Definition: Total Quality Management

1. Definition:Total Quality Management • Total Quality Management (TQ, QM or TQM) and Six Sigma (6) are sweeping “culture change” efforts to position a company for greater customer satisfaction, profitability and competitiveness. • TQM may be defined as managing the entire organization so that it excels on all dimensions of products and services that are important to the customer.

2. Quality Descriptions Design Quality (Features) vs. Conformance Quality

3. Conformance Quality • Meeting Our Customer’s Requirements • Doing (the Right) Things Right the First Time; Freedom from Failure (Defects) • Consistency (Reduction in Variation) • Continuous Improvement • Quality in Everything We Do

4. Quality Management History • Frederick Winslow Taylor wrote Principles of Scientific Management in 1911 • Walter A. Shewhart used statistics in quality control and inspection, and showed that productivity improves when variation is reduced (1924); wrote Economic Control of Manufactured Product in 1931 • W. Edwards Deming and Joseph M. Juran, students of Shewhart, went to Japan in 1950; began transformation from “shoddy” to “world class” goods • In 1960, Dr. K. Ishikawa formalized “quality circles” - the use of small groups to eliminate variation and improve processes • In the late ‘70’s and early 80’s: - Deming returned from Japan to write Out of the Crisis, and began his famous 4-day seminars in the United States - Phil Crosby wrote Quality is Free - NBC ran “If Japan can do it, why can’t we?” - Motorola began 6 Sigma

5. Quality Management History “On the assembly line at the Ford Motor Company in 1923, most of the workers producing Model T’s were immigrants and could not speak English. Many were also illiterate. Workers learned their trade by modeling the actions of other workers. They were unable to plan, problem-solve, and make decisions. As a result, the Taylor scientific school of management flourished, and MBAs and industrial engineers were invented to do this work. Today, however, the workforce is educated. Workers know what is needed to improve their jobs, and companies that do not tap into this significant source of knowledge will truly be at a competitive disadvantage.” Joseph M. Juran (1991)

6. Quality Management History “Knowledge-worker productivity is the biggest of the 21st-century management challenges. In the developed countries, it is their first survival requirement. In no other way can the developed countries hope to maintain themselves, let alone to maintain their leadership and their standards of living.” Peter F. Drucker (1999)

7. Quality Management History Deming’s 14 Points 1. Create constancy of purpose for improvement 2. Adopt a new philosophy 3. Cease dependence on mass inspection 4. Do not award business on price alone 5. Work continually on the system of production and service 6. Institute Modern methods of training 7. Institute modern methods of supervision of workers 8. Drive out fear 9. Break down barriers between departments 10. Eliminate slogans, exhortations, and targets for the work force 11. Eliminate numerical quotas 12. Remove barriers preventing pride of workmanship 13. Institute a vigorous program of education and retraining 14. Take action to accomplish the transformation

8. A Quality Management System Is… • A belief in the employee’s ability to solve problems • A belief that people doing the work are best able to improve it • A belief that everyone is responsible for quality

9. Quality Management History Deming’s Concept of “Profound Knowledge” • Understanding (and appreciation) of Systems - optimizing sub-systems sub-optimizes the total system - the majority of defects come from systems, the responsibility of management (e.g., machines not in good order, defective material) • Knowledge of Statistics (variation, capability, uncertainty in data, etc.) - to identify where problems are, and point managers and workers toward solutions • Knowledge of Psychology (Motivation) - people are afraid of failing and not being recognized, so they fear how data will be used against them • Theory of Knowledge - understanding that management in any form is a prediction, and is based on assumptions

10. Elements for Success • Management Support/Involvement • Mission Statement • Proper Planning • Customer and Bottom Line Focus • Measurement • Empowerment/Shared Leadership • Teamwork/Effective Meetings • Continuous Process Improvement • Dedicated Resources/Training

11. Benchmarking 1. Identify those processes needing improvement. 2. Identify a firm that is the world leader in performing the process (Library & WWW). 3. Contact the managers of that company and make a personal visit to interview managers and workers. 4. Analyze data

12. Organizational Profile: Environment, Relationships, and Challenges 2 Strategic Planning 5 Human Resource Development & Management 1 Leadership 7 Business Results 3 Customer and Market Focus 6 Process Management Baldrige Award Criteria Framework Information, Analysis, and Knowledge Management

13. Malcolm Baldrige NationalQuality Award (2004) 1.0 Leadership (120 points) 2.0 Strategic Planning (85 points) 3.0 Customer and Market Focus (85 points) 4.0 Information and Analysis (90 points) 5.0 Human Resource Focus (85 Points) 6.0 Process Management (85 points) 7.0 Business Results (450 points)

14. Categories for the Baldrige Award • Manufacturing companies or subsidiaries that: • produce and sell manufactured products or manufacturing processes or • produce agricultural, mining, or construction products. • Service companies or subsidiaries that sell service • Small businesses • Education Institutions • Health Care Organizations • Non-Profit (new)

15. Characteristics of a Baldrige Award Winner • The companies formulated a vision of quality and how they would achieve it. • Senior management was actively involved. • Companies carefully planned and organized their quality effort to insure effective initiation. • They vigorously controlled the overall process. • Studies have shown MBA Winners’ success.

16. ISO 9000 • Series of standards agreed upon by the International Organization for Standardization(ISO) • Adopted in 1987 • More than 100 countries • A prerequisite for global competition? • ISO 9000 directs you to: • document what you do and then do as you documented.

17. ISO 9000 Series • 9001 • Model for Quality Assurance in Design, Production Installation, and Servicing. • 9002 • Model for Quality Assurance in Production and Installation • 9003 • Model for Quality Assurance in Final Inspection Test

18. Three Forms of Certification 1. First party: A firm audits itself against ISO 9000 standards. 2. Second party: A customer audits its supplier. 3. Third party: A "qualified" national or international standards or certifying agency serves as auditor.

19. ISO 9000 versus the Baldrige Award • Which should we pursue first? • What are the differences between the two? • Do you have to be ISO 9000 certified before going for the Baldrige Award?

20. Baldrige QS 9000 ISO 9000 ISO 9000 versusthe Baldrige Award Evans and Lindsay The Management and Control of Quality, Southwestern Books, p536.

21. Costs of Quality: Categories • Appraisal costs • Prevention costs • Internal failure costs • External failure costs

22. The 1-10-100 Rule 1 10 100 · Defects caught at their source cost the organization $1. · Defects caught outside of the source department but within the organization cost $10. · Defects that reach the external customer cost $100!

23. Cost of Poor Quality Category Examples Failure – Costs – InternalPrevention Costs Re-shipping Quality Administration Unnecessary Travel Time Quality Planning Re-picking/Picking Quality Systems Design Unpacking/Storing Returns Calibration and Maintenance Re-order Time Production/Inspection Equipment Crediting Time Vendor Assessment Quality Training Failure Costs – ExternalAppraisal Costs Loss of Sales Incoming Test and Inspection Complaints In-Process Inspection Returns Final Inspection Warranty Claims Sampling Procedures Quality Audits

24. COPQ Projections $ Saved External Failure Costs $ Internal Failure Costs Total Cost Using a COPQ System Total Cost Without Using A COPQ System Appraisal Costs Prevention Costs Months

25. Process Flow Chart Buffer:Material Received from Supplier No, Continue… Inspect Material for Defects Defects found? Yes Can be used to find quality problems. Return to Supplier for Credit

26. Input-Output Analysis Suppliers Inputs Sub- Processes Outputs Customers Measures S I P O C From Flowchart

27. Example SIPOC - Specifying Equipment Selection and Installation Procedures at Coca-Cola USA Suppliers Customers Coca-Cola Fountain Inputs Technical Information Technical Questions Customer Input Process Developing Installation Cost Reduction Programs Developing Equipment Selection Policies and Procedures Designing Installation Policies and Procedures Outputs Equipment Selection Guide Equipment Sales Manuals Technology Cost/ Benefit Matrix Installation Guidelines Installation Time Standards Installation Rating System Installation Design Guidelines Customers Burger King McDonald’s Prestige Coca-Cola Fountain Equipment Suppliers Measures Number of Entities Using Guidelines Installation Audit Ratings Survey of Users Effectively Using Selection Guidelines

28. Pareto Analysis 80% of the problems may be attributed to 20% of the causes. Frequency Assy. Instruct. Design Purch. Other Training

29. Run Chart 0.58 0.56 0.54 0.52 Diameter 0.5 0.48 0.46 0.44 1 2 3 4 5 6 7 8 9 10 11 12 Time (Hours)

30. Histogram Frequency Data Ranges

31. Scatter Diagram 12 10 8 Defects 6 4 2 0 0 10 20 30 Hours of Training

32. Checksheet (data collection) Monday • Billing Errors • Wrong Account • Wrong Amount • A/R Errors • Wrong Account • Wrong Amount

33. Machine Man Effect Environment Method Material Cause & Effect Diagram

34. Fishbone Analysis:Existing Hiring Process Problems

35. UCL LCL Control Charts 1020 1010 1000 990 980 970 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

36. Customer Survey

37. Example Customer Survey Results - Quantas Airways Survey of Frequent Flier Needs – Order of Priority: • No lost baggage 12. Assistance with connections • No damaged baggage 13. Being kept informed of delays • Clean toilets 14. Transport to cities • Comfortable seats 15. Accurate arrival info • Prompt baggage delivery 16. Well-organized boarding • Ample leg room 17. Quick/friendly airport check-in • Good quality meals 18. Self-service baggage trolleys • Prompt reservation service 19. On-time arrival • Friendly/efficient cabin crew 20. Provision of pillows/rugs • Clean and tidy cabin 21. Assistance with customs • Comfortable cabin temp 22. On-time departures

38. Continuous Improvement Process Orlando Remanufacturing And Distribution Center

39. Remanufacturing Procedures Disassembly and Cleaning Reassembly • Remove • Cup Rest • Splash Plate • Drain Pan • Valves • Mounting Blocks • Remove • Product Hoses, Tower and Disassemble Inspect Soda Manifold Install Drain Pan Riser Onto Ice Chest Assembly Install and Connect Valve Wiring Assembly • Prepare Rear Tower Panel on Woodgrain Units for Sabre Vinyl • Repair Dents • Sand • Clean Surface • Flush Cooling Circuits • Inspect Fittings Install Valve Mounting Blocks Install Tower Structure Onto Drain Pan Riser • Clean • Ice Chest • Parts • Tower Assembly Sanitize Cooling Circuits Install Valves Install New Beverage Tubing and Rubatex Flush Out Apply Sabre Vinyl Install Sabre Valve Covers, Nozzles and Decals • Install Clamps at Each Tubing End • Install Tubing to Mounting Block Fittings • Put’ O ’rings on Fittings Polish Stainless Steel Surfaces That Will Be Visible Install Lid Remanufacturing Install Tube Protector on Inlets • Load Test Ice Bin by Drain • Evaluate Cold Plate Leak Test Drain Pan • Impact and Evaluate Fittings • Inspect Legs Install Drain Pan, Drain Fittings and Hose • Clean Electrical Junction Box • Check for Frayed Wires • Tape Connections Install Splash Plate Hold for Write-off if Bin Leaks or Circuits are Unusable Drill and Tap New Mounting Holes for Broken Hardware Send to QA Install Cup Rest • Test Junction Box • Continuity • Correct Secondary Voltage Requisition Needed Parts Install Valve Mounting Plate

40. Phase 1: Internal Kickbacks To Be Remanufac-tured Equipment Tear Down And Wash Remanu- facture Reassembly Final Clean-up Unit Not OK QA

41. Five Most Common Reasons For Returns From QA January-May (61 units)

42. Reasons for Returns from QA- Weighted Average Weighted Avg. = % Occurring X Defect Cost (0-10, Based on Time to Repair)

43. Why Dirt? Environment • Dust/Humidity • Poor Lighting • Space Limitations Measurement • QA Manager Fixes Some Things Without Informing the Technicians Methods • Need to Rinse Parts off after Sandblasting • Need Better Procedure for Determining What to Remanufacture Based on its Condition Machines • Best tools for $$? Materials • Cleaning Compounds watered down • Need Larger Wire Brushes People • Need More Training • More Attention to Detail – Do it Right the First Time

44. Why Leaks? Environment • High Temperatures in Warehouse • Poor Lighting Materials • Bad Tubing • “O” Rings Out of Spec • “O” Rings Too Old (Dry) Machines • Bad Dispenser Design • Need Rims That Make it Easier to Install Tubing People • Use Wrong Clamps • Don’t Crimp Properly • Forget to Connect Methods • Softening Tubing with Water that’s Too Hot • Need to Check Units for All Possible Ways They Could Leak Measurement • No Testing for Leaks Prior to QA • Need to ID by Mfr./Model Which Units Leak the Most

45. 1. Plan a change aimed at improvement. 4. Institutionalize the change or abandon or do it again. 4. Act 1. Plan 3. Check 2. Do 3. Study the results; did it work? 2. Execute the change. PDCA Cycle (Deming Wheel)

46. What is Six Sigma? • A sweeping culture change effort to position a company for greater customer satisfaction, profitability and competitiveness (developed by Motorola in the late 1970’s) • A goal of near perfection in meeting customer requirements • A comprehensive and flexible system for achieving, sustaining and maximizing business success; uniquely driven by close understanding of customer needs, disciplined use of facts, data, and statistical analysis, and diligent attention to managing, improving and reinventing business processes

47. Six Sigma DMAIC Process Define: Define who your customers are, and what their requirements are for your products and services – Their expectations. Define your team goals, project boundaries, what you will focus on and what you won’t. Define the process you are striving to improve by mapping the process. Control Improve Define Analyze Measure

48. Six Sigma DMAIC Process Measure: Eliminate guesswork and assumptions about what customers need and expect and how well processes are working. Collect data from many sources to determine speed in responding to customer requests, defect types and how frequently they occur, client feedback on how processes fit their needs, how clients rate us over time, etc. The data collection may suggest Charter revision. Control Improve Define Analyze Measure

49. Six Sigma DMAIC Process Analyze: Grounded in the context of the customer and competitive environment, analyze is used to organize data and look for process problems and opportunities. This step helps to identify gaps between current and goal performance, prioritize opportunities to improve, identify sources of variation and root causes of problems in the process. Control Improve Define Analyze Measure

50. Six Sigma DMAIC Process Control Improve: Generate both obvious and creative solutions to fix and prevent problems. Finding creative solutions by correcting root causes requires innovation, technology and discipline. Improve Define Analyze Measure