Current Event Assignments

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Five Major Cost of Quality Categories

Prevention costs

Appraisal costs

Internal failure costs

External failure costs

Morale costs

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Lean

A management philosophy focused on maximizing customer value while minimizing waste

Waste, or “muda,” comes in seven forms:

Overproduction

Waiting

Transportation

Nonvalue-adding processes

Inventory

Motion

Costs of quality (scrap, rework, and inspection)

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Value Streams

A series of steps executed in the right way and at the right time to create value for the customer.

Each step must be:

valuable to the customer

capable (gets the exact same result every time)

available (it can be performed whenever needed)

adequate (capacity to perform it exactly when needed)

flexible (can respond rapidly to changing customer desires without creating inefficiencies)

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Lean and Value Streams

Goal: Optimize the flow of products and services through value streams that flow internally across technologies, assets, and departments to customers and externally with supply chain partners

“Pull” system versus “push” system

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Total Quality Management (TQM)

A philosophy and system of management focused on long-term success through customer satisfaction.

Quality integrated throughout the organization’s activities

Employee commitment to continuous improvement

Suppliers are partners in the TQM process

Uses tools including continuous improvement or kaizen, quality function deployment (QFD), and statistical process control (SPC) to achieve performance improvements

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Kaizen

Relentless pursuit of product and process improvement through a series of small, progressive steps

Follows a well-defined and structured approach

plan–do–check–act (the Deming Wheel)

Incorporates problem-solving tools

Pareto analysis, histograms, scatter diagrams, check sheets, fishbone diagrams, control charts, run charts, and process flow diagrams

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Quality Function Deployment (QFD)

QFD is a process, supported by a set of tools, to translate customer requirements, or “voice of the customer” (VOC), into specifications.

Helps to understand what value represents to the customer and provides direction

Across-functional activity, involving input from operations, marketing/sales, engineering, accounting/ finance, and supply.

Can be applied to both products and services.

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The Potential Role of Supply in QFD

Product planning - Provide expertise in analyzing customer requirements and generating a list of new product ideas

Parts deployment - Provide alternative design concepts and estimate the manufacturing costs of various parts

Process planning - Determine supplier process constraints

Production planning - Help develop performance measurement criteria for production planning

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Six Sigma

Philosophy that work is processes that can be defined, measured, analyzed, improved and controlled (DMAIC)

Six sigma quality (6 σ) represents 3.4 defects per million opportunities

six standard deviations are very close to zero defects and correspond to a Cpk value of 2.0

Uses a set of tools, such as SPC, control charts and flowcharting, to drive process improvements.

Well-defined projects with measurable goals:

e.g., cost reduction or profit increase through improvements in cycle time, delivery, safety, etc.

Team members have training in statistics

Applies to manufacturing and to services

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Statistical Process Control (SPC)

A technique that involves testing a random sample of output from a process in order to detect if nonrandom changes in the process are occurring

Causes of variation: Common causes and special or nonrandom, assignable causes

Process capability: ability of the process to meet specifications consistently

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Assuring Supplier Quality Through SPC

Buyer establishes required quality specifications

Supplier determines process capability

a. Identify common or chance causes of variation

b. Identify special or assignable causes of variation

c. Eliminate special causes

Compare buyer’s quality requirements to the supplier’s process capability

Make necessary adjustments

a. Negotiate process improvements with supplier

b. Seek an alternate supplier

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Control Chart

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Dimensions of Service Quality Evaluation

Reliability: Ability to perform the promised service dependably and accurately

Responsiveness: Willingness to help customers and provide prompt service

Assurance: Knowledge and courtesy of employees and their ability to inspire trust and confidence

Empathy: Caring, individualized attention the firm provides its customers

Tangibles: Appearance of physical facilities, equipment and appearance of personnel

Source: Parasuraman, A., “Finding Service Gaps in the Age of e-Commerce,” IESE Insight, Second Quarter 2013, Issue 17, pp. 30–37.

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A Framework for Analyzing Services

Value of the service

high, medium low

Pareto/ABC analysis

Degree of repetitiveness

repetitive versus unique

Degree of tangibility

low versus high

Direction of the service

directed towards people or assets

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A Framework for Analyzing Services (cont’d)

Production of the service

People, equipment or people and equipment

Skill level of people

Nature of demand

Continuous, periodic or discrete

Nature of service delivery

Location, time

Degree of standardization

Standard or customized

Skills required for the service

Skilled, unskilled

Estimated costs vs. estimated benefits

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ISO Quality Standards

ISO has adopted a common “high level structure” (HLS) for its management systems standards

Ten sections: scope, normative references, terms and conditions, context of the organization, leadership, planning, support, operation, performance evaluation, and improvement.

ISO 9001: 2015

Provides a set of standardized requirements for a quality management system, regardless of what the user organization does, its size, or whether it is in the private or public sector.

defines the requirements a quality system must meet, but does not dictate how they should be met, leaving scope and flexibility for implementation.

ISO 14001: 2015

Sets the requirements for an effective environmental management system.

Similar to ISO 9001, it is suitable for organizations of all types and sizes.

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Quality Awards

Deming Prize

Established in Japan in 1950 to honor Dr. W. Edward Deming’s contribution to the quality field

Given annually to recognize both individuals for their contributions to the field of TQM and businesses that have successfully implemented TQM.

Non-Japanese companies now eligible

Malcolm Baldrige National Quality Award

Annual award that recognizes U.S. organizations in manufacturing, service, small business, health care, education, and nonprofit

Evaluates both quality management programs and achievement of results, with heavy emphasis on organization-wide financial performance.

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