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Total Quality Management Presented by C. Christopher Lee Associate Professor of Management

Total Quality Management Presented by C. Christopher Lee Associate Professor of Management. Lee (2012): Critical Issues on TQM. Customer & Quality Quality Measurements Process Improvement 3 σ (sigma), 4 σ , 5 σ , 6 σ Continuous Improvement Quality & Profitability Total Commitment.

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Total Quality Management Presented by C. Christopher Lee Associate Professor of Management

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  1. Total Quality Management Presented byC. Christopher LeeAssociate Professor of Management

  2. Lee (2012): Critical Issues on TQM • Customer & Quality • Quality Measurements • Process Improvement • 3 σ (sigma), 4 σ, 5 σ, 6 σ • Continuous Improvement • Quality & Profitability • Total Commitment

  3. Customer & Quality • The first step of TQM is to define the quality. • Customers set an expectation for a product/service. • When the expectation is met, customers are satisfied. • When customers are satisfied, they validate the quality of the product/service. • Therefore, Quality = Customer Satisfaction • Review Question (RQ): Who defines the quality? Why?

  4. Quality Measurements • After defining the quality for a product/service, the next step is to quantify the quality. • A manager should form a team including workers, quality specialist. • The manager should lead the team to determine a proper measurement for each process of a product/service; A quality goal can become a measurable number. • The quality goal is now set scientifically. • Workers will collect the data for the measurement, process & analyze the data, and improve the process. • RQ: Why does TQM quantify the quality? • RQ: Why do Workers have to be involved in quantifying the quality (planning)?

  5. Product Control vs. Process Control • Product Control = Quality Control (old): • Before TQM, we implemented quality control by checking the defect rate of finished goods. This is product control. • This approach does NOT improve the quality. • When you check the quality of finished goods, damages were already done. • Summary: Product control is not TQM. • Reality Check: Still many business organizations conduct “quality control” approach, and think they are implementing TQM. • RQ: Why doesn’t Quality Control improve the quality actually?

  6. Product Control vs. Process Control (continued) • Process Control = Process Improvement, Quality Improvement, TQM (new): TQM asks you to check the quality in each process of a whole business operation. • If a process shows low quality, you must stop the whole operation, and everyone must solve the particular process immediately. • By improving each process, the whole operation (total quality) is improved, and the quality of the fished good is improved. • Summary: • RQ: Why is “quality improvement” better than “quality control”?

  7. Striving for 6 σ • SPC: Statistical Process Control • 3 σ: Less than 3 defects per 1000 • Industry standard, Supply chain management • 4 σ : Less than 3 defects per 10,000 • Leader in the industry • Contender for Malcom Baldridge Award • 5 σ : Less than 3 defects per 100,000 • Contender for Deming Prize • 6 σ : Less than 3 defects per 1,000,000 • World Leader • Motorola (early 90s); Toyota (1965-early 2000s) • RQ: Why did Toyota lose the 6-sigma reputation in 2000s?

  8. Continuous Improvement • OLD: If it is not broken, don’t fix it. • NEW: Even if you achieved a quality goal, never stop improving the process. • TQM = Continuous improvement = Never-ending process • If you stop improving, a competitor will take over your territory soon. • To simply survive, you need to continuously improve the quality. • 3 σ 4 σ 5 σ 6 σ • RQ: Why is TQM a never-ending process?

  9. Relationship b/w Quality & Profitability • REVENUE: • Words of Mouth: • Higher Quality • Higher Satisfaction • Worlds of Mouth • Higher Sales • Higher Price: • Higher Quality • Higher Perception • Higher Price • Higher Revenue • COST: • Lower WIP: • Higher Quality • Less Defects • Less WIP • Less Production Cost • Lower Returns: • Higher Quality • Less Defects • Less Returns • Less Operations Cost Quality  Revenue & Cost  Profit !!!

  10. Interlinking Quality and Profitability Performance RQ: What is the relationship b/w quality & profitability?

  11. Total Commitment • Time & Cost: Improving a process takes a lot of resources (time & cost). Imagine a business operation that involves more than 100 processes. • Long-Term Project: Therefore, TQM must be a long-term project. • Total Quality: Every process in the organization must get involved in quality improvement. • Top Management Support:Top management must commit fully to this TQM project, otherwise the TQM will fail miserably. Without support of CEO/President of a firm, TQM will never be implemented successfully. • RQ: Why does TQM fail without total commitment & full support by top management?

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