OPERATION MANAGEMENT

TOTAL QUALITY MANAGEMENT
=
WORLD CLASS MANAGEMENT
SYSTEM
MANAGEMENT
• DEFINITION:

Management is the process of designing
and maintaining an environment
conducive for performance for a group of
people working together for attainment of
a common objective in time
MANUFACTURING INDUSTRY
VALUE ADITION
BY
CONVERSION
INPUT
RAW MATERIAL
OUTPUT
VALUE ADDED PRODUCT &
SERVICES.
SERVICE INDUSTRY
VALUE ADITION
BY
CONVERSION
INPUT
CUSTOMER
OUTPUT
VALUE ADDED CUSTOMER
What Is Quality?
• “The degree of excellence of a thing”
(Webster‟s Dictionary)

• “The totality of features and
characteristics that satisfy needs” ( ASQC)

QUALITY
• FITNESS FOR USE
• SATISFY STATED AND IMPLIED NEEDS
• CUSTOMER SATISFACTION
„q‟ – Product Quality &
„Q‟ – Total quality including product quality, fitness
for use and world class quality in every aspect of
the organizational management.

QUALITY IS USER AS WELL AS PRODUCT SPECIFIC .

THE SAME PRODUCT IS OF GOOD QUALITY TO CERTAIN
USER SEGMENT CAN BE OF BAD QUALITY TO ANOTHER
USER SEGMENT.
3-3
Dimensions of Quality (cont.)
Exhibit
3-1
1. Eight Dimensions of Quality
Performance -- primary operating characteristics

Features -- little extras

Reliability -- probability of successful operation (nonfailure)
within a given time span

Conformance -- meeting preestablished standards

Durability -- length of usefulness, economically and technically

Serviceability -- speed, courtesy, competence, and ease of repair

Aesthetics -- pleasing to the senses

Perceived quality -- indirect evaluations of quality
(e.g., reputation)
The Meaning of Quality
Quality of Conformance





Quality of Design





Producer‟s Perspective Consumer‟s Perspective
Fitness for
Consumer Use
Production Marketing
•Conformance to
specifications
•Cost
•Quality characteristics
•Price
• OPERATION MANAGEMENT is the ‘effective and
efficient management of a Process’.

• TQM IS ORIENTATION TOWARDS PROCESS & COMPANY
WIDE PERFORMANCE EXCELLENCE IN ALL FUNCTIONS
INVOLVING EVERYBODY.
PROCESS
(Men, Machine,
Material, Method)
Product Customer
Big Q – TOTAL QUALITY.
Small „q‟ – Product Quality.
OBJECTIVES OF A WORLD CLASS ORGANIZATION
• THREE CRITICAL FACTORS FOR SURVIVAL &
PERFORMANCE EXCELLENCE OF AN INDUSTRY:

A. COMPETITIVE ADVANTAGE.

B. CUSTOMER SATISFACTION.

C. INCREASE RETURN ON INVESTMENT (ROI).
CUSTOMER SATISFACTION :
• Customer Satisfaction is attained if the customer‟s
stated , implied and latent needs are fulfilled.
• The evidence of customer‟s satisfaction is his
continued patronage of the same brand & product,
his feedback , reduction in customer complaint &
increase in sales and market share.
• Maximization of Services decides the market
leadership as product “quality” becomes a
mandatory requirement.

The Customer Satisfaction is attained by
providing the Goods & Services of Right
Quality & Right Quantity at the Right
Time, Right Place and Right Price.
CUSTOMER SATISFACTION : VALUE FOR MONEY.
• Unless the Product or Service we offer can be
distinguished in some way from the competitors,
there is a likely hood that the Market place will
view it as a “Commodity” and so the sale will
tend to go to the cheapest supplier. Hence the
importance of seeking to add additional values
to our offering to mark it out from the
competition.
• Adding value through differentiation of the
Products or Services creates value segments
which is a powerful means of achieving a
defensible advantage in the market.
MAXIMIZATION OF RETURN ON
INVESTMENT
A. INCREASE PROFIT MARGIN BY
a. Price Increase.
b. Reduce Cost of Production.
B. INCREASE THROUGHPUT OR WORKING
CAPITAL TURNOVER .

ROI = Net Income / Investment.
= (Net Income/Revenue) X (Revenue/Investment)
= Return on Revenue X Investment Turnover.
COMPETITIVE ADVANTAGES
CUSTOMER
Needs seeking benefits at
acceptable prices
COMPANY.
Assets & utilization.
COMPETITOR.
Assets & Utilization
Cost diff.
THE FUNDAMENTALS OF
CUSTOMER SATISFACTION
• UNDERSTAND & BELIEVE IN THE IMPORTANCE OF SATISFYING
CUSTOMERS.

• TRUST YOUR CUSTOMERS.

• BUILD CUSTOMER RESPECT IN THE VALUE SYSTEM OF THE EMPLOYEES.

• ESTABLISH „LISTENING POSTS‟ FOR EMPLOYEES AT ALL LEVEL.

• LET YOUR CUSTOMERS INTERACT WITH YOUR EMPLOYEES.

• INCORPORATE CUSTOMER SATISFACTION OBJECTIVES IN THE „KRAs‟.

• EMPOWER EMPLOYEES TO DELIVER HIGH LEVEL OF CUSTOMER
SATISFACTION.

TQM – TOTAL QUALITY
MANAGEMENT
IS AN ORGANISED SCIENTIFIC APPROACH
TOWARDS CONTINUOUS IMPROVEMENT
OF QUALITY INVOLVING EVERYONE IN
THE ORGANISATION COVERING EVERY
FUNCTIONS AIMED TOWARDS TOTAL
CUSTOMER SATISFACTION AND
MAXIMIZATION OF „ROI‟.
WORLD COMPETITION IN QUALITY
1950 1960 1970 1980 1990
THE WEST (COMPANY X)
JOURNEY TO TOTAL QUALITY -
LONG ENDURING JOURNEY OF
INDETERMINATE LENGTH.
IN THE BOTTOM-UP APPROACH FOCUS AT THE
OPERATIONAL LEVEL.
• Move the Ideas to each employees at their speed.
• Do not force strategy but aim to change people‟s
mindset.
• Never under-estimate people power.
• Develop ways of Horizontal Quality Thinking.
• Challenges “Business-As-Usual” Attitudes
Eight Characteristics of
A World Class Organisation
(Thomas Peters & Robert Watermann)
• Were Action oriented.

• Were customer oriented (Learned about needs of
their customer).

• Promoted managerial autonomy and
empowerment.

• Achieved productivity by employee orientation.
Eight Characteristics of
A World Class Organisation
(Thomas Peters & Robert Watermann)
• Led by sound value of their leader (A role
model).
• Focused on business they knew best (Core
competence).
• Simple and lean organisation.
• Flexible orientation – Centralised as well
as De-Centralised.



Inspection
QA
TQC
TQM
INSPECTION

• POST PRODUCTION EXERCISES.

• GRADING, SALVAGE.

• CORRECTIONS.
QUALITY ASSURANCE
• PROCESS COMPLIANCE IN
MANUFACTURING.

• STATISTICAL PROCESS CONTROL.

• CORRECTIVE ACTIONS.

• ISO 9000: 1994.
TQC – TOTAL QUALITY CONTROL
• EXTENSIVE USE OF QUALITY
IMPROVEMENT TOOLS.

• COMPANY WIDE QUALITY ASSURANCE –
CWQA.

• CORRECTIVE & PREVENTIVE ACTIONS.
TOTAL QUALITY MANAGEMENT - TQM
• CONTINUAL IMPROVEMENT

• CUSTOMER & ROI FOCUS

• TEI-TOTAL EMPLOYEE INVOLVEMENT

• PROCESS ORIENTED SYSTEMATIC
APPROACH.
ATTAINMENT OF DESIRED QUALITY
REQUIRED COMMITMENT AND
PARTICIPATION OF ALL MEMBERS IN AN
ORGANISATION WHEREAS
RESPONSIBILITY OF QUALITY
MANAGEMENT BELONGS TO THE TOP
MANAGEMENT.
QUALITY POLICY
• THE OVERALL QUALITY INTENSIONS AND
DIRECTIONS OF AN ORGANISATION AS
REGARDS “QUALITYÄS FORMALLY
EXPRESSED BY THE TOP MANAGEMENT.
QUALITY MANAGEMENT
• THE ASPECT OF OVERALL MANAGEMENT
FUNCTION THAT DETERMINES AND
IMPLEMENTS THE QUALITY POLICY.
QUALITY SYSTEM
• THE ORGANISATIONAL STRUCTURE,
RESPONSIBILITIES, PROCEDURES,
PROCESSES AND RESOURCES FOR
IMPLEMENTATION OF THE QUALITY
SYSTEM.
QUALITY CONTROL
(Control over process)
The operational techniques and activities
that are used to fulfill the requirements of
quality aimed both at monitoring a Process
and at eliminating causes for
unsatisfactory performance.
QUALITY ASSURANCE.
• ALL THOSE PLANNED AND SYSTAMATIC
ACTIONS NECESSARY TO PROVIDE
ADEQUATE COFIDENCE THAT A PRODUCT
AND SERVICE WILL SATISFY GIVEN
REQUIREMENT.

CURRENT INDUSTRIAL SITUATION.
MATURED INDUSTRY –FREE AVAILABILITY OF
TECHNOLOGY.

INFAVOURABLE SUPPLY DEMAND POSITION LEADING TO
INTENSIVE COMPETITION.

INTERNATIONAL SURGE IN DEMAND OF END PRODUCTS
LEADING TO SCARCITY OF RAW MATERIAL.

RAW MATERIAL PRICES ZOOMING AVARAGE 50% -
Natural Rubber- 144%, ZnO – 150%, Reclaim
Rubbber/Plastic-40-50%, Plastic material- 50%, Petroleum
Oil-72%, Carbon - 38%, Chemicals- 26% to 50% & Steel –
100%, Other Metals- 60-80%.
CURRENT INDUSTRIAL SITUATION.
• COST OF LABOUR INCREASES TO AT LEAST 10-15%
EVERY YEAR.

• OTHER CONSUMABLES INCREASE AS PER RATE OF
INFLATION I.E. AROUND 9-13%.

• POWER SITUATION EXTREMLY BAD LEADING TO
INCREASED WASTAGES.

• SELLING PRICES OF END PRODUCTS ARE MORE OR
LESS STABLE.

• PROFIT MARGINS SHRINKING OR DISAPPEARED.
INDIA‟S GLOBAL COMPETITIVENESS :
• INFRASTRUCTURE – POOR COMPARED TO GLABAL
STANDARD:
POWER SITUATION- HIGH TARRIF & SHORTAGE.
VEHICLE MOVEMENT- 250 KM./DAY COMPARED TO
INTERNATIONAL 600-700 KM./DAY.
RED TAPISM & CORRUPTION – HIGH.
POLITICAL SITUATION- DIVERSE DIRECTIONS.

• LABOR SITUATION – PRODUCTIVITY – 40% AS
COMPARED TO INTERNATIONAL STANDARD. LABOR
LAWS – OUTDATED.

• GOVT. PROTECTIVE DYKES DISAPPEARING.
INDIA‟S GLOBAL COMPETITIVENESS :
• Indian Brains best suited for the Service & „IT‟ Industry.
• English speaking low cost Technically sound man power
availability.
• Democratic Country.
• Subsequent Government‟s commitment to Globalization
& Liberalization.
• International quality of Education in the field of
Management, Engineering, Medical Science &
Information Technology.
• Abundant Natural Resources.
• Matured Agricultural & Agro Industry.
• Sound Manufacturing Industrial Base.
• Large Domestic market with Purchasing Power.
HOW NOT ONLY SURVIVE BUT HAVE A WORLD
CLASS PERFORMANCE EXCELLENCE
• The Answer is the implementation of
“ THE THEORY OF HOLISTIC
MANAGEMENT FOR WORLD CLASS
PERFORMANCE “.
RESULTS DELIGHTED CUSTOMERS
EMPOWERED EMPLOYEES
MAXIMUM ROI
ALL ROUND PERFORMANCE EXCELLNCE.
WORLD CLASS PERFORMANCE & LEADERSHIP
QUALITY IMPROVEMENT
QUALITY CONTROL
QUALITY PLANNING
QUALITY MANAGEMENT
SYSTEM—ISO 9000
SUPPLY CHAIN MANAGMENT
TOTAL ORGANISATION
INVOLVEMENT
CONTINUOUS IMPROVEMENT
STRATEGIC QUALITY PLANNING
CUSTOMER FOCUS
TOTAL QUALITY
MANAGEMENT PROCESS
INFRASTRUCTURE
FOUNDATION
THEORY OF HOLISTIC
MANAGEMENT FOR
WORLD CLASS
PERFORMANCE
EXCELLENCE.
FOUNDATION :
• GIVES SUSTAINIBILITY OF AN ORGANIZATION.

• A SOUND BASE ON WHICH A WELL STRUCTURED &
WORLD CLASS ORGANIZATION CAN BE BUILT.

• MAKE THE ORGANIZATION SURVIVE & GROW AT ALL
TIMES.

• COMPONENTS OF FOUNDATION :
A. CUSTOMER FOCUS.
B. STRATEGIC QUALITY PLANNING.
C. CONTINUOUS IMPROVEMENT.
CUSTOMER SATISFACTION
• Customer Satisfaction is attained if the customer‟s
stated , implied and latent needs are fulfilled.
• The evidence of customer‟s satisfaction is his
continued patronage of the same brand & product,
his feedback , reduction in customer complaint &
increase in sales and market share.
• The Customer Satisfaction is attained by providing
the Goods & Services of Right Quality & Right
Quantity at the Right Time, Right Place and
Right Price.
STEPS TO CREATE A CUSTOMER FOCUSED
ORGANIZATION
• UNDERSTAND & BELIEVE IN THE IMPORTANCE OF SATISFYING
CUSTOMERS.

• TRUST YOUR CUSTOMERS.

• BUILD CUSTOMER RESPECT IN THE VALUE SYSTEM OF THE EMPLOYEES.

• ESTABLISH „LISTENING POSTS‟ FOR EMPLOYEES AT ALL LEVEL.

• LET YOUR CUSTOMERS INTERACT WITH YOUR EMPLOYEES.

• INCORPORATE CUSTOMER SATISFACTION OBJECTIVES IN THE „KRAs‟.

• EMPOWER EMPLOYEES TO DELIVER HIGH LEVEL OF CUSTOMER
SATISFACTION.

DEPARTMENTAL FUNCTION
• VERTICAL CHIMNEYS
Purchase
Dept.Á
Production
„Dept. „‟B
Finance
„Dept. Ç
Marketing
Dept. D
CONVENSIONAL ORGANISATION ( - 1+ 1 = 0 )
HORIZONTAL QUALITY THINKING
• WORLD CLASS ORGANISATION(1&1=11)
HR
Production Finance Marketing
Customer
Satisfaction
DEPARTMENTAL FUNCTIONS
Concept of Internal Customer
Materials Department
- R.M. of Right Quality,
Quantity, Price at right
Time and Place

Production
Value addition by
Conversion
Marketing
Creation of
Esteem Value
Customer
Maintenance Dept.
Machines of right quality,
Quantity, cost & at right time
And place

Finance Dept.
Finance of right
Quality, quantity,
Cost ,at right time
And place
HR Department
Human Resource of
Right quality, quantity
At right cost ,time
& place
Eight Building Blocks of TQM
Satisfy All Parties at the
Same time
Involve all participants
In the enterprise
Focus on
Prevention
Work under the
“7 ZERO” Banner
Do it Right the
First Time
Measure
“value added”
Act always in line
With Customer
Needs
Develop an Internal
Customer – Supplier
Relationship
“SEVEN ZERO” BANNER
• ZERO DISDAIN FOR OTHERS.
• ZERO STOCK.
• ZERO DELAY
• ZERO PAPER.
• ZERO DOWNTIME.
• ZERO DEFECT.
• ZERO ACCIDENT.
FINANCIAL PERSPECTIVE
1. ROI.
2. CASH FLOW.
3. PROFIT.
CUSTOMER PERSPECTION
1. CUSTOMER SATISFACTION.
2.COMPETITIVE ADVANTAGE.
3.MARKET SHARE.
4. BRAND IMAGE.
INTERNAL BUSINESS PERSPECTIVE
1. EMPLOYEE SATISFACTION.
2. EMPLOYEE TURNOVER.
3. INVENTORY TURNOVER.
4. SAFETY RECORD.
5. PROJECT PERFORMANCE.
INNOVATION & LEARNING
PERSPECTIVE
1.NO. OF IMPROVEMENTS P.A
2.NO. OF NEW PRODUCTS P.A.
3.NO. OF NEW MARKET SEGEM
-ENT ADDED P.A.
4.NO. OF NEW CUSTOMERS P.A
BALANCE SCORE CARD.
STRATEGIC QUALITY PLANNING – ELEVEN TQM
STEPS to be an WORLD CLASS ORGANISATION
• TQM overview.
• Set MISSION.
• Identify CUSTOMERS.
• Identify Customer‟s Needs.
• Define CRITICAL PROCESS & MEASURES.
• Set Organizational VISION.

STRATEGIC QUALITY PLANNING – ELEVEN TQM
STEPS to be an WORLD CLASS ORGANISATION
• Develop Strategic Plan (10-20 yrs)
• Develop Annual Plan for Breakthrough
• Revise Roles and Responsibilities
• Form Steering Committee to set change
strategy.
• Annual Review
CONTINUOUS IMPROVEMENT :
• CONTINUOUS „ENHANCEMENT OF PRODUCTIVITY‟ IN
ALL ASPECTS OF BUSINESS ENTERPRISES: Materials,
Men, Technology, Machine, Process, Finance,
Management & LSCM.

• FOCUSING ON „3M‟ PRACTICE OF MURI, MURA & MUDA.

• FOCUSING ON „5S‟ OF HOUSE KEEPING.

• PRACTICNG DEMING‟S P-D-C-A CYCLE.

• REDUCTION IN WASTAGES & CYCLE TIME.
Current Managerial Function
Deming‟s (Shewarts‟s) P-D-C-A Cycle

Act Plan
Check
Do
Quality Management System
(ISO 9000)
PLANNING
• DEFINITION:

• Planning is the decision making process of
choosing the best alternative consuming
least amount of input resources and giving
the maximum output for attaining the
desired objective in time.
• DO – Execute or Implement the Plan as per schedule with
effectiveness and efficiency.

• CHECK – is to ascertain the „Deviation‟ between what was
planned what has happened and what is the „Root Cause‟ for the
same.

• ACT – After analyzing the root cause take the Corrective and
Preventive actions so that a mistake once occurred leading top a
deviation is never ever repeated again. Since it is a cycle,
incorporate these corrective & preventive actions in the next plan
so that the organization is in a path of „Continuous Improvement‟
by continual elimination of mistakes or solving the problems.

To ensure that once an improvement has been done, it is
permanently part of the system & it never retracts, a
„Quality Management System‟ – ISO 9001:2000 is
implemented.
MANAGEMENT
(Policy, Mission & Vision)

continual
improvement
QUALITY
COUNCIL

TOTAL QUALITY TEAMS QUALITY

QUALITY
CIRCLES

PROCESS
MANAGEMENT


7/30/2014 55 PNM
PEOPLE
Increased
revenue
Improved
competitive
position
Increased
market
share
Higher
prices
Reduced
cost of
operations
Increased
defect-free
output
Increased
profits
C
o
n
t
i
n
u
a
l

Q
u
a
l
i
t
y

I
m
p
r
o
v
e
m
e
n
t

or
Cost-Route
Benefits
Market-Route
Benefits
3-7
Competitive Benefits of TQM
Exhibit
3-4
3 M PRACTICE.
• MURI – Unreasonableness.

• MURA – Unevenness.

• MUDA – Wastage.
NINE WASTAGES(MUDA) :
• Wastages due to disdain, jealousy, politics among team
members and within an organization.
• Wastages due to excess “inventory”.
• Wastages due to “Delay” in processing of queries,
transportation, communication etc..
• Wastages due to unwarranted “Paper Work”.
• Wastages due to loss of Production on account of
“machine Downtime”.
• Wastages due to “Product/Service Defects, reworks”
etc.
• Wastages due to “Accidents”.
• Wastages due to faulty “Process Design & Control”.
• Wastages due to “Untapped & Misused Resources”.


5 S of HOUSEKEEPING.
• SEIRI – ORDERLINESS.

• SEISO – CLARITY.

• SEITON – TIDINESS.

• SEIKETSU – CLEANLINESS.

• SHITSUKE – Practice all the four together.
COST OF QUALITY
• THE QUALITY SYSTEM MUST INCLUDE
METHODS AND PROCEDURES TO
DETERMINE AND EVELUATE THE
IMPACT THE COST OF QUALITY HAS
ON THE PROFITABILITY OF THE COMPANY.

• THE PURPOSE OF THE COST OF
QUALITY REPORTING SYSTEM IS TO
PROVIDE MANAGEMENT WITH A TOOL
TO MEASURE EFFECTIVENESS AND
IDENTIFY IMPORVEMENT AREAS.

Quality Management Maturity Grid
Cost Categories
• Prevention Costs
• Appraisal Costs
• Internal failure Costs
• External failure Costs
The cost of poor quality
(COPQ):


• “COPQ is the sum of all costs that would
disappear if there were no quality problems.” -
Juran

• “You can easily spend 15 - 20% of your sales
dollars on the COPQ.” - Crosby

• “In most companies the costs of poor quality
runs at 20 - 40%.” - Juran


Traditional COPQ
COPQ
DISTRIBUTION OF QUALITY
COSTS

Total Quality Cost


External failure

Internal failure

Appraisal


Prevention

Time
Maturity of Quality System
Traditional Model
New Model
% of Quality Cost items within Total
Quality Cost
 Process improvement
 Product simplification
 Training costs
 Inspection costs
 Warranty cost
 Product liability
 Scrap
 Rework
Internal Failure Costs
External Failure Costs
Appraisal Costs
Prevention Costs
Quality Costs
3-8a


 Process improvement
 Product simplification
 Training costs
 Inspection costs
 Warranty cost
 Product liability
 Scrap
 Rework
Internal Failure Costs
External Failure Costs
Appraisal Costs
Prevention Costs
 Little or no
defective work
 No dissatisfied
customers
 Very little inspection
 An ounce of
prevention is worth
a pound of cure
Decline
Decline
Decline
Increase
Decline
Increase
C
o
n
t
i
n
u
a
l

I
m
p
r
o
v
e
m
e
n
t

Quality Costs
3-8
INFRASTRUCTURE :
• BUILDS THE ORGANIZATIONS OVER A SOLID
FOUNDATION.

• HOLDS THE ORGANIZATION TOGETHER UNDER A
SYSTEM & INFRASTRUCTURE TO MAINTAIN THE
ORGANIZATIONAL LEADERSHIP, MARKET POSITION &
DEFNDS THE „ROI‟.

• NEEDS A SYSTEM OF „MANAGEMENT‟.

• COMPONENTS OF INFRASTRUCTURE :
A. TOTAL ORGANIZATION INVOLVEMENT -TOI.
B. SUPPLY CHAIN MANAGEMENT.
C. QUALITY MANAGEMENT SYSTEM – ISO 9000.
TOTAL ORGANIZATION INVOLVEMENT :
• INVOLVEMENT OF SUPPLIERS, EMPLOYEES &
CUSTOMERS IN ORGANIZATIONAL WORKING.
• TRAINING & EDUCATION TO ALL ON ORGANIZATION‟S
MISSION,VISION & STRATEGIC PLAN.
• TOTAL EMPLOYEE INVOLVEMENT- TEI & EMPLOYEE
EMPOWERMENT.
• MANAGEMENT BY OBJECTIVE.
• PRINCIPLE OF INTREPREUNERSHIP TO BE DEPLOYED.
• ORGANIZED INVOLVEMENT OF EMPLOYEES IN
DECISION MAKING PROCESS IN VARIOUS
TEAMS/COMMMITTES ON VITAL AREAS OF OPERATION
TO ENSURE OWNERSHIP.
SUPPLY CHAIN MANAGEMENT :
• SUPPLY CHAIN MANAGEMENT CAN BE
DEFINED AS THE “DEMAND MANAGEMENT
SYSTEM” WHICH INTEGREATES THE ENTIRE
SUPPLY MECHANISM OF SUPPLIERS OF RAW
MATERIALS TO ITS CONVERSION PROCESS
IN THE ORGANIZATION INTO THE FINISHED
GOODS & SERVICES TILL THEY REACH TO
THE CONSUMERS THROUGH THE
DISTRIBUTION CHANNEL.
SUPPLY CHAIN MANAGEMENT :
• THE SUPPLY CHAIN IS CONSISTING OF
INDIVIDUAL LINKS ENTANGLED
SYSTEMETICALLY INTO EACH OTHER OF
MATERIAL REQUIREMENT PLANNING(MRP-I),
MANUFACTURING RESOURCE PLANNING
(MRP-II) & DISTRIBUTION REQUIREMENT
PLANNING (DRP) OUTPUT OF ONE PROCESS
BEING INPUT FOR THE OTHER.
Raw
Material
Suppliers
Inbound
Raw
Material
Production
Outbound
Finished
Goods
Finished
Goods
Regional
Warehouse
Customers
MRP
DRP
SUPPLY CHAIN MANAGEMENT
Information
Materials & Products
SUPPLY CHAIN MANAGEMENT
• It changes the paradigm information and
materials/products, are from Control to
COORDINATION in Supply Chain Management.
• By moving away from separate control of
departments, and towards overall co-ordination of
effort, all the major movements activities, both of
brought together in a single system .
• The objective of SCM are:
A. MAXIMIZATION OF CUSTOMER SATISFACTION BY
PROVIDING PRODUCTS & SERVICES OF RIGHT
QUALITY IN RIGHT QUANTITY AT RIGHT TIME,
RIGHT PLACE AND AT RIGHT PRICE.
B. MAXIMIZATION OF THE RETURN ON INVESTMENT
–ROI.
C. REDUCTION OF „CYCLE TIME‟ & „INVENTORY‟

SUPPLY CHAIN MANAGEMENT
• SCM leads to implementation of a “FLEXIBLE
SYSTEM”.
• Small lot Sizes in SCM prevent losses from unsold
stock and allows flexibility through switching, small
change over time and ease of handling.
• Maximum efficiency in using labor, capital and plant
throughout the company;
• Flexible planning and control procedures;
• Controlled customer service performance;
• Minimum variance (reduced uncertainty);
• Minimum total cost;
• Product quality, in other words, preservation of
added value.
• Eliminates „PRODUCT OBSOLESENCE‟.
• SCM is a „PROCESS ORIENTED SYSTEM‟ with the
interlinking of the sub-processes into a system.
ISO 9000 :2008 QUALITY MANAGEMENT SYSTEM :
• CONCEPT OF “Q”TAKING OVER FROM “q”.

• ISO DEVELOPED 9000 SERIES IN RESPONSE TO
MARKET GLOBALIZATION.

• BY 1994 IT WAS ACCEPTED IN 70 COUNTRIES AND
TODAY IT IS ACCEPTED BY 120 COUNTRIES.

• ISO 9000 IS AN EFFECTIVE POWERFUL TOOL FOR
MANAGEMENT OF PRODUCT QUALITY AS WELL AS ALL
BUSINESS OPERATION

• MANDATORY FOR ENTRY IN INTERNATIONAL MARKET
PARTICULARLY EUROPEAN & NORTH AMERICAN
MARKET.
ISO 9000:2008
• IT IS A QUALITY MANGEMENT SYSTEM

• IT TAKES THE MYSTERY OUT OF
QUALITY.

• IT DEFINES QUALITY CHAPTER BY
CHAPTER & VERSE BY VERSE.
DEFINITION OF ISO 9000
• The ISO9000 standard defines the formal quality
management system necessary to assure that
the Technical, Administrative and Human factors
affecting the Quality of an Organisation‟s
Products or Services are under control.

• Further this formal system must be implemented
such that its effectiveness can be demonstrated
to the organisation‟s Management, to the
Customer‟s of the organisation and to an
independent third party for the purpose of
varification.

IMPORTANCE OF ISO 9000
INTERNAL :
• Vehicle To hold Quality Improvement Gains.

• Provides good platform for continuous Quality
Improvement.

• Provides method for involving non-manufacturing areas
in Quality & quality Improvement.

• Keeps high Employees‟ Moral & ensures their total
Involvement.
ISO 9000 SERIES DETAILS
• ISO 9000 : 2008 – Vocabulary & Definations

• ISO 9001:2008– Certification Standard for
implementation, audit & certification of the
Q.M.S. with Process orientation aimed towards
Customer Satisfaction and Continuous
Improvement.

• ISO9004 :2008– Guidelines for proceeding
further on journey to TQM.
ISO 9000 EXPECTATIONS
• Is the Organisation‟s Quality System adequate.

• Does the organisation follow its Quality system.

• Is there a Process orientation in the
organisational activities.

• Is there a platform for holding the Gain and for
Continuous Improvement.
IMPORTANCE OF ISO 9000.
EXTERNAL :
• Ensures Customer Satisfaction.

• Generates Customer Confidence thro‟ World class
Products & Services.

• Ensures confidence with all stake holders in the
organisation including Suppliers, Investors,Share holders
etc.

• Fulfills commitments to Society & Country as a whole.
ISO 9000 EXPECTATIONS
• Does the Organisation audit itself.

• is there a evidence of documented Quality
System Audits with evidence of resulting
corrective action.

• Are Management reviews of the Quality
System conducted and acted upon?
Customer
Requirement
Customer
Satisfaction
PRODUCT
REALIZATION
Resource
Management
Q.M.S.
Continual Improvement
Management
Responsibility.
Measurement,
Analysis &
Improvement.
Input
Out put
Product
Role of QMS in Organizational Effectiveness.
PRINCIPAL 1 – CUSTOMER
FOCUSSED ORGANISATION
• DEVELOP A CUSTOMER FOCUSSED
ORGANIZATION.
• UNDERSTAND CURRENT AND FUTURE
CUSTOMERS NEEDS AND EXPECTATIONS
.
• MEASURE CUSTOMER SATISFACTION
AND ACT ON IT.

PRINCIPAL 2 - LEADERSHIP
• LEADERS ESTABLISH UNITY OF PURPOSE AND
DIRECTION OF THE ORGANISATION.CREATE
AND MAINTAIN FOR „TEI‟ IN ACHIEVING THE
ORGANISATIONS OBJECTIVES.
• ESTABLISH VISION,DIRECTION AND SHARED
VALUES. SET CHALLENGING TARGETS AND
GOALS AND IMPLEMENT STRATEGIES TO
ACHIEVE THEM. COACH FACILITATE AND
EMPOWER PEOPLE.
PRINCIPAL 3 – INVOLVEMENT
OF PEOPLE
• SUCCESS OF AN ORGANIZATION DEPENDS ON
THE MEN BEHIND THE MACHINES AND
PROCESSES.
• INVOLVE THEM BY CREATING A PLATFORM FOR
KNOWLEDGE SHARING THRO‟ KAIZEN,
QUALITY CIRCLE, JQI OR SIX SIGMA.
• CREATE PERSONAL OWNERSHIP OF AN
ORGANISATIONS TARGETS AND GOALS , USING
ITS PEOPLES KNOWLEDGE
PRINCIPAL 4 – PROCESS
APPROACH
• A DESIRED RESULT IS ACHIEVED MORE
EFFICIENTLY WHEN RELATED
RESOURCES AND ACTIVITIES ARE
MANAGED AS A PROCESS
• EXPLICITLY IDENTIFY INTERNAL /
EXTERNAL CUSTOMERS AND SUPPLIERS
OF PROCESSES & RESOURCES.
• INTERLINK THE PROCESSES IN A
SCIENTIFIC MANAGEMENT SYSTEM
PRINCIPAL 6 – CONTINUAL
IMPROVEMENT
• DEVELOP A STEP BY STEP APPROACH
FOR CONTINUAL IMPROVEMENT IN ALL
BUSINESS ACTIVITIES.
• DEVELOP CONTINUAL IMPROVEMENT AS
A HABIT CYCLE.
• SET REALISTIC AND CHALLENGING
IMPROVEMENT GOALS
PRINCIPAL 5 – SYSTEM
APPROACH TO MANAGEMENT
• IDENTIFYING , UNDERSTANDING AND
MANAGING A SYSTEM OF INTERRELATED
PROCESSES FOR A GIVEN OBJECTIVE
IMPROVES THE ORGANIZATION‟S
EFFECTIVENESS AND EFFICIENCY.
• IDENTIFY A SET OF PROCESSES IN A SYSTEM &
THEIR INTERDEPENCIES. ALIGN THE
PROCESSES WITH THE ORGANISATIONS GOALS
AND TARGETS. MEASURE RESULTS AGAINST
KEY OBJECTIVES.
PRINCIPAL 7 – FACTUAL APPROACH
TO DECISION MAKING
• ANALYZE PAST AND CURRENT DATA AND
FACTS AND BASE YOUR FUTURE DECISIONS
BASED ON LEARNINGS FROM THEM.
• DECISIONS AND ACTIONS ARE BASED ON THE
CURRENT TREND AND INFORMATION ON THE
LIKELY FUTURE HAPPENINGS TO MAXIMISE
PRODUCTIVITY AND TO MINIMISE WASTE AND
REWORK.
• DEVELOP A FACTUAL TARGET WHICH IS
REALISTIC.
PRINCIPAL 8 – MUTUALLY BENEFICIAL
SUPPLIER RELATIONSHIP
• FOR VALUE ADDITION TO BOTH LEVERAGE ON
EACH OTHER‟S CAPABILITIES FOR WORLD
CLASS PERFORMANCE.
• ESTABLISH STRATEGIC ALLIANCES FOR JOINT
DEVELOPMENT AND IMPROVEMENT OF
PRODUCTS PROCESSES AND SYSTEMS
TOWARDS CUSTOMER SATISFACTION AND
CONTINUAL IMPROVEMENT.
• DEVELOP A WIN-WIN RELATIONSHIP WITH
YOUR SUPPLIER.
ISO 14001:2004

ENVIRONMENTAL
MANAGEMENT
SYSTEM
• Organizations have to undertake Environment
Reviews and Audits to assess their
Environmental Performance conforming to Legal
as well as Company’s Environmental Policy.
• To achieve this the organization must have a
structured management System integrated with
the overall management system of the
organization.
• ISO 14001:2004 specifies the requirements of
an effective Environmental Management System
applicable to all types and sizes of the
organization.
• The overall aim is to protect the environment
and prevent pollution in balance with the Socio-
economic needs.
• ISO14001:2004 is a Certification standard and
ISO 14004:2004 is a complementary standard
for further guidance.
ISO 14001:2004
Environmental policy
Planning
Implementation and operation
Checking and corrective action
Continual
improvement
Management review
SCOPE of ISO 14001:2004
The Environmental Management System should
enable an organization to formulate the
policies and objectives taking into account
the Legislative requirements and Information
about significant impact which the
organization can control and over which it
has an influence.
Here the ‘Environment’ implies the surroundings
in which an organization operates including
air, water, land, natural resources, flora,
fauna, humans and their interrelations.
The objective is to prevent ‘Pollution’ . Use of
processes, practices, materials or products
that avoid, reduce or control pollution which
may include recycling, treatment, process
changes, control mechanisms, reviewing and
maintaining the environmental policy.
• CRUX OF ISO14001:2004 IS THE „EIA‟ i.e.
Environment Impact Assessment and Risk
minimization.
QS-9000 : 1998
• This ‘QMS’ is applicable to the ‘Automobile I ndustry and its
suppliers of components and parts’.
• The QMS is divided into two sections :
- The first section is typically ISO 9000:2000 requirements.
- The second section is ‘Customer Specific requirement’ of
the three automobile majors i.e. Chrysler, Ford and General
Motors. At the end of the standard a passing reference is made
to reference standard of other global auto majors like ‘Mack
Trucks’, ‘Navister’, ‘Paccar’, ‘Toyota’, ‘Mitsubishi Motors’
and ‘Volvo’ standards.
• The standard’s aim was to bring uniformity in the performance
standards of the automotive component suppliers across the
globe.
OSHAS 18001: 2007
• OSHAS is a standard for the Occupational Safety and
Hazard assessment and risk minimization.
• The main work in OSHAS implementation is the „HIRA‟ or
the Hazard Identification and Risk Assessment and its
minimization by suitable actions.
QS 9000
• The goal of the QS-9000 is to develop fundamental quality
system that provide for the continuous improvement, defect
prevention and reduction in the variations and waste in the
supply chain.
• QS 9000 continuously enhanced the performance of the
‘QMS’ by eliminating redundant requirements and thus
reducing the cost.
• The ‘QMS’ focused heavily on the principles of the ‘VALUE
ANALYSIS’ AND ‘VALUE ENGINEERING’ oriented
towards customer satisfaction and eliminating all those parts,
components or activities that do not add value to the product
from the customer’s point of view.

TQM – TOTAL QUALITY
MANAGEMENT
IS AN ORGANISED SCIENTIFIC APPROACH
TOWARDS CONTINUOUS IMPROVEMENT
OF QUALITY INVOLVING EVERYONE IN
THE ORGANISATION COVERING EVERY
FUNCTIONS AIMED TOWARDS TOTAL
CUSTOMER SATISFACTION
JOURNEY TO TOTAL QUALITY -LONG ENDURING
JOURNEY OF INDETERMINATE LENGTH.
IN THE BOTTOM-UP APPROACH FOCUS AT THE
OPERATIONAL LEVEL.
• Move the Ideas to each employees at their speed.
• Do not force strategy but aim to change people‟s
mindset.
• Never under-estimate people power.
• Develop ways of Horizontal Quality Thinking.
• Challenges “Business-As-Usual” Attitudes
PRE-REQUISITES for SUCCESS
for “TQM”
• COMMITTMENT AT THE TOP
• ORGANISATION for QUALITY
• STRATEGIC DIRECTION
• CUSTOMER ORIENTATION
• NEED-BASED EDUCATION & TRAINING
• TOTAL INVOLVEMENT of EMPLOYEES
• SUPPORTIVE CULTURE
• TEAMWORK
• PREVENTION BASED SYSTEMS
• RECOGNITION &REWARD SYSTEM

Quality Planning:
• Identify the customers, both external and
internal.
• Determine customer needs.
• Decide on the „Product Goals‟.
• Develop product features that respond to
customer needs.
• Products include both goods and services.
• Establish quality goals that meet the
needs of customers and suppliers alike,
and do so at minimum combined cost.


Quality Planning:
• Develop alternative Processes that can
produce the needed Product Features
meeting the „Product Goals‟ as well as the
„Quality Goals‟.
• Select the Best Cost Effective Zero Defect
Optimum Process.
• prove process capability – prove that the
Process can meet the Quality Goals &
Product Goals under operating conditions.
• Decide on a „Quality Control‟ System.
QUALITY CONTROL
• Choose control subjects-what to control.
• Choose units of measurement.
• Establish measurement.
• Establish standards of performance.
• Measure actual performance.
• Interpret the difference (actual versus
standard).
• Take action on the difference.
QUALITY CONTROL & FEEDBACK LOOP
ACTUATOR (Rectifies the
Deviation in process &/or
Input resources)
SENSOR & ANALYZER
(Senses & Compares the
actual performance with the
objective)
PROCESS
(Value addition by
Conversion)
OBJECTIVES
(Customers
Satisfaction &
Max. R.O.I)
INPUT
OUTPUT

QUALITY IMPROVEMENT

• Prove the need for improvement.
• Identify specific projects for improvement.
• Organize to guide the projects.
• Organize for diagnosis-for discovery of causes.
• diagnose to find the causes.
• Provide remedies.
• Prove that the remedies are effective under
operating conditions.
• Provide for control to hold the gains.
VARIOUS QUALITY IMPROVEMENT
TECHNIQUES
• JURAN QUALITY IMPROVEMENT TECHNIQUE.

• KAIZEN GEMBA.

• QUALITY CIRCLE.

• SIX SIGMA.
END OUTPUT OF IMPLEMENTATION OF
THEORY OF HOLISTIC MANAGEMENT :
• GLOBAL MARKET LEADERSHIP.
• WORLD CLASS PERFORMANCE EXCELLENCE.
• SUSTAINABLE & GROWING ORGANIZATION.
• FEATURES OF A WORLD CLASS ORGANIZATION:
A. DELIGHTED CUSTOMER.
B. EMPOWERED EMPLOYEES.
C. MAXIMUM RETURN ON INVESTMENT.
D. ALL ROUND PERFORMANCE EXCELLENCE.

TQM PIONEERS
WALTER SHEWART:

• FOUNDER OF P-D-C-A CYCLE.

• ORIGINATOR OF STATISTICAL PROCSS
CONTROL at A & T Bells Lab in 1930.

TQM PIONEERS
W. EDWARD DEMING:

• LED QUALITY REVOLUTION IN JAPAN POST WORLD WAR
II.
• QUALITY IS A KEY COMPETITIVE ADVANTAGE
• DEMING QUALITY AWARD BY JAPAN IS THE MOST
PRESTIGIOUS QUALITY AWARD
• DEMING‟S FOURTEEN POINTS FOR EXCELLENCE.
• DEMING‟S SEVEN DEADLY DISEASES
• DEMING‟S CHAIN REACTION.
• DEMING‟S TRIANGLE.
• DEMING‟S CYCLE OR ACTION PLAN – P-D-C-A .

TQM PIONEERS
JOSEPH M. JURAN:

• LED QUALITY REVOLUTION IN JAPAN POST WORLD
WAR II
• HE DEFINED QUALITY AS FITNESS FOR USE BY
CUSTOMER.
• JURAN‟s TRIOLOGY OF QUALITY PLANNING,
QUALITY CONTROL & QUALITY IMPROVEMENT.
• STARTED JURAN‟S INSTITUTE IN USA.
• INTRODUCED COST OF POOR QUALITY.
• DEVELOPING A QUALITY HABIT.
• THE UNIVERSAL BREAKTHROUGH SEQUENCE.
TQM PIONEERS
PHILIP B. CROSBY :
• STARTED CROSBY QUALITY COLLEGE.
• CREATED THE CONCEPT OF “Zero defect”.
• DEFINED QUALITY AS CONFORMANCE
TO REQUIRMENT.
• CROSBY‟S SIX „C‟s.
• CROSBY‟S FOUR ABSOLUTES OF QUALITY
MANAGEMENT.
• CROSBY‟S QUALITY VACCINE.
• CROSBY‟S 14 STEPS FOR QUALITY IMPROVEMENT.

A.V. Feigenbaum
• ORIGINATOR OF „TQM‟ CONCEPT.
• HIS THEORY OF THREE STEPS TO QUALITY:
QUALITY LEADERSHIP, MODERN QUALITY
TECHNOLOGY & ORGANIZATIONAL
COMMITMENT.
• VIEWED QUALITY AS A STRATEGIC BUSINESS
TOOL.
GENICHI TAGUCHI :
• QUALITY LOSS FUNCTION.
• KAORU ISHIKAWA :
• ORIGINATOR OF FISH BONE OR THE CAUSE AND EFFECT
DIAGRAM.
• Quality begins with Education & ends with Education.
• First step of Quality is to know the customer‟s Requirements.
• Ideal State of Quality Control occurs when Inspection is ni
longer necessary.
• ORIGINATOR OF CONCEPT OF „CWQC‟.
• RESPONSIBLE FOR INITIAL DEPLOYMENT OF QUALITY
CIRCLES.
• REMOVE THE ROOT CAUSE & NOT THE SYSPTOMS.
• MASAAKI IMAI :
• POPULARIZED THE KAIZAN CONCEPT OF CONTINUOUS
IMPROVEMENT.
• E. GOLDRAT
• THEORY OF CONSTRAINTS.
• TAIICHI OHNO :
• FORMULATED THE FLEXIBLE MANUFACTURING
SYSTEM(FMS).
• FATHER OF THE JUST-IN-TIME & KANBAN
SYSTEM OF MANUFACTURING.
• FATHER OF “TPS” OR TOYOTA PRODUCTION
SYSTEM.
• SHEIGO SHINGO :
• ORIGINATOR OF „SINGLE MINUTE EXCHANGE OF
DIES‟- „SMED.
• INTRODUCING THE CONCEPT OF MODULAR
MANUFACTURING.
• INTRODUCING THE CONCEPT OF „Poka-Yoke‟ or
fool Proofing.

TQM PIONEERS
ALL OF THEM ADVOCATED
“INVOLVEMENT 0F TOP
MANAGEMENT”
DR. DEMING‟S FOURTEEN POINTS
1. ACHIEVE CONSTANCY OF PURPOSE.

2. LEARN A NEW PHILOSOPHY.

3. DO NOT DEPEND ON MASS INSPECTION.

4. REDUCE THE NO. OF VENDORS.

5. RECOGNISE TWO SOURCES OF FAULTS :
-MANAGEMENT & PRODUCTION SYSTEMS.
- PRODUCTION WORKER.

6. IMPROVE ON THE JOB TRAINING.
DR. DEMING‟S FOURTEEN POINTS
7. IMPROVE SUPERVISION.
8. DRIVE OUT FEAR.
9. IMPROVE COMMUNICATION.
10. ELIMINATE FEAR.
11. CONSIDER WORK STANDARDS
CAREFULLY.
12. TEACH STATISTICAL METHODS.
13. ENCOURAGE NEW SKILLS.
14. USE STATISTICAL KNOWLEDGE.
Deming‟s Triangle :
Management Commitment to Improvement
( Points 1,2,14)
Apply Statistical Methodology.
(Points 3,5,6, 13).
Improve Interrelationships
(Points 4,7,8,9,10,11,12)
Deming‟s Seven deadly Diseases:
• Lack of Constancy of Purpose.
• Emphasis on Short Term Profits.
• Over reliance on Performance Appraisals.
• Job hopping of Managers.
• Emphasis on Visual Controls.
• Excessive Medical Costs for Employee Health care.
• Excessive warranty & Legal costs.
The Deming Chain Reaction
Improve quality
Cost decrease because of
less rework, fewer mistakes,
fewer delays and snags, and
better use of time and material
Productivity improves
Stay in business
Capture the market with
better quality and lower price
Provide jobs and more jobs
Crosby‟s 6 C‟s :
• Comprehension
• Commitment
• Competence
• Correction
• Communication
• Continuance
CROSBY‟S Four „Absolutes of Quality :
• Quality is defined as conformance to requirement, not
“goodness”.
• The system for achieving quality is prevention, not
appraisal.
• The performance standard is zero defects, not “that is”
close enough..
• The measurement of quality is the price of non-
conformances, not indexes.

Five symptoms of Crosby‟s diagnosis of
trouble company
• The company has an extensive field service for reworking and
corrective actions.
• The outgoing product normally deviates from the customer‟s
requirements.
• Management does not provide a clear performances standard,
so that employees develop their own.
• Management denies that it is the cause of problem. Managers
tend to blame the workers in order to hide their inability the
system.
• Management does not recognize the price of the non-
conformance.
Crosby‟s 14 Steps for Quality
Improvement :
• Management commitment
• Quality improvement team
• Quality measurement
• Cost of quality
• Quality awareness
• Corrective action
• Zero defect planning
• Supervisor training

Crosby‟s 14 Steps for Quality
Improvement :
• Zero defects day
• Goal setting
• Error cause removal
• Recognition
• Quality councils
• Do it all over again
Major Components of Crosby‟s Quality
Vaccine (or Crosby Triangle)
Integrity, policies
System, operations
Communication
3 M PRACTICE.
• MURI – Unreasonableness.

• MURA – Unevenness.

• MUDA – Wastage.
NINE WASTAGES(MUDA) :
• Wastages due to disdain, jealousy, politics among team
members and within an organization.
• Wastages due to excess “inventory” of raw material, W-
I-P, finished goods, consumables etc.
• Wastages due to “Delay” in processing of queries,
transportation, communication etc..
• Wastages due to unwarranted “Paper Work”.
• Wastages due to loss of Production on account of
“machine Downtime”.
• Wastages due to “Product/Service Defects, reworks”
etc.
• Wastages due to “Accidents”.
• Wastages due to faulty “Process Design & Control”.
• Wastages due to “Untapped & Misused Resources”.


5 S of HOUSEKEEPING.
• SEIRI – ORDERLINESS.

• SEISO – CLARITY.

• SEITON – TIDINESS.

• SEIKETSU – CLEANLINESS.

• SHITSUKE – Practice all the four together.
5 S
• Seiri (Organize). This means sorting and
organizing items as per the frequency of usage. If
the items are used once per year, they can be
stored away from the work place; if the items are
used once per month or once per week, they can
be stored together but off-line. If the items are
used daily, they should be stored at the work place
itself.

• Seiton (Neatness)- The items should be stored
in an organized way. There should be a place for
each item and each place is assigned with only one
item. Name plates and coloured tags may be used
for easy identification. If possible, the third
dimension of the storage area should be used.

5 S
• Seiso (Shine the work place). This
means that the work place should be
cleaned such that it is free from burs,
grease, oil, waste, scrap, etc.
• Seiketsu (Standardization). The
employees should decide the standards for
keeping the work place, machines, assails
in neat and clean condition. The standard
should be inspected randomly.
5 S
• Shitsuke (Self-discipline). This means
that the employees should treat 5 S as
their way of life and develop self-discipline
by way of wearing badges, following work
procedure, punctuality and dedicating
themselves to the organization, etc.

Ch 3 - 45
© 2000 by Prentice-Hall Inc
Russell/Taylor Oper Mgt 3/e
Quality Awards And Certifications

• The Malcolm Baldrige Award
• The Deming Prize
• Industry, regional, and company awards

–Institute of Industrial Engineers
–NASA
–European Quality Award
Malcolm Baldrige Award Criteria - 1996
Exhibit
3-11
Category
Maximum
Points
(1.0) Leadership 125
(2.0) Information and Analysis 85
(3.0) Strategic Planning 85
(4.0) Human Resource Development
and Management 85
(5.0) Process Management 85
(6.0) Business Results 450
(7.0) Customer Focus 85
TOTAL POINTS 1000
3-15
THE CORE VALUES OF THE MALCOLM BALDRIGE
NATIONAL QUALITY AWARDS (MBNQA)
• CUSTOMER DRIVEN QUALITY.

• LEADERSHIP.

• CONTINUOUS IMPROVEMENT & LEARNING.

• VALUING EMPLOYEES.

• FAST RESPONSE.

• DESIGN QUALITY & PREVENTION.

• LONG RANGE OUTLOOK OF THE QUALITY PLAN.

• MANAGEMENT BY FACT.

• PARTNERSHIP DEVELOPMENT.

• CORPORATE RESPONSIBILITY & CITIZENSHIP.

• RESULT FOCUS.


THE MALCOLM BALDRIGE NATIONAL QUALITY
AWARD ( MBNQA) CRITERIA
 CATEGORIES/ ITEMS

• LEADERSHIP
– ORGANISATIONAL LEADERSHIP ---85
– PUBLIC RESPONSIBILITY & CITIZENSHIP--40


• STRATEGIC PLANNING
– STRATEGY DEVELOPMENT—40
– STRATEGY DEPLOYMENT--- 45


• CUSTOMER & MARKET FOCUS
– CUSTOMER & MARKET KNOWLEDGE —40
– CUSTOMER SATISFACTION & RELATIONSHIP--45


• INFORMATION & ANALYSIS
– MEASUREMENT OF ORGANISATIONAL PERFORMANCE—40
– ANALYSIS OF ORGANISATIONAL PERFORMANCE ----45


• HUMAN RESOURCE FOCUS
– WORK SYSTEM -- 35
– EMPLOYEE EDUCATION, TRAINING & DEVELOPMENT—25
– EMPLOYEE WELLBEING & SATISFACTION ---25








– POINT VALUES

– 125





– 85




– 85







– 85




– 85








• PROCESS MANAGEMENT
– PRODUCT & SERVICE
PROCESSES --55
– SUPPORT PROCESSES
--15
– SUPPLIES & PARTNERING
PROCESSES --15


• BUSINESS RESULTS
– CUSTOMER FOCUSED RESULTS-
- 115
– FINANCIAL & MARKET RESULTS
—115
– HUMAN RESOURCE RESULTS
--- 80
– SUPPLIES & PARTNER RESULTS
--- 25
– ORGANISATIONAL
EFFECTIVENESS RESULTS--115



– TOTAL POINTS





• 85








• 450













• 1000


THE MALCOLM BRIDGE CRITERIA FOR PERFORMANCE
EXCELLENCE FRAMEWORK- A SYSTEM PROSPECTIVE
CUSTOMERS & MARKET FOCUSED STRATEGY & ACTION PLAN
2.
STRATEGIC
PLANNING
5.
HUMAN
RESOURCE
FOCUS
1. LEADERSHIP
3.
CUSTOMER & MARKET
FOCUS
6.
PROCESS
MANAGEMENT
7.
BUSINESS
RESULTS
4. INFORMATION & ANALYSIS
FIGURE NO 33
EUROPEAN QUALITY AWARDS:
SCORING PROCESS



ENABLERS 500 RESULTS 500
FIGURE NO. 32

L
E
A
D
E
R
S
H
I
P



1
0
0
P
R
O
C
E
S
S
E
S



1
4
0
B
U
S
I
N
E
S
S
U
T
I
L
I
T
I
E
S
1
5
0


PEOPLE MANAGEMENT 90
POLICY & STRATEGY 80
RESOURCES 90
PEOPLE SATISFACTION 90
CUSTOMER SATISFACTION 200
IMPACT ON SOCIETY 60
DEMING PRIZE CRITERIA
 Policy
 Organisation and Operation
 Education and training
 Collecting and using information
 Analysis
 Standardisation
 Control
 Quality assurance
 Effect
 Planning for future
Deming Prize has 10 main categories:
I. Policy:
1. Management, quality and quality control
policy.
2. Policy-making method.
3. Policy correctness and consistency.
4. Use of statistical methods.
5. Policy transmission and dissemination.
6. Checking policy and attainment.
7. Relation between long-term and short-
term policies.


II. Organisation and operation:
1. Clarification of authority and
responsibility.
2. Correctness of delegation of power.
3. Cooperation among divisions.
4. Committee activities.
5. Use of staff.
6. Use of QC circle activities.
7. Quality control audits.
III. Education and training:
1. Plans and actual accomplishments.
2. Quality-mindedness, control-mindedness &
understanding of effects.
3. How well education on statistical-mindedness
and methods has been taken.
4. Understanding of effects.
5. Education of affiliates (especially
subcontractors, suppliers and sales
companies).
6. QC circle activities.
7. Suggestion system for improvements and its
workings.

IV. Collecting and using information :
1. Collection of outside information.
2. Passing information among divisions.
3. Speed of information transmittal (e.g.,
use of computers).
4. Information processing and statistical
analysis.

V. Analysis :
1. Selection of priority problems and
themes.
2. Correctness of analytical methods.
3. Use of statistical methods relating to
company‟s technology.
4. Standards themselves.
5. Use of statistical methods.
6. Accumulated technical expertise.
7. Use of standards.
VI. Standardisation :
1. System of standards.
2. Method of setting and revising of
standards.
3. Actual setting and revising of standards.
4. Standards themselves.
5. Use of statistical methods.
6. Accumulated technical expertise.
7. Use of standards.
VII. Control:
1. System for controlling quality, cost and
production volume.
2. Control points and control items.
3. Use of statistical means (e.g., control
charts) and thinking.
4. Contributions by QC circles.
5. Actual control activities.
6. State of control.
VIII. Quality assurance :
1. New product development methods (e.g.,
quality analysis and deployment, reliability and
design studies).
2. Safety and product liability prevention.
3. Process design, analysis, control and
improvement.
4. Process capability.
5. Measurement and inspection.
6. Equipment, subcontracting, purchasing and
serving control.
7. Quality assurance system and diagnosis.
8. Use of statistical methods.
9. Quality assessment and audit.
10. Actual size of quality assurance.
IX. Effect :
1. Measuring effect.
2. Tangible benefits such as quality,
service, delivery scheduling, cost, profit,
safety and environment.
3. Intangible benefits.
4. Convergence between expected and
actual effect.
X. Planning for future :
1. Understanding of present conditions
and specificity.
2. Policies for correcting defects.
3. Plans for promoting TQC.
4. Relation to long-term plans.

THANK YOU

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