Unit 2

1. Unit 2 TQM Principles

2. Customer Satisfaction • Customers-Internal & External • Types of Customers Type I:- INSIGNIFICANT CUSTOMERS who knows not what he wants and knows not that he knows that he knows not what he wants • Type II:- HUMBLE CUSTOMERS Who knows not what he wants and knowsthat he knows not what he wants

3. Customer Satisfaction • Type III:- SLEEPING CUSTOMERS who knows what he wants and knows not that he knows what he wants • Type IV:- MASTER CUSTOMER who knows what he wants and knows that he knows what he wants .

4. Customer Perception of Quality • One of the basic concepts of the TQM philosophy is continuous process improvement. • This concept implies that there is no acceptable quality level because the customer’s needs, values and expectations are constantly changing and becoming more demanding.’

5. An American Society for Quality (ASQ) survey on end user perceptions of important factors that influenced purchases showed the following ranking: 1. Performance 2. Features. 3. Service 4. Warranty 5. Price 6. Reputation

6. Performance involves “fitness for Use”—a phrase that indicates that the product and service is ready for the customers use at the time of sale. Features : Identifiable features or attributes of a product or service are psychological, time-oriented, contractual, ethical,and technological. Features are secondary characteristics of the product or service. For example, the primary function of an automobile is transportation, whereas a car stereo system is a feature of an automobile. Service : An emphasis on customer service is emerging as a method for organizations to give the customer-added value. However,customer service is an intangible—it is made up of many small things, all geared to changing the customer’s perception. • Providing excellent customer service is different from and more difficult to achieve than excellent product quality. • Organizations that emphasize service never stop looking for and finding ways to serve their customers better, even if their customers are not complaining.

7. Warranty The product warranty represents an organization’s public promise of a quality product backed up by a guarantee of customer satisfaction. Ideally, it also represents a public commitment to guarantee a level of service sufficient to satisfy the customer. A warranty forces the organization to focus on the customer’s definition of product and service quality. An organization has to identify the characteristics of product and service quality and the importance the customer attaches to each of those characteristics. A warranty generates feedback by providing information on the product and service quality. It also forces the organization to develop a corrective action system. Finally, a warranty builds marketing muscle. The warranty encourages customers to buy a service by reducing the risk of the purchase decision, and it generates more sales from existing customers by enhancing loyalty. Price Today’s customer is willing to pay a higher price to obtain value. Customers are constantly evaluating one organization’s products and services against those of its competitors to determine who provides the greatest value. However, in our highly-competitive environment, each customer’s concept of value is continually changing. Ongoing efforts must be made by everyone having contact with customers to identify, verify, and update each customer’s perception of value in relation to each product andservice. Reputation Customers are willing to pay a premium for a known or trusted brand name and often become customers for life. Because it costs five times as much to win a new customer as it does to keep an existing one, customer retention is an important economic strategy for any organization. Although it is difficult for an organization to quantify improved customer satisfaction, it is very easy to quantify an increase in customer retention.

8. Customer Complaints • Complaints can be seen as an opportunity to obtain information and provide a positive service to the customer. • In reality, the Customer is giving the organization a second chance. • A Petty complaint voiced to a front line employee often becomes a major complaint when it gets to the Management level.

9. Some actions organizations can take to handle complaints are as follows: Investigate Customers experiences by actively soliciting feedback and then acting on it promptly. • Develop Procedures for Complaint resolution that include empowering front – line personnel. • Analyze complaints, but understand that complaints do not always fit into neat categories. • Work to identify process and material variations and then eliminate the root cause. “More inspection” is not corrective action. • When a survey response is received, a senior manager should contact the customer and strive to resolve the concern.

10. 6. Establish customer satisfaction measures and constantly monitor them. 7. Communicate Complaint information and the results of all investigations and solutions to all people in the organization. 8. Provide a monthly complaint report to the quality council for their evaluation and if needed, the assignment of process improvement teams. 9. Identify customers expectations beforehand rather than afterward through complaint analysis

11. Service Quality The dimensions of quality for a service differ somewhat from those of a manufactured product. Service quality is more directly elated to time, and the interaction between employees and the customer. Evans and Lindsay identify the following dimensions of service quality. 1. Time and timeliness: How long a customer must wait for service, and if it is completed in time. For example, is an overnight package delivered overnight? 2. Completeness: Is everything the customer asked for provided? For example, is a mail order from a catalog company complete when delivered? 3. Courtesy: How customers are treated by employees. For example, are catalog phone operators nice and are their voices pleasant?

12. Service Quality Contd. 4. Consistency: Is the same level of service provided to each customer each time? Is your newspaper delivered on time every morning? 5. Accessibility and convenience: How easy it is to obtain the service. For example, when you call BPL Mobile, does the service representative answer quickly? 6. Accuracy: Is the service performed right every time? Is your bank or credit card statement correct every month? 7. Responsiveness: How well the company reacts to unusual situations, which can happen frequently in a service company. For example, how well a telephone operator at a catalog company is able to respond to a customer’s suggestions about a catalog item not fully described in the catalog.

13. Service Quality Contd. All the product and service characteristics mentioned previously must be considered in the design process to meet the consumer’s expectations for quality. This requires that a company accurately assess what the consumer wants and needs. Consumer research to determine what kind of products are desired and the level of quality expected is a big part of a company’s quality management program. Once consumer needs and wants have been determined by marketing, they are incorporated into the design of the product, and it is up to operations to ensure that the design is properly implemented, resulting in products and services consumers want and having quality they expect.

14. Customer Retention Customers are willing to pay a premium for a known or trusted brand name and often become customers for life. Because it costs five times as much to win a new customer as it does to keep an existing one, customer retention is an important economic strategy for any organization. Although it is difficult for an organization to quantify improved customer satisfaction, it is very easy to quantify an increase in customer retention. Investment in customer retention can be a more effective bottom-line approach than concentrating on lowering operational costs. An effective marketing retention strategy is achieved through using feedback form information collecting tools.

15. Employee Involvement Motivation:- By Needs, Desire, Monetary Benefits, Incentives, Promotions, Facilities, Recognition, Etc. • Need For Employee Involvement • To take Right Decision Making • Full Knowledge & Skill to be used • Solve Problems • Morale & Commitment • Leadership • Creativity & Innovation Employee Involvement is one approach to improving quality and productivity.

16. Maslow’s Need Theory SELF -ACTUALISATION ESTEEM SOCIAL SECURITY SURVIVAL

17. HERZBERG’S TWO-FACTOR THEORY MOTIVATORS • Recognition, • Responsibility • Achievement • Promotion • Work Environment HYGIENE or DISSATISFIERS FACTORS • Low Salary • Minimum Benefits • Poor Working Conditions, • I ll Defined Organization Policies • Partiality Perks

18. Motivated Work Force • Know Thyself • Know your Employees • Establish a Positive Attitude • Share the goal • Monitor Progress • Develop Interesting Work-Job Rotation, Enlargement & Enrichment. • Communicate & Celebrate Success

19. Empowerment • Empowerment is an environment in which people have the ability, confidence and the commitment to take the responsibility and ownership to improve the process and initiate necessary steps to satisfy customer requirements within well defined boundaries in order to achieve organizational values and goals. • Employee empowerment requires that the individual is held responsible for accomplishing a whole task. • Empowerment focuses on expanding the context of the job such as its interactions and interdependencies to other functions of the organization

20. Conditions for Empowered Environment • Every person in the organization should understand the need for change • The system needs to change to the new paradigm for reinforcing and motivating individual and group accomplishments • The organization must enable its employees by providing information, education and skill

21. TEAMS DEFINITION A Team is defined as a group of people working together to achieve common Objectives or Goals. WHY TEAMS WORK • More Knowledgeable • Special Abilities Pool Together • More Interaction More Cordial Relationship & Better Job • Better Communication TYPES OF TEAMS Process Improvement Team Cross-Functional Team Self Directed Teams Natural Work Teams

22. DECISION-MAKING METHOD • No Decision • Unilateral Decision • Hand Clasp Decision • Minority- Rule Decision • Majority- Rule Decision • Consensus

23. Barriers to Team Progress • Insufficient Training • Incompatible Compensation • First Line Supervisor Resistance • Lack of Planning • Lack of Management Support • Lack Union Support • Project Scope Too Large • No Clear Measure of Success • No Sufficient Time Given

24. Recognition and Reward • Recognition is a form of Employee motivation in which the organization publicly acknowledges the positive contributions an individual or team has made to the success of an organization. This acknowledgement is delivered using verbal and written praise and may include symbolic items such as certificates and Plaques. • Reward is something tangible such as theatre tickets, dinner for two, cash award etc. to promote desirable behaviour. • While Reward may be delayed until an appropriate time, the recognition should be done on an timely basis. • Rewards must be appropriate to the improvement level – the greater the improvement, the greater the reward. • They should be of value and it is also desirable for the employee to select the form of the reward from the various alternatives.

25. People like to be recognized either as a team or individually. A Persons feeling of achievement, value to the organization, knowing the organization cadres and having peer recognition may be more important than any reward. • Other forms of Individual and team recognition include pictures on the bulleting board, articles in newspapers, letters to families, making a presentation to the management, passing along compliments from others, personal phone calls or notes, placing positive notes in folders, on the spot praise and increased responsibility. • There are various forms of rewards such as Individual and team rewards, Cash rewards etc.

26. Effective Reward Practices • Extrinsic Rewards: 1. Profit Sharing 2. Gain Sharing 3. Employment Security 4. Compensation Time 5. Individual based performance systems 6. Quality based performance appraisals

27. Intrinsic Rewards • Non – Monetary forms of Recognition to acknowledge achievement of quality improvement goals • Celebrations • Regular Expressions of Appreciation by managers and Leaders to employees • Formal Suggestion system available for individuals to make quality improvement suggestions • Quality Based Promotions • 360 degree performance appraisals – feedback from coworkers, subordinates or customers incorporated into performance appraisals • Developmental Based Performance appraisals

28. An effective recognition and reward system • Serves as a continual reminder that the Organization regard quality and productivity as important • Offers the Organization a visible technique to thank high achievers for outstanding performance • Provides employees a specific goal to work toward. It motivates them to improve the Process • Boosts morale in the work environment by creating a healthy sense of competition among individuals and teams seeking recognition

29. Performance Appraisal • The purpose of Performance Appraisal is to let employees know how they are doing and provide a basis for promotions, Salary increases, Counseling and other purposes related to an employee’s future. • Employees should be made aware of the appraisal process , what is evaluated and how often. • The Appraisal should point out strengths and weaknesses as well as how to improve performance • A Key factor in a successful Performance appraisal is employee Involvement. Performance must be based on standards that are developed and agreed upon by the appraisor and employee. It should be viewed as a positive way to get employees involved. • Every Effort should be made to avoid errors in performance evaluations. Culture, Ethics, Education Level, and predetermined opinions can affect evaluations. It would be unfair indeed to render a poor rating based on bias or anything except how the employee has performed based on established standards. An Unfair evaluation could cost the organization a valuable employee

30. Appraisal Formats • Ranking – Compares employees by ranking from highest to lowest • Narrative - Gives a written description of employees strengths and weaknesses • Graphic – It indicates the major duties performed by the employee and rates each duty with a scale, usually from 1 (Poor) to 5 (Excellent). • Force Choice – Places each employee in a category with a predetermined percentage. For eg. Excellent (10%), Very good (25%), Good (30%), Fair (25%), Poor (10%)

31. Suggestions to improve Performance Appraisals • Use Rating Scales that have few rating categories. • Require work team or group evaluations that are at least equal in emphasis to individual focused evaluations. • Require more frequent performance reviews where such reviews will have a dominant emphasis on future performance planning. • Promotion decisions should be made by an independent administrative process that draws on current job information and potential for the new job. • Include indexes of external customer satisfaction in the appraisal process • Use Peer and subordinate feedback as an index of internal customer satisfaction • Include evaluation for process improvement in addition to the results.

32. Benefits of Employee Involvement • Empowering • Better Decisions • Better improvement • Corrective Action • Effective Cooperation &Communication • Loyalty Increases & Floating Population Reduces • More Money to Share

33. Continuous Process Improvement • Achieve Perfection • Work as Process to make it Effective, Efficient, and Adaptable • Changing Customer Needs • Control in process-Reduce Scrap, Time, Idle of Resources • Eliminate Non Conformance in All Phases • Bench Marking • Innovation • Statistical Tools, QFD,FMEA. Taguchi Loss Function

34. Types of Problems • Compliance • Unstructured • Efficiency • Process Design • Product Design

35. Shewhart’s PDSA CYCLE in 1930 • PLAN • DO • STUDY • ACT ACT PLAN STUDY DO

36. Continuous Process Improvement Cycle Phase 1 Identify the opportunity Phase 2 Analyze the Process Phase 7Plan for the Future ACT PLAN Phase 3 Develop the Optimal Solution Phase 6 Standardize the Solution STUDY DO Phase 4 Implementation Phase 5 Study the Results

38. The Deming Cycle or PDCA Cycle PLAN Plan a change to the process. Predict the effect this change will have and plan how the effects will be measured ACT DO Adopt the change as a permanent modification to the process, or abandon it. Implement the change on a small scale and measure the effects CHECK Study the results to learn what effect the change had, if any.

39. Kaoru Ishikawa has expanded Deming's four steps into six: • Determine goals and targets. • Determine methods of reaching goals. • Engage in education and training. • Implement work. • Check the effects of implementation. • Take appropriate action.

40. Juran's Trilogy Juran's Trilogy is possibly the most simple, complete, and pure representation of managing for Quality ever devised. The trilogy exemplifies the essence of Quality. It completely meets its objective in the most efficient and effective manner possible

41. Juran's Trilogy Quality Planning • Identify the Customers • Determine the customer’ needs • Develop a process • Prove process capability

42. Juran's Trilogy Quality Control • Choose control Subjects (What to Control) • Choose Units of measurements • Establish Measurement • Establish Standards of performance • Measure actual performance • Interpret the difference • Take action on the difference

43. Juran's Trilogy Quality Improvement • Prove need for improvement • Identify specific projectsfor Improvements • Organize to guide & Diagnosis • To find causes • Provide Remedies • Prove remedies for effective in operating conditions • Control the gains

44. JURAN’S QUALITY TRIOLOGY Quality Improvement Threshold Of Plan Quality Planning Cost of Quality Initial Quality Zone Quality Control Chronic Waste (An opportunity For Improvement) Breakthrough Quality Zone Time

45. Juran’s Spiral of Progress in Quality Customers Further Product Development Marketing Customers Product Development Operation

46. Quality Improvement Strategies • Repair • Refinement • Renovation • Reinvention

47. KAI Change ZEN Good (for the better) KAIZEN = Continual Improvement

48. KAIZEN Umbrella-Continuous Improvement • Customer Orientation • 5 S • TQC • Zero Defect • TPM • QC’s • JIT • Quality Improvements

49. Japanese Mgt Functions and Kaizen TOP Mgt Innovation Middle Mgt KAIZEN Supervisors Maintenance Workers

50. Japanese Vs Western Approach