Quality Management. 3-2 Lecture Outline  Meaning of Quality  Total Quality Management  Quality Improvement and Role of Employees  Strategic Implications

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  • Quality Management

    Copyright 2006 John Wiley & Sons, Inc.

  • Lecture OutlineMeaning of QualityTotal Quality ManagementQuality Improvement and Role of EmployeesStrategic Implications of TQMSix Sigma

    Copyright 2006 John Wiley & Sons, Inc.

  • Lecture Outline (cont.)TQM in Service CompaniesCost of QualityQuality Management and ProductivityIdentifying Quality Problems and CausesQuality Awards and Setting Quality StandardsISO 9000

    Copyright 2006 John Wiley & Sons, Inc.

  • Meaning of QualityWebsters Dictionarydegree of excellence of a thingAmerican Society for Qualitytotality of features and characteristics that satisfy needsConsumers and Producers Perspective

    Copyright 2006 John Wiley & Sons, Inc.

  • Meaning of Quality:Consumers PerspectiveFitness for usehow well product or service does what it is supposed toQuality of designdesigning quality characteristics into a product or serviceA Mercedes and a Ford are equally fit for use, but with different design dimensions

    Copyright 2006 John Wiley & Sons, Inc.

  • Dimensions of Quality:Manufactured ProductsPerformance basic operating characteristics of a product; how well a car is handled or its gas mileageFeatures extra items added to basic features, such as a stereo CD or a leather interior in a carReliabilityprobability that a product will operate properly within an expected time frame; that is, a TV will work without repair for about seven years

    Copyright 2006 John Wiley & Sons, Inc.

  • Dimensions of Quality:Manufactured Products (cont.)Conformance degree to which a product meets preestablished standardsDurabilityhow long product lasts before replacementServiceabilityease of getting repairs, speed of repairs, courtesy and competence of repair person

    Copyright 2006 John Wiley & Sons, Inc.

  • Dimensions of Quality:Manufactured Products (cont.)Aestheticshow a product looks, feels, sounds, smells, or tastesSafety assurance that customer will not suffer injury or harm from a product; an especially important consideration for automobilesPerceptionssubjective perceptions based on brand name, advertising, and the like

    Copyright 2006 John Wiley & Sons, Inc.

  • Dimensions of Quality:ServiceTime and TimelinessHow long must a customer wait for service, and is it completed on time?Is an overnight package delivered overnight?Completeness:Is everything customer asked for provided?Is a mail order from a catalogue company complete when delivered?

    Copyright 2006 John Wiley & Sons, Inc.

  • Dimensions of Quality:Service (cont.)Courtesy:How are customers treated by employees?Are catalogue phone operators nice and are their voices pleasant?ConsistencyIs the same level of service provided to each customer each time?Is your newspaper delivered on time every morning?

    Copyright 2006 John Wiley & Sons, Inc.

  • Dimensions of Quality:Service (cont.)Accessibility and convenienceHow easy is it to obtain service?Does a service representative answer you calls quickly?AccuracyIs the service performed right every time?Is your bank or credit card statement correct every month?ResponsivenessHow well does the company react to unusual situations?How well is a telephone operator able to respond to a customers questions?

    Copyright 2006 John Wiley & Sons, Inc.

  • Meaning of Quality:Producers PerspectiveQuality of ConformanceMaking sure a product or service is produced according to designif new tires do not conform to specifications, they wobbleif a hotel room is not clean when a guest checks in, the hotel is not functioning according to specifications of its design

    Copyright 2006 John Wiley & Sons, Inc.

  • Meaning of Quality:A Final PerspectiveConsumers and producers perspectives depend on each otherConsumers perspective: PRICE Producers perspective: COSTConsumers view must dominate

    Copyright 2006 John Wiley & Sons, Inc.

  • Meaning of Quality

    Copyright 2006 John Wiley & Sons, Inc.

  • Total Quality ManagementCommitment to quality throughout organization

    Principles of TQMCustomer-orientedLeadershipStrategic planningEmployee responsibilityContinuous improvementCooperationStatistical methodsTraining and education

    Copyright 2006 John Wiley & Sons, Inc.

  • Quality GurusWalter ShewartIn 1920s, developed control chartsIntroduced the term quality assurance W. Edwards Deming Developed courses during World War II to teach statistical quality-control techniques to engineers and executives of companies that were military suppliersAfter the war, began teaching statistical quality control to Japanese companiesJoseph M. JuranFollowed Deming to Japan in 1954Focused on strategic quality planning

    Copyright 2006 John Wiley & Sons, Inc.

  • Quality Gurus (cont.)Armand V. FeigenbaumIn 1951, introduced concepts of total quality control and continuous quality improvementPhilip Crosby In 1979, emphasized that costs of poor quality far outweigh the cost of preventing poor qualityIn 1984, defined absolutes of quality managementconformance to requirements, prevention, and zero defectsKaoru IshikawaPromoted use of quality circlesDeveloped fishbone diagram Emphasized importance of internal customer

    Copyright 2006 John Wiley & Sons, Inc.

  • Deming Wheel: PDCA Cycle

    Copyright 2006 John Wiley & Sons, Inc.

  • Strategic Implications of TQMStrong leadershipGoals, vision, or missionOperational plans and policiesMechanism for feedback

    Copyright 2006 John Wiley & Sons, Inc.

  • Six SigmaA process for developing and delivering near perfect products and servicesMeasure of how much a process deviates from perfection3.4 defects per million opportunitiesChampionan executive responsible for project success

    Copyright 2006 John Wiley & Sons, Inc.

  • Black Belts and Green BeltsBlack Belt project leaderMaster Black Belta teacher and mentor for Black BeltsGreen Beltsproject team members

    Copyright 2006 John Wiley & Sons, Inc.

  • Six Sigma: DMAIC3.4 DPMO67,000 DPMOcost = 25% of sales

    Copyright 2006 John Wiley & Sons, Inc.

  • TQM in Service CompaniesPrinciples of TQM apply equally well to services and manufacturingServices and manufacturing companies have similar inputs but different processes and outputsServices tend to be labor intensiveService defects are not always easy to measure because service output is not usually a tangible item

    Copyright 2006 John Wiley & Sons, Inc.

  • Quality Attributes in ServiceBenchmarkbest level of quality achievement one company or companies seek to achieveTimelinesshow quickly a service is provided

    Copyright 2006 John Wiley & Sons, Inc.

  • Cost of Quality Cost of Achieving Good QualityPrevention costscosts incurred during product designAppraisal costscosts of measuring, testing, and analyzing Cost of Poor QualityInternal failure costsinclude scrap, rework, process failure, downtime, and price reductionsExternal failure costsinclude complaints, returns, warranty claims, liability, and lost sales

    Copyright 2006 John Wiley & Sons, Inc.

  • Prevention CostsQuality planning costscosts of developing and implementing quality management programProduct-design costscosts of designing products with quality characteristicsProcess costscosts expended to make sure productive process conforms to quality specificationsTraining costscosts of developing and putting on quality training programs for employees and managementInformation costscosts of acquiring and maintaining data related to quality, and development of reports on quality performance

    Copyright 2006 John Wiley & Sons, Inc.

  • Appraisal CostsInspection and testingcosts of testing and inspecting materials, parts, and product at various stages and at the end of a processTest equipment costscosts of maintaining equipment used in testing quality characteristics of productsOperator costscosts of time spent by operators to gar data for testing product quality, to make equipment adjustments to maintain quality, and to stop work to assess quality

    Copyright 2006 John Wiley & Sons, Inc.

  • Internal Failure CostsScrap costscosts of poor-quality products that must be discarded, including labor, material, and indirect costsRework costscosts of fixing defective products to conform to quality specificationsProcess failure costscosts of determining why production process is producing poor-quality productsProcess downtime costscosts of shutting down productive process to fix problemPrice-downgrading costscosts of discounting poor-quality productsthat is, selling products as seconds

    Copyright 2006 John Wiley & Sons, Inc.

  • External Failure CostsCustomer complaint costscosts of investigating and satisfactorily responding to a customer complaint resulting from a poor-quality productProduct return costscosts of handling and replacing poor-quality products returned by customerWarranty claims costscosts of complying with product warrantiesProduct liability costslitigation costs resulting from product liability and customer injuryLost sales costscosts incurred because customers are dissatisfied with poor quality products and do not make additional purchases

    Copyright 2006 John Wiley & Sons, Inc.

  • Competitiveness and ProductivityCompetitivenessdegree to which a nation can produce goods and services that meet the test of international marketsProductivityratio of output to inputOutputsales made, products produced, customers served, meals delivered, or calls answeredInputlabor hours, investment in equipment, material usage, or square footage

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