1. Chapter 6
Managing Quality

2. Outline Quality And Strategy Defining Quality
Why Quality is important?
Seven tools of TQM

3. 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

4. How Quality improves Profitability?

5. Ways Quality Improves Productivity
Improved response
Higher Prices
Improved reputation
Sales Gains
Improved Quality
Increased Profits
Increased productivity
Lower rework and scrap costs
Lower warranty costs
Reduced Costs
Figure 6.1

6. How do you define Quality?

7. 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

8. Different Views User-based – better performance, more features
Manufacturing-based – conformance to standards, making it right the first time
Product-based – specific and measurable attributes of the product

9. Implications of Quality
Company reputation
Perception of new products
Employment practices
Supplier relations
Product liability
Reduce risk
Global implications
Improved ability to compete

10. Malcom Baldrige National Quality Award
Established in 1988 by the U.S. government
Designed to promote TQM practices
Recent winners
The Bama Companies, Kenneth W. Monfort College of Business, Caterpillar Financial Services, Baptist Hospital, Clarke American Checks, Los Alamos National Bank

11. What are the costs of quality?

12. Costs of Quality Prevention costs - reducing the potential for defects
Appraisal costs - evaluating products, parts, and services
Internal failure - producing defective parts or service before delivery
External costs - defects discovered after delivery

13. Costs of Quality Total Cost Total Cost Quality Improvement
External Failure
Internal Failure
Prevention
Appraisal

14. TQM (Total Quality Management)
Refers to a quality emphasis that:
Encompasses entire organization, from
supplier to customer. And 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

15. Deming’s Fourteen Points (How he implemented TQM!?)
Create consistency of purpose
Lead to promote change
Build quality into the product; stop depending on inspection
Build long term relationships based on performance, not price
Continuously improve product, quality, and service
Start training
Emphasize leadership
Table 6.1

16. Deming’s Fourteen Points
Drive out fear
Break down barriers between departments
Stop haranguing workers
Support, help, improve
Remove barriers to pride in work
Institute a vigorous program of education and self-improvement
Put everybody in the company to work on the transformation
Table 6.1

17. We develop those into Seven Concepts of TQM
Continuous improvement
Six Sigma
Employee empowerment
Benchmarking
Just-in-time (JIT)
Taguchi concepts
Knowledge of TQM tools

18. 1- Continuous Improvement
Represents continual improvement of all processes
Involves all operations and work centers including suppliers and customers
People, Equipment, Materials, Procedures

19. Shewhart’s PDCA Model for Continuous Improvement
4. Act
Implement the plan
Plan
Identify the improvement and make a plan
3. Check
Is the plan working?
2. Do
Test the plan
Figure 6.3

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

21. 2-Six Sigma
Originally developed by Motorola, Six Sigma refers to an extremely high measure of process capability
A Six Sigma capable process will return no more than 3.4 defects per million operations (DPMO)
Highly structured approach to process improvement

22. Six Sigma Improvement Model
Define critical outputs and identify gaps for improvement
Measure the work and collect process data
Analyze the data
Improve the process
Control the new process to make sure new performance is maintained
DMAIC Approach

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

24. 3- 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

25. Quality Circles
Group of employees who meet regularly to solve problems
Trained in planning, problem solving, and statistical methods
Often led by a facilitator
Very effective when done properly

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

27. Use internal benchmarking if you’re big enough
Selecting best practices to use as a standard for performance
Use internal benchmarking if you’re big enough
Determine what to benchmark
Form a benchmark team
Identify benchmarking partners
Collect and analyze benchmarking information
Take action to match or exceed the benchmark

28. Best Practices for Resolving Customer Complaints
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

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

30. What is a “Just In Time” system? And How is it related to Quality?

31. 5-Just-in-Time (JIT): JIT cuts the cost of quality
JIT systems are designed to produce or deliver goods
as they are needed
Relationship to quality:
JIT cuts the cost of quality
JIT improves quality
Better quality means less inventory and better, easier-to-employ JIT system

32. Just-in-Time (JIT)
‘Pull’ system of production scheduling including supply management
Production only when signaled
Allows reduced inventory levels
Inventory costs money and hides process and material problems
Encourages improved process and product quality

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

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

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

36. Taguchi Concepts Most Quality problems are the result of poor product and process design.
Experimental design methods to improve product and process design
Identify key component and process variables affecting product variation

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

38. Tools of TQM
To empower employees and implement TQM as a continuing effort, everyone in the organization must be trained in the techniques of TQM.

39. 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
Flow charts
Tools for Identifying Problems
Histogram
Statistical process control chart

40. Seven Tools for TQM
(a) Check Sheet: An organized method of recording data / / / //
/ / /// /
// ///
// ////
/// // /
Hour
Defect A B C
Figure 6.5

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
Flow charts
Tools for Identifying Problems
Histogram
Statistical process control chart

42. Seven Tools for TQM
(b) Scatter Diagram: A graph of the value of one variable vs. another variable
Absenteeism
Productivity
Figure 6.5

43. 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
Flow charts
Tools for Identifying Problems
Histogram
Statistical process control chart

44. Seven Tools for TQM
(c) Cause and Effect Diagram: A tool that identifies process elements (causes) that might effect an outcome
Cause
Materials
Methods
Manpower
Machinery
Effect
Figure 6.5

45. Cause-and-Effect Diagrams
Inadequate
supply of magazines
Inadequate special meals on-board
Insufficient clean pillows
& blankets on-board
Material
Broken luggage carousel
Mechanical delay on plane
Deicing equipment not available
Machinery
Dissatisfied Airline Customer
Methods
Understaffed ticket counters
Understaffed crew
Poorly trained attendants
Manpower
Overbooking policies
Bumping policies
Mistagged bags
Poor check-in policies
Figure 6.6

46. 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
Flow charts
Tools for Identifying Problems
Histogram
Statistical process control chart

47. Seven Tools for TQM
(d) Pareto Charts: A graph to identify and plot problems or defects in descending order of frequency
Frequency
Percent
A B C D E
Figure 6.5

48. Pareto Charts Data for October 54 12 4 3 2 70 – – 100 – 93 60 – – 88
70 –
60 –
50 –
40 –
30 –
20 –
10 –
0 –
Frequency (number)
Causes and percent
Cumulative percent
Data for October
– 100
– 93
– 88
– 72
Room svc Check-in Pool hours Minibar Misc.
72% 16% 5% 4% 3% 12 4 3 2 54
Number of occurrences

49. 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
Flow charts
Tools for Identifying Problems
Histogram
Statistical process control chart

50. Seven Tools for TQM
(e) Flow Charts (Process Diagrams): A chart that describes the steps in a process
Figure 6.5

51. Sealing Weighing Labeling
Flow Charts
Packing and shipping process
Packing station
Sealing Weighing Labeling
Quick freeze storage
(60 Mins)
Storage
(4 to 6 hrs)
Shipping dock

52. 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
Flow charts
Tools for Identifying Problems
Histogram
Statistical process control chart

53. Seven Tools for TQM
(f) Histogram: A distribution showing the frequency of occurrence of a variable
Distribution
Repair time (minutes)
Frequency
Figure 6.5

54. Seven Tools for TQM
(g) Statistical Process Control Chart: A chart with time on the horizontal axis to plot values of a statistic
Upper control limit
Target value
Lower control limit
Time
Figure 6.5

55. Statistical Process Control (SPC)
Uses statistics and control charts to tell when to take corrective action
Drives process improvement
Four key steps
Measure the process
When a change is indicated, find the assignable cause
Eliminate or incorporate the cause
Restart the revised process

56. 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 6.7

57. 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

58. When and Where to Inspect?

59. 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 processes
When production or service is complete
Before delivery from your facility
At the point of customer contact

60. TQM In Services
Service quality is more difficult to measure than the quality of goods
Service quality perceptions depend on
Intangible differences between products
Intangible expectations customers have of those products

61. Determinants of Service Quality
Reliability
Responsiveness
Competence
Access
Courtesy
Communication
Credibility
Security
Understanding/ knowing the customer
Tangibles