Total Quality Management

What is TQM? Meeting quality expectations as defined by the customer Integrated organizational effort designed to improve quality of processes at every business level

Defining Quality – 5 Ways 1. Conformance to specs - designer based Does product/service meet tolerances defined by designers? E.g. 20 min wait for pizza (average) + 10 min acceptable (?) delay. What about a customer? Is a 30 min. delay acceptable? 2. Fitness for use - user based definition Evaluates performance for intended use. E.g. Jeep vs. Jaguar on mountain roads? 3. Value for price paid - user based def. Evaluation of usefulness vs. price paid. E.g. receive the same value but at a lower price

Defining Quality – 5 Ways 4. Support services - user based def. Quality of support after sale. E.g. excellent warranty service 5. Psychological criteria - user based definition e.g. ambiance, prestige, friendly staff may leave the impression of higher quality Case: Gold Coast Advertising

Evolution of TQM – New Focus

TQM Philosophy – What’s Different? 1. Focus on Customer Identify and meet customer needs Stay tuned to changing needs, e.g. fashion styles 96% of customers do not complain (stop buying and/or tell others 9-11 people); satisfied customers  1 person Fixing the problem after the complaint  customers become more loyal than if they had not had the problem in the first place It costs more to obtain a new customer than to retain one Customers increase their spending the longer they buy from a company

TQM Philosophy – What’s Different? 2. Continuous Improvement Continuous learning and problem solving (jap.) Kaizen: requires that the company continually strive to do better through learning and problem solving (“small doses of medicine are better than one large dose”) Perfection can NEVER be achieved

TQM Philosophy – What’s Different? 2. Continuous Improvement Continuous learning and problem solving 6 sigma: 3.4 defects per one million. Example: If 20 mln passengers per year pass through London’s Heathrow Airport, only 68 passengers per year will have misplaced luggage 3 sigma: 2.6 defects per one thousand => 2,600 per million 52,000 passengers per year will have misplaced luggage

TQM Philosophy – What’s Different? 3. Quality at the Source Inspection (before) vs. prevention & problem solving (now) 4. Employee Empowerment (they are expected to seek out, identify, and correct problems) Employees no longer afraid of reporting problems 5. Focus on both external (who purchase company’s goods/services) and internal customers (e.g., packaging department is an internal customer of assembly department)

TQM Philosophy– What’s Different? (continued) 6. Team Approach – Quality Circles (“two heads are better than one”) Teams formed around processes – 8 to 10 people Meet weekly to analyze and solve problems 7. Benchmarking Studying practices at “best in class” companies; e.g. many companies use Amex to benchmark conflict resolution 8. Managing Supplier Quality Certifying suppliers vs. receiving inspection

TQM Philosophy– What’s Different? (continued) 9. Just-in-Time ‘Pull’ system of production/purchasing Customer starts production with an order Involves ‘vendor partnership programs’ to improve quality of purchased items Reduces all inventory levels Inventory hides process & material problems Improves process & product quality

Just-In-Time (JIT) Example Scrap Work in process inventory level (hides problems) Unreliable Vendors Capacity Imbalances

Just-In-Time (JIT) Example Reducing inventory reveals problems so they can be solved. Scrap Unreliable Vendors Capacity Imbalances

Cost of Quality – 4 Categories I. Quality Control Costs (Prevention & Appraisal) II. Quality Failure Costs (Internal & External Failure) Early detection/prevention is less costly May be less by a factor of 10 Case: Delta Plastics Inc. (A): Question 1. Identify the different costs of quality described in the case.

Ways of Improving Quality 1. Plan-Do-Study-Act Cycle (PDSA) Also called the Deming Wheel after originator Circular, never ending problem solving process 2. Quality Function Deployment Used to translate customer preferences to design 3. Seven Tools of Quality Control Tools typically taught to problem solving teams

Ad 1. PDSA Details Plan Do Study Act Evaluate current process Collect procedures, data, identify problems Develop an improvement plan, performance objectives Do Implement the plan – trial basis Study Collect data and evaluate against objectives Act Communicate the results from trial If successful, implement new process

PDSA (continued) Cycle is repeated After act phase, start planning and repeat process

Ad 2. QFD Details Process used to ensure that the product meets customer specifications (Example: Student’s backpack) 3. Voice of the engineer 2. Customer-based benchmarks 1. Voice of the customer

QFD - House of Quality Adding trade-offs, targets & developing product specifications 4. Trade-offs 5. Technical Benchmarks 6. Targets

Ad 3. Seven Problem Solving Tools (i) Cause-and-Effect Diagrams (ii) Flowcharts (iii) Checklists (iv) Control Charts (v) Scatter Diagrams (vi) Pareto Analysis (vii) Histograms

Cause-and-Effect Diagrams Called Fishbone Diagram Focused on solving identified quality problem Used to find problem sources/solutions Steps Identify the problem to correct Draw main causes for problem as ‘bones’ Ask ‘What could have caused problems in these areas?’ Repeat for each sub-area.

Fishbone Chart - Problems with Airline Customer Service

Fishbone Chart - Problems with Getting to Work on Time Consider the everyday task of getting to work on time or arriving at your first class on time in the morning. Draw a fish-bone chart showing reasons why you might arrive late in the morning. 4 M: Method, Material, Machinery, Manpower

Flowcharts Used to document the detailed steps in a process Often the first step in Process Re-Engineering

Checklist Simple data check-off sheet designed to identify type of quality problems at each work station; per shift, per machine, per operator

Control Charts Important tool used in Statistical Process Control The UCL and LCL are calculated limits used to show when process is in or out of control

Scatter Diagrams A graph that shows how two variables are related to one another Data can be used in a regression analysis to establish equation for the relationship

Linear regression - example No. of shipments: Weeks 1 – 8: All shipmnts: 23, 31, 28, 37, 35, 40, 41, 44 With defects: 5, 8, 6, 11, 10, 14, 12, 15 Employee turnover (new hires + terminations) 1, 3, 5, 2, 4, 6, 5, 5

Pareto Analysis Technique that displays the degree of importance for each element Named after the 19th century Italian economist Often called the 80-20 Rule Principle is that quality problems are the result of only a few problems e.g. 80% of the problems caused by 20% of causes

Pareto Analysis Develop a Pareto analysis of the following reasons of delay in a production process. What do you conclude? Reason for Delay Frequency Awaiting engineering decision 11 No schematic available 10 Test equipment down 22 Delay in inspection 15 Inadequate parts 40 Lack of personnel available 3

Pareto Analysis of Wine Glass Defects (Total Defects = 77)

Histograms A chart that shows the frequency distribution of observed values of a variable like service time at a bank drive-up window Displays whether the distribution is symmetrical (normal) or skewed

Quality Awards and Standards Malcolm Baldrige National Quality Award The Deming Prize ISO 9000 Certification ISO 14000 Standards

MBNQA- What Is It? Award named after the former Secretary of Commerce – Reagan Administration Intended to reward and stimulate quality initiatives Given to no more that two companies in each of three categories; manufacturing, service, and small business Past winners; FedEx, 3M, IBM, Ritz-Carlton Typical winners have scored around 700 points

The Deming Prize Given by the Union of Japanese Scientists and Engineers since 1951 Named after W. Edwards Deming who worked to improve Japanese quality after WWII Not open to foreign companies until 1984 Florida Power & Light was first US company winner

ISO Standards ISO 9000 Standards (published in 1987): Certification developed by International Organization for Standardization Set of internationally recognized quality standards Companies are periodically audited & certified ISO 9000:2000 Quality Management Systems (QMS) – Fundamentals and Standards ISO 9001:2000 QMS – Requirements (customer) ISO 9004:2000 QMS - Guidelines for Performance ISO 14000: Focuses on a company’s environmental responsibility

ISO Standards (1) Design/Development -> (2) Procurement -> (3) Production -> (4) Installation -> (5) Servicing ISO 9001: 2000 (1)  (5) ISO 9002, ISO 9003: withdrawn, incorporated into ISO 9001: 2000 ISO 10011: Guidelines for Auditing & Quality Management

Quality Gurus Walter A. Shewhart W. Edwards Deming Joseph M. Juran Armand V. Feigenbaum Phillip Crosby Kaoru Ishikawa Genichi Taguchi

Why TQM Efforts Fail Lack of a genuine quality culture Lack of top management support and commitment Over- and under-reliance on SPC methods