1 Quality Management TQM G ÁBOR Á RVA P H D S TUDENT 29 April 2016 D EPT. OF M ANAGEMENT AND C ORPORATE E CONOMICS F ACULTY OF E CONOMIC AND S OCIAL S CIENCES B UDAPEST U NIVERSITY OF T ECHNOLOGY AND E CONOMICS

2 Agenda for today Core principles of Total Quality Management –Customer focus –Total involvement

3 Evolution of QMS Inspection Quality Control Quality Assurance –Quality Management Systems –ISO 9001 Total Quality Management –SixSigma –TPM

4 What is TQM? TQM is a combination of: –Quality culture –Quality strategy –Process improvement tools –Continuous quality improvement

5 Origins of TQM USA after World War II: –Increasing demand for consumer goods: focus on quantity instead of quality Other countries (Japan, Korea): –Economic revolution –More innovative, cost-effective By 1980 the US lost its domination as world supplier, and foreign competitiors captured a large segment of the US market

6 How to get quality back to US? Management must change the way if they are to survive Consumer-oriented economy TQM’s quality definition: A basic business strategy that provides goods and services that completely satisfy both internal and external customers by meeting their explicit and implicit expectations

7 Goa l Principle s Supporting elements TQMTQM Leadership Communication Supportive structure Reward and recognitions Measurement Education and training Process improvement Total involvement Customer focus

8 TQM- the core principles Customer focus: –Concept of internal and external customer –Collection, understanding, analysis and fulfillment of customer requirements Process improvement: –Work is the result of a series of interrelated steps and activities that result in an output. –Reduce the variability of the output and improve the reliability of the process Total involvement: –Active leadership of senior management –Utilizing the talents of all employees –Bulinding long-term partnerships with suppliers

9 Leadership: role of senior managers as advocates, teachers, and leaders Education and training: quality is based on the skills of every employee and his or her understanding of what is required Supportive structure: senior managers may require support to bring about the change necessary to implement a quality strategy Consultants, small support staff TQM system – supporting elements 1.

10 Communications: may need to be addressed differently in order to communicate to all employees a sincere commitment to change Bottom-up flow of information Reward and recognition: teams and individuals who successfully apply the quality process must be recognized and possibly rewarded Provides role model for others Measurement: the use of data becomes topmost in installing a quality management process TQM system – supporting elements 2.

11 Product versus process focus Traditional method Product management Work process Suppliers Customers INPUT OUTPUT INSPECTINSPECT INSPECTINSPECT WAST E

12 Work process Process measures Output measures Outcome measures

13 Measurement at three levels Process measures: define activities, variables, and operations of the work process itself –Help to predict the characteristics of the outputs before delivered to customers. Output measures: define specific features, values, characteristics, and attributes of each product or service. –Voice of the customer: Requirements –Voice of the process: Capability Outcome measures: define the ultimate impact of the process on the customer and dependent on what the customer does with the product or service –Customer satisfaction

14 Measurement at 3 levels Example: Pizza delivery Process –Number of orders –Distance Output –Delivery time Outcome –Customer satisfaction How often does she or he orders from the firm?

15 Customer focus Key questions: –Who your customers are? –What customers expect from the organization? –How well do organizations provide the services customers have requested? Internal vs. External customers –90%*90%*90%=73%

16 Customer focus Output: The specific products or services that you produce as part of your work process, and that you pass to others, who, in turn, use them in their work process. Determine customers’s expectations Customer satisfaction

17 Understanding customers’s expectations Key questions –What product/service characteristics do customers want? Faster, better, cheaper –What performance level is needed to satisfy their expectations? –What is the relative importance of each characteristic? –How satisfied are customers with the current level of performance?

18 Garvin’s 8 dimensions Quality dimensions of products –Performance –Features –Reliability –Conformance –Durability –Serviceability –Aesthetics –Perceived quality

19 Service quality-Berry –Reliability –Responsiveness –Competence –Access –Courtesy –Communications –Credibility –Security –Understanding the customer –Tangibles

20 5 RATER criteria Reliability: Ability to perform the promised service dependably and accurately Assurance: Knowledge and courtesy of employees and their ability to inspire trust and confidence Tangibles: Physichal facilities, equipment and appearance of the personnel Empathy: Caring, individualized attention the firm provides its customers Responsiveness: Willingness to help customers and provide prompt services

21 Implicit, explicit and latent requirements Hidden level: compensation for dissatisfied customer

22 Implicit, explicit and latent requirements Implicit –Customers’ base expectations –Always assumed to be present –If missing, customers will always be dissatisfied Explicit –Specifications and requirements –Involved in the selection process –Trade offs and negotiation

23 Implicit, explicit and latent requirements Latent –Value-added features that the customer did not even know about, but is delighted to receive Hidden: Solving problems –Solving problems in a promt, effective, courteous way

24 Application of the expectations levels Clarifies which characteristics should be discussed –Explicit requirements (level 2) Predict how the level of customer satisfaction might respond to a change in characteristics Indicates possible future trends in expectations –Expectations migrate down through the hierarchy over time

25 Understanding customers

26 Understanding customers Level 1 (reactive methods) –Reactive mode of waiting complaints –Minimal understanding of expectations Level 2 (help desk, hotline) –Listen to customers –Listening to customer expectations is NOT their primary goal Level 3 (mystery hopper, focus groups) –Full understanding of customer –Designed to gain info about customers’ expectations

27 Leadership&empowerment Total involvement –Build loyal employees and suppliers –Active leaderhip of senior management Empowerment –Utilize the talent of all employees –Employees are empowered to improve their output

28 Leadership Leaders are the people who do the right thing, managers are those who do the things right. (Warren Bennis)

29 Empowerment Alignment –Knowledge and support of the vission, values, policy by employees Capability –Ability, skills, knowledge to do the job Mutual trust –Employees need to trust management and feel that management trusts them

30 Thank You for Your kind attention! G ÁBOR Á RVA MVT. BME. HU 29 April 2016 D EPT. OF M ANAGEMENT AND C ORPORATE E CONOMICS F ACULTY OF E CONOMIC AND S OCIAL S CIENCES B UDAPEST U NIVERSITY OF T ECHNOLOGY AND E CONOMICS