1. Quality BA 339 Mellie Pullman

2. Managing Quality Quality defined Quality assurance  Continuous improvement tools  Statistical quality control Total cost of quality

3. Judging Fitness for Use What are desired benefits received by the customer from the product?

4. Quality Specifications Design quality: Inherent value of the product in the marketplace  Dimensions include: Performance, Features, Reliability, Durability, Serviceability, Response, Aesthetics, and Reputation. Conformance quality: Degree to which the product or service design specifications are met Quality as fitness for use Quality as excellence

5. Common Improvement Tools Process mapping Cause and effect diagrams (aka “Fishbone” or Ishikawa diagrams) Check sheets Pareto analysis Run charts and scatter plots Bar graphs Histograms

6. Cause and Effect Diagram ASKS: What are the possible causes? Root cause analysis — open and narrow phases

7. Generic C&E Diagram

8. Problem: Late Room Service No one is sure why, but plenty of opinions “Management by Fact” CI Tools we will use:  Fishbone diagram  Check sheets  Pareto analysis

9. Check Sheets Event:Day 1Day 2Day 3 Food not readyII I Elevator delayedllllllllllll Too few runnersII No cartsIII

10. Pareto Analysis (sorted histogram) Late Elevator Late food Lacking cart Few runners Other (160) 100 85 70 65

11. Percent of each out of 480 total incidents... Late elevator 21% Late food 18% Late cart 15% Runners 14% Other 33%

12. The PDCA Cycle Plan Do Check Act

13. Inspect every item Expensive to do Testing can be destructive, should be simply unnecessary Statistical techniques Statistical process control (SPC) Acceptance Sampling Discovering “problems”

14. Costs of Quality: Four Sources Appraisal Costs Internal Failure Costs External Failure Costs Prevention Costs

15. External Failure Costs Appraisal Costs Prevention Costs Internal Failure Costs Costs of Quality Costs of Poor Quality Rule-of-Thumb: $1 spent in prevention leads to $10 of saved internal, external, and appraisal costs.

16. Cost of Quality End user’s hand Warranty cost Loss of market share Reputation Own process Next process End of the line Final inspection Defects found at Cost to the company Impact to the company Very minor Minor delay Some rework Rework (mat’l, labor, capacity, etc) Reschedule of work Significant rework Delivery delay Inspection costs

17. Hidden Costs of Poor Quality Lost sales Paperwork errors Lost discounts Delays Obsolete inventory Damaged goods Extra process capacity Premium freight costsOvertime to correct errors Process downtime Extra inventory Loss of good will Reprocessing Customer returns Sorting inspection Warranty expenses Rejects Customer allowancesIncorrect orders shipped

18. Total Quality Costs: “Quality is Free”

19. The Cost/Productivity Advantage BeforeAfter ImprovementImprovement Scrap rate15%5% Order size100100 Number produced115105 Production costs @ $10 per unit$1,150$1,050 Sales revenue @ $15 per unit$1,500$1,500 Profit$ 350$ 450

20.  Category 1 - Leadership 110 points  Category 2 - Strategic Planning 80 points  Category 3 - Customer and Market Focus 80 points  Category 4 - Information and Analysis 80 points  Category 5 - Human Resource Focus 100 points  Category 6 - Process Management 100 points  Category 7 - Business Results 450 points Criteria for Performance Excellence

21. ISO 9000 & 14000 Series of standards agreed upon by the International Organization for Standardization (ISO) More than 100 countries involved A prerequisite for global competition?

22. Quality Awards & Programs Malcom Baldridge: Most extensive  Focus: customer satisfaction & quality ISO 9000: Quality standards requiring companies to “say what they do and do what they say”  Focus: conformance to specs, customer requirements, continuous improvement, leadership ISO 14000: Environmental standards requiring companies to keep track of their raw materials use, their generation, treatment, and disposal of hazardous materials.  Focus: performance improvement, labeling and life cycle assessment Hot!

23. Question? What is the relationship between quality & environmental performance?