Chapter - Total Quality Management Operations Management by R Dan Reid & Nada R Sanders 4th Edition © Wiley 2010 PowerPoint Presentation by R.B Clough – UNH M E Henrie - UAA © Wiley 2010 Defining Quality Definition of quality is dependent on the people defining it There is a lack of a single, universal definition of quality common definitions include Conformance to specifications Fitness for use Value for price paid Support services Psychological criteria © Wiley 2010 Order Qualifiers… Delivering Two Kinds of Quality by Keith McFarland, Business Week, Feb 15, 2006 As I write this, the petroleum executive sitting next to me on the plane has carefully unpacked his Bose QuietComfort headphones and iPod nano, which has me thinking about the meaning of quality The Japanese actually have two words for quality and an understanding of each is necessary to compete today More than 20 years after the quality craze kicked off in the U.S (primarily because America was getting its clock cleaned by the Japanese), quality remains an elusive target for many American companies Not that we haven't made progress In 1980 the average car produced by Ford (F) had twice as many product flaws (as measured by J.D Power's survey of initial quality) as the average Japanese car 2010 © Wiley Order Qualifiers… By 1986 the Japanese auto industry lead over Ford had shrunk from 100% to about 20%, as Ford made quality "Job One." But since that impressive initial spurt of progress, many U.S companies have struggled to keep up on quality, even as the Japanese began building more of their products in the U.S with American workers INNOVATION CURVE The truth is, the Japanese have an unfair advantage Japanese culture intrinsically values quality and appreciates the small details In fact, the Japanese expression for quality is atarimae hinshitsu, which can be roughly translated as "taken-for-granted quality." What the Japanese take for granted when it comes to quality? They take for granted that things should work as they are supposed to, and they even see an elegance to things working properly whether it's ©cars, schedules, Wiley subway 2010 traditional flower arranging, or the famous tea ceremony Order Qualifiers… Japanese manufacturers were so obsessed with taken-forgranted quality that they created a constant stream of innovations that built on renowned quality-management consultant Ed Deming's original concepts: lean manufacturing, just-in-time industry, and design for quality In today's competitive markets, manufacturers need to be very far along this quality innovation curve or moving along it very quickly If they are not, you can take for granted that they will go out of business This is true even for small, entrepreneurial companies The ability to create products and services that work is no longer a source of long-term competitive advantage It has become just the price of admission to most markets If the stuff your competitors make works better, your customers aren't going to be customers for long © Wiley 2010 …and Order Winners! MODERN MARVELS That brings us to the second of the two Japanese expressions for quality: miryoku teki hinshitsu, which means "bewitching" or "enchanting quality." This kind of quality appeals not to customer expectations and reliability (that things should what they're supposed to), but rather to a person's aesthetic sense of beauty and elegance That's what I think Apple Computer (AAPL) got right with the iPod and its many offspring The nano belonging to the man sitting next to me is a marvel, not just of miniaturization, but of rounded edges in a world of sharp corners And as I put on my own Bose headphones, I realize how much I appreciate being able to retreat to my Zen space amid the rumble of the aircraft engines, rattling serving carts, and chattering cabin mates If these products didn't work properly when you turned them on, nobody would buy them They would lack atarimae hinshitsu But with the hungry competitors in most markets today, taken-for© Wiley 2010 granted quality by itself may not get the job done Defining Quality – Ways Conformance to specifications Fitness for use Evaluation of usefulness vs price paid Support services Evaluates performance for intended use Value for price paid Does product/service meet targets and tolerances defined by designers? Quality of support after sale Psychological e.g Ambiance, prestige, friendly staff © Wiley 2010 TQM is a Philosophy for Business Philosophy is the discipline concerned with questions of how one should live (ethics); what sorts of things exist and what are their essential natures (metaphysics); what counts as genuine knowledge (epistemology); and what are the correct principles of reasoning (logic) The word is of Greek origin: φιλοσοφία (philosophía), meaning love of wisdom http://en.wikipedia.org/wiki/Philosophy © Wiley 2010 Quality Gurus © Wiley 2010 Deming’s 14 Points Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs Adopt the new philosophy We are in a new economic age Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change Cease dependence on inspection to achieve quality Eliminate the need for inspection on a mass basis by building quality into the product in the first place © Wiley 2010 10 Reliability: Example, Ch #10 R1 = 90 R2 = 85 R3 = 90 R4 = 95 Rs = = (.90)*(.85)*(.90)*(.95) = 0.6541 © Wiley 2010 39 Process Management Quality products come from quality sources Quality must be built into the process Quality at the source is belief that it is better to uncover source of quality problems and correct it TQM extends to quality of product from company’s suppliers © Wiley 2010 40 Managing Supplier Quality TQM efforts must extend to a firm’s suppliers Suppliers should meet pre-specified quality criteria, such as certification Inspection of incoming material is a waste of time and effort Firm may have in-plant representative at supplier © Wiley 2010 41 Quality Awards and Standards Malcolm Baldrige National Quality Award (MBNQA) The Deming Prize ISO 9000 Certification ISO 14000 Standards © Wiley 2010 42 ISO Standards ISO 9000 Standards: 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 responsibility © Wiley 2010 43 Manufacturing Quality vs Service Quality Manufacturing quality focuses on tangible product features Conformance, performance, reliability, features Service organizations produce intangible products that must be experienced Quality often defined by perceptional factors like courtesy, friendliness, promptness, waiting time, consistency © Wiley 2010 44 Why TQM Efforts Fail Lack of a genuine quality culture Lack of top management support and commitment Over- and under-reliance on SPC methods © Wiley 2010 45 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; Motorola Corp., Xerox, FedEx, 3M, IBM, Ritz-Carlton © Wiley 2010 46 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 P & L was first US company winner © Wiley 2010 47 Many Viewpoints! Why Six Sigma Is on the Downslope by Tom Davenport, Harvard Business Online January 10, 2008 I was never a big fan of Six Sigma As approaches to business process improvement and management go, it always had some glaring shortcomings First, there was all the statistical mumbojumbo it implied—but seldom delivered on in most companies' implementations Second, it didn't incorporate information technology—arguably the most powerful force available for improving (or screwing up) processes—in any way Third, it was overly elitist Instead of relying on Six Sigma expert "black belts" the process analysis and design, every employee should be a process improver, as I argued last week Fourth, it really only enabled incremental improvement, not radical breakthroughs Fifth and last, it wasn't a good fit for innovation-oriented work Even Jack Welch now admits that it shouldn't be used everywhere in a company, but I might argue that it should only be used in product manufacturing, where the idea of reducing defects to one in six © Wiley 2010 48 Many Viewpoints! So what's the best alternative to Six Sigma for process improvement? Well, there really is no one alternative that's best for all processes and circumstances Companies really need a combination of tools and approaches The best companies in process management already have such a combination You hear about Lean Six Sigma, which is a combination of some of the lean approaches found in the Toyota Production System and Six Sigma, but actually the mix should be even broader Johnson & Johnson, for example, in its "Process Excellence" program, also adds a component involving breakthrough change Even Motorola, where Six Sigma was born, also incorporates a method for creating breakthrough process improvements http://www.businessweek.com/managing/content/jan2008/ca2008018_555075.htm? © Wiley 2010 chan=search 49 TQM Within OM TQM is broad sweeping organizational change TQM impacts Marketing – providing key inputs of customer information Finance – evaluating and monitoring financial impact Accounting – provides exact costing Engineering – translate customer requirements into specific engineering terms Purchasing – acquiring materials to support product development Human Resources – hire employees with skills necessary Information systems – increased need for accessible information © Wiley 2010 50 Chapter Highlights TQM is different from the old concept of quality as it focus is on serving customers, identifying the causes of quality problems, and building quality into the production process Four categories of quality cost of prevention, appraisal, internal and external costs Seven TQM notable individuals include Walter A Shewhart, W Edwards Demings, Joseph M Juran, Armand V Feigenbaum, Philip B Crosby, Kaoru Ishikawa, and Genichi Taguchi © Wiley 2010 51 Chapter Highlights Continued Seven features of TQM combine to create TQM philosophy; customer focus, continuous improvement, employee empowerment, use of quality tools, product design, process management, and managing supplier quality QFD is a tool used to translate customer needs into specific engineering requirements Reliability is the probability that the product will functions as expected The Malcom Baldridge Award is given to companies to recognize excellence in © Wiley 2010 52 quality management The End Copyright © 2007 John Wiley & Sons, Inc All rights reserved Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United State Copyright Act without the express written permission of the copyright owner is unlawful Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc The purchaser may make back-up copies for his/her own use only and not for distribution or resale The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein © Wiley 2010 53 ... the factory floor Substitute leadership Eliminate management by objective Eliminate management by numbers, numerical goals Substitute leadership © Wiley 2010 13 Deming’s 14 Points Remove barriers... is everybody's job From http://www.deming.org/theman/teachings02.html © Wiley 2010 15 Evolution of TQM – New Focus © Wiley 2010 16 Cost of Quality Quality affects all aspects of the organization... Diagrams Pareto Analysis Histograms © Wiley 2010 25 Cause-and-Effect Diagrams Called Fishbone Diagram Focused on solving identified quality problem © Wiley 2010 26 Flowcharts Used to document