1. Chapter 9 Introduction to Quality

2. Management 3620Chapter 9 Introduction to Quality9-2 Different Ways to Define Quality User-based quality –defined by the customers and their expectations Operations-based quality –degree to which an item conforms to specifications provided by the designers Product-based quality –viewed as a precise and measurable variable, i.e., fastest, biggest, smallest

3. Management 3620Chapter 9 Introduction to Quality9-3 Dimensions of Quality (1 of 2) Performance - main characteristics of the product/service Aesthetics - appearance, feel, smell, taste Special features - extra characteristics Conformance - how well product or service conforms to customer’s expectations Safety - risk of injury

4. Management 3620Chapter 9 Introduction to Quality9-4 Dimensions of Quality (2 of 2) Reliability - consistency of performance Durability - useful life of the product or service Perceived quality - indirect evaluation of quality (e.g. reputation) Service after sale - handling of customer complaints or checking on customer satisfaction

5. Management 3620Chapter 9 Introduction to Quality9-5 Examples of Quality Dimensions (1 of 2) Table 9-1

6. Management 3620Chapter 9 Introduction to Quality9-6 Examples of Quality Dimensions (2 of 2) Table 9-1

7. Management 3620Chapter 9 Introduction to Quality9-7 Service Design Ease of use Conformance to design Determinants of Quality

8. Management 3620Chapter 9 Introduction to Quality9-8 Why Quality is Important to the Firm? Reduces costs and increases market share Improves company reputation Reduces chances of product liability suits International implications

9. Management 3620Chapter 9 Introduction to Quality9-9 Some Consequences of Poor Quality Loss of business Liability Productivity Costs

10. Management 3620Chapter 9 Introduction to Quality9-10 Costs of Quality (1 of 2) Failure Costs - costs incurred by defective parts/products or faulty services. –Internal Failure Costs Costs incurred to fix problems that are detected before the product/service is delivered to the customer. –External Failure Costs All costs incurred to fix problems that are detected after the product/service is delivered to the customer.

11. Management 3620Chapter 9 Introduction to Quality9-11 Costs of Quality (2 of 2) Appraisal Costs –All product and/or service quality inspection costs. Prevention Costs –All quality training, quality planning, customer assessment, process control, and quality improvement costs to prevent defects from occurring

12. Management 3620Chapter 9 Introduction to Quality9-12 Key Contributors to Quality Management Table 9-6

13. Management 3620Chapter 9 Introduction to Quality9-13 Baldrige Award Deming Prize Quality Awards

14. Management 3620Chapter 9 Introduction to Quality9-14 Malcolm Baldrige National Quality Award (1 of 2) Began in 1987 Recognizes achievements of excellent organizations and provide examples to others –may give two awards in each category manufacturing small business service health care education

15. Management 3620Chapter 9 Introduction to Quality9-15 Malcolm Baldrige National Quality Award (2 of 2) Establishes criteria for evaluating quality efforts Provides guidance for other American companies

16. Management 3620Chapter 9 Introduction to Quality9-16 2001 MBNQA Categories and Scoring System 1.0 Leadership120 2.0 Strategic Planning 85 3.0 Customer and Market Focus 85 4.0 Information and Analysis 90 5.0 Human Resource Focus 85 6.0 Process Management 85 7.0 Business Results450 8.0 Global Market Development and Competitiveness (optional)100

17. Management 3620Chapter 9 Introduction to Quality9-17 Deming Prize Instituted 1951 by Union of Japanese Scientists and Engineers (JUSE) honoring W. Edwards Deming Several categories including prizes for individuals, factories, small companies, and Deming application prize Japan’s highly coveted award Main focus on statistical quality control American company winners

18. Management 3620Chapter 9 Introduction to Quality9-18 Quality Certification ISO 9000 Set of international standards on quality management and quality assurance, critical to international business ISO 9000 series standards, briefly, require firms to document their quality-control systems at every step (incoming raw materials, product design, in-process monitoring and so forth) so that they’ll be able to identify those areas that are causing quality problems and correct them

19. Management 3620Chapter 9 Introduction to Quality9-19 ISO 9000: 2000 Series Table 9-7 modified Combined with ISO 9001

20. Management 3620Chapter 9 Introduction to Quality9-20 ISO 9000 Registration Process (1 of 3) When an organization feels that its quality system is good enough, it may ask an accredited registrar or other third party audit team for pre-assessment Feedback is provided regarding how well the company’s systems meet certification standards The company makes adjustments based on this information

21. Management 3620Chapter 9 Introduction to Quality9-21 ISO 9000 Registration Process (2 of 3) The final audit begins with a review of the company's quality manual, which the accredited registrar or third party audit team typically uses as its guide The audit team checks to see that the documented quality system meets the requirement of ISO 9000 and that the organization is practicing what is documented

22. Management 3620Chapter 9 Introduction to Quality9-22 ISO 9000 Registration Process (3 of 3) When the registrar is satisfied with the favorable recommendation of the audit team, registration is granted This certification lasts three years during which the registrar periodically monitors the company

23. Management 3620Chapter 9 Introduction to Quality9-23 ISO 14000 ISO 14000 - A set of international standards for assessing a company’s environmental performance Standards in three major areas –Management systems –Operations –Environmental systems

24. Management 3620Chapter 9 Introduction to Quality9-24 ISO 14000 Management systems –Systems development and integration of environmental responsibilities into business planning Operations –Consumption of natural resources and energy Environmental systems –Measuring, assessing and managing emissions, effluents, and other waste