Quality Management January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

What is Quality? January 2012 Quality Management

January 2012 Quality Management

Quality Quality has been defined in a number of ways. When viewed from a consumer’s perspective, it means meeting or exceeding customer expectations. January 2012 Quality Management

Dimensions of Quality Dimension Product example Mobile phone   Performance Signal, Battery charge Features Internet, camera,...... Conformance Workmanship Reliability Mean-time-to-failure Durability Useful life Serviceability Ease of repair Response Courtesy of dealer Aesthetics Surface finish Reputation Customer report ranking January 2012 Quality Management

Two Views of Quality How well the features of a product or service meet the customer need and therefore provide them with satisfaction => higher quality costs (usually) more Freedom from failures => higher quality costs (usually) less January 2012 Quality Management

Total Quality Total quality is an approach to doing business that attempts to maximize an organization’s competitiveness through the continual improvement of the quality of its products, services, people, processes, and environments. January 2012 Quality Management

Managing for Quality (Juran) A set of universal methods that any organization, whether a business, an agency, a university or a hospital can use to attain superior results by designing, continuously improving and ensuring that all products, services and processes meet customer and stakeholder needs. January 2012 Quality Management

Juran´s trilogy Designing and planning for Quality Compliance, controlling and assuring quality Improving quality January 2012 Quality Management

Juran´s trilogy Creating processes to design goods and services to meet needs of the stakeholders (internal and external). Understand needs of customers Creating processes to control quality. Ensure compliance to design criteria Creating a systematic approach to improve continuously. Failures must be discovered and remedied. => Create functions and skills to do the things above January 2012 Quality Management

Financial trilogy Financial planning Financial control Annual financial and operational budgets (revenues, costs and profits) Financial goals for the organization and its divisions Financial control Evaluation of actual financial performance and taking action on the differences Cost control, expense control, risk management, inventory control, etc. Financial improvement Improvement of financial results Cost reduction projects, new facilities, new product development, M &A, joint ventures, etc January 2012 Quality Management

Quality planning Establish the project and design goals Identify the customers Discover the customer needs Develop the product or service features Develop the process features Develop the controls and transfer to operations => Customer – customer needs- product features – process features- process control features January 2012 Quality Management

Quality planning tools Benchmarking Brainstorming Competitive analysis Control charts FMEA Flow diagram Process capability Scatter diagram Etc. January 2012 Quality Management

Quality Control Assure Repeatable and Compliant Processes January 2012 Quality Management

Quality Control Tools SPC (Statistical Process Control) Problem Solving methods Poka Yoke January 2012 Quality Management

Quality Improvement Create breakthroughs in Performance January 2012 Quality Management

Quality Improvement Tools Six Sigma RDMAIC process Recognize Define Measure Analyze Improve Control January 2012 Quality Management

Juran´s trilogy January 2012 Quality Management

The Total Quality Approach to Quality Management Key characteristics of the total quality approach are as follows: strategically based, customer focus, long-term commitment, teamwork, employee involvement and empowerment, continual process improvement, education and training, January 2012 Quality Management

The Total Quality Approach to Quality Management The rationale for total quality can be found in the need to compete in the global marketplace. Countries that are competing successfully in the global marketplace are seeing their quality of living improve. Those that cannot are seeing theirs decline. January 2012 Quality Management

The Total Quality Pioneers W. Edward Deming is best known for his Fourteen Points, the Deming Cycle Joseph M. Juran is best known for the Pareto Principle, and the Juran Trilogy. Armand V. Feigenbaum is best known for his Total Quality Control. Philip B. Crosby is best known for his Quality is Free and the Zero Defects program January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Quality and Global Competitiveness Several factors can inhibit competitiveness, including those related to business and government, family, and education. In a global marketplace quality is the key to competitiveness. Total Quality approach minimizes the Cost of Quality, making products or services more competitive January 2012 Quality Management

Costs of Quality COPQ Prevention Appraisal and inspection Internal failure External failure COPQ = Costs of Poor Quality COPQ January 2012 Quality Management

Prevention Costs Quality Planning activities Quality training FMEA analysis Control Plans Quality training Product design Verification January 2012 Quality Management

Appraisal and Inspection Costs Testing product Reviewing documents Inspecting equipment and supplies End of line inspection Product audits Etc. January 2012 Quality Management

Internal Failure Costs Rework on product Scrap of non conforming product Correcting database errors Stocking extra parts to replace defective components Etc, January 2012 Quality Management

External Failure Costs Warranty claims Investigating complaints January 2012 Quality Management

Direct Cost of Poor Quality (4 – 8% of Sales) Scrap Rework Warranty Customer Return Loss of Customer Loyalty Engineering change Excessive inventory Late delivery Excessive overtime Excessive employee turnover Expediting costs Indirect Cost of Poor Quality (15 – 25% of Sales) January 2012 Quality Management

Cost of Quality Total Failure Appraisal & Prevention 100% Costs Freedom from failures 100% Juran´s Cost of Quality January 2012 Quality Management

Cost of Quality Quality Costs Cost of Quality Excess Quality Junk Zone Profit Zone Customer Value of Quality 100% Freedom from Failures January 2012 Quality Management

Quality Cost as % of Sales January 2012 Quality Management

Cost distribution as a % of total cost of Quality Prevention 3,5 Appraisal 2,5 Internal 26 External 68 January 2012 Quality Management

COPQ - car recalls Here are the larger recent recalls, and these are just for October 2010- Nissan: 2.2 million vehicles worldwide (747,000 in the U.S.): ignition relay problem BMW: 130,000 vehicles: faulty fuel pump in the twin-turbo inline 6 Honda: 470,000 cars in the U.S.: faulty seal in master brake cylinder Mercedes-Benz: 85,000 E-Class cars: possible power steering connection fitting problem Toyota: 1.53 million cars worldwide (740,000 in the U.S.): faulty seal in master cylinder GM: 392,000 Chevrolet Impalas: faulty front seat-belt anchors. January 2012 Quality Management

COPQ – car recalls USA Automakers recalled about 15.5 million vehicles last year compared with 20 million in 2010, according to figures released on Friday by the National Highway Traffic Safety Administration. The figure was the fourth lowest in the last decade. January 2012 Quality Management

Investment in Quality Cost January 2012 Quality Management

Quality and Global Competitiveness The most important key in maximizing competitiveness is the human resource. The Competitive Edge is in the Quality of the People January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Strategic Management Strategic management is management that bases all actions, activities, and decisions on what is most likely to ensure successful performance in the marketplace. The two major components of strategic management are strategic planning and strategic execution. Part of strategic planning is thinking creatively to eliminate “sacred cows” that work against competitiveness. January 2012 Quality Management

Strategic planning Who are we? Where are we going? How will we get there? What do we hope to accomplish? What are our core competencies? What are our strengths and weaknesses? What are our opportunities and threats? January 2012 Quality Management

Core competencies Core competencies are things an organization does so well they can be viewed as providing a competitive advantage. January 2012 Quality Management

SWOT analysis SWOT analysis is defined as a structured approach to evaluating the strategic position of a business by identifying its strengths, weaknesses, opportunities and threats SWOT analysis identifies the core competencies of the organization January 2012 Quality Management

SWOT analysis Opportunities Threats Strengths Weaknesses => apply to External Factors Strengths Weaknesses => apply to Internal Factors January 2012 Quality Management

SWOT analysis January 2012 Quality Management

SWOT example January 2012 Quality Management

Strategic Management Strategies that organizations can adopt for gaining a sustainable competitive advantage are cost leadership, differentiation, and market-niche strategies. Total Quality can be the most effective cost leadership or differentiation strategy improve efficiency, cut costs continuous improvement of the product features January 2012 Quality Management

Strategic Execution Even the best strategic plan will serve no purpose unless it is effectively executed. January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Ethics Ethics is about doing the right thing within a moral framework. The most common impediment to ethical conduct is human nature because people tend to behave according to perceived personal interest. January 2012 Quality Management

Ethics The Total Quality approach cannot be successfully implemented in an organization that fails to subscribe to high standards of ethical behavior January 2012 Quality Management

Ethics Many of the fundamental elements of total quality depend on trust and ethical behavior, including communication, interpersonal relations, conflict management, problem solving, teamwork, employee involvement and empowerment, and customer focus. January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Partnerships may be formed internally (among departments) and Partnering Partnering means working together for mutual benefit. It involves pooling resources, sharing costs, and cooperating in ways that mutually benefit all parties involved in the partnership. Partnerships may be formed internally (among departments) and externally with suppliers, customers January 2012 Quality Management

Partnering with suppliers 85% of the added value comes from suppliers (automotive industry) Traditional model (based on price only) Total Quality model – partnership from design to delivery January 2012 Quality Management

Partnering with Customers The rationale for forming customer partnerships is customer satisfaction. The best way to ensure customer satisfaction is to involve customers as partners in the product development process. Doing so is, in turn, the best way to ensure competitiveness. Customer-defined quality is a fundamental aspect of total quality. January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics & Corporate Social Responsibility Partnering and Strategic Alliances Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Quality Culture One of the greatest obstacles in implementing Total Quality is the cultural behavior Why? Successful Total Quality implementation requires cultural change People do not like to change! Resisting change is natural human behavior Fear Uncertainty Loss of control More work …… Emotional transition January 2012 Quality Management

Total Quality culture Short vs long term objectives Managers as coaches vs bosses Finger pointing vs problem solving Supplier cooperation Continuous improvement January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Customer Satisfaction ( Every organization has both internal and external customers. An external customer is the one referred to in the traditional definition. An internal customer is any employee whose work depends on that of employees whose work precedes his or hers. January 2012 Quality Management

Customer Satisfaction In a total quality setting, customers define quality. Therefore, customer satisfaction must be the highest priority. Customer satisfaction is achieved by producing high-quality products that meet or exceed expectations. =>It must be renewed with each purchase. January 2012 Quality Management

Customer Satisfaction The key to establishing a customer focus is to put employees in touch with customers so that customer needs are known and understood. Once the customer needs and expectations are defined they need to be translated into product specification. One of the tools to do so is Quality Function Deployment (QFD) January 2012 Quality Management

Quality Function Deployment (QFD) Quality Function Deployment (QFD) is a structured approach to defining customer needs or requirements and translating them into specific plans to produce products to meet those requirements. The "voice of the customer" is the term to describe these stated and unstated customer needs or requirements. The voice of the customer is captured in a variety of ways: direct discussion, surveys, customer specifications, observation, warranty data, field reports, etc. January 2012 Quality Management

Quality Function Deployment (QFD) This understanding of the customer requirements is then summarized in a product planning matrix or "house of quality". These matrices are used to translate higher level "what's" or requirements into lower level "how's" or means to satisfy the requirements January 2012 Quality Management

House of Quality (computer mouse) January 2012 Quality Management

QFD example – car door January 2012 Quality Management

January 2012 Quality Management

January 2012 Quality Management

QFD Six matrices to compare: Customer requirements with related technical features Technical features with applied technologies Applied technologies with manufacturing processes Manufacturing processes with quality control processes (to optimize processes) Quality control processes with statistical process control processes Statistical control parameters with specifications January 2012 Quality Management

QFD Matrices January 2012 Quality Management

Kano model The Kano model is a theory of product development and customer satisfaction developed in the 80s by Professor Noriaki Kano which classifies customer preferences into following categories: Must-Be One-Dimensional Attractive January 2012 Quality Management

Kano model Must-be Quality These attributes are taken for granted when fulfilled but result in dissatisfaction when not fulfilled. One-dimensional Quality These attributes result in satisfaction when fulfilled and dissatisfaction when not fulfilled. These are attributes that are spoken of and ones which companies compete for. Attractive Quality These attributes provide satisfaction when achieved fully, but do not cause dissatisfaction when not fulfilled. These are attributes that are not normally expected,. . An example of this would be package of milk that leaks. Customers are dissatisfied when the package leaks, but when it does not leak the result is not increased customer satisfaction. Since customers expect these attributes and view them as basic, then it is unlikely that they are going to tell the company about them when asked about quality attributes An example of this would be a milk package that is said to have ten percent more milk for the same price will result in customer satisfaction, but if it only contains six percent then the customer will feel misled and it will lead to dissatisfaction. For example, a thermometer on a package of milk showing the temperature of the milk. Since these types of attributes of quality unexpectedly delight customers, they are often unspoken January 2012 Quality Management

Kano model January 2012 Quality Management

Customer expectations vs. customer satisfaction Actual performance Customer satisfaction Product A Product B January 2012 Quality Management

Customer Satisfaction, Retention and Loyalty Measuring customer satisfaction alone is not enough. => Many customers who found a defect can be satisfied. Organizations should, in addition, measure customer retention. It costs much more to find a new customer than to retain one. Customer loyalty January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Employee Empowerment Empowerment means engaging employees in the thinking processes of an organization in ways that matter Empowerment means giving employees ownership of their jobs ( they are the best experts) but it does not mean that managers abdicate their responsibility or authority Empowerment requires a change in organizational culture (resistance to change) January 2012 Quality Management

Empowerement Why empowerment? Vehicles: it is the best way to increase creative thinking resulting in enhancing an organization’s competitiveness. it can be an outstanding motivator. Vehicles: Quality circles Kaizen groups Etc. January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Good leaders overcome resistance to change Leadership and Change Leadership is the ability to inspire people to make a total, willing, and voluntary commitment to accomplishing or exceeding organizational goals. Good leaders overcome resistance to change Good leaders are committed to both the job to be done and the people who must do it. They are good communicators and they are persuasive. January 2012 Quality Management

Leadership and Change To facilitate change in a positive way, leaders: must have a clear vision and corresponding goals, exhibit a strong sense of responsibility, be effective communicators, have a high energy level, and have the will to change. January 2012 Quality Management

Commitment of Top Management Our feedbacks have made clear that the most influential factor in successful quality leadership has been the active participation of upper management. In fact to our knowledge, every successful quality revolution has included the active participation of upper management. We know of no exceptions. J.M.Juran January 2012 Quality Management

Commitment of Top Management It is not enough that top management commit themselves for life to product quality and productivity. They must know what it is they are committed to – i.e. what they must do. These obligations cannot be delegated. More resolutions or approval are not enough. W.Edwards Deming January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Team Building and Teamwork A team is a group of people with a common, collective goal. The rationale for the team approach to work is that “two heads are better than one” January 2012 Quality Management

Teamwork Quality Circles Kaizen Team oriented problem solving 8D methodology (Ford) January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Effective communication Communication is the transfer of a message that is both received and understood. Effective communication is a higher order of communication. It means the message is received, understood, and being acted on in the desired manner. Communication is the oil that keeps the total quality engine running. Without it, total quality breaks down. Communication is a process that involves message, sender, receiver, and medium January 2012 Quality Management

Effective communication In Total Quality, the success of the following elements is depending on effective communication: Customer focus Leadership Decision Making Teamwork Problem solving Employee empowerment January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Training January 2012 Quality Management

Training Training is an organized, systematic series of activities designed to enhance an individual’s work-related knowledge, skills, understanding, and motivation. . January 2012 Quality Management

Training Benefits of training Fewer production errors Increased productivity Improved quality Decreased turnover rate Improved safety and health Increased flexibility of employees Better response to change Improved communication Better teamwork January 2012 Quality Management

QM – Philosophy & Concepts The Total Quality Approach Quality and Global Competitiveness Strategic Management Ethics Partnering Quality Culture Customer Satisfaction Employee Empowerment Leadership and Change Teambuilding and Teamwork Effective Communication Education and Training January 2012 Quality Management

Total Quality Total quality is an approach to doing business that attempts to maximize an organization’s competitiveness through the continual improvement of the quality of its products, services, people, processes, and environments. January 2012 Quality Management