Total Quality Management

What is TQM?

Meeting quality expectations as defined by the customer

Integrated organizational effort designed to improve quality of processes at every business level

Defining Quality 5 Ways

1. Conformance to specs - designer based

2. Fitness for use - user based definition

Does product/service meet tolerances defined by designers? E.g. 20 min wait for pizza (average) + 10 min acceptable (?) delay. What about a customer? Is a 30 min. delay acceptable?
Evaluates performance for intended use. E.g. Jeep vs. Jaguar on mountain roads?

3. Value for price paid - user based def.

Evaluation of usefulness vs. price paid. E.g. receive the same value but at a lower price
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Defining Quality 5 Ways

4. Support services - user based def.

Quality of support after sale. E.g. excellent warranty service

5. Psychological criteria - user based definition

e.g. ambiance, prestige, friendly staff may leave the impression of higher quality

Case: Gold Coast Advertising

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Evolution of TQM New Focus

TQM Philosophy Whats Different?

1. Focus on Customer

Identify and meet customer needs Stay tuned to changing needs, e.g. fashion styles

96% of customers do not complain (stop buying and/or tell others 9-11 people); satisfied customers 1 person Fixing the problem after the complaint customers become more loyal than if they had not had the problem in the first place It costs more to obtain a new customer than to retain one Customers increase their spending the longer they buy from a company

TQM Philosophy Whats Different?

2. Continuous Improvement Continuous learning and problem solving (jap.) Kaizen: requires that the company continually strive to do better through learning and problem solving (small doses of medicine are better than one large dose)

Perfection can NEVER be achieved

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TQM Philosophy Whats Different?

2. Continuous Improvement Continuous learning and problem solving 6 sigma: 3.4 defects per one million. Example: If 20 mln passengers per year pass through Londons Heathrow Airport, only 68 passengers per year will have misplaced luggage 3 sigma: 2.6 defects per one thousand => 2,600 per million 52,000 passengers per year will have misplaced luggage 8

TQM Philosophy Whats Different?

3. Quality at the Source

4. Employee Empowerment (they are expected to seek out, identify, and correct problems)

Inspection (before) vs. prevention & problem solving (now)

5. Focus on both external (who purchase companys goods/services) and internal customers (e.g., packaging department is an internal customer of assembly department)

Employees no longer afraid of reporting problems

TQM Philosophy Whats Different? (continued)

6. Team Approach Quality Circles (two heads are better than one)

Teams formed around processes 8 to 10 people Meet weekly to analyze and solve problems Studying practices at best in class companies; e.g. many companies use Amex to benchmark conflict resolution Certifying suppliers vs. receiving inspection
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7. Benchmarking

8. Managing Supplier Quality

TQM Philosophy Whats Different? (continued)

9. Just-in-Time Pull system of production/purchasing

Customer starts production with an order

Involves vendor partnership programs to improve quality of purchased items Reduces all inventory levels

Inventory hides process & material problems

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Improves process & product quality

Just-In-Time (JIT) Example

Work in process inventory level (hides problems)

Unreliable Vendors

Scrap

Capacity Imbalances
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Just-In-Time (JIT) Example

Reducing inventory reveals problems so they can be solved.

Unreliable Vendors

Scrap

Capacity Imbalances
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Cost of Quality 4 Categories

I. Quality Control Costs (Prevention & Appraisal) II. Quality Failure Costs (Internal & External Failure) Early detection/prevention is less costly

May be less by a factor of 10

Case: Delta Plastics Inc. (A): Question 1. Identify the different costs of quality described in the case.

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Ways of Improving Quality

1. Plan-Do-Study-Act Cycle (PDSA)

Also called the Deming Wheel after originator Circular, never ending problem solving process

2. Quality Function Deployment

Used to translate customer preferences to design

3. Seven Tools of Quality Control

Tools typically taught to problem solving teams

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Ad 1. PDSA Details

Plan

Do

Evaluate current process Collect procedures, data, identify problems Develop an improvement plan, performance objectives
Implement the plan trial basis Collect data and evaluate against objectives Communicate the results from trial If successful, implement new process

Study

Act

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PDSA

(continued)

Cycle is repeated
After act phase, start planning and repeat process

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Ad 2. QFD Details

Process used to ensure that the product meets customer specifications (Example: Students backpack)

3. Voice of the engineer

1. Voice of the customer

2. Customer-based benchmarks

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QFD - House of Quality

Adding trade-offs, targets & developing product specifications

4. Trade-offs

6. Targets

5. Technical Benchmarks
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Ad 3. Seven Problem Solving Tools

(i) Cause-and-Effect Diagrams (ii) Flowcharts (iii) Checklists (iv) Control Charts (v) Scatter Diagrams (vi) Pareto Analysis (vii) Histograms
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Cause-and-Effect Diagrams

Called Fishbone Diagram Focused on solving identified quality problem

Used to find problem sources/solutions Steps

Identify the problem to correct Draw main causes for problem as bones Ask What could have caused problems in these areas? Repeat for each sub-area.

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Fishbone Chart - Problems with Airline Customer Service

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Fishbone Chart - Problems with Getting to Work on Time

Consider the everyday task of getting to work on time or arriving at your first class on time in the morning. Draw a fish-bone chart showing reasons why you might arrive late in the morning. 4 M: Method, Material, Machinery, Manpower
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Flowcharts

Used to document the detailed steps in a process Often the first step in Process Re-Engineering

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Checklist

Simple data check-off sheet designed to identify type of quality problems at each work station; per shift, per machine, per operator

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Control Charts

Important tool used in Statistical Process Control The UCL and LCL are calculated limits used to show when process is in or out of control

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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

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Linear regression - example

No. of shipments: Weeks 1 8:

All shipmnts: 23, 31, 28, 37, 35, 40, 41, 44 With defects: 5, 8, 6, 11, 10, 14, 12, 15

Employee turnover (new hires + terminations) Weeks 1 8:

1, 3, 5, 2, 4, 6, 5, 5
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Pareto Analysis

Technique that displays the degree of importance for each element Named after the 19th century Italian economist Often called the 80-20 Rule

Principle is that quality problems are the result of only a few problems e.g. 80% of the problems caused by 20% of causes

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Pareto Analysis

Develop a Pareto analysis of the following reasons of delay in a production process. What do you conclude? Reason for Delay

Frequency
11 10

Awaiting engineering decision No schematic available

Test equipment down

Delay in inspection Inadequate parts Lack of personnel available

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15 40 3

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Pareto Analysis of Wine Glass Defects (Total Defects = 77)

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Frequency (Number)

88% 54 72%

93%

97%

100% 100%
Cumulative Percent
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60 50 40 30 20 10 0

80% 60% 40% 12 5 4

Contamination

20% 2 0%
Misc.

Scratches

Porosity

Nicks

Causes, by percent total defects

Histograms

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 Awards and Standards

Malcolm Baldrige National Quality Award The Deming Prize ISO 9000 Certification ISO 14000 Standards

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MBNQA- What Is It?

Award named after the former Secretary of Commerce Reagan Administration Intended to reward and stimulate quality initiatives Given to no more that two companies in each of three categories; manufacturing, service, and small business Past winners; FedEx, 3M, IBM, Ritz-Carlton Typical winners have scored around 700 points
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The Deming Prize

Given by the Union of Japanese Scientists and Engineers since 1951 Named after W. Edwards Deming who worked

to improve Japanese quality after WWII

Not open to foreign companies until 1984 Florida Power & Light was first US company winner
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ISO Standards

ISO 9000 Standards (published in 1987):

Certification developed by International Organization for Standardization Set of internationally recognized quality standards Companies are periodically audited & certified ISO 9000:2000 Quality Management Systems (QMS) Fundamentals and Standards ISO 9001:2000 QMS Requirements (customer) ISO 9004:2000 QMS - Guidelines for Performance responsibility
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ISO 14000: Focuses on a companys environmental

ISO Standards

(1) Design/Development -> (2) Procurement -> (3) Production -> (4) Installation -> (5) Servicing

ISO 9001: 2000 (1) (5) ISO 9002, ISO 9003: withdrawn, incorporated into ISO 9001: 2000 ISO 10011: Guidelines for Auditing & Quality Management
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Quality Gurus

Walter A. Shewhart W. Edwards Deming Joseph M. Juran Armand V. Feigenbaum Phillip Crosby Kaoru Ishikawa Genichi Taguchi
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Why TQM Efforts Fail

Lack of a genuine quality culture Lack of top management support and commitment Over- and under-reliance on SPC methods
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