1. Managing Quality CHAPTER SIX McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

2. 2-2 Case Review  American Vinyl Products

3. 2-3 What Is Quality?  Real world example: http://www.youtube.com/watch?v=VgIIuBw9 EbE  Oxford American Dictionary  a degree or level of excellence  American Society for Quality  totality of features and characteristics that satisfy needs without deficiencies  Joseph Juran  Fitness for use

4. Dimensions of Quality for Goods and Services 6–4 Figure 6-1

5. Cost of Quality (COQ) 6–5 Costs associated with inspection to assess quality levels (e.g. staff, tools, training, etc.) Costs from defects found before delivery to the customer (e.g., rework, scrap, etc.) Costs associated with defects found after delivery to customer (e.g., warranty, recall, etc.) Costs associated with preventing defects and limiting failure and appraisal costs (e.g., training, improvement projects, data gathering, analysis) Appraisal Costs Internal Failure Costs External Failure Costs Prevention Costs

6. 2-6 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

7. 2-7 Quality Gurus W. Edwards Deming (Real world example: Toyota) Joseph M. Juran Philip B. Crosby Imai

8. Quality Gurus 6–8

9. 2-9 Deming’s 14 Points 1.Create constancy of purpose 2.Adopt philosophy of prevention 3.Understand inspection 4.Select a few suppliers based on quality 5.Constantly improve system and workers

10. 2-10 6.Institute worker training 7.Instill leadership among supervisors 8.Eliminate fear among employees 9.Eliminate barriers between departments 10.Eliminate slogans Deming’s 14 Points (cont.)

11. 2-11 11.Remove numerical quotas 12.Enhance worker pride 13.Institute vigorous training and education programs 14.Develop a commitment from top management to implement above 13 points Deming’s 14 Points (cont.)

12. Inverted View of Management 6–12 Figure 6-1

13. Quality Improvement Tools 6–13 Histogram uncover patterns in data Cause and Effect Analysis uncover contributors to a problem Defects in Jeans Defect typeTallyTotal A. Tears in fabric////4 B.Discoloredfabric///3 C. Broken//// //// //// //// //// /36 //// //7 Total50 Defect typeTallyTotal A. Tears in fabric////4 B.Discoloredfabric///3 C. Broken zipper//// //// //// //// //// /36 D. Ragged seams //// //7 Total50 Check Sheets frequency and location of problems Pareto Analysis Identify critical (frequent) problems

14. Quality Improvement Tools cont’d 6–14 Scatter Diagrams determine variable relationships Process Flow Analysis display and analyze process steps Process Control Chart monitor if operating normally Y X LCL UCL CL Process Capability Analysis compare specifications to variability

15. 2-15 Total Quality Management A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction. TQM

16. TQM Values TQM values –Holistic view of quality –Emphasis on customer –Extended process view of operations –Emphasis on prevention, not inspection –Disdain for variability –Data (not opinion) based decision making –Employee empowerment 6–16

17. TQM Values TQM values –Top Management support –Supplier quality (involvement ) –Continuous improvement –Bench marking –Champion –Quality at the source –Team approach 6–17

18. Quality Circles 6–18 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 Quality circle –group of workers and supervisors from same area who address quality problems

19. Guiding Methodologies: PDCA Plan-do-check-act cycle (Deming wheel or cycle): sequence to solve problems and improve over time –Plan: identify problem and actions for improvement –Do: implement formulated plan –Check: monitor results –Act: take corrective action and institutionalize changes 6–19 Act CheckDo Plan Figure 6-2

20. 2-20 Six Sigma A process for developing and delivering virtually perfect products and services Measure of how much a process deviates from perfection 3.4 defects per million opportunities Six Sigma Process –four basic steps of Six Sigma—align, mobilize, accelerate, and govern Champion –an executive responsible for project success

21. Guiding Methodologies: 6σ Six Sigma: quality improvement through elimination of defects and variation Standard deviation: statistical measure of variation 6–21 Sigma LevelDefects per Million 2σ2σ308,537 3σ3σ66,807 4σ4σ6,210 5σ5σ233 6σ6σ3.4

22. Guiding Methodologies: 6σ cont’d Sigma level of quality 6–22 Lower specification Mean Upper specification Four sigma Six sigma Two sigma

23. 6–23 Six Sigma Master Black Belt –a teacher and mentor for Black Belt Black Belts –Project leader Green Belts –project team members

24. Guiding Methodologies: DMAIC Define: determine Critical to Quality (CTQ) characteristics from customer’s perspective Measure: gather data on CTQ processes Analyze: determine cause of defects Improve: modify processes Control: ensure improvements are maintained 6–24

25. 2-25 Quality Awards Baldrige Award Deming Prize

26. 2-26 The Deming Prize Honoring W. Edwards Deming Japan’s highly coveted award Main focus: First U.S. company to win: Florida Power and Light in 1989 Second U.S. company to win: AT&T Power Systems unit of AT&T Microelectronics in 1994

27. 2-27 Malcolm Baldrige Award  Created in 1987 to stimulate growth of quality management in United States  Select six industries.  http://www.youtube.com/watch? v=kHWDc7D9G-E Malcolm Baldrige, former U.S. Secretary of Commerce

28. 2-28 Malcolm Baldrige Award  Criteria for award  1.0 Leadership (125 points)  2.0 Strategic Planning (85 points)  3.0 Customer and Market Focus (85 points)  4.0 Information and Analysis (85 points)  5.0 Human Resource Focus (85 points)  6.0 Process Management (85 points)  7.0 Business Results (450 points)

29. ISO 9000 ISO 9000: internationally accepted standards for quality management systems What an organization does to fulfill: –the customer's quality requirements, and –applicable regulatory requirements, while aiming to –enhance customer satisfaction, and –achieve continual improvement of its performance in pursuit of these objectives. 6–29 http://www.iso.org

30. ISO 9000 and ISO 14000 6–30 For all types of organizations Application and audit International standard Required by many customers Certification maintenance requires periodic auditing A set of international standards for assessing a company’s environmental performance ISO 9000ISO 14000

31. 6–31 ISO 9000 Certification, Implications, and Registrars

32. Homework problems on ch6 6–32 Do problems 1,2, and 3 on page 180