ABS

Amity Business School

Programme - MBA, Semester II
Course –Operations Management
Name of Faculty – Rajeev Pathak

1
 ABS

Leaders in the Quality Revolution

• W. Edwards Deming
• Joseph M. Juran
• Philip B. Crosby

Slide 3.2
 W. Edward Deming ABS

• Received a Ph.D. in physics and trained as a

statistician
• Worked for Western Electric in the 1920s and 30s
• After World War II helped Japan implement his
statistical quality control
• Deming became known in 1980 when the broadcast
program entitled If Japan Can…Why Can’t We?
• Credited with having the greatest influence on quality
management
• Quality philosophy focused on reducing uncertainty
and variability

Slide 3.3
 W. Edward Deming cont…
ABS

Deming:
• stressed that the ultimate responsibility for
quality improvement lies with top
management
• estimated that 85 to 95 % of variation
results from the system
• maintained that the majority of poor quality
in a system is caused by management
• claimed that higher levels of quality lead to
higher levels of productivity

Slide 3.4
 Deming Chain Reaction
ABS

Improve quality

Costs decrease because of

less rework and mistakes

Productivity improves

Capture market with better

quality and lower price

Stay in business and provide more jobs

Slide 3.5
 Deming’s System of Profound ABS

Knowledge
• Appreciation for a system
• Understanding variation
• Theory of knowledge
• Psychology

Slide 3.6
 Systems ABS

A system is a set of functions or activities

within an organization that work
together for the aim of the organization.
• Components must work together
• Management must optimize the system
• Every system must have a purpose

Slide 3.7
 Variation ABS

• Many sources of uncontrollable variation

exist (common causes)
• Special (assignable) causes of variation
can be recognized and controlled
• Failure to understand these differences
can increase variation in a system
• Taguchi philosophy seeks to minimize
variation around a target value

Slide 3.8
 Sources of Variation in ABS
Production Processes

Measurement
Operators Methods
Materials Instruments

INPUTS PROCESS OUTPUTS

Tools Human
Machines Environment Inspection
Performance

Slide 3.9
 Traditional View of Conformance to
ABS
Specifications

Loss No Loss Loss

0.480 0.500 0.520

Tolerance

Slide 3.10
 Theory of Knowledge ABS

• Knowledge is not possible without theory

• Experience alone does not establish a
theory, it only describes
• Theory shows a cause and effect
relationship that can be used for
prediction

Slide 3.11
 Psychology ABS

• Sincere trust and belief in people

• Understanding of how people work in
systems
• People are motivated intrinsically and
extrinsically; intrinsic motivation is the
most powerful
• Fear is demotivating
• Managers should develop pride and joy in
work
Slide 3.12
 Deming’s 14 Points
ABS
(Abridged) (1 of 2)
1. Create and publish a company mission
statement and commit to it.
2. Learn the new philosophy.
- Customer driven continuous improvement
3. Understand the purpose of inspection.
- workers must be responsible for their work
4. End business practices driven by price alone.
- Price has no meaning without quality
5. Constantly improve system of production
and service.
6. Institute training.
- Job specific training
Slide 3.13
 Deming’s 14 Points (2 of 2)
ABS

7. Teach and institute leadership.

8. Drive out fear and create trust.
9. Optimize team and individual efforts.
10. Eliminate exhortations for work force.
11. Eliminate numerical quotas and M.B.O.
Focus on improvement.
12. Remove barriers that rob people of pride
of workmanship.
13. Encourage education and self-improvement.
14. Take action to accomplish the transformation.

Slide 3.14
 Deming Prize ABS

• Instituted 1951 by Union of Japanese

Scientists and Engineers (JUSE) in Japan
• Several categories including prizes for
individuals, factories, small companies, and
Deming application prize
• American company winners
– Florida Power & Light (first U.S. winner)

Slide 3.15
 Joseph Juran ABS

• Industrial Engineer
• Joined Western Electric in the 1920s
• Authored The Quality Control Handbook
which often referred to as the quality bible
• Believed quality improvement should be
achieved through projects
• Focused on three major quality processes,
called the Quality Trilogy

Slide 3.16
 Juran’s Quality Trilogy ABS

• Quality planning
– Preparing to meet quality goals
• Quality control
– Meeting quality goals during operations
Q.P
• Quality improvement
– Reaching unprecedented levels
of performance

Q.C. Q.I.
Slide 3.17
 Key Idea ABS

• Juran proposed a simple definition of quality:

“fitness for use.”
• This definition of quality suggests that it
should be viewed from both external and
internal perspectives; that is, quality is related
to “(1) product performance that results in
customer satisfaction; (2) freedom from
product deficiencies, which avoids customer
dissatisfaction.”

Slide 3.18
 Philip B. Crosby ABS

• Corporate V.P. for quality at International

Telephone
• Authored book entitled Quality is Free
• Believed that zero defects is a realistic goal
• Defined the cost of quality as:
– Expense of nonconformance

Slide 3.19
 Phillip B. Crosby ABS

Quality is free . . .

• “Quality is free. It’s not a gift, but it is free. What

costs money are the unquality things -- all the
actions that involve not doing jobs right the first
time.”
 Philip B. Crosby’s ABS

Philosophy
Absolutes of Quality Management:
• quality means conformance to requirements
– Requirements must be clearly stated so they
can’t be misunderstood
• problems are functional in nature
– Problems must be identified by those
individuals that cause them

Slide 3.20
 Philip B. Crosby’s ABS

Philosophy cont…
• there is no optimum level of defects
– Doing the job right the first time is always cheaper
• cost of quality is the only useful
measurement
– Quality cost data are useful to call problems to
management’s attention
– Crosby estimated that most companies spend 15
to 20 percent of their sales dollars on quality costs
• zero defects is the only performance
standard
Slide 3.21