Chapter 2 quality management

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  • Quality ManagementBeni Asllani University of Tennessee at ChattanoogaOperations Management - 6th EditionChapter 2Roberta Russell & Bernard W. Taylor, III

  • Lecture outlineWhat is quality?Evolution of quality managementQuality toolsTQM and QMSFocus of quality managementcustomersRole of employees in quality improvementQuality in service companiesSix sigmaCost of qualityEffect of quality management on productivityQuality awardsIso 90002-*

  • What Is Quality?Oxford American Dictionarya degree or level of excellenceAmerican Society for Qualitytotality of features and characteristics that satisfy needs without deficienciesConsumers and producers perspective2-*

  • What Is Quality:Customers PerspectiveFitness for usehow well product or service does what it is supposed toQuality of designdesigning quality characteristics into a product or serviceA Mercedes and a Ford are equally fit for use, but with different design dimensions.


  • Dimensions of Quality:Manufactured ProductsPerformance basic operating characteristics of a product; how well a car handles or its gas mileageFeatures extra items added to basic features, such as a stereo CD or a leather interior in a carReliabilityprobability that a product will operate properly within an expected time frame; that is, a TV will work without repair for about seven years2-*

  • Dimensions of Quality:Manufactured Products (cont.)Conformance degree to which a product meets preestablished standardsDurabilityhow long product lasts before replacement; with careServiceabilityease of getting repairs, speed of repairs, courtesy and competence of repair person2-*

  • Dimensions of Quality:Manufactured Products (cont.)Aestheticshow a product looks, feels, sounds, smells, or tastesSafety assurance that customer will not suffer injury or harm from a product; an especially important consideration for automobilesPerceptionssubjective perceptions based on brand name, advertising, and like2-*

  • Dimensions of Quality: ServicesTime and timelinesshow long must a customer wait for service, and is it completed on time?is an overnight package delivered overnight?Completeness:is everything customer asked for provided?is a mail order from a catalogue company complete when delivered?2-*

  • Dimensions of Quality:Services (cont.)Courtesy:how are customers treated by employees?are catalogue phone operators nice and are their voices pleasant?Consistencyis same level of service provided to each customer each time?is your newspaper delivered on time every morning?2-*

  • Dimensions of Quality:Services (cont.)Accessibility and conveniencehow easy is it to obtain service?does service representative answer you calls quickly?Accuracyis service performed right every time?is your bank or credit card statement correct every month?Responsivenesshow well does company react to unusual situations?how well is a telephone operator able to respond to a customers questions?2-*

  • What Is Quality:Producers PerspectiveQuality of conformancemaking sure product or service is produced according to designif new tires do not conform to specifications, they wobbleif a hotel room is not clean when a guest checks in, hotel is not functioning according to specifications of its design2-*

  • Meaning of Quality2-*

  • What Is Quality:A Final PerspectiveCustomers and producers perspectives depend on each otherProducers perspective:production process and COSTCustomers perspective:fitness for use and PRICE Customers view must dominate2-*

  • Evolution of Quality Management: Quality GurusWalter ShewartIn 1920s, developed control chartsIntroduced term quality assurance was an American physicist, engineer and statistician, sometimes known as the father of statistical quality control2-*

  • W. Edwards Deming Developed courses during World War II to teach statistical quality-control techniques to engineers and executives of companies that were military suppliersAfter war, began teaching statistical quality control to Japanese companieswas an American statistician, professor, author, lecturer, and consultant. He is perhaps best known for the"Plan-Do-Check-Act"cycle popularly named after him. In Japan, from 1950 onward, he taught top business managers how to improve design (and thus service), product quality, testing, and sales (the last through global markets)[1]by various means, including the application of statistical methods


  • Joseph M. JuranFollowed Deming to Japan in 1954Focused on strategic quality planning Quality improvement achieved by focusing on projects to solve problems and securing breakthrough solutionswas a Romanian-born American management consultant and engineer. He is principally remembered as an evangelist for quality and quality management, having written several influential books on those subjects


  • Evolution of Quality Management: Quality GurusArmand V. FeigenbaumIn 1951, introduced concepts of total quality control and continuous quality improvementan American quality control expert and businessman. He devised the concept of Total Quality Control, later known as Total Quality Management.Philip Crosby In 1979, emphasized that costs of poor quality far outweigh cost of preventing poor qualityIn 1984, defined absolutes of quality managementconformance to requirements, prevention, and zero defectswas a businessman and author who contributed to management theory and quality management practices. 2-*

  • Kaoru IshikawaPromoted use of quality circlesDeveloped fishbone diagram Emphasized importance of internal customerwas a Japanese organizational theorist, Professor at the Faculty of Engineering at The University of Tokyo, noted for his quality management innovations.


  • Demings 14 Points2-*Create constancy of purposeAdopt philosophy of preventionStop mass inspectionSelect a few suppliers based on qualityConstantly improve system and workers

  • Demings 14 Points (cont.)6. Institute worker training7. Instill leadership among supervisors8. Eliminate fear among employees9. Eliminate barriers between departments10. Eliminate slogans and exhortations2-*

  • Demings 14 Points (cont.)Remove numerical quotasEnhance worker prideInstitute vigorous training and education programsDevelop a commitment from top management to implement above 13 points2-*

  • Deming Wheel: PDCA Cycle2-*

  • Quality toolsProcess Flow ChartCause-and-Effect DiagramCheck SheetPareto AnalysisHistogramScatter DiagramStatistical ProcessControl Chart2-*

  • Flow chart2-*

  • Cause-and-effect diagram Cause-and-effect diagram (fishbone diagram)chart showing different categories of problem causes2-*

  • Cause-and-effect matrixCause-and-effect matrixgrid used to prioritize causes of quality problems2-*

  • Check sheets and histograms2-*

  • Pareto analysisPareto analysismost quality problems result from a few causes2-*

  • Pareto chart2-*

  • Scatter diagram2-*

  • Control Chart2-*

  • TQM and QMSTotal Quality Management (TQM)customer-oriented, leadership, strategic planning, employee responsibility, continuous improvement, cooperation, statistical methods, and training and educationQuality Management System (QMS)system to achieve customer satisfaction that complements other company systems2-*

  • Focus of Quality Management CustomersTQM and QMSsserve to achieve customer satisfactionPartneringa relationship between a company and its supplier based on mutual quality standardsMeasuring customer satisfactionimportant component of any QMScustomer surveys, telephone interviews


  • Role of Employees in Quality ImprovementParticipative problem solvingemployees involved in quality-managementevery employee has undergone extensive training to provide quality service to Disneys guestsKaizeninvolves everyone in process of continuous improvement2-*

  • Quality Circles and QITsQuality circlegroup of workers and supervisors from same area who address quality problemsProcess/Quality improvement teams (QITs)focus attention on business processes rather than separate company functions2-*

  • Quality in ServicesService defects are not always easy to measure because service output is not usually a tangible itemServices tend to be labor intensiveServices and manufacturing companies have similar inputs but different processes and outputs2-*

  • Quality Attributes in ServicesPrinciples of TQM apply equally well to services and manufacturingTimelinesshow quickly a service is provided?Benchmarkbest level of quality achievement in one company that other companies seek to achieve2-*quickest, friendliest, most accurate service available.

  • Six SigmaA process for developing and delivering virtually perfect products and servicesMeasure of how much a process deviates from perfection3.4 defects per million opportunitiesSix Sigma Processfour basic steps of Six Sigmaalign, mobilize, accelerate, and governChampionan executive responsible for project success2-*

  • Six Sigma:Breakthrough StrategyDMAIC2-*3.4 DPMO67,000 DPMOcost = 25% of sales

  • Six Sigma:Black Belts and Green BeltsBlack Beltproject leaderMaster Black Belta teacher and mentor for Black BeltsGreen Beltsproject team members2-*

  • Six SigmaDesign for Six Sigma (DFSS)a systematic approach to designing products and processes that will achieve Six SigmaProfitabilitytypical criterion for selection Six Sigma projectone of the factors distinguishing Six Sigma from TQMQuality is not only free, it is anhonest-to-everything profit maker.2-*

  • Cost of Quality Cost of Achieving Good QualityPrevention costscosts incurred during product designAppraisal costscosts of measuring, testing, and analyzing Cost of Poor QualityInternal failure costsinclude scrap, rework, process failure, downtime, and price reductionsExternal failure costsinclude complaints, returns, warranty claims, liability, and lost sales2-*

  • Prevention CostsQuality planning costscosts of developing and implementing quality management programProduct-design costscosts of designing products with quality characteristicsProcess costscosts expended to make sure productive process conforms to quality specificationsTraining costscosts of developing and putting on quality training programs for employees and managementInformation costscosts of acquiring and maintaining data related to quality, and development and analysis of reports on quality performance


  • Appraisal CostsInspection and testingcosts of testing and inspecting materials, parts, and product at various stages and at end of processTest equipment costscosts of maintaining equipment used in testing quality characteristics of productsOperator costscosts of time spent by operators to gather data for testing product quality, to make equipment adjustments to maintain quality, and to stop work to assess quality2-*

  • Internal Failure CostsScrap costscosts of poor-quality products that must be discarded, including labor, material, and indirect costsRework costscosts of fixing defective products to conform to quality specificationsProcess failure costscosts of determining why production process is producing poor-quality productsProcess downtime costscosts of shutting down productive process to fix problemPrice-downgrading costscosts of discounting poor-quality productsthat is, selling products as seconds2-*

  • External Failure CostsCustomer complaint costscosts of investigating and satisfactorily responding to a customer complaint resulting from a poor-quality productProduct return costscosts of handling and replacing poor-quality products returned by customerWarranty claims costscosts of complying with product warrantiesProduct liability costslitigation costs resulting from product liability and customer injuryLost sales costscosts incurred because customers are dissatisfied with poor-quality products and do not make additional purchases

  • Measuring and Reporting Quality CostsIndex numbersratios that measure quality costs against a base valuelabor index ratio of quality cost to labor hourscost index ratio of quality cost to manufacturing costsales index ratio of quality cost to salesproduction index ratio of quality cost to units of final product2-*

  • QualityCost RelationshipCost of qualitydifference between price of nonconformance and conformancecost of doing things wrong20 to 35% of revenuescost of doing things right3 to 4% of revenues2-*

  • Effect of Quality Management on ProductivityProductivity ratio of output to inputQuality impact on productivityfewer defects increase output, and quality improvement reduces inputsYield- a measure of productivity

    2-*Yield=(total input)(% good units) + (total input)(1-%good units)(% reworked)orY=(I)(%G)+(I)(1-%G)(%R)

  • Computing ProductCost per Unit2-*

  • Computing Product Yieldfor Multistage Processes2-*

  • QualityProductivity RatioQPRproductivity index that includes productivity and quality costs2-*

  • Malcolm Baldrige AwardCreated in 1987 to stimulate growth of quality management in United StatesCategoriesLeadershipInformation and analysisStrategic planningHuman resource focusProcess managementBusiness resultsCustomer and market focus2-*

  • Other Awards for QualityNational individual awardsArmand V. Feigenbaum MedalDeming MedalE. Jack Lancaster MedalEdwards MedalShewart MedalIshikawa MedalInternational awardsEuropean Quality AwardCanadian Quality AwardAustralian Business Excellence AwardDeming Prize from Japan2-*

  • ISO 9000A set of procedures and policies for international quality certification of suppliersStandardsISO 9000:2000Quality Management SystemsFundamentals and Vocabularydefines fundamental terms and definitions used in ISO 9000 family ISO 9001:2000Quality Management SystemsRequirementsstandard to assess ability to achieve customer satisfactionISO 9004:2000Quality Management SystemsGuidelines for Performance Improvementsguidance to a company for continual improvement of its quality-management system2-*

  • ISO 9000 Certification,Implications, and RegistrarsISO 9001:2000only standard that carries third-party certificationMany overseas companies will not do business with a supplier unless it has ISO 9000 certificationISO 9000 accreditationISO registrars2-*

  • 2-*Copyright 2009 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein.



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