Total Quality Management

1. Total Quality Management

2. What is TQM? • Meeting quality expectations as defined by the customer • Integrated organizational effort designed to improve quality of processes at every business level

3. Defining Quality – 5 Ways • 1. Conformance to specs - designer based • Does product/service meet tolerances defined by designers? E.g. 20 min wait for pizza (average) + 10 min acceptable (?) delay. What about a customer? Is a 30 min. delay acceptable? • 2. Fitness for use - user based definition • Evaluates performance for intended use. E.g. Jeep vs. Jaguar on mountain roads? • 3. Value for price paid - user based def. • Evaluation of usefulness vs. price paid. E.g. receive the same value but at a lower price

4. Defining Quality – 5 Ways • 4. Support services - user based def. • Quality of support after sale. E.g. excellent warranty service • 5. Psychological criteria - user based definition • e.g. ambiance, prestige, friendly staff may leave the impression of higher quality • Case: Gold Coast Advertising

5. Evolution of TQM – New Focus

6. TQM Philosophy – What’s Different? • 1. Focus on Customer • Identify and meet customer needs • Stay tuned to changing needs, e.g. fashion styles • 96% of customers do not complain (stop buying and/or tell others 9-11 people); satisfied customers  1 person • Fixing the problem after the complaint  customers become more loyal than if they had not had the problem in the first place • It costs more to obtain a new customer than to retain one • Customers increase their spending the longer they buy from a company

7. TQM Philosophy – What’s Different? • 2. Continuous Improvement • Continuous learning and problem solving • (jap.) Kaizen: requires that the company continually strive to do better through learning and problem solving (“small doses of medicine are better than one large dose”) • Perfection can NEVER be achieved

8. TQM Philosophy – What’s Different? • 2. Continuous Improvement • Continuous learning and problem solving • 6 sigma: 3.4 defects per one million. Example: If 20 mln passengers per year pass through London’s Heathrow Airport, only 68 passengers per year will have misplaced luggage • 3 sigma: 2.6 defects per one thousand => 2,600 per million • 52,000 passengers per year will have misplaced luggage

9. TQM Philosophy – What’s Different? • 3. Quality at the Source • Inspection (before) vs. prevention & problem solving (now) • 4. Employee Empowerment (they are expected to seek out, identify, and correct problems) • Employees no longer afraid of reporting problems • 5. Focus on both external (who purchase company’s goods/services) and internalcustomers (e.g., packaging department is an internal customer of assembly department)

10. TQM Philosophy– What’s Different? (continued) • 6. Team Approach – Quality Circles (“two heads are better than one”) • Teams formed around processes – 8 to 10 people • Meet weekly to analyze and solve problems • 7. Benchmarking • Studying practices at “best in class” companies; e.g. many companies use Amex to benchmark conflict resolution • 8. Managing Supplier Quality • Certifying suppliers vs. receiving inspection

11. TQM Philosophy– What’s Different? (continued) 9. Just-in-Time • ‘Pull’ system of production/purchasing • Customer starts production with an order • Involves ‘vendor partnership programs’ to improve quality of purchased items • Reduces all inventory levels • Inventory hides process & material problems • Improves process & product quality

12. Work in process inventory level(hides problems) Unreliable Vendors Capacity Imbalances Scrap Just-In-Time (JIT) Example

13. Unreliable Vendors Capacity Imbalances Scrap Just-In-Time (JIT) Example Reducing inventory reveals problems so they can be solved.

14. Cost of Quality – 4 Categories • I. Quality Control Costs (Prevention & Appraisal) • II. Quality Failure Costs (Internal & External Failure) • Early detection/prevention is less costly • May be less by a factor of 10 • Case: Delta Plastics Inc. (A): Question 1. Identify the different costs of quality described in the case.

15. Ways of Improving Quality • 1. Plan-Do-Study-Act Cycle (PDSA) • Also called the Deming Wheel after originator • Circular, never ending problem solving process • 2. Quality Function Deployment • Used to translate customer preferences to design • 3. Seven Tools of Quality Control • Tools typically taught to problem solving teams

16. Ad 1. PDSA Details • Plan • Evaluate current process • Collect procedures, data, identify problems • Develop an improvement plan, performance objectives • Do • Implement the plan – trial basis • Study • Collect data and evaluate against objectives • Act • Communicate the results from trial • If successful, implement new process

17. PDSA (continued) • Cycle is repeated • After act phase, start planning and repeat process

18. Ad 2. QFD Details • Process used to ensure that the product meets customer specifications (Example: Student’s backpack) 3. Voice of the engineer 2. Customer-based benchmarks 1. Voice of the customer

19. QFD - House of Quality • Adding trade-offs, targets & developing product specifications 4. Trade-offs 5. Technical Benchmarks 6. Targets

20. Ad 3. Seven Problem Solving Tools • (i) Cause-and-Effect Diagrams • (ii) Flowcharts • (iii) Checklists • (iv) Control Charts • (v) Scatter Diagrams • (vi) Pareto Analysis • (vii) Histograms

21. Cause-and-Effect Diagrams • Called Fishbone Diagram • Focused on solving identified quality problem • Used to find problem sources/solutions • Steps • Identify the problem to correct • Draw main causes for problem as ‘bones’ • Ask ‘What could have caused problems in these areas?’ Repeat for each sub-area.

22. Fishbone Chart - Problems with Airline Customer Service

23. Fishbone Chart - Problems with Getting to Work on Time • Consider the everyday task of getting to work on time or arriving at your first class on time in the morning. Draw a fish-bone chart showing reasons why you might arrive late in the morning. • 4 M: Method, Material, Machinery, Manpower

24. Flowcharts • Used to document the detailed steps in a process • Often the first step in Process Re-Engineering

25. Checklist • Simple data check-off sheet designed to identify type of quality problems at each work station; per shift, per machine, per operator

26. Control Charts • Important tool used in Statistical ProcessControl • The UCL and LCL are calculated limits used to show when process is in or out of control

27. Scatter Diagrams • A graph that shows how two variables are related to one another • Data can be used in a regression analysis to establish equation for the relationship

28. Linear regression - example • No. of shipments: • Weeks 1 – 8: • All shipmnts: 23, 31, 28, 37, 35, 40, 41, 44 • With defects: 5, 8, 6, 11, 10, 14, 12, 15 • Employee turnover (new hires + terminations) • Weeks 1 – 8: • 1, 3, 5, 2, 4, 6, 5, 5

29. Pareto Analysis • Technique that displays the degree of importance for each element • Named after the 19th century Italian economist • Often called the 80-20 Rule • Principle is that quality problems are the result of only a few problems e.g. 80% of the problems caused by 20% of causes

30. Pareto Analysis • Develop a Pareto analysis of the following reasons of delay in a production process. What do you conclude? • Reason for Delay Frequency • Awaiting engineering decision 11 • No schematic available 10 • Test equipment down 22 • Delay in inspection 15 • Inadequate parts 40 • Lack of personnel available 3

31. Pareto Analysis of Wine Glass Defects (Total Defects = 77)

32. Histograms • A chart that shows the frequency distribution of observed values of a variable like service time at a bank drive-up window • Displays whether the distribution is symmetrical (normal) or skewed

33. Quality Awards and Standards • Malcolm Baldrige National Quality Award • The Deming Prize • ISO 9000 Certification • ISO 14000 Standards

34. MBNQA- What Is It? • Award named after the former Secretary of Commerce – Reagan Administration • Intended to reward and stimulate quality initiatives • Given to no more that two companies in each of three categories; manufacturing, service, and small business • Past winners; FedEx, 3M, IBM, Ritz-Carlton • Typical winners have scored around 700 points

35. The Deming Prize • Given by the Union of Japanese Scientists and Engineers since 1951 • Named after W. Edwards Deming who worked to improve Japanese quality after WWII • Not open to foreign companies until 1984 • Florida Power & Light was first US companywinner

36. ISO Standards • ISO 9000 Standards (published in 1987): • Certification developed by International Organization for Standardization • Set of internationally recognized quality standards • Companies are periodically audited & certified • ISO 9000:2000 Quality Management Systems (QMS) – Fundamentals and Standards • ISO 9001:2000 QMS – Requirements (customer) • ISO 9004:2000 QMS - Guidelines for Performance • ISO 14000:Focuses on a company’s environmental responsibility

37. ISO Standards • (1) Design/Development -> (2) Procurement -> (3) Production -> (4) Installation -> (5) Servicing • ISO 9001: 2000 (1)  (5) • ISO 9002, ISO 9003: withdrawn, incorporated into ISO 9001: 2000 • ISO 10011: Guidelines for Auditing & Quality Management

38. Quality Gurus • Walter A. Shewhart • W. Edwards Deming • Joseph M. Juran • Armand V. Feigenbaum • Phillip Crosby • Kaoru Ishikawa • Genichi Taguchi

39. Why TQM Efforts Fail • Lack of a genuine quality culture • Lack of top management support and commitment • Over- and under-reliance on SPC methods