Understanding Quality and Its Impact on Business

1. READ THIS CHAPTER! BUAD306 Chapter 9 – Management of Quality Chapter 10 – Quality Control (not in text)

2. Quality Defined By YOU • Examples of high quality products and services? • Examples of low quality products and services? What do you remember more?

3. Quality Defined by Business • The ability of a product or service to consistently meet or exceed customer expectations

4. Dimensions of Quality • Performance – basic operating characteristics • Aesthetics – how a product looks, feels, etc. • Special features – “extras” • Conformance – to specifications • Reliability – consistency of performance • Durability – how long it lasts • Perceived Quality – customer’s view of quality • Serviceability - service after sale/repairs • Safety – risk of harm/injury

5. Quality Terms • Ease of Use – how easy it is for the customer to use the product/service • Service after Use – how well the company “steps up” • Quality of Design – designing quality characteristics into a product or service • Quality of Conformance – making sure the product is produced according to the design/intent of designers

6. Quality Considerations For Service Industries • Tangibles – appearances (staff, facility, etc.) • Convenience – ease of availability/accessibility • Reliability – perform consistently & accurately • Responsiveness – how well company reacts to unusual circumstances • Timeliness – speed of service delivery/waiting time • Assurance – the knowledge level of the staff • Courtesy – how well customer is treated

7. Consequences of Poor Quality • Loss of business • Liability - due to damages or injury • Productivity – defective products can slow down a production process • Costs • Diminished Reputation

8. Costs of Quality • Appraisal Costs – costs of measuring, testing and analyzing • Prevention Costs – costs incurred during production design • Failure Costs – difference between what it actually costs to produce/deliver & what it would cost if there were no failures • Internal Failure Costs (before)– rework, downtime • External Failure Costs (after)– complaints, returns

9. Quality Responsibilities • Who is responsible for quality in the organization? • Why is it important to face quality issues sooner than later?

10. Ensuring Continual Quality • Design quality into the process • Instill a quality mentality • Continually seek new ideas and improvements How do you do this systematically???

11. Total Quality Management • A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.

12. Total Quality Management • Customer defined quality • Successful product design • Utilize processes that ensure quality • Continuous improvement - track results & improve on them • Encourage suppliers & distributors to embrace TQM • All employees responsible for quality – requires training • Utilize competitive benchmarking • Shared problem solving – team oriented • Top management leadership Read Text

13. Six Sigma – as defined by GE • “…if you can measure how many "defects" you have in a process, you can systematically figure out how to eliminate them and get as close to "zero defects" as possible. • To achieve Six Sigma Quality, a process must produce no more than 3.4 defects per million opportunities. • An "opportunity" is defined as a chance for nonconformance, or not meeting the required specifications. • This means we need to be nearly flawless in executing our key processes. IMPT: Read Text

14. Six Sigma Concepts - DMAIC • Define – process improvement goals • Measure – baseline data • Analyze – to verify cause • Improve – based on analysis • Control – transition into production & monitor continuously IMPT: Read Text

15. Example: Trabant • Is Trabant an example of efficiency? • Are there issues at Trabant? • What solutions do you have?

16. Problem Solving & Quality • Variety of Techniques – all generally following the same “steps:” • Define problem • Develop measures/standards • Analyze the situation • Generate solutions • Implement solution • Monitor IMPT: Read Text

17. Basic Quality Tools • Check sheets • Flowcharts • Scatter diagrams • Histograms • Pareto analysis • Control charts • Cause-and-effect diagrams • Run Chart IMPT: Read Text

18. Generating New Ideas • Brainstorming • Interviewing • Benchmarking • 5W2H • What, Why, Where, When, Who, How, How Much IMPT: Read Text

19. Benchmarking Steps • Analysis using quality tools • Identify a critical process that needs improvement • Identify an organization that excels in the process • Study their benchmark activity • Analyze data (compare/contrast) • Improve process IMPT: Read Text

20. Chapter 10 Quality Control

21. Quality Scenarios • Toner Cartridges • Subway Subs • Taco Bell Tacos

22. Quality Control • A process that measures output relative to a standard and acts when outputs don’t meet the standard

23. Inspection before/after production Corrective action during production Quality built into the process Acceptance sampling Process control Continuous improvement The least progressive The most progressive Phases of Quality Assurance

24. Inputs Transformation Outputs Acceptance sampling Acceptance sampling Process control Inspection • How Much/How Often  Why?? • Where/When • Centralized vs. On-site

25. Production Inputs Finished products Before a costly operation Before an irreversible process Before a covering process Services Restaurants – appearance, waiting time, food quality, accuracy Retail – inventory, pricing, appearance, waiting time Inspection Points

26. Process Control • A statistical procedure using control charts to see if any part of the production process is not functioning properly and could cause poor quality.

27. Process Control Steps • Define • Measure • Compare to standard • Evaluate • Take corrective action • Evaluate corrective action

28. Variations and Control • Assignable Variation - A variation whose source can be identified • Examples: fatigue, equipment adjustments, carelessness, interruptions • Random Variation - Natural variations in the output of process • Examples: Countless minor factors

29. Data Evaluated • Attribute Data (P & C Charts) • Product characteristic evaluated with a discrete choice: Good/bad, yes/no • Variable Data (Control Charts) • Product characteristic that can be measured on a continuous scale: Length, size, weight, height, time, velocity

30. Control Charts • A time-ordered plot of sample statistics, used to distinguish between random and nonrandom variability • Compared against control limits • Upper control limits • Lower control limits

31. Abnormal variationdue to assignable sources Out ofcontrol UCL Mean Normal variationdue to chance LCL Abnormal variationdue to assignable sources 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Sample number Process Control Charts

32. Process is In Control When… • No sample points are outside limits • Most points near process average • Equal number of points above & below centerline • Points appear randomly distributed