Quality ManagementQuality Management
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Lecture OutlineLecture Outline
Meaning of QualityMeaning of Quality Total Quality ManagementTotal Quality Management Quality Improvement and Role of Quality Improvement and Role of
EmployeesEmployees Strategic Implications of TQMStrategic Implications of TQM Six SigmaSix Sigma
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Lecture Outline (cont.)Lecture Outline (cont.)
TQM in Service CompaniesTQM in Service Companies Cost of QualityCost of Quality Quality Management and ProductivityQuality Management and Productivity Identifying Quality Problems and CausesIdentifying Quality Problems and Causes Quality Awards and Setting Quality Quality Awards and Setting Quality
StandardsStandards ISO 9000ISO 9000
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Meaning of QualityMeaning of Quality
Webster’s DictionaryWebster’s Dictionary degree of excellence of a thingdegree of excellence of a thing
American Society for QualityAmerican Society for Quality totality of features and characteristics totality of features and characteristics
that satisfy needsthat satisfy needs Consumer’s and Producer’s Consumer’s and Producer’s
PerspectivePerspective
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Meaning of Quality:Meaning of Quality:Consumer’s PerspectiveConsumer’s Perspective
Fitness for useFitness for use how well product or how well product or
service does what it is service does what it is supposed tosupposed to
Quality of designQuality of design designing quality designing quality
characteristics into a characteristics into a product or serviceproduct or service
A Mercedes and a Ford are A Mercedes and a Ford are equally “fit for use,” but with equally “fit for use,” but with different design dimensionsdifferent design dimensions
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Dimensions of Quality:Dimensions of Quality:Manufactured ProductsManufactured Products
Performance Performance basic operating characteristics of a product; how basic operating characteristics of a product; how
well a car is handled or its gas mileagewell a car is handled or its gas mileage Features Features
““extra” items added to basic features, such as a extra” items added to basic features, such as a stereo CD or a leather interior in a carstereo CD or a leather interior in a car
ReliabilityReliability probability that a product will operate properly probability that a product will operate properly
within an expected time frame; that is, a TV will within an expected time frame; that is, a TV will work without repair for about seven yearswork without repair for about seven years
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ConformanceConformance degree to which a product meets pre–established degree to which a product meets pre–established
standardsstandards DurabilityDurability
how long product lasts before replacementhow long product lasts before replacement ServiceabilityServiceability
ease of getting repairs, speed of repairs, courtesy ease of getting repairs, speed of repairs, courtesy and competence of repair personand competence of repair person
Dimensions of Quality:Dimensions of Quality:Manufactured Products (cont.)Manufactured Products (cont.)
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AestheticsAesthetics how a product looks, feels, sounds, how a product looks, feels, sounds,
smells, or tastessmells, or tastes Safety Safety
assurance that customer will not suffer assurance that customer will not suffer injury or harm from a product; an injury or harm from a product; an especially important consideration for especially important consideration for automobilesautomobiles
PerceptionsPerceptions subjective perceptions based on brand subjective perceptions based on brand
name, advertising, and the likename, advertising, and the like
Dimensions of Quality:Dimensions of Quality:Manufactured Products (cont.)Manufactured Products (cont.)
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Dimensions of Quality:Dimensions of Quality:ServiceService
Time and TimelinessTime and Timeliness How long must a customer wait for service, How long must a customer wait for service,
and is it completed on time?and is it completed on time? Is an overnight package delivered overnight?Is an overnight package delivered overnight?
Completeness:Completeness: Is everything customer asked for provided?Is everything customer asked for provided? Is a mail order from a catalogue company Is a mail order from a catalogue company
complete when delivered?complete when delivered?
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Dimensions of Quality:Dimensions of Quality:Service (cont.)Service (cont.)
Courtesy:Courtesy: How are customers treated by employees?How are customers treated by employees? Are catalogue phone operators nice and are Are catalogue phone operators nice and are
their voices pleasant?their voices pleasant? ConsistencyConsistency
Is the same level of service provided to each Is the same level of service provided to each customer each time?customer each time?
Is your newspaper delivered on time every Is your newspaper delivered on time every morning?morning?
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Accessibility and convenienceAccessibility and convenience How easy is it to obtain service?How easy is it to obtain service? Does a service representative answer you calls quickly?Does a service representative answer you calls quickly?
AccuracyAccuracy Is the service performed right every time?Is the service performed right every time? Is your bank or credit card statement correct every month?Is your bank or credit card statement correct every month?
ResponsivenessResponsiveness How well does the company react to unusual situations?How well does the company react to unusual situations? How well is a telephone operator able to respond to a How well is a telephone operator able to respond to a
customer’s questions?customer’s questions?
Dimensions of Quality:Dimensions of Quality:Service (cont.)Service (cont.)
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Meaning of Quality:Meaning of Quality:Producer’s PerspectiveProducer’s Perspective
Quality of ConformanceQuality of Conformance Making sure a product or service is Making sure a product or service is
produced according to designproduced according to design if new tires do not conform to specifications, they if new tires do not conform to specifications, they
wobblewobble if a hotel room is not clean when a guest checks if a hotel room is not clean when a guest checks
in, the hotel is not functioning according to in, the hotel is not functioning according to specifications of its designspecifications of its design
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Meaning of Quality:Meaning of Quality:A Final PerspectiveA Final Perspective
Consumer’s and producer’s Consumer’s and producer’s perspectives depend on each otherperspectives depend on each other
Consumer’s perspective: PRICE Consumer’s perspective: PRICE Producer’s perspective: COSTProducer’s perspective: COST Consumer’s view must dominateConsumer’s view must dominate
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Fitness forConsumer Use
Fitness forConsumer Use
Producer’s PerspectiveProducer’s Perspective Consumer’s PerspectiveConsumer’s Perspective
Quality of ConformanceQuality of Conformance
• Conformance to specifications
• Cost
Quality of DesignQuality of Design
• Quality characteristics• Price
MarketingMarketingProductionProduction
Meaning of Quality Meaning of Quality
Meaning of QualityMeaning of Quality
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Total Quality ManagementTotal Quality Management
Commitment to quality throughout organizationCommitment to quality throughout organization
Principles of TQMPrinciples of TQM Customer-orientedCustomer-oriented LeadershipLeadership Strategic planningStrategic planning Employee responsibilityEmployee responsibility Continuous improvementContinuous improvement CooperationCooperation Statistical methodsStatistical methods Training and educationTraining and education
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Quality GurusQuality Gurus
Walter ShewartWalter Shewart In 1920s, developed control chartsIn 1920s, developed control charts Introduced the term “Introduced the term “quality assurance” quality assurance”
W. Edwards DemingW. Edwards Deming Developed courses during World War II to teach Developed courses during World War II to teach
statistical quality-control techniques to engineers and statistical quality-control techniques to engineers and executives of companies that were military suppliersexecutives of companies that were military suppliers
After the war, began teaching statistical quality control After the war, began teaching statistical quality control to Japanese companiesto Japanese companies
Joseph M. JuranJoseph M. Juran Followed Deming to Japan in 1954Followed Deming to Japan in 1954 Focused on strategic quality planning Focused on strategic quality planning
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Armand V. FeigenbaumArmand V. Feigenbaum In 1951, introduced concepts of total quality control In 1951, introduced concepts of total quality control
and continuous quality improvementand continuous quality improvement Philip Crosby Philip Crosby
In 1979, emphasized that costs of poor quality far In 1979, emphasized that costs of poor quality far outweigh the cost of preventing poor qualityoutweigh the cost of preventing poor quality
In 1984, defined absolutes of quality management—In 1984, defined absolutes of quality management—conformance to requirements, prevention, and “zero conformance to requirements, prevention, and “zero defects”defects”
Kaoru IshikawaKaoru Ishikawa Promoted use of quality circlesPromoted use of quality circles Developed “fishbone” diagram Developed “fishbone” diagram Emphasized importance of internal customerEmphasized importance of internal customer
Quality Gurus (cont.)Quality Gurus (cont.)
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Deming Wheel: PDCA Deming Wheel: PDCA CycleCycle
1. PlanIdentify problem and develop plan for improvement.
2. DoImplement plan on a test basis.
3. Study/CheckAssess plan; is it working?
4. ActInstitutionalize improvement; continue cycle.
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Strategic Implications of Strategic Implications of TQMTQM
Strong leadershipStrong leadership GoalsGoals, , visionvision, or , or missionmission Operational plans and policiesOperational plans and policies Mechanism for feedbackMechanism for feedback
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Six SigmaSix Sigma
A process for developing and delivering A process for developing and delivering near perfect products and servicesnear perfect products and services
Measure of how much a process Measure of how much a process deviates from perfectiondeviates from perfection
3.4 defects per million opportunities3.4 defects per million opportunities ChampionChampion
an executive responsible for project successan executive responsible for project success
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Black Belts and Black Belts and Green BeltsGreen Belts
Black BeltBlack Belt project leaderproject leader
Master Black BeltMaster Black Belt a teacher and mentor a teacher and mentor
for Black Beltsfor Black Belts
Green BeltsGreen Belts project team project team
membersmembers
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3.4 DPMO3.4 DPMO
67,000 DPMOcost = 25% of
sales
67,000 DPMOcost = 25% of
sales
DEFINEDEFINE CONTROLCONTROLIMPROVEIMPROVEANALYZEANALYZEMEASUREMEASURE
Six Sigma: DMAICSix Sigma: DMAIC
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TQM in Service TQM in Service CompaniesCompanies
Principles of TQM apply equally well to Principles of TQM apply equally well to services and manufacturingservices and manufacturing
Services and manufacturing companies Services and manufacturing companies have similar inputs but different have similar inputs but different processes and outputsprocesses and outputs
Services tend to be labor intensiveServices tend to be labor intensive Service defects are not always easy to Service defects are not always easy to
measure because service output is not measure because service output is not usually a tangible itemusually a tangible item
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Quality Attributes in Quality Attributes in ServiceService
BenchmarkBenchmark ““best” level of quality best” level of quality
achievement one achievement one company or company or companies seek to companies seek to achieveachieve
TimelinessTimeliness how quickly a service how quickly a service
is providedis provided ““quickest, friendliest, most quickest, friendliest, most accurate service accurate service
available.”available.”
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Cost of QualityCost of Quality
Cost of Achieving Good QualityCost of Achieving Good Quality Prevention costsPrevention costs
costs incurred during product designcosts incurred during product design Appraisal costsAppraisal costs
costs of measuring, testing, and analyzingcosts of measuring, testing, and analyzing Cost of Poor QualityCost of Poor Quality
Internal failure costsInternal failure costs include scrap, rework, process failure, downtime, include scrap, rework, process failure, downtime,
and price reductionsand price reductions External failure costsExternal failure costs
include complaints, returns, warranty claims, include complaints, returns, warranty claims, liability, and lost salesliability, and lost sales
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Prevention CostsPrevention Costs
Quality planning costsQuality planning costs costs of developing and costs of developing and
implementing quality implementing quality management programmanagement program
Product-design costsProduct-design costs costs of designing costs of designing
products with quality products with quality characteristicscharacteristics
Process costsProcess costs costs expended to make costs expended to make
sure productive process sure productive process conforms to quality conforms to quality specificationsspecifications
Training costsTraining costs costs of developing and costs of developing and
putting on quality training putting on quality training programs for employees programs for employees and managementand management
Information costsInformation costs costs of acquiring and costs of acquiring and
maintaining data related maintaining data related to quality, and to quality, and development of reports on development of reports on quality performancequality performance
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Appraisal CostsAppraisal Costs
Inspection and testingInspection and testing costs of testing and inspecting materials, parts, and costs of testing and inspecting materials, parts, and
product at various stages and at the end of a product at various stages and at the end of a processprocess
Test equipment costsTest equipment costs costs of maintaining equipment used in testing costs of maintaining equipment used in testing
quality characteristics of productsquality characteristics of products Operator costsOperator costs
costs of time spent by operators to gar data for costs of time spent by operators to gar data for testing product quality, to make equipment testing product quality, to make equipment adjustments to maintain quality, and to stop work to adjustments to maintain quality, and to stop work to assess qualityassess quality
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Internal Failure CostsInternal Failure Costs
Scrap costsScrap costs costs of poor-quality costs of poor-quality
products that must be products that must be discarded, including labor, discarded, including labor, material, and indirect costsmaterial, and indirect costs
Rework costsRework costs costs of fixing defective costs of fixing defective
products to conform to products to conform to quality specificationsquality specifications
Process failure costsProcess failure costs costs of determining why costs of determining why
production process is production process is producing poor-quality producing poor-quality productsproducts
Process downtime costsProcess downtime costs costs of shutting down costs of shutting down
productive process to fix productive process to fix problemproblem
Price-downgrading costsPrice-downgrading costs costs of discounting poor-costs of discounting poor-
quality products—that is, quality products—that is, selling products as selling products as “seconds”“seconds”
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External Failure CostsExternal Failure Costs
Customer complaint costsCustomer complaint costs costs of investigating and costs of investigating and
satisfactorily responding to a satisfactorily responding to a customer complaint resulting customer complaint resulting from a poor-quality productfrom a poor-quality product
Product return costsProduct return costs costs of handling and replacing costs of handling and replacing
poor-quality products returned poor-quality products returned by customerby customer
Warranty claims costsWarranty claims costs costs of complying with costs of complying with
product warrantiesproduct warranties
Product liability costsProduct liability costs litigation costs litigation costs
resulting from product resulting from product liability and customer liability and customer injuryinjury
Lost sales costsLost sales costs costs incurred costs incurred
because customers because customers are dissatisfied with are dissatisfied with poor quality products poor quality products and do not make and do not make additional purchasesadditional purchases
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Competitiveness and Competitiveness and ProductivityProductivity
CompetitivenessCompetitiveness degree to which a nation can produce goods and degree to which a nation can produce goods and
services that meet the test of international services that meet the test of international marketsmarkets
ProductivityProductivity ratio of output to inputratio of output to input
OutputOutput sales made, products produced, customers sales made, products produced, customers
served, meals delivered, or calls answeredserved, meals delivered, or calls answered InputInput
labor hours, investment in equipment, material labor hours, investment in equipment, material usage, or square footageusage, or square footage
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Measures of Productivity
Competitiveness and Competitiveness and Productivity (cont.)Productivity (cont.)
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Become efficientBecome efficient output increases with little or no increase in inputoutput increases with little or no increase in input
ExpandExpand both output and input grow with output growing both output and input grow with output growing
more rapidlymore rapidly Achieve breakthroughsAchieve breakthroughs
output increases while input decreasesoutput increases while input decreases DownsizeDownsize
output remains the same and input is reducedoutput remains the same and input is reduced RetrenchRetrench
both output and input decrease, with input both output and input decrease, with input decreasing at a faster ratedecreasing at a faster rate
Productivity IncreaseProductivity Increase
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Quality Management Quality Management and Productivityand Productivity
ProductivityProductivity ratio of output to inputratio of output to input
Yield: Yield: a measure of productivitya measure of productivity
Yield=(total input)(% good units) + (total input)(1-%good units)(% reworked)Yield=(total input)(% good units) + (total input)(1-%good units)(% reworked)
or
Y=(I)(%G)+(I)(1-%G)(%R)Y=(I)(%G)+(I)(1-%G)(%R)
or
Y=(I)(%G)+(I)(1-%G)(%R)Y=(I)(%G)+(I)(1-%G)(%R)
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Product CostProduct Cost
Y
RKIK rd ))(())(( Product Cost
where:Kd = direct manufacturing cost per unitI = inputKr = rework cost per unitR = reworked unitsY = yield
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Computing ProductComputing ProductYield for Multistage ProcessesYield for Multistage Processes
Y = (I)(%g1)(%g2) … (%gn)
where:I = input of items to the production process that will result in finished productsgi = good-quality, work-in-process products at stage i
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Quality–Productivity RatioQuality–Productivity Ratio
QPRQPR productivity index that includes productivity and productivity index that includes productivity and
quality costsquality costs
QPR =(non-defective units)
(input) (processing cost) + (defective units) (reworked cost)
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Seven Quality Control ToolsSeven Quality Control Tools
Pareto AnalysisPareto Analysis Flow ChartFlow Chart Check SheetCheck Sheet HistogramHistogram
Scatter DiagramScatter Diagram SPC ChartSPC Chart Cause-and-Effect Cause-and-Effect
DiagramDiagram
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NUMBER OFNUMBER OFCAUSECAUSE DEFECTSDEFECTS PERCENTAGEPERCENTAGE
Poor designPoor design 8080 6464 %%Wrong part dimensionsWrong part dimensions 1616 1313Defective partsDefective parts 1212 1010Incorrect machine calibrationIncorrect machine calibration 77 66Operator errorsOperator errors 44 33Defective materialDefective material 33 22Surface abrasionsSurface abrasions 33 22
125125 100100 %%
Pareto AnalysisPareto Analysis
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Per
cen
t fr
om
eac
h c
ause
Per
cen
t fr
om
eac
h c
ause
Causes of poor qualityCauses of poor quality
Mac
hine
cal
ibra
tions
Mac
hine
cal
ibra
tions
Defec
tive
parts
Defec
tive
parts
Wro
ng d
imen
sion
s
Wro
ng d
imen
sion
s
Poor D
esig
n
Poor D
esig
n
Ope
rato
r err
ors
Ope
rato
r err
ors
Defec
tive
mat
eria
ls
Defec
tive
mat
eria
ls
Surfa
ce a
bras
ions
Surfa
ce a
bras
ions
00
1010
2020
3030
4040
5050
6060
7070(64)(64)
(13)(13)(10)(10)
(6)(6)(3)(3) (2)(2) (2)(2)
Pareto ChartPareto Chart
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Flow ChartFlow Chart
Operation DecisionStart/ Finish
Start/ Finish
Operation
OperationOperation
Operation
Decision
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Check SheetCheck Sheet
COMPONENTS REPLACED BY LABTIME PERIOD: 22 Feb to 27 Feb 2002REPAIR TECHNICIAN: Bob
TV SET MODEL 1013
Integrated Circuits ||||Capacitors |||| |||| |||| |||| |||| ||Resistors ||Transformers ||||CommandsCRT |
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HistogramHistogram
0
5
10
15
20
1 2 6 13 10 16 19 17 12 16 2017 13 5 6 2 1
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Scatter DiagramScatter Diagram
YY
XX
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Control ChartControl Chart
1818
1212
66
33
99
1515
2121
2424
22 44 66 88 1010 1212 1414 1616
Sample numberSample number
Nu
mb
er o
f d
efec
tsN
um
ber
of
def
ects
UCL = 23.35
LCL = 1.99
c = 12.67
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Cause-and-Effect Diagram Cause-and-Effect Diagram
QualityProblemQuality
Problem
Out of adjustmentOut of adjustment
Tooling problemsTooling problems
Old / wornOld / worn
MachinesMachinesFaultyFaulty testing equipmenttesting equipment
Incorrect specificationsIncorrect specifications
Improper methodsImproper methods
MeasurementMeasurement
Poor supervisionPoor supervision
Lack of concentrationLack of concentration
Inadequate trainingInadequate training
HumanHuman
DeficienciesDeficienciesin product designin product design
Ineffective qualityIneffective qualitymanagementmanagement
Poor process designPoor process design
ProcessProcess
InaccurateInaccuratetemperature temperature controlcontrol
Dust and DirtDust and Dirt
EnvironmentEnvironment
Defective from vendorDefective from vendor
Not to specificationsNot to specifications
Material-Material-handling problemshandling problems
MaterialsMaterials
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Baldrige AwardBaldrige Award
Created in 1987 to stimulate growth of Created in 1987 to stimulate growth of quality management in the United Statesquality management in the United States
CategoriesCategories LeadershipLeadership Information and analysisInformation and analysis Strategic planningStrategic planning Human resourceHuman resource FocusFocus Process managementProcess management Business resultsBusiness results Customer and market focusCustomer and market focus
