Chapter 5 Introduction to Quality Management (QM) DPT333/3.

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Chapter 5Introduction to Quality Management (QM)DPT333/3Introduction to Quality Management (QM)Learning ObjectivesAt the end of this course, you are expected to have an ability to DESCRIBE, EXPLAIN and ILLUSTRATE Definition of Quality,Quality management and its pioneers, Total quality, 2 views of quality, Key elements of total quality, customer satisfaction, Retention and loyalty. QualityQuality is in the eye of the beholderPeople deal with quality in daily lives.Eg: Shopping, eating in restaurant, buying motorbikes, buying cars, a house, TV, PC, etcPerceived quality is a major factor people consider in market place.QualityConsider you are eating in a restaurant;How will you judge the quality of the restaurant?Most people apply such criteria below;ServiceResponse timeFood preparationEnvironmentPriceSelection / food varieties.TastyDEFINITION OF QUALITYDefined in a number of different ways by different people/organizations.Fred Smith, CEO of FedEX;Performance to the standard expected by the customerGeneral Services Administration (GSA);Meeting the customers needs the first time and every timeDEFINITION OF QUALITYBOEING;Provide our customers with products and services that consistently meet their needs and expectationsUS department of Defense;Doing the right thing right the 1st time, always strive for improvement, and always satisfying the customers DEFINITION OF QUALITYW. Edwards Deming in his book OUT OF CRISIS;Quality can be defined only in terms of his agent.Quality has many different criteria and different people value the various criteria differently.-DemingTotal Quality (TQ) ApproachThe total in TQ indicates a concern for quality in the broadest sense - Big QBig Q refers to the quality of the products, services, people, processes, and environments.Little Q Focus on individual criteriaTotal Quality (TQ) Approach 1The seat is CUSTOMER FOCUS.Each of 3 legs is a broad element of TQ approach.3 legs;Measures - (SPC, Benchmarking, Quality tools)Description: Quality can and must be measured!People - (Quality is built in, Quality is expected but not inspected, employees are empowered)Description: QUALITY cannot be inspected into a product or service, it must be built in by people who are empowered to do their jobs right.Processes - (Continual improvement, Good enough is never enough)Description: PROCESSES must be improved, continually and forever.CUSTOMER FOCUSMeasures;SPCBenchmarkingQuality ToolsPeople;Quality is built inQuality is expected, not inspectedEmployees are empoweredProcessesContinual ImprovementGood enough is never enoughFigure 1-1Total Quality (TQ) Approach 2Total Quality is an approach to doing business that attempts to maximize the competitiveness of an organization throuh the continual improvement of the quality of the products, services, people, processes, and environments.Total Quality (TQ) Approach 2Achieved by following characteristics;Strategically basedCustomer focusedObsession with qualityScientific approachLong term commitmentTeamworkContinual processes improvementEducation and trainingFreedom through controlEmployee empowerment2 Views of QualityHomeworkRead page 8-11 Historic development of TQ9 Key elements of TQStrategically basedCustomer focusObsession with QualityScientific ApproachLong term commitmentTeamworkContinual Process ImprovementEducation and TrainingFreedom through Control1. Strategically basedOrganizations contains at least vision, mission and broad objectives.Strategic plan designed to give sustainable competitive advantage.Toward achieving world-leading quality and improve forever.2. Customer focusCustomer is the driverApplied to both customers:Internal CustomerExternal customer3. Obsession with QualityOrganization must become obsessed with meeting or exceeding quality.How can we do this better?Good enough is never enough4. Scientific ApproachHard data are used to in establishing benchmarks, monitoring performance, and making improvements.5. Long term commitmentManagement innovations after attending short term seminars often FAIL in their initial attempts to adopt quality approach.Because they often look TQ as another management innovation rather than as a whole new way of culture.6. TeamworkPartnership is not a pretense, it is a common struggle for the customers, not separate struggles for power.Also applies to relationship with suppliers, regulating agencies, and local communities.7. Continual Process ImprovementFundamental of Total Quality goal is; Quality of products / services.To continually improve the quality of the product, it is necessary to continually improve systems.8. Education and TrainingFundamental to TQRepresent the best way to improve people.In an organization, every should constantly learning.Encouraged by managementKnow how to work hard and smart.9. Freedom through ControlIncrease the ownership feel about the decision made.Mistake: Management see employee involvement as a loss of management control.Customer SatisfactionCustomer SatisfactionUnderstanding Customer-Defined QualityIdentifying customer needs (Internal & external)Communicating with customersCustomer Feedback for Design ImprovementCustomer Satisfaction processCustomer SatisfactionCustomer defines Quality, employee produce it.In a TQ setting, External Customers (Buyers/purchasers) define quality, and Internal Customer (staff) produce it.Who is a CUSTOMER?Figure 7-1: History: Traditional view of supplier and customer relationshipCompany and its processesSupplierSupplierSupplierSupplierCustomerCustomerCustomerCustomerWho is a CUSTOMER?Fig7-2: Contemporary view of customer supplier relationshipSupplierSupplierSupplierSupplierCustomerCustomerCustomerCustomerCustomer& SupplierCustomer& SupplierCustomer& SupplierCustomer& SupplierCustomer& SupplierCustomer defined valueProduct/service must have attributes customers want.Factors important to customers:Products/service qualityService provided by organizationOrganizations personnelOrganizations imageSelling priceOverall cost of product.Customer Satisfaction, Retention, and Loyalty MAJOR TOPICSUnderstanding Who Is a CustomerUnderstanding Customer-Defined QualityIdentifying External Customer NeedsIdentifying Internal Customer NeedsCommunicating with CustomersUsing Customer Feedback to Make Design ImprovementsCustomer Satisfaction, Retention, and LoyaltyCustomer Satisfaction ProcessCustomer-Defined ValueCustomer Value AnalysisCustomer RetentionEstablishing a Customer FocusRecognizing the Customer-Driven OrganizationValue Perception and Customer LoyaltyCustomer Loyalty ModelCustomer Loyalty versus Customer ProfitabilityCustomers as Innovation PartnersCustomer Satisfaction, Retention, and LoyaltyHistorically - customers were considered who used a companys products and suppliers were outsiders who provided the materials needed to produce the products. A more contemporary view - every organization has both internal and external customers. Customer Satisfaction, Retention, and LoyaltyAn external customer - one referred to in the traditional definition. An internal customer - any employee whose work depends on that of employees whose work precedes his or hers.Customer Satisfaction, Retention, and LoyaltyIn a total quality setting, customers define quality. Customer satisfaction must be the HIGHEST PRIORITY.!!! Can be achieved by producing high-quality products that meet or exceed expectations. Must be renewed with each purchase. The key to establishing a customer focus is to put employees in touch with customers so that customer needs are understood.Customer Satisfaction, Retention, and LoyaltyScholtes six-step strategy for identifying customer needs: speculate about results,develop an information-gathering plan, gather information, analyze the results, check the validity of conclusionstake action.Customer Satisfaction, Retention, and LoyaltyCustomer needs are NOT STATIC. So constant contact with customers is important in a total quality setting. Should be in-person or by telephone. Written surveys - can be used, but will not produce the level of feedback that personal contact can generate.Customer Satisfaction, Retention, and LoyaltyQuality function deployment (QFD) is a mechanism for putting into operation the concept of building in quality. It makes customer feedback a normal part of the product development process, thereby improving customer satisfaction.Customer Satisfaction, Retention, and LoyaltyMeasuring customer satisfaction alone is not enough. Many customers who defect are satisfied. Organizations should measure customer retention.Organizations should go beyond satisfying customers to creating value for them in every supplier-customer interaction.Customer Satisfaction, Retention, and LoyaltyThe customer loyalty model consists of four components: Business performanceGlobal perceptionsLoyalty behaviorsFinancial outcomesCustomer Satisfaction, Retention, and LoyaltyThe goal of organizations should be more than just earning customer loyalty; it should be earning the loyalty of profitable customers. Organizations should never assume a positive correlation between customer loyalty and profitability, nor should they assume that a customer who is initially profitable will always be profitable.Customer Satisfaction, Retention, and LoyaltyAn innovative approach to product development that is gaining acceptance is turning customers into innovation partners. With this approach, the customer is given a technological tool kit for designing his or her own products and making product innovations..Customer Satisfaction, Retention, and LoyaltyInnovative approach is implemented using the following steps: Develop a tool kit for customers that is easy to useIncrease the flexibility of your own production processesCarefully select the first customers to use your took kitContinually improve your tool kitAdapt business practices to suit the innovation partnership approach


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