Chapter 5 - Total Quality Management - Wright State University ...

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PowerPoint Presentation Wiley 2007*Chapter 5 - Total Quality ManagementOperations ManagementbyR. Dan Reid & Nada R. Sanders3rd Edition Wiley 2007PowerPoint Presentation by R.B. Clough UNHM. E. Henrie - UAA Wiley 2007 Wiley 2007*Defining QualityDefinition of quality is dependent on the people defining itThere is a lack of a single, universal definition of quality5 common definitions includeConformance to specificationsFitness for useValue for price paidSupport servicesPsychological criteria Wiley 2007 Wiley 2007*Order QualifiersDelivering Two Kinds of Quality by Keith McFarland, Business Week, Feb. 15, 2006As I write this, the petroleum executive sitting next to me on the plane has carefully unpacked his Bose QuietComfort 2 headphones and iPod nano, which has me thinking about the meaning of quality. The Japanese actually have two words for quality -- and an understanding of each is necessary to compete today.More than 20 years after the quality craze kicked off in the U.S. (primarily because America was getting its clock cleaned by the Japanese), quality remains an elusive target for many American companies. Not that we haven't made progress. In 1980 the average car produced by Ford (F) had twice as many product flaws (as measured by J.D. Power's survey of initial quality) as the average Japanese car. Wiley 2007 Wiley 2007*Order QualifiersBy 1986 the Japanese auto industry lead over Ford had shrunk from 100% to about 20%, as Ford made quality "Job One." But since that impressive initial spurt of progress, many U.S. companies have struggled to keep up on quality, even as the Japanese began building more of their products in the U.S. with American workers.INNOVATION CURVE. The truth is, the Japanese have an unfair advantage. Japanese culture intrinsically values quality and appreciates the small details. In fact, the Japanese expression for quality is atarimae hinshitsu, which can be roughly translated as "taken-for-granted quality."What do the Japanese take for granted when it comes to quality? They take for granted that things should work as they are supposed to, and they even see an elegance to things working properly -- whether it's cars, subway schedules, traditional flower arranging, or the famous tea ceremony. Wiley 2007 Wiley 2007*Order QualifiersJapanese manufacturers were so obsessed with taken-for-granted quality that they created a constant stream of innovations that built on renowned quality-management consultant Ed Deming's original concepts: lean manufacturing, just-in-time industry, and design for quality. In today's competitive markets, manufacturers need to be very far along this quality innovation curve -- or moving along it very quickly. If they are not, you can take for granted that they will go out of business.This is true even for small, entrepreneurial companies. The ability to create products and services that work is no longer a source of long-term competitive advantage. It has become just the price of admission to most markets. If the stuff your competitors make works better, your customers aren't going to be customers for long. Wiley 2007 Wiley 2007*and Order Winners!MODERN MARVELS. That brings us to the second of the two Japanese expressions for quality: miryoku teki hinshitsu, which means "bewitching" or "enchanting quality." This kind of quality appeals not to customer expectations and reliability (that things should do what they're supposed to), but rather to a person's aesthetic sense of beauty and elegance.That's what I think Apple Computer (AAPL) got right with the iPod and its many offspring. The nano belonging to the man sitting next to me is a marvel, not just of miniaturization, but of rounded edges in a world of sharp corners.And as I put on my own Bose headphones, I realize how much I appreciate being able to retreat to my Zen space amid the rumble of the aircraft engines, rattling serving carts, and chattering cabin mates. If these products didn't work properly when you turned them on, nobody would buy them. They would lack atarimae hinshitsu. But with the hungry competitors in most markets today, taken-for-granted quality by itself may not get the job done.http://www.businessweek.com/smallbiz/content/feb2006/sb20060214_876719.htm?chan=search Wiley 2007 Wiley 2007*Defining Quality 5 WaysConformance to specificationsDoes product/service meet targets and tolerances defined by designers?Fitness for use Evaluates performance for intended useValue for price paidEvaluation of usefulness vs. price paidSupport servicesQuality of support after salePsychologicale.g. Ambiance, prestige, friendly staff Wiley 2007 Wiley 2007*TQM is a Philosophy for BusinessPhilosophy is the discipline concerned with questions of how one should live (ethics); what sorts of things exist and what are their essential natures (metaphysics); what counts as genuine knowledge (epistemology); and what are the correct principles of reasoning (logic). The word is of Greek origin: (philosopha), meaning love of wisdom.http://en.wikipedia.org/wiki/Philosophy Wiley 2007 Wiley 2007*Quality Gurus Wiley 2007 Wiley 2007*Demings 14 PointsCreate constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place. Wiley 2007 Wiley 2007*Demings 14 PointsEnd the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs. Institute training on the job. Institute leadership (see Point 12 and Ch. 8). The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers. Wiley 2007 Wiley 2007*Demings 14 PointsDrive out fear, so that everyone may work effectively for the company.Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service. Wiley 2007 Wiley 2007*Demings 14 PointsEliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.Eliminate work standards (quotas) on the factory floor. Substitute leadership. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership. Wiley 2007 Wiley 2007*Demings 14 PointsRemove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality. Wiley 2007 Wiley 2007*Demings 14 PointsInstitute a vigorous program of education and self-improvement. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job. From http://www.deming.org/theman/teachings02.html Wiley 2007 Wiley 2007*Evolution of TQM New Focus Wiley 2007 Wiley 2007*Cost of QualityQuality affects all aspects of the organizationQuality has dramatic cost implications of;Quality control costsPrevention costsAppraisal costsQuality failure costsInternal failure costsExternal failure costs Wiley 2007 Wiley 2007*Cost of Quality 4 CategoriesEarly detection/prevention is less costly May be less by a factor of 10 Wiley 2007 Wiley 2007*TQM MethodologyTQM Focuses on identifying quality problem root causes Encompasses the entire organizationInvolves the technical as well as peopleRelies on seven basic concepts ofCustomer focusContinuous improvementEmployee empowermentUse of quality toolsProduct designProcess managementManaging supplier quality Wiley 2007 Wiley 2007*TQM Methodology - conceptsFocus on CustomerIdentify and meet customer needsStay tuned to changing needs, e.g. fashion stylesContinuous ImprovementContinuous learning and problem solving, e.g. Kaizen, 6 sigma, benchmarking Wiley 2007 Wiley 2007*TQM Methodology Concepts (continued)Employee EmpowermentEmpower all employees; external and internal customersTeams formed around processes 8 to 10 peopleMeet weekly to analyze and solve problemsQuality ToolsOngoing training on analysis, assessment, and correction, & implementation toolsStudying practices at best in class companiesPlan-Do-Study-Act Wiley 2007 Wiley 2007*Ways of Improving QualityPlan-Do-Study-Act Cycle (PDSA)Also called the Deming Wheel after originatorCircular, never ending problem solving processSeven Tools of Quality ControlTools typically taught to problem solving teamsQuality Function DeploymentUsed to translate customer preferences to design Wiley 2007 Wiley 2007*PDSA DetailsPlanEvaluate current processCollect procedures, data, identify problemsDevelop an improvement plan, performance objectivesDoImplement the plan trial basisStudyCollect data and evaluate against objectivesActCommunicate the results from trialIf successful, implement new process Wiley 2007 Wiley 2007*PDSA (continued)Cycle is repeated After act phase, start planning and repeat process Wiley 2007 Wiley 2007*Seven Tools of Quality ControlCause-and-Effect DiagramsFlowchartsChecklistsControl ChartsScatter DiagramsPareto AnalysisHistograms Wiley 2007 Wiley 2007*Cause-and-Effect DiagramsCalled Fishbone DiagramFocused on solving identified quality problem Wiley 2007 Wiley 2007*FlowchartsUsed to document the detailed steps in a processOften the first step in Process Re-Engineering Wiley 2007 Wiley 2007*ChecklistSimple data check-off sheet designed to identify type of quality problems at each work station; per shift, per machine, per operator Wiley 2007 Wiley 2007*Control ChartsImportant tool used in Statistical Process Control Chapter 6The UCL and LCL are calculated limits used to show when process is in or out of control Wiley 2007 Wiley 2007*Scatter DiagramsA graph that shows how two variables are related to one anotherData can be used in a regression analysis to establish equation for the relationship Wiley 2007 Wiley 2007*Pareto AnalysisTechnique that displays the degree of importance for each elementNamed after the 19th century Italian economistOften called the 80-20 RulePrinciple is that quality problems are the result of only a few problems e.g. 80% of the problems caused by 20% of causes Wiley 2007 Wiley 2007*HistogramsA chart that shows the frequency distribution of observed values of a variable like service time at a bank drive-up windowDisplays whether the distribution is symmetrical (normal) or skewed Wiley 2007 Wiley 2007*Product Design - Quality Function Deployment Critical to ensure product design meets customer expectationsUseful tool for translating customer specifications into technical requirements is Quality Function Deployment (QFD)QFD encompassesCustomer requirementsCompetitive evaluationProduct characteristicsRelationship matrixTrade-off matrixSetting Targets Wiley 2007 Wiley 2007*Quality Function Deployment(QFD) DetailsProcess used to ensure that the product meets customer specificationsVoice of theengineerVoice of the customerCustomer-basedbenchmarks Wiley 2007 Wiley 2007*QFD - House of QualityAdding trade-offs, targets & developing product specificationsTrade-offsTargetsTechnicalBenchmarks Wiley 2007 Wiley 2007*Reliability critical to qualityReliability is the probability that the product, service or part will function as expectedNo product is 100% certain to function properlyReliability is a probability function dependent on sub-parts or components Wiley 2007 Wiley 2007*Reliability critical to qualitySimple Serial Reliability of a system is the product of component reliabilitiesRS = (R1) (R2) (R3) . . . (Rn)RS = reliability of the product or systemR1 = reliability of the components Wiley 2007 Wiley 2007*Reliability critical to qualityCan increase reliability by placing components in parallel Parallel components allow system to operate if one or the other failsRSubsystem = R1 +(R2* Probability of needing 2nd component) = R1 +R2*(1- R1) Wiley 2007 Wiley 2007*Reliability: Example, Ch 5 #10Rs = = (.90)*(.85)*(.90)*(.95) = 0.6541 Wiley 2007 Wiley 2007*Reliability: Example, Ch 5 #10Rs = = (.90)*(.9775)*(.99)*(.95) = 0.8274R2 = .85+.85*(1-.85)=0.9775R3 = .90+.90*(1-.90)=0.99 Wiley 2007 Wiley 2007*Process ManagementQuality products come from quality sourcesQuality must be built into the processQuality at the source is belief that it is better to uncover source of quality problems and correct itTQM extends to quality of product from companys suppliers Wiley 2007 Wiley 2007*Managing Supplier QualityTQM efforts must extend to a firms suppliersSuppliers should meet pre-specified quality criteria, such as certificationInspection of incoming material is a waste of time and effortFirm may have in-plant representative at supplier Wiley 2007 Wiley 2007*ISO StandardsISO 9000 Standards: Certification developed by International Organization for StandardizationSet of internationally recognized quality standards Companies are periodically audited & certifiedISO 9000:2000 QMS Fundamentals and StandardsISO 9001:2000 QMS RequirementsISO 9004:2000 QMS - Guidelines for PerformanceMore than 40,000 companies have been certified ISO 14000: Focuses on a companys environmental responsibility Wiley 2007 Wiley 2007* Quality Awards and StandardsMalcolm Baldrige National Quality Award (MBNQA)The Deming Prize ISO 9000 CertificationISO 14000 Standards Wiley 2007 Wiley 2007*MBNQA- What Is It?Award named after the former Secretary of Commerce Regan AdministrationIntended to reward and stimulate quality initiativesGiven to no more that two companies in each of three categories; manufacturing, service, and small businessPast winners; Motorola Corp., Xerox, FedEx, 3M, IBM, Ritz-Carlton Wiley 2007 Wiley 2007*The Deming PrizeGiven by the Union of Japanese Scientists and Engineers since 1951Named after W. Edwards Deming who worked to improve Japanese quality after WWIINot open to foreign companies until 1984Florida P & L was first US company winner Wiley 2007 Wiley 2007*Manufacturing Quality vs. Service QualityManufacturing quality focuses on tangible product featuresConformance, performance, reliability, featuresService organizations produce intangible products that must be experiencedQuality often defined by perceptional factors like courtesy, friendliness, promptness, waiting time, consistency Wiley 2007 Wiley 2007*Why TQM Efforts FailLack of a genuine quality cultureLack of top management support and commitmentOver- and under-reliance on SPC methods Wiley 2007 Wiley 2007*Many Viewpoints!Why Six Sigma Is on the Downslope by Tom Davenport, Harvard Business Online January 10, 2008I was never a big fan of Six Sigma. As approaches to business process improvement and management go, it always had some glaring shortcomings. First, there was all the statistical mumbo-jumbo it impliedbut seldom delivered on in most companies' implementations. Second, it didn't incorporate information technologyarguably the most powerful force available for improving (or screwing up) processesin any way. Third, it was overly elitist. Instead of relying on Six Sigma expert "black belts" do the process analysis and design, every employee should be a process improver, as I argued last week. Fourth, it really only enabled incremental improvement, not radical breakthroughs. Fifth and last, it wasn't a good fit for innovation-oriented work. Even Jack Welch now admits that it shouldn't be used everywhere in a company, but I might argue that it should only be used in product manufacturing, where the idea of reducing defects to one in six standard deviations really makes sense. Wiley 2007 Wiley 2007*Many Viewpoints!So what's the best alternative to Six Sigma for process improvement? Well, there really is no one alternative that's best for all processes and circumstances. Companies really need a combination of tools and approaches. The best companies in process management already have such a combination. You hear about Lean Six Sigma, which is a combination of some of the lean approaches found in the Toyota Production System and Six Sigma, but actually the mix should be even broader. Johnson & Johnson, for example, in its "Process Excellence" program, also adds a component involving breakthrough change. Even Motorola, where Six Sigma was born, also incorporates a method for creating breakthrough process improvements. http://www.businessweek.com/managing/content/jan2008/ca2008018_555075.htm?chan=search Wiley 2007 Wiley 2007*TQM Within OMTQM is broad sweeping organizational changeTQM impactsMarketing providing key inputs of customer informationFinance evaluating and monitoring financial impactAccounting provides exact costingEngineering translate customer requirements into specific engineering termsPurchasing acquiring materials to support product developmentHuman Resources hire employees with skills necessaryInformation systems increased need for accessible information Wiley 2007 Wiley 2007*Chapter 5 HighlightsTQM is different from the old concept of quality as it focus is on serving customers, identifying the causes of quality problems, and building quality into the production processFour categories of quality cost of prevention, appraisal, internal and external costsSeven TQM notable individuals include Walter A. Shewhart, W. Edwards Demings, Joseph M. Juran, Armand V. Feigenbaum, Philip B. Crosby, Kaoru Ishikawa, and Genichi Taguchi Wiley 2007 Wiley 2007*Chapter 5 Highlights - ContinuedSeven features of TQM combine to create TQM philosophy; customer focus, continuous improvement, employee empowerment, use of quality tools, product design, process management, and managing supplier qualityQFD is a tool used to translate customer needs into specific engineering requirementsReliability is the probability that the product will functions as expectedThe Malcom Baldridge Award is given to companies to recognize excellence in quality management. Wiley 2007 Wiley 2007* The EndCopyright 2007 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United State Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions 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 contained herein. Wiley 2007

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