1. Total Quality Management
4/19/2017
Total Quality Management
CII Institute of Logistics Total Quality Management

2. Meaning of Quality: Consumer’s Perspective
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
CII Institute of Logistics Total Quality Management

3. 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
CII Institute of Logistics Total Quality Management

4. 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
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5. 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
CII Institute of Logistics Total Quality Management

6. Dimensions of Quality: Service
Time and Timeliness
How long must a customer wait for service, and is it completed on time?
Is an overnight package delivered overnight?
Completeness:
Is everything customer asked for provided?
Is a mail order from a catalogue company complete when delivered?
CII Institute of Logistics Total Quality Management

7. Dimensions of Quality: Service (cont.)
Courtesy:
How are customers treated by employees?
Are catalogue phone operators nice and are their voices pleasant?
Consistency
Is the same level of service provided to each customer each time?
Is your newspaper delivered on time every morning?
CII Institute of Logistics Total Quality Management

8. Dimensions of Quality: Service (cont.)
Accessibility and convenience
How easy is it to obtain service?
Does a service representative answer you calls quickly?
Accuracy
Is the service performed right every time?
Is your bank or credit card statement correct every month?
Responsiveness
How well does the company react to unusual situations?
How well is a telephone operator able to respond to a customer’s questions?
CII Institute of Logistics Total Quality Management

9. Meaning of Quality: Producer’s Perspective
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
CII Institute of Logistics Total Quality Management

10. Meaning of Quality: A Final Perspective
Consumer’s and producer’s perspectives depend on each other
Consumer’s perspective: PRICE
Producer’s perspective: COST
Consumer’s view must dominate
CII Institute of Logistics Total Quality Management

11. Producer’s Perspective Consumer’s Perspective
Meaning of Quality
Fitness for
Consumer Use
Producer’s Perspective
Consumer’s Perspective
Quality of Conformance
Conformance to specifications
Cost
Quality of Design
Quality characteristics
Price
Marketing
Production
Meaning of Quality
CII Institute of Logistics Total Quality Management

12. CII Institute of Logistics Total Quality Management
Why TQM?
Ford Motor Company had operating losses of $3.3 billion between 1980 and 1982.
Xerox market share dropped from 93% in 1971 to 40% in 1981.
Attention to quality was seen as a way to combat the competition.
CII Institute of Logistics Total Quality Management

13. TQM: A “Buzzword” Losing Popularity
For many companies, the term TQM is associated with corporate programs (mid 1980s ~ early 1990s) aimed at implementing employee teams and statistical process control.
Unfortunately, many companies were dissatisfied with the perceived results of these programs, concluding TQM does not work.
Question: Why were they dissatisfied? Were they justified?
CII Institute of Logistics Total Quality Management

14. Total Quality Management
TQM
Total - made up of the whole
Quality - degree of excellence a product or service provides
Management - act, art or manner of planning, controlling, directing,….
Therefore, TQM is the art of managing the whole to achieve excellence.
Total Quality Management

15. CII Institute of Logistics Total Quality Management
What does TQM mean?
Total Quality Management means that the organization's culture is defined by and supports the constant attainment of customer satisfaction through an integrated system of tools, techniques, and training. This involves the continuous improvement of organizational processes, resulting in high quality products and services.
CII Institute of Logistics Total Quality Management

16. CII Institute of Logistics Total Quality Management
What’s the goal of TQM?
“Do the right things right the first time, every time.”
CII Institute of Logistics Total Quality Management

17. CII Institute of Logistics Total Quality Management
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.
CII Institute of Logistics Total Quality Management

18. CII Institute of Logistics Total Quality Management
Productivity and TQM
Traditional view:
Quality cannot be improved without significant losses in productivity.
TQM view:
Improved quality leads to improved productivity.
CII Institute of Logistics Total Quality Management

19. CII Institute of Logistics Total Quality Management
Basic Tenets of TQM
1. The customer makes the ultimate determination of quality.
2. Top management must provide leadership and support for all quality initiatives.
3. Preventing variability is the key to producing high quality.
4. Quality goals are a moving target, thereby requiring a commitment toward continuous improvement.
5. Improving quality requires the establishment of effective metrics. We must speak with data and facts not just opinions.
CII Institute of Logistics Total Quality Management

20. The three aspects of TQM
Tools, techniques, and training in their use for analyzing, understanding, and solving quality problems
Counting
Customers
Culture
Quality for the customer as a
driving force and central concern.
Shared values and beliefs, expressed by leaders, that define and support quality.
CII Institute of Logistics Total Quality Management

21. Total Quality Management and Continuous Improvement
TQM is the management process used to make continuous improvements to all functions.
TQM represents an ongoing, continuous commitment to improvement.
The foundation of total quality is a management philosophy that supports meeting customer requirements through continuous improvement.
Total Quality Management

22. Continuous Improvement versus Traditional Approach
Customer focus
Cross-functional teams
Focus on “what” and “how”
Long-term focus
Continuous improvement
Process improvement focus
Incremental improvements
Problem solving
Market-share focus
Individuals
Focus on ‘who” and “why”
Short-term focus
Status quo focus
Product focus
Innovation
Fire fighting
CII Institute of Logistics Total Quality Management

23. CII Institute of Logistics Total Quality Management
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.”
CII Institute of Logistics Total Quality Management

24. CII Institute of Logistics Total Quality Management
Value-based Approach
Manufacturing Dimensions
Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality
Service Dimensions
Reliability
Responsiveness
Assurance
Empathy
Tangibles
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25. The TQM System Continuous Improvement Objective Principles Elements
Customer
Focus
Process
Improvement
Total
Involvement
Leadership
Education and Training Supportive structure
Communications Reward and recognition
Measurement
Elements
CII Institute of Logistics Total Quality Management

26. Total Quality Management
Commitment to quality throughout organization
Principles of TQM
Customer-oriented
Leadership
Strategic planning
Employee responsibility
Continuous improvement
Cooperation
Statistical methods
Training and education
CII Institute of Logistics Total Quality Management

27. CII Institute of Logistics Total Quality Management
Quality Gurus
Walter Shewart
In 1920s, developed control charts
Introduced the term “quality assurance”
W. Edwards Deming
Developed courses during World War II to teach statistical quality-control techniques to engineers and executives of companies that were military suppliers
After the war, began teaching statistical quality control to Japanese companies
Joseph M. Juran
Followed Deming to Japan in 1954
Focused on strategic quality planning
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28. CII Institute of Logistics Total Quality Management
Quality Gurus (cont.)
Armand V. Feigenbaum
In 1951, introduced concepts of total quality control and continuous quality improvement
Philip Crosby
In 1979, emphasized that costs of poor quality far outweigh the cost of preventing poor quality
In 1984, defined absolutes of quality management—conformance to requirements, prevention, and “zero defects”
Kaoru Ishikawa
Promoted use of quality circles
Developed “fishbone” diagram
Emphasized importance of internal customer
CII Institute of Logistics Total Quality Management

29. CII Institute of Logistics Total Quality Management
Deming’s 14 Points
Create constancy of purpose
Adopt philosophy of prevention
Cease mass inspection
Select a few suppliers based on quality
Constantly improve system and workers
CII Institute of Logistics Total Quality Management

30. Deming’s 14 Points (cont.)
Institute worker training
Instill leadership among supervisors
Eliminate fear among employees
Eliminate barriers between departments
Eliminate slogans
CII Institute of Logistics Total Quality Management

31. Deming’s 14 Points (cont.)
Remove numerical quotas
Enhance worker pride
Institute vigorous training and education programs
Develop a commitment from top management to implement above 13 points
CII Institute of Logistics Total Quality Management

32. Deming Wheel: PDCA Cycle
1. Plan
Identify problem and develop plan for improvement.
2. Do
Implement plan on a test basis.
3. Study/Check
Assess plan; is it working?
4. Act
Institutionalize improvement; continue cycle.
CII Institute of Logistics Total Quality Management

33. CII Institute of Logistics Total Quality Management
TQM and…
… Partnering
a relationship between a company and its supplier based on mutual quality standards
… Customers
system must measure customer satisfaction
… Information Technology
infrastructure of hardware, networks, and software necessary to support a quality program
CII Institute of Logistics Total Quality Management

34. Quality Improvement and Role of Employees
Participative problem solving
employees involved in quality management
every employee has undergone extensive training to provide quality service to Disney’s guests
CII Institute of Logistics Total Quality Management

35. Quality Circle CII Institute of Logistics Total Quality Management
Presentation
Implementation
Monitoring
Solution
Problem results
Problem Analysis
Cause and effect
Data collection and analysis
Problem Identification
List alternatives
Consensus
Brainstorming
Training
Group processes
Data collection
Problem analysis
Organization
8-10 members
Same area
Supervisor/moderator
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36. Strategic Implications of TQM
Strong leadership
Goals, vision, or mission
Operational plans and policies
Mechanism for feedback
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37. CII Institute of Logistics Total Quality Management
Six Sigma
A process for developing and delivering near perfect products and services
Measure of how much a process deviates from perfection
3.4 defects per million opportunities
Champion
an executive responsible for project success
CII Institute of Logistics Total Quality Management

38. Black Belts and Green Belts
project leader
Master Black Belt
a teacher and mentor for Black Belts
Green Belts
project team members
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39. CII Institute of Logistics Total Quality Management
Six Sigma: DMAIC
DEFINE
MEASURE
ANALYZE
IMPROVE
CONTROL
67,000 DPMO
cost = 25% of sales
3.4 DPMO
CII Institute of Logistics Total Quality Management

40. TQM in Service Companies
Principles of TQM apply equally well to services and manufacturing
Services and manufacturing companies have similar inputs but different processes and outputs
Services tend to be labor intensive
Service defects are not always easy to measure because service output is not usually a tangible item
CII Institute of Logistics Total Quality Management

41. Quality Attributes in Service
Benchmark
“best” level of quality achievement one company or companies seek to achieve
Timeliness
how quickly a service is provided
“quickest, friendliest, most accurate service available.”
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42. CII Institute of Logistics Total Quality Management
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
CII Institute of Logistics Total Quality Management

43. CII Institute of Logistics Total Quality Management
Prevention Costs
Quality planning 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
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44. CII Institute of Logistics Total Quality Management
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 gar data for testing product quality, to make equipment adjustments to maintain quality, and to stop work to assess quality
CII Institute of Logistics Total Quality Management

45. Internal Failure Costs
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”
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
CII Institute of Logistics Total Quality Management

46. 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

47. Measuring and Reporting Quality Costs
Index numbers
ratios that measure quality costs against a base value
labor index
ratio of quality cost to labor hours
cost index
ratio of quality cost to manufacturing cost
sales index
ratio of quality cost to sales
production index
ratio of quality cost to units of final product
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48. Quality–Cost Relationship
Cost of quality
Difference between price of nonconformance and conformance
Cost of doing things wrong
20 to 35% of revenues
Cost of doing things right
3 to 4% of revenues
Profitability
In the long run, quality is free
CII Institute of Logistics Total Quality Management

49. Quality Management and Productivity
ratio of output to input
Yield: a measure of productivity
CII Institute of Logistics Total Quality Management

50. Quality–Productivity Ratio
QPR
productivity index that includes productivity and quality costs
QPR =
(non-defective units)
(input) (processing cost) + (defective units) (reworked cost)
CII Institute of Logistics Total Quality Management

51. Seven Quality Control Tools
Pareto Analysis
Flow Chart
Check Sheet
Histogram
Scatter Diagram
SPC Chart
Cause-and-Effect Diagram
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52. CII Institute of Logistics Total Quality Management
Pareto Analysis
NUMBER OF
CAUSE DEFECTS PERCENTAGE
Poor design %
Wrong part dimensions 16 13
Defective parts 12 10
Incorrect machine calibration 7 6
Operator errors 4 3
Defective material 3 2
Surface abrasions 3 2 %
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53. Percent from each cause
Causes of poor quality
Machine calibrations
Defective parts
Wrong dimensions
Poor Design
Operator errors
Defective materials
Surface abrasions 10 20 30 40 50 60 70
(64)
(13)
(10)
(6)
(3)
(2)
Pareto Chart
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54. CII Institute of Logistics Total Quality Management
Flow Chart
Operation
Decision
Start/ Finish
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55. CII Institute of Logistics Total Quality Management
Check Sheet
COMPONENTS REPLACED BY LAB
TIME PERIOD: 22 Feb to 27 Feb 2002
REPAIR TECHNICIAN: Bob
TV SET MODEL 1013
Integrated Circuits ||||
Capacitors |||| |||| |||| |||| |||| ||
Resistors ||
Transformers ||||
Commands
CRT |
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56. CII Institute of Logistics Total Quality Management
Histogram 5 10 15 20
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57. CII Institute of Logistics Total Quality Management
Scatter Diagram Y X
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58. CII Institute of Logistics Total Quality Management
Control Chart 18 12 6 3 9 15 21 24 2 4 8 10 14 16
Sample number
Number of defects
UCL = 23.35
LCL = 1.99
c = 12.67
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59. Cause-and-Effect Diagram
Quality
Problem
Out of adjustment
Tooling problems
Old / worn
Machines
Faulty
testing equipment
Incorrect specifications
Improper methods
Measurement
Poor supervision
Lack of concentration
Inadequate training
Human
Deficiencies
in product design
Ineffective quality
management
Poor process design
Process
Inaccurate
temperature
control
Dust and Dirt
Environment
Defective from vendor
Not to specifications
Material-
handling problems
Materials
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60. CII Institute of Logistics Total Quality Management
Baldrige Award
Created in 1987 to stimulate growth of quality management in the United States
Categories
Leadership
Information and analysis
Strategic planning
Human resource
Focus
Process management
Business results
Customer and market focus
CII Institute of Logistics Total Quality Management

61. Other Awards for Quality
National individual awards
Armand V. Feigenbaum Medal
Deming Medal
E. Jack Lancaster Medal
Edwards Medal
Shewart Medal
Ishikawa Medal
International awards
European Quality Award
Canadian Quality Award
Australian Business Excellence Award
Deming Prize from Japan