Chapter 9

Quality Management
 Quality Management

 Quality is the ability of a product or service to

consistently meet or exceed customer expectations.

 A quality system may help to:

- Improve company competitiveness.
- Spot product or service deficiencies and
improve processes.
-Deliver what customers order consistently
and on time.
 Quality Management

 An effective quality system will improve business

performance because it helps to:
- Understand customers’ requirements.

- Improve profitability and competitiveness.

- Know how to satisfy customer requirements.

- Ensure delivered products conform to those
requirements.
- Understand how to organise and control the
business in order to minimise errors and waste.
 Dimensions of Quality
Performance Main characteristics of the product/service.
Aesthetics Appearance, feel, smell, taste.
Special Extra characteristics.
Features
Conformance How well product/service conforms to
customer’s expectations.
Reliability Consistency of performance.
Durability Useful life of the product/service.
Perceived Indirect evaluation of quality (e.g.
Quality reputation).
Serviceability Service after sale.
Consistency Quality does not vary.
 Examples of Quality Dimensions

Dimensions Product Service

(Automobile) (Auto Repair)
Performance Everything works, fit All work done, at
& finish Ride, agreed price.
handling, grade of
materials used.

Aesthetics Interior Design, Soft Clean working/

touch. waiting area.
Special Features CD Player, GPS Location, call when
Systems. ready. Computer
Diagnostics.
 Examples of Quality Dimensions
Dimensions Product Service
(Automobile) (Auto Repair)

Reliability Infrequency of Work done

breakdown. correctly, ready
when promised.
Durability Useful life in miles Work holds up over
time.
Perceived Quality Top rated car. Award winning
service department.
Serviceability Handling of Handling of
complaints and/or complaints.
requests for
information.
 Service Quality
Convenience The availability and accessibility of the
service.
Reliability the ability to perform a service
dependably, consistently, and accurately.
Responsiveness How fast the service is.
Time The speed with which service is
delivered.
Assurance Knowledge and ability to convey trust and
confidence.
Courtesy The way customers are treated by
employees who come into contact with
them.
Tangibles The physical appearance of facility,
equipment, personnel, and
communication materials.
Consistency The ability to provide the same level of
good quality repeatedly.
 Examples of Service Quality
Dimension Examples
1. Convenience Was the service center conveniently located?

2. Reliability Was the problem fixed?

3. Responsiveness Were customer service personnel willing and

able to answer questions?
4. Time How long did the customer wait?

5. Assurance Did the customer service personnel seem

knowledgeable about the repair?
6. Courtesy Were customer service personnel and the
cashier friendly and courteous?
7. Tangibles Were the facilities clean, personnel neat?

8. Consistency Was the service quality good, and consistent

with previous visits?
 Challenges with Service Quality

• Customer expectations often change.

• Different customers have different expectations.

• Each customer contact is a “moment of truth”.

• Customer participation can affect perception of quality.

• “Fail-safe” must be designed into the system (for

customer self-service).
Determinants of Quality

Design Ease of
use

Conforms
to design Service
 Determinants of Quality

 Quality of design
– Intention of designers to include or exclude
features in a product or service.

 Quality of conformance
– The degree to which goods or services conform to
the intent of the designers.
 The Consequences of Poor Quality

• Costs.

• Liability.

• Productivity.

• Loss of business.
 Responsibility for Quality
• Design.
• Procurement.
• Customer service.
• Top management.
• Quality assurance.
• Marketing and sales.
• Production/operations.
• Packaging and shipping.
Quality Costs
 Costs of Quality
 Failure Cost- Costs incurred by defective parts/products
or faulty services.
– Internal Failure Cost: Costs incurred to fix problems that are
detected before the product/service is delivered to the customer.
– External Failure Costs: All costs incurred to fix problems that
are detected after the product/service is delivered to the customer.

 Appraisal Costs
– Costs of activities designed to ensure quality or
uncover defects.

 Prevention Costs
– All TQ training, TQ planning, customer assessment,
process control, and quality improvement costs to
prevent defects from occurring.
 Basic Quality Tools
Tools aid in data collection and interpretation, and
provide the basis for decision making. There are a
number of tools that can be used for problem solving
and process improvement.

– Flowcharts
– Check sheets
– Histograms
– Pareto Charts
– Scatter diagrams
– Control charts
– Run charts
– Cause-and-effect diagrams
 Check Sheet

Billing Errors Monday

Wrong Account

Wrong Amount

A/R Errors

Wrong Account

Wrong Amount
 Pareto Analysis

Number of defects
80% of the
problems may
be attributed
to 20% of the
causes.

Off Smeared Missing Loose Other

center print label
 Control Chart

1020
UCL
1010

1000

990
LCL
980

970

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
 Cause-and-Effect Diagram

Methods Materials
Cause
Cause
Cause
Cause
Cause Cause
Environment Effect
Cause Cause

Cause Cause
Cause Cause

People Equipment
Diameter Run Chart

Time (Hours)
 Tracking Improvements

UCL
UCL
UCL

LCL
LCL
Additional improvements
LCL Process centered made to the process
and stable
Process not centered
and not stable
 Quality Certification

• ISO 9000
– Set of international standards on quality
management and quality assurance, critical to
international business.

• ISO 14000
– A set of international standards for assessing a
company’s environmental performance.
 ISO 9000
Quality Management Principles

• Leadership.
• Customer focus.
• Process approach.
• People involvement.
• Continual improvement.
• Factual approach to decision making.
• A systems approach to management.
• Mutually beneficial supplier relationships.
 ISO 14000

 Management systems
– Systems development and integration of environmental
responsibilities into business planning.

 Operations
– Consumption of natural resources and energy.

 Environmental systems
– Measuring, assessing and managing emissions,
effluents, and other waste.
Quality Assurance vs. Strategic Approach

 Quality Assurance
– Emphasis on finding and correcting defects before
reaching market.

 Strategic Approach
– Proactive, focusing on preventing mistakes from
occurring.
– Greater emphasis on customer satisfaction.
 The Quality Gurus

 Walter Shewhart.
 W. Edwards Deming.
 Joseph M. Juran.
 Armand Feignbaum.
 Philip B. Crosby.
 Kaoru Ishikawa.
 Genichi Taguchi.
 Ohno and Shingo.
Key Contributors to Quality Management

Contributor Known for

Shewhart Control Chart.

Deming 14 points; special & common causes of

variation

Juran Quality is fitness for use; quality trilogy

Feignbaum Quality is a total field

Crosby Quality is free; zero defects

Ishikawa Cause-and effect diagrams; quality circles

Taguchi Taguchi loss function

Ohno and Continuous improvenment

Shingo
 Total Quality Management

 A philosophy that involves everyone in an

organization in a continual effort to improve quality
and achieve customer satisfaction.

T The involvement and input of everyone.

Fully meeting customers needs and

Q
requirements.

M The way we act, operate and handle it.

 The TQM Approach

1. Find out what the customer wants.

2. Design a product or service that meets or exceeds

customer wants.

3. Design processes that facilitates doing the job right

the first time.

4. Keep track of results.

5. Extend these concepts to suppliers.

 Elements of TQM
1. Continuous improvement (Kaizen).
2. Competitive benchmarking.
3. Employee empowerment.
4. Team approach.
5. Decisions based on facts.
6. Knowledge of tools.
7. Supplier quality.
8. Champion.
9. Quality at the source.
10. Suppliers.
 Benchmarking Process

 Identify a critical process that needs improving.

 Identify an organization that excels in this process.

 Contact that organization.

 Analyze the data.

 Improve the critical process.

 Obstacles to Implementing TQM

 Lack of:
– Company-wide definition of quality.
– Strategic plan for change.
– Customer focus.
– Real employee empowerment.
– Strong motivation.
– Time to devote to quality initiatives.
– Leadership.

 Poor inter-organizational communication.

 View of quality as a “quick fix”.
 Emphasis on short-term financial results.
 Internal political and “turf” wars.
 Criticisms of TQM

1. Blind pursuit of TQM programs.

2. Programs may not be linked to strategies.

3. Quality-related decisions may not be tied to market

performance.

4. Failure to carefully plan a program.

 Basic Steps in Problem Solving

1. Define the problem and establish an improvement goal.

2. Define measures and collect data.

3. Analyze the problem.

4. Generate potential solutions.

5. Choose a solution.

6. Implement the solution.

7. Monitor the solution to see if it accomplishes the goal.

 The PDSA Cycle

Plan

Act

Do

Study
 Six Sigma
 An effective problem solving methodology for improving
organizational performance.

 With a focus on:

-Saving time.
-Reducing costs.
-Improving quality.
-Reducing variability.
-Reducing the number of mistakes that occur
down to practically zero.
-Improving performance in the eyes of the
customer.
 Six Sigma
Six sigma: A business process for improving
quality, reducing costs, and increasing
customer satisfaction.
 Statistically
– Having no more than 3.4 defects per million.

 Conceptually
– Program designed to reduce defects.
– Requires the use of certain tools and techniques.

Six Sigma Companies: Amazon, Boeing, Dell, Ford,

Motorola, Bank of America, Unipart etc.
 Six Sigma Tools

 Gauge R&R.

 Control charts.

 Process capability.

 Design of experiments.

 Failure mode and effects analysis (FMEA).

 3 Sigma and 6 Sigma Quality

Lower Upper
specification specification

1350 ppm 1350 ppm

1.7 ppm 1.7 ppm

Process
mean
+/- 3 Sigma

+/- 6 Sigma
 Six Sigma Process

DMAIC
 Define
 Measure
 Analyze
 Improve
 Control
 Six Sigma Management Component

 Reducing variation.

 Utilizing statistical models.

 Providing strong leadership.

 Defining performance metrics.

 Improving process performance.

 Selecting projects likely to succeed.

 Selecting and training appropriate people.

 Designing a structured improvement strategy.

 Lean Production
 “A systematic approach to identifying and eliminating
waste(non-value-added activities) through continuous
improvement by flowing the product at the pull of the
customer in pursuit of perfection.”
Waste in Operations
Waste in Operations
Lean Goals
Basic Elements of Lean
 Lean Six Sigma

 Organizations cannot focus on “just speed” (Lean) or

“just quality” (Six Sigma).

 The two strategies reinforce each other.

 Lean Six Sigma is a good strategy not Lean or Six

Sigma!
 Lecture Takeaways

 Basics of Quality Management.

 Dimensions of quality management
 Determinants of Quality.
 Consequence of poor quality.
 Costs of quality.
 Tools of quality management.
 Quality Certifications.
 Quality Gurus and their contributions.
 Basics of TQM and Six Sigma.
 Basics of Lean.
 Basics of Lean Six Sigma.`