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Total Quality Management (TQM)

  1. 1. Chapter 5 - Total Quality Management Mudassar Salman
  2. 2. Learning Objectives <ul><li>Explain the meaning of TQM </li></ul><ul><li>Identify features of the TQM philosophy </li></ul><ul><li>Describe the four dimensions of Quality </li></ul><ul><li>Identify the costs of Quality </li></ul><ul><li>Identify tools used for solving Quality problems </li></ul><ul><li>Quality awards and Quality certifications </li></ul><ul><li>Identify Quality leaders and their contributions </li></ul>
  3. 3. What is TQM? <ul><li>Meeting quality expectations as defined by the customer </li></ul><ul><li>Integrated organizational effort designed to improve quality of processes at every business level </li></ul>
  4. 4. Defining Quality – 5 Ways <ul><li>Conformance to specifications </li></ul><ul><ul><li>Does product/service meet targets and tolerances defined by designers? </li></ul></ul><ul><li>Fitness for use </li></ul><ul><ul><li>Evaluates performance for intended use </li></ul></ul><ul><li>Value for price paid </li></ul><ul><ul><li>Evaluation of usefulness vs. price paid </li></ul></ul><ul><li>Support services </li></ul><ul><ul><li>Quality of support after sale </li></ul></ul><ul><li>Psychological </li></ul><ul><ul><li>e.g. Ambiance, prestige, friendly staff </li></ul></ul>
  5. 5. Manufacturing Quality vs. Service Quality <ul><li>Manufacturing quality focuses on tangible product features </li></ul><ul><ul><li>Conformance, performance, reliability, features, durability, serviceability </li></ul></ul><ul><li>Service organizations produce intangible products that must be experienced </li></ul><ul><ul><li>Quality often defined by perceptional factors like courtesy, friendliness of staff, promptness in resolving complaints, atmosphere, waiting time, consistency </li></ul></ul>
  6. 6. Dimensions of Quality for Manufacturing vs. Service Organizations <ul><li>Manufacturing </li></ul><ul><ul><li>Conformance to specifications </li></ul></ul><ul><ul><li>Performance </li></ul></ul><ul><ul><li>Reliability </li></ul></ul><ul><ul><li>Features </li></ul></ul><ul><ul><li>Durability </li></ul></ul><ul><ul><li>Serviceability </li></ul></ul><ul><li>Service </li></ul><ul><ul><li>Tangible factors </li></ul></ul><ul><ul><li>Consistency </li></ul></ul><ul><ul><li>Responsiveness to customer needs </li></ul></ul><ul><ul><li>Courtesy / friendliness </li></ul></ul><ul><ul><li>Timeliness / promptness </li></ul></ul><ul><ul><li>Atmosphere </li></ul></ul>
  7. 7. Quality in Practice <ul><li>Motorola and GE attribute their success to having one of the best quality management programs in the world. </li></ul><ul><li>Six-Sigma was implemented </li></ul><ul><ul><li>Levels of defects is reduced to 3.4 parts per million </li></ul></ul><ul><ul><li>Everyone is trained in quality improvement principles and techniques </li></ul></ul><ul><ul><li>Black-Belt – their full time job is to identify and solve quality problems </li></ul></ul>
  8. 8. Cost of Quality <ul><li>Quality effects all aspects of the organization and have dramatic cost implications </li></ul><ul><li>Most obvious consequence of poor quality is dissatisfied customers and eventual loss of business </li></ul><ul><li>Prevention costs – cost of preparing and implementing a quality plan </li></ul><ul><li>Appraisal costs – cost of testing, evaluating and inspecting quality </li></ul><ul><li>Internal failure costs – cost of scrap, rework, and material losses </li></ul><ul><li>External failure costs – cost of failure at customer site, including returns, repairs and recalls </li></ul><ul><ul><li>External failures can sometimes put a company out of business almost overnight </li></ul></ul><ul><ul><li>External failure costs tend to be particularly high for service organizations </li></ul></ul>
  9. 9. Cost of Defects
  10. 10. The Evolution of TQM <ul><li>Early 20 th century – Quality meant inspection. Reactive in nature </li></ul><ul><li>1980s – Quality began to have strategic meaning. Proactive in nature </li></ul><ul><li>Successful companies understand that quality provides a competitive advantage </li></ul><ul><li>Put customer first, and define quality as meeting or exceeding customers expectation </li></ul><ul><li>Quality excellence has become a standard for doing business </li></ul>
  11. 11. Evolution of TQM – New Focus
  12. 12. Quality Gurus <ul><li>Walter A. Shewhart (1920s & 1930s) </li></ul><ul><ul><li>Grandfather of quality control </li></ul></ul><ul><ul><li>Contributed to understand the process of variability </li></ul></ul><ul><ul><li>Developed concept of statistical control charts </li></ul></ul><ul><li>W. Edwards Deming (1940s & 1950s) </li></ul><ul><ul><li>Father of quality control </li></ul></ul><ul><ul><li>Stressed management’s responsibility for quality </li></ul></ul><ul><ul><li>Developed “14 points” to guide companies in quality improvement </li></ul></ul><ul><ul><li>Japanese established “Deming Prize” in his name </li></ul></ul><ul><ul><li>15% of quality problems are actually due to worker error </li></ul></ul><ul><ul><li>85% of quality problems are caused by systems and errors </li></ul></ul>
  13. 13. Quality Gurus – contd. <ul><li>Joseph M. Juran (1950s) </li></ul><ul><ul><li>Defined quality as “fitness for use” </li></ul></ul><ul><ul><li>Developed concept of cost of quality </li></ul></ul><ul><ul><li>Originated idea of quality triology </li></ul></ul><ul><ul><ul><li>Quality planning </li></ul></ul></ul><ul><ul><ul><li>Quality control </li></ul></ul></ul><ul><ul><ul><li>Quality improvement </li></ul></ul></ul><ul><li>Armand V. Feigenbaum (1960s) </li></ul><ul><ul><li>Introduced the concept of total quality control </li></ul></ul><ul><li>Philip B. Crosby (1970s) </li></ul><ul><ul><li>Coined phrase “quality is free” </li></ul></ul><ul><ul><li>Introduced concept of zero defects </li></ul></ul><ul><ul><li>Developed the phrase “Do it right the first time” </li></ul></ul>
  14. 14. Quality Gurus – contd. <ul><li>Kaoru Ishikawa </li></ul><ul><ul><li>Developed cause-and-effect diagrams </li></ul></ul><ul><ul><li>Identified concept of “internal customer” </li></ul></ul><ul><ul><li>Introduced the concept of “quality circles” </li></ul></ul><ul><li>Genichi Taguchi </li></ul><ul><ul><li>Focused on product design quality </li></ul></ul><ul><ul><li>Developed Taguchi loss function </li></ul></ul><ul><ul><ul><li>Costs of quality increase as a quadratic function as conformance values move away from target </li></ul></ul></ul><ul><li>Robust Design </li></ul><ul><ul><li>A design that results in a product that can perform over a wide range of conditions </li></ul></ul>
  15. 15. Traditional view of the cost of conformance
  16. 16. Taguchi view of the cost of non-conformance – The Taguchi loss function
  17. 17. TQM Philosophy – What’s Different? <ul><li>TQM attempts to embed quality in every aspect of the organization </li></ul><ul><li>Focus on Customer </li></ul><ul><ul><li>Identify and meet customer needs </li></ul></ul><ul><ul><li>Stay tuned to changing needs, e.g. fashion styles </li></ul></ul><ul><li>Continuous Improvement </li></ul><ul><ul><li>Continuous learning and problem solving, e.g. Kaizen, 6 sigma </li></ul></ul><ul><li>Quality at the Source </li></ul><ul><ul><li>Inspection vs. prevention & problem solving </li></ul></ul><ul><li>Employee Empowerment </li></ul><ul><ul><li>Empower all employees; external and internal customers </li></ul></ul><ul><ul><li>Team approach, quality circle </li></ul></ul>
  18. 18. TQM Philosophy– What’s Different? ( continued ) <ul><li>Understanding Quality Tools </li></ul><ul><ul><li>Ongoing training on analysis, assessment, and correction, & implementation of quality tools </li></ul></ul><ul><li>Team Approach </li></ul><ul><ul><li>Teams formed around processes – 8 to 10 people </li></ul></ul><ul><ul><li>Meet weekly to analyze and solve problems </li></ul></ul><ul><li>Benchmarking </li></ul><ul><ul><li>Studying practices at “best in class” companies </li></ul></ul><ul><li>Managing Supplier Quality </li></ul><ul><ul><li>Certifying suppliers vs. receiving inspection </li></ul></ul>
  19. 19. Four Dimensions of Quality <ul><li>Quality of design </li></ul><ul><ul><li>Determining which features to include in the final design </li></ul></ul><ul><li>Quality of conformance to design </li></ul><ul><ul><li>Production processes are set up to meet design specifications </li></ul></ul><ul><li>Ease of use </li></ul><ul><ul><li>Instructions, operation, maintenance, safety </li></ul></ul><ul><li>Post-sale service </li></ul><ul><ul><li>Responsiveness, rapid repair, p.m., spare parts </li></ul></ul>
  20. 20. Cost of Quality – 4 Categories <ul><li>Early detection/prevention is less costly </li></ul><ul><ul><li>May be less by a factor of 10 </li></ul></ul>
  21. 21. Ways of Improving Quality <ul><li>Plan-Do-Study-Act Cycle (PDSA) </li></ul><ul><ul><li>Also called the Deming Wheel after its originator </li></ul></ul><ul><ul><li>Circular, never ending problem solving process </li></ul></ul><ul><li>Quality Function Deployment </li></ul><ul><ul><li>Used to translate customer preferences to design </li></ul></ul><ul><li>Seven Tools of Quality Control </li></ul><ul><ul><li>Tools typically taught to problem solving teams </li></ul></ul>
  22. 22. PDSA Details <ul><li>Plan </li></ul><ul><ul><li>Evaluate current process </li></ul></ul><ul><ul><li>Collect procedures, data, identify problems </li></ul></ul><ul><ul><li>Develop an improvement plan, performance objectives </li></ul></ul><ul><li>Do </li></ul><ul><ul><li>Implement the plan – trial basis </li></ul></ul><ul><li>Study </li></ul><ul><ul><li>Collect data and evaluate against objectives </li></ul></ul><ul><li>Act </li></ul><ul><ul><li>Communicate the results from trial </li></ul></ul><ul><ul><li>If successful, implement new process </li></ul></ul>
  23. 23. PDSA (continued) <ul><li>Cycle is repeated </li></ul><ul><ul><li>After act phase, start planning and repeat process </li></ul></ul>
  24. 24. Quality Function Deployment <ul><li>A tool used to translate the preferences of the customer into specific technical requirements </li></ul><ul><li>QFD begins by identifying customer requirements, coming from marketing department </li></ul><ul><li>These requirements are numerically scored, based on their importance, and scores are translated into specific product characteristics </li></ul><ul><li>Comparison of product is made with its competitors, relative to identified characteristics </li></ul><ul><li>Specific goals are set to address identified problems </li></ul><ul><li>The resulting matrix looks like a picture of house and is often called the “house of quality” </li></ul>
  25. 25. QFD – Contd. <ul><li>Customer requirements </li></ul><ul><ul><li>Survey customers to find out what they specifically need in our product </li></ul></ul><ul><ul><ul><li>Focus groups, telephonic interviews, directly talk to customers </li></ul></ul></ul><ul><li>Competitive Evaluation </li></ul><ul><ul><li>How our product compares to those of competitors </li></ul></ul><ul><ul><li>Evaluation scale is from one to five </li></ul></ul><ul><ul><li>Higher the rating, the better </li></ul></ul>
  26. 26. QFD – Contd. <ul><li>Product Characteristics </li></ul><ul><ul><li>Specific product characteristics are on top of relationship matrix </li></ul></ul><ul><li>The Relationship Matrix </li></ul><ul><ul><li>The strength of relationship between customer requirements and product characteristics is shown in the relationship matrix </li></ul></ul><ul><ul><li>A negative relationship means that as we increase the desirability of one variable, we decrease the desirability of other </li></ul></ul><ul><ul><li>A positive relationship means that as increase in desirability of one variable is related to an increase in the desirability of another </li></ul></ul>
  27. 27. QFD – Contd. <ul><li>The Trade-off Matrix </li></ul><ul><ul><li>The roof of house is put through trade-off matrix </li></ul></ul><ul><ul><li>Shows how each product characteristics is related to the others </li></ul></ul><ul><ul><li>What trade-offs we need to make </li></ul></ul><ul><li>Setting Targets </li></ul><ul><ul><li>The bottom row of the house is the output of QFD </li></ul></ul><ul><ul><li>These are specific, measurable product characteristics that have been formulated from general customer requirements </li></ul></ul>
  28. 28. QFD Details <ul><li>Process used to ensure that the product meets customer specifications </li></ul>Voice of the engineer Voice of the customer Customer-based benchmarks
  29. 29. QFD - House of Quality <ul><li>Adding trade-offs, targets & developing product specifications </li></ul>Trade-offs Targets Technical Benchmarks
  30. 30. Seven Problem Solving Tools <ul><li>Cause-and-Effect Diagrams </li></ul><ul><li>Flowcharts </li></ul><ul><li>Checklists </li></ul><ul><li>Control Charts </li></ul><ul><li>Scatter Diagrams </li></ul><ul><li>Pareto Analysis </li></ul><ul><li>Histograms </li></ul>
  31. 31. Cause-and-Effect Diagrams <ul><li>Called Fishbone Diagram </li></ul><ul><li>Focused on solving identified quality problem </li></ul>
  32. 32. A general cause-and-effect diagram
  33. 33. Flowcharts <ul><li>Used to document the detailed steps in a process </li></ul><ul><li>Often the first step in Process Re-Engineering </li></ul>
  34. 34. Checklist <ul><li>Simple data check-off sheet designed to identify type of quality problems at each work station; per shift, per machine, per operator </li></ul>
  35. 35. Control Charts <ul><li>Important tool used in Statistical Process Control – Chapter 6 </li></ul><ul><li>The UCL and LCL are calculated limits used to show when process is in or out of control </li></ul>
  36. 36. Scatter Diagrams <ul><li>A graph that shows how two variables are related to one another </li></ul><ul><li>Data can be used in a regression analysis to establish equation for the relationship </li></ul>
  37. 37. Pareto Analysis <ul><li>Technique that displays the degree of importance for each element </li></ul><ul><li>Named after the 19 th century Italian economist </li></ul><ul><li>Often called the 80-20 Rule </li></ul><ul><li>Principle is that quality problems are the result of only a few problems e.g. 80% of the problems caused by 20% of causes </li></ul>
  38. 38. Histograms <ul><li>A chart that shows the frequency distribution of observed values of a variable like service time </li></ul><ul><li>at a bank drive-up window </li></ul><ul><li>Displays whether the distribution is symmetrical (normal) or skewed </li></ul>
  39. 39. Reliability <ul><li>The probability that a product, service. Or part will perform, as intended. </li></ul><ul><li>No product is guaranteed with 100% certainty to function properly </li></ul><ul><li>High reliability is an important part of customer-oriented quality </li></ul><ul><li>The reliability of a product is a direct function of the reliability of its component parts. </li></ul><ul><li>If all the parts in a product must work for the product to function, then the reliability of the system is computed as product of the reliabilities of the individual components: </li></ul><ul><ul><li>R s = (R 1 )(R 2 )(R 3 )……(R n ) </li></ul></ul><ul><li>Where R s = reliability of the product or system </li></ul><ul><li>R 1…n = reliability of components 1 through n </li></ul>
  40. 40. Reliability – contd. <ul><li>The more components a product has, the lower its reliability </li></ul><ul><li>The failure of certain products can be very critical. </li></ul><ul><li>One way to increase product relaibility is to build redundancy into product design in the form of backup parts </li></ul><ul><li>Redundancy is built into the system by placing components in parallel. </li></ul><ul><li>When one component fails, the other takes over </li></ul><ul><li>R s = (Reliability of 1 st component) + {(reliability of 2 nd component) x (probability of needing 2 nd component)} </li></ul>
  41. 41. Process Management <ul><li>A quality product comes from a quality process </li></ul><ul><li>Quality at source </li></ul><ul><ul><li>The belief that it is best to uncover the source of quality problems and eliminate it </li></ul></ul><ul><li>Managing Supplier quality </li></ul><ul><ul><li>The philosophy of TQM extends to concept of quality suppliers and ensures that they engage in the same quality practices </li></ul></ul><ul><ul><li>If suppliers meet quality standards, materials do not have to be inspected upon arrival </li></ul></ul>
  42. 42. Quality Awards and Standards <ul><li>Malcolm Baldrige National Quality Award </li></ul><ul><li>The Deming Prize </li></ul><ul><li>ISO 9000 Certification </li></ul><ul><li>ISO 14000 Standards </li></ul>
  43. 43. MBNQA- What Is It? <ul><li>Award named after the former Secretary of Commerce – Regan Administration </li></ul><ul><li>Intended to reward and stimulate quality initiatives </li></ul><ul><li>Given to no more that two companies in each of three categories; manufacturing, service, and small business </li></ul><ul><li>Past winners; FedEx, 3M, IBM, Ritz-Carlton </li></ul><ul><li>Typical winners have scored around 700 points </li></ul>
  44. 44. MBNQA Criterion <ul><li>Categories Points </li></ul><ul><li>Leadership 120 </li></ul><ul><li>Strategic Planning 85 </li></ul><ul><li>Customer and Market Focus 85 </li></ul><ul><li>Information and Analysis 90 </li></ul><ul><li>Human Resource Focus 85 </li></ul><ul><li>Process Management 85 </li></ul><ul><li>Business Results 450 </li></ul><ul><li>Total Points 1000 </li></ul>
  45. 45. The Deming Prize <ul><li>Given by the Union of Japanese Scientists and Engineers since 1951 </li></ul><ul><li>Named after W. Edwards Deming who worked to improve Japanese quality after WWII </li></ul><ul><li>Not open to foreign companies until 1984 </li></ul><ul><li>Florida P & L was first US company winner </li></ul>
  46. 46. ISO Standards <ul><li>ISO 9000 Standards: </li></ul><ul><ul><li>Certification developed by International Organization for Standardization </li></ul></ul><ul><ul><li>Set of internationally recognized quality standards </li></ul></ul><ul><ul><li>Companies are periodically audited & certified </li></ul></ul><ul><ul><li>ISO 9000:2000 QMS – Fundamentals and </li></ul></ul><ul><ul><li>Standards </li></ul></ul><ul><ul><li>ISO 9001:2000 QMS – Requirements </li></ul></ul><ul><ul><li>ISO 9004:2000 QMS - Guidelines for Performance </li></ul></ul><ul><ul><li>More than 40,000 companies have been certified </li></ul></ul><ul><li>ISO 14000: </li></ul><ul><ul><ul><li>Focuses on a company’s environmental responsibility </li></ul></ul></ul>
  47. 47. Why TQM Efforts Fail <ul><li>Lack of a genuine quality culture </li></ul><ul><li>Lack of top management support and commitment </li></ul><ul><li>Over- and under-reliance on SPC methods </li></ul>
  48. 48. Chapter 5 Highlights <ul><li>TQM focuses on serving the customer’s quality needs </li></ul><ul><li>TQM uses continuous improvement, quality at the source, employee empowerment, quality tools, teams, benchmarking, and supplier certification </li></ul><ul><li>Four dimensions: product/service design, conformance, easy of use, post-sale support </li></ul><ul><li>Quality costs; prevention, appraisal, internal & external failures </li></ul><ul><li>QFD and Seven Quality Tools used in managing quality </li></ul><ul><li>The MBNQA, Deming Prize, and ISO Certification help focus on quality improvement and excellence </li></ul><ul><li>The seven Quality Gurus all made key contributions </li></ul>