35A00210

Operations Management
Lecture 10
Quality management
History of quality
Definition of quality
Cost of qual ity
Total quality management
Quality awards
Lecture 10
Quality management
History of quality
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Development of quality
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The three main gurus of quality
W. Edwards Deming
- quality is continuous improving and minimizing
variation
- the biggest reason for low quality is bad
management
- 14 points, plan-do-check-act cycle, removing
fear, long term focus, training employees, fact-
based management
Joseph M. Juran
- quality is fitness for use(functionality)
- strongest customer point of view
- importance of management, planning, training,
annual quality breakthroughs, focus on chronic
problems, quality has a price
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The three main gurus of quality
Phil ip Crosby
- quality is production according to specifications
- Quality is free, Zero defects
- prevention of errors/faults is important
- there is no trade-off in quality
- Increased publicity of quality tremendously
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Walter Shewhart
- statistical process control (SPC) already in
1930s
Other important persons related to
quality
Genichi Taguchi
- product and production design as a base for quality and
costs
- Quality loss -function (even a small deviation from
optimal cost money), Robust design -ideology
Armend Feigenbaum
- everybody is responsible for quality
(TQM in 1950s), Total Quality
Control
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Other important persons related to
quality
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Kaoro Ishikawa
- quality circles, customershipwithin the organization
- Ishikawa-diagrams (cause-effect) and graphical
presentation of quality
Yoki Akao
- QFD (quality function deployment/House of Quality) as
tool for product design
Shigeo Shingo
- Poka-Yoke (mistake-proofing) -design, redesign of
processes
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Lecture 10
Quality management
Definition of quality
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Quality is remembered
long after the price has
been forgotten Gucci family slogan
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Importance of quality - case
Firestone -
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174 dead, 700 injured, 13 million recalled tires
and $2,5 billion bill!
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What is quality really?
The degree of excellence of a thing (Webster)
Excellence
The totality of features and characteristics that satisfy needs
How customer and potential customers view the product
Meeting and exceeding customer expectations
Value for the price
Fitness for use
Neither mind or matter, but a third entity independent of the
two...even though it cannot be defined, you know what it is
Psychological impressions
Specifications as to how product should be made
How well each unit of product meets specifications
Conformance to specifications
Quality is hard to define or even notice. On the other hand,
bad quality can be seen far away
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Many ways to define quality
Production orientati on
- quality is measured by the faults in the product
Product ori entation
- the features of the product define its quality
Value ori entation
- value in relation to price
Competition ori entation
- value that customer gives to product in comparison to others
Customer ori entation
- ability to satisfy customer needs
Environmental orientati on
- total impact on society and environment
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Two main ways to look at quality
Meeting standards
and specifications
- quality of production
- costs, regulations
Difference in quali ty
leads to deviati on
from agreed
properties
Ability to meet
customer needs and
expectations
- quality of design
- price, features, user
friendliness, functionality,...
Quality enables
satisfying customer
needs
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Customer
point of view
Producer
point of view
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The characteristics of quality
Functionality
Reliability
Appearance
Recovery
Contact
Overall
quality
Durability
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Responsiveness Reliability
Credibility
Competence
Timeliness
and speed
Performance
Ten dimensions of service quality
Service
quality
Tangibles
Communi-
cation
Empathy
Assurance
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Service Quality Gap Model
Lecture 10
Quality management
Cost of quality
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Mr. Biv gives managers grey hair
Mistakes
Rework
Breakdown
Inefficiency
Variation
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Costs of quality assurance
Design of quality
systems and control
- both management and
control
Implementation of
quality system
- training and teaching
- product, process and
machine design
- checking processes
- supplier relationships
- information gathering and
analyzing
Quality control and
inspection
- material, production
process, finished product,
installation etc. inspections
Maintenance of test
equipment
External approval
costs
Control Prevention
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Costs of low quality
Guarantees and
liability costs
Repairing costs
Return and recall
costs
Discounts
Customer complaints
Bad reputation
Lost sales
Legal costs
Reproduction
Retesting
Scrap costs
Downtime
Lower yield
Extra capacity,
inventory, work time
Extra scheduling
Internal failure External failure
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Different costs are not linear!
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Prevention Customer Process Final inspection
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100%
wrong
Quality level 100%
good
Cost of
quali ty assurance
Cost of
low quality
Total
Quality
Costs
Optimal level
Minimum cost level
Traditional view on quality costs
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Optimal level
More current view on quality costs
Minimum cost level
100%
wrong
Quality level 100%
good
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Cost of
quali ty assurance
Cost of
low quality
Total
Quality
Costs
Cost of quality assurance
does not increase
exponentially with quality
level when its build into
the system!
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Other remarks of quality costs
Its been estimated that costs of low quality are
even 20-30% of sales
Great amount of quality costs are created in
design phase
- 95% of quality costs are fixed after design phase
The sooner the fai lure is found the lower is the
cost it causes
- inspection is 100 times cheaper than sending repairperson
- unfortunately, most of the quality costs still come from failure
Sometimes good enough -poli cy is optimal
- on the other hand, in some cases its not acceptable to produce
quality lower than 100%
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Lecture 10
Quality management
Total quality management
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What is Total Quality Management
(TQM)?
Qual ity philosophy concerning the whole
organi zation
Managing the whole organization so that it can
fulfil l customer expectations
- quality (in broad sense) is the most important success factor
In TQM all persons in organizati on influence i n
quality, not just quality control or inspection
department
15% of all quality problems are related to a particul ar worker or
tool. The other 85% arise from faults in the companys system
and will continue until the system is changed.
W. Edwards Deming
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Principles of TQM
TQM
Scientific
quali ty control
Principle of
continuous
improvement
and commitment
Customer focus
and commitment
for quality
Involvement of
whole
organization
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Principles of TQM
Customer specifies quality standards
Management commits to quality and manages
improving of quality
Employees are responsible for quality
- e.g. quality circles (group focus), training
Design of processes to maintain quality
Doing things right in the first time
Continuous improvement
- plan - do - check - act, benchmarking
Observing quality and immediate reactions
- e.g. prevention and statistical quality control
- improvements are based on facts
Involvement of suppliers in quality programs etc.
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Implementing TQM
Prerequisites and requirements...
- commitment of top management
- training and empowerment of employees
- strong customer focus and broad quality concept
- continuous process improvement
Implementation...
- process differs from one company to another
- begins and ends with training
- training of management, composition of steering group
- quality improvement plans, goals, responsibilities, priorities
- recognizing core processes, information gathering
- communication, training of lower level employees
- finding causes and solutions for problems
- from problem solving to managing processes
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Why do TQM programs usually
fail?
Lack of commitment of top management
- organization structure, rewards, lack of resources
Concentrating on one technique instead of whole
process
- e.g. quality circles TQM is process, not a formula/technique
- all departments can influence quality (human resources, purchasing...)
Trying to implement procedures that dont fit into
organization (e.g. statistical process control)
Lack of involvement of employees
- no interest, no commitment (middle management usually problem)
Support ends with training
- TQM needs continuous contribution
Lack of long term interest
- trying everything expecting immediate results
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Lecture 10
Quality management
Quality standards and
awards
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ISO -standards
International quality certification system
- founded in 1987, used in over that 100 countries
- International Organization for Standardization
Prerequisite for i nternati onal competi tion?
- Common language for different parties, minimum requirement
Five different series; ISO 9000-9004
- 9000 and 9004 basically just instructions and guidelines
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Desing Purchasing Productions Testing Installation Service
ISO 9001
ISO 9002
ISO 9003
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ISO -standards
Mainly quality improvement tool
- how is quality assured in a company? (=prevention)
- organization must document everything related to quality and then
operate according to documents
- firms apply due to internal improvements and external credibility
Concentrates on quality and control of
processes
- systematic policies and processes
- dont take innovations in account
Does not provide solution for probl ems but
suggestions how to improve quality system
Does not guarantee quali ty of operati ons
- having a standard and using one are different things!
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ISO beyond quality
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Quality awards
Basic idea is to improve appreciation of quality and
award successful companies
- gather information, experiences and implementation advices from winners -
and sell it
Many different awards around the world
- Deming (J apan), Baldrige (USA), European Quality Award, Finnish quality
award etc.
- different categories (e.g. production, service, SMEs, public organizations)
Application processes long and expensive
- lots of documentation, focus on other things in organization may disappear
TQM variables often stressed
- enablers (processes of TQM) have been more important than real results
- now the balance is 50% vs. 50%
Is there advantage in taking part?
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European Foundation for Quality
Management
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10%
10%
10%
10%
10%
10%
10%
15% 15%
Complementary methods with different kinds of
objectives
- both are based on commitment to quality
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Internal focus
Process oriented quality
No continuousness
required
Standards
Standards and awards
Awards
External focus
Customer oriented quality
Supports continuous
development
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