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Total Quality Management
Chapter 5
MGMT 326
Foundations
of Operatio
nsIntroductio
n
Strategy
QualityAssuran
ce
Capacity,Facilities,& WorkDesign
Planning& Control
Products &
ProcessesProduct
Design
ProcessDesign
ManagingQuality
Statistical
ProcessControl
Total Quality Management (TQM)Chapter 5
What is quality?
Costs ofquality
Total QualityManagement (TQM)
Customer-
Defined Quality
TQMPhilosophy
Quality inProduct Design
(Quality FunctionDeployment)
QualityTools
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Why Quality is Important
Increases value of products to customers
Reduces expensive mistakes Increases profits Shareholder value
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How Customers Define Quality
Customer-defined quality: Meeting quality expectations as defined by the customer High performance design vs. product or
service consistency Psychological (perceived quality): the
quality that the customer thinks he/she got
Value: the good or service is superior to others with similar prices (getting more for your money)
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How Customers Define Quality (2)
How customers define quality (2) Fitness for use: how well the product
performs its intended function – differs by target market
Support services – technical support, repairs, etc.
See differences between manufacturing and service organizations, pp. 139-140, Table 5.1
Quality includes all characteristics that are important to customers – not just the core product
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How Companies Meet Customer Requirements
Companies use product or service specifications to meet customer requirements
Characteristics of the product or service which will be measured to determine quality
Target values (ideal values) for each characteristic Should be based on customer expectations Should meet any legal requirements
Conformance quality: If a product or service consistently meets specifications, it has conformance quality.
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Cost of Quality – 4 Categories
Early detection/prevention is less costly Costs may be less by a factor of 10
See pages 140-141 for cost of quality details
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Total Quality Management (TQM)
Customer-defined quality: Meeting quality expectations as defined by the customer
Integrated organizational effort designed to improve quality on all quality characteristics that are important to customers (core product and anything else that affects customers)
Requires a coordinated effort All levels of the organization All functions (departments) in the organization Work with suppliers and listen to customers
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External and internal customers
External customers buy goods and/or services from the organization External customers may be people,
businesses, government agencies, universities, or non-profit organizations
If you work in an organization, internal customers are people in the same organization who use your work product (goods, services, reports, information systems)
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TQM Philosophy
Focus on Customer Identify and meet customer needs Stay tuned to changing needs, e.g. fashion
styles Continuous Improvement: Continuous learning
and problem solving Quality at the Source: Find the problem when
it occurs and fix it. Employee Empowerment and problem solving
(pages 149-150): Empower all employees. Serve external and internal customers
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TQM Philosophy (2)
Quality improvement teams (QIT's or quality circles)
Teams formed around processes – 8 to 10 people Meet regularly to analyze and solve problems
Self-managed work teams: a work group is responsible for managing its responsibilities. Managers are coaches, not bosses. (less common than QIT's)
Benchmarking: Studying practices at “best in class” companies
Managing Supplier Quality: Certify suppliers and eliminate receiving inspection
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Plan-Do-Study-Act Cycle (PDSA)
PDSA is a problem-solving process used in continuous improvement
Plan: Document the current process. What is being done?
Collect procedures and flowchart the process Collect performance data and identify problems.
Evaluate the current process. What should be changed?
Set performance objectives. Develop an improvement plan.
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Plan-Do-Study-Act Cycle (2)
Do: Implement the improvement plan on trial basis
Study: Collect data on the new process. Compare actual performance with objectives
Act Communicate the results from the trial If successful, implement new process throughout the
organization. If the trial was not successful or did not fully achieve
objectives, go back to Plan step.
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PDSA (continued)
Cycle is repeated After act phase, start planning and repeat
process
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Seven Problem Solving Tools
Cause-and-Effect Diagrams Flowcharts Checksheet Control Charts Scatter Diagrams Pareto Analysis Histograms
Cause-and-Effect DiagramsUsed to identify the cause of a quality problem
Followup: Collect data to verify the cause and develop a plan to eliminate the cause.
fig_05_08
Flowchart
Used to document the detailed steps in a process
Often the first step in Process Reengineering
ChecksheetTool Used to Collect Data for Analysis
Control Chart Set confidence intervals for the mean and range of
a process (usual behavior) LCL = lower control limit, UCL = upper control limit Is process in control (predictable)? Does process have conformance quality?
Scatter Diagrams A graph that shows how two variables are
related to one another Data can be used in a regression analysis to
establish equation for the relationship
Pareto AnalysisUsed to Prioritize Problems
Most important problems should be solved first Prioritize by number of defects or $ cost of defects Often called the 80-20 Rule: Most quality problems
are the result of only a few causes. Example: 80% of the problems caused by 20% of causes
Histogram A chart that shows the frequency distribution of
observed values of a variable like service time at a bank drive-up window Displays whether the distribution is symmetrical
(normal) or skewed
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Quality in Product Design
Quality function deployment (QFD) Used by product design teams Used to translate customer preferences into specific
technical requirements The technical requirements are used to develop
the product specification Operations is responsible for making the product
to specifications Products that meet specifications have
conformance quality Objective is to satisfy customers
Principal tool is House of Quality (pages 154-156)
QFD Details Process used to ensure that the product meets
customer specifications
Voice of the
customer
Customer-basedbenchmarks
Voice of theengineer
QFD - House of Quality Adding trade-offs, targets & developing
product specifications
TargetsTechnical
Benchmarks
