Modern Importance of Quality
“The first job we have is to turn out quality
merchandise that consumers will buy and keep
on buying. If we produce it efficiently and
economically, we will earn a profit, in which
you will share.”
- William Cooper Procter
Definitions of Quality
• Transcendent definition: excellence
• Product-based definition: quantities of
product attributes
• User-based definition: fitness for intended
use
• Value-based definition: quality vs. price
• Manufacturing-based definition:
conformance to specifications
Quality Perspectives
transcendent &
product-based
user-based
needs
Marketing
Customer
products
and
services
value-based
Design
manufacturingbased
Manufacturing
Distribution
Information flow
Product flow
Customer-Driven Quality
• “Meeting or exceeding customer
expectations”
• Customers can be...
– Consumers
– External customers
– Internal customers
Total Quality
• People-focused management system
• Focus on increasing customer satisfaction
and reducing costs
• A systems approach that integrates
organizational functions and the entire
supply chain
• Stresses learning and adaptation to change
• Based on the scientific method
Principles of Total Quality
•
•
•
Customer and stakeholder focus
Participation and teamwork
Process focus and continuous
improvement
...supported by an integrated organizational
infrastructure, a set of management practices,
and a set of tools and techniques
Customer and Stakeholder Focus
•
•
•
•
Customer is principal judge of quality
Organizations must first understand
customers’ needs and expectations in order
to meet and exceed them
Organizations must build relationships with
customers
Customers include employees and society at
large
Participation and Teamwork
•
•
•
•
Employees know their jobs best and
therefore, how to improve them
Management must develop the systems and
procedures that foster participation and
teamwork
Empowerment better serves customers, and
creates trust and motivation
Teamwork and partnerships must exist both
horizontally and vertically
Process Focus and Continuous
Improvement
•
A process is a sequence of activities
that is intended to achieve some result
Competitive Advantage
• Is driven by customer wants and needs
• Makes significant contribution to business
success
• Matches organization’s unique resources with
opportunities
• Is durable and lasting
• Provides basis for further improvement
• Provides direction and motivation
Quality supports each of these characteristics
Quality and Profitability
Improved quality
of design
Improved quality
of conformance
Higher perceived
value
Higher
prices
Increased market
share
Increased
revenues
Higher profitability
Lower
manufacturing and
service costs
Evidence that Quality Impacts
Business Results
• General Accounting Office study of
Baldrige Award applicants
• Baldrige stock study (see
www.quality.nist.gov)
• Hendricks and Singhal study of quality
award winners
• Performance results of Baldrige Award
winners
GAO TQ Model
Reliability
Product and
service quality On-time delivery
Error/defects
Leadership for
continuous
improvement
Quality systems and
employee involvement
Overall satisfaction
Customer
satisfaction Customer retention
Complaints
Competitiveness
Market share
Profits
Organization
benefits
Costs
Cycle time
Turnover
Satisfaction
Safety & health
Productivity
Three Levels of Quality
• Organizational level: meeting external
customer requirements
• Process level: linking external and
internal customer requirements
• Performer/job level: meeting internal
customer requirements
Quality and Personal Values
• Personal initiative has a positive impact
on business success
• Quality begins with personal attitudes
• Quality-focused individuals often exceed
customer expectations
• Attitudes can be changed through
awareness and effort (e.g., personal
quality checklists)
Definition:
Total Quality Management
• Total Quality Management (TQ, QM or TQM)
and Six Sigma (6) are sweeping “culture change”
efforts to position a company for greater customer
satisfaction, profitability and competitiveness.
• TQ may be defined as managing the entire
organization so that it excels on all dimensions of
products and services that are important to the
customer.
• We often think of features when we think of the
quality of a product or service; TQ is about
conformance quality, not features.
Another meaning of TQM
Total Quality Management means that the
organization's culture is defined by and
supports the constant attainment of
customer satisfaction through an integrated
system of tools, techniques, and training.
This involves the continuous improvement
of organizational processes, resulting in
high quality products and services.
What’s the goal of TQM?
“Do the right things right the
first time, every time.”
Another way to put it
• At it’s simplest, TQM is all managers
leading and facilitating all contributors in
everyone’s two main objectives:
(1) total client satisfaction through quality
products and services; and
(2) continuous improvements to processes,
systems, people, suppliers, partners, products,
and services.
Total Quality also is…
• Meeting Our Customer’s Requirements
• Doing Things Right the First Time; Freedom
from Failure (Defects)
• Consistency (Reduction in Variation)
• Continuous Improvement
• Quality in Everything We Do
A Quality Management System is…
• A belief in the employee’s ability to solve
problems
• A belief that people doing the work are best able
to improve it
• A belief that everyone is responsible for quality
Elements for Success
•
•
•
•
•
•
•
•
•
Management Support
Mission Statement
Proper Planning
Customer and Bottom Line Focus
Measurement
Empowerment
Teamwork/Effective Meetings
Continuous Process Improvement
Dedicated Resources
The Continuous Improvement Process
Empowerment/
Shared Leadership
Customer
Satisfaction
Business
Results
Team
Management
Process
Improvement/
Problem
Solving
Measurement
Measurement
Measurement
...
Measurement
Modern History of Quality Management
•
Frederick W. Taylor wrote Principles of Scientific Management in 1911.
•
Walter A. Shewhart used statistics in quality control and inspection, and
showed that productivity improves when variation is reduced (1924); wrote
Economic Control of Manufactured Product in 1931.
•
W. Edwards Deming and Joseph M. Juran, students of Shewhart, went to
Japan in 1950; began transformation from “shoddy” to “world class” goods.
•
In 1960, Dr. K. Ishikawa formalized “quality circles” - the use of small groups
to eliminate variation and improve processes.
•
In the late ‘70’s and early ‘80’s:
– Deming returned from Japan to write Out of the Crisis,
and began his famous 4-day seminars in the United States
– Phil Crosby wrote Quality is Free
– NBC ran “If Japan can do it, why can’t we?”
– Motorola began 6 Sigma
History of Quality Management
Deming’s 14 Points
1. Create constancy of purpose for improvement
2. Adopt a new philosophy
3. Cease dependence on mass inspection
4. Do not award business on price alone
5. Work continually on the system of production and service
6. Institute modern methods of training
7. Institute modern methods of supervision of workers
8. Drive out fear
9. Break down barriers between departments
10. Eliminate slogans, exhortations, and targets for the work force
11. Eliminate numerical quotas
12. Remove barriers preventing pride of workmanship
13. Institute a vigorous program of education and retraining
14. Take action to accomplish the transformation
History of Quality Management
Deming’s Concept of “Profound Knowledge”
 Understanding (and appreciation) of Systems
- optimizing sub-systems sub-optimizes the total system
- the majority of defects come from systems, the responsibility of
management (e.g., machines not in good order, defective material, etc.
 Knowledge of Statistics (variation, capability, uncertainty in data, etc.)
- to identify where problems are, and point managers and workers
toward solutions
 Knowledge of Psychology (Motivation)
- people are afraid of failing and not being recognized,
so they fear how data will be used against them
 Theory of Knowledge
- understanding that management in any form is a prediction, and is
based on assumptions
History of Total Quality
According to Dr. Joseph M. Juran (1991):
“On the assembly line at the Ford Motor Company in 1923,
most of the workers producing Model T’s were immigrants
and could not speak English. Many were also illiterate.
Workers learned their trade by modeling the actions of other
workers. They were unable to plan, problem-solve, and make
decisions. As a result, the Taylor scientific school of
management flourished, and MBAs and industrial engineers
were invented to do this work. Today, however, the workforce
is educated. Workers know what is needed to improve their
jobs, and companies that do not tap into this significant source
of knowledge will truly be at a competitive disadvantage.”
History of Total Quality
According to Phil Crosby, Quality is . . .
An attitude:
- Zero Defects
- Continuous Improvement
A measurement:
- Price of Conformance, plus
- Price of Nonconformance (defects)
TQ: Transforming an Organization
From
To
Motivation through fear and loyalty
Motivation through shared vision
Attitude: “It’s their problem”
Ownership of every problem
affecting the customer
Attitude: “the way we’ve always done
it”
Continuous improvement
Decisions based on assumptions/
judgment calls
Decisions based on data and facts
Everything begins and ends with
management
Everything begins and ends with
customers
Crisis management and recovery
Doing it right the first time
Choosing participative OR scientific
management
Choosing scientific AND
participative management
What is Six Sigma?
• A goal of near perfection in meeting customer requirements
• A sweeping culture change effort to position a company for
greater customer satisfaction, profitability and competitiveness
• A comprehensive and flexible system for achieving,
sustaining and maximizing business success; uniquely driven
by close understanding of customer needs, disciplined use of
facts, data, and statistical analysis, and diligent attention to
managing, improving and reinventing business processes
(Source:The Six Sigma Way by Pande, Neuman and Cavanagh)
Is 99% Quality Good Enough?
• 22,000 checks will be deducted from the
wrong bank accounts in the next 60
minutes.
• 20,000 incorrect drug prescriptions will be
written in the next 12 months.
• 12 babies will be given to the wrong parents
each day.
Six Sigma Quality
The objective of Six Sigma quality is 3.4 defects
per million opportunities!
(Number of Standard Deviations)
3 Sigma
4 Sigma
5 Sigma
6 Sigma
0.0
2700
63
0.57
0.002
0.5
6440
236
3.4
0.019
1.0
22832
1350
32
0.019
1.5
66803
6200
233
3.4
2.0
158,700
22800
1300
32
Defects Per Million Opportunities (DPMO)
·
100K
But is Six Sigma Realistic?
·
IRS – Tax Advice (phone-in)
(66810 ppm)
10K
41
Average
Company
1K
31
····
···
Restaurant Bills
Doctor Prescription Writing
Payroll Processing
Order Write-up
Journal Vouchers
Wire Transfers
Air Line Baggage Handling
Purchased Material
Lot Reject Rate
100
21
·
(233 ppm)
10
11
Best in Class
1
1
Domestic Airline
Flight Fatality Rate
(3.4 ppm)
2
3
3
4
4
SIGMA
5
5
6
6
7
(0.43 ppm)
7
Six Sigma Improvement Methods
DMAIC vs. DMADV
Define
Measure
Analyze
Continuous Improvement
Reengineering
Improve
Design
Control
Validate
Six Sigma DMAIC Process
Control
Improve
Define
Analyze
Measure
Define: Define who your
customers are, and what
their requirements are for
your products and services –
Their expectations. Define
your team goals, project
boundaries, what you will
focus on and what you won’t.
Define the process you are
striving to improve by
mapping the process.
Six Sigma DMAIC Process
Control
Improve
Define
Analyze
Measure
Measure: Eliminate
guesswork and assumptions
about what customers need
and expect and how well
processes are working. Collect
data from many sources to
determine speed in responding
to customer requests, defect
types and how frequently they
occur, client feedback on how
processes fit their needs, how
clients rate us over time, etc.
The data collection may
suggest Charter revision.
Six Sigma DMAIC Process
Control
Improve
Define
Analyze
Measure
Analyze: Grounded in the
context of the customer and
competitive environment,
analyze is used to organize
data and look for process
problems and opportunities.
This step helps to identify gaps
between current and goal
performance, prioritize
opportunities to improve,
identify sources of variation and
root causes of problems in the
process.
Six Sigma DMAIC Process
Control
Improve
Define
Analyze
Measure
Improve: Generate both
obvious and creative
solutions to fix and prevent
problems. Finding creative
solutions by correcting root
causes requires innovation,
technology and discipline.
Six Sigma DMAIC Process
Control
Improve
Define
Analyze
Measure
Control: Insure that the
process improvements, once
implemented, will “hold the
gains” rather than revert to
the same problems again.
Various control tools such as
statistical process control can
be used. Other tools such as
procedure documentation
helps institutionalize the
improvement.
Six Sigma DMADV Process
Validate
Design
Define
Analyze
Measure
Design: Develop detailed
design for new process.
Determine and evaluate
enabling elements.
Create control and testing
plan for new design. Use
tools such as simulation,
benchmarking, DOE,
Quality Function
Deployment (QFD),
FMECA analysis, and
cost/benefit analysis.
Six Sigma DMADV Process
Validate
Design
Define
Analyze
Measure
Validate: Test detailed
design with a pilot
implementation. If
successful, develop and
execute a full-scale
implementation. Tools in
this step include:
planning tools,
flowcharts/other process
management techniques,
and work documentation.
History of Quality Assurance (1 of 2)
• Skilled craftsmanship during Middle Ages
• Industrial Revolution: rise of inspection and
separate quality departments
• Statistical methods at Bell System
• Quality control during World War II
• Quality management in Japan
History of Quality Assurance (2 of 2)
• Quality awareness in U.S. manufacturing
industry during 1980s: “Total Quality
Management”
• Malcolm Baldrige National Quality Award
(1987)
• Quality in service industries, government,
health care, and education
• Current and future challenge: keep progress in
quality management alive
Productivity and TQM
• Traditional view:
– Quality cannot be improved without significant
losses in productivity.
• TQM view:
– Improved quality leads to improved
productivity.
Basic Tenets of TQM
• 1. The customer makes the ultimate determination
of quality.
• 2. Top management must provide leadership and
support for all quality initiatives.
• 3. Preventing variability is the key to producing
high quality.
• 4. Quality goals are a moving target, thereby
requiring a commitment toward continuous
improvement.
• 5. Improving quality requires the establishment of
effective metrics. We must speak with data and
facts not just opinions.
The three aspects of TQM
Counting
Customers
Culture
Tools, techniques, and training in their use
for analyzing, understanding, and solving
quality problems
Quality for the customer as a
driving force and central concern.
Shared values and beliefs, expressed by
leaders, that define and support quality.
Quality Throughout
• “A Customer’s impression of quality begins with
the initial contact with the company and continues
through the life of the product.”
– Customers look to the total package - sales, service
during the sale, packaging, deliver, and service after the
sale.
– Quality extends to how the receptionist answers the
phone, how managers treat subordinates, how courteous
sales and repair people are, and how the product is
serviced after the sale.
• “All departments of the company must strive to
improve the quality of their operations.”
Value-based Approach
• Manufacturing
Dimensions
–
–
–
–
–
–
–
–
Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality
• Service Dimensions
–
–
–
–
–
Reliability
Responsiveness
Assurance
Empathy
Tangibles
The TQM System
Continuous
Improvement
Objective
Principles
Elements
Customer
Focus
Process
Improvement
Total
Involvement
Leadership
Education and Training Supportive structure
Communications
Reward and recognition
Measurement