Chapter 6
Total Quality Management
Chapter OutlineQuality imperative
Quality and Productivity
Improved:•Performance•Reliability•Features•etc.
Improved reputation for quality
Increased Market share
Experience-based scale economies
Higher PricesIncreased Profits
I. Market Gains
Quality and Productivity
Improved reliability or conformance
Increasedproductivity Lower
manufacturing costs
Lower service costs
Lower warranty and product liability costs
Increased Profits
II. Cost Savings
Lower rework and scrap costs
Relative Quality Boosts rates of return
0
10
20
30
40
50
Inferior Superior
ROS
ROI
Relative quality (percentile)
%
20 40 60 80
The Costs The Costs of Poor of Poor QualityQuality Prevention CostsPrevention Costs Appraisal CostsAppraisal Costs Internal Failure CostsInternal Failure Costs External Failure CostsExternal Failure Costs
Costs of quality assurancePrevention Costs
QC administration and systems planningQuality trainingQuality planning (QC engineering work) Incoming, in-process, final inspectionSpecial processes planningQuality data analysisProcurement planningVendor surveysReliability studiesQuality measurement and control equipmentQualification of material
Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich
Costs of quality assuranceAppraisal Costs
TestingInspectionQuality auditsIncoming test and inspection and laboratory acceptanceChecking laborLaboratory or other measurement serviceSetup for test and inspectionTest and inspection materialOutside endorsementMaintenance and calibrationProduct engineering review and shipping releaseField testing
Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich
Costs of quality assuranceInternal Failure Costs
Scrap, at full shop costRework, at full shop costScrap and rework , fault of vendorMaterial procurementFactory contact engineeringQC investigations (of failures)Material review activityRepair and troubleshooting
Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich
Costs of quality assuranceExternal Failure Costs
Complaints and loss of customer goodwillWarranty costsField maintenance and product serviceReturned material processing and repairReplacement inventoriesStrained distributor relations
Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich
Costs of Detecting DefectsCosts of Detecting DefectsC
os
t o
f d
ete
cti
on
an
d c
orr
ec
tio
n
Process Final testing CustomerWhere defect is detected
Figure 6.3
Percentage Cost Distribution by Category:
Watches
External failure
52%
Internal failure
29%
Appraisal
16% Prevention
3%
Fourth-Quarter Indexes
Hidden costs of poor Quality
Chapter OutlineQuality imperativeDefining quality
TOTAL QUALITY INTERFACES
QUALITY
QUALITY OF PERFORMANCE
QUALITY OF DESIGN
QUALITY OF CONFORMANCE
CONSUMER NEEDS/REQUIREMENTS
WORK PROCESS/SYSTEM
Chapter OutlineQuality imperativeDefining qualityContrasting approaches to quality
Approaches To QM
PassiveFind it and fix it
Emphasize on AQLIt is a job of QC departmentQuantity is top priorityQuality is expensive
ActiveBuild Q into the productFocus on PC and CIIt is a company-wide concernQuality is top priorityHigher Q means lower cost
Traditional New
Chapter OutlineQuality imperativeDefining qualityContrasting approaches to qualityHow to build quality
TQMTQMWheelWheel
Customer
satisfaction
Figure 6.1
Employee InvolvementCultural changeTeams
Three types
Individual developmentAwards and incentives
A
(Act)
P
(Plan)
(Check)
C
(Do)
D
Quality
Never-ending
improvement
The Deming (PDCA) Cycle
TQMTQMWheelWheel
Customer
satisfaction
Figure 6.1
Chapter OutlineQuality imperativeDefining qualityContrasting approaches to qualityHow to build qualityQuality awards and certification
ISOISO90009000
ISO 9000 Standards and Their Areas of Application in
Production Flow
Design Development
Procurement Production Installation Servicing
ISO9001
ISO9002
ISO9003
AccreditISO Guide 40, EN 45012
ACCREDITATION & REGISTRATION PROCESS
Registrar Accreditation Board
Registrars
Suppliers*
Purchasers
AuditorsCourse
Providers
AssureISO 9000
Series
CertifyISO 10011
AssureISO 9000
Series
Recognize
Train
Audit
EmployRegisterISO Guide 48
*Registered to ISO 9001, 9002, or 9003
Category 1 - Leadership
110 points
Category 2 - Strategic Planning
80 points
Category 3 - Customer and Market Focus
80 points
Category 4 - Information and Analysis
80 points
Category 5 - Human Resource Focus
100 points
Category 6 - Process Management
100 points
Category 7 - Business Results
450 points
Criteria for Criteria for Performance Performance ExcellenceExcellence
Leadership -Leadership - The organization’s leadershipsystem and senior leaders’ personal leadership
Strategic Planning -Strategic Planning - How the organization sets strategic directions and how it develops the critical strategies and action plans
Customer and Market Focus -Customer and Market Focus - How the company determines requirements, expectations, and preferences of customers and markets
Information and Analysis -Information and Analysis - The selection, management, and effectiveness of use of information and data to support
key company processes and action plans, and the company’s performance management system
Human Resource Focus -Human Resource Focus - How the company enables employees to develop and utilize their full potential, aligned
with the company’s objectives
Process Management -Process Management - How key processes are designed, implemented, managed, and improved
Business Results -Business Results - The organization’s performance and improvement in key business areas
