Evolution of Quality Management: Case Studies and Strategies for Success

1. Chapter 3: Quality Management

2. What business are you in? • CEO of GM announced, “GM wasn’t in the business of making cars, GM was in the business of making money”. • Taylor > Drucker > McNamara • According to Tom Peters from “In Search of Excellence” fame Chapter 3: Quality Management

3. Chapter 3 Quality Management Chapter 3: Quality Management

4. Chapter 3:Quality Management

5. Examples Chapter 3: Quality Management

6. West Babylon School District • Began applying continuous improvement and quality to its administrative and education processes. • TQE • Applied Deming’s “14 Points” for management to administrative process. • Numerous improvements made. Chapter 3: Quality Management

7. National Semiconductor • Early proponent of total quality • Quality circles 1981 • Preventive maintenance 1982 • Statistical process control 1983 • Design of experiment techniques 1984 • Design for manufacturing techniques 1986 Chapter 3: Quality Management

8. National Semiconductorcontinued • Second stage of quality initiatives (1990s) • Focused on customer-supplier relationships • Customer satisfaction • Customer score cards • Process analysis • Employee empowerment • Team strategies • Problem solving techniques • Visioning Chapter 3: Quality Management

9. National Semiconductorcontinued • Third stage • Personal mastery • Shared vision • Systems thinking • Team learning Chapter 3: Quality Management

10. NCR • Produces business information processing systems • Recognized need to continuously improve its products • Major component of its continuous improvement program is use of statistical techniques Chapter 3: Quality Management

11. NCR continued • Began using statistical process control techniques in 1985 to monitor its autoinsertion operation on its printed circuit board assembly line. • Line was producing an unacceptable number of defects. • Reasons included misinserted or broken parts, using the wrong parts and so on. Chapter 3: Quality Management

12. NCR continued • Quality engineering department established process averages, control limits and guidelines for action for “out-of-control” conditions. • Production was stopped when out-of-control condition detected until cause identified. • Random samples of 1000 insertions were collected each hour and the results plotted on a c chart. • Out-of-control situations were investigated to identify the assignable cause. Chapter 3: Quality Management

13. NCR concluded • Learned a great deal about the autoinsertion operation using the control charts. • Problem of broken parts was traced to a specific supplier. • Because of the success of this experiment, statistical process control was implemented across the entire assembly line. • NCR has since changed its approach from “inspect and repair” to “prevent and design for quality.” Chapter 3: Quality Management

14. Timber Companies • Because of environmental restrictions and limited quantities of large-diameter trees, many timber companies are using statistical quality control techniques to maximize the quality and quantity of finished lumber produced Chapter 3: Quality Management

15. Converting Logs into Finished Lumber • Debarked log split down the middle • Split log resawed to create boards • Ends of boards trimmed • Boards are stacked • Log debarked • Boards dried in kiln for 2 to 30 days • Boards are planed Chapter 3: Quality Management

16. Applying SPCto the Stacking Operation • Important because this determines straightness of finished lumber. • Lumber stacked in layers. • Separators placed between layers to form air channels and transfer weight of wood. • Automated equipment used to stack lumber making it necessary to monitor the alignment of the separators. Chapter 3: Quality Management

17. Stacking Operation continued • Estimated cost of misplaced separator is $31.50 owing to board warping. • Average sawmill handles upwards of 30,000 separators each day. • Measuring board placed in front of each column of separators to monitor separator alignment. • Stack of lumber contains approximately 15 columns of separators and 360 separators. Chapter 3: Quality Management

18. Stacking Operation concluded • Total number of misplaced separators is divided by the total number of separators in the stack of lumber and result plotted on p chart. • Using p chart, workers monitor the stacking equipment and identify problems before an out-of-control situation arises. Chapter 3: Quality Management

19. Quality Management Perspectives Chapter 3: Quality Management

20. Quality Costs • Two primary sets of costs involved in quality • Control costs • Failure costs • These costs are often as high as 15 to 35% of sales • Costs often broken down into four categories Chapter 3: Quality Management

21. Category 1:Prevention Costs • Costs associated with trying to prevent defects and errors • Training for quality • Educating suppliers • Designing product for quality • Designing production system for quality • Preventive maintenance Chapter 3: Quality Management

22. Category 2: Appraisal Costs • Costs of determining current quality • Measuring and testing parts • Running special test laboratories • Acquiring special testing equipment • Conducting statistical process control • Inspecting incoming materials Chapter 3: Quality Management

23. Category 3: Internal Costs of Defects • Costs incurred when defects are found before shipment/delivery to customer. • Labor and materials going into scrap • Reworking and retesting to correct defects • Downtime of equipment and labor while waiting for repairs • Yield losses Chapter 3: Quality Management

24. Category 4: External Costs of Defects • Costs of trying to correct defects after receipt by customer. • Lost of customer goodwill • Recalls to correct problem • Warranty, insurance, and legal suit settlements Chapter 3: Quality Management

25. Quality Management Philosophies Chapter 3: Quality Management

26. Chapter 3: Quality Management

27. W. Edwards Deming • Major source of poor quality is variation • Quality improvement the responsibility of top management • All employees should be trained in use of problem solving tools and especially statistical techniques Chapter 3: Quality Management

28. Deming’s 14 Points • Create constancy of purpose • Adopt the new philosophy • Cease dependence on mass inspection • End practice of awarding business on basis of price tags • Improve constantly and forever • Institute modern methods of training Chapter 3: Quality Management

29. Deming’s 14 Points continued • Institute modern method of supervision • Drive out fear • Breakdown organizational barriers • Eliminate arbitrary numerical goals • Eliminate work standards and quotas • Remove barriers that reduce pride of workmanship Chapter 3: Quality Management

30. Deming’s 14 Points continued • Institute a vigorous program of education and training • Push the other 13 points everyday Chapter 3: Quality Management

31. Joseph Juran Chapter 3: Quality Management

32. Joseph Juran • Quality Control Handbook (1951) • Quality Trilogy • Quality Planning • Quality Control • Quality Improvement • Need to place more emphasis on planning and improvement Chapter 3: Quality Management

33. Joseph Juran continued • Organizations move through 4 phases • Minimize prevention and appraisal costs – results in increased external failure costs • Increase appraisal costs – finds defects sooner and raises internal costs • Process control introduced increasing appraisal costs but lowering internal and external failure costs • Prevention costs increased in effort to lower total quality costs Chapter 3: Quality Management

34. Phillip Crosby Chapter 3: Quality Management

35. Philip B. Crosby • Quality is conformance to requirements, not elegance • Better to produce item right the first time than to try to inspect quality in • Quality at the source - responsibility shifted from quality control department to workers Chapter 3: Quality Management

36. Total Quality Management (TQM) • Quality problems do not exist, rather organizations have functional problems • Zero defects only meaningful performance standard • Cost of quality the only performance measure Chapter 3: Quality Management

37. Economic Control of Quality of Manufactured Product(1931) Chapter 3: Quality Management

38. History of TQM • Dr. Shewart began using statistical control at the Bell Institute in 1930s • Military standards developed in 1950s • After World War II, Japanese Union of Scientist and Engineers began consulting with Deming • Deming Prize introduced in Japan in 1950 Chapter 3: Quality Management

39. History of TQM continued • Juran writes “Total Quality Control” 1951 • Juran makes first trip to Japan in 1954 • “Quality” Japan’s national slogan in 1956 • First quality circles created in 1957 • 10,000 quality circles by 1966 • 100,000 quality circles by 1977 • First U.S. quality circle 1974 Chapter 3: Quality Management

40. Five Steps in TQM • Determine what customers want • Develop products and services • Develop production system • Monitor the system • Include customers and suppliers Chapter 3: Quality Management

41. New Responsibilities of Quality Control Department • Training employees how to control quality • Conducting random quality audits • Consulting on quality problems • Determining cost of quality • Helping implement quality control ideas • Overseeing final test of finished goods Chapter 3: Quality Management

42. Quality Circles • Focus on all problems facing workers • Composed of natural work groups • Not limited to shop employees • Usually spend couple hours per week on company time analyzing problems Chapter 3: Quality Management

43. Process analysis Runs chart Control chart Pareto chart Histogram Scatter diagram Fishbone chart Presentation skills Analysis skills Brainstorming Quality Tools Chapter 3: Quality Management

44. Tools for Quality Control Chapter 3: Quality Management

45. Tools for Quality Control continued Chapter 3: Quality Management

46. Insufficient Time Spent Covering Curriculum Chapter 3: Quality Management

47. Taguchi Methods • Design for Manufacturability (DFM) • Procedure for statistical testing to determine best combination of product and transformation system design that will make output relatively independent of normal fluctuations in the production system Chapter 3: Quality Management

48. Quality Function Deployment (QFD) • Tools for helping translate customer desires directly into product service attributes. Chapter 3: Quality Management

49. Benchmarking Comparing an organization’s performance to performance of other organizations. Chapter 3: Quality Management

50. Purposes for Benchmarking • Comparing an organization’s performance to the best organization’s performance • Comparing an organization’s business processes with similar processes • Comparing products and services • Identifying best practices to implement • Projecting trends Chapter 3: Quality Management