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Chapter 6

Quality:
Meeting Customer
Expectations

McGraw-Hill/Irwin

The McGraw-Hill Companies, Inc. 2008

Learning Objectives
State the contributions Shewhart, Deming, Juran, and Crosby made to

quality management.
Describe why customer loyalty is so important for profitability.
Explain the importance of internal and external customers and the

role each plays in TQM.


Describe the three principles of TQM.
Explain how the PDCA cycle is used to obtain continuous improvement.
Describe the seven steps of the quality improvement story.
Describe industry-focused and process-focused benchmarking.
Describe how Six Sigma is used to enhance quality.
Explain how certification programs can provide structure for quality

improvement.
State the criteria used for the Malcolm Baldrige National Quality Award.

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Quality . . . What do we mean???


Quality = Conformance to customer
specifications and expectations.

Quality is defined by the customer.


Quality has a key role in customer
perception of value.
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Dimensions of Product Quality*


Performance
What are the desirable characteristics of the
product?
Features
What additional characteristics of the product are
possible?
Reliability
Is the product dependable? Does it accomplish
what it promises?
Durability
How long will the product last?
*Source: Garvin, D.A. (1984) and Pisek, P.E. (1987)

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Dimensions of Product Quality*


Serviceability
Can the product be easily and inexpensively repaired?

Aesthetics
Does the product satisfy subjective requirements?

Response
Is the interaction between the customer and the product
provider pleasant and appropriate?

Reputation
What does information on past performance say about
the company?
*Source: Garvin, D.A. (1984) and Pisek, P.E. (1987)

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Dimensions of Service Quality


Reliability
Does the business keep its promises?
Responsiveness
Does it promptly respond to the needs of its customers?
Assurance
Can the employees generate customer trust and
confidence?

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Dimensions of Service Quality


Empathy
Are employees approachable and sensitive to individual
customers?
Tangibles
Do the physical facilities, equipment, and written
materials show care and attention?

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Dimensions of Product and Service Quality

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A Brief History of Quality Management


Shewhart
Developed the use of statistical process control charts,
which provide an opportunity to control the variability of
processes

Juran
Believed quality problems could be traced to ineffective
management.
Created a framework for managing quality that consisted
of three elements: quality planning, quality control, and
quality improvement.
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A Brief History of Quality Management


Deming:
Stressed that
significant quality
improvement only
comes from
changing the
organization, and
that responsibility
rests with upper
management.
Demings 14
Points

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A Brief History of Quality Management


Crosby:
Known for his
influence on the
education and attitudes
of top management,
not the development of
techniques.
Crosby also had
14 points
http://www.philipcrosby.com/pc
a/index.html
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A Brief History of Quality Management


Crosby also had 4 absolutes.

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Cost of Quality
All of the costs associated with maintaining the quality of goods and services.
Those costs are reduced as failures are moved closer to the firm and ultimately
prevented.

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Cost of Quality Categories


Prevention costs
Investing in advanced technology and processes to promote good engine
design.
Rule of Thumb For every $1 spent here, you save more below

Appraisal costs (inspection and testing)


Implementing worker self-inspection to capture and rework defective
components on the assembly line

Internal failure costs


Sending the engine to rework in the factory after a defect is detected in the
final product

External failure costs


Replacing the engine after it fails in the customers automobile
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Customer Loyalty and Quality


The cost of acquiring a new customer is much higher than
the cost of retaining a current one.
Customer retention results from the customer having good
experiences.
As the customer gains experiences, he/she becomes more
loyal.
As the customer becomes more loyal, retention costs less.
A very loyal customer may become a company advocate.

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Total Quality Management


TQM devlops a culture of doing it right the first time.
It is based on three principles:
Customer focus: The customer determines what quality is.
Continuous process improvement: Constantly trying to
eliminate variability.
Total involvement: A commitment at all levels of the firm.

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How TQM Accomplishes Its Principles


TQMs
supportive

approaches

3 Principles
Of Quality

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Total Quality Managements Impact on


Profitability

Insert exhibit 6.9 (Impact on profitability)

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Obtaining Continuous Improvement:


The Plan-Do-Check-Act (PDCA) Cycle
Plan: Identify the
problem, understand it,
and find its root cause.

Act: standardize
the change
throughout the
business.

Do: Take action


to fix the
problem.

Check: See if
things have
improved.
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Six Sigma Quality


A philosophy and set of methods companies use to
eliminate defects in their products and processes
Evolution of Total Quality Management movement

Adopted by General Electric, Motorola, etc., as a


means of focusing effort on quality using a
methodological approach
Overall focus of the methodology is to understand
and achieve what the customer wants
Seeks to reduce variation in the processes that lead
to product defects
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Six Sigma Quality: DMAIC Cycle for existing


process/product improvement
Define, Measure, Analyze, Improve, and Control
(DMAIC)
1. Define (D)

Customers and their priorities

2. Measure (M)

Process and its performance

3. Analyze (A)

Causes of defects

4. Improve (I)

Remove causes of defects

5. Control (C)

Maintain quality

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Six Sigma Quality: DMADV Cycle for new


service/product design
Define, Measure, Analyze, Design, and Verify
(DMADV)
1. Define (D)

Customers and their priorities

2. Measure (M)

Process and its performance

3. Analyze (A)

Causes of defects

4. Design (D)

Design the New Product or Service

5. Verify (V)

Determine whether new design is


effective
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Six Sigma Hierarchy


Executive Leader
Executive who sponsors the overall Six Sigma Initiative

Champion
Middle- or senior-level executive who sponsors a specific Six
Sigma project, ensuring that resources are available and crossfunctional issues are resolved

Master Black Belt


Highly experienced and successful Black Belt who has managed
several projects and is an expert in Six Sigma methods/tools
Responsible for coaching/mentoring/ training Black Belts and
for helping the Six Sigma leader and Champions keep the
initiative on track
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Six Sigma Hierarchy


Black Belt
Full-time professional who acts as a team leader on Six
Sigma projects
Typically has four to five weeks of classroom training in
methods, statistical tools, and (sometimes) team skills

Green Belt
Part-time professional who participates on a Black Belt
project team or leads smaller projects
Typically has two weeks of classroom training in
methods and basic statistical tools

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Benchmarking
Industry-focused benchmarking is the identification
of the best practices among competitors.
Process-focused benchmarking focuses on similar
processes of other companies, even if they are not
competitors.

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Benchmarking

Industry
Focused

Process
Focused

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Quality Certification Programs:


ISO

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Quality Awards

The Malcolm
Baldrige National
Quality Award,
managed by the
Department of
Commerce,
provides an
excellent structure
for developing a
quality-driven
organization.

Insert exhibit 6.20

http://www.quality.nist.gov/Improvement_Act.htm
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