Chapter 5 Total Quality Management Operations Management by

Competing on Quality? n High performance design: n n Superior features, high durability, & excellent customer service Product & service consistency: n n n Meets design specifications Close tolerances Error free delivery © 2005 Wiley 2

Defining Quality – 5 Ways n Conformance to specifications n n Fitness for use n n Evaluation of usefulness vs. price paid Support services n n Evaluates performance for intended use Value for price paid n n Does product/service meet targets and tolerances defined by designers? Quality of support after sale Psychological n e. g. Ambiance, prestige, friendly staff © 2005 Wiley 3

Manufacturing Quality vs. Service Quality n Manufacturing quality focuses on tangible product features n n Conformance, performance, reliability, features, durability, serviceability Service organizations produce intangible products that must be experienced n Quality often defined by perceptional factors like responsiveness, courtesy, friendliness, promptness, waiting time, consistency © 2005 Wiley 4

Cost of Quality n Early detection/prevention is less costly n May be less by

What is TQM? n n Meeting quality expectations as defined by the customer Integrated

Evolution of TQM – New Focus © 2005 Wiley 7

TQM Philosophy – What’s Different? n Focus on Customer n n n Continuous Improvement n n Continuous learning and problem solving, e. g. Kaizen, 6 sigma Quality at the Source n n Identify and meet customer needs Stay tuned to changing needs, e. g. fashion styles Prevention & problem solving vs. inspection Employee Empowerment Empower all employees; external and internal customers © 2005 Wiley n 8

TQM Philosophy– What’s Different? (continued) n Understanding Quality Tools n n Team Approach n n n Teams formed around processes – 8 to 10 people Meet weekly to analyze and solve problems Benchmarking n n Ongoing training on analysis, assessment, and correction, & implementation tools Studying practices at “best in class” companies Managing Supplier Quality n Certifying suppliers vs. receiving inspection © 2005 Wiley 9

Ways of Improving Quality n Plan-Do-Study-Act Cycle (PDSA) n n n Also called the Deming Wheel after originator Circular, never ending problem solving process Seven Tools of Quality Control n Tools typically taught to problem solving teams © 2005 Wiley 10

PDSA Details n Plan n n Do n n Implement the plan – trial basis Study n n Evaluate current process Collect procedures, data, identify problems Develop an improvement plan, performance objectives Collect data and evaluate against objectives Act Communicate the results from trial n If successful, implement new process © 2005 Wiley n 11

PDSA n (continued) Cycle is repeated n After act phase, start planning and repeat

Seven Problem Solving Tools n n n n Cause-and-Effect Diagrams Flowcharts Checklists Control Charts

Cause-and-Effect Diagrams n n Called Fishbone Diagram Focused on identifying the causes of quality

Example: Delayed Flight Departures Equipment Personnel Aircraft late to gate Late arrival Gate occupied Other Weather Air traffic Mechanical failures late pushback tug Gate agents cannot process passengers quickly enough Too few agents Agents undertrained Agents undermotivated Agents arrive at gate late Late cabin cleaners Late or unavailable cabin crews late or unavailable cockpit crews poor announcement of departures weight an balance sheet late Late baggage to aircraft Late fuel Late food service Delayed checkin procedure Confused seat selection Passengers bypass checkin counter Checking oversize baggage Issuance of boarding pass Acceptance of late passengers cutoff too close to departure time Desire to protect late passengers Desire to help company’s income Poor gate locations Material © 2005 Wiley Delayed Flight Departures Procedure 15

Flowcharts n n Used to document the detailed steps in a process Often the

Example: Process at Departure Gate © 2005 Wiley 17

Checklist n Simple data check-off sheet designed to identify type of quality problems at

Control Charts n n Important tool used in Statistical Process Control – Chapter 6

Scatter Diagrams n n A graph that shows how two variables are related to

Pareto Analysis n Technique that displays the degree of importance for each element n Named after the 19 th century Italian economist n Often called the 80 -20 Rule n Principle is that quality problems are the result of only a few problems e. g. 80% of the problems caused by 20% of causes © 2005 Wiley 21

Histograms n n 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 © 2005 Wiley 22

Quality Awards and Standards n Malcolm Baldrige National Quality Award n The Deming Prize

MBNQA- What Is It? n n n Award named after the former Secretary of Commerce – Regan 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; Fed. Ex, 3 M, IBM, Ritz-Carlton Typical winners have scored around 700 points © 2005 Wiley 24

The Deming Prize n Given by the Union of Japanese Scientists and Engineers since 1951 n Named after W. Edwards Deming who worked to improve Japanese quality after WWII n Not open to foreign companies until 1984 n Florida P & L was first US company winner © 2005 Wiley 25

ISO Standards n ISO 9000 Standards: n n n n Certification developed by International Organization for Standardization Set of internationally recognized quality standards Companies are periodically audited & certified ISO 9000: 2000 QMS – Fundamentals and Standards ISO 9001: 2000 QMS – Requirements ISO 9004: 2000 QMS - Guidelines for Performance More than 40, 000 companies have been certified ISO 14000: Focuses on a company’s environmental © 2005 Wiley responsibility n 26