1. CHAPTER 6 TOTAL QUALITY MANAGEMENT

2. QUALITY AS A PHILOSOPHY As competitive weapon that must be produced efficiently : high performance design and consistency TQM is stressing on customer satisfaction, employee involvement and continuous improvement in quality Quality is the responsibility of management Clearly defining quality and bridging the gap between customer expectation and operating capabilities

3. CUSTOMER-DRIVEN DEFINITIONS OF QUALITY The ability to meet or exceeding the expectations of customers : conformance to specifications value fitness for use support psychological impression

4. THE COST OF QUALITY (see Russell & Taylor) The cost of achieving good quality : Prevention costs : preventing defects before they happened or preventing poor quality products from reaching the customer (quality planning, process, training and information costs) Appraisal costs : assessing the level of quality attained by the operating system or cost of measuring, testing and analyzing the inputs and processes to ensure that product quality specifications are being met (operator, test equipment, inspection and testing costs)

5. THE COST OF QUALITY (continued) The cost of poor quality or the cost of nonconformance or failure cost Internal failure costs : defects discovered during the production or before they are delivered to the customer (scrap, rework, process failure, process downtime, price-downgrading costs) External failure costs : defects discovered after the customer received the product or service (customer complain, product return, warranty claim, product liability, lost sale costs)

6. THE QUALITY-COST RELATIONSHIP (see Russell & Taylor) Less cost if the defect is detected early in the process A service entity has little opportunity to examine and correct the defective internal process before the employee-customer interaction is happened. So in this case it becomes an external failure When the sum of prevention and appraisal costs increased, internal and external failure cost decreased Increase in sales and market share resulting from increased customer confidence in quality will offset the high cost of achieving good quality

7. THE QUALITY-COST RELATIONSHIP (continued) The cost of achieving good quality will be less because of the innovations in technology, processes & work methods. Higher quality products charge higher prices Achieving quality at minimum cost by focusing more on improving the capabilities & training of employees, getting them more involved in preventing poor quality and focusing less on engineering solutions Improving quality at the new product development stage rather than in the production process of developed product to reduce appraisal cost

8. EMPLOYEE INVOLVEMENT Cultural change : instilling the awareness of the importance of quality to all employees and functions Teams : small group, commitment, leadership role, common goals and approaches Individual development : training program Awards and incentives : the role of monetary and non monetary incentives for improving quality

9. CONTINUOUS IMPROVEMENT Continually seeking ways to improve operations (quality and process improvement) Benchmarking Sense of employees’ ownership Any aspects of operations to be improved Five steps to get started Problem-solving process (plan-do-check-act)

10. IMPROVING QUALITY THROUGH TQM Purchasing considerations - the quality of inputs : high quality products/services (defect-free parts) at reasonable cost, clear and realistic specifications, process capability studies, cross function coordination with engineering and quality control Product and service design : influence methods, materials and specifications that consequently affect defect rate, market share, reliability, added time and cost

11. IMPROVING QUALITY THROUGH TQM (continued) Process design : shorten the waiting time, investing new machinery Quality function deployment : translating customers’ requirements into the design of products/services and their processes that requires inter functional communication and coordination Benchmarking (competitive, functional and internal) : measures the firm’s products/services and process against the industry leaders

12. IMPROVING QUALITY THROUGH TQM (continued) Data analysis tools : data collection to identify quality problems and causes (see more detail and examples on Russell & Taylor) Data snooping : using different data analysis tools together