Quality Management
January 2012
Quality Management
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QM – Philosophy & Concepts
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The Total Quality Approach
Quality and Global Competitiveness
Strategic Management
Ethics
Partnering
Quality Culture
Customer Satisfaction
Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
Effective Communication
Training
January 2012
Quality Management
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QM – Philosophy & Concepts
• The Total Quality Approach
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Quality and Global Competitiveness
Strategic Management
Ethics
Partnering
Quality Culture
Customer Satisfaction
Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
Effective Communication
Training
January 2012
Quality Management
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What is Quality?
January 2012
Quality Management
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January 2012
Quality Management
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Quality
• Quality has been defined in a number of ways.
When viewed from a consumer’s perspective,
it means meeting or exceeding customer
expectations.
January 2012
Quality Management
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Dimensions of Quality
Dimension
Performance
Features
Conformance
Reliability
Durability
Serviceability
Response
Aesthetics
Reputation
January 2012
Product example
Mobile phone
Signal, Battery charge
Internet, camera,......
Workmanship
Mean-time-to-failure
Useful life
Ease of repair
Courtesy of dealer
Surface finish
Customer report ranking
Quality Management
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Two Views of Quality
• How well the features of a product or service
meet the customer need and therefore
provide them with satisfaction => higher
quality costs (usually) more
• Freedom from failures => higher quality costs
(usually) less
January 2012
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Total Quality
• Total quality is an approach to doing business
that attempts to maximize an organization’s
competitiveness through the continual
improvement of the quality of its products,
services, people, processes, and
environments.
January 2012
Quality Management
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Managing for Quality (Juran)
• A set of universal methods that any
organization, whether a business, an agency, a
university or a hospital can use to attain
superior results by designing, continuously
improving and ensuring that all products,
services and processes meet customer and
stakeholder needs.
January 2012
Quality Management
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Juran´s trilogy
• Designing and planning for Quality
• Compliance, controlling and assuring
quality
• Improving quality
January 2012
Quality Management
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Juran´s trilogy
• Creating processes to design goods and services
to meet needs of the stakeholders (internal and
external). Understand needs of customers
• Creating processes to control quality. Ensure
compliance to design criteria
• Creating a systematic approach to improve
continuously. Failures must be discovered and
remedied.
=> Create functions and skills to do the things
above
January 2012
Quality Management
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Financial trilogy
• Financial planning
– Annual financial and operational budgets (revenues, costs and
profits)
– Financial goals for the organization and its divisions
• Financial control
– Evaluation of actual financial performance and taking action on
the differences
– Cost control, expense control, risk management, inventory
control, etc.
• Financial improvement
– Improvement of financial results
– Cost reduction projects, new facilities, new product
development, M &A, joint ventures, etc
January 2012
Quality Management
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Quality planning
• Establish the project and design goals
• Identify the customers
• Discover the customer needs
• Develop the product or service features
• Develop the process features
• Develop the controls and transfer to operations
=> Customer – customer needs- product features –
process features- process control features
January 2012
Quality Management
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Quality planning tools
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Benchmarking
Brainstorming
Competitive analysis
Control charts
FMEA
Flow diagram
Process capability
Scatter diagram
Etc.
January 2012
Quality Management
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Quality Control
• Assure Repeatable and Compliant Processes
January 2012
Quality Management
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Quality Control Tools
• SPC (Statistical Process Control)
• Problem Solving methods
• Poka Yoke
January 2012
Quality Management
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Quality Improvement
• Create breakthroughs in Performance
January 2012
Quality Management
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Quality Improvement Tools
• Six Sigma
– RDMAIC process
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January 2012
Recognize
Define
Measure
Analyze
Improve
Control
Quality Management
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Juran´s trilogy
January 2012
Quality Management
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The Total Quality Approach to
Quality Management
• Key characteristics of the total quality approach are
as follows:
– strategically based,
– customer focus,
– long-term commitment,
– teamwork,
– employee involvement and empowerment,
– continual process improvement,
– education and training,
January 2012
Quality Management
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The Total Quality Approach to
Quality Management
• The rationale for total quality can be found in the
need to compete in the global marketplace.
• Countries that are competing successfully in the
global marketplace are seeing their quality of living
improve. Those that cannot are seeing theirs
decline.
January 2012
Quality Management
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The Total Quality Pioneers
• W. Edward Deming is best known for his Fourteen Points, the
Deming Cycle
• Joseph M. Juran is best known for the Pareto Principle, and the
Juran Trilogy.
• Armand V. Feigenbaum is best known for his Total Quality
Control.
• Philip B. Crosby is best known for his Quality is Free and the
Zero Defects program
January 2012
Quality Management
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QM – Philosophy & Concepts
• The Total Quality Approach
• Quality and Global Competitiveness
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Strategic Management
Ethics
Partnering
Quality Culture
Customer Satisfaction
Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
Effective Communication
Training
January 2012
Quality Management
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Quality and Global Competitiveness
• Several factors can inhibit competitiveness,
including those related to business and
government, family, and education.
• In a global marketplace quality is the key to
competitiveness.
• Total Quality approach minimizes the Cost of
Quality, making products or services more
competitive
January 2012
Quality Management
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Costs of Quality
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Prevention
Appraisal and inspection
Internal failure
External failure
COPQ
• COPQ = Costs of Poor Quality
January 2012
Quality Management
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Prevention Costs
• Quality Planning activities
– FMEA analysis
– Control Plans
• Quality training
• Product design Verification
January 2012
Quality Management
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Appraisal and Inspection Costs
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Testing product
Reviewing documents
Inspecting equipment and supplies
End of line inspection
Product audits
Etc.
January 2012
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Internal Failure Costs
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Rework on product
Scrap of non conforming product
Correcting database errors
Stocking extra parts to replace defective
components
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January 2012
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External Failure Costs
• Warranty claims
• Investigating complaints
January 2012
Quality Management
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Direct Cost of Poor
Quality (4 – 8% of
Sales)
Scrap
Rework
Warranty
Customer Return
Loss of Customer Loyalty
Engineering change
Excessive inventory
Late delivery
Excessive overtime
Excessive employee turnover
Expediting costs
Indirect Cost of Poor
Quality (15 – 25% of
Sales)
January 2012
Quality Management
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Cost of Quality
Costs
Total
Failure
Appraisal & Prevention
Freedom from failures
100%
Juran´s Cost of Quality
January 2012
Quality Management
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Cost of Quality
Cost of Quality
Quality Costs
Junk
Zon
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Excess
Quality
Profit
Zone
Customer Value
of Quality
Freedom from Failures
January 2012
Quality Management
100%
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Quality Cost as % of Sales
January 2012
Quality Management
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Cost distribution as a % of total cost of
Quality
3,5 %
2,5 %
26 %
Appraisal
Internal Failure
68 %
January 2012
Prevention
External Failure
Quality Management
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COPQ - car recalls
Here are the larger recent recalls, and these are just for October 2010•
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Nissan: 2.2 million vehicles worldwide (747,000 in the U.S.):
ignition relay problem
BMW: 130,000 vehicles: faulty fuel pump in the twin-turbo inline 6
Honda: 470,000 cars in the U.S.: faulty seal in master brake cylinder
Mercedes-Benz: 85,000 E-Class cars: possible power steering
connection fitting problem
Toyota: 1.53 million cars worldwide (740,000 in the U.S.): faulty seal
in master cylinder
GM: 392,000 Chevrolet Impalas: faulty front seat-belt anchors.
January 2012
Quality Management
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COPQ – car recalls USA
Automakers recalled about 15.5 million vehicles last year compared with 20 million in
2010, according to figures released on Friday by the National Highway Traffic Safety
Administration. The figure was the fourth lowest in the last decade.
January 2012
Quality Management
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Investment in Quality Cost
January 2012
Quality Management
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Quality and Global Competitiveness
• The most important key in maximizing competitiveness is the
human resource.
• The Competitive Edge is in the Quality of the People
January 2012
Quality Management
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QM – Philosophy & Concepts
• The Total Quality Approach
• Quality and Global Competitiveness
• Strategic Management
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Ethics
Partnering
Quality Culture
Customer Satisfaction
Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
Effective Communication
Training
January 2012
Quality Management
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Strategic Management
• Strategic management is management that bases
all actions, activities, and decisions on what is
most likely to ensure successful performance in
the marketplace.
• The two major components of strategic
management are strategic planning and strategic
execution.
• Part of strategic planning is thinking creatively to
eliminate “sacred cows” that work against
competitiveness.
January 2012
Quality Management
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Strategic planning
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Who are we?
Where are we going?
How will we get there?
What do we hope to accomplish?
What are our core competencies?
What are our strengths and weaknesses?
What are our opportunities and threats?
January 2012
Quality Management
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Core competencies
• Core competencies are things an organization
does so well they can be viewed as providing a
competitive advantage.
January 2012
Quality Management
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SWOT analysis
• SWOT analysis is defined as a structured
approach to evaluating the strategic position
of a business by identifying its strengths,
weaknesses, opportunities and threats
• SWOT analysis identifies the core
competencies of the organization
January 2012
Quality Management
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SWOT analysis
• Opportunities
• Threats
– => apply to External Factors
• Strengths
• Weaknesses
– => apply to Internal Factors
January 2012
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SWOT analysis
January 2012
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SWOT example
January 2012
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Strategic Management
• Strategies that organizations can adopt for gaining a
sustainable competitive advantage are
– cost leadership,
– differentiation, and
– market-niche strategies.
• Total Quality can be the most effective cost
leadership or differentiation strategy
– improve efficiency, cut costs
– continuous improvement of the product features
January 2012
Quality Management
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Strategic Execution
• Even the best strategic plan will serve no
purpose unless it is effectively executed.
January 2012
Quality Management
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QM – Philosophy & Concepts
• The Total Quality Approach
• Quality and Global Competitiveness
• Strategic Management
• Ethics
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Partnering
Quality Culture
Customer Satisfaction
Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
Effective Communication
Training
January 2012
Quality Management
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Ethics
• Ethics is about doing the right thing within a
moral framework.
• The most common impediment to ethical
conduct is human nature because people
tend to behave according to perceived
personal interest.
January 2012
Quality Management
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Ethics
• The Total Quality approach cannot be
successfully implemented in an organization
that fails to subscribe to high standards of
ethical behavior
January 2012
Quality Management
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Ethics
• Many of the fundamental elements of total quality
depend on trust and ethical behavior, including
– communication,
– interpersonal relations,
– conflict management,
– problem solving, teamwork,
– employee involvement and empowerment, and
– customer focus.
January 2012
Quality Management
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QM – Philosophy & Concepts
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The Total Quality Approach
Quality and Global Competitiveness
Strategic Management
Ethics
• Partnering
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Quality Culture
Customer Satisfaction
Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
Effective Communication
Training
January 2012
Quality Management
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Partnering
• Partnering means working together for mutual
benefit. It involves pooling resources, sharing costs,
and cooperating in ways that mutually benefit all
parties involved in the partnership.
• Partnerships may be formed
– internally (among departments) and
– externally with suppliers, customers
January 2012
Quality Management
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Partnering with suppliers
• 85% of the added value comes from suppliers
(automotive industry)
• Traditional model (based on price only)
• Total Quality model – partnership from design
to delivery
January 2012
Quality Management
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Partnering with Customers
• The rationale for forming customer
partnerships is customer satisfaction.
• The best way to ensure customer satisfaction
is to involve customers as partners in the
product development process.
• Doing so is, in turn, the best way to ensure
competitiveness.
• Customer-defined quality is a fundamental
aspect of total quality.
January 2012
Quality Management
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QM – Philosophy & Concepts
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The Total Quality Approach
Quality and Global Competitiveness
Strategic Management
Ethics & Corporate Social Responsibility
Partnering and Strategic Alliances
• Quality Culture
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Customer Satisfaction
Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
Effective Communication
Training
January 2012
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Quality Culture
• One of the greatest obstacles in implementing Total Quality is the
cultural behavior
• Why?
• Successful Total Quality implementation requires cultural change
• People do not like to change!
• Resisting change is natural human behavior
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Fear
Uncertainty
Loss of control
More work
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• Emotional transition
January 2012
Quality Management
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Total Quality culture
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Short vs long term objectives
Managers as coaches vs bosses
Finger pointing vs problem solving
Supplier cooperation
Continuous improvement
January 2012
Quality Management
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QM – Philosophy & Concepts
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The Total Quality Approach
Quality and Global Competitiveness
Strategic Management
Ethics
Partnering
Quality Culture
• Customer Satisfaction
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Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
Effective Communication
Training
January 2012
Quality Management
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Customer Satisfaction
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Every organization has both internal and
external customers.
– An external customer is the one referred to
in the traditional definition.
– An internal customer is any employee
whose work depends on that of employees
whose work precedes his or hers.
January 2012
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Customer Satisfaction
• In a total quality setting, customers define
quality. Therefore, customer satisfaction must be
the highest priority.
• Customer satisfaction is achieved by producing
high-quality products that meet or exceed
expectations.
=>It must be renewed with each purchase.
January 2012
Quality Management
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Customer Satisfaction
• The key to establishing a customer focus is to put
employees in touch with customers so that
customer needs are known and understood.
• Once the customer needs and expectations are
defined they need to be translated into product
specification.
• One of the tools to do so is Quality Function
Deployment (QFD)
January 2012
Quality Management
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Quality Function Deployment (QFD)
• Quality Function Deployment (QFD) is a structured
approach to defining customer needs or requirements
and translating them into specific plans to produce
products to meet those requirements.
• The "voice of the customer" is the term to describe
these stated and unstated customer needs or
requirements.
• The voice of the customer is captured in a variety of
ways: direct discussion, surveys, customer
specifications, observation, warranty data, field
reports, etc.
January 2012
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Quality Function Deployment (QFD)
• This understanding of the customer requirements is
then summarized in a product planning matrix or
"house of quality".
• These matrices are used to translate higher level
"what's" or requirements into lower level "how's" or
means to satisfy the requirements
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House of Quality (computer mouse)
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QFD example – car door
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QFD
• Six matrices to compare:
– Customer requirements with related technical
features
– Technical features with applied technologies
– Applied technologies with manufacturing processes
– Manufacturing processes with quality control
processes (to optimize processes)
– Quality control processes with statistical process
control processes
– Statistical control parameters with specifications
January 2012
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QFD Matrices
January 2012
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Kano model
• The Kano model is a theory of product development
and customer satisfaction developed in the 80s by
Professor Noriaki Kano which classifies customer
preferences into following categories:
– Must-Be
– One-Dimensional
– Attractive
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Kano model
• Must-be Quality
These attributes are taken for granted when fulfilled but result in
dissatisfaction when not fulfilled.
• One-dimensional Quality
These attributes result in satisfaction when fulfilled and
dissatisfaction when not fulfilled. These are attributes that are
spoken of and ones which companies compete for.
• Attractive Quality
These attributes provide satisfaction when achieved fully, but do
not cause dissatisfaction when not fulfilled. These are attributes
that are not normally expected,.
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January 2012
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Kano model
January 2012
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Customer expectations vs. customer
satisfaction
Customer
expectations
Actual
performance
Customer
satisfaction
Product A
Product B
January 2012
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Customer Satisfaction, Retention and
Loyalty
• Measuring customer satisfaction alone is not enough.
=> Many customers who found a defect can be
satisfied.
• Organizations should, in addition, measure customer
retention.
• It costs much more to find a new customer than to
retain one.
• Customer loyalty
January 2012
Quality Management
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QM – Philosophy & Concepts
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The Total Quality Approach
Quality and Global Competitiveness
Strategic Management
Ethics
Partnering
Quality Culture
Customer Satisfaction
• Employee Empowerment
• Leadership and Change
• Teambuilding and Teamwork
• Effective Communication
• Training
January 2012
Quality Management
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Employee Empowerment
• Empowerment means engaging employees in the
thinking processes of an organization in ways that
matter
• Empowerment means giving employees ownership
of their jobs ( they are the best experts)
– but it does not mean that managers abdicate their
responsibility or authority
• Empowerment requires a change in organizational
culture (resistance to change)
January 2012
Quality Management
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Empowerement
• Why empowerment?
– it is the best way to increase creative thinking
resulting in enhancing an organization’s
competitiveness.
– it can be an outstanding motivator.
• Vehicles:
– Quality circles
– Kaizen groups
– Etc.
January 2012
Quality Management
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QM – Philosophy & Concepts
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The Total Quality Approach
Quality and Global Competitiveness
Strategic Management
Ethics
Partnering
Quality Culture
Customer Satisfaction
Employee Empowerment
• Leadership and Change
• Teambuilding and Teamwork
• Effective Communication
• Training
January 2012
Quality Management
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Leadership and Change
• Leadership is the ability to inspire people to
make a total, willing, and voluntary
commitment to accomplishing or exceeding
organizational goals.
• Good leaders overcome resistance to change
• Good leaders are committed to both the job
to be done and the people who must do it.
• They are good communicators and they are
persuasive.
January 2012
Quality Management
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Leadership and Change
• To facilitate change in a positive way, leaders:
– must have a clear vision and
corresponding goals,
– exhibit a strong sense of responsibility,
– be effective communicators,
– have a high energy level, and
– have the will to change.
January 2012
Quality Management
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Commitment of Top Management
Our feedbacks have made clear that the most
influential factor in successful quality
leadership has been the active participation of
upper management. In fact to our knowledge,
every successful quality revolution has
included the active participation of upper
management. We know of no exceptions.
J.M.Juran
January 2012
Quality Management
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Commitment of Top Management
It is not enough that top management commit
themselves for life to product quality and
productivity. They must know what it is they
are committed to – i.e. what they must do.
These obligations cannot be delegated. More
resolutions or approval are not enough.
W.Edwards Deming
January 2012
Quality Management
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QM – Philosophy & Concepts
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The Total Quality Approach
Quality and Global Competitiveness
Strategic Management
Ethics
Partnering
Quality Culture
Customer Satisfaction
Employee Empowerment
Leadership and Change
• Teambuilding and Teamwork
• Effective Communication
• Training
January 2012
Quality Management
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Team Building and Teamwork
• A team is a group of people with a common,
collective goal.
• The rationale for the team approach to work is
that “two heads are better than one”
January 2012
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Teamwork
• Quality Circles
• Kaizen
• Team oriented problem solving
– 8D methodology (Ford)
January 2012
Quality Management
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QM – Philosophy & Concepts
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The Total Quality Approach
Quality and Global Competitiveness
Strategic Management
Ethics
Partnering
Quality Culture
Customer Satisfaction
Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
• Effective Communication
• Training
January 2012
Quality Management
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Effective communication
• Communication is the transfer of a message
that is both received and understood.
• Effective communication is a higher order of
communication. It means the message is
received, understood, and being acted on in
the desired manner.
• Communication is the oil that keeps the total
quality engine running. Without it, total
quality breaks down.
January 2012
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Effective communication
• In Total Quality, the success of the following
elements is depending on effective
communication:
– Customer focus
– Leadership
– Decision Making
– Teamwork
– Problem solving
– Employee empowerment
January 2012
Quality Management
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QM – Philosophy & Concepts
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The Total Quality Approach
Quality and Global Competitiveness
Strategic Management
Ethics
Partnering
Quality Culture
Customer Satisfaction
Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
Effective Communication
• Training
January 2012
Quality Management
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Training
• Training is an organized, systematic series of
activities designed to enhance an individual’s
work-related knowledge, skills, understanding,
and motivation.
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January 2012
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Training
• Benefits of training
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Fewer production errors
Increased productivity
Improved quality
Decreased turnover rate
Improved safety and health
Increased flexibility of employees
Better response to change
Improved communication
Better teamwork
January 2012
Quality Management
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QM – Philosophy & Concepts
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The Total Quality Approach
Quality and Global Competitiveness
Strategic Management
Ethics
Partnering
Quality Culture
Customer Satisfaction
Employee Empowerment
Leadership and Change
Teambuilding and Teamwork
Effective Communication
• Education and Training
January 2012
Quality Management
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Total Quality
• Total quality is an approach to doing business
that attempts to maximize an organization’s
competitiveness through the continual
improvement of the quality of its products,
services, people, processes, and
environments.
January 2012
Quality Management
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