Management of Quality Chapter 9 PP June 27, 2012

Learning objectives LO 1 – define the term quality LO 2 – understand the evolution of quality management LO 3 – be familiar with most common quality tools LO 4 – understand the cost of quality

What is Quality? Oxford American Dictionary – a degree or level of excellence American Society for Quality – the totality of features and characteristics that satisfy needs without deficiencies

What is Quality? Consumer’s perspective – Fitness for use – Quality of design

What is Quality? Manufacturer’s perspective – Performance mpg – Features Sirrius, OnStar – Reliability Expected life time – Conformance Meets standards

What is Quality? Manufacturer’s perspective – Durability LL Bean boots – Serviceability Repair “experience” – Aesthetics looks – Safety customers – Perceptions Brand and image

What is Quality? Service’s perspective – Time and timeliness When customer wants it – Completeness Dell – Courtesy Shown customers – Consistency – Accessibility and convenience – Accuracy – Responsiveness

What is Quality? Service’s perspective – Consistency McDonalds – Accessibility and convenience Return calls Sears!!!! – Accuracy First time, every time – Responsiveness To your satisfaction?

What is Quality At the end of the day…… – Customer’s and producer’s perspectives depend on each other Producer’s perspective: – production process and COST Customer’s perspective: – fitness for use and PRICE Customer’s view must dominate

The Gurus Deming – Quality up, costs up – Quality down, costs down – Quality up, costs down

The Gurus Deming – Open system – Focus on quality less waste rework lower turnover greater customer loyalty – Focus on costs quality declines opposite of above

The Gurus 14 Principles – #3: “quality at the source” 7 Deadly sins – Lack of constancy of purpose – Emphasis on short-term profits – Performance reviews, merit rating, etc – Mobility of management – Running a company on visible figures alone – Excessive medical costs – Excessive costs of warranty

The Deming (PDCA) Cycle

Quality Tools Process flow chart

Quality Tools Process flow chart Check sheet Histogram Pareto analysis

Quality Tools - Pareto Analysis

Quality Tools Process flow chart Check sheet Histogram Pareto analysis Scatter diagram Process control chart

Quality Tools – Control Chart 2 17

Quality Tools Process flow chart Check sheet Histogram Pareto analysis Scatter diagram Process control chart Fishbone (“cause and effect”)

Quality Tools – Fishbone

Quality Awards Baldrige Award k k

Quality Certification ISO 9000 ISO ISO ISO 26000

Six Sigma measurement-based strategy for process improvement and variation reduction Focus on: – improving existing system – developing new processes or products at Six Sigma quality levels. $230,000 savings per project – 4-6 projects per year. – General Electric $10 billion during the first fivea.

Six Sigma Projects Large chemical site had significant losses due to power outages Large number of changes from client after approving engineering design Amount of product out of spec and being automatically removed is high Sharp differences in sales performance of people?

Variation in Sales Performance Define: Why is there such a difference is the sales performance of people? Measure: Top people have 10X volume of the bottom 25%. – Failure to meet sales quotas is a defect.

Variation in Sales Performance Analyze: Education, training, time in job, product line, sales area, profiles. Improve: Able to identify by profile 72% of the top sales people. – Use this tool to select new people into this function. Control: Use profiles for new hires and continue to monitor performance levels.

Six Sigma

Why bother??? cost of doing things right 3 to 4% of revenues cost of doing things wrong 20 to 35% of revenues And then there’s this………