Discussion 6

Chapter 9

Management of Quality

© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.

1

Learning Objectives (1 of 2)

You should be able to:

9.1 Discuss the philosophies of quality gurus

9.2 Define the term quality as it relates to products and as it relates to services

9.3 Identify the determinants of quality

9.4 Explain why quality is important and the consequences of poor quality

9.5 Distinguish the costs associated with quality

9.6 Discuss the importance of ethics in managing quality

9-‹#›

© McGraw-Hill Education.

Learning Objectives (2 of 2)

9.7 Compare the quality awards

9.8 Discuss quality certification and its importance

9.9 Describe TQM

9.10 Give an overview of problem solving

9.11 Give an overview of process improvement

9.12 Describe the six sigma methodology

9.13 Describe and use various quality tools

9-‹#›

© McGraw-Hill Education.

Quality Management

Quality

The ability of a product or service to consistently meet or exceed customer expectations

For a decade or so, quality was an important focal point in business. After a while, this emphasis began to fade as other concerns took precedence

There has been a recent resurgence in attention to quality given recent experiences with the costs and adverse attention associated with highly visible quality failures:

Auto recalls

Toys

Produce

Dog food

Pharmaceuticals

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.1

Quality Contributors (1 of 2)

Walter Shewart

“father of statistical quality control”

Control charts

Variance reduction

W. Edwards Deming

Special versus common cause variation

The 14 points

Joseph Juran

Quality Control Handbook, 1951

Viewed quality as fitness-for-use

Quality trilogy – quality planning, quality control, quality improvement

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.1

Quality Contributors (2 of 2)

Armand Feigenbaum

Quality is a “total field”

The customer defines quality

Philip B. Crosby

Zero defects

Quality is Free, 1979

Kaoru Ishikawa

Cause-and-effect diagram

Quality circles

Recognized the internal customer

Genichi Taguchi

Taguchi loss function

Taiichi Ohno and Shigeo Shingo

Developed philosophy and methods of kaizen

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.2

Dimensions of Product Quality

Performance – main characteristics of the product

Aesthetics – appearance, feel, smell, taste

Special features – extra characteristics

Conformance – how well the product conforms to design specifications

Reliability – consistency of performance

Durability – the useful life of the product

Perceived quality – indirect evaluation of quality

Serviceability – handling of complaints or repairs

Consistency – quality doesn’t vary

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.2

Dimensions of Service Quality (1 of 2)

Convenience – the availability and accessibility of the service

Reliability – ability to perform a service dependably, consistently, and accurately

Responsiveness – willingness to help customers in unusual situations and to deal with problems

Time – the speed with which the service is delivered

Assurance – knowledge exhibited by personnel and their ability to convey trust and confidence

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.2

Dimensions of Service Quality (2 of 2)

Courtesy – the way customers are treated by employees

Tangibles – the physical appearance of facilities, equipment, personnel, and communication materials

Consistency – the ability to provide the same level of good quality repeatedly

Expectancy – meet (or exceed) customer expectations

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.2

Assessing Service Quality

Audit service to identify strengths and weaknesses

In particular, look for discrepancies between:

Customer expectations and management perceptions of those expectations

Management perceptions customer expectations and service-quality specifications

Service quality and service actually delivered

Service actually delivered and what is communicated about the service to customers

Customers’ expectations of the service provider and their perceptions of provider delivery

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.3

Determinants of Quality

Quality of design

Intention of designers to include or exclude features in a product or service

Quality of conformance

The degree to which goods or services conform to the intent of the designers

Ease-of-use and user instructions

Increase the likelihood that a product will be used for its intended purpose and in such a way that it will continue to function properly and safely

After-the-sale service

Taking care of issues and problems that arise after the sale

9-‹#›

© McGraw-Hill Education.

Responsibility for Quality

Top management

Design

Procurement

Production/operations

Quality assurance

Packaging and shipping

Marketing and sales

Customer service

Everyone in the organization has some responsibility for quality, but certain areas of the organization are involved in activities that make them key areas of responsibility

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.4

Benefits of Good Quality

Enhanced reputation for quality

Ability to command premium prices

Increased market share

Greater customer loyalty

Lower liability costs

Fewer production or service problems

Lower production costs

Higher profits

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.4

The Consequences of Poor Quality

Loss of business

Liability

Productivity

Costs

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.5

Costs of Quality (1 of 2)

Appraisal costs

Costs of activities designed to ensure quality or uncover defects

Prevention costs

All TQ training, TQ planning, customer assessment, process control, and quality improvement costs to prevent defects from occurring

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.5

Costs of Quality (2 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

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.6

Ethics and Quality

Substandard work

Defective products

Substandard service

Poor designs

Shoddy workmanship

Substandard parts and materials

Having knowledge of this and failing to correct and report it in a timely manner is unethical.

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.7

The Baldrige Competition

Award categories

Education

Healthcare

Manufacturing

Nonprofit/government

Service

Small Business

Purpose of the award

Stimulate efforts to improve quality

Recognize quality achievements

Publicize successful programs

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.7

Baldrige Criteria

Leadership

Strategic planning

Customer focus

Measurement, analysis, and knowledge management

Workforce focus

Operations focus

Results

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.8

Quality Certification (1 of 2)

International Organization for Standardization

ISO 9000

Set of international standards on quality management and quality assurance, critical to international business

ISO 14000

A set of international standards for assessing a company’s environmental performance

ISO 24700

Pertains to the quality and performance of office equipment that contains reused components

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.8

Quality Certification (2 of 2)

ISO 9000

Quality principles

Principle 1 Customer focus

Principle 2 Leadership

Principle 3 Involvement of people

Principle 4 Process approach

Principle 5 System approach to management

Principle 6 Continual improvement

Principle 7Factual approach to decision making

Principle 8 Mutually beneficial supplier relationships

9-‹#›

© McGraw-Hill Education.

Quality and the Supply Chain

Business leaders are increasingly recognizing the importance of their supply chains in achieving their quality goals

Requires:

Measuring customer perceptions of quality

Identifying problem areas

Correcting these problems

Supply chain quality management can benefit from a collaborative relationship with suppliers

Helping suppliers with quality assurance efforts

Information sharing on quality-related matters

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.9

Total Quality Management

A Philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.

TQM

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.9

TQM Approach

Find out what the customer wants

Design a product or service that meets or exceeds customer wants

Design processes that facilitate doing the job right the first time

Keep track of results

Extend these concepts throughout the supply chain

Top management must be involved and committed

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.9

TQM Elements

Continuous improvement

Competitive benchmarking

Employee empowerment

Team approach

Decision based on fact, not opinion

Knowledge of tools

Supplier quality

Champion

Quality at the source

Suppliers are partners in the process

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.9

Continuous Improvement

Continuous improvement

Philosophy that seeks to make never-ending improvements to the process of converting inputs into outputs

Kaizen

Japanese word for continuous improvement

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.9

Quality at the Source

The philosophy of making each worker responsible for the quality of his or her work

“Do it right” and “If it isn’t right, fix it”

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.9

Obstacles to Implementing TQM

Obstacles include:

Lack of company-wide definition of quality

Lack of strategic plan for change

Lack of customer focus

Poor inter-organizational communication

Lack of employee empowerment

View of quality as a “quick fix”

Emphasis on short-term financial results

Inordinate presence of internal politics and “turf” issues

Lack of strong motivation

Lack of time to devote to quality initiatives

Lack of leadership

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.10

PDSA Cycle (1 of 3)

Plan-Do-Study-Act (PDSA) cycle

Plan

Begin by studying and documenting the current process.

Collect data on the process or problem

Analyze the data and develop a plan for improvement

Specify measures for evaluating the plan

Do

Implement the plan, document any changes made, collect data for analysis

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.10

PDSA Cycle (2 of 3)

Study

Evaluate the data collection during the do phase

Check results against goals formulated during the plan phase

Act

If the results are successful, standardize the new method and communicate it to the relevant personnel

Implement training for the new method

If unsuccessful, revise the plan and repeat the process

If unsuccessful, revise the plan and repeat the process

9-‹#›

© McGraw-Hill Education.

Learning Objective 9.10

PDSA Cycle (3 of 3)