LESSON 6 – MANAGEMENT OF QUALITY Reactive vs.

Proactive Quality

• Quality
• Quality Assurance
– The ability of a product or service to – Reactive
consistently meet or exceed customer – Emphasis is on finding and correcting
expectations defects before they reach the market
• Prior to the 1970s and 1980s,
quality was not a focal point of
• Strategic Approach
U.S. companies
• Foreign competition, due in – Proactive
part to a focus on quality, was – Focuses on preventing mistakes from
able to capture significant occurring
shares of U.S. markets – Greater emphasis on customer
• Since the 1980s, quality has satisfaction
been increasingly embraced by – Involves all manager and workers in a
U.S. executives continuing effort to improve quality
Quality Contributors Dimensions of Product Quality
• Performance– main characteristics of the
• Walter Shewart
product
– “Father of Statistical Quality Control”
• Aesthetics– appearance, feel, smell, taste
– Control charts
• Special features– extra characteristics
– Variance reduction
• Conformance– how well the product
• W. Edwards Deming
conforms to design specifications
– Special vs. common cause variation
• Reliability– consistency of performance
– The 14 points
• Durability– the useful life of the product
• Joseph Juran
• Perceived quality– indirect evaluation of
– Quality Control Handbook, 1951
quality
– Viewed quality as fitness-for-use
• Serviceability– handling of complaints or
– Quality trilogy– quality planning,
repairs
quality control, quality improvement
Dimensions of Service Quality
• Armand Feigenbaum
• Convenience– the availability and
– Quality is a “total field”
accessibility of the service
– The customer defines quality
• Reliability– ability to perform a service
• Philip B. Crosby
dependably, consistently, and accurately
– Zero defects
• Responsiveness– willingness to help
– Quality is Free, 1979
customers in unusual situations and to deal
• Kaoru Ishikawa
with problems
– Cause-and-effect diagram
• Time– the speed with which the service is
– Quality circles
delivered
– Recognized the internal customer
• Assurance– knowledge exhibited by
• Genichi Taguchi
personnel and their ability to convey trust
– Taguchi loss function
and confidence
• Taiichi Ohno and Shigeo Shingo
• Courtesy– the way customers are treated by
– Developed philosophy and methods
employees
of kaizen
 • Tangibles– the physical appearance of • Enhanced reputation for quality
facilities, equipment, personnel, and • Ability to command higher prices
communication materials • Increased market share
• Consistency– the ability to provide the same • Greater customer loyalty
level of good quality repeatedly • Lower liability costs
Assessing Service Quality • Fewer production or service problems
• Audit service to identify strengths and • Higher profits
weaknesses Responsibility for Quality
• In particular, look for discrepancies • Everyone in the organization has some
between: responsibility for quality, but certain areas
1. Customer expectations and of the organization are involved in activities
management perception of those that make them key areas of responsibility:
expectations • Top management
2. Management perceptions customer • Design
expectations and service-quality • Procurement
specifications • Production/operations
3. Service quality and service actually • Quality assurance
delivered • Packaging and shipping
4. Customers’ expectations of the • Marketing and sales
service provider and their perceptions • Customer service
of provider delivery Costs of Quality
Determinants of Quality • Failure Costs - costs incurred by defective
• Quality of design parts/products or faulty services.
– Intention of designers to include or – Internal Failure Costs
exclude features in a product or • Costs incurred to fix problems
service that are detected before the
• Quality of conformance product/service is delivered to
– The degree to which goods or services the customer.
conform to the intent of the designers – External Failure Costs
• Ease-of-Use and user instructions • All costs incurred to fix
– Increase the likelihood that a product problems that are detected
will be used for its intended purpose after the product/service is
and in such a way that it will continue delivered to the customer
to function properly and safely • Appraisal Costs
• After-the-sale service – Costs of activities designed to ensure
– Taking care of issues and problems quality or uncover defects
that arise after the sale • Prevention Costs
The Consequences of Poor Quality – All TQ training, TQ planning, customer
• Loss of business assessment, process control, and
• Liability quality improvement costs to prevent
• Productivity defects from occurring
• Costs Ethics and Quality
• Substandard work
– Defective products
Benefits of Good Quality
 – Substandard service Quality Certification
– Poor designs
International Organization for Standardization
– Shoddy workmanship
• ISO 9000
– Substandard parts and materials
– Set of international standards on
Having knowledge of this and failing to correct
quality management and quality
and report it in a timely manner is unethical.
assurance, critical to international
Quality Awards business
▪ Deming Prize • ISO 14000
▪ EFQM Excellence Award – A set of international standards for
▪ Baldrige Award assessing a company’s environmental
Baldrige Criteria performance
I. Leadership (120 points) • ISO 24700
– Senior leadership – Pertains to the quality and
– Governance and social responsibilities performance of office equipment that
II. Strategic planning (85 points) contains reused components
– Strategy development • ISO 9000: 2000
– Strategy deployment – Quality Principles:
III. Customer and market focus (85 points) • Principle 1 Customer focus
– Customer and market knowledge • Principle 2 Leadership
– Customer relationships and • Principle 3 Involvement of
satisfaction people
IV. Measurement, Analysis, and Knowledge • Principle 4 Process approach
Management (90 points) • Principle 5 System approach to
– Measurement, analysis, and management
improvement of organizational
• Principle 6 Continual
performance
improvement
– Management of information,
• Principle 7 Factual approach to
information technology, and
decision making
knowledge
• Principle 8 Mutually beneficial
V. Workforce focus (90 points)
supplier relationships
– Workforce engagement
Total Quality Management
– Workforce environment
• A philosophy that involves everyone in an
VI. Process management (85 points)
organization in a continual effort to
– Work systems design
improve quality and achieve customer
– Work process management and
satisfaction.
improvement
TQM Approach
VII. Results (450 points)
1. Find out what the customer wants
– Product and service outcomes
2. Design a product or service that meets or
– Customer-focused outcomes
exceeds customer wants
– Financial and market outcomes
3. Design processes that facilitate doing the
– Workforce-focused outcomes
job right the first time
– Process effectiveness outcomes
4. Keep track of results
– Leadership outcomes
 5. Extend these concepts throughout the statistical tools for variation reduction
supply chain from six sigma to achieve speed and
TQM Elements quality
1. Continuous improvement – An approach that is equally applicable
2. Competitive benchmarking to products and services
3. Employee empowerment • Early application in service
4. Team approach support functions of General
5. Decision based on fact, not opinion electric and Caterpillar Finance
6. Knowledge of tools Obstacles to Implementing TQM
7. Supplier quality • Obstacles include:
8. Champion – Lack of company-wide definition of
9. Quality at the source quality
10. Suppliers are partners in the process – Lack of strategic plan for change
Continuous Improvement – Lack of customer focus
• Continuous Improvement – Poor inter-organizational
– Philosophy that seeks to make never- communication
ending improvements to the process – Lack of employee empowerment
of converting inputs into outputs – View of quality as a “quick fix”
– Kaizen – Emphasis on short-term financial
• Japanese word for continuous results
improvement. – Inordinate presence of internal
Quality at the Source politics and “turf” issues
• The philosophy of making each worker – Lack of strong motivation–
responsible for the quality of his or her – Lack of time to devote to quality
work initiatives
– “Do it right” and “If it isn’t right, fix it” – Lack of leadership
Six Sigma PDSA Cycle
• Six Sigma • Plan-Do-Study-Act (PDSA) Cycle
– A business process for improving
quality, reducing costs, and increasing
customer satisfaction
– Statistically
• Having no more than 3.4
– Plan
defects per million
• Begin by studying and
– Conceptually
documenting the current
• Program designed to reduce
process.
defects
• Collect data on the process or
• Requires the use of certain
problem
tools and techniques
• Analyze the data and develop a
Lean Six Sigma
plan for improvement
• Lean Six Sigma
• Specify measures for evaluating
– A balanced approach to process
the plan
improvement that integrates
– Do
principles from lean operation and
 • Implement the plan, document
any changes made, collect data
for analysis
– Study
• Evaluate the data collection
during the do phase
• Check results against goals
formulated during the plan
phase
– Act
• If the results are successful,
standardize the new method
and communicate it to the
relevant personnel
• Implement training for the new
method
• If unsuccessful, revise the plan
and repeat the process
Problem Solving

Quality Circles
Process Improvement • Quality Circles
• Process Improvement – Groups of workers who meet to
– A systematic approach to improving a discuss ways of improving products or
process processes
• Less structured and more
informal than teams involved in
continuous improvement
• Quality circle teams have
historically had relatively little
authority to make any but the
most minor changes
– Work best when decisions are based
on consensus
Basic Quality Tools • Methods:
– List reduction
 – Balance sheet How Much to Inspect?
approach
– Paired comparisons
Benchmarking Process
• Identify a critical process that needs
improving
• Identify an organization that excels in this
process
• Contact that organization
• Analyze the data Where to Inspect in the Process?
• Improve the critical process • Typical Inspection Points:
5W2H – Raw materials and purchased parts
– Finished products
– Before a costly operation
– Before an irreversible process
– Before a covering process
Centralized vs. On-Site Inspection
• Effects on cost and level of disruption are a
major issue in selecting centralized vs. on-
site inspection
– Centralized
• Specialized tests that may best
be completed in a lab
Quality Control
– More specialized
Phases of Quality Assurance
testing equipment
– More favorable
testing
environment
– On-Site
• Quicker decisions are rendered
• Avoid introduction of
extraneous factors
• Inspection • Quality at the source
– An appraisal activity that compares Statistical Process Control (SPC)
goods or services to a standard • identifies special causes of variation and
– Inspection issues: seeks corrective action
1. How much to inspect and how – Quality of Conformance
often? • A product or service conforms
2. At what points in the process to to specifications
inspect? • A tool used to help in this process:
3. Whether to inspect in a – SPC
centralized or on-site location? • Statistical evaluation of the
4. Whether to inspect attributes output of a process
or variables?
 • Helps us to decide if a process is
“in control” or if corrective
action is needed
Process Variability
• Two basic questions: concerning variability:
1. Are the variations random?
• Process control
2. Given a stable process, is the inherent
variability of the process within a
range that conforms to performance
criteria
• Process capability
• Variation
– Random (common cause) variation:
• Natural variation in the output
of a process, created by
countless minor factors
– Assignable (special cause) variation:
• A variation whose cause can be
identified
Control Process
• Sampling and corrective action are only a
part of the control process
• Steps required for effective control:
– Define
– Measure
– Compare
– Evaluate
– Correct
– Monitor