Managing Quality & Risk Week September The Properties of Quality Management Module leader – Tim Rose

Quality ‘at risk’…

Module route map Semester 1Date (W/c)Content Week 107/09/2015Introduction to Module & Topic Week 214/09/2015The Properties of Risk Management Week 321/09/2015The Properties of Quality Management Week 428/10/2015Risk and Failure Week 505/10/2015Risk and People Week 612/10/2015Quality Monitoring and Controlling Processes 19/10/2015College closed for staff development 26/10/2014Reading week Week 702/11/2015Risk Management Systems [1] Week 809/11/2015Risk Management Systems [2] Week 916/11/2015Independent research Week 1023/11/2015Peer review Week 1130/11/20151:1 Tutorials Week 1207/12/2015Assignment workshop/ revision N/a11/01/2016Exam

Intended learning outcomes By the end this session you will:  Identify quality characteristics  Discuss measurement of quality  Explore methodology of quality management  Discuss statistical approaches to quality management  Debate application of quality control processes and inherent costs.

Thought… “Companies without a risk management strategy are more likely to suffer the costs of problems and crises.” To what extent do you agree with this statement?

“Delivering the right product in the right way, in the right quantity and right quality, in the right place at the right time for the right customer at the right cost” [Mangan, et al, 2012] Striving for ‘Perfection’

Five Critical Operations Performance Objectives: 1. Quality 2. Speed 3. Dependability 4. Flexibility 5. Cost [Slack, et al 2007] Importance of Quality

Including characteristics based on:  Functionality – performance and features  Appearance – aesthetic appeal, look, feel, sound & smell  Reliability – consistency of performance  Durability – total useful life of the product  Recovery – ease of problem solution  Contact – include personnel involvement/ intangibles (Plus, legal & regulatory compliance requirements). [Presentation sourced: Slack, et al (2007)] Quality Characteristics

 Transcendent approach – absolute quality  Manufacturing-based approach – quality product built to precise design specification  User-based approach – quality product, fit for purpose (concern for its adherence to specification & to appropriateness for customer)  Product-based approach – quality as precise and measurable set of characteristics to satisfy customers  Value-based approach – quality defined in terms of cost and price. [Slack, et al 2009] Five approaches to Quality

‘ The Five Gap Model’ of Quality GapNameDefinition 1PositioningBetween management perspectives of customer expectations & the expectations themselves 2SpecificationBetween management perceptions of customer expectations & actual product specified 3DeliveryBetween product promised & that actually delivered 4CommunicationBetween product delivered & that externally communicated to customers (e.g. advert) 5Perception*Between the product quality perceived & that expected by the customer (*Externally influenced) [Jones & Robinson 2012]

Group activity a) Analyse a brand based on the ‘Five Gap Model’ b) Present your findings to the Module Group.

Quality characteristics of the 'total package'  Breakdown of 'package' to identify individual characteristics within and between each element of itself  'Package' meaning organisation, operation, department, etc...  Enables assignment of responsibilities for maintaining each aspect of quality; ‘accountability’.

Measuring each characteristic  Aim for specific, quantifiable, objective tangible measures  Measure intangibles, such as customer perception, staff satisfaction (think 'The Five Gap Model' of quality) Two types of measures  Variables – measured on a continuous variable scale e.g. length, diameter, weight, time, etc.  Attributes – assessed on two states e.g. right or wrong, works or does not work (yes/no).

Setting quality standards Against what do you measure quality?  The quality standard is the level of quality which defines the boundary between acceptable and unacceptable  Need to consider organisational constraints e.g. legal, regulatory, technology, costs, etc.  Standards need to meet customer expectations.

Control quality standards Where should the checks take place?  Identify critical control points to enable product/service to conform to specification  Consider risk based approach to defining critical control points i.e. prior to a costly part of the process...  100% product check or sample check only?  100% check may not be 100% accurate? Sampling can create judgement errors:  Type I error – making a correction where none is needed  Type II error – not making corrections where they are needed.

Control quality standards 3. How should the checks be performed –  Statistical Process Control (SPC) Sampling the process during production  Acceptance Sampling Analysis of incoming or outgoing batch of materials as acceptable or not.

Statistical Process Control (SPC) Key elements:  Control Charts – Useful to monitor results of many samples over a period of time  Identify trends/patterns in faults reported  Decision making to resolve fault – consider human and/or technical solutions  Set control limits (usually at three standard deviations either side).

Variation in process quality  Common variance causes -  Machinery  Materials  People  Environmental  Key question – ‘Is this variation in the process performance acceptable?’  Key decision – define the acceptable range of weights within agreed tolerance levels – this is the specification range.

SPC summary  System assumes any values of process performance within the control limits are equally acceptable and any values outside the limits are not  (i.e. Values close to the ‘target’ are regarded as equal to those on perimeter range)  Sustaining performance within given control limits does not help to support an ethos of ‘continuous improvement’.

Benefits of SPC  Builds on process knowledge at detailed level  Organisational experience in understanding the specifics of each process and its capability  Competitive advantage  Greater accuracy in predicting how a process will perform under change  Detailed analysis builds the knowledge of process capability leading to strategic advantage.

Acceptance Sampling  Process control before or after a process  Sample will determine whether to accept or reject the whole batch  Usually based on attributes (wrong/right)  Risks involved in using a sample to determine decision  Type I risk = producer’s risk (batch rejected which is of good quality)  Type II risk – consumer’s risk (batch accepted which is of poor quality and sending it to consumer).

The cost of “quality” Three questions: 1. Cost of controls 2. Cost of insurance 3. Cost of management and staff time Returns from Risk and Quality management programmes should greater than its costs, i.e.;  A reduction in costs caused by losses  An increase in revenue from profitable ventures [Sadgrove (2015), The Complete Guide to Business Risk Management]

The cost of “quality” Costs Investment in risk management Total costs Prevention costs Incident costs [Sadgrove, p.87 (2015), The Complete Guide to Business Risk Management]

Learning outcomes from this session Throughout this session you have: Identified quality characteristics Discussed measurement of quality Explored methodology of quality management Discussed statistical approaches to quality management Debated application of quality control processes and inherent costs.

Out of class activity  In groups, research and prepare a short presentation on your allocated topic:  EFQM EFQM  The Kitemark BSI The Kitemark BSI  Investors in People Investors in People  Six Sigma Six Sigma  Suggested reading: Sadgrove, K (2015) The Complete Guide to Business Risk Management  Chapter 4: Treating Risk…