Quality Control Chapter 2 Total Quality Management and

Quality Control Chapter 2 - Total Quality Management and Principles 1

Outline q. Introduction q. Basic Approach q. Leadership q. Customer Satisfaction q. Employee Involvement 2

Outline- cont’d. q. Continuous Process Improvement q. Supplier Partnership q. Performance Measures q. Deming’s 14 Points 3

Learning Objectives When you complete this chapter, you should: q. Know the six basic concepts, the purpose and benefits of TQM. q. Understand the twelve characteristics of a leader. q. Describe the necessary management activities to implement a TQM program. q. Know the importance of customer satisfaction and how to achieve it. 4

Learning Objectives- cont’d. When you complete this chapter, you should: q. Describe the process necessary for effective employee involvement. q. Describe continuous process improvement and the problem-solving method. q. Know the importance of supplier partnership and techniques to measure effectiveness. q. Be able to describe the measures of performance. 5

Introduction Total Quality Management (TQM) is the application of quantitative methods and human resources to improve all the processes within an organization and exceed customer needs now and in the future. 6

TQM q The purpose of TQM is to provide a quality product to customers, which will, in turn, increase the productivity and lower cost q TQM allows the organization to achieve the business objectives of profit and growth q Job Security. TQM creates a satisfying place to work 7

TQM – cont’d. q q q A company will not begin the transformation to TQM until it is aware that the quality of the product or service must be improved TQM requires a cultural change TQM is mandated by the customer TQM is better way to run a business and compete in domestic and word markets Quality is first among equal cost and service Improvements in quality lead directly to increased productivity 8

TQM – cont’d. Basic Approach: 1. 2. 3. A committed and involved management to provide long-term top-tobottom organizational support An unwavering focus on the customer Effective involvement and utilization of the entire work force 9

TQM – cont’d. Basic Approach cont’d: 4. Continuous improvement of the business and production processes 5. Treating suppliers as partners 6. Establishing performance measures for the processes 10

TQM – cont’d. The Road to Business Growth Continuous Improvement Supplier Partnering Employee Involvement Focus on Quality Leadership Process Orientation Customer Satisfaction Clear Vision 11

TQM – cont’d. Quality Element Previous State TQM Definition Product-Oriented Customer-oriented Priorities Second to service and cost First among service and cost Decisions Short-term Long-term Emphasis Detection Prevention Errors Operations System Responsibility Quality Control Everyone Prob. Solving Managers Teams Procurement Price Life-cycle costs Manager’s Role Plan, enforce etc Delegate, facilitate Table 2. 1 New and Old Cultures 12

TQM– cont’d. q Quality involves the design of the product and the process q TQM is not something that will occur overnight, it takes a long time to build the appropriate emphasis and techniques into the culture 13

Leadership q. The ability to positively influence people and systems to have a meaningful impact and achieve results 14

Leadership – cont’d. q Recognize that the quality function is no more responsible for product quality…. Quality is the responsibility of everyone in the organization q Commitment to quality becomes part of the corporation’s business strategy and leads to enhanced profit and an improved competitive position 15

Leadership – cont’d. Leadership System: q. Refers to how decisions are made, communicated, and carried out at all levels; mechanisms for leadership development, self-examination, and improvement q. Effectiveness of leadership system depends in part on its organizational structure 16

Leadership – cont’d. Leadership Characteristics: 1. Give priority attention to external and internal customers and their needs 2. Empower, rather than control, subordinates 3. Emphasize improvement rather than maintenance 4. Emphasize prevention 5. Encourage collaboration rather than competition 17

Leadership – cont’d. Leadership Characteristics Cont’d: 6. Train and coach, rather than direct and supervise 7. Learn from problem 8. Improve communications 9. Demonstrate their commitment to quality 10. Choose suppliers on the basis of quality, not price 18

Leadership – cont’d. Leadership Characteristics Cont’d: 11. Establish organizational systems to support the quality effort 12. Encourage and recognize team effort Leadership is essential during every phase of the implementation process and particular at the start!!!!! 19

TQM Implementation q Begins with the Senior Management’s and the CEO’s commitment q Involvement is required q Requires the education of Senior Management in TQM concepts q Timing of the implementation process can be very important q Formation of the Quality Council q Development of Core Values, Vision Statement, Mission Statement, Quality Policy Statement 20

TQM Implementation – cont’d. Quality Council: q Composed of: CEO, the Senior Managers of the functional areas, such as design, marketing, finance, production, and quality; and a coordinator or consultant q The coordinator will ensure that the team members are empowered and know their responsibilities 21

TQM Implementation – cont’d. Quality Council Duties: 1. Develop the core values, vision, mission, and quality policy statements 2. Develop the strategic long-term plan with goals and the annual quality improvement program with objectives 3. Create the total education and training plan 4. Determine and continually monitor the cost of poor quality 22

TQM Implementation – cont’d. Quality Council Duties: 5. Determine the performance measures for the organization 6. Determine projects that improve the processes 7. Establish multifunctional project and departmental or work group team 8. Establish or revise the recognition and reward system 23

TQM Implementation– cont’d. q Core Values for the Malcolm Baldrige National Quality Award: q Visionary Leadership q Customer-driven Excellence q Organizational & Personal Learning q Valuing Employees & Partners 24

TQM Implementation– cont’d. Core Values for the Malcolm Baldrige National Quality Award Cont’d: q. Agility q. Focus on the Future q. Management for Innovation q. Management by Fact 25

TQM Implementation– cont’d. Core Values for the Malcolm Baldrige National Quality Award Cont’d: q Social Responsibility q Focus on Results and Creating Value q Systems Perspective 26

TQM Implementation – cont’d. Quality Statements: q Include the Vision Statement, Mission Statement, and Quality Policy Statement q They are part of the strategy planning process, which includes goals and objectives q Develop with input from all personnel 27

TQM Implementation – cont’d. Seven Steps to Strategy Planning: q Customer Needs q Customer Positioning q Predict the Future q Gap Analysis q Closing the Gap q Alignment q Implementation 28

Customer Satisfaction Who is the Customer? External Customer -- those who receive the final products. Occurs normally at the organizational level Internal Customers -- occur at the process and crossdepartmental levels within the company Identifying Customers: q What parts or products are produced? q Who uses our parts or products? q Who do we call, correspond/interact with? q Who supplied the inputs to the process? 29

Customer Satisfaction – cont’d. Checklist to improve satisfaction: 1. Who are my customers? 2. What do they need? 3. What are their measures and expectations? 4. How is my product or service? 5. Does my product or service exceed expectations? 6. How do I satisfy those needs? 7. What corrective action is necessary? 8. Are customers included on teams? 30

Customer Satisfaction – cont’d. Customer Feedback: 1. Comment cards and formal surveys 2. Focus groups 3. Direct customer contacts 4. Field Intelligence 5. Study complaints 6. Monitoring the Internet 31

Customer Satisfaction – cont’d. Customer Complaints: q Dissatisfied customers rarely complain q Opportunity for quality improvement q Procedure for customer complaints, such as: q Accept complaints q Feedback complaint information to all people q Analyze complaints by doing effective work q Eliminate the root cause q Report results of all investigations and solutions to everyone involved 32

Customer Satisfaction – cont’d. Basic Elements of Service Quality: q Organization q Customer q Communication q Front-Line People q Leadership 33

Employee Involvement ……. any activity by which employees participate in work-related decisions and improvement activities, with the objectives of tapping the creative energies of all employees and improving their motivation 34

Employee Involvement – cont’d. Education and Training: q The cost of education and training for all personnel is enormous and the time to achieve it is lengthy q Educational needs vary by function area, department and job q Quality Council may want to establish a project team for the planning of the program 35

Continuous Process Improvement The Goal is to achieve perfection: q View work as a process q Make all processes effective, efficient, and adaptable q Anticipate changing customer needs q Control in-process performance using measures such as scrap reduction… q Maintain constructive dissatisfaction with the present level of performance 36

Continuous Process Improvement– cont’d. The Goal is to achieve perfection: q Eliminate waste and rework q Investigate non-value added activities q Eliminate nonconformities q Use benchmarking to stay competitive q Hold gains q Lessons learned q Use tools such as SPC, design of experiments etc. 37

Continuous Process Improvement– cont’d. FEEDBACK INPUT Materials Money Information Data, etc PROCESS People Equipment Method Procedures Environment Materials OUTPUT Information Data Product Service, etc. OUTCOMES CONDITIONS Figure 2 -3 Input/output process model 38

Continuous Process Improvement– cont’d. Problem-Solving Method: 1. Identify the opportunity 2. Analyze the current process 3. Develop the optimal solution(s) 4. Implement changes 5. Study the results 6. Standardize the solution 7. Plan for the future 39

Continuous Process Improvement– cont’d. Problem-Solving Method – Phase I: q Identify the opportunity Identify and prioritize opportunities for improvement 1. Is the problem important and not superficial and why? 2. Will the problem solution contribute to the attainment of goals? 3. Can be problem be defined clearly using numbers? 40

Continuous Process Improvement– cont’d. Problem-Solving Method – Phase I: q Form a team Select the team leader and determine goals and deadlines q Define the Scope Develop a good problem statement that states the facts, focuses on what is known and emphasizes the impact on the customer. 41

Continuous Process Improvement– cont’d. Problem-Solving Method – Phase I: q Develop a comprehensive charter that specifies q Authority q Objective and scope q Composition q Direction and control q General 42

Continuous Process Improvement– cont’d. Problem-Solving Method – Phase II: q Analyze the current process q Develop a process flow q Define the target performance measures q Collect all available data and information q Determine the root cause 43

Continuous Process Improvement– cont’d. Problem-Solving Method – Phase III: q Develop the optimal solution q Determine possible solutions q Judge possible solutions for greatest potential for success q Categorize solutions as short range or long range 44

Continuous Process Improvement– cont’d. Problem-Solving Method – Phase IV: q Implement Changes q Prepare the implementation plan q Obtain approval for the plan q Develop implementation plan report 45

Continuous Process Improvement– cont’d. Problem-Solving Method – Phase V: q Study the results q Take measurements q Evaluate results q Identify unforeseen problems as a result of the changes 46

Continuous Process Improvement– cont’d. Problem-Solving Method – Phase VI: q Standardize the Solution q Institutionalize the change q Certify the quality peripherals q Certify operators q Cross-training 47

Continuous Process Improvement– cont’d. Problem-Solving Method – Phase VII: q Plan for the Future q Conduct regular scheduled reviews q Establish systems to identify areas for future improvement q Incorporate process measurement and team problem solving in all work activities q Reduce complexity, variation and out-of- control processes 48

Supplier Partnership On average 40% or more of product or service cost is due to procurement. The supplier should be treated as an extension of the process. This requires: q Long term relationship with supplier(s) q Good supplier management 49

Supplier Partnership– cont’d. Supplier Selection Criteria: q Quality of parts/raw materials Certified? q On-time delivery q 100% delivery q Technology 50

Performance Measurements– cont’d. q Service q Billing Errors q Sales per square feet q Activity time q Production q Yield q Inventory turns q On-time delivery 51

Performance Measurements– cont’d. Cost of Poor Quality: q. Prevention Costs: q Costs of minimizing failure and appraisal costs q Appraisal Costs: q Costs of determining the degree of conformance to quality requirements 52

Performance Measurements– cont’d. Cost of Poor Quality: q. Internal Failure Costs: q Costs resulting from defects found before the customer receives the product or service q External Failure Costs: q Costs resulting from defects found after the customer receives the product or service 53

Performance Measurements– cont’d. Optimum Cost of Poor Quality q Total Quality Costs = Internal and External Failure Costs + Prevention and Appraisal Costs q Poor quality usually is a result of low investment in prevention and appraisal q This results in an increase in the failure costs 54

Performance Measurements– cont’d. Optimum Cost of Poor Quality q As more money/effort is invested in prevention and appraisal, the quality improves which in turn drives the failure costs down. q The total costs of poor quality is at its lowest when the failure costs are non existent. 55

Performance Measurements– cont’d. Malcolm Baldrige National Quality Award The Baldrige Award is given by the President of the United States to businesses — manufacturing and service, small and large —and to education and health care organizations that apply and are judged to be outstanding in seven areas 56

Performance Measurements– cont’d. Malcolm Baldrige National Quality Award Core Values/Concepts q. Visionary leadership q. Customer-driven excellence q. Org. and personal learning q. Valuing employees and partners q. Agility q. Focus on the future 57

Performance Measurements– cont’d. Malcolm Baldrige National Quality Award Core Values/Concepts q Managing for innovation q Management by fact q Social Responsibility q Focus on results and creating value q Systems perspective 58

Taguchi’s Loss Function L = D 2 C High loss where L = loss to society D =distance from target value C = cost of deviation Unacceptable Loss (to producing organization, customer, and society) Poor Good Best Low loss Target-oriented quality yields more product in the “best” category Target-oriented quality brings product toward the target value Frequency Conformance-oriented quality keeps products within 3 standard deviations Lower Target Upper Specification 59

Deming’s 14 Points 1. Create consistency of purpose 2. Lead to promote change 3. Build quality into the product; stop depending on inspection 4. Build long term relationships based on performance, not price 5. Continuously improve product, quality, and service 60

Deming’s 14 Points– cont’d. 6. Start training 7. Emphasize leadership 8. Drive out fear 9. Break down barriers between departments 10. Stop haranguing workers 61

Deming’s 14 Points– cont’d. 11. Support, help, improve 12. Remove barriers to pride in work 13. Institute a vigorous program of education and self-improvement 14. Put everybody in the company to work on the transformation 62