3-1copyright 2009, john wiley & sons, inc. chapter 2: quality management lecture outline ...

3-1Copyright 2009, John Wiley & Sons, Inc.Copyright 2009, John Wiley & Sons, Inc.

Chapter 2: Quality ManagementChapter 2: Quality ManagementLecture OutlineLecture Outline

Meaning of QualityMeaning of Quality Total Quality ManagementTotal Quality Management Quality Improvement and Role of Quality Improvement and Role of

EmployeesEmployees Strategic Implications of TQMStrategic Implications of TQM Six SigmaSix Sigma


Lecture Outline (cont.)Lecture Outline (cont.)

Cost of QualityCost of Quality Quality Management and ProductivityQuality Management and Productivity Identifying Quality Problems and CausesIdentifying Quality Problems and Causes Quality Awards and Setting Quality Quality Awards and Setting Quality

StandardsStandards ISO 9000ISO 9000


Meaning of QualityMeaning of Quality

Webster’s DictionaryWebster’s Dictionary degree of excellence of a thingdegree of excellence of a thing

American Society for QualityAmerican Society for Quality totality of features and characteristics totality of features and characteristics

that satisfy needsthat satisfy needs Consumer’s and Producer’s Consumer’s and Producer’s

PerspectivePerspective


Meaning of Quality:Meaning of Quality:Consumer’s PerspectiveConsumer’s Perspective

Fitness for useFitness for use how well product or how well product or

service does what it is service does what it is supposed tosupposed to

Quality of designQuality of design designing quality designing quality

characteristics into a characteristics into a product or serviceproduct or service

A Mercedes and a Ford are A Mercedes and a Ford are equally “fit for use,” but with equally “fit for use,” but with different design dimensionsdifferent design dimensions


Dimensions of Quality:Dimensions of Quality:Manufactured ProductsManufactured Products

Performance Performance basic operating characteristics of a product; how basic operating characteristics of a product; how

well a car is handled or its gas mileagewell a car is handled or its gas mileage Features Features

““extra” items added to basic features, such as a extra” items added to basic features, such as a stereo CD or a leather interior in a carstereo CD or a leather interior in a car

ReliabilityReliability probability that a product will operate properly probability that a product will operate properly

within an expected time frame; that is, a TV will within an expected time frame; that is, a TV will work without repair for about seven yearswork without repair for about seven years


ConformanceConformance degree to which a product meets pre–established degree to which a product meets pre–established

standardsstandards DurabilityDurability

how long product lasts before replacementhow long product lasts before replacement ServiceabilityServiceability

ease of getting repairs, speed of repairs, courtesy ease of getting repairs, speed of repairs, courtesy and competence of repair personand competence of repair person

Dimensions of Quality:Dimensions of Quality:Manufactured Products (cont.)Manufactured Products (cont.)


AestheticsAesthetics how a product looks, feels, sounds, how a product looks, feels, sounds,

smells, or tastessmells, or tastes Safety Safety

assurance that customer will not suffer assurance that customer will not suffer injury or harm from a product; an injury or harm from a product; an especially important consideration for especially important consideration for automobilesautomobiles

PerceptionsPerceptions subjective perceptions based on brand subjective perceptions based on brand

name, advertising, and the likename, advertising, and the like

Dimensions of Quality:Dimensions of Quality:Manufactured Products (cont.)Manufactured Products (cont.)


Dimensions of Quality:Dimensions of Quality:ServiceService

Time and TimelinessTime and Timeliness How long must a customer wait for service, How long must a customer wait for service,

and is it completed on time?and is it completed on time? Is an overnight package delivered overnight?Is an overnight package delivered overnight?

Completeness:Completeness: Is everything customer asked for provided?Is everything customer asked for provided? Is a mail order from a catalogue company Is a mail order from a catalogue company

complete when delivered?complete when delivered?


Dimensions of Quality:Dimensions of Quality:Service (cont.)Service (cont.)

Courtesy:Courtesy: How are customers treated by employees?How are customers treated by employees? Are catalogue phone operators nice and are Are catalogue phone operators nice and are

their voices pleasant?their voices pleasant? ConsistencyConsistency

Is the same level of service provided to each Is the same level of service provided to each customer each time?customer each time?

Is your newspaper delivered on time every Is your newspaper delivered on time every morning?morning?


Accessibility and convenienceAccessibility and convenience How easy is it to obtain service?How easy is it to obtain service?

AccuracyAccuracy Is the service performed right every time?Is the service performed right every time?

ResponsivenessResponsiveness How well does the company react to unusual How well does the company react to unusual

situations?situations? EmpathyEmpathy

Do you feel the server understands your situation?Do you feel the server understands your situation?

Dimensions of Quality:Dimensions of Quality:Service (cont.)Service (cont.)


Meaning of Quality:Meaning of Quality:Producer’s PerspectiveProducer’s Perspective

Quality of ConformanceQuality of Conformance Making sure a product or service is Making sure a product or service is

produced according to designproduced according to design if new tires do not conform to specifications, they if new tires do not conform to specifications, they

wobblewobble if a hotel room is not clean when a guest checks if a hotel room is not clean when a guest checks

in, the hotel is not functioning according to in, the hotel is not functioning according to specifications of its designspecifications of its design


Fitness forConsumer Use

Fitness forConsumer Use

Producer’s PerspectiveProducer’s Perspective Consumer’s PerspectiveConsumer’s Perspective

Quality of ConformanceQuality of Conformance

• Conformance to specifications

• Cost

Quality of DesignQuality of Design

• Quality characteristics• Price

MarketingMarketingProductionProduction

Meaning of Quality Meaning of Quality

Meaning of QualityMeaning of Quality


Total Quality ManagementTotal Quality Management

Commitment to quality throughout organizationCommitment to quality throughout organization

Principles of TQMPrinciples of TQM Customer-orientedCustomer-oriented LeadershipLeadership Strategic planningStrategic planning Employee responsibilityEmployee responsibility Continuous improvementContinuous improvement CooperationCooperation Statistical methodsStatistical methods Training and educationTraining and education


Deming’s 14 PointsDeming’s 14 Points

1.1. Create constancy of purposeCreate constancy of purpose

2.2. Adopt philosophy of preventionAdopt philosophy of prevention

3.3. Cease mass inspectionCease mass inspection

4.4. Select a few suppliers based on Select a few suppliers based on qualityquality

5.5. Constantly improve system and Constantly improve system and workersworkers


6.6. Institute worker trainingInstitute worker training

7.7. Instill leadership among Instill leadership among supervisorssupervisors

8.8. Eliminate fear among employeesEliminate fear among employees

9.9. Eliminate barriers between Eliminate barriers between departmentsdepartments

10.10. Eliminate slogansEliminate slogans

Deming’s 14 Points (cont.)Deming’s 14 Points (cont.)


11.11. Remove numerical quotasRemove numerical quotas

12.12. Enhance worker prideEnhance worker pride

13.13. Institute vigorous training and Institute vigorous training and education programseducation programs

14.14. Develop a commitment from top Develop a commitment from top management to implement management to implement above 13 pointsabove 13 points

Deming’s 14 Points (cont.)Deming’s 14 Points (cont.)


Deming Wheel: PDCA Deming Wheel: PDCA CycleCycle

1. PlanIdentify problem and develop plan for improvement.

2. DoImplement plan on a test basis.

3. Study/CheckAssess plan; is it working?

4. ActInstitutionalize improvement; continue cycle.


Six SigmaSix Sigma

A process for developing and delivering A process for developing and delivering near perfect products and servicesnear perfect products and services

Measure of how much a process Measure of how much a process deviates from perfectiondeviates from perfection

3.4 defects per million opportunities3.4 defects per million opportunities ChampionChampion

an executive responsible for project successan executive responsible for project success


Black Belts and Black Belts and Green BeltsGreen Belts

Green BeltsGreen Belts project team membersproject team members

Black BeltBlack Belt project leaderproject leader

Master Black BeltMaster Black Belt a teacher and mentor for a teacher and mentor for

Black BeltsBlack Belts


3.4 DPMO3.4 DPMO

67,000 DPMOcost = 25% of

sales

67,000 DPMOcost = 25% of

sales

DEFINEDEFINE CONTROLCONTROLIMPROVEIMPROVEANALYZEANALYZEMEASUREMEASURE

Six Sigma: DMAICSix Sigma: DMAIC


Cost of QualityCost of Quality

Cost of Achieving Good QualityCost of Achieving Good Quality Prevention costsPrevention costs

costs incurred during product designcosts incurred during product design Appraisal costsAppraisal costs

costs of measuring, testing, and analyzingcosts of measuring, testing, and analyzing Cost of Poor QualityCost of Poor Quality

Internal failure costsInternal failure costs include scrap, rework, process failure, downtime, include scrap, rework, process failure, downtime,

and price reductionsand price reductions External failure costsExternal failure costs

include complaints, returns, warranty claims, include complaints, returns, warranty claims, liability, and lost salesliability, and lost sales


Prevention CostsPrevention Costs

Quality planning costsQuality planning costs costs of developing and costs of developing and

implementing quality implementing quality management programmanagement program

Product-design costsProduct-design costs costs of designing costs of designing

products with quality products with quality characteristicscharacteristics

Process costsProcess costs costs expended to make costs expended to make

sure productive process sure productive process conforms to quality conforms to quality specificationsspecifications

Training costsTraining costs costs of developing and costs of developing and

putting on quality training putting on quality training programs for employees programs for employees and managementand management

Information costsInformation costs costs of acquiring and costs of acquiring and

maintaining data related maintaining data related to quality, and to quality, and development of reports on development of reports on quality performancequality performance


Appraisal CostsAppraisal Costs

Inspection and testingInspection and testing costs of testing and inspecting materials, parts, and costs of testing and inspecting materials, parts, and

product at various stages and at the end of a product at various stages and at the end of a processprocess

Test equipment costsTest equipment costs costs of maintaining equipment used in testing costs of maintaining equipment used in testing

quality characteristics of productsquality characteristics of products Operator costsOperator costs

costs of time spent by operators to gar data for costs of time spent by operators to gar data for testing product quality, to make equipment testing product quality, to make equipment adjustments to maintain quality, and to stop work to adjustments to maintain quality, and to stop work to assess qualityassess quality


Internal Failure CostsInternal Failure Costs

Scrap costsScrap costs costs of poor-quality costs of poor-quality

products that must be products that must be discarded, including labor, discarded, including labor, material, and indirect costsmaterial, and indirect costs

Rework costsRework costs costs of fixing defective costs of fixing defective

products to conform to products to conform to quality specificationsquality specifications

Process failure costsProcess failure costs costs of determining why costs of determining why

production process is production process is producing poor-quality producing poor-quality productsproducts

Process downtime costsProcess downtime costs costs of shutting down costs of shutting down

productive process to fix productive process to fix problemproblem

Price-downgrading costsPrice-downgrading costs costs of discounting poor-costs of discounting poor-

quality products—that is, quality products—that is, selling products as selling products as “seconds”“seconds”


External Failure CostsExternal Failure Costs

Customer complaint costsCustomer complaint costs costs of investigating and costs of investigating and

satisfactorily responding to a satisfactorily responding to a customer complaint resulting customer complaint resulting from a poor-quality productfrom a poor-quality product

Product return costsProduct return costs costs of handling and replacing costs of handling and replacing

poor-quality products returned poor-quality products returned by customerby customer

Warranty claims costsWarranty claims costs costs of complying with costs of complying with

product warrantiesproduct warranties

Product liability costsProduct liability costs litigation costs litigation costs

resulting from product resulting from product liability and customer liability and customer injuryinjury

Lost sales costsLost sales costs costs incurred costs incurred

because customers because customers are dissatisfied with are dissatisfied with poor quality products poor quality products and do not make and do not make additional purchasesadditional purchases


Quality Management Quality Management and Productivityand Productivity

ProductivityProductivity ratio of output to inputratio of output to input

Yield: Yield: a measure of productivitya measure of productivity

Yield=(total input)(% good units) + (total input)(1-%good units)(% reworked)Yield=(total input)(% good units) + (total input)(1-%good units)(% reworked)

or

Y=(I)(%G)+(I)(1-%G)(%R)Y=(I)(%G)+(I)(1-%G)(%R)

or

Y=(I)(%G)+(I)(1-%G)(%R)Y=(I)(%G)+(I)(1-%G)(%R)


Product YieldProduct Yield

E.g.E.g.Start 100 motors per dayStart 100 motors per day80% are good80% are good50% of poor quality units can be reworked50% of poor quality units can be reworked

YieldYield = (= (II)(%)(%GG) + () + (II)(1 - %)(1 - %GG)(%)(%RR))

YY = 100(0.80) + 100(1 - 0.80)(0.50)= 100(0.80) + 100(1 - 0.80)(0.50)

= 90 motors= 90 motors

YY = 100(0.90) + 100(1 - 0.90)(0.50)= 100(0.90) + 100(1 - 0.90)(0.50)

= 95 motors= 95 motors

If product quality is increased to 90% good,If product quality is increased to 90% good,


Product CostProduct Cost

Y

RKIK rd ))(())(( Product Cost

where:Kd = direct manufacturing cost per unitI = inputKr = rework cost per unitR = reworked unitsY = yield


Product CostProduct Cost

E.g.E.g.Direct mfg cost = $30, Rework cost = $12Direct mfg cost = $30, Rework cost = $12100 motors started, 20% defective100 motors started, 20% defective50% of defective motors can be reworked50% of defective motors can be reworked

Product cost =Product cost =((KKdd)()(II) + () + (KKrr)()(RR))

YY

Product cost = = $34.67 per motorProduct cost = = $34.67 per motor($30)(100) + ($12)(10)($30)(100) + ($12)(10)

90 motors90 motors

The manufacturing cost after quality improvement isThe manufacturing cost after quality improvement is

Product cost = = $32.21 per motorProduct cost = = $32.21 per motor($30)(100) + ($12)(5)($30)(100) + ($12)(5)

95 motors95 motors


Seven Quality Control ToolsSeven Quality Control Tools

Pareto AnalysisPareto Analysis Flow ChartFlow Chart Check SheetCheck Sheet HistogramHistogram

Scatter DiagramScatter Diagram SPC ChartSPC Chart Cause-and-Effect Cause-and-Effect

DiagramDiagram


NUMBER OFNUMBER OFCAUSECAUSE DEFECTSDEFECTS PERCENTAGEPERCENTAGE

Poor designPoor design 8080 6464 %%Wrong part dimensionsWrong part dimensions 1616 1313Defective partsDefective parts 1212 1010Incorrect machine calibrationIncorrect machine calibration 77 66Operator errorsOperator errors 44 33Defective materialDefective material 33 22Surface abrasionsSurface abrasions 33 22

125125 100100 %%

Pareto AnalysisPareto Analysis


Per

cen

t fr

om

eac

h c

ause

Per

cen

t fr

om

eac

h c

ause

Causes of poor qualityCauses of poor quality

Mac

hine

cal

ibra

tions

Mac

hine

cal

ibra

tions

Defec

tive

parts

Defec

tive

parts

Wro

ng d

imen

sion

s

Wro

ng d

imen

sion

s

Poor D

esig

n

Poor D

esig

n

Ope

rato

r err

ors

Ope

rato

r err

ors

Defec

tive

mat

eria

ls

Defec

tive

mat

eria

ls

Surfa

ce a

bras

ions

Surfa

ce a

bras

ions

00

1010

2020

3030

4040

5050

6060

7070(64)(64)

(13)(13)(10)(10)

(6)(6)(3)(3) (2)(2) (2)(2)

Pareto ChartPareto Chart


Flow ChartFlow Chart

Operation DecisionStart/ Finish

Start/ Finish

Operation

OperationOperation

Operation

Decision


Check SheetCheck Sheet

COMPONENTS REPLACED BY LABTIME PERIOD: 22 Feb to 27 Feb 2002REPAIR TECHNICIAN: Bob

TV SET MODEL 1013

Integrated Circuits ||||Capacitors |||| |||| |||| |||| |||| ||Resistors ||Transformers ||||CommandsCRT |


HistogramHistogram

0

5

10

15

20

1 2 6 13 10 16 19 17 12 16 2017 13 5 6 2 1


Scatter DiagramScatter Diagram

YY

XX


Control ChartControl Chart

1818

1212

66

33

99

1515

2121

2424

22 44 66 88 1010 1212 1414 1616

Sample numberSample number

Nu

mb

er o

f d

efec

tsN

um

ber

of

def

ects

UCL = 23.35

LCL = 1.99

c = 12.67


Cause-and-Effect Diagram Cause-and-Effect Diagram

QualityProblemQuality

Problem

Out of adjustmentOut of adjustment

Tooling problemsTooling problems

Old / wornOld / worn

MachinesMachinesFaultyFaulty testing equipmenttesting equipment

Incorrect specificationsIncorrect specifications

Improper methodsImproper methods

MeasurementMeasurement

Poor supervisionPoor supervision

Lack of concentrationLack of concentration

Inadequate trainingInadequate training

HumanHuman

DeficienciesDeficienciesin product designin product design

Ineffective qualityIneffective qualitymanagementmanagement

Poor process designPoor process design

ProcessProcess

InaccurateInaccuratetemperature temperature controlcontrol

Dust and DirtDust and Dirt

EnvironmentEnvironment

Defective from vendorDefective from vendor

Not to specificationsNot to specifications

Material-Material-handling problemshandling problems

MaterialsMaterials


Baldrige AwardBaldrige Award

Created in 1987 to stimulate growth of Created in 1987 to stimulate growth of quality management in the United Statesquality management in the United States

CategoriesCategories LeadershipLeadership Information and analysisInformation and analysis Strategic planningStrategic planning Human resourceHuman resource FocusFocus Process managementProcess management Business resultsBusiness results Customer and market focusCustomer and market focus


ISO 9000ISO 9000

A set of procedures and A set of procedures and policies for international policies for international quality certification of quality certification of supplierssuppliers

StandardsStandards ISO 9000:2000ISO 9000:2000

Quality Management Quality Management Systems—Fundamentals Systems—Fundamentals and Vocabularyand Vocabulary

defines fundamental defines fundamental terms and definitions terms and definitions used in ISO 9000 family used in ISO 9000 family

ISO 9001:2000ISO 9001:2000 Quality Management SystemsQuality Management Systems

—Requirements—Requirements standard to assess ability to standard to assess ability to

achieve customer satisfactionachieve customer satisfaction ISO 9004:2000ISO 9004:2000

Quality Management SystemsQuality Management Systems—Guidelines for Performance —Guidelines for Performance ImprovementsImprovements

guidance to a company for guidance to a company for continual improvement of its continual improvement of its quality-management systemquality-management system

3-1copyright 2009, john wiley & sons, inc. chapter 2: quality management lecture outline ...

Documents