Section # 8 Quality Management

Topic Covered: Definition of Quality Quality Movement Taguchi Approach The Malcolm Baldridge National Q. Award. ISO 9000 Quality Management Concepts Cost of Quality Responsibility for Quality Just-In Time manufacturing (JIT) Total Quality Management (TQM)

Definition of Quality (WHAT IS QUALITY?):

Quality is by no menus a new concept in modern business. In October 1887, William Cooper Procter, grandson of the founder of Procter and Gamble, told his employees, "The first job we have is to him out quality merchandise that consumers will buy and keep on buying. If we produce it efficiently and economically, we will earn a profit, in which you will share." Procter's statement addresses three issues that are critical to managers of manufacturing and service organizations: productivity, cost, and quality. Productivity (the measure of efficiency defined as the amount of output achieved per unit of input), the cost of operations, and the quality of the goods and services that create customer satisfaction all contribute to profitability. Of these three determinants of profitability, the most significant factor in determining the long-run success or failure of any organization is quality. High quality goods and services can provide an organization with a competitive edge. High quality reduces costs due to returns, rework, and scrap. It increases productivity, profits, and other measures of success. Most importantly, high quality generates satisfied customers, who reward the organization with continued patronage and word-ofmouth advertising. Quality can be a confusing concept, partly because people view quality in relation to differing criteria based on their individual roles in the productionmarketing value chain. In addition, the meaning of quality continues to evolve as the quality profession grows and matures. Neither consultants nor business professionals agree on a universal definition. A study that asked managers of 86 firms in the eastern United States to define quality produced several dozen different responses, including the following: 1. Perfection 2. Consistency

3. Eliminating waste 4. Speed of delivery 5. Compliance w i th policies and procedures 6. Providing a good, usable product 7. Doing it right the first time 8. Delighting or pleasing customers 9. Total customer service and satisfaction

Quality Movement:
During the past 100 years, the views of quality have changed dramatically. Prior to World War I, quality was viewed predominantly as inspection, sorting out the good items from the bad. Emphasis was on problem identification. Following World War I and up to the early 1950s, emphasis was still on sorting good items from bad. However, quality control principles were now emerging in the form of: Statistical and mathematical techniques Sampling tables Process control charts From the early 1950s to the late 1960s, quality control evolved into quality assurance, with its emphasis on problem avoidance rather than problem detection. Additional quality assurance principles emerged, such as: The cost of quality Zero-defect programs Reliability engineering Total quality control

TAGUCHI'S APPROACH:
The old traditional definition of quality states quality is conformance to specifications. This definition was expanded by Joseph M. Juran (1904-) in 1974 and then by the American Society for Quality Control (ASQC) in 1983. Juran observed that "quality is fitness for use." The ASQC defined quality as" the totality of features and characteristics of a product or service that bear on its ability to satisfy given needs." Taguchi presented another definition of quality. His definition stressed the losses associated with a product. Taguchi stated that "quality is the loss a product causes to society after being shipped, other than losses caused by its intrinsic

functions." Taguchi asserted that losses in his definition "should be restricted to two categories: (1) loss caused by variability of function, and (2) loss caused by harmful side effects." Taguchi is saying that a product or service has good quality if it "performs its intended functions without variability, and causes little loss through harmful side effects, including the cost of using it." It must be kept in mind here that "society" includes both the manufacturer and the customer. Loss associated with function variability includes, for example, energy and time (problem fixing), and money (replacement cost of parts). Losses associated with harmful side effects could be market shares for the manufacturer and/or the physical effects, such as of the drug thalidomide, for the consumer. Consequently, a company should provide products and services such that possible losses to society are minimized, or, "the purpose of quality improvement is to discover innovative ways of designing products and processes that will save society more than they cost in the long run." The concept of reliability is appropriate here. The next section will clearly show that Taguchi's loss function yields an operational definition of the term "loss to society" in his definition of quality

The Malcolm Baldrige National Quality Award (MBNQA):

The Malcolm Baldrige National Quality Award recognizes U.S. organizations in the business, health care, education, and nonprofit sectors for performance excellence. The Baldrige Award is the only formal recognition of the performance excellence of both public and private U.S. organizations given by the President of the United States. It is administered by the Baldrige Performance Excellence Program, which is based at and managed by the National Institute of Standards and Technology, an agency of the U.S. Department of Commerce. Up to 18 awards may be given annually across six eligibility categoriesmanufacturing, service, small business, education, health care, and nonprofit. As up-till year 2010, 91 organizations had received the award. The Baldrige National Quality Program and the associated award were established by the Malcolm Baldrige National Quality Improvement Act of 1987 (Public Law 100107). The program and award were named for Malcolm Baldrige, who served as United States Secretary of Commerce during the Reagan administration, from 1981 until Baldriges 1987 death in a rodeo accident. In 2010, the program's name was changed to the Baldrige Performance Excellence Program to reflect the evolution of the field of quality from a focus on product,

service, and customer quality to a broader, strategic focus on overall organizational qualitycalled performance excellence Organizations that apply for the Baldrige Award are judged by an independent board of examiners. Recipients are selected based on achievement and improvement in seven areas, known as the Baldrige Criteria for Performance Excellence as follows: 1. Leadership: How upper management leads the organization, and how the organization leads within the community. 2. Strategic planning: How the organization establishes and plans to implement strategic directions. 3. Customer and market focus: How the organization builds and maintains strong, lasting relationships with customers. 4. Measurement, analysis, and knowledge management: How the organization uses data to support key processes and manage performance. 5. Human resource focus: How the organization empowers and involves its workforce. 6. Process management: How the organization designs, manages and improves key processes. 7. Business/organizational performance results: How the organization performs in terms of customer satisfaction, finances, human resources, supplier and partner performance, operations, governance and social responsibility, and how the organization compares to its competitors The award promotes awareness of performance excellence as an increasingly important element in competitiveness. It also promotes the sharing of successful performance strategies and the benefits derived from using these strategies. To receive a Baldrige Award, an organization must have a role-model organizational management system that ensures continuous improvement in delivering products and/or services, demonstrates efficient and effective operations, and provides a way of engaging and responding to customers and other stakeholders. The award is not given for specific products or services

Quality Management & Its Six Major Concepts:

During the past twenty years, there has been a revolution toward improved quality. The improvements have occurred not only in product quality, but also in quality leadership and quality project management. Unfortunately, it takes an economic disaster or a recession to get management to recognize the need for improved quality. Prior to the recession of 19791982, Ford, General Motors, and Chrysler viewed each other as the competition rather than the Japanese. Prior to the recession of 19891994, high-tech engineering companies never fully

recognized the need for shortening product development time and the relationship between project management, total quality management, and concurrent engineering. The push for higher levels of quality appears to be customer driven. Customers are now demanding: Higher performance requirements Faster product development Higher technology levels Materials and processes pushed to the limit Lower contractor profit margins Fewer defects/rejects One of the critical factors that can affect quality is market expectations. The variables that affect market expectations includes: Salability: the balance between quality and cost Produceability: the ability to produce the product with available technology and workers, and at an acceptable cost Social acceptability: the degree of conflict between the product or process and the values of society (i.e., safety, environment) Operability: the degree to which a product can be operated safely Availability: the probability that the product, when used under given conditions, will perform satisfactorily when called upon Reliability: the probability of the product performing without failure under given conditions and for a set period of time Maintainability: the ability of the product to be retained in or restored to a performance level when prescribed maintenance is performed

Customer demands are now being handled using total quality management (TQM). Total quality management is an ever-improving system for integrating various organizational elements into the design, development, and manufacturing efforts, providing cost-effective products or services that are fully acceptable to the ultimate customer. Externally, TQM is customer oriented and provides for more meaningful customer satisfaction. Internally, TQM reduces production line bottlenecks and operating costs, thus enhancing product quality while improving organizational morale.

The Six Major Concept for Quality Management are as:

1. 2. 3. 4. Total Quality Management (TQM). ISO 9000 (International Standards Organization 9000) DMAIC (Define, Measure, Analyze, Determine, Improve, Control) Six Sigma (Continued..)

5. Just-In Time Manufacturing (JIT). 6. Business Process Re-engineering (BPR).

Each concept is explained as follows: 1. Total Quality Management (TQM):

Total Quality Management (TQM) is a management strategy aimed at embedding awareness of quality in all organizational processes. Total Quality Management (TQM) has been widely used in manufacturing, education, government, and service industries, as well as NASA space and science programs. Total Quality provides an umbrella under which everyone in the organization can strive and create customer satisfaction at continually lower real costs. Total Quality Management (TQM) is the management of total quality. We know that management consists of planning, organizing, directing, control, and assurance. Then, one has to define "total quality". Total quality is called total because it consists of the following three qualities: 1. Quality of return to satisfy the needs of the shareholders 2. Quality of products and services to satisfy some specific needs of the Cnsumer 3. Quality of life - at work and outside work - to satisfy the needs of the people in the organization

2. ISO 9000 (International Standards Organization 9000):

The ISO 9000 family of standards relate to quality management systems and are designed to help organizations ensure they meet the needs of customers and other stakeholders. The standards are published by ISO, the International Organization for Standardization and available through National standards bodies. ISO 9000 deals with the fundamentals of quality management systems, including the eight management principles, on which the family of standards is based. ISO 9001 deals with the requirements that organizations wishing to meet the standard have to meet. Independent confirmation that organizations meet the requirements of ISO 9001 may be obtained from third party certification bodies. Over a million organizations worldwide are independently certified making ISO 9000 one of the most widely used management tools in the world today

The Company establishes, documents, implements, and maintains a quality management system and continually improves its effectiveness in accordance with the requirements of the ISO 9000 International Standard. ISO 9000, standard deals with capability of organizations to design and supply goods and services of predetermined quality as per customer requirements. The Quality Management System standards created by ISO are meant to certify the processes and the system of an organization, not the product or service itself. ISO 9000 standards do not certify the quality of the product or service.

3. DMAIC (Define, Measure, Analyze, Determine, Improve, Control):

The DMAIC project methodology has five phases as under: 1. Define the problem, the voice of the customer, and the project goals, specifically. 2. Measure key aspects of the current process and collect relevant data. 3. Analyze the data to investigate and verify cause-and-effect relationships. 4. Determine what the relationships are, and attempt to ensure that all factors have been considered. Seek out root cause of the defect under investigation. 5. Improve or optimize the current process based upon data analysis using techniques such as design of experiments, poka yoke or mistake proofing, and standard work to create a new, future state process. Set up pilot runs to establish process capability.
6. Control the future state process to ensure that any deviations from target are

corrected before they result in defects. Implement control systems such as statistical process control, production boards , visual workplaces, and continuously monitor the process.

4. Six Sigma:
Six Sigma is a business management strategy originally developed by Motorola, USA in 1986. As up to year 2010, it is widely used in many sectors of industry. In Six Sigma, a defect is defined as any process output that does not meet customer specifications, or that could lead to creating an output that does not meet customer specifications.

Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization ("Black Belts", "Green Belts", etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction and/or profit increase). Six Sigma originated as a set of practices designed to improve manufacturing processes and eliminate defects, but its application was subsequently extended to other types of business processes as well.

5. Just-In Time Manufacturing (JIT):

Just in time (JIT) is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs. Just-in-time production method is also called the Toyota Production System. To meet JIT objectives, the process relies on signals between different points in the process, which tell production when to make the next part. signals are usually 'tickets' but can be simple visual signals, such as the presence or absence of a part on a shelf. Implemented correctly, JIT focuses on continuous improvement and can improve a manufacturing organization's return on investment, quality, and efficiency. To achieve continuous improvement key areas of focus could be flow, employee involvement and quality. Quick notice that stock depletion requires personnel to order new stock is critical to the inventory reduction at the center of JIT. This saves warehouse space and costs. However, the complete mechanism for making this work is often misunderstood.

6. Business Process Re-engineering (BPR).

Business process re-engineering is the analysis and design of workflows and processes within an organization. According to Davenport (1990) a business process is a set of logically related tasks performed to achieve a defined business outcome. Re-engineering is the basis for many recent developments in management. The cross-functional team, for example, has become popular because of the desire to re-engineer separate functional tasks into complete crossfunctional processes. Also, many recent management information systems developments aim to integrate a wide number of business functions. Enterprise resource planning, supply chain management, knowledge management systems,

groupware and collaborative systems, Human Resource Management Systems and customer relationship management. Business process re-engineering is also known as business process redesign, business transformation, or business process change management.

Cost of Quality:
To verify that a product or service meets the customer's requirements requires the measurement of the cost of quality. For simplicity's sake, the costs can be classified as "the cost of conformance" and "the cost of nonconformance." Conformance costs include items such as training, indoctrination, verification, validation, testing, maintenance, calibration, and audits. Nonconforming costs include items such as scrap, rework, warranty repairs, product recalls, and complaint handling. Trying to save a few project dollars by reducing conformance costs could prove disastrous. For example, an American company won a contract as a supplier of Japanese parts. The initial contract called for the delivery of 10,000 parts. During inspection and testing at the customer's (that is, Japanese) facility, two rejects were discovered. The Japanese returned all 10,000 components to the American supplier stating that this batch was not acceptable. In this example, the nonconformance cost could easily be an order of magnitude greater than the conformance cost. The moral is clear: Feigenbaum divided cost of quality into two categories and four sub categories: Costs of Control: Prevention costs Appraisal costs Costs of Failure of Control:

Internal defect costs External defect costs

Cost of Quality

 Prevention costs are the up-front costs oriented toward the satisfaction of customer's requirements with the first and all succeeding units of product produced without defects. Included in this are typically such costs as design review, training, quality planning, surveys of vendors, suppliers, and subcontractors, process studies, and related preventive activities. Appraisal costs are costs associated with evaluation of product or process to ascertain how well all of the requirements of the customer have been met. Included in this are typically such costs as inspection of product, lab test, vendor control, in-process testing, and internalexternal design reviews. Internal failure costs are those costs associated with the failure of the processes to make products acceptable to the customer, before leaving the control of the organization. Included in this area are scrap, rework, repair, downtime, defect evaluation, evaluation of scrap, and corrective actions for these internal failures.

External failure costs are those costs associated with the determination by the
customer that his requirements have not been satisfied. Included are customer returns and allowances, evaluation of customer complaints, inspection at the customer, and customer visits to resolve quality complaints and necessary corrective action.