1. BMM 3633 Industrial Engineering

2. Learning Objectives:  Define the meanings of product quality, cost of quality and quality conformance.  Describe the tools for problem solving and continuous improvement.  Develop a scatter diagram, pareto analysis, histogram, flowchart, and cause-and- effect diagram.

3. Contents:  Quality  Quality Gurus  Malcolm Baldrige National Quality Award  International Quality Standard  Total Quality Management (TQM)  Tools of TQM  Inspection

4. “Quality is never an accident; it is always the result of intelligent effort.” -John Ruskin-

5. There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible. -Henry Ford (1863-1947) American industrialist-

6. Quality is remembered long after the price is forgotten. Gucci Family Slogan The bitterness of poor quality remains long after low pricing is forgotten! Leon M. Cautillo The quality, not the longevity, of one's life is what is important. Martin Luther King, Jr.

7. Quality is the first priority!!! Quality but not quantity!!!

8. Quality Quality is… Judged by customer Meeting and exceeding customer needs Delighting the customer Customer satisfaction External customers – who buy and use a product or service. Internal customers – who are the next persons in the process

9. Definition of quality: Fitness for Use Conformance to Specifications Producing the Very Best Products Excellence in Products and Services Total Customer Satisfaction Exceeding Customer Expectations Quality (cont..)

10. Different Views of Quality 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 Quality (cont..)

11. Quality & Strategy Quality helps firms increase sales and reduce costs Quality (cont..)

12. Key Dimensions of Product Quality Performance – the basic operating characteristics of a product Features – the extra items added to the basic features Reliability – the probability that a product will operate properly within an expected time frame Conformance – the degree to which a product meets pre- established standard Durability – how long the product last; its lifespan before replacement Serviceability – the ease of getting repair, the speed of repairs, competence of repair person Aesthetics – how a product looks, feels, sounds, smells or tastes Safety – user protection before/during/after use Quality (cont..)

13. Costs of Quality Prevention costs - reducing the potential for defects (planning, design, process, training) Appraisal costs - evaluating products, parts, and services (inspection, testing, equipment, operator) Internal failure - producing defective parts or service before delivery (scrap, rework, process failure, downtime) External costs - defects discovered after delivery (complaints, returns, warranty claims, liability, lost sales) Quality (cont..)

14. Quality Gurus W. Edwards Deming – 14 Points for implementing quality, PDCA cycle Joseph M. Juran – Top management commitment, fitness for use Armand Feigenbaum – Total Quality Control Philip B. Crosby – Quality is Free, zero defects

15. Deming’s 14 points for Implementing Quality Improvement 1.Create consistency of purpose 2.Lead to promote change 3.Build quality into the product; stop depending on inspection 4.Build long term relationships based on performance, not price 5.Continuously improve product, quality, and service 6.Start training Quality Gurus (cont..)

16. 7.Emphasize leadership 8.Drive out fear 9.Break down barriers between departments 10.Stop haranguing workers 11.Support, help, improve 12.Remove barriers to pride in work 13.Institute a vigorous program of education and self- improvement 14.Put everybody in the company to work on the transformation Quality Gurus (cont..) Deming’s 14 points for Implementing Quality Improvement

17. Malcolm Baldrige National Quality Award Established in 1988 by the U.S. government Designed to promote TQM practices (awarded annually to organizations that exceed in quality mgmt and succeed in related performance criteria such as profitability and market share) Award criteria Leadership Information and analysis Strategic quality planning Human resource development & management Process management Quality & operational results Customer focus & satisfaction

18. International Quality Standard International Organization for Standardization (ISO) – non-governmental organization headquartered in Geneva ISO 9000 – published in 1978, reviewed every 5 years is a procedure/system for certifying suppliers to ensure they meet international standard for quality mgmt. ISO 9000 certified – involves documenting quality procedures, on-site assessment, ongoing series of audit of products or services. ISO 9001:2000 – revised standard which emphasis on leadership by top management and customer satisfaction rather than documented procedures

19. ISO 14000 Environmental Standard ISO 14000 – an environmental management standard established by the International Standards Organization (ISO) Core elements Environmental management Auditing Performance evaluation Labeling Lifecycle assessment

20. 7 Concepts of TQM Continuous Improvement Six Sigma Employee Empowerment Benchmarking Just-in-Time Taguchi Concept Knowledge of TQM Tools – 7 Tools of TQM Total Quality Management

21. Continuous Improvement Represents continual improvement of all processes Involves all operations including suppliers and customers that covers People, Equipment, Materials, and Procedures Walter Shewhart develop a circular model known as PDCA to stress the continuous nature of the improvement process. Japanese use the word ‘Kaizen’ to describe continuous or ongoing process improvement Total Quality Management (cont..)

22. Shewhart’s PDCA Model Total Quality Management (cont..)

23. Six Sigma Originally developed by Motorola In statistical sense, Six Sigma refers to an extremely high measure of process capability (99.9997% accuracy) A Six Sigma capable process will return no more than 3.4 defects per million operations (DPMO) Highly structured approach to process improvement Six Sigma improvement model known as DMAIC Total Quality Management (cont..)

24. Six Sigma is a program designed to reduce defects to help lower costs, save time, and improve customer satisfaction. 3 key players in the Six Sigma program Master Black Belts – full time teacher who have extensive training in statistics, quality tools, and leadership Black Belts – project team leaders Green Belts – spend part of their time on team projects and the rest on their normal jobs. Total Quality Management (cont..)

25. 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 Total Quality Management (cont..)

26. Quality Circle / Employee Empowerment 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 Total Quality Management (cont..)

27. Benchmarking Selecting best practices to use as a standard for performance Benchmarking procedures/steps, Determine what to benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking information Take action to match or exceed the benchmark Use internal benchmarking if you’re big enough Total Quality Management (cont..)

28. Just-in-Time JIT systems are designed to produce or deliver goods just as they are needed Related to quality in three ways; JIT cuts the cost of quality – scrap, rework, inventory investment, damage costs are directly related to inventory on hand JIT improves quality – limits the number of potential sources of error Better quality means less inventory and better, easier- to-employ JIT system Total Quality Management (cont..)

29. Taguchi Concepts Experimental design methods (DOE) to improve product and process design Identify key component and process variables affecting product variation Three concepts Quality robustness Quality robustness - Ability to produce products uniformly in adverse manufacturing and environmental conditions Quality loss function Quality loss function – mathematical function that identifies all costs connected with poor quality (repair, scrap, warranty, etc) Target-oriented quality Target-oriented quality – a philosophy of continuous improvement to bring the product exactly on target Total Quality Management (cont..)

30. Quality Loss Function

31. 7 Tools of TQM Check Sheet Scatter Diagram Cause-and-Effect Diagram Pareto Chart Flow Chart Histogram Statistical Process Control Chart (SPC chart) Tools of TQM

32. 1. Check Sheet: An organized method of recording data Tools of TQM (cont..)

33. 2. Scatter Diagram: Also known as a correlation chart. A graph shows the relationship between two measurement. Tools of TQM (cont..)

34. 3. Cause and Effect Diagram: Also known as Ishikawa or Fishbone diagram. A tool that identifies potential sources of process variation that may effect an outcome Tools of TQM (cont..)

35. 4. Pareto Charts: A graph to identify and plot problems or defects in descending order of frequency (focusing on major problem, vital few) Tools of TQM (cont..)

36. 5. Flow Charts (Process Diagrams): A chart that describes the steps in a process Tools of TQM (cont..)

37. 6. Histogram: A distribution showing the frequency of occurrence of a variable between the high and low range of data Tools of TQM (cont..)

38. 7. Statistical Process Control Chart: A chart with time on the horizontal axis to plot values of a statistic. Show upper and lower limits for the process. Tools of TQM (cont..)

39. 7 Cause-and-Effect Diagram for Problems with Airline Customer Service Example 1

40. Example 2 Pareto Analysis Chart

41. Packing and shipping process Example 3 Flow Chart

42. The Role of Inspection Involves examining items to see if an item is good or defective Inspection involve measurement, tasting, touching, weighing, or testing of the product. Detect a defective product Does not correct deficiencies in process or product It is expensive Issues When to inspect Where in process to inspect Inspection

43. 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 Inspection (cont..)

44. Problems Worker fatigue/ability Measurement error Process variability Inspection (cont..)

45. Source Inspection The best inspection – no inspection at all (doing the job properly at the source) Source control with employee empowerment Treat the next step in the process as your customer Ensure perfect product to your customer Inspection (cont..)

46. Exercise 1.Develop a cause-and-effect diagram for the causes of possibly student getting late to class. Explain briefly how “getting late to class” is related to quality management. 2.The accounts receivable department has documented the following defects over a 30-day period:

47. CategoryFrequency Invoice amount does not agree with the check amount108 Invoice not on record (not found)24 No formal invoice issued18 Check (payment) not received on time30 Check not signed8 Invoice number and invoice referenced do not agree12 What techniques would you use and what conclusions can you draw about defects in the accounts receivable department?

48. Any Questions???

49. Thank You