1. Managing Quality

2. Quality and Strategy Defining Quality Implications of Quality
Cost of Quality (COQ)
Ethics and Quality Management

3. International Quality Standards
ISO 9000
ISO14000
Think!! Why Quality Standards
Are Important ?

4. You should have done couple of them in prerequisite!
Total Quality Management
Continuous Improvement
Six Sigma
Employee Empowerment
Benchmarking
Just-in-Time (JIT)
Taguchi Concepts
Knowledge of TQM Tools

5. Tools of TQM Check Sheets Scatter Diagrams Cause-and-Effect Diagrams
Pareto Charts
Flowcharts
Histograms
Statistical Process Control (SPC)

6. The Role of Inspection TQM in Services When and Where to Inspect
Source Inspection
Service Industry Inspection
Inspection of Attributes versus Variables
TQM in Services

7. Define quality and TQM
Describe the ISO international quality standards
Explain how benchmarking is used
Use the seven tools of TQM

8. Quality and Strategy –
Managing quality supports differentiation, low cost, and response strategies
Quality helps firms increase sales and reduce costs
Building a quality organization is a demanding task

9. Strategic Implications of TQM
Strong leadership
Goals, vision, or mission
Operational plans and policies
Mechanism for feedback

10. Two Ways Quality Improves Profitability –
Improved response
Flexible pricing
Improved reputation
Sales Gains via
Improved Quality
Increased Profits
Increased productivity
Lower rework and scrap costs
Lower warranty costs
Reduced Costs via
Figure 6.1

11. The Flow of Activities –
Organizational Practices
Leadership, Mission statement, Effective operating procedures, Staff support, Training
Yields: What is important and what is to be accomplished
Quality Principles
Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQM
Yields: How to do what is important and to be accomplished
Employee Fulfillment
Empowerment, Organizational commitment
Yields: Employee attitudes that can accomplish what is important
Customer Satisfaction
Winning orders, Repeat customers
Yields: An effective organization with a competitive advantage

12. Defining Quality –
The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs
American Society for Quality

13. Different Views – Think why conformance is important – link with next slide!!
User-based – better performance, more features
Manufacturing-based – conformance to standards, making it right the first time

14. Quality of Conformance
Making sure a product or service is produced according to design
if new tires do not conform to specifications, they wobble
if a hotel room is not clean when a guest checks in, the hotel is not functioning according to specifications of its design

15. Meaning of Quality: Consumer’s Perspective –Discuss - how quality can be different for different people (e.g. their needs)
Fitness for use
how well product or service does what it is supposed to
Quality of design
designing quality characteristics into a product or service
A Mercedes and a Ford are equally “fit for use,” but with different design dimensions

16. Implications of Quality –
Company reputation
Perception of new products
Employment practices
Supplier relations
Global implications
Improved ability to compete

17. Key Dimensions of Quality – Can you add more to this slide – You know more 
Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality
Value 7

18. Dimensions of Quality: Manufactured Products
Performance
basic operating characteristics of a product; how well a car is handled or its gas mileage
Features
“extra” items added to basic features, such as a stereo CD or a leather interior in a car
Reliability
probability that a product will operate properly within an expected time frame; that is, a TV will work without repair for about seven years

19. Dimensions of Quality: Manufactured Products (cont.)
Conformance
degree to which a product meets pre–established standards
Durability
how long product lasts before replacement
Serviceability
ease of getting repairs, speed of repairs, courtesy and competence of repair person

20. Dimensions of Quality: Manufactured Products (cont.)
Aesthetics
how a product looks, feels, sounds, smells, or tastes
Safety
assurance that customer will not suffer injury or harm from a product; an especially important consideration for automobiles
Perceptions
subjective perceptions based on brand name, advertising, and the like

21. Cost of Quality Cost of Achieving Good Quality Prevention costs
costs incurred during product design
Appraisal costs
costs of measuring, testing, and analyzing
Cost of Poor Quality
Internal failure costs
include scrap, rework, process failure, downtime, and price reductions
External failure costs
include complaints, returns, warranty claims, liability, and lost sales

22. Prevention Costs Quality planning costs Product-design costs
costs of developing and implementing quality management program
Product-design costs
costs of designing products with quality characteristics
Process costs
costs expended to make sure productive process conforms to quality specifications
Training costs
costs of developing and putting on quality training programs for employees and management
Information costs
costs of acquiring and maintaining data related to quality, and development of reports on quality performance

23. Appraisal Costs Inspection and testing
costs of testing and inspecting materials, parts, and product at various stages and at the end of a process
Test equipment costs
costs of maintaining equipment used in testing quality characteristics of products
Operator costs
costs of time spent by operators to gather data for testing product quality, to make equipment adjustments to maintain quality, and to stop work to assess quality

24. Internal Failure Costs
Scrap costs
costs of poor-quality products that must be discarded, including labor, material, and indirect costs
Rework costs
costs of fixing defective products to conform to quality specifications
Process failure costs
costs of determining why production process is producing poor-quality products
Process downtime costs
costs of shutting down productive process to fix problem
Price-downgrading costs
costs of discounting poor-quality products—that is, selling products as “seconds”

25. External Failure Costs
Customer complaint costs
costs of investigating and satisfactorily responding to a customer complaint resulting from a poor-quality product
Product return costs
costs of handling and replacing poor-quality products returned by customer
Warranty claims costs
costs of complying with product warranties
Product liability costs
litigation costs resulting from product liability and customer injury
Lost sales costs
costs incurred because customers are dissatisfied with poor quality products and do not make additional purchases

26. Hidden costs of poor Quality

27. Costs of Poor Process Performance
Defects: Any instance when a process fails to satisfy its customer.
Prevention costs are associated with preventing defects before they happen.
Appraisal costs are incurred when the firm assesses the performance level of its processes.
Internal failure costs result from defects that are discovered during production of services or products.
External failure costs arise when a defect is discovered after the customer receives the service or product.

28. How can we Improve a Process?
Reduce errors
Meet or exceed expectations of internal/external customers
Make the process safer
Make the process more satisfying to the person doing it.

30. Leaders in Quality W. Edwards Deming 14 Points for Management
Joseph M. Juran Top management commitment, fitness for use
Armand Feigenbaum Total Quality Control
Philip B. Crosby Quality is Free (Why he said that), zero defects

31. Ethics and Quality Management
Managers must deliver healthy, safe, quality products and services
Poor quality risks injuries, lawsuits, recalls, and regulation
Organizations are judged by how they respond to problems

32. Encompasses entire organization, from supplier to customer
TQM
Encompasses entire organization, from supplier to customer
Stresses a commitment by management to have a continuing, companywide drive toward excellence in all aspects of products and services that are important to the customer

33. Another way to put it
At it’s simplest, TQM is all managers leading and facilitating all contributors in everyone’s two main objectives:
1) total client satisfaction through quality products and services; and
(2) continuous improvements to processes, systems, people, suppliers, partners, products, and services.

34. Seven Concepts of TQM Continuous improvement Six Sigma
Employee empowerment
Benchmarking
Just-in-time (JIT)
Taguchi concepts
Knowledge of TQM tools

35. Continuous Improvement
Represents continual improvement of all processes
Involves all operations and work centers including suppliers and customers
People, Equipment, Materials, Procedures

36. Employee Empowerment
Getting employees involved in product and process improvements
85% of quality problems are due to process and material
Techniques
Build communication networks that include employees
Develop open, supportive supervisors
Move responsibility to employees
Build a high-morale organization
Create formal team structures

37. Benchmarking
Selecting best practices to use as a standard for performance
Determine what to benchmark
Collect and analyze benchmarking information
Take action to match or exceed the benchmark

38. Is Resolving Customer Complaints Important. Some best practices
Is Resolving Customer Complaints Important ? Some best practices! (Can you think of any other  ?)
Make it easy for clients to complain
Respond quickly to complaints
Resolve complaints on first contact
Use computers to manage complaints
Recruit the best for customer service jobs

39. Just-in-Time (JIT)
Relationship to quality?

40. Just-in-Time (JIT) Allows reduced inventory levels
Inventory costs money and hides process and material problems
Encourages improved process and product quality

41. Tools of TQM – Tools for Generating Ideas Tools to Organize the Data
Check sheets
Scatter diagrams
Cause-and-effect diagrams
Tools to Organize the Data
Pareto charts
Flowcharts
Tools for Identifying Problems
Histogram
Statistical process control chart

42. Statistical Process Control (SPC)
Uses statistics and control charts to tell when to take corrective action
Drives process improvement

43. An SPC Chart Plots the percent of free throws missed
Upper control limit
Coach’s target value
Lower control limit
Game number
| | | | | | | | |
20%
10% 0%
Figure 6.8

44. Inspection
Involves examining items to see if an item is good or defective
Detect a defective product
Does not correct deficiencies in process or product
It is expensive
Issues
When to inspect
Where in process to inspect

45. When and Where to Inspect
At the supplier’s plant while the supplier is producing
At your facility upon receipt of goods from the supplier
Before costly or irreversible processes
During the step-by-step production process
When production or service is complete
Before delivery to your customer
At the point of customer contact

46. Source Inspection Also known as source control
The next step in the process is your customer
Ensure perfect product to your customer

47. Service Industry Inspection
Organization
What is Inspected
Standard
Hotel
Reception desk
Doorman
Room
Minibar
Use customer’s name
Greet guest in less than 30 seconds
All lights working, spotless bathroom
Restocked and charges accurately posted to bill
Table 6.5

48. Service Industry Inspection
Organization
What is Inspected
Standard
Hospital
Billing
Pharmacy
Lab
Nurses
Admissions
Accurate, timely, and correct format
Prescription accuracy, inventory accuracy
Audit for lab-test accuracy
Charts immediately updated
Data entered correctly and completely
Table 6.5

49. Service Industry Inspection
Organization
What is Inspected
Standard
Restaurant (Add More under what is inspected & standard )
Waiter
Knows and suggest specials, desserts
Table 6.5

50. Service Industry Inspection
Organization
What is Inspected
Standard
Department Store
Display areas
Stockrooms
Salesclerks
Attractive, well-organized, stocked, good lighting
Rotation of goods, organized, clean
Neat, courteous, very knowledgeable
Table 6.5

51. Service Specifications at UPS

52. Determinants of Service Quality
Reliability
Consistency of performance and dependability
Responsiveness
Willingness or readiness of employees
Competence
Required skills and knowledge
Access
Approachability and ease of contact
Courtesy
Politeness, respect, consideration, friendliness
Communication
Keeping customers informed
Credibility
Trustworthiness, believability, honesty
Security
Freedom from danger, risk, or doubt
Understanding/ knowing the customer
Understand the customer’s needs
Tangibles
Physical evidence of the service
Table 6.5
© 2011 Pearson Education, Inc. publishing as Prentice Hall

53. Long Waiting Times May Indicate Need for Service Process Redesign (Think – what you can do to redesign following process?)

54. Service Recovery Strategy – (Think - why recovery strategy is important? What is its relationship with Productivity & Quality?)
Managers should have a plan for when services fail
Marriott’s LEARN routine
Listen
Empathize
Apologize
React
Notify

55. Questions - When Developing Strategies to Improve Service Productivity
How to transform inputs into outputs efficiently?
Will improving productivity hurt quality?
Will improving quality hurt productivity?
Add other question 

57. Managing for Productivity
WHAT IS PRODUCTIVITY?
Productivity is defined as outputs divided by inputs
where: outputs are the goods and services produced, and inputs are labor, capital, materials, and energy
Productivity is important because it determines whether a company will make a profit and affects a country’s standard of living
Maintaining productivity depends on control

58. Managing for Productivity
Managing for Productivity and Results

59. Control: When Managers Monitor Performance –
WHY IS CONTROL IMPORTANT?
Control is making something happen the way it was planned to happen, while controlling is monitoring performance, comparing it with goals, and taking corrective action as needed
Recall that:
-planning is setting goals and deciding how to achieve them
-organizing is arranging tasks, people, and other resources to accomplish the work
-leading is motivating people to work hard to achieve the organization’s goals
-controlling is making sure performance meets objectives

60. Why Control is Needed ? There are six reasons why control is needed:
1. To adapt to change & uncertainty - organizations need to be able to deal with change and uncertainty in the environment
2. To discover irregularities and errors - without checks and balances, companies might not survive
3. To reduce costs, increase productivity, or add value - control systems can reduce costs, increase output, and add value to a product

61. 4. To detect opportunities - controls can help firms identify opportunities that might otherwise go unnoticed
5. To deal with complexity - controls help firms deal with the complexities of multiple product lines, customer bases, and so on
6. To decentralize decision making & facilitate teamwork - controls allow top managers to decentralize control to lower levels and encourage teamwork
Now think why these six pointers are important & how they can help in improving productivity/quality!! E.g. #1 is about managing change! Why is that important?
Tip: Markets are dynamic (change in constant)!
Think about all pointers, please!

62. Four steps in the control process: Set standard, measure performance, compare them, if performance greater than standard - maybe upgrade your standard!
1. Establish Standards
The desired performance level for a given goal is a control standard, or performance standard
Standards can be broad or narrow
2. Measure Performance
Performance is measured using three sources: written reports, oral reports, and personal observation

63. 3. Compare Performance To Standards
Measured performance is compared to established standards
The amount of deviation acceptable depends on the predetermined range of variation
Some firms follow management by exception where managers are informed of a situation only if data show a significant deviation from standards
4. Take Corrective Action, If Necessary
Firms can make no changes to the current situation, recognize and reinforce positive performance, or take action to correct negative performance

64. Steps in the Control Process

65. Quality and Productivity helps you in achieving market gains & cost savings! What else? 
I. Market Gains
Improved:
Performance
Reliability
Features
etc.
Improved reputation for quality
Increased Market share
Increased Profits
Higher Prices

66. Quality and Productivity
II. Cost Savings
Increased
productivity
Lower manufacturing costs
Improved reliability or conformance
Lower rework and scrap costs
Increased Profits
Lower service costs
Lower warranty and product liability costs

67. Not just Quality but Manage Total Quality (TQM) I hope we got fair overview of Productivity & Quality Management Please read around the concepts 

68. Target is to achieve Quality Throughout
“A Customer’s impression of quality begins with the initial contact with the company and continues through the life of the product.”
Customers look to the total package - sales, service during the sale, packaging, deliver, and service after the sale.
Quality extends to how the receptionist answers the phone, how managers treat subordinates, how courteous sales and repair people are, and how the product is serviced after the sale.
“All departments of the company must strive to improve the quality of their operations.”

69. Leaving you with an example