Management of Quality

 You should be able to:

Define the term quality as it relates to products and as it relates to services

Explain why quality is important and the consequences of poor quality

Identify the determinants of quality

Distinguish the costs associated with quality

Compare the quality awards

Discuss the philosophies of quality gurus

Describe TQM

Give an overview of problem solving

Give an overview of process improvement

Describe and use various quality tools
9-2

 Quality

The ability of a product or service to consistently meet or exceed customer expectations o For a decade or so, quality was an important focal point in business. After a while, this emphasis began to fade as other concerns took precedence o There has been a recent resurgence in attention to quality given recent experiences with the costs and adverse attention associated with highly visible quality failures:
• Auto recalls
• Toys
• Produce
• Dog food
• Pharmaceuticals
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Performance main characteristics of the product
Aesthetics appearance, feel, smell, taste
Special features extra characteristics
Conformance how well the product conforms to design specifications
Reliability
Durability consistency of performance the useful life of the product
Perceived quality indirect evaluation of quality
Serviceability handling of complaints or repairs

Reliability ability to perform a service dependably, consistently, and accurately
Responsiveness willingness to help customers in unusual situations and to deal with problems
Time
Assurance the speed with which the service is delivered knowledge exhibited by personnel and their ability to convey trust and confidence
Courtesy
Tangibles
Consistency the way customers are treated by employees the physical appearance of facilities, equipment, personnel, and communication materials the ability to provide the same level of good quality repeatedly

 Audit service to identify strengths and weaknesses
 In particular, look for discrepancies between:

Customer expectations and management perception of those expectations

Management perceptions customer expectations and service-quality specifications

Service quality and service actually delivered

Customers’ expectations of the service provider and their perceptions of provider delivery
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 Quality of design

Intention of designers to include or exclude features in a product or service
 Quality of conformance

The degree to which goods or services conform to the intent of the designers
 Ease-of-Use and user instructions

Increase the likelihood that a product will be used for its intended purpose and in such a way that it will continue to function properly and safely
 After-the-sale service

Taking care of issues and problems that arise after the sale
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 Top management
 Design
 Procurement
 Production/operations
 Quality assurance
 Packaging and shipping
 Marketing and sales
 Customer service
• Everyone in the organization has some responsibility for quality, but certain areas of the organization are involved in activities that make them key areas of responsibility.
9-8

 Enhanced reputation for quality
 Ability to command premium prices
 Increased market share
 Greater customer loyalty
 Lower liability costs
 Fewer production or service problems
 Lower production costs
 Higher profits
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 Loss of business
 Liability
 Productivity
 Costs
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 Appraisal Costs

Costs of activities designed to ensure quality or uncover defects
 Prevention Costs

All TQ training, TQ planning, customer assessment, process control, and quality improvement costs to prevent defects from occurring
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 Failure Costs - costs incurred by defective parts/products or faulty services.

Internal Failure Costs o Costs incurred to fix problems that are detected before the product/service is delivered to the customer.

External Failure Costs o All costs incurred to fix problems that are detected after the product/service is delivered to the customer
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 Substandard work

Defective products

Substandard service

Poor designs

Shoddy workmanship

Substandard parts and materials
Having knowledge of this and failing to correct and report it in a timely manner is unethical.
9-13

Contributor
Shewart
Deming
Juran
Key Contributions
Control charts; variance reduction
14 points; special vs. common causes of variation
Quality is fitness-for-use; quality trilogy
Feigenbaum
Crosby
Ishikawa
Taguchi
Quality is a total field; the customer defines quality
Quality is free; zero defects
Cause-and-effect diagrams; quality circles
Taguchi loss function
Ohno and Shingo Continuous improvement
9-14

Deming’s 14 Points
1.
Create constancy of purpose toward improvement of product and service with a plan to become competitive and stay in business.
2.
Adopt the new philosophy. We are in a new economic age. We can no longer live with commonly accepted levels of delays, mistakes, defective materials, and defective workmanship
3.
Cease dependence on mass inspection.
4.
End the practice of awarding on the basis of price tag.
5.
Find problems. It is management’s job to work continually on the system.
6.
Institute modern methods of training on the job
7.
The responsibility of foremen must be changed from sheer numbers to quality.
8.
Drive out fear, so that everyone may work effectively for the company.
9.
Break down barriers between departments.
10. Eliminate numerical goals, posters, and slogans for the workforce asking for new levels of productivity without providing methods.
11. Eliminate work standards that prescribe numerical quotas.
12. Remove barriers that stand between the hourly worker and his right to pride of workmanship.
13. Institute a vigorous program of education and retraining.
14. Create a structure in top management that will push every day on the above 13 points.
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 Quality Awards

Deming Prize

Malcolm Baldrige National Quality Award

European Quality Award
 Quality Certifications

ISO 9000

ISO 14000

ISO 24700
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 Benefits of the Baldrige Competition

Winners achieve financial success

Winners share their knowledge

The process motivates employees

The process requires obtaining data

The process provides feedback
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 Award Categories

Education

Healthcare

Manufacturing

Nonprofit/Government

Service

Small Business
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9-19

 International Organization for Standardization
 ISO 9000

Set of international standards on quality management and quality assurance, critical to international business
 ISO 14000

A set of international standards for assessing a company’s environmental performance
 ISO 24700

Pertains to the quality and performance of office equipment that contains reused components
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 ISO 9000: 2005

Quality Principles: o Principle 1 Customer focus o Principle 2 Leadership o Principle 3 Involvement of people o Principle 4 Process approach o Principle 5 System approach to management o Principle 6 Continual improvement o Principle 7 Factual approach to decision making o Principle 8 Mutually beneficial supplier relationships
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 Business leaders are increasingly recognizing the importance of their supply chains in achieving their quality goals

Requires: o Measuring customer perceptions of quality o Identifying problem areas o Correcting these problems

Supply chain quality management can benefit from a collaborative relationship with suppliers o Helping suppliers with quality assurance efforts o Information sharing on quality-related matters
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 A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.
T Q M
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 Find out what the customer wants
 Design a product or service that meets or exceeds customer wants
 Design processes that facilitate doing the job right the first time
 Keep track of results
 Extend these concepts throughout the supply chain
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 Continuous improvement
 Competitive benchmarking
 Employee empowerment
 Team approach
 Decision based on fact, not opinion
 Knowledge of tools
 Supplier quality
 Champion
 Quality at the source
 Suppliers are partners in the process
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 Continuous Improvement

Philosophy that seeks to make never-ending improvements to the process of converting inputs into outputs

Kaizen o Japanese word for continuous improvement.
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 The philosophy of making each worker responsible for the quality of his or her work

“Do it right” and “If it isn’t right, fix it”
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 Six Sigma

A business process for improving quality, reducing costs, and increasing customer satisfaction

Statistically o Having no more than 3.4 defects per million

Conceptually o Program designed to reduce defects o Requires the use of certain tools and techniques
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 Lean Six Sigma

A balanced approach to process improvement that integrates principles from lean operation and statistical tools for variation reduction from six sigma to achieve speed and quality

An approach that is equally applicable to products and services o Early application in service support functions of
General electric and Caterpillar Finance
9-29

 Obstacles include:

Lack of company-wide definition of quality

Lack of strategic plan for change

Lack of customer focus

Poor inter-organizational communication

Lack of employee empowerment

View of quality as a “quick fix”

Emphasis on short-term financial results

Inordinate presence of internal politics and “turf” issues

Lack of strong motivation

Lack of time to devote to quality initiatives

Lack of leadership
9-30

 Flowcharts
 Check sheet
 Histogram
 Pareto analysis
 Scatter diagrams
 Control charts
 Cause-and-Effect diagrams
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A flowchart is a visual representation of a process.
Diamond = Decision points
Rectangle = Procedures
Arrows = The direction of “flow”
Figure 9.5, page 401
Flowchart for catalog telephone orders -- potential failure points are highlighted.

 A tool for organizing and collecting data; a tally of problems or other events by category
 Frequently used for problem identification

 A chart that shows an empirical frequency distribution

 Technique for classifying problem areas according to degree of importance and focusing on resolving the most important.

80 percent of defects from 20 percent of the causes of defects.

 A graph that shows the degree and direction of relationship between two variables

 Time ordered plot of statistics calculated from samples taken from the process
 Used to detect the presence of correctable causes of process variation

 A diagram used to organize and search for the causes of a problem (aka Fishbone diagram)
 Six Ms:
Man
Machine
Material
Method training, qualifications, experience, certification maintenance, testing, software or hardware updates raw material, consumables, and information process, testing, control
Measurement calibration
Mother Nature environmental conditions like noise, humidity, and temperature

 A diagram used to organize and search for the causes of a problem (aka Fishbone diagram)

 Brainstorming
 Affinity Diagram
 Quality circles
 Interviewing
 Benchmarking
 5W2H
9-41

 Quality Circle

Groups of workers who meet to discuss ways of improving products or processes o Less structured and more informal than teams involved in continuous improvement o Quality circle teams have historically had relatively little authority to make any but the most minor changes
9-42

 Identify a critical process that needs improvement
 Identify an organization that excels in this process
 Contact that organization
 Analyze the data
 Improve the critical process
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 Quality is a strategic imperative for organizations

Customers are very concerned with the quality of goods and services they receive
 Quality is a never-ending journey

It is important that most organizational members understand and buy into this idea
 Customer satisfaction ≠ customer loyalty
 Quality needs to be incorporated throughout the entire supply chain, not just the organization itself
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