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Total Quality Management

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What is TQM?

Meeting quality expectations as defined by the customer

Integrated organizational effort designed to improve quality of processes at every business level

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Defining Quality – 5 Ways 1. Conformance to specs - designer based

Does product/service meet tolerances defined by designers? E.g. 20 min wait for pizza (average) + 10 min acceptable (?) delay. What about a customer? Is a 30 min. delay acceptable?

2. Fitness for use - user based definition Evaluates performance for intended use. E.g.

Jeep vs. Jaguar on mountain roads? 3. Value for price paid - user based def.

Evaluation of usefulness vs. price paid. E.g. receive the same value but at a lower price

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Defining Quality – 5 Ways

4. Support services - user based def. Quality of support after sale. E.g.

excellent warranty service 5. Psychological criteria - user based

definition e.g. ambiance, prestige, friendly staff

may leave the impression of higher quality

Case: Gold Coast Advertising

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Evolution of TQM – New Focus

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TQM Philosophy – What’s Different?

1. Focus on Customer Identify and meet customer needs Stay tuned to changing needs, e.g. fashion

styles 96% of customers do not complain (stop buying

and/or tell others 9-11 people); satisfied customers 1 person

Fixing the problem after the complaint customers become more loyal than if they had not had the problem in the first place

It costs more to obtain a new customer than to retain one

Customers increase their spending the longer they buy from a company

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TQM Philosophy – What’s Different?

2. Continuous Improvement Continuous learning and problem

solving (jap.) Kaizen: requires that the company continually strive to do better through learning and problem solving (“small doses of medicine are better than one large dose”)

Perfection can NEVER be achieved

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TQM Philosophy – What’s Different?

2. Continuous Improvement Continuous learning and problem solving

6 sigma: 3.4 defects per one million. Example: If 20 mln passengers per year pass through London’s Heathrow Airport, only 68 passengers per year will have misplaced luggage

3 sigma: 2.6 defects per one thousand => 2,600 per million

52,000 passengers per year will have misplaced luggage

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TQM Philosophy – What’s Different?

3. Quality at the Source Inspection (before) vs. prevention & problem

solving (now) 4. Employee Empowerment (they are

expected to seek out, identify, and correct problems) Employees no longer afraid of reporting

problems 5. Focus on both external (who purchase

company’s goods/services) and internal customers (e.g., packaging department is an internal customer of assembly department)

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TQM Philosophy– What’s Different? (continued)

6. Team Approach – Quality Circles (“two heads are better than one”) Teams formed around processes – 8 to 10

people Meet weekly to analyze and solve problems

7. Benchmarking Studying practices at “best in class”

companies; e.g. many companies use Amex to benchmark conflict resolution

8. Managing Supplier Quality Certifying suppliers vs. receiving inspection

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TQM Philosophy– What’s Different? (continued)

9. Just-in-Time ‘Pull’ system of production/purchasing

Customer starts production with an order Involves ‘vendor partnership programs’

to improve quality of purchased items Reduces all inventory levels

Inventory hides process & material problems

Improves process & product quality

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Just-In-Time (JIT) Example

ScrapScrap

Work in process inventory levelWork in process inventory level(hides problems)(hides problems)

Unreliable Unreliable VendorsVendors

Capacity Capacity ImbalancesImbalances

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Just-In-Time (JIT) Example

Reducing inventory revealsReducing inventory reveals

problems so they can be solved.problems so they can be solved.

ScrapScrapUnreliable Unreliable VendorsVendors

Capacity Capacity ImbalancesImbalances

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Cost of Quality – 4 Categories

I. Quality Control Costs (Prevention & Appraisal) II. Quality Failure Costs (Internal & External Failure) Early detection/prevention is less costly

May be less by a factor of 10 Case: Delta Plastics Inc. (A): Question 1. Identify the different costs of quality described in the case.

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Ways of Improving Quality 1. Plan-Do-Study-Act Cycle (PDSA)

Also called the Deming Wheel after originator Circular, never ending problem solving process

2. Quality Function Deployment Used to translate customer preferences to

design

3. Seven Tools of Quality Control Tools typically taught to problem solving teams

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Ad 1. PDSA Details Plan

Evaluate current process Collect procedures, data, identify problems Develop an improvement plan, performance

objectives Do

Implement the plan – trial basis Study

Collect data and evaluate against objectives Act

Communicate the results from trial If successful, implement new process

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PDSA (continued)

Cycle is repeated After act phase, start planning and repeat

process

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Ad 2. QFD Details Process used to ensure that the product meets

customer specifications (Example: Student’s backpack)

3. Voice of theengineer

1. Voice of the

customer

2. Customer-basedbenchmarks

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QFD - House of Quality

Adding trade-offs, targets & developing product specifications

4. Trade-offs

6. Targets

5. TechnicalBenchmarks

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Ad 3. Seven Problem Solving Tools

(i) Cause-and-Effect Diagrams (ii) Flowcharts (iii) Checklists (iv) Control Charts (v) Scatter Diagrams (vi) Pareto Analysis (vii) Histograms

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Cause-and-Effect Diagrams Called Fishbone Diagram Focused on solving identified quality problem

Used to find problem sources/solutions Steps

Identify the problem to correct Draw main causes for problem as ‘bones’ Ask ‘What could have caused problems in

these areas?’ Repeat for each sub-area.

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Fishbone Chart - Problems with Airline Customer Service

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Fishbone Chart - Problems with Getting to Work on Time

Consider the everyday task of getting to work on time or arriving at your first class on time in the morning. Draw a fish-bone chart showing reasons why you might arrive late in the morning.

4 M: Method, Material, Machinery, Manpower

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Flowcharts Used to document the detailed steps in a

process Often the first step in Process Re-Engineering

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Checklist Simple data check-off sheet designed to

identify type of quality problems at each work station; per shift, per machine, per operator

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Control Charts Important tool used in Statistical Process

Control The UCL and LCL are calculated limits used

to show when process is in or out of control

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Scatter Diagrams A graph that shows how two variables

are related to one another Data can be used in a regression analysis

to establish equation for the relationship

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Linear regression - example No. of shipments: Weeks 1 – 8:

All shipmnts: 23, 31, 28, 37, 35, 40, 41, 44

With defects: 5, 8, 6, 11, 10, 14, 12, 15 Employee turnover (new hires +

terminations) Weeks 1 – 8:

1, 3, 5, 2, 4, 6, 5, 5

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Pareto Analysis Technique that displays the degree of

importance for each element Named after the 19th century Italian

economist Often called the 80-20 Rule Principle is that quality problems are the

result of only a few problems e.g. 80% of the problems caused by 20% of causes

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Pareto Analysis Develop a Pareto analysis of the following

reasons of delay in a production process. What do you conclude?

Reason for Delay Frequency Awaiting engineering decision 11 No schematic available 10 Test equipment down 22 Delay in inspection 15 Inadequate parts 40 Lack of personnel available 3

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Pareto Analysis of Wine Glass Defects (Total Defects = 77)

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125 4 2

72%

88%93% 97% 100%

0

10

20

30

40

50

60

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Scratches Porosity Nicks Contamination Misc.

Causes, by percent total defects

Freq

uenc

y (N

umbe

r)

0%

20%

40%

60%

80%

100%

Cum

ulat

ive

Perc

ent

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Histograms 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

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Quality Awards and Standards

Malcolm Baldrige National Quality Award

The Deming Prize ISO 9000 Certification ISO 14000 Standards

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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; FedEx, 3M, IBM, Ritz-Carlton

Typical winners have scored around 700 points

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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 Power & Light was first US

company winner

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ISO Standards ISO 9000 Standards (published in 1987):

Certification developed by International Organization for Standardization

Set of internationally recognized quality standards

Companies are periodically audited & certified ISO 9000:2000 Quality Management Systems

(QMS) – Fundamentals and Standards ISO 9001:2000 QMS – Requirements (customer) ISO 9004:2000 QMS - Guidelines for Performance

ISO 14000: Focuses on a company’s environmental responsibility

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ISO Standards

(1) Design/Development -> (2) Procurement -> (3) Production -> (4) Installation -> (5) Servicing ISO 9001: 2000 (1) (5) ISO 9002, ISO 9003: withdrawn,

incorporated into ISO 9001: 2000 ISO 10011: Guidelines for Auditing &

Quality Management

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Quality Gurus Walter A. Shewhart W. Edwards Deming Joseph M. Juran Armand V. Feigenbaum Phillip Crosby Kaoru Ishikawa Genichi Taguchi

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Why TQM Efforts Fail

Lack of a genuine quality culture

Lack of top management support and commitment

Over- and under-reliance on SPC methods