Total Quality Management

Goal 2
1

What is Quality?
A degree or level of excellence. qDifficult to define qVarious attributes Quality is determined by what Customers want & is willing to pay for.

What is Quality?
•Different needs of consumers Different Quality Expectations

Fitness for Use
How well the product or service does what the consumer thinks It is supposed to do

smells. feels.Customer’s Perspective Manufactured products-Quality q q Performance – Basic operating characteristics. speed of repairs. Aesthetics – How a product looks. How well a car handles or its gas mileage? Reliability – Product Operating properly within an expected time frame. Serviceability – Ease of getting repairs. sound . q q q q Durability – Life span of product before replacement. Safety .

Accessibility and convenience – Easy to obtain Service. Completeness – Is everything provided? Courtesy – How customers are treated? Consistency – Same level of service each time. Accuracy – Is the service performed right every time? .Customer’s Perspective Service Quality q q q q q q Time and timeliness – Customer waiting time.

Quality – Two Perspectives .

Quality Evolution Quality Control: focus is to stop poor quality products going to customers – Inspection after the fact. .

TQM (Total Quality Management) The management of quality throughout the organization at all levels and across all areas. .

Quality is the responsibility of all employees. Focus on continuous quality improvement. . Use of statistical quality control methods. and customer’s needs are top priority.TQM (Management Principles) q q q q q q q q The customer defines quality. Quality is a strategic issue. Training & education of all employees. Top management must provide the leadership for quality. Quality problems are solved through cooperation.

” Henry Ford Long term commitment q Short term profitability .How TQM Companies Work? TQM Companies q Customer driven “What is our business? Is not determined by the Producer but by the Consumer”. “The customer can have any Color car as long as it’s black. Peter Drucker q Traditional Companies q Company / Product driven.

How TQM Companies Work? TQM Companies q Continuous improvement q Quality at the source q High employee Participation q Cross functional teams q Elimination of waste Traditional Companies q High production cost & waste q Inspection after the fact q Top-down approach q q Fortressed departments High scrap & rework .

TQM Tools 1. The Plan.Act cycle Quality Circles Benchmarking Statistical & quantitative tools .Check.Do. 3. 2. 4.

The PDCA Cycle .

Quality Circles .

Benchmarking is the search for industry best practices that lead to superior performance .Benchmarking Continuously evaluating the practices of best-in-class and adapting company processes to incorporate the best of these practices.

Benchmarking Types qInternal Benchmarking Benchmarking qCompetitive qIndustry Benchmarking Benchmarking qWorld-Class .

Leads to adaptation of best practices. Improves customer satisfaction. .Benchmarking Advantages • • • • • q Prevents "reinventing the wheel“. Leads to adaptation of proven practices. Results in a better understanding of internal strengths and weaknesses. Make companies more competitive.

3. Identifying performance gaps and understanding the reasons they exist.Benchmarking Process 1. Researching and identifying the best in class. Select and prioritize benchmarking projects. 5. . Implementing and managing the approved changes. 2. 6. Through investigation and documentation of the company’s internal processes and development of performance indicators.   4. Organize benchmarking teams.

Statistical and Quantitative Techniques Pareto diagrams Control charts Cause-and-effect diagrams .

Pareto Diagram .

Pareto Diagram .

Control Charts Production Line A µ + 2σ µ + σ µ µ σ 0 1 2 3 4 5 6 7 8 9 10 Days µ - Defect Rate .

Cause-and-effect Diagrams .

Cause-and-effect Diagrams Human Factors Inadequate supervision Poor training New operator Inadequate tools Incorrect speed Poor maintenance Flawed part design Incorrect manufacturing sequence Multiple suppliers Incorrect specification Variation in purchased components Methods and Design Factors Machine-related Factors Materials and Components Factors .

Costs of Quality Cost of achieving good quality Prevention costs Cost of poor quality Internal failure costs External failure costs Appraisal costs .

Prevention costs Costs of trying to prevent poor quality products from reaching the customer. • Quality planning costs • Quality training costs • Product design costs • Process design costs .

• Test equipment costs • Operator costs . goods in process. finished goods. • Testing and inspection costs – Raw material.Appraisal or Inspection costs Costs incurred to identify defective products before they are shipped to customers.

Internal failure costs Costs incurred when poor quality products are discovered during appraisal process. • Scrap costs • Rework costs • Re-inspection of reworked products • Downtime costs .

External failure costs Costs incurred after the customer has received poor quality product. • Customer complaint costs • Product return costs • Warranty claims costs • Lost sales costs .

Costs of Quality Costs Cost of Internal Internal and external failure & External failure Prevention Cost of Prevention and appraisal Total Total Cost & Total Appraisal Quality of conformance Percentage of output (Percent of output without without defects defects) .

0 % 40 0 0 .8 % 0 6 .0 % 8 0 .0 0 0 0 0 .0 0 .0 % 6 0 .0 0 0 7 0 .0 0 80 0 1 .0 % 5 0 90 0 0 .0 % 0 2 .2 0 0 70 0 5 .1 % 0 4 .0 0 0 Ya 2 er P rce t e n 0 0 .5 % 1 2 .0 0 60 0 5 .5 0 0 90 0 0 .0 0 10 0 3 .0 0 10 0 3 .2 % 0 8 .7 % 0 6 .2 % 2 0 .3 % 1 0 .0 0 1 0 .0 0 0 1 0 .0 0 3 0 .5 % 0 6 .0 0 .0 0 30 0 4 .1 0 0 9 0 .8 % 0 2 .0 0 0 1 2 .1 % 0 4 .0 0 50 0 8 .0 0 80 0 7 .1 % 0 4 .0 0 0 0 20 0 1 .0 % 1 .8 % 2 6 .4 % 0 4 .0 0 .3 % 0 0 1 .0 0 .5 0 0 0 0 .6 % 2 0 .0 0 .2 % 1 0 .0 % 1 0 .3 % 60 0 0 .0 0 2 0 .2 % 0 0 .Quality Cost Report A m d sa s ssu e le P en n c s : rev tio o ts S yste d v lo m n m ee p e t Q a T in g u lity ra in S p rv n o p v n n a itie u e isio f re e tio ctiv s Q a Im ro e e t p je u lity p v m n ro cts T ta o l Ap p rais c s : al o ts In e n sp ctio R lia ility te g e b stin S p rv n o te g a d in e n u e isio f stin n sp ctio D p cia n o te e u m n e re tio f st q ip e t T ta o l In tern failu c s : al re o ts N t co o scra e st f p R w rk la o a d o e e d e o b r n v rh a D w tim d e to d fe in q a o n e u e cs u lity D o l o d fe e p d cts isp sa f e ctiv ro u T ta o l E xtern failu c s : al re o ts W rra ty re a a n p irs W rra ty re la m n a n p ce e ts A wn s llo a ce C st o fie se icin o f ld rv g T ta o l T tal q ality C s o u ot 5 .4 0 0 10 0 7 .0 0 10 0 2 .0 0 20 0 1 .0 0 1 0 .6 % 1 .0 0 40 0 2 .3 0 0 5 5 .0 0 Ya 1 er P rce t e n 0 4 .0 0 A on mu t 40 0 0 .0 0 .2 % 1 6 .0 0 .2 % 0 8 .0 0 0 0 30 0 2 .6 % 1 6 .2 % 2 4 .0 0 0 0 10 0 4 .0 0 50 0 0 .6 % 0 0 .2 % 4 0 .0 0 .0 % 50 0 6 .8 % 0 4 .0 0 1 2 .0 0 10 0 0 .8 % 4 0 .1 % 0 8 .4 % 1 0 .0 0 4 .0 % A on mu t 20 0 7 .0 0 20 0 0 .0 0 .0 0 .3 0 0 60 0 3 .0 0 8 .0 0 .0 0 1 3 .0 0 60 0 0 .0 0 0 1 0 .0 0 .0 0 2 0 .0 0 7 .4 % 3 0 .0 0 2 0 .4 % 1 0 .6 % 4 0 .0 0 1 0 .8 % 1 4 .

Nonfinancial Measures Nonfinancial measures of customer satisfaction: • Number of customer complaints • Defective units as a percentage of total units shipped to customers • Percentage of products that experience early or excessive failure • On-time delivery rate .

Nonfinancial Measures Nonfinancial measures of internal performance: • Number of defects for each product line • Process yield (ratio of good output to total output) • Employee turnover (ratio of the number of employees who left the company to the total number of employees) .

and failure costs. appraisal costs. Nonfinancial measures help focus attention on the precise problem areas that need improvement and also serve as indicators of future long-run performance.Evaluating Quality Performance Financial measures are helpful to evaluate trade-offs among prevention costs. .

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