Chapter 9
Management of Quality
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Chapter 15 Quality Management
• Quality management refers to systematic policies, methods,
and procedures used to ensure that goods and services are
produced with appropriate levels of quality to meet and exceed
the needs of customers.
• Organizations today integrate quality principles into their
management systems, using tools such as Total Quality
Management (TQM), Six Sigma, and Lean Operating Systems.
Understanding Quality
• Quality can be a confusing concept, partly because people view
quality in relation to differing criteria based on their individual
roles in the value chain such as:
 perfection,
 doing it right the first time, and/or
 consistency.
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Chapter 15 Quality Management
A Brief History of Quality Management
• Historical uses of quality management include the precision
involved in building of Egyptian pyramids, interchangeable parts
during Industrial Revolution, and statistical tools used for quality
control during World War II.
• Dr. Joseph Juran and Dr. W. Edwards Deming were pioneers in the
field (more later on these two quality gurus).
• Japan integrated quality ideas and methods throughout their
organizations and developed a culture of continuous improvement.
1924 - Statistical process control charts
1930 - Tables for acceptance sampling
1940’s - Statistical sampling techniques
1950’s - Quality assurance/TQC
1960’s - Zero defects
1970’s - Quality assurance in services
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Chapter 15 Quality Management
Principles of Total Quality Management
 A focus on customers and stakeholders.
 A process focus supported by continuous improvement and learning.
 Participation and teamwork by everyone in the organization.
Investment in Quality Yields Business Results
 Increased employee participation
 Improved product and service quality
 Improved customer satisfaction
 Improved productivity
 Improved employee skills
 Improved financial performance
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Dimensions of Quality
• Performance - main characteristics of the product/service
• Aesthetics - appearance, feel, smell, taste
• Special Features - extra characteristics
• Conformance - how well a product/service meets expectations
• Reliability - consistency of performance
• Durability - useful life of the product/service
• Perceived Quality - indirect evaluation of quality (e.g. reputation)
• Serviceability - service after sale
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W. Edwards Deming
•
Reducing variability in processes
•
^ quality -> ^ productivity and V costs
•
“Chain Reaction” theory
•
“14 Points” management philosophy
•
Deming Cycle: Plan, Do, Study, and Act.
PDSA Cycle
Joseph Juran
•
Quality Control Handbook (1951)
•
Defined quality as “fitness for use”
•
Advocated use of quality cost measurement
•
Quality Trilogy: quality planning - quality control - quality improvement
Philip B. Crosby
•
Quality is Free (1979)
•
Quality means conformance to requirements, not excellence.
•
Doing the job right the first time is always cheaper.
•
Measurement: the cost of quality = expense of nonconformance.
•
The only performance standard is Zero Defects (ZD).
Feignbaum:
Ishigawa:
Taguchi:
Ohno and Shingo:
Quality is a total field
Cause and Effect diagram; Quality Circles
Taguchi Loss Function
Continuous improvement (Toyota)
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The Process Improvement Cycle
Select a
process
Document
Study/document
Evaluate
Seek ways to
Improve it
Implement the
Improved process
Design an
Improved process
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Chapter 15 Influential Leaders in Quality Management
Deming’s
Chain Reaction
W. Edwards Deming 14 Points
Point
Point
Point
Point
Point
Point
Point
Point
Point
Point
Point
Point
Point
Point
1: Create Vision; Demonstrate Commitment
2: Learn the Philosophy
3: Understand Inspection
4: Stop Purely Cost Based Decision
5: Improve Constantly and Forever
6: Institute Training
7: Institute Leadership
8: Drive Out Fear
9: Optimize the Efforts of Teams
10: Eliminate Exhortation
11: Eliminate Numerical Quotas
12: Remove Barriers to Pride in Work
13: Reward Education / Self-Improvement
14: Take Action
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Elements of TQM
A philosophy that involves everyone in an organization
in a continual effort to improve quality and achieve
customer satisfaction.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Continual improvement
Competitive benchmarking
Employee empowerment
Team approach
Decisions based on facts
Knowledge of tools
Supplier quality
Champion
Quality at the source
Relationship with customers and suppliers
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Chapter 15 Quality Management
Six Sigma
•
•
•
Six Sigma is a business improvement approach that seeks to
find and eliminate causes of defects and errors.
Used by companies including Motorola, Allied Signal, Texas
Instruments, and General Electric.
The Six Sigma concept characterizes quality performance by
defects (or errors) per million opportunities – dpmo or epmo.
Statistically speaking:
– 3 Sigma results in around 3 defects per thousand (old standard)
– 6 Sigma results in around 3-4 defects per million
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Chapter 15 Quality Management
Six Sigma’s DMAIC Process
Define: identify customer and priorities, identify and define a suitable
project, identify CTQs (critical to quality characteristics).
Measure: determine how to measure the process, identify key
internal processes that influence CTQs.
Analyze: determine likely causes of defects and understand why
defects are generated by identifying key variables that cause
process variation.
Improve: identify means to remove defects, confirm key variables,
modify the process to stay within acceptable range.
Control: determine how to maintain improvements, put tools in place
to ensure that key variables remain within acceptance ranges
under the modified process.
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Chapter 15 Quality Management
Implementing Six Sigma
Six Sigma teams are comprised of:
• Champions - senior-level managers who promote and lead the
deployment of Six Sigma.
• Master Black Belts - full-time Six Sigma experts who are responsible for
Six Sigma strategy, training, mentoring, deployment, and results.
• Black Belts - fully-trained Six Sigma experts with up to 160 hours of
training who perform much of the technical analyses required of Six
Sigma projects, usually on a full-time basis.
• Green Belts – functional employees who are trained in introductory Six
Sigma tools and methodology and work on projects on a part-time
basis, assisting Black Belts while developing their own knowledge and
expertise.
• Team Members are individuals from various functional areas who
support specific projects.
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Chapter 15 Quality Management
Cost of Quality Measurements
Cost of quality: costs associated with avoiding poor quality
or those incurred as a result of poor quality.
Quality
is
Free
• Prevention costs: expended to keep nonconforming
goods and services from being made and reaching the
customer – Training cost.
• Appraisal costs: expended on ascertaining quality
levels through measurement and analysis of data to
detect and correct problems.
• Internal-failure costs: costs incurred as a result of
unsatisfactory quality that is found before delivery of
good or service to the customer.
• External-failure costs: incurred after poor-quality
goods or services reach the customer.
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ISO 9000:2000
Chapter 15 Quality Management
• Quality standards 1987, 1994, 2000 to improve the
quality of operation’s processes, and provide confidence
to organizations and customers.
• Internationally recognized - required in certain countries.
• Standardizes key terms in quality; provides a set of basic
principles for initiating quality management systems.
•
•
•
•
•
•
•
•
Customer focus
Leadership
People involvement
Process approach
A systems approach to management
Continual improvement
Factual approach to decision making
Mutually beneficial supplier relationships
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The Deming Prize
• Honoring W. Edwards Deming
• Japan’s highly coveted award
• Main focus on statistical quality control
Malcolm Baldrige National Quality Award
•
•
•
•
•
•
•
Leadership (125 points)
Strategic Planning (85 points)
Customer and Market Focus (85 points)
Information and Analysis (85 points)
Human Resource Focus (85 points)
Process Management (85 points)
Business Results (450 points)
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Chapter 15 Quality Management
Continuous Improvement (Kaizen): focuses on small, gradual, and
frequent improvements over the long term with participation by
everyone in the organization.
Poka-Yoke (Mistake-Proofing): an approach using automatic
devices or methods to avoid simple human error.
• French fries are prepackaged for a particular size of a fryer.
• A flash memory with the beveled corner.
• Windows: Are you sure?
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Responsibility for Quality
•
•
•
•
•
•
•
•
Top management
Design
Procurement
Production/operations
Quality assurance
Packaging and shipping
Marketing and sales
Customer service
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TQM Tools – 7 Tools
Flowcharts
Visual representation of the process - logical sequential flow
Check sheets
A tabular or graphical method making data easier to understand
Run charts
A graphical approach for tracking performance over time
Pareto analysis
Vilfredo Pareto (Italian): few factors account for a large percentage
Cause-and-effect Ishikawa - Fishbone diagrams: grouping causes in categories
Histograms
Showing the frequency of events
Control charts
A statistical tool for identifying non-randomness in a process
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Customer’s Satisfaction Flowchart for a Restaurant
Identify the
problem
Warm
Welcome
Rectify
Need for
order
assistance
Identify # of guests
and match with
table availability
Routine
Fulfill
Order/Need
Dissatisfied
Satisfied or
not
Need help
Satisfied
Suggestions
Check and
farewell
Complete the “Guest’s
Suggestion Form”
Daily Report
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Enter into guest history
profile and initiate a
letter if necessary
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Check Sheet
Day
Mon
Type of Defects
Missing Smeared Dented Cap is
label
Print
Bottle
lose Other
Time
Total
8:00 - 9:00
III
I
II
6
9:00 -10:00
II
I
3
10:00 - 11:00
III
I
I (torn)
5
11:00 - 12:00
I
I
II
4
1:00 - 2:00
II
I
3
2:00 - 3:00
I
III
4
3:00 - 4:00
III
IIII
7
Total
15
5
8
3
1
32
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An Example of a Run Chart
Number of
Complaints
Number of Complaints per Year
35
Mean
30
25
20
15
10
5
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
0
Jan
Complaints
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Number of
Complaints Mean
10
18
12
18
13
18
15
18
18
18
13
18
19
18
18
18
25
18
20
18
27
18
30
18
Months
Mean
18
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Pareto Chart
Types of
Complaints
Taste of meal
Cold Food
Slow service
Dirty table
Other
Total
Number of Cum.
Complaints Perc.
65
25
20
10
4
124
52%
73%
89%
97%
100%
Restaurant - Pareto Chart
100%
120
90%
100
80%
70%
80
Number of
Complaints
60%
50%
60
Cum. Perc.
40%
40
30%
20%
20
10%
0
0%
Taste of
meal
Number of Cumm.
Types of Complaints Complaints Perc.
Taste of meal
0
0%
Cold Food
25
42%
Slow Service
20
76%
Dirty Table
10
93%
Other
4
100%
Total
59
Cold Food
Slow
service
Dirty table
Other
Saba's Restaurant - Pareto Chart
100%
90%
50
80%
70%
40
Number of
Complaints
Cumm.
Perc.
60%
30
50%
40%
20
30%
20%
10
10%
0
0%
Taste of Cold Food Slow Dirty Table
meal
Service
Other
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Cause and Effect (Fishbone) Diagram
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Histogram
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Control Chart
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Service Quality
Dimension
Examples
1. Convenience
Was the service center conveniently located?
2. Reliability
Was the problem fixed?
3. Responsiveness Were customer service personnel able to answer questions?
4. Time
How long did the customer wait?
5. Assurance
Did the customer service personnel seem knowledgeable?
6. Courtesy
Were customer service personnel and the cashier friendly?
7. Tangibles
Were the facilities clean; personnel neat?
Challenges with Service Quality:
• Customer expectations often change
• Different customers have different expectations
• Each customer contact is a “moment of truth”
• Customer participation can affect perception of quality
• “Fail-safe” must be designed into the system
Many
Moments
of Truth
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