CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT Caesar Ritz – luxury hotel Ritz-Carlton Hotel Company Anticipating the wishes and needs of the guests Resolving problems Caring conduct toward guests and each other SKILLED AND EMPOWERED WORK FORCE OPERATING WITH PRIDE AND JOY TRUE MANAGEMENT GURUS – QUALITY REVOLUTION - Insights- measuring, managing, and improving quality W. Edwards Deming Joseph M. Juran Philip B. Crosby COVERAGE 1. 2. 3. 4. 5. 6. Quality management philosophies Similarities and differences Individual contributions to modern practice Other key individuals Principles of total quality Implementation of quality management systems- ISO 9000 THE DEMING PHILOSOPHY - DR. W. EDWARDS DEMING (1900-1993) Ph.D. in Physics Statistician Western Electric- pioneering era of statistical quality control- 1920s and 1930s Viewing management processes statistically Taught quality control courses Teaching statistics- not only to engineers and factory workers Quality to upper level management – ignored in the U.S. - Japan- census Theories and usefulness Teaching statistical quality control Importance top management leadership customer/supplier partnerships continuous improvement in product development & manufacturing processes Union of Japanese Scientists and Engineers- Deming Application Prize in 1951 High level of achievement in quality practices Japan’s highest honor, THE ROYAL ORDER OF THE SACRED TREASURE - CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT - Virtually unknown in the U.S. - “If Japan Can… Why Can’t We?”- contributions in Japan and work in Nashua Corporation - U.S. companies- improve quality - Seeds of quality knowledge develop their own effective quality management systems - Death: December 1993- 93 - QUALITY Helps somebody Enjoys a good and sustainable market - VARIATION- chief culprit of poor quality Variations from specifications inconsistent performance and premature wear and failure Inconsistencies in human behavior frustrate customers and damage reputation - CONTINUOUS IMPROVEMENT + STATISTICAL ANALYSIS reduce variation - - - CONTINUOUS IMPROVEMENT IN PRODUCT AND SERVICE QUALITY Reducing uncertainty and variability a. Design b. Manufacturing c. Service processes Driven by LEADERSHIP OF TOP MANAGEMENT Higher quality higher productivity long-term competitive strength DEMING CHAIN REACTION Improvements in quality lower cost Lower costs: a. Less rework b. Fewer mistakes c. Fewer delays and snags d. Better use of time and materials Lower costs productivity improvements Better quality + lower prices higher market share stay in business job creation Top management- responsibility for quality improvement DEMING’S 14 POINTS - Radical departure from management thinking and practice 1960s-1970s- quotas and strict work measurement Ruled by autocratic managers- little interest in listening to customers, workforce, improving quality 1. Statement of the Aims and Purposes Management’s commitment to the statement 2. Learn new philosophy Know the Top management and everybody 3. Understand- purpose of INSPECTION Improvement of processes Reduction of cost CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT 4. END THE PRACTICE OF AWARDING – based on price tag only 5. CONTINUOUS IMPROVEMENT – production and service system 6. TRAINING 7. LEADERSHIP 8. REMOVE FEAR. CREATE TRUST. CLIMATE- INNOVATION 9. OPTIMIZE – EFFORTS OF TEAMS, GROUPS, STAFF AREAS 10. ELIMINATE EXHORTATIONS 11. Eliminate numerical quotas Learn and institute methods for improvement Eliminate MBO (management by objective) Learn the capabilities of processes and the improvement procedures 12. REMOVE BARRIERS- pride of workmanship 13. EDUCATION AND SELF-IMPROVEMENT 14. TAKE ACTION TRANSFORMATION POINT 1: VISION AND COMMITMENT - Values, mission and vision – future long-term direction Businesses- profit and social entities serving customers and employees Long-term view Invest in innovation, education and training Responsibility- jobs Improving competitive position Responsibility – top management Effective leadership begins with commitment Commitment to quality and performance- still difficult Nakagawa na ng thorough assessment sa kanilang kumpanya at alam na kung ano ang kailangan nilang baguhin, hindi pa rin nila ma-exploit ang opportunities dahil sa denial at excuses POINT 2: LEARN NEW PHILOSOPHY - Historical ways – numerical quotas or motivational slogans outdated Customer-driven approach to quality Learn and understand the principles of quality and performance excellence ORGANIZATIONAL LEARNING- learn new approaches and relearn many older approces CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT POINT 3: UNDERSTAND INSPECTION - - 20th century- INSPECTION- primary means for quality control IMPLICATIONS OF ROUTINE INSPECTION Defects are present Lack of attention to quality- production quality Non-value adding activity Rework + disposition of defective material decreases productivity + increases costs Workers should be responsible for their work In-process inspection Use of statistical tolls – eliminate post-production inspection INSPECTION- information gathering tool for improvement, not for quality assurance New role of inspection- integrated to quality management practices Understanding how to reduce variation Eliminating many sources of unnecessary inspection Reducing the non-value-added costs POINT 4: STOP MAKING DECISIONS PURELY BASED ON COST - - - Purchasing departments- cost minimization and competition among suppliers Purchasing departments are being evaluated on the money they spend The direct costs associated with poor quality materials during production and warranty periods + loss of customer goodwill > cost savings by the traditional practice Understanding the role- supplier to production and impact on the system Long-term relationships with fewer suppliers loyalty & opportunities – mutual improvement Multiple suppliers Protection against strikes Protection against natural disasters Hidden costs of multiple suppliers Increased travel to visit suppliers Loss of volume discounts Increased setup charges higher unit costs Increased inventory Increased administrative expense Constantly changing suppliers due to price increases variation in materials Process of each supplier is different Reduced supply base decreases variation reducing scrap, rework and reduced need for adjustment Long-term relationship strengthens supplier-customer bond greater production of suppliers improved communication with customer enhances opportunities for process improvement SUPPLY CHAIN MANAGEMENT Minimizing total supply chain costs Stronger partnerships with suppliers POINT 5: CONSTANT AND FOREVER IMPRVOEMENT CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT - Improvements Design Operations - Improvements in design Understanding customer needs Continual market surveys Other sources of feedback Understanding the manufacturing and service delivery process - Improvements in operations Reducing the causes and impacts of variation Engaging to innovate Seek ways of doing jobs more efficiently and effectively - Improvement in quality improvement in productivity decrease in costs - Continuous improvement – necessary means for survival - Training POINT 6: INSTITUTE TRAINING - People- most valuable resource Improve quality and productivity Adds to worker morale Puts the company as dedicated in investing in their future Tools- diagnosing, analyzing, and solving quality problems Identifying improvement opportunities Excellent training programs for technology Company should enrich the ancillary skills of the workforce. POINT 7: INSTITUTE LEADERSHIP - Job of management- leadership Supervision- overseeing and directing work Leadership- guidance better performance Eliminate fear Encourage teamwork POINT 8: DRIVE OUT FEAR - Reprisal Failure Unknown Relinquishing control Change Mutual respect of managers and workers are needed Afraid to report quality problems Not meet quotas Reduced incentive pay CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT Blamed for problems in the system - Afraid to cooperate with other departments Higher performance ratings and bonuses Fear takeovers Reorganizations - Culture without fear – slow process Can be destroyed – transition of leadership Change in corporate policies POINT 9: OPTIMIZE THE EFFORTS OF TEAMS - - Teamwork Breakdown barriers- departments and individuals Barriers between functional areas Fear of losing power Internal competition – raises and performance ratings Inhibits teamwork and cooperation Poor quality a. Cannot understand the wants of their internal customers b. Not getting what they need from internal suppliers Training and employee involvement POINT 10: ELIMINATE EXHORTATIONS (STATEMENTS URGING TO DO SOMETHING) - Posters, slogans, motivational programs- directed at the wrong people All quality problems are due to workforce Overlooking the major source of problems- systems Well-design system + right tools and environment Higher levels of trust and motivation POINT 11: ELIMINATE QUOTAS AND MANAGEMENT BY OBJECTIVE - Quotas and standards- no improvement Short-cut quality to reach goal Little incentive to continue or to exert more effort after they reach a goal Goals are useful Numerical goals without incorporating a method to reach a goal Frustration and resentment Understand the system Continually try to improve POINT 12: REMOVE BARRIERS TO PRIDE IN WORKMANSHIP - Workforce and management- commodity Monotonous tasks CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT - Inferior machines, tools or materials - Running defective items - Reporting to supervisors who know little about the job - Blame when problems occur - Understand the factors of employee motivation and workforce engagement Build an environment- pride in workmanship Understand the meaning of their work Rewarded for accomplishments POINT 13: EDUCATION AND SELF-IMPROVEMENT - POINT 6- training in specific job skills POINT 13- continuing, broad education for self-development Invest in people long-term success Fundamental mission of business – provide jobs Business and society responsibility to improve the value of the individual Developing the worth of the individual- powerful motivation method Elevating the general knowledge base of the workforce outside of specific job skills POINT 14: TAKE ACTIONS - Cultural change Must be initiated by top management Includes everyone Meets with skepticism and resistance a. If there are many of the traditional management practices to be eliminated - Many firms used Deming’s principles and organized quality approaches according to his philosophy CRITICISM OF DEMING PHILOSOPHY Only a philosophy Lacked specific directions and approaches – how to do it Not fit into the traditional American business culture Quality excellence- learning, hard work, and dedication PROFOUND KNOWLEDGE - SYSTEM OF PROFOUND KNOWLEDGE- clear rationale or the underlying foundations of 14 points 1. 2. 3. 4. Appreciation- SYSTEM Understanding- VARIATION Theory of Knowledge Psychology CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT SYSTEMS or SYSTEMS THINKING - - - - - - Set of functions or activities work together aim Many smaller, interacting sub-systems Subsystems are linked together internal customers and suppliers Organization- many individual functions – separate units Most processes are cross-functional Managers’ focus a. Interaction of parts b. Interaction of the system with other systems System should be for all stakeholders – long-term benefit Understand the interrelationships among the a. systems’ components b. involved stakeholders SUB-OPTIMIZATION Doing the best- individual components Losses Win-lose effect Purchasing materials at the lowest price Excessive costs in scrap and repair Increasing overall costs Minimizing the cost of manufacturing Products- do not meet the designers’ specifications and customer needs Applicable to managing people Pitting individuals / departments against each other – SELF-DESTRUCTIVE a. Maximizing expected gain of the department, not the whole firm Requires internal cooperation - FACTORS AFFECTING INDIVIDUAL EMPLOYEE’S PERFORMANCE a. Training b. Information and resources c. Leadership of superiors d. Disruptions on the job e. Management policies and practices - Blaming individuals – little ability to control the environment VARIATION - - Statistical theory and variation Variation is natural. QUINCUNX- device showing the natural process of variation Computer-simulated quincunx- frequency distribution in one simulation Symmetrical bell-shaped distribution or normal distribution Variation exists in production and service process CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT Inherent factors in the design – cannot easily be controlled - Excessive variation Failed products Erratic and inconsistent service performance – not meeting customers’ expectations - STATISTICAL METHODS Primary tools – identify and quantify variation - Everyone must be familiar with statistical techniques and other problem-solving tools. Objectivity Common knowledge across all levels of management Little room for ambiguity or misunderstanding - Modern technology- many physical parts with very little variation - Variation still exists Human behavior hampering quality efforts Performance - Understand the variation improvements in technology, process design and training reduce variation - Producers and consumers benefit PRODUCERS a. Less inspection b. Less scrap and rework c. More consistent human performance d. Higher productivity e. Higher customer satisfaction CONSUMERS a. Similar quality characteristics b. Consistent delivery of performance THEORY OF KNOWLEDGE - Branch of philosophy Nature and scope of knowledge Presuppositions and basis General reliability of claims to knowledge - Understanding how things work Necessity of effectiveness of future-related decisions - Rational plan Prediction concerning conditions Behavior Comparison of performance grounded on theory - Understanding – assumptions and theory behind statistical tools and techniques correct application Copying an example of success without understanding the theory disaster - Knowledge is not possible without theory Experience cannot establish a theory It only describes CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT Cannot be tested or validated No help to management - THEORY Cause and effect relationship prediction and rational management decisions - Deming never gave solutions or prescriptions for quality Learn and discover what is appropriate for them To rationalize their decisions PSYCHOLOGY - - - - - - Understanding: People Interaction between people and circumstances Interactions between leaders and employees System of management Important in designing a work environment Employee well-being Employee satisfaction Understanding human behavior Fair treatment of people People differ from one another True leader Aware of people’s differences Working to optimize the abilities and preferences of everybody Motivation Intrinsic- most powerful motivators Extrinsic People – need love and esteem Need dignity and self-esteem Fear – not motivator Prevents the system from reaching its full potential Cannot enjoy the work not productive and focused on quality principles Helps us to nurture and preserve positive innate attributes of people Carrots and sticks – no long-term values Pay is not a motivator Monetary rewards – way of managers- not understanding the management of intrinsic motivation Joy in work is next to getting good ratings Ruled by external forces Act to protect what they have Avoid punishment IMPACTS OF PROFOUND KNOWLEDGE- PETER SCHOLTES NOT UNDERSTANDING THE SYSTEMS - Events- individual events, not a net result of many interactions and interdependent forces Seeing the symptoms, not the deep causes of problems No understanding of the impact of intervention in one part to the another place or time CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT - Blaming people- little or no ability to control the events - Don’t understand- whole village in raising a child NOT UNDERSTANDING VARIATION - - Not seeing occurring trends Seeing trends – when actually there is non Don’t know when expectations- realistic No understanding of the past performance can’t predict future performance Don’t know – difference- prediction, forecasting, guesswork Give others credit or give others blame – simply they are lucky or unlucky Attributing everything to: a. Human effort b. Heroics c. Frailty d. Error e. Deliberate sabotage Without considering the systemic cause Cannot distinguish – fact from opinion NOT UNDERSTANDING PSYCHOLOGY - - No understanding in motivation and the reasons behind the people’s actions Carrots and sticks and induced motivation No positive effect Impairing relationship – motivator and worker No understanding in the process of change, resistance to change Coercive and paternalistic approaches – dealing with people Cynicism, demoralization, demotivation, guilt, resentment, burnout, craziness, and turnover NOT UNDERSTAND THE THEORY OF KNOWLEDGE: - Don’t know the planning process Cannot accomplish learning and improvement Don’t understand the difference- improvement and change Problems- unresolved - WALTER SHEWHART Common and special causes of variation- 1920s Business schools- behavioral theories Management scientists refined systems theory – 1950s-1970s Scientists- understand - relationship – prediction, observation and theory - THE JURAN PHILOSOPHY synergized and developed into a unified universal theory of management CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT - JOSEPH JURAN (1904-2008) Born in Romania 1912- US Western Electric- 1920s Statistical methods for quality Corporate industrial engineer 1951- writing, editing, and publishing of Quality Control Handbook a. One of the most comprehensive quality manuals b. Revised several times c. Popular reference - Deming + Juran Japanese- 1950s Principal force of quality reorganization - Japanese application of Juran’s philosophy Quality- senior management level Training the entire management hierarchy- quality principles Improve quality- revolutionary rate Reporting progress – quality goals executive levels Workforce in quality Revising – reward & recognition structure - - U.S. businesses – major crisis in quality Huge costs of poor quality Loss of sales to foreign competition New thinking about quality- inclusion of all levels of management Upper management Training and experience- quality management Improving the quality saving the US from losing its status as economic superpower - Not proposing a major cultural change Improve quality – working within the familiar system Fit to strategic business planning process Minimal risk of rejection Employees at different levels speak – own languages Top management- language of dollars Workers- language of things Middle management- speak both languages and translate between dollars and things STATISTICS- common language- DEMING Use of quality cost accounting and analysis OPERATIONAL LEVEL Increasing conformance to specifications a. Elimination of defects b. Statistical tools for analysis Philosophy – fit – existing management systems - External and internal perspective - - CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT - Quality is related to: PRODUCT PERFORMANCE- customer satisfaction FREEDOM FROM PRODUCT DEFICIENCIES- avoids customer dissatisfaction - User-based definition of quality- FITNESS FOR USE Basis for: a. Design b. Manufacturing c. Delivery d. Service - TWO LEVELS OF PURSUIT OF QUALITY Mission of the firm- high design quality Mission of each department- high conformance quality - Activities: Market research Product development Design Planning for manufacture need a competent company-wide quality management Purchasing Production process control Inspection Testing Sales Customer feedback - SENIOR MANAGEMENT Active and enthusiastic leadership – quality management process - - - - QUALITY TRILOGY- three major quality processes 1. QUALITY PLANNING- process – preparing – meet quality goals 2. QUALITY CONTROL- process- meeting quality goals- operations 3. QUALITY IMPROVEMENT- process- breaking through unprecedented levels of performance During that time, few companies- significant planning and improvement activities Major cultural shift in management thinking QUALITY PLANNING Identifying customers- internal & external Determination of needs Translation of needs to specifications Development of product features- response to needs Development of processes capable of producing product or delivering service Employees should know their customers- internal (department) or external (another organization) Quality goals Meeting needs of customers and suppliers Minimum combined cost Design of the process – produce the product satisfy customers + meet quality goals Strategic planning – quality Short-term and long-term goals Setting priorities CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT Comparing results with previous plans Meshing plans with other corporate strategic objectives QUALITY CONTROL - - Determination of what to control Establishment of units of measurement objective evaluation of data Establishment of standards of performance Measuring actual performance Interpretation of the difference Actual performance Standard Action on the deviation QUALITY IMPROVEMENT - BREAKTHROUGH SEQUENCE Discovery organization diagnosis corrective action control 1. PROOF OF THE NEED request for resources – quality improvement program Top managers – quality improvements- good economics Data collection efforts language of money- universal language of Information- poor quality, low productivity, poor service top management 2. PROJECT IDENTIFICATION Converting atmosphere of defensiveness or blame into a constructive action Participation in a project increases the likelihood of the action of the participants on the results 3. ORGANIZATION FOR BREAKTHROUGH Broad or narrow a. BROAD- entire division + formal committee structures b. NARROW- small group of workers Definition and agreement a. Specific aims- project b. Authority to conduct experiments c. Implementation strateiges 2 PATHS FROM PROBLEM TO SOLUTION a. DIAGNOSITC JOURNEY - SYMPTOM TO CAUSE performed by different individuals with appropriate b. REMEDIAL JOURNEY- CAUSE TO REMEDY skills (specialists) 4. DIAGNOSTIC JOURNEY Data collection Statistics Problem-solving tools Full-time specialized experts (SIX SIGMA BLACK BELTS) CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT Management-controllable problems and operator-controllable problems a. Different methods- diagnosis & remedy 5. REMEDIAL JOURNEY Several phases a. Alternative- optimizes total costs b. Implementing remedial action c. Dealing with resistance to change 6. HOLDING THE GAINS New standards and procedures Training – workforce Institution of controls - - Juran + Deming Top management commitment Need for improvement Use of quality control techniques Traomomg Difference Juran- Deming is wrong to drive out fear a. Fear can bring out the best in people THE CROSBY PHILOSOPHY - PHILIP CROSBY (1926-2001) Corporate vice president- quality – INTERNATIONAL TELEPHONE AND TELEGRAPH 1979- PHILIP CROSBY ASSOCIATES- training programs QUALITY IS FREE- attention of top corporate managers – U.S. ABSOLUTES OF QUALITY MANAGEMENT BASIC ELEMENTS OF IMPROVEMENT - ABSOLUTES OF QUALITY MANAGEMENT 1. Quality- conformance to requirements o Manufacturing perspective on quality o Quality is judged – meeting requirements o Non-conformance- absence of quality o Requirements- responsibility of management a. Ironclad b. clearly stated- not misunderstood c. communication devices 2. No such thing- QUALITY PROBLEM a. Problems came from functional departments CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT b. Burden of responsibility for solving functional problems – functional departments, not quality department c. Quality department a. Measure conformance b. Report results c. Leadership and support- quality improvement 3. NO SUCH THING- ECONOMICS OF QUALITY a. Doing the job right the first time is always cheaper b. Quality is free c. Costing money- actions- not doing jobs right the first time 4. COST OF QUALITY- expense of non-conformance a. Only performance measurement b. 15%-20% of sales on quality costs c. Well-run quality management program- less than 2.5% of sales – prevention and appraisal d. Cost of poor quality e. Calling problems to management attention f. Selecting opportunities- corrective action g. Tracking quality improvement over time 5. ZERO DEFECTS- only performance standard a. Doing it right the first time b. Preventing defects c. d. e. f. Became common to believe that error is inevitable, accepting it and anticipating it, to err is human In our personal life- we do not tolerate errors dual standard Most human error- lack of attention – due to assumption that error is inevitable Careful consideration + pledging to make a constant conscious effort to do the jobs right the first time a. Eliminating waste of rework, scrap, repair decreasing cost and increases individual opportunity - Juran + Deming Majority of quality problems- not from human error, a. From poorly designed systems- responsibility of management - BASIC ELEMENTS OF IMPROVEMENT DETERMINATION- serious commitment of top management for quality improvement EDUCATION- understanding the Absolutes of Quality Management IMPLEMENTATION- understanding the implementation process - Approach – behavioral Management and organizational processes change corporate culture and attitudes Fit well within existing organizational structures CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT COMPARING DEMING, JURAN, AND CROSBY SIMILARITIES - Quality- imperative in future competitiveness Top management commitment- absolute necessity Quality management practices- save money Responsibility for quality on management Continuous, never-ending improvement Customer and strong management-worker partnerships Need for changing culture Difficulties in changing culture - Understand the nature and differences of philosophies and their fitness to own unique culture Developing an approach specifically tailored to own culture and management style OTHER QUALITY PHILOSOPHIES - A.V. FEIGENBAUM KAORU ISHIKAWA A.V. FEIGENBAUM - manager- manufacturing and quality control- GENERAL ELECTRIC 1968- General Systems Company – Pittsfield, Massachusetts Speaker Founding chairman of the board of International Academy of quality European Organization for Quality Control Union of Japanese Scientists and Engineers (JUSE) American Society for Quality - TOTAL QUALITY CONTROL Effective system Integration of: a. Quality development b. Quality maintenance c. Quality improvement efforts Enable production and service at the most economical levels Full customer satisfaction BOOK- TOTAL QUALITY CONTROL Quality Control: Principles, Practice and Administration QUALITY a. Strategic business tool b. Involvement from everyone c. Use of quality costs- measurement and evaluation tool - - THREE STEPS TO QUALITY CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT 1. QUALITY LEADERSHIP a. Continuous management emphasis- sound planning b. Constant focus and lead- quality effort 2. MODERN QUALITY TECHNOLOGY a. Integration of office staff + engineers + shop-floor workers b. Evaluate and implement new techniques Satisfy customers 3. ORGANIZATIONAL COMMITMENT a. Continuous training b. Motivation c. Integration of quality in business planning – importance of quality - HIDDEN FACTORY Portion of plant capacity wasted due to poor quality Contemporary thinking Important elements of Malcolm Baldrige National Quality Award Customer is the judge of quality Quality and innovation- interrelated and mutually beneficial Managing quality = managing business Quality- continuous process of improvement Customers and suppliers – involvement in the process - NATIONAL MEDAL OF TECHNOLOGY AND INNOVATION KAORU ISHIKAWA - - Early pioneer- Japanese quality revolution Foremost figure in Japanese quality Development of Japanese quality strategy Engineering professor – Tokyo University Editorial review board – Quality Control for Foremen- 1962 Chief executive director – QC Circle Headquarters Union of Japanese Scientists and Engineers Participative, bottom-up view of quality Attention of top management Company-wide approach to quality control Feigenbaum’s concept of total quality Greater involvement of all employees – from top management to non-management employees Reducing reliance- quality professionals and quality departments Collecting and analyzing factual data Visual tools Statistical techniques foundations- implementing total quality Teamwork Quality begins with the customer Understanding customers’ needs- basis for improvement CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT - Quality begins and ends- education - First step- know the requirements of customers - Ideal state of quality control- inspection- no longer necessary - Remove the root cause - Quality control- responsibility of all - Don’t confuse means with objectives - Quality first, long-term profits - Marketing- entrance and exit of quality - Top management- not show anger - 95% of problems- solved with simple tools – analysis & problem-solving - Data without dispersion information or variability- false data - Developed cause-and-effect diagram – popular quality improvement tool PRINCIPLES, PRACTICES, AND TECHNIQUES OF QUALITY MANAGEMENT - James W. Dean, Jr. + David E. Bowen PRINCIPLES – foundation of philosophy PRACTICES- activities to implement principles TECHNIQUES- tools and approaches – making practices effective achieving high quality and performance excellence QUALITY MANAGEMENT PRINCIPLES - - - - THREE CORE PRINCIPLES: CUSTOMER FOCUS TEAMWORK CONTINUOUS IMPROVEMENT HISTORY Little understanding on the external customer requirements, less to internal customers Market-out perspective (build it and they will come) Not using market-in perspective – meeting customer expectations and requirements Managers and specialists – controlled production systems Workers- the activities and procedures, not entitled for contributing an input Non-existent- teamwork and soliciting ideas from the workforce Tolerable amount of waste and error a. Controlled by post-production inspection Quality improvements is based on technological breakthroughs TOTAL QUALITY Active identification of customer needs and expectations Utilizing the knowledge and experience of the workforce Continuous improvement of processes and systems ISO 9000:2000 From collective experience and knowledge of international experts in ISO Technical Committee (ISO/TC 176), Quality Management, and quality Assurance responsible for ISO 9000 standards Comprehensive and fundamental rules or beliefs- leading and operating an organization Basic principles and practices of quality- evident in Deming, Juran and Crosby Philosophy CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT a. Customer focus 1. Understanding current and future customer needs 2. Meeting customer requirements 3. Exceeding customer expectations b. Teamwork- involvement of people 1. People are essence of the company 2. Full involvement – benefit of the company c. Continual improvement 1. Must be a permanent objective d. Leadership 1. Unity of purpose and direction 2. Internal environment – full involvement of people e. Process approach 1. Management of activities and resources as a process higher efficiency f. System approach to management 1. Interrelated processes as a system a. Identification b. Understanding c. Management higher effectiveness and efficiency g. Factual approach to decision making 1. Decisions – based on analysis of data and information h. Mutually beneficial supplier relationships 1. Organization + suppliers - interdependent and mutually beneficial relationship value creation QUALITY MANAGEMENT PRACTICES - Approaches to achieve the principles QUALITY PRINCIPLES CUSTOMER FOCUS PRACTICES TO IMPLEMENT QUALITY MANAGEMENT PRINCIPLES - - - Researching and understanding Needs Expectations Linking objectives with needs & expectations Communication of: Needs Expectation Measuring customer satisfaction Corrective action results of customer satisfaction measurement Systematic management of customer relationships Balanced approach Satisfying customers CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT Satisfying other stakeholders LEADERSHIP - INVOLVEMENT OF PEOPLE - - - Accounting for the needs of stakeholders Clear vision Setting goals and targets Shared values, fairness and ethical role models Trust Elimination of fear Responsibility and accountability Resources Training Freedom to act Inspiration / encouraging Recognition of people’s contributions Understanding Importance of contribution Importance of their role Identification of constraints to performance Accepting ownership of problems & responsibility for solution Evaluation of performance against personal goals & objectives Seeking opportunities Competence Knowledge Experience Freely sharing knowledge and experience Openly discussing problems & issues PROCESS APPROACH SYSTEMS APPROACH TO MANAGEMENT - Defining activities desired result Clear responsibility & accountability – management of key activities Analysis and measurement of capability of key activities Interfaces of key activities- within and between the functions Factors- resources, methods, materials improve key activities Evaluation of risks, consequences, and impacts of activities Customers Suppliers Other stakeholders - Structuring a system most effective and efficient way objectives Understanding – interdependencies – processes Structured approaches – harmonization and integration of processes Better understanding – roles & responsibilities common objectives reducing cross-functional barriers Understanding capabilities Resource constraints Defining the normal operation of specific activities Continuous improvement Measurement - CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT Evaluation CONTINUAL IMPROVEMENT - - Consistent organization-wide approach to continual improvement Training- methods and tools Every person – objective continuous improvement – products, processes, and systems Goals Guide continuous improvement Measurement – continual improvement Recognition and acknowledgement of improvements - Accurate & reliable data and information Accessibility of data Valid methods- data & information analysis Decisions and actions – factual analysis + experience + intuition - Balancing short-term gains and long-term considerations Expertise and resources with partners Key suppliers Identification Selection Communication Clear Open Sharing Information Future plans Joint development activities Improvement activities Improvements and achievements – SUPPLIERS Inspiring Encouraging Recognizing - FACTUAL APPROACH TO DECISION-MAKING MUTUALLY BENEFICIAL SUPPLIER RELATIONSHIP - - - QUALITY MANAGEMENT TECHNIQUES - - Tools Plan data Collect data Analyze results Monitor progress Solve problems Excel chart – trends of manufacturing defects effectiveness of training Statistical technique of experimental design- optimize process settings reduce scrap or increase yield Deming- basic statistics Statistical methods for quality Ability to view data and information from a statistical perspective- vital skill CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT VARIATION AND STATISTICAL THINKING - - - THINK STATISTICALLY IF NOT: Making decisions – single data point See trends – non-existent Manipulating financial or operational results – cannot be controlled STATISTICAL THINKING- philosophy of learning and action All work – system – interconnected processes Variation exists – all processes Variation a. Understood b. Reduced success Wealth of information today ability to understand variability in data and statistical thinking important UNDERSTANDING VARIATION - - - - Sources of variation – manufacturing processes Materials Strength Thickness Moisture content Cutting tools Strength Composition Tools - Wear Vibrations- changes in machine settings Electrical fluctuations- variations in power Operators Physical stress Emotional stress Not uniform measurement gauges Not uniform human inspection capabilities Extremely precise instruments meron pa ring slight differences OPERATIONAL PROBLEMS CREATED BY VARIATION - - - INCREASES UNPREDICTABILITY Understand variation predicting the future performance REDUCES CAPACITY UTIIZATION Increases the load on the process there’s no incorporation of slack BULLWHIP EFFECT Small changes in demand increasingly amplified effect upstream - production & inventory levels unnecessary costs and difficulties DIFFICULT TO FIND ROOT CAUSES Due to external factors Residing within the system DIFFICULT TO DETECT POTENTIAL PROBLEMS EARLY CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT Unusual variation – existence of a problem Little inherent variation – easier to detect the existence of a problem - - - - Complex interactions of variations – not easily understood Materials Tools Machines Operators Environment Variation – random No way of identifying and explaining the individual sources Combined effect of variation – stable and statistically predictable COMMON CAUSES OF VARIATION- factors – natural part of the process Result of: a. Product design b. Production system design 80%-95% of the variation Reduced a. Redesigning b. Better technology c. Training SPECIAL CAUSES OR ASSIGNABLE CAUSES OF VARIATION External sources – not inherent in the process Appearing sporadically Disrupt the random pattern of common causes Easily detectable – statistical methods Economical to correct Examples: a. Bad batch of materials from supplier b. Poorly trained machine operator c. Broken or worn tool d. Miscalibration of measuring instruments Unusual variation from isolated incidents- explained or corrected FUNDAMENTAL MANAGEMENT MISTAKES - Treating special causes as common causes – increasing the variation Treating common causes as special causes- missed opportunity to reduce variation but the variation is uncontrollable Fault Complaint Mistake Breakdown Accident Shortage CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT DEMING’S RED BEAD AND FUNNEL EXPERIMENTS - Statistical thinking – heart of Deming Philosophy and principles of Profound Knowledge Red Bead Experiment 1. Variation exists in systems Stable variation can be predicted a. STATISTICAL LIMITS OF VARIATION- limits- expect from a stable system a. Variation within this- we have a stable production system b. Variation is from common causes 2. All the variation in the production and from the workers – came from the process a. Eliminated the source of variability- most significant: PEOPLE b. Each worker – identical c. Cannot control the production units d. Cannot do better than the system would allow e. No influence of motivation or threats f. Historically, all variation is believed to be controllable and place blame on those who cannot do anything 3. NUMERICAL GOALS- MEANINGLESS a. Merit pay and putting probation rewards and punishment of performance actual rewarding and punishing the process b. Ranking or appraising people – demoralizing; especially when outcomes cannot be influenced c. Goals have no bearing on the number of produced units d. Do your best frustration e. No basis – best willing workers in the past best in the future 4. MANAGEMENT- RESPONSIBLE FOR THE SYSTEM a. Bad management b. Rigid procedures c. Workers- no say in improving the process d. Management – not working with the supplier to improve the inputs e. Management- relying on inspection controlling the process FUNNEL EXPERIMENT - People can do and affect outcomes of many processes Unwanted variation by tampering with the process or indiscriminately trying to remove common causes of variation STRATEGY 1 – leave the funnel alone – variation of points around the target Tampering the process increase variation Using rules inappropriately more variation Not understanding the process not understanding the variation inappropriate reaction to an error increased variation CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT QUALITY MANAGEMENT SYSTEMS - Structured and systematic approach in implementing total quality QUALITY MANAGEMENT SYSTEM Mechanism Managing and continuously improving core process Goal: maximum customer satisfaction + lowest overall cost Specific implementation a. Quality concepts b. Quality standards c. Quality methods d. Quality tools e. Unique to a company Basis for documenting processes a. Control and improve operations b. Drive innovation c. Objectives a. Higher product conformity b. Less variation c. Fewer defects, waste, rework, human error d. Improved productivity, efficiency, effectiveness THING TO DO IN ESTABLISHING A QUALITY MANAGEMENT SYSTEM 1. QUALITY POLICY Formal document Commitment a. High quality b. Meeting customer expectations 2. ORGANIZATIONAL STRUCTURE FOR QMS Responsibilities Methods of communication Maintenance- essential records Documentation Performance review 3. RESOURCES Special skills Training Workspaces Manufacturing equipment Inspection technology Computer software Supporting work environment 4. RESPONSIBILITY OF PEOPLE CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT a. Prevent defects and errors b. Identify and solve quality problems c. Verify implementation of solutions - Core of QMS- goods and services – customers want PROCESSES Customer requirements- identification Product planning and design processes Purchasing procedures Methods and technology- controlling production Inspection and testing Disposition of non-conforming product Maintenance and validation a. Measuring equipment b. Testing equipment - Measurement and data analysis processes understanding performance a. Evaluation of: a. Conformity of goods and services b. Customer satisfaction c. Integrity of QMS b. Basis for: a. Corrective action b. Continuous improvement c. Prevention of future problems QUALITY MANUAL Permanent reference a. System implementation b. System maintenance Not required to be complex a. Small company- dozen pages b. Large company- manuals for all key functions. Sufficient records a. conformance to requirements b. Effective operation of a quality system RECORDS a. Inspection reports b. Test data c. Audit reports d. Calibration data Readily retrievable a. Analysis – trends b. Monitoring – effectiveness of corrective actions OTHER DOCUMENTS- controlled a. Drawings CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT b. Specifications c. Inspection procedures and instructions d. Work instructions e. Operation sheets SYSTEM MAINTENANCE AND UPDATE a. INTERNAL AUDITS a. Conformance to documented procedures b. Effectiveness of documented procedures c. Reporting issues – management for corrective action d. Review of records a. Process records b. Training records c. Complaints d. Corrective actions e. Previous audit reports e. f. g. h. i. Asking people who perform the process regularly Comparing with written procedures Noting compliance and deviations Trailing paperwork or other data Consistency: process vs. written procedure vs. worker’s explanation Analyzing the process – meets the intent and objectives continuous improvement ISO 9000 FAMILY OF STANDARDS - Set of standards and guidelines Quality management systems International consensus – good quality management practices Comprehensive framework Design and management of quality management system Process orientation Discipline – document and control key processes ISO 9000 FAMILY OF STANDARDS - - QUALITY standards and guidelines INTERNATIONAL ORGANIZATION FOR STANDARDIZATION (IOS) – 1946 Representatives – national standards bodies of 91 nations Series of written quality standards – 1987 ISO- equal Organizations certified under ISO 9000 – equal quality with other organizations certified Adopted by US a. American National Standards Institute b. American Society for Quality Documentation for all processes – quality Compliance- auditing continuous improvement CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT - Became a common qualification for being a supplier - ISO certification – necessity for product certification - - - Treaty on European Union- Maastricht, the Netherlands – 1992 Free trade Quality- key strategic objective Revised in 1994 20 fundamental elements of basic quality system a. Management responsibility b. Design control c. Purchasing d. Product identification and traceability e. Process control f. Inspection and testing g. Corrective and preventive action h. Internal quality audits i. Training j. Statistical techniques FIVE OBJECTIVES 1. Continuous improvement of product and service quality – meeting requirements 2. Improve quality of operations meeting needs- customers and stakeholders Needs: a. Stated b. Implied 3. Fulfillment of quality requirements + improvement confidence to internal management and employees 4. Quality requirements are achieved product 5. Fulfillment of quality system requirements - CRITICISM OF THE ORIGINAL AND 1994 REVISION Only required – documented, verifiable process Can comply but still produce poor-quality product EU- deemphasis on ISO 9000 registration – passing a test than focusing on quality processes and improvement ISO 9000:2000 – eight quality management principles - 2008 amendment to standards Clarification of the language and concepts Improve compatibility with ISO 14001:2004- popular environmental standard Clarification of: a. legal standards b. Outsourcing c. Internal audits d. Competence e. Processes a. Design b. Development CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT c. Monitoring d. Measuring f. Controlling non-conforming products - ISO 9000 family of standards Procedures a. Development b. Documentation c. Implementation Consistency of operations and performance a. Production processes b. Service delivery processes Continual improvement Using fundamental principles of total quality THREE DOCUMENTS OF ISO 9000 FAMILY STANDARDS 1. ISO 9000:2005- FUNDAMENTALS AND VOCABULARY Fundamental background information Definition of key terms 2. ISO 9001:2008- REQUIREMENTS Core document Specific requirements- quality management system Products meeting customers’ and regulatory requirements Specifies requirements, not the way to achieve Interpretation and application - meet - unique needs of different types – businesses/national cultures Auditing quality system – effective management of processes customer audits or third-party certification Independent credibility and recognition of quality management systems 3. ISO 9004:2009- GUIDELINES FOR PERFORMANCE IMPROVEMENTS Guidelines- improving & sustaining quality management systems ISO 9001:2008- BASIC QUALITY ASSURANCE SYSTEM FOUR MAJOR AREAS OF BASIC QUALITY ASSURANCE SYSTEM 1. MANAGEMENT RESPONSIBILITY a. Responsibility of top management effective quality system b. Promotion – importance of quality c. Quality management system a. Development b. Implementation d. Customer requirements a. Identification b. Meeting e. Definition: a. Quality policy b. Quality objectives CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT f. Responsibilities for quality g. Documents and records control 2. RESOURCE MANAGEMENT a. Sufficient people b. Sufficient facilities c. Sufficient training resources 3. PRODUCT REALIZATION a. Controlling the production or service process a. Receipt of an order or quote b. Design c. Materials d. Procurement e. Manufacturing or service delivery f. Distribution g. Field service 4. MEASUREMENT, ANALYSIS AND IMPROVEMENT a. Control procedures 1. Quality assurance a. Products b. Processes 2. Analysis of quality-related data 3. Correction 4. Prevention 5. Improvement planning activities - - Requirements- stated- set of numbered clauses – what should do WORK ENVIRONMENT Conditions- work is performed Physical Environmental Other factors – noise, temperature, humidity, lighting, weather Identify aspects of work environment- impact quality of good or service Approach – managing people-related factors a. Work methods b. Ergonomics c. Physical work environment Ability to audit conformance to the standards Due diligence Protect against liability Applicable to all types of businesses MANUFACTURING- largest adopter of ISO 9000 - Advisory in nature CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT - Used for two-party contractual situations (customer & supplier) Used for internal auditing - Evolved being a criteria for companies Certifying quality management Achieve registration- third-party auditor a. Third party auditor – began in UK; accepted by all supplier’s customers a. Laboratory b. Registrar or accreditation agency - Implementation – difficult task Painstaking and costly undertaking Instituting many new procedures and training many people Individual sites – individual registration All costs- borne by applicant Process is so expensive Registration audit- $10,000-40,000 Internal cost- documentation and training - $100,000. Recertification- every 3 years - Successful implementation – resources & support of top management Details of implementation- operating managers, supervisors, employees THREE PRINCIPAL BENEFITS OF ISO 9000 1. DISCIPLINE a. Reviewing quality system – routine basis b. Calling for corrective action – upon failure to maintain quality system 2. BASICS OF A GOOD QUALITY SYSTEM a. Basic requirements a. Understanding customer requirements b. Meeting customer requirements c. Equipping people resources d. Physical resources and support services e. Identification and correction of problems 3. MARKETING PROGRAM a. Differentiation - Higher customer satisfaction Higher customer retention Better quality products CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT - Improved productivity - Increasing on-time delivery - Decreasing cycle time - Increasing first-pass yields - Reducing frequency of test procedures - Improved quality and service to customers - Reduced defects - Reduced rate for correctable defects - Improved building experience approval rating - Reduced costs - Increased use of data – business management tool - Increased management commitment - More efficient management reviews - Improved customer communication BUILDING EFFECTIVE QUALITY MANAGEMENT SYSTEMS - - - Many QMS focus more on compliance than quality improvement Quality department can become distracted Disconnected from quality processes Focus: maintain data and documentation ISO certificate or meeting regulatory requirements Effective QMS Integrated with enterprise systems a. ERP b. MES c. SCM Focus on actionable decision-making Seeking root causes of problems Improving processes and systems Driving principles of quality Fostering effective practices TOP MANAGEMENT Commitment to development and implementation of quality management system Continuous improvement of effectiveness a. Communicating importance of meeting customer, statutory and regulatory requirements b. Quality policy c. Quality objectives d. Management reviews e. Availability of resources CHAPTER 2: FOUNDATIONS OF QUALITY MANAGEMENT
