Defining Quality • Conformance to Requirements • Fitness for Use • Customer Satisfaction
Conformance to Requirements • High quality is often synonymous with meeting specifications. • Manufacturing frequently takes this approach since it is closely linked to defect and scrap rates. • It is also very important to highly-regulated industries, e.g., health care.
Fitness for Use • This approach is user-oriented. it suggests that quality lies in the eye of the beholder. • Different users have different needs, and to the extent that a product or service meets those needs, it is deemed to be of high quality.
Customer Satisfaction • Customer satisfaction is a common measure for service quality. • Customer satisfaction not only measures quality, but also influences future purchasing decisions. • Customer satisfaction is determined by the gap between perception and expectation.
Quality Dimensions • Instead of a simple, uniform concept, quality needs to be defined in specific terms (dimensions) for a product or service. • An organization needs to focus on one or few quality dimensions. • The selection of quality dimensions depends on the basic business strategy.
Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived quality Examples of Product Dimensions
Reliability Accessibility Convenience Empathy Responsiveness Aesthetics Performance Perceived quality Examples of Service Dimensions
Strategic Consideration in Quality Management • Compete on quality (qualifier or order winner) • Link quality to strategic planning • Define quality from customers’ view • Link quality to financial performance • Define clear quality measures
Minimizing the Costs of Quality • Prevention and Appraisal Costsrise during the initial phase of quality improvement. • Internal and External Failure Costs should fall as quality improves. • Appraisal Cost should fall as quality improves. • Total Cost of Quality should fall as quality improves.
Key Elements of Quality Management • Top Management Commitment • Customer Focus • Continuous Improvement • Employee Commitment and Involvement
Malcolm Baldridge Awards • Designed to recognize organizations which have achieved excellence in quality and to identify “role models” for other organizations. • Includes five categories: manufacturing, service, small business, health care, and education. • Internet web site: www.quality.nist.gov/
Organizational Profile: Environment, Relationships, and Challenges The Baldrige Framework –A Systems Perspective 2 Strategic Planning 5 Human Resource Focus 1 Leadership 7 Business Results 3 Customer & Market Focus 6 Process Management 4 Measurement, Analysis, and Knowledge Management
ISO 9000:2000 • Quality system standards adopted in 1987 by International Organization for Standardization; revised in 1994 and 2000 • Technical specifications and criteria to be used as rules, guidelines, or definitions of characteristics to ensure that materials, products, processes, and services are fit for their purpose.
ISO 9000 Key Characteristics • Establishes a quality management system (QMS) to facilitates consistency • It is not prescriptive; does not say “how” to do anything; specifies “what” processes need to be in place • It is not a product standard • It is not TQM • It is site specific
Major Potential Benefits of ISO 9000Registration • Documentation of quality management system • Reduction of variation • Help develop and expand business • Reduction or elimination of customer audit • Increased profitability/reduced costs • Elimination of duplication of quality systems
Major Problems with ISO 9000 Registration • Does not assure high quality • Costs - application and maintenance • Time - application and maintenance • Level of internal expertise and use of consultants • Executive commitment • Selection of registration
Key Methods for Quality Improvement • Process Improvement • Business Process Reengineering • Benchmarking • Six Sigma
Process Improvement • Uses a systematic process to improve the performance of a process • Employees are the key contributors • Uses intra- or inter-functional teams to carry out improvement initiatives • Management provides critical resources and support
Business Process Reengineering (BPR) • Seeks radical (breakthrough) improvement in process performance • Relies heavily on experts, not regular employees • Uses technology to re-design a process • Requires significant financial investment • A high-risk, high potential reward method
Benchmarking • A method to learn and adopt “best practices” • Best practices can come from a specific competitors or industry, or from any industry • Requires significant time and resources • Benchmarking should be followed by internal innovation
Six Sigma • A quality improvement methodology that focuses on eliminating defects through reduction of variation in a process • Defect – A measurable outcome that is not within acceptable (specification) limits • The goal is to reduce cost and improve quality simultaneously.
Requirements for Implementing Quality Management • Commitment to and involvement in quality from management • Personal accountability and rewards for quality improvement • Effective training on improvement tools • A culture that promotes empowerment and quality improvement