MANAGING QUALITY

Learning Objectives:
After this chapter, we will be able to know:

Quality and Quality Management

Importance of Quality
Two ways quality improves PROFITABILITY
and the flow of activities
Different views towards Quality
Identify the dimensions of Quality
Learning Objectives:
Cost of Quality
Quality Loss Function
Quality Certification
Total Quality Management (TQM)
Six Sigma
 QUALITY and QUALITY MANAGEMENT

• Quality
-is the ability of a product or service to
consistently meet or exceed the customer's
expectation.

• Quality Management
-it is an approach to doing business that
attempts to maximize the competitiveness of an
oraganization through the continual improvement of
the quality of its products, services, people,
processes and environment.
 Juran "Quality Trilogy"
• Quality Planning:
-Determine who are the customer.
-Determine the needs of the customers.
-Develop product features that respond to
cusomer's needs.
-Develop processes that are able to produce
those product features.

• Quality Control:
-Evaluate actual Quality Performance.
-Compare actual performance to quality goals.
-Act on the differences.
 Juran "Quality Trilogy"

• Quality Improvement:
-Establish the infrastructure needen to
secure annual quality improvement.
-Identify specific needs for improvement- the
improvement projects.
-Provide the resources, motivation, and
training to teams.
 Why was QUALITY important?

• it defines the work of our business

• establish your reputation
• identify the satisfaction of the customer
• increase profits and sales
• reduce costs
• contribute to long-term revenue and
profitability
 Two Ways Quality
Improves Profitability
Sales Gains via
Improved response
Flexible pricing
Improved reputation
Improved Increased
Quality Profits
Reduced Costs via
 Increased productivity
 Lower rework and scrap costs
 Lower warranty costs
 The Flow of Activities
Organizational Practices
Leadership, Mission statement, Effective operating procedures, Staff
support, Training
Yields: What is important and what is to be
accomplished
Quality Principles
Customer focus, Continuous improvement, Benchmarking, Just-in-time,
Tools of TQM
Yields: How to do what is important and to be
accomplished
Employee Fulfillment
Empowerment, Organizational commitment
Yields: Employee attitudes that can accomplish
what is important
Customer Satisfaction
Winning orders, Repeat customers
Yields: An effective organization with
a competitive advantage
 Different Views
User-based – better performance, more features

Manufacturing-based – conformance to
standards, making it right the first time

Product-based – specific and measurable

attributes of the product.
 Dimensions of QUALITY
• PERFORMANCE
-main characteristics of the product/service
• AESTHETICS
-appearance, feel, smell, taste
• SPECIAL FEATURES
-extra characteristics
• CONFORMANCE
-how well product/service conforms to
customer's expectations
 Dimension of QUALITY
• RELIABLITY
-consistency of performance

• DURABILITY
-useful life of the product/service

• PERCEIVED QUALITY
-indirect evaluation of quality(e.g. reputation)
• SERVICEABILITY
-service after sale
 COST OF QUALITY

• 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
occuring.
 COST OF QUALITY
• Failure Costs
-costs incurred by defective parts/products or
faulty services.
• Internal Failure Costs
-costs incurred to fix problems that are detected
before the product/service is delivered to the
customer.
• External Failure Costs
-all costsincurred to fix problems that are
detected after the product/service is delivered to the
customer.
 Costs of Quality

Total Total Cost

Cost
External Failure

Internal Failure

Prevention

Appraisal
Quality Improvement
 Quality Loss Function

Shows that costs increase as the product

moves away from what the customer wants
Costs include customer dissatisfaction,
warranty and service, internal
scrap and repair, and costs to society
Traditional conformance specifications
are too simplistic
 Quality Loss Function

High loss Unacceptable

Loss (to Poor
producing
organization, Fair
customer, and Good
society) Best
Low Target-oriented quality
loss yields more product in
the “best” category
Target-oriented quality
brings product toward
Frequency the target value
Conformance-oriented
quality keeps products
within 3 standard
deviations
Lower Target Upper
Specification
 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 STANDARDS

Requirements:
-System requirements
-Management
-Resources
-Realization
-Remedial
 ISO 14000

• ISO 14000- A set of international standards

for assessing a company's environmental
performance.

• Standards in three(3) major areas:

-Management Systems
-Operations
-Environmental Systems
 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.
TOTAL QUALITY MANAGEMENT

A philosophy that involves everyone in

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

T Q M
 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 supplier.
 Obstacles in 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
 Obstacles in implementing TQM

-Leadership
-Poor inter-organizational communication
-View of quality as a "quick fix"
-Emphasis on short-term financial results
-Internal political and "turf" wars
 Tools of TQM

Tools for Generating Ideas

Check sheets
Scatter diagrams
Cause-and-effect diagrams
Tools to Organize the Data
Pareto charts
Flowcharts
Tools for Identifying Problems
Histogram
Statistical process control chart
 Tools for Generating Ideas

(a) Check Sheet: An organized method of

recording data

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 Tools for Generating Ideas
(b) Scatter Diagram: A graph of the value of one
Productivity variable vs. another variable

Absenteeism
 Tools for Generating Ideas
(c) Cause-and-Effect Diagram: A tool that identifies
process elements
(causes) that might
effect an outcome
Cause
Materials Methods
Effect

Manpower Machinery
 Tools to Organize the Data
(a) Pareto Chart: A graph to identify and plot
problems or defects in descending
order of frequency
Frequency

Percent
A B C D E
 Tools to Organize the Data
(b) Flowchart (Process Diagram): A chart that
describes the
steps in a process
 Tools for Identifying Ideas
(a) Histogram: A distribution showing the frequency
of occurrences of a variable
Distribution
Frequency

Repair time (minutes)

 Tools for Identifying Ideas
(b) Statistical Process Control Chart: A chart with
time on the
horizontal axis to plot
values of a statistic

Upper control limit

Target value

Lower control limit

Time
 SIX SIGMA
A business process for improving
quality, reducing costs, and increasing
customer satisfaction.
 Six Sigma Management

• Providing strong leadership

• Defining performance metrics
• Selecting projects likely to succeed
• Selecting and trainings appropriate people
 Six Sigma Process
Six Sigma

1.Define critical outputs DMAIC Approach

and identify gaps for
improvement
2.Measure the work and
collect process data
3.Analyze the data
4.Improve the process
5.Control the new process to
make sure new performance
is maintained