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Quality Management

Chapter 9

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Total Quality Management (TQM)

• Total quality management is defined as managing the entire organization so that it excels on all dimensions of products and services that are important to the customer

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Quality Specifications

• Design quality: Inherent value of the product in the marketplace

– Dimensions include: Performance, Features, Reliability/Durability, Serviceability, Aesthetics, and Perceived Quality.

• Conformance quality: Degree to which the product or service design specifications are met

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Costs of Quality

External Failure Costs

Appraisal Costs

Prevention Costs

Internal FailureCosts

Costs ofQuality

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Quality movement

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The birth of 6 Sigma

• In 1980, Motorola involved in

Japanese BB Call market

• Through the use of statistical tools

• On Jan. 15, 1987, Motorola

launched ‘Six Sigma Quality

Program’

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Six Sigma Quality

• A philosophy and set of methods companies use to eliminate defects in their products and processes

• Seeks to reduce variation in the processes that lead to product defects

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6 Sigma

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Standard Deviation vs Performance

Sigma Errors/million transactions

6 3.4 (99.9997%)

5 233 (99.98%)

4 6210 (99.38%)

3 66807 (93.32%)

2 308527 (70%)

1 690000 (29%)

transaction 99% 6 sigma

Lost orders/per 300,000 trans.

3000 1

complaints/50,000 trans.

410 <2

Computer down time 1.68hrs/wk <1.8sec/wk

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Six Sigma Quality (Continued)

• Six Sigma allows managers to readily describe process performance using a common metric: Defects Per Million Opportunities (DPMO)

1,000,000 x

units of No. x

unit per error for

iesopportunit ofNumber

defects ofNumber

DPMO 1,000,000 x

units of No. x

unit per error for

iesopportunit ofNumber

defects ofNumber

DPMO

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The 6 sigma organization

• Champion

• Master Black Belt

• Black Belt

• Green Belt

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Six Sigma Quality: DMAIC Cycle (Continued)

1. Define (D)

2. Measure (M)

3. Analyze (A)

4. Improve (I)

5. Control (C)

Customers and their priorities

Process and its performance

Causes of defects

Remove causes of defects

Maintain quality

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Analytical Tools for Six Sigma and Continuous Improvement: Flow Chart

No, Continue…

Material Received

from Supplier

Inspect Material for

DefectsDefects found?

Return to Supplier for Credit

Yes

Can be used to find quality problems

Can be used to find quality problems

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Analytical Tools for Six Sigma and Continuous Improvement: Cause & Effect Diagram

Effect

ManMachine

MaterialMethod

Environment

Possible causes:Possible causes: The results or effect

The results or effect

Can be used to systematically track backwards to find a possible cause of a quality problem (or effect)

Can be used to systematically track backwards to find a possible cause of a quality problem (or effect)

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Analytical Tools for Six Sigma and Continuous Improvement: Checksheet

Billing Errors

Wrong Account

Wrong Amount

A/R Errors

Wrong Account

Wrong Amount

Monday

Can be used to keep track of defects or used to make sure people collect data in a correct manner

Can be used to keep track of defects or used to make sure people collect data in a correct manner

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Analytical Tools for Six Sigma and Continuous Improvement: Histogram

Nu

mb

er

of

Lo

ts

Data RangesDefects

in lot

0 1 2 3 4

Can be used to identify the frequency of quality defect occurrence and display quality performance

Can be used to identify the frequency of quality defect occurrence and display quality performance

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Analytical Tools for Six Sigma and Continuous Improvement: Pareto Analysis

Can be used to find when 80% of the problems may be attributed to 20% of thecauses

Can be used to find when 80% of the problems may be attributed to 20% of thecauses

Assy.Instruct.

Fre

quen

cy

Design Purch. Training

80%

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Analytical Tools for Six Sigma and Continuous Improvement: Run Chart

Can be used to identify when equipment or processes are not behaving according to specifications

Can be used to identify when equipment or processes are not behaving according to specifications

0.440.460.480.5

0.520.540.560.58

1 2 3 4 5 6 7 8 9 10 11 12Time (Hours)

Dia

me

ter

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Analytical Tools for Six Sigma and Continuous Improvement: Control Charts

Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality

Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality

970

980

990

1000

1010

1020

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

LCL

UCL

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Six Sigma Roles and Responsibilities

1. Executive leaders must champion the process of improvement

2. Corporation-wide training in Six Sigma concepts and tools

3. Setting stretch objectives for improvement

4. Continuous reinforcement and rewards

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PDCA Cycle (Deming Wheel)

1. Plan a change aimed at improvement.

1. Plan

2. Execute the change.

2. Do

3. Study the results; did it work?

3. Check

4. Institutionalize the change or abandon or do it again.

4. Act

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10

Continuous Improvement (CI)

• Management's view of performance standards of the organization– performance level of the firm as something to be

"continuously challenged and incrementally upgraded."

• The way management views the contribution and role of its workforce– believe employee involvement and team efforts are the

key to improvement

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ISO 9000 and ISO 14000

• Series of standards agreed upon by the International Organization for Standardization (ISO)

• Adopted in 1987

• More than 160 countries

• A prerequisite for global competition?

• ISO 9000 an international reference for quality, ISO 14000 is primarily concerned with environmental management

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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

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Guidelines for Use

• 9000

– Quality Management and Quality Assurance Standards: Guidelines for Selection and Use

• 9004

– Quality Management and Quality System Elements--Guidelines

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Three Forms of ISO 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

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External Benchmarking Steps

1. Identify those processes needing improvement

2. Identify a firm that is the world leader in performing the process

3. Contact the managers of that company and make a personal visit to interview managers and workers

4. Analyze data