Lecture5 - Quality Management CHAPTER OBJECTIVES Introduce...

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Unformatted text preview: Quality Management CHAPTER OBJECTIVES • Introduce the quality gurus who have played a significant role in the evolution of quality management and describe their specific contributions. • Identify the different dimensions of quality for both goods and services. • Define the components of the cost of quality. • Describe the more successful quality management initiatives, including total quality management (TQM) and Six Sigma. • Present some of the quality awards and recognitions that encourage firms to provide high-quality goods and services. 6–2 Managerial Issues • Defining quality from the customer’s perspective. • Constant increases in the level of quality of today’s goods and services. • Difficulties encountered in managing service quality. • Identifying quality dimensions that are most important to customers. • Avoiding the costs of poor quality products and services. • The shift from producers’ markets to consumers’ markets as markets become globalized. • Customer loyalty that is increasingly based on quality. 6–3 Defining Quality Defining The totality of features and The characteristics of a product or service that bears on its ability to satisfy stated or implied needs or American Society for Quality 6–4 Different Views Different User-based – better performance, User-based more features more Manufacturing-based – Manufacturing-based conformance to standards, making it right the first time right Product-based – specific and Product-based measurable attributes of the product 6–5 Implications of Quality Implications 1. Company reputation Perception of new products Employment practices Supplier relations 1. Product liability Reduce risk 1. Global implications Improved ability to compete 6–6 The Quality Gurus • Quality Gurus –Individuals who have been identified as making a significant contribution to improving the quality of goods and services. • Walter A. Shewhart • W. Edwards Deming • Joseph M. Juran • Armand Feigenbaum • Philip Crosby • Genichi Taguchi • Kaoru Ishikawa 6–7 Three of the Quality Gurus Compared Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Professional Publishing Ltd., 1989), pp. 291–92. 6–8 Three of the Quality Gurus Compared (cont’d) Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Professional Publishing Ltd., 1989), pp. 291–92. 6–9 Three of the Quality Gurus Compared (cont’d) Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Professional Publishing Ltd., 1989), pp. 291–92. 6–10 The Quality Gurus (cont’d) • Walter A. Shewhart –Statistician at Bell Laboratories • Developed statistical control process methods to distinguish between random and nonrandom variation in industrial processes to keep processes under control. • Developed the “plan-do-check-act” (PDCA) cycle that emphasizes the need for continuous improvement. • Strongly influenced Deming and Juran. 6–11 Shewhart’s Plan-Do-Check-Act (PDCA) Cycle Source: “The PDCA Cycle” from Deming Management at Work by Mary Walton, copyright © 1990 by Mary Walton. Used by permission of G. P. Putnam’s Sons, a division of Penguin Putnam, Inc. 6–12 The Quality Gurus (cont’d) • W. Edwards Deming –Advocated Statistical Process Control (SPC) • Methods which signal shifts in a process that will likely lead to products and/or services not meeting customer requirements. • Emphasized an overall organizational approach to managing quality. • Demonstrated that quality products are less costly than poor quality products. • Identified 14 points critical for improving quality. –The Deming Prize • Highest award for industrial excellence in Japan. 6–13 Deming’s 14-Point Program for Improving Quality 1. Create constancy of purpose for improvement of product and service. 2. Adopt the new philosophy. 3. Cease dependence on mass inspection. 4. End the practice of awarding business on the price tag alone. 5. Improve constantly and forever the system of production and training. 6. Institute training. 7. Institute leadership. 8. Drive out fear. 9. Break down barriers between staff areas. 10. Eliminate slogans, exhortations, and targets for the workforce. 11. Eliminate numerical quotas. 12. Remove barriers to pride in workmanship. 13. Institute a vigorous program of education and retraining. 14. Take action to accomplish the program. 6–14 The Quality Gurus (cont’d) • Joseph M. Juran –Emphasized the importance of producing quality products through an approach focused on quality planning, control, and improvement. –Defined product quality as “fitness for use” as viewed by the customer in: • Quality of design • Quality of conformance • Availability • Safety • Field use –Categorized the cost of quality as: • Cost of prevention • Cost of detection/appraisal • Cost of failure 6–15 The Quality Gurus (cont’d) • Armand Feigenbaum –Proposed the concept of “total quality control,” making quality everyone’s responsibility. • Stressed interdepartmental communication. • Emphasized careful measurement and report of quality costs • Philip Crosby –Preached that “quality is free.” –Believed that an organization can reduce overall costs by improving the overall quality of its processes. 6–16 The Quality Gurus (cont’d) • Genichi Taguchi –Emphasized the minimization of variation. • Concerned with the cost of quality to society. • Extended Juran’s concept of external failure. • Kaoru Ishikawa –Developed problem­solving tools such as the cause­ and­effect (fishbone) diagram. –Called the father of quality circles. 6–17 Defining the Dimensions of Quality • Quality in Goods • Quality in Services – Performance – Reliability – Features – Tangibles – Reliability – Responsiveness – Durability – Assurance – Conformance – Empathy – Serviceability – Aesthetics – Perceived quality 6–18 Additional Views of Quality in Services • Technical Quality versus Functional Quality –Technical quality—the core element of the good or service. –Functional quality—customer perception of how the good functions or the service is delivered. • Expectations and Perceptions –Customers’ prior expectations (generalized and specific service experiences) and their perception of service performance affect their satisfaction with a service. • Satisfaction = (Perception of Performance) – (Expectation) 6–19 The Cost of Quality • Cost of Quality –Framework for identifying quality components that are related to producing both high quality products and low quality components, with the goal of minimizing the total cost of quality. –Costs of poor quality: • Detection/appraisal costs • Internal failure costs • External failure costs 6–20 Typical Quality Cost Ratios 6–21 Costs of Quality Total Cost Total Cost External Failure Internal Failure Prevention Appraisal Quality Improvement 6–22 Two Views of the Cost of Improved Quality 6–23 The Cost of Quality (Juran’s Model) Cost Category Cost of prevention Costs associated with the development of programs to prevent defectives from occurring in the first place Cost of detection/ appraisal Costs associated with the test and inspection of subassemblies and products after they have been made. Cost of failure Costs associated with the failure of a defective product. Internal failure costs—producing defective products that are identified before shipment. External failure costs—producing defective products that are delivered to the customer. 6–24 Assuring Customer Satisfaction • Service Recovery –How quickly a firm rectifies a service mistake has a strong effect on establishing customer loyalty and creating customer satisfaction. • Service Guarantees –Provide customer feedback on service operations –Effective guarantees • • • • • Unconditional Easy to understand Meaningful Easy and painless to invoke Easy and quick to collect on 6–25 Organization-wide Quality Initiatives • Total Quality Management (TQM) –An approach for integrating quality at all levels of an organization • Organization-wide initiative encompassing all functional areas and levels within the organization. • Focuses on producing high quality goods and services. 6–26 Elements of TQM • Leadership –Top management vision, planning and support • Employee involvement –All employees assume responsibility for inspecting the quality of their work. • Product/Process Excellence –Involves product design quality and monitoring the process for continuous improvement. • Poka-yokes are devices that prevent defects from being produced. 6–27 Elements of TQM (cont’d) • Continuous Improvement –A concept that recognizes that quality improvement is a journey with no end and that there is a need for continually looking for new approaches for improving quality. • Customer Focus (on “Fitness for Use”) –Design quality • Specific characteristics of a product that determine its value in the marketplace. –Conformance quality • The degree to which a product meets its design specifications. 6–28 Implementing TQM • Successful Implementation of TQM –Requires total integration of TQM into day­to­day operations. • Causes of TQM Implementation Failures –Lack of focus on strategic planning and core competencies. –Obsolete, outdated organizational cultures. 6–29 Obstacles to Implementing TQM • Lack of a company-wide definition of quality. • Lack of a formalized strategic plan for change. • Lack of a customer focus. • Poor inter-organizational communication. • Lack of real employee empowerment. • Lack of employee trust in senior management. • View of the quality program as a quick fix. • Drive for short-term financial results. • Politics and turf issues. 6–30 Three Schools of Quality Management Programs 6–31 Three Schools of Quality Management Programs (cont’d) 6–32 Six Sigma • Goals of Six Sigma –To reduce process variation to the point where only 3.4 defects per million are produced by a process that involves a high volume of manufactured units or service transactions on a continuous basis. –Provide a framework and methodologies to analyze and evaluate business processes and reduce waste. • Successful Implementation –Training and selection of the workforce –Impressive cost savings of program 6–33 Employee Empowerment Employee Getting employees involved in product and Getting process improvements process 85% of quality problems are due to process and 85% material material Techniques Build communication networks Build that include employees that Develop open, supportive supervisors Move responsibility to employees Build a high-morale organization Create formal team structures 6–34 Quality Circles Quality Group of employees who meet Group regularly to solve problems regularly Trained in planning, problem Trained solving, and statistical methods solving, Often led by a facilitator Very effective when done properly 6–35 Benchmarking Selecting best practices to use as a Selecting standard for performance standard al ern g if nt se i arkin gh Um ou h enc big en be ’r you Determine what to Determine benchmark benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking Collect information information Take action to match or exceed the Take benchmark benchmark 6–36 Best Practices for Resolving Customer Complaints Complaints Make it easy for clients to complain Respond quickly to complaints Resolve complaints on first contact Use computers to manage complaints Recruit the best for customer service Recruit jobs jobs 6–37 Just-in-Time (JIT) Just-in-Time Relationship to quality: JIT cuts the cost of quality JIT improves quality Better quality means less Better inventory and better, easier-toinventory employ JIT system 6–38 Just-in-Time (JIT) Just-in-Time ‘Pull’ system of production scheduling Pull’ including supply management including Production only when signaled Allows reduced inventory levels Inventory costs money and hides process and material Inventory problems problems Encourages improved process and product Encourages quality quality 6–39 Just-In-Time (JIT) Example Just-In-Time Reducing inventory reveals problems so they can be solved Unreliable Vendors Scrap Capacity Imbalances 6–40 Taguchi Concepts Taguchi Engineering and experimental design Engineering methods to improve product and process design process Identify key component and process Identify variables affecting product variation variables Taguchi Concepts Quality robustness Quality loss function Target-oriented quality 6–41 Quality Robustness Quality Ability to produce products uniformly Ability in adverse manufacturing and environmental conditions environmental Remove the effects of adverse Remove conditions conditions Small variations in materials and Small process do not destroy product quality process Quality Loss Function Quality Shows that costs increase as the Shows product moves away from what the customer wants customer Target Costs include customer Costs oriented dissatisfaction, warranty quality and service, internal scrap and repair, and costs to society society Traditional conformance Traditional specifications are too simplistic specifications 6–43 Quality Loss Function L = D2 C High loss Unacceptable Loss (to Loss producing organization, customer, and society) and Poor Fair Good Best Low loss where L= lloss to oss society society D= distance from distance target value target C= cost cost Target-oriented quality of Target-oriented deviation deviation yields more product in the “best” category the Target-oriented quality Target-oriented brings product toward the target value the Frequency Conformance-oriented Conformance-oriented quality keeps products within 3 standard deviations deviations Lower Target Upper Specification 6–44 Inspection Inspection Involves examining items to see if an Involves item is good or defective item Detect a defective product Does not correct deficiencies in Does process or product process It is expensive Issues When to inspect Where in process to inspect 6–45 When and Where to Inspect When 1. At the supplier’s plant while the supplier is At producing producing 2. At your facility upon receipt of goods from the At supplier supplier 3. Before costly or irreversible processes 4. During the step-by-step production process 5. When production or service is complete 6. Before delivery to your customer 7. At the point of customer contact 6–46 Inspection Inspection Many problems Worker fatigue Measurement error Process variability Robust design, empowered Robust employees, and sound processes are better solutions are 6–47 Source Inspection Source Also known as source control The next step in the process is The your customer your Ensure perfect product Ensure to your customer to Poka-yoke is the concept of foolproof devices or techniques designed to pass only acceptable product 6–48 Service Industry Inspection Service Organization What is What Inspected Inspected Jones Law Office Receptionist Receptionist performance performance Billing Attorney Standard Is phone answered by the Is second ring second Accurate, timely, and Accurate, correct format correct Promptness in returning Promptness calls calls 6–49 Service Industry Inspection Service Organization Hard Rock Hotel What is What Inspected Inspected Reception Reception desk desk Doorman Room Minibar Standard Use customer’s name Greet guest in less than 30 Greet seconds seconds All lights working, spotless All bathroom bathroom Restocked and charges Restocked accurately posted to bill accurately 6–50 Service Industry Inspection Service Organization Arnold Palmer Arnold Hospital Hospital What is What Inspected Inspected Billing Pharmacy Lab Nurses Admissions Standard Accurate, timely, and Accurate, correct format correct Prescription accuracy, Prescription inventory accuracy inventory Audit for lab-test accuracy Charts immediately Charts updated updated Data entered correctly and Data completely completely 6–51 Service Industry Inspection Service Organization Olive Garden Olive Restaurant Restaurant What is What Inspected Inspected Busboy Busboy Waiter Standard Serves water and bread Serves within 1 minute within Clears all entrée items and Clears crumbs prior to dessert crumbs Knows and suggest Knows specials, desserts specials, 6–52 Service Industry Inspection Service Organization Nordstrom Nordstrom Department Store Store What is What Inspected Inspected Standard Display areas Attractive, well-organized, Attractive, stocked, good lighting stocked, Rotation Stockrooms Rotation of goods, organized, clean organized, Neat, courteous, very Neat, Salesclerks knowledgeable knowledgeable 6–53 Quality Performance Levels for Various Processes 6–54 Recognizing and Rewarding Quality • Promotion of High Quality Goods and Services –Malcolm Baldrige National Quality Award (MBNQA) (United States) –Deming Prize (Japan) –European Quality Award (European Union) –ISO9000 certification 6–55 Malcolm Baldrige National Quality Award (MBNQA) • Background –Established in 1987 to recognize total quality management in American industry. • Purpose –Stimulate U.S. companies to improve quality and productivity. –Establish guidelines and criteria to evaluate quality. –Recognize those firms that improve their quality. –Provide guidance in how to achieve quality. 6–56 The Integrated Framework of the Baldrige Award Criteria 6–57 2001 Award Criteria—Item Listing 6–58 Benefits of the Baldrige Quality Criteria • Baldrige guidelines can be used to: –Help define and design a total quality system. –Evaluate ongoing internal relationships among department, divisions, and functional units within an organization. –Assess and assist outside suppliers of goods and services to a company. –Assess customer satisfaction. 6–59 ISO 9000 • The International Organization for Standardization (ISO) • ISO 9000 Series of Quality Standards –An international set of standards for documenting the processes that an organization uses to produce its goods and services. ISO 9001:2000 Quality Management Systems: Requirements ISO 9004:2000 Quality Management Systems: Guidelines for Performance Improvement ISO 9000:2000 Quality Management Systems: Fundamentals and Standards 6–60 6– ISO 9000 (cont’d) • ISO 9000 Certification –First party certification—A firm audits itself. –Second party certification—Customers audit their suppliers. –Third party assessment—Company is assessed by outside registrars from ASQ’s Registration Accreditation Board (RAB). –ISO 9000/Q90 Registration Process • Application to registrar • Preliminary assessment • Full audit 6–61 European Quality Award (EQA) • European Foundation for Quality Management (EFQM) –Stimulate and assist European organizations in quality improvement activities. –Support managers in the adoption of TQM. • EFQM Excellence Model –A non­prescriptive frame work based on nine criteria that recognizes that there are many approaches to achieving sustainable excellence. 6–62 Overview of the EFQM Excellence Model 6–63 Recent Winners of the European Quality Award 6–64 The Deming Prize • Deming Prize –Initiated by Japan in 1951 to recognize the importance of high quality products. –Name after W. Edwards Deming –Categories of the Deming Prize: • The Deming Prize for Individuals • The Deming Application Prize • The Quality Control Award for Operations/ Business Units 6–65 ...
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  • Spring '14
  • Evolution, Malcolm Baldrige National Quality Award, W. Edwards Deming, Quality Gurus

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