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Chapter 1

Chapter 1. Introduction to Quality. Modern Importance of Quality. “The first job we have is to turn out quality merchandise that consumers will buy and keep on buying. If we produce it efficiently and economically, we will earn a profit, in which you will share.”

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Chapter 1

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  1. Chapter 1 Introduction to Quality

  2. Modern Importance of Quality “The first job we have is to turn out quality merchandise that consumers will buy and keep on buying. If we produce it efficiently and economically, we will earn a profit, in which you will share.” - William Cooper Procter October 1887

  3. Key Idea Building—and maintaining—quality into an organization’s goods and services, and more importantly, into the infrastructure of the organization itself, is not an easy task.

  4. The Importance of Quality • Japanese success • Impact of quality on productivity and profit • Costs of quality • Quality as a competitive advantage

  5. Quality and Productivity I. Market Gains • Improved: • Performance • Reliability • Features • etc. Improved reputation for quality Increased Market share Experience-based scale economies IncreasedProfits Higher Prices

  6. Quality and Productivity II. Cost Savings Increased productivity Lower manufacturing costs • Improved reliability or conformance Lower rework and scrap costs Increased Profits Lower service costs Lower warranty and product liability costs

  7. Relative Quality Boosts rates of return % 20 40 60 80 Relative quality (percentile)

  8. The Costs of Quality • Prevention Costs • Appraisal Costs • Internal Failure Costs • External Failure Costs

  9. Costs of quality assurancePrevention Costs • QC administration and systems planning • Quality training • Quality planning (QC engineering work) Incoming, in-process, final inspection • Special processes planning • Quality data analysis • Procurement planning • Vendor surveys • Reliability studies • Quality measurement and control equipment • Qualification of material Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

  10. Costs of quality assuranceAppraisal Costs • Testing • Inspection • Quality audits • Incoming test and inspection and laboratory acceptance • Checking labor • Laboratory or other measurement service • Setup for test and inspection • Test and inspection material • Outside endorsement • Maintenance and calibration • Product engineering review and shipping release • Field testing Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

  11. Costs of quality assuranceInternal Failure Costs • Scrap, at full shop cost • Rework, at full shop cost • Scrap and rework , fault of vendor • Material procurement • Factory contact engineering • QC investigations (of failures) • Material review activity • Repair and troubleshooting Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

  12. Costs of quality assuranceExternal Failure Costs • Complaints and loss of customer goodwill • Warranty costs • Field maintenance and product service • Returned material processing and repair • Replacement inventories • Strained distributor relations Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

  13. Costs of Detecting Defects Cost of detection and correction Process Final testing Customer Where defect is detected Figure 6.3

  14. Percentage Cost Distribution by Category: Watches Fourth-Quarter Indexes Appraisal 16% Internal failure 29% Prevention 3% External failure 52%

  15. Hidden costs of poor Quality

  16. Competitive Advantage • Is driven by customer wants and needs • Makes significant contribution to business success • Matches organization’s unique resources with opportunities • Is durable and lasting • Provides basis for further improvement • Provides direction and motivation Quality supports each of these characteristics

  17. History of Quality Assurance (1 of 3) • Skilled craftsmanship during Middle Ages • Industrial Revolution: rise of inspection and separate quality departments • Early 20th Century: Scientific Management, statistical methods at Bell System, Walter Shewhart, MIL-STD • Post-World War II. Japan’s success • The U.S. quality revolution

  18. History of Quality Assurance (2 of 3) • Early successes: Baldrige award, 1987 • Quality awareness in U.S. manufacturing industry during 1980s: from “Little Q” to “Big Q” - Total Quality Management • Disappointments and criticism: Emergence of quality management in service industries, government, health care, and education,

  19. History of Quality Assurance (3 of 3) Evolution of Six Sigma • Current and future challenge: keep progress in quality management alive

  20. Defining Quality Perfection Fast delivery Providing a good, usable product Consistency Eliminating waste Doing it right the first time Delighting or pleasing customers Total customer service and satisfaction Compliance with policies and procedures

  21. Formal Definitions of Quality • Transcendent definition: excellence • Value-based definition: quality vs. price • User-based definition: fitness for intended use • Product-based definition: quantities of product attributes • Manufacturing-based definition: conformance to specifications

  22. Quality Perspectives transcendent & value-based user-based needs Marketing Customer product-based Design products and services manufacturing- based Manufacturing Distribution Information flow Product flow

  23. TOTAL QUALITY INTERFACES CONSUMER NEEDS/REQUIREMENTS QUALITY QUALITY OF PERFORMANCE QUALITY OF DESIGN QUALITY OF CONFORMANCE WORK PROCESS/SYSTEM

  24. Quality as a Management Framework • GE study • Quality as a “management discipline” and not just a “technical discipline”. • Total quality control, companywide quality control, total quality management, TQ

  25. Principles of Total Quality • Customer and stakeholder focus • Participation and teamwork • Process focus supported by continuous improvement and learning …all supported by an integrated organizational infrastructure, a set of management practices, and a set of tools and techniques

  26. Customer and Stakeholder Focus • Customer is principal judge of quality • Organizations must first understand customers’ needs and expectations in order to meet and exceed them • Organizations must build relationships with customers • Customers include employees and society at large

  27. Key Idea To meet or exceed customer expectations, organizations must fully understand all product and service attributes that contribute to customer value and lead to satisfaction and loyalty.

  28. Participation and Teamwork • Employees know their jobs best and therefore, how to improve them • Management must develop the systems and procedures that foster participation and teamwork • Empowerment better serves customers, and creates trust and motivation • Teamwork and partnerships must exist both horizontally and vertically

  29. Key Idea In any organization, the person who best understands his or her job and how to improve both the product and the process is the one performing it.

  30. Process Focus and Continuous Improvement • A process is a sequence of activities that is intended to achieve some result

  31. Continuous Improvement • Enhancing value through new products and services • Reducing errors, defects, waste, and costs • Increasing productivity and effectiveness • Improving responsiveness and cycle time performance

  32. Key Idea Major improvements in response time may require significant simplification of work processes and often drive simultaneous improvements in quality and productivity.

  33. Deming’s View of aProduction System Suppliers of materials and equipment Design and Redesign Consumer research Receipt and test of materials Consumers A B C D Production, assembly inspection Distribution Tests of processes, machines, methods INPUTS PROCESSES OUTPUTS Feedback

  34. Learning • The foundation for improvement … Understanding why changes are successful through feedback between practices and results, which leads to new goals and approaches • Learning cycle: • Planning • Execution of plans • Assessment of progress • Revision of plans based on assessment findings

  35. Infrastructure, Practices, and Tools Infrastructure Leadership Strategic HRM Process Information and knowledge Planning mgt. management Practices Performance Training appraisal Tools Trend chart

  36. TQ Infrastructure • Customer relationship management • Leadership and strategic planning • Human resources management • Process management • Information and knowledge management

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