Chapter 9
Management of Quality
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Education 9-1
Chapter 9: Learning Objectives
You should be able to:
LO 9.1 Discuss the philosophies of quality gurus
LO 9.2 Define the term quality as it relates to products and as it relates to
services
LO 9.3 Identify the determinants of quality
LO 9.4 Explain why quality is important and the consequences of poor quality
LO 9.5 Distinguish the costs associated with quality
LO 9.6 Discuss the importance of ethics in managing quality
LO 9.7 Compare the quality awards
LO 9.8 Discuss quality certification and its importance
LO 9.9 Describe TQM
LO 9.10 Give an overview of problem solving
LO 9.11 Give an overview of process improvement
LO 9.12 Describe the six sigma methodology
LO 9.13 Describe and use various quality tools
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Quality Management
Quality is the ability of a product or service to
consistently meet or exceed customer expectations
For a decade or so, quality was an important focal
point in business. After a while, this emphasis began
to fade as other concerns took precedence
There has been a recent resurgence in attention to
quality given recent experiences with the costs and
adverse attention associated with highly visible
quality failures:
Auto recalls
Toys
Produce
Dog food
Pharmaceuticals
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Quality Contributors
Walter Shewart
“father of statistical quality control”
Control charts
Variance reduction
W. Edwards Deming
Special vs. common cause variation
The 14 points
Joseph Juran
Quality Control Handbook, 1951
Viewed quality as fitness-for-use
Quality trilogy – quality planning, quality control, quality
improvement
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Quality Contributors (cont.)
Armand Feigenbaum
Quality is a “total field”
The customer defines quality
Philip B. Crosby
Zero defects
Quality is Free, 1979
Kaoru Ishikawa
Cause-and-effect diagram
Quality circles
Recognized the internal customer
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Quality Contributors (cont.)
Genichi Taguchi
Taguchi loss function
Taiichi Ohno and Shigeo Shingo
Developed philosophy and methods of kaizen
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Dimensions of Product Quality
Performance – main characteristics of the product
Aesthetics – appearance, feel, smell, taste
Special features – extra characteristics
Conformance – how well the product conforms to design specifications
Reliability – consistency of performance
Durability – the useful life of the product
Perceived quality – indirect evaluation of quality
Serviceability – handling of complaints or repairs
Consistency – quality doesn’t vary
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Dimensions of Service Quality
Convenience – the availability and accessibility of the service
Reliability – ability to perform a service dependably,
consistently, and accurately
Responsiveness – willingness to help customers in unusual
situations and to deal with problems
Time – the speed with which the service is delivered
Assurance – knowledge exhibited by personnel and their
ability to convey trust and confidence
Courtesy – the way customers are treated by employees
Tangibles – the physical appearance of facilities, equipment,
personnel, and communication materials
Consistency – the ability to provide the same level of good
quality repeatedly
Expectancy – meet (or exceed) customer expectations
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Assessing Service Quality
Audit service to identify strengths and weaknesses
In particular, look for discrepancies between:
1. Customer expectations and management perceptions
of those expectations
2. Management perceptions customer expectations and
service-quality specifications
3. Service quality and service actually delivered
4. Service actually delivered and what is communicated
about the service to customers
5. Customers’ expectations of the service provider and
their perceptions of provider delivery
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Determinants of Quality
Quality of design
Intention of designers to include or exclude features in a product or
service
Quality of conformance
The degree to which goods or services conform to the intent of the
designers
Ease-of-use and user instructions
Increase the likelihood that a product will be used for its intended
purpose and in such a way that it will continue to function properly
and safely
After-the-sale service
Taking care of issues and problems that arise after the sale
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Responsibility for Quality
Top management Everyone in the
Design organization has some
Procurement responsibility for
Production/operations
quality, but certain
areas of the
Quality assurance
organization are
Packaging and shipping involved in activities
Marketing and sales that make them key
Customer service areas of responsibility
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Benefits of Good Quality
Enhanced reputation for quality
Ability to command premium prices
Increased market share
Greater customer loyalty
Lower liability costs
Fewer production or service problems
Lower production costs
Higher profits
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The Consequences of Poor Quality
Loss of business
Liability
Productivity
Costs
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Costs of Quality
Appraisal costs
Costs of
activities designed to ensure
quality or uncover defects
Prevention costs
All TQ training, TQ planning, customer
assessment, process control, and quality
improvement costs to prevent defects
from occurring
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Costs of Quality (cont.)
Failure costs - costs incurred by defective
parts/products or faulty services
Internal failure costs
Costsincurred to fix problems that are
detected before the product/service is
delivered to the customer
External failure costs
All costs incurred to fix problems that are
detected after the product/service is delivered
to the customer
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Ethics and Quality
Substandard work
Defective products
Substandard service
Poor designs
Shoddy workmanship
Substandard parts and materials
Having knowledge of this and failing to correct
and report it in a timely manner is unethical.
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The Baldrige Competition
Award categories
1.Education
2. Healthcare
3. Manufacturing
4. Nonprofit/government
5. Service
6. Small Business
Purpose of the award
1. Stimulate efforts to improve quality
2. Recognize quality achievements
3. Publicize successful programs
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Baldrige Criteria
I. Leadership
II. Strategic planning
III. Customer focus
IV. Measurement, analysis, and knowledge management
V. Workforce focus
VI. Operations focus
VII.Results
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Quality Certification
International Organization for Standardization
ISO 9000
Set of international standards on quality management
and quality assurance, critical to international business
ISO 14000
A set of international standards for assessing a
company’s environmental performance
ISO 24700
Pertains to the quality and performance of office
equipment that contains reused components
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Quality Certification (cont.)
ISO 9000
Quality principles
Principle 1 Customer focus
Principle 2 Leadership
Principle 3 Involvement of people
Principle 4 Process approach
Principle 5 System approach to management
Principle 6 Continual improvement
Principle 7 Factual approach to decision making
Principle 8 Mutually beneficial supplier
relationships
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Quality and the Supply Chain
Business leaders are increasingly recognizing the
importance of their supply chains in achieving their
quality goals
Requires:
Measuring customer perceptions of quality
Identifying problem areas
Correcting these problems
Supply chain quality management can benefit
from a collaborative relationship with suppliers
Helping suppliers with quality assurance efforts
Information sharing on quality-related matters
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Total Quality Management
A philosophy that involves everyone in an
organization in a continual effort to improve
quality and achieve customer satisfaction
T Q M
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TQM Approach
1. Find out what the customer wants
2. Design a product or service that meets or exceeds
customer wants
3. Design processes that facilitate doing the job right
the first time
4. Keep track of results
5. Extend these concepts throughout the supply chain
6. Top management must be involved and committed
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TQM Elements
1. Continuous improvement
2. Competitive benchmarking
3. Employee empowerment
4. Team approach
5. Decision based on fact, not opinion
6. Knowledge of tools
7. Supplier quality
8. Champion
9. Quality at the source
10. Suppliers are partners in the process
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Continuous Improvement
Continuous improvement
Philosophy that seeks to make never-
ending improvements to the process
of converting inputs into outputs
Kaizen
Japanese word for continuous improvement
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Quality at the Source
The philosophy of making each
worker responsible for the quality of
his or her work
“Do it right” and “If it isn’t right, fix it”
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Obstacles to Implementing TQM
Obstacles include:
1. Lack of company-wide definition of quality
2. Lack of strategic plan for change
3. Lack of customer focus
4. Poor inter-organizational communication
5. Lack of employee empowerment
6. View of quality as a “quick fix”
7. Emphasis on short-term financial results
8. Inordinate presence of internal politics and “turf” issues
9. Lack of strong motivation
10. Lack of time to devote to quality initiatives
11. Lack of leadership
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Act Plan
PDSA Cycle Study Do
Plan-Do-Study-Act (PDSA) cycle
Plan
Begin by studying and documenting the current process.
Collect data on the process or problem
Analyze the data and develop a plan for improvement
Specify measures for evaluating the plan
Do
Implement the plan, document any changes made,
collect data for analysis
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Act Plan
PDSA Cycle (cont.)
Plan-Do-Study-Act (PDSA) cycle Study Do
Study
Evaluate the data collection during the do phase
Check results against goals formulated during the plan phase
Act
If the results are successful, standardize the new method
and communicate it to the relevant personnel
Implement training for the new method
If unsuccessful, revise the plan and repeat the process
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Problem Solving
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Process Improvement
A systematic approach to improving a process
Map the process
Collect information about the process and identify
each step in the process
Prepare a flowchart that accurately depicts the process
Analyze the process
Ask critical questions about the process
Ask specific questions about each step in the process
Redesign the process
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Six Sigma
Six Sigma
A business process for improving quality,
reducing costs, and increasing customer
satisfaction
Statistically
Having no more than 3.4 defects per million
Conceptually
Program designed to reduce defects
Requires the use of certain tools and techniques
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Six Sigma (cont.)
Principles
Reduction in variation is an important goal
The methodology is data driven; it requires data validation
Outputs are determined by inputs
Only a critical few inputs have a significant impact on outputs
DMAIC
Define: Set the context and objectives for improvement
Measure: Determine the baseline performance and capability of
the process
Analyze: Use data and tools to understand the cause-and-effect
relationships of the process
Improve: Develop the modifications that lead to a validated
improvement of the process
Control:Establish plans and procedures to ensure that
improvements are sustained
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Basic Quality Tools
9-34
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Methods for Generating Ideas
Brainstorming
Quality circles
Benchmarking
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Quality Circles
Groups of workers who meet to discuss
ways of improving products or processes
Less structured and more informal
than teams involved in continuous
improvement
Quality circle teams have historically
had relatively little authority to make
any but the most minor changes
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Benchmarking Process
1. Identify a critical process that needs
improvement
2. Identify an organization that excels in this
process
3. Contact that organization
4. Analyze the data
5. Improve the critical process
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Operations Strategy
Quality is a strategic imperative for
organizations
Customers are very concerned with the quality of goods
and services they receive
Quality is a never-ending journey
It is important that most organizational members
understand and buy into this idea
Customer satisfaction ≠ customer loyalty
Quality needs to be incorporated throughout
the entire supply chain, not just the
organization itself
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