Quality: Meeting Customer Expectations

Quality: Meeting Customer Expectations
Chapter 6 Quality: Meeting Customer Expectations

DEFINITION OF QUALITY PRODUCER’S DEFINITION --- CONFORMANCE – HOW A PRODUCT OR SERVICE MEETS THE SPECIFICATIONS CONSUMER’S DEFINITION --- VALUE – HOW WELL THE PRODUCT OR SERVICE SERVES ITS INTENDED PURPOSE AT A PRICE THEY ARE WILLING TO PAY.

Definitions of Quality
ASQ: Product characteristics & features that affect customer satisfaction User-Based: What consumer says it is Manufacturing-Based: Degree to which a product conforms to design specification Product-Based: Level of measurable product characteristic 12

WHO IS TO BLAME FOR QUALITY?
EIGHTY FIVE PERCENT OF THE REASONS FOR FAILURE TO MEET CUSTOMERS’ EXPECTATIONS ARE RELATED TO DEFICIENCIES IN SYSTEMS AND PROCESS RATHER THAN THE EMPLOYEES. THE ROLE OF THE MANAGEMENT IS TO CHANGE THE PROCESS RATHER THAN BADGERING INDIVIDUALS TO DO BETTER.

Dimensions of Product Quality*
Performance What are the desirable characteristics of the product? (Car: acceleration, fuel consumption, braking, etc.) Features What additional characteristics of the product are possible? (GPS, backup camera, collision sensor) Reliability Is the product dependable? Does it accomplish what it promises? (average time between faults) Durability How long will the product last? (life of a product)

Dimensions of Product Quality*
Serviceability Can the product be easily and inexpensively repaired? Aesthetics Does the product satisfy subjective requirements? Response Is the interaction between the customer and the product provider pleasant and appropriate? Reputation What does information on past performance say about the company?

Dimensions of Service Quality
Assurance Can the employees generate customer trust and confidence? Empathy Are employees approachable and sensitive to individual customers? Tangibles Do the physical facilities, equipment, and written materials show care and attention? (is the product kept clean, is instruction easy to follow, etc.)

Dimensions of Product and Service Quality

FIVE Reasons Why Quality is Important
Company reputation Costs and market share Product liability Global implications Productivity 14

Ways in Which Quality Can Improve Productivity
Market Gains Improved response Economies of Scale Improved reputation Improved Quality Increased Profits Reduced Costs Increased productivity Lower rework and scrap costs Lower warranty costs 6

International Quality Standards
Industrial Standard Z (Japan) Specification for TQM ISO 9000 series (Europe/EC) Common quality standards for products sold in Europe (even if made in U.S.) ISO series (Europe/EC) Standards for recycling, labeling etc. ASQ Q90 series; MILSTD (U.S.) 16

What ISO's name means? Because "International Organization for Standardization" would have different abbreviations in different languages ("IOS" in English, "OIN" in French for Organisation internationale de normalisation), it was decided at the outset to use a word derived from the Greek isos, meaning "equal". Therefore, whatever the country, whatever the language, the short form of the organization's name is always ISO.

ISO 9000 SERIES The ISO 9000 series is actually made up of five separate standard: ISO 9000, 9001, 9002, 9003, and Standards 9000 and 9004 are interpretive guidelines, and the remaining three are the standards for different types of business operations, as noted below. ISO Provides guidelines and definitions used to select the standard most applicable for a given organizations road map to the other standards.

ISO 9000 SERIES (CONT) ISO Provides a quality assurance model for assuring conformance in design, development, production, installation, and servicing. This is the most comprehensive standard and is intended for use by those who design and develop their own products. ISO Provides a quality assurance model for conformance in production and installation. This standard is appropriate for firms that manufacture products to another firm's design specifications and have no responsibility for servicing.

ISA 9000 SERIES (CONT) ISO Provides a model for conformance in final test and inspection procedures, appropriate for use in firm such as commodity suppliers, etc. ISO Provides guidance in the establishment and internal documentation of a quality system. It assists in identifying and developing the relationships between inputs necessary to assure quality.

Quality Certification Programs: ISO

ISO and Suppliers Buyers have immediate visibility that a supplier have received registration. ISO 9000 certification replaces individual certification program Certified suppliers are listed in a master list of companies ISO certified supplier can easily meet ANSI standards ISO certification opens doors to foreign markets ANSI = American National Standards Institute Mission -To enhance both the global competitiveness of U.S. business and the U.S. quality of life by promoting and facilitating voluntary consensus standards and conformity assessment systems, and safeguarding their integrity.

BUYER AND ISO ISO certification saves time and money for buyers
Suppliers pay for all the ISO certification ISO certification makes it easier to select supplier

EC Environmental Standard ISO 14000
Core Elements: Environmental management Auditing Performance evaluation Labeling Life-cycle assessment 18

Malcolm Baldrige National Quality Award
Established in 1988 by the U.S. government – Public Law (August 20, 87) Designed to promote TQM practices Some criteria Senior executive leadership; strategic planning; management of process quality. Quality results; customer satisfaction 17

Quality Awards The Malcolm Baldrige National Quality Award, managed by the Department of Commerce, provides an excellent structure for developing a quality-driven organization.

The Malcolm Baldrige National Quality Award (MBNQA) is presented annually by the President of the United States to organizations that demonstrate quality and performance excellence. Three awards may be given annually in each of six categories: Manufacturing Service company Small business Education Healthcare Nonprofit Established by Congress in 1987 for manufacturers, service businesses and small businesses, the Baldrige Award was designed to raise awareness of quality management and recognize U.S. companies that have implemented successful quality-management systems. The education and healthcare categories were added in A government and nonprofit category was added in 2007. The Baldrige Award is named after the late Secretary of Commerce Malcolm Baldrige, a proponent of quality management. The U.S. Commerce Department's National Institute of Standards and Technology manages the award and ASQ administers it.

Organizations that apply for the MBNQA are judged by an independent board of examiners. Recipients are selected based on achievement and improvement in seven areas, known as the Baldrige Criteria for Performance Excellence: Leadership: How upper management leads the organization, and how the organization leads within the community. Strategic planning: How the organization establishes and plans to implement strategic directions. Customer and market focus: How the organization builds and maintains strong, lasting relationships with customers. Measurement, analysis, and knowledge management: How the organization uses data to support key processes and manage performance. Human resource focus: How the organization empowers and involves its workforce. Process management: How the organization designs, manages and improves key processes. Business/organizational performance results: How the organization performs in terms of customer satisfaction, finances, human resources, supplier and partner performance, operations, governance and social responsibility, and how the organization compares to its competitors.

Purposes : Raising awareness of performance excellence as a competitive tool Recognizing performance excellence and identifying role models Encouraging the sharing of best practices Establishing a consensus standard criteria for assessment

Baldrige Criteria

Malcolm Baldrige Award (1,000 Points)
1.0 Leadership (90 pts): This category examines senior executives' personal leadership and involvement in creating and sustaining a customer focus and clear and visible quality values. Also examined is how the values and expectations are integrated into the company's management system, including how the company addresses its public responsibilities and corporate citizenship. 1.1 Senior Executive Leadership (45) 1.2 Leadership System and Organization (25) 1.3 Public Responsibility and Corporate Citizenship (20)

2.0 Information and Analysis (75 pts): This category examines the scope, validity, analysis, management, and use of data and information to drive quality excellence and improve competitive performance. Also examined is the adequacy of the company's data, information, and analysis system to support improvement of the company's customer focus, products, services, and internal operations. 2.1 Management of Information and Data (20) 2.2 Competitive Comparisons and Benchmarking (15) 2.3 Analysis and Use of Company-Level Data (40)

3.0 Strategic Planning (55 pts): This category examines the company's planning process and how all key quality requirements are integrated into overall business planning. Also examined are the company's short- and longer-term plans and how quality and performance requirements are deployed to work units. 3.1 Strategy Development (35) 3.2 Strategy Deployment (20)

4.0 Human Resource Development and Management (140 pts): This category examines how the workforce is enabled to develop and utilize its full potential, aligned with the company's performance objectives. Also examined are the company's efforts to build and maintain an environment conducive to performance excellence, full participation, and personal and organizational growth. 4.1 Human Resource Planning and Evaluation (20) 4.2 High Performance Work Systems (45) 4.3 Employee Education, Training and Development (50) 4.4 Employee Well-Being and Satisfaction (25)

5.0 Process Management (140 pts): This category examines the key aspects of process management, including' customer-focused design, product and service delivery processes, support services and supply management involving all work units, including research and development The category examines how key processes are designed, effectively managed, and improved to achieve higher performance. 5.1 Design and Introduction of Products and Services (40) 5.2 Process Management: Product and Service Production and Delivery (40) 5.3 Process Management: Support Services (30) 5.4 Management of Supplier Performance (30)

6.0 Business Results (250 pts): This category examines the company's performance and improvement in key business areas: product and service quality, productivity and operational effectiveness, supply quality, and financial performance indicators linked to these areas relative to those of competitors. 6.1 Product and Service Quality Results (75) 6.2 Company Operational and Financial Results (130) 6.3 Supplier Performance Results (45)

7.0 Customer Focus and Satisfaction (250 pts): This category examines the company's systems for customer learning and for building and maintaining customer relationships. Also examined are levels and trends in key measures of business success: customer satisfaction and retention, market share, and satisfaction relative to competitors. 7.1 Customer and Market Knowledge (30) 7.2 Customer Relationship Management (30) 7.3 Customer Satisfaction Determination (30) 7.4 Customer Satisfaction Results (100) 7.5 Customer Satisfaction Comparison (60)

Baldrige award winners, the Baldrige index, have performed about 2-5 times better than the S&P 500 index.

Baldrige Item Not Covered by ISO 9000
Public responsibility Competitive comparisons and benchmarks Analysis and uses of company-level data Strategic quality and company performance planning process Quality and performance plans Employee involvement Employee well-being and morale and services Quality assessment Product and service quality results Company operational results Business process and support service results Customer relationship management Commitment to customers Customer satisfaction determination, results, and comparison Continuous improvement

Baldrige Items covered by ISO 9000
Senior executive leadership Management for quality Scope and management of quality Performance data and information Human resource management Employee education and training Employee performance and recognition Design and introduction of quality products Process management-product and service delivery processes Production and delivery processes Process management-business processes and support services Supplier quality and results Future requirements and expectations

COST OF QUALITY Prevention Cost: The cost incurred in the process of trying to prevent defects and errors from occurring. It consists of such elements: - Planning the quality control process - Training for quality - Educating the firm's suppliers - Designing the product for quality. - Designing the production process for quality - Preventive maintenance

COST OF QUALITY (CONTINUED)
Appraisal cost: The cost of determining the current quality of the production process. It consists of factors such as: - Measuring and testing parts and material - Running special test laboratories - Acquiring special testing equipment - Conducting statistical process control programs - Receiving inspection - Reporting on quality

Internal cost of defects: The cost incurred when defects and errors are found before shipment/delivery to the customer. It consists of elements such as: - Labor and Material going into scrap - Engineering change notices - Rework and retesting to correct defects - Profit losses on downgraded products/services - Yield losses from malfunctioning equipment or improperly trained workers - Expecting to get customer orders of appropriate quality delivered on time

External cost of defects: The cost of trying to correct defects and errors after receipt by the customer. It includes items such as: - Quick response to complaints - Adjustment to correct the problem - Lost goodwill of the customer - Recalls to correct the problem for other customers - Warranty, insurance, and legal suit settlements

Deming’s Fourteen Points
Create consistency of purpose Lead to promote change Build quality into the products Build long term relationships Continuously improve product, quality, and service Start training Emphasize leadership 26

Deming’s Points - continued
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 4-27 27

TOTAL QUALITY MANAGEMENT
IT CONVEYS A TOTAL, COMPANYWIDE EFFORT TO ACHIEVE CUSTOMER’S SATISFACTION THROUGH FULL INVOLVEMENT OF THE ENTIRE WORKFORCE AS WELL AS CUSTOMERS AND SUPPLIERS, WITH A FOCUS ON CONTINUOUS IMPROVEMENT

TQM Encompasses entire organization, from supplier to customer.
Stresses a commitment by management to have a continuing company-wide drive toward excellence in all aspects of products and services that are important to the customer. 20

Concepts of TQM Continuous improvement
Employee empowerment - Quality Circle Benchmarking Just-in-time (JIT) Knowledge of tools 22

Continuous Improvement
Represents continual improvement of process & customer satisfaction Involves all operations & work units Other names Kaizen (Japanese) Zero-defects Six sigma 23

Employee Empowerment Getting employees involved in product & process improvements 85% of quality problems are due to process & material Techniques Support workers Let workers make decisions Build teams & quality circles © 1995 Corel Corp. 24

Quality Circles 4 hours/month
Group of 6-12 employees from same work area Meet regularly to solve work-related problems 4 hours/month Facilitator trains & helps with meetings 25

Benchmarking Selecting best practices to use as a standard for performance 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

Just-in-Time (JIT) Relationship to quality: JIT cuts cost of quality
JIT improves quality Better quality means less inventory and better, easier-to-employ JIT system 30

Just-in-Time (JIT) ‘Pull’ system of production/purchasing
Customer starts production with an order Involves ‘vendor partnership programs’ to improve quality of purchased items Reduces all inventory levels Inventory hides process & material problems Improves process & product quality 31

Just-In-Time (JIT) Example
Scrap Work in process inventory level (hides problems) Unreliable Vendors Capacity Imbalances 32

Just-In-Time (JIT) Example
Scrap Reducing inventory reveals problems so they can be solved. Unreliable Vendors Capacity Imbalances 33

Tools for TQM Taguchi technique 34

Taguchi Techniques Experimental design methods to improve product & process design Identify key component & process variables affecting product variation Taguchi Concepts Quality robustness Quality loss function Target specifications 46

Tools for TQM Taguchi technique Quality loss function 34

Quality Loss Function Graph
Loss = (Actual X - Target)2 • (Cost of Deviation) Lower (upper) specification limit Measurement Greater deviation, more people are dissatisfied, higher cost 49

Quality Loss Function Example
The specifications for the diameter of a gear are ± 0.25 mm. If the diameter is out of specification, the gear must be scrapped at a cost of $ What is the loss function? © T/Maker Co. 50

Quality Loss Function Solution
L = D2 • C = (X - Target)2 • C L = Loss ($); D = Deviation; C = Cost 4.00 = ( )2 • C Item scrapped if greater than (USL = ) with a cost of $4.00 C = 4.00 / ( )2 = 64 L = D2 • 64 = (X )2 • 64 Enter various X values to obtain L & plot 51

Tools for TQM Taguchi technique Quality loss function Check Sheet 34

Check Sheet Definition: A simple data collection form consisting of multiple categories with definitions. Data are entered on the form with a simple tally mark each time one of the categories occurs. Purpose: To facilitate the collection and analysis of data. A check sheet is a simple means of data collection. The most straightforward check sheet is simply to make a list of items that you expect will appear in a process and to mark a check beside each item when it does appear. This type of data collection can be used for almost anything, from checking off the occurrence of particular types of defects to the counting of expected items (e.g., the number of times the telephone rings before being answered). new

Tools for TQM Taguchi technique Quality loss function Check Sheet
Pareto charts 34

Pareto Chart A Pareto chart is a bar graph. The lengths of the bars represent frequency or cost (time or money), and are arranged with longest bars on the left and the shortest to the right. In this way the chart visually depicts which situations are more significant. new

Pareto Chart Pareto charts are used to display the Pareto principle in action, arranging data so that the few vital factors that are causing most of the problems reveal themselves. The Pareto effect even operates in quality improvement: 80% of problems usually stem from 20% of the causes. Concentrating improvement efforts on these few will have a greater impact and be more cost-effective than undirected efforts. new

Pareto Analysis of Wine Glass Defects
Frequency (number) 72% 16% 5% 4% 3% Causes, by percent of total defects 53

Pareto Chart of Customer Complaints

Pareto charts Process chart 34

Process Chart Shows sequence of events in process
Depicts activity relationships Has many uses Identify data collection points Find problem sources Identify places for improvement Identify where travel distances can be reduced 54

Process Chart Example ¡ = Operation; ð = Transport; o = Inspect; D = Delay; Ñ = Storage 55

Pareto charts Process charts Cause-and-effect diagrams 34

Cause and Effect Diagram
Used to find problem sources/solutions Other names Fish-bone diagram, Ishikawa diagram Steps Identify problem to correct Draw main causes for problem as ‘bones’ Ask ‘What could have caused problems in these areas?’ Repeat for each sub-area. 56

Cause and Effect Diagram Example
Problem Too many defects 57

Method Manpower Material Machinery Too many defects Main Cause 58

Method Manpower Drill Over Time Too many defects Wood Steel Lathe Material Machinery Sub-Cause 59

Method Manpower Material Machinery Tired Old Slow Drill Over Time Steel Wood Lathe Too many defects 60

Tools for TQM Taguchi technique Quality loss function Check sheet
Pareto charts Process charts Cause-and-effect diagrams Statistical process control 34

Statistical Process Control (SPC)
Uses statistics & control charts to tell when to adjust process Developed by Shewhart in 1920’s Involves Creating standards (upper & lower limits) Measuring sample output (e.g. mean wgt.) Taking corrective action (if necessary) Done while product is being produced 61

Statistical Process Control Steps
Produce Good Provide Service Stop Process Yes No Assign. Causes? Take Sample Inspect Sample Find Out Why Create Control Chart Start 62

Control Chart Example UCL LCL 63

How TQM Accomplishes Its Principles
TQM’s supportive approaches 3 Principles Of Quality

Service Quality Attributes
Tangibles Reliability Communication Credibility Security Responsiveness Competence Courtesy Access © 1995 Corel Corp. Under- standing 68

WAYS TO IMPROVE QUALITY
DESIGN THE PRODUCT – STANDARDIZE PARTS, SIMPLIFY ASSEMBLY PROCESS, SPECIFY PROCESS EDUCATE CONSUMER ADOPT LONG TERM PERSPECTIVE DEMAND QUALITY FROM SUPPLIER USE STATISTICAL METHODS TO IDENTIFY THE SOURCES OF POOR QUALITY AND ACT TO SOLVE THEM IMPROVE SUPERVISION

WAYS TO IMPROVE QUALITY (cont.)
DO NOT EMPHASIZE OUTPUT AT THE EXPENSE OF GOOD QUALITY MAKE SURE THAT EMPLOYEES HAVE THE PROPER TRAINING TO DO THEIR JOB MAKE IT RIGHT THE FIRST TIME IMPROVE PURCHASING METHODS – RAW MATERIAL

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 Issues When to inspect Where in process to inspect 64

When and Where to Inspect
At the supplier’s plant while the supplier is producing At your plant upon receipt of goods from the supplier Before costly or irreversible processes During the step-by-step production processes When production is complete Before shipment from your plant At the point of customer contact 65

When and Where to Inspect in Services
Business Where Variable Bank Teller station Speed, courtesy Checking Accuracy Store Stockrooms Stock rotation Display areas Attractiveness Counters Courtesy, knowledge 66

Decision Making Process (non-Shewhart’s cycle)
Plan – identify problems, understand problems and clearly defined problems. Causes – List all possible reasons causing the problems. Identify interrelated reasons and the root causes of the problems Solution – Identify solutions Do – Implement the solutions Check or Evaluate – Check the problems again after a certain period to make sure the desired outcomes have been achieved. new

Plan, Do, Check, ACT (PDCA) Cycle and Quality Improvement (QI)

Obtaining Continuous Improvement: The Plan-Do-Check-Act (PDCA) Cycle
Plan: Identify the problem, understand it, and find its root cause. Act: standardize the change throughout the business. Do: Take action to fix the problem. Check: See if things have improved.

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