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Topic-16. Quality management. Quality Management. What’s quality? Different people have different ideas about quality. There is no clear definition on the term of quality. From customer: quality is often associated with value/usefulness.

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    1. Topic-16 Quality management

    2. Quality Management • What’s quality? Different people have different ideas about quality. There is no clear definition on the term of quality. • From customer: quality is often associated with value/usefulness. • From producer: quality is the conformance to design specification. • From salesman: quality is related to features/functions/price

    3. Quality Management (II) • Quality is a relative concept usually refers to: • fitness-to-use • Excellence • Satisfactory of customer/……….. • Examples: * If you want to buy a PC computer, .. * When you order a telephone service…

    4. Development of Quality Management • Before 1960s: (inspection oriented) • Up to 1900s: individual operator inspection (one-by-one) • Early 1900s: foreman quality control through inspection • After 1940s: statistical quality control (SQC based on the progress of statistic theory and control theory, focused on the techniques of inspection.

    5. Development of Quality Management (II) • After 1960s(management oriented) 4. Early 1960s: preventive quality, MGT responsibility. 5. 1970s: total quality control (TQC) theory and practice. (quality is free if you do right at first place) 6. After 1980s: strategic quality MGT—quality is competitive weapon put quality into strategic planning

    6. Development of Quality Management (III) • From: reactive, inspection-oriented to preventive MGT-oriented • From: “control-in” to “build-in” to “manage-in” quality.

    7. From Reactive Inspection AOL Product Oriented Blame Placing Quality vs. Operations Cost or Quality Operations Only Hunches on Cost of Quality Predominantly Blur-Collar Defects should be hidden Quality dept has Quality Problem Subordinated to MGT Team General manager not evaluated on Quality Quality Costs more Quality is technical Schedule first To Proactive Prevention Zero Defect Organization Oriented Problem solving Quality and Operations Cost and Quality Product design, Process Design, and Operations Formal reporting on cost of quality Predominantly White-Collar Cost Defects should be highlighted Purchasing, R&D, Marketing has Quality Problem Part of the MGT Team Quality Performance is part of General manager review Quality costs less Quality is managerial Quality first Changing Quality Assumption

    8. Measurement of Quality • A. Design Quality vs. Conformance Quality • B. Traditional view: • Conformance • Fitness to Use • Excellence

    9. Design and Conformance Quality Design Quality: Output goals and specifications Output goals: results form strategic decisions that establish output characteristics based upon the complex relationship among customer needs, output value, potential demand, marketing strategies and profitability. Output specifications: translations output characteristics into concrete specifications for outputs Conformance Quality: meeting output specifications Operations in concerned primarily with conformance to output specifications and with ensuring that output specifications create the desired output characteristics

    10. Traditional Definition of Quality 1.Conformance to requirements: according to this view, product quality is synonymous with meeting specifications. This critical issue is whether the final product conforms to the design and performance standards that have content or validity of these standards. 2. Fitness for use: this approach is more user-oriented. Different users have different needs, and to the extent that a product is designed and manufactured to meet those needs, it is of high quality. 3. Innate excellence: excellence is both absolute and universally recognizable. This definition reflects the belief that through styles and tastes change, there is something enduring about works of high quality. They provide a standard against which other products are judged.

    11. Eight dimensions of product quality 1. Performance The primary operating characteristics of a product. For an automobile, these would be traits like acceleration, handling, cruising speed, and comfort; for a television set. They would include sound and picture clarity, color, and ability to receive distant stations. 2. Product Features The “bells and whistles” that are often added to spice them up; free drinks on a lengthy plane flight, permanent press as well as cotton cycles on a washing machine, and automatic tuners on a color television set are all secondary to basic product or services being offered.

    12. 3. Reliability A reliable product is one that can be count on; the odds of its failing within a specific period is small. Two common measures of reliability are the mean time to first failure (MTFF) and the mean time between failures (MTBF). 4. Conformance This is a measure of consistency; a reflection on how well a product matches up against pre-established specifications. This is an especially important element of service business. Incorrect bank statements, lost mail, or delayed airline flight are often cited as examples or deteriorating quality.

    13. 5. Durability This dimension is a characteristic of physical products alone. Durability thus reflects the economic or physical life of a product; it is commonly measured by the number of hours, or miles that a product can be used before replacement is required. 6. Serviceability Serviceability refers to the speed of repair which is therefore an important independent element in maintaining a quality image. For example, caterpillar Tractor’s guarantee that replacement parts will be shipped anywhere in the world within 48 hours has undoubtedly enhanced its reputation for quality.

    14. 7. Aesthetics This is a subjective dimension. How a product looks, feels, sounds, tastes, or smells is clearly a matter of personal judgment. That these elements affect buying behavior is certain-witness the attention paid to the superior “fits and finishes” of Japan automobiles 8. Perception of Quality Not only the most subjective dimension but also based on advertising or on the excellence of other produced by the company. It shapes first impressions, which are critical in assessing an unknown product. For example, the strong quality image of Maytag’s new line of dishwashers- initially based on the performance of its laundry equipment, rather than on any solid evidence of superior reliability or durability of this particular product- is a perfect example (halo effect)

    15. Eight Dimensions of Quality 1. Features (secondary characteristics) 2. Performance (user defined) 3. Reliability 4.Durability 5.Conformance 6.Serviceability 7. Aesthetics 8. Perceived quality Many quality problems result from different viewing of quality

    16. Examples of Dimension of Quality

    17. The Gurus • 1. Deming: Management is responsible • 2. Juran: Quality trilogy • 3. Feigenbaum: Total quality control (TQC) • 4. Ishikawa: Total company involvement • 5. Crosby: Quality is free

    18. Setting Goals “If management decides it can live with a 10% defective rate, it will get a 10% defect rate. A company gets what it asks for. Management must take the lead.” Philip Crosby Management Consultant Wall Street Journal

    19. “Quality is only as good as the customer says it is, not what the numbers on an engineer’s quality-control charts show.” Armand V. Feigernbaum General Systems Company

    20. A Competitive Advantage “U.S. managers have traditionally viewed quality control as a defensive strategy to control cost. Management must learn that quality is a competitive strategy that separates the winner from losers.” David Garvin Wall Street Journal

    21. Strategic Importance of Quality • A firm must select a focused number of dimensions of quality to compete in marketplace • A firm must define the quality from customer’s satisfaction which not only at time of sales but over product lifetime. • A firm must put “quality” into their strategic planning:

    22. Strategic Importance of Quality (II) • 1. Positioning products in the market in terms of the dimensions of quality selected • 2. Linking quality profitability and overall business strategy to respond competitive needs • 3. Developing a companywide continuous quality improvement plan.

    23. Traditional View of How Much to Inspect Optimal Level of Inspection Annual cost ($) Total Quality Control Cost Cost of Scrap, Rework, and Detecting Defects Cost of Defective Products to Customers 0 Percent of Products Inspected

    24. The Japanese versus the North American Quality Philosophy $ Costs True Benefits Perceived Benefits 10% Defective Towards 0% Defective Less No. of Defects North American Approach to quality Japanese Approach to quality

    25. “In the 1990’s, ‘made in the USA’ will become a symbol of world-class quality again. When 30% of U.S. products were failures, versus 3% for Japan, that was an enormous difference. But at failures of 0.3% and 0.03%, it’ll be difficult for anyone to tell.” J.M. Juran Juran Institute

    26. Improvements in the U.S. Industry “The U.S. industry is making great strides, particularly in auto and electronics.” David Garvin “In 1985 American car owners reported 50% more problems than Japanese car owners. In 1987 this was only 36%. The quality gap may be wiped out soon.” The Columbus Dispatch

    27. Quality: Cost vs. Profits • Costs of Quality: • Preventing cost: • Appraisal costs: • Internal failure costs: • External failure costs:

    28. Quality: Cost vs. Profits (II) • Profits from quality: • Market gains-improved quality-increased market share and higher price-increased profit. • Cost savings-improved reliability/conformance-reduced/scrap & rework/liability & warranty-increased profit.

    29. Quality Cost Report

    30. Costs Associated with Quality Management

    31. Product Liability- A Quality Issue • What is “Product Liability”? • Examples: • Auto Vehicles/ Garage Door Openers • Bicycle Breakers/ Sport Equipment • Hot Water Heaters • Children Toys • Health Care Consumers Producers Property Damage Personal Injury

    32. Major Causes of Liability Allegations • Defect in product design 35% • Failure to warn 24% • Defect in construction 23% • Incorrect labeling 19% • Foreseeable misuse 6% • Others 9%

    33. Major Causes of Liability Allegations (II) • Major design defects: • Risks are not reduced to the minimum • No adequate warning/protection devise • Fail to perform intended function safety • Create unreasonable dangerous side effects • Fail to minimize avoidable consequence of misuse. • ………………………..

    34. Reduce Product Liability • Reduce the risk through better design • Anticipate product misuse • Proper selection of components/parts • Enforce quality control procedures • Provide sufficient installation /maintenance /operating instructions • Add all warning to potential damages • Offer safety devise when necessary • Involve CEO/top management in risk reduction projects • Monitor legal development in product design

    35. “A customer is the most important visitor on our premise. He is not dependent on us; we are dependent on him. He is not an interruption on our work– he is the PURPOSE of it. He is not an outsider to our business; he is part of it. We are not doing him a favor by serving him; he is doing us a favor by giving us an opportunity to do so.” <A Quote from 40 years ago>

    36. Understanding Total Quality Management (TQM) • TQM: is an organizational wide quality control program involving: • All functional areas • All people With continuous quality improvement attempt and customer satisfaction oriented

    37. Understanding TQM (II) • TQM considering all factors which influence quality including: ---RM/Parts quality ---Machine/Eqmt quality ---People’s quality ---Organization’s quality

    38. Understanding TQM (III) • TQC Principles: --Small Lotsize Production Principle --Shop Floor Cleanliness Principle --Less-than-full-capacity Scheduling Principle -- ……………

    39. Quality Management in Services • Since many services are intangible it is difficult to determine their quality • Customers set their own standards for services • Perceived quality of service affected by the surroundings • Performance of service employees determine in large part the quality of the services

    40. Improving Quality Through TQM • Purchasing considerations • Buyer must emphasize quality, delivery, and price • Work with the supplier to obtain defect-free parts • Specifications must be clear and realistic • Allow time to identify qualified suppliers • Improve communication between purchasing, engineering, quality control, and other departments • Product and Service Design • Design changes can increase defect rates • Stable design reduce quality problems • Stable design may become obsolete in the marketplace

    41. Improving Quality Through TQM (II) • Process Design • New equipment con overcome quality problems • Concurrent engineering ensures that production requirements and process capabilities are synchronized • Quality Function Deployment (QFD) • Voice of the customer- What do customers need and want? • Competitive analysis- How well are we serving customers? • Voice of the engineer- What technical measures relate to our customer’s need? • Correlation- What are the relationships between the voice of the customer and the voice of the engineer? • Technical comparison- How does our product or service performance compare to that of our competition? • Trade-offs- What are the potential technical trade-offs?

    42. Improving Quality through TQM (III) • Benchmarking • Planning- identify process, leader, performance measures • Analysis- measure gap, identify causes • Integration- establish goals and resource commitments • Action- develop teams, implement plan, monitor progress, return to step I • Tools for improving quality • Flow diagrams • Process charts • Checklist- record the frequency of occurrence • Histograms- summarize data on a continuous scale • Bar charts- bar height represents the frequency of occurrence • Pareto charts- a bar chart organized in decreasing order • Scatter diagrams- a plot of two variables showing whether they are related • Cause-and-effect, fishbone, or Ishakawa diagram • Graphs- a variety of pictorial formats, such as line graphs and pie chats

    43. Malcom Baldrige National Quality Award • Established in 1987 • Named for secretary of commerce Malcom Baldrige • Improved quality as a means of reducing the trade deficit • Learn strengths and weaknesses and find ways to improve operations • Seven criteria

    44. Criteria for Performance Excellence • Category 1—Leadership 120 points • Category 2—Strategic Planning 85 points • Category 3—Customer and Market Focus 85 points • Category 4—Information and Analysis 90 points • Category 5—Human Resource Focus 85 points • Category 6—Process Management 85 points • Category 7—Business Results 450 points

    45. International Quality Documentation Standards • What is ISO 9000? • Certified companies are listed in a directory • Compliance with ISO 9000 standards indicates quality claims can be documented • ISO 14000- an environment management system • Standards require that companies keep track of their raw materials use and the generation, treatment, and disposal of hazardous wastes • Companies must prepare a plan for ongoing improvement in environmental performance • Standards cover the following areas: • Environmental management system • Environmental performance evaluation • Environmental labeling • Life cycle assessments • Benefits of ISO Certification • External- potential sales advantage • Internal- provides guidance in staring the TQM journey

    46. New Trends in TQM • World-Class Practice --Quality begins when business strategy is formulated --Quality is the weapon of choice to capture global markets --Quality drives the productivity machine --Not depending on inspection to catch defects concentrating on doing things right the first time --Committing tremendous resources to put in place TQM programs aimed at continuous improvement

    47. Service Quality Dimensions