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Quality DefinedASQC totality of features and characteristics of a product or service that bears on its ability to satisfy given needs
fitness for its use how well does the product do what thecustomer thinks it should do and wants it to do
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Dimensions of Qualityquality of design - degree to which quality characteristics aredesigned into a product
products or services designed with different levels of quality for different types of customers
customer determines quality
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Dimensions of Quality (cont)customer dimensions of product quality
performance, features, reliability
conformance, durability, serviceability
aesthetics, safety, other perceptions
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Dimensions of Quality (cont)customer dimensions of service quality
time and timeliness, completeness, courtesy, consistency
accessibility and convenience, accuracy, responsiveness
quality characteristics weighed by customer relative to cost of product or service
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Dimensions of Quality (cont)quality from producer perspective
quality of conformance product is produced according todesign specifications
achieving quality of conformance
design of production process
equipment, technology, materialsemployees, use of statistical quality control (SQC)
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TQMTQM total commitment to quality throughout the entireorganization
Deming approach to quality management
continuous improvement of production process to achieveconformance to specifications and reduce variation
two primary sources of process improvement
common causes of quality problems poor productdesign or insufficient employee training
special causes of quality problems improperlyoperating equipment or a poor operator
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TQM (cont)emphasizes extensive use of SQC to reduce variability inproduction process
dismisses extensive use of inspections as coming too late toreduce product defects
primary responsibility for quality is with employee andmanager, not quality manager or inspection technician
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TQM (cont)Deming's 14 points
create constancy pf purpose toward productimprovement
prevent poor-quality products rather than acceptablelevels of poor quality
eliminate need for inspection to achieve quality and relyon SQC to improve product and process design
select a few suppliers or vendors based on qualitycommitment rather than competitive prices
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TQM (cont)constantly improve production process by focus on twoprimary sources of quality problems, the system andworkers
institute worker training on prevention of quality problemsand use of SQC
instill leadership among supervisors to help workersperform better
encourage employee involvement by eliminating fear of reprisal for asking questions and identifying qualityproblems
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TQM (cont)eliminate barriers between departments and promotecooperation and a team approach
eliminate slogans and numerical targets that encourageworkers to achieve higher performance levels withoutfirst showing them how to do it
eliminate numerical quotas which employees attempt tomeet at any cost without regard for quality
enhance worker pride, artistry, and self-esteem byimproving supervision and the production process so thatworkers can perform to their capabilities
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TQM (cont)institute training programs in methods of qualityimprovement throughout the entire organization
develop a commitment from top management toimplement previous points
Deming Wheel (PDCA Cycle) plan, do, study/check, act
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TQM (cont)Joseph Juran - included quality in strategic planning process
strategic quality planning - determine desired quality leveland design production process to achieve desired qualitycharacteristicsemphasizes quality improvement by focus on chronic qualityproblems and securing a break-thru solution
hundreds, or even thousands, of quality improvement
projects going on at any one time
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TQM (cont)Phillip Crosby author of 1979 book Quality is Free
emphasized the cost of poor quality
cost of poor quality far outweighs cost of preventing poor quality
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TQM (cont)Armand Feigenbaum introduced total quality control in 1980s
total quality control total commitment of management andemployees throughout the organization to improve qualityJapanese adopt this approach referred to as company-wide quality control
Japanese believe all employees at all levels are responsiblefor continuous quality improvement
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TQM (cont)TQM and continuous process improvement
focus of continuous process improvement is businessprocesses rather than business functions
continuous process improvement
identify critical processes
analyze processes to find out how all tasks and functionsare interrelatedobjective is to determine how to improve process whileimproving quality of work performed
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TQM (cont)principles of TQM
TQM is set of principles that focus on quality improvementas driving force in all functional areas and in all levels in anorganizationprinciples of TQM
customer defines quality and customer needs are toppriority
top management must provide leadership for qualityquality is a strategic issue
quality is the responsibility of all employees at all levels
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TQM (cont)all functions within an organization must focus oncontinuous quality improvement
quality problems are solved through cooperation amongemployees and management
problem solving and continuous quality improvement areSQC methodstraining and education of all employees is the basis for
continuous quality improvement
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TQM (cont)TQM throughout the organization
marketing and R&D, engineering
purchasing, human resources
management, shipping
customer service
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TQM (cont)strategic implications of TQM
quality as core competency
quality as order qualifier or order winner quality as means to position firm to compete
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Cost of Qualitycosts of quality fall into two categories
cost of quality assurance cost of achieving quality
prevention costs
reflect philosophy of doing it right first time
examples of prevention costs - quality planningcosts, product design costs, process costs, trainingcosts, and information costs
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Cost of Quality (cont)appraisal costs
catch mistakes after the fact
examples of appraisal costs inspection and testing,test equipment, and operator costs
cost of not conforming to specifications costs associatedwith poor quality
cost of failures is difference between what it actuallycosts to produce a product and what it would cost if therewere no failures
cost of poor quality is usually largest quality cost sourcein organization
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Cost of Quality (cont)two types of cost of nonconforming
internal failure costs
discovered before product is delivered tocustomer
lower for service than manufacture
examples of internal failure costs scrap,
rework, process failure, process downtime, price-downgrading
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Cost of Quality (cont)index numbers are one means of measuring and reportingquality costs
index numbers are ratios which measure quality costsagainst a base value
general form is quality index = (total quality cost / base) x100
useful as standard to make comparisons over time
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Cost of Quality (cont)labor index
(total quality cost / direct labor hours) x 100
may not be appropriate for comparisons wheretechnology change reduces labor usage
cost index
(total quality cost / manufacturing cost) x 100
not affected by technology change
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Cost of Quality (cont)sales index
(total quality cost / sales) x 100
may be distorted by changes in selling price or costs
production index
(total quality cost / # units final product) x 100
may not be as effective where have number of differentproducts
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Cost of Quality (cont)quality-cost relationship
as prevention and appraisal costs increase, internal andexternal failure costs typically decrease
as company focuses on achieving quality, cost of achievinggood quality goes down leads companies to frequentlyseek 100% quality or zero defects
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Cost of Quality (cont)Japanese focus on improving quality at minimum cost
improve capabilities and training of employees rather than on engineering solutions
concentrate on quality characteristics in design stagerather than trying to build quality in production process
long-term view of firm success suggests firms who takelong-term focus on quality do increase profitability
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Cost of Quality (cont)impact of quality management on productivity
productivity = output / input
quality impact on productivity fewer defects increasesoutput while quality improvement reduces inputs
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Cost of Quality (cont)product yield (Y) for single stage production process
Y = (I) (%G) + (I) (1 - %G) (%R) where
I = planned number of units started in the productionprocess
%G = % good units produced%R = % reworked units
any increase in % of good products produced willincrease product yield
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Cost of Quality (cont)product yield for multiple stage production process with norework
Y = (I) (%g 1) (%g 2) . . . (%g i) where
I = input of items in the production process that will resultin finished products
%g i = good quality, work-in-progress products at stage I
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Cost of Quality (cont) product manufacturing cost
cost = ((K d) (I) + (K r ) (R)) / (Y) where
Kd = direct manufacturing cost per unit
I = inputKr = rework cost per unit
R = reworked unitsY = yield
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Cost of Quality (cont)quality-productivity ratio (QPR)
QPR = (good quality units)(100) / ((input) (processingcost) + (defective units) (rework cost))
QPR increases if either processing cost or rework cost or bothdecrease
more good quality units are produced relative to totalproduct input (number of units that begin productionprocess)
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Cost of Quality (cont)indirect productivity gains
quality improvement may have indirect as well as directimpact of productivity
in general, any quality improvements or improveddesigns which enhance the workplace, reducecongestion, or smooth out and speed up productionprocess increase productivity
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Cost of Quality (cont)quality improvement and role of employees
participative problem solving involves employeesdirectly in quality management process
quality circles group of workers from same area whoaddress production problems
process improvement teams includes members frominter-related functions that make up a process
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QC Improvement ToolsPareto analysis
flow charts (process flow chart)
check sheetshistograms
scatter diagramsstatistical process control (SPC) chartscause-and effect diagrams
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Quality AwardsMalcolm Baldridge National Quality Award (since 1987)
given annually to one or two companies in each of threecategories: manufacturing, services, and small businesses(less than 500 full-time employees)
award criteria leadership, information and analysis,strategic quality planning, human resource utilization, qualityassurance of products and service, quality results, and
customer satisfactionmarked increase in productivity in firms who have beenfinalists or winners
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ISO 9000standards are set forth by the International Organization for Standardization (ISO) located in Geneva, Switzerland
members are national standards organizations for more than 90countriesISO member for US is the American National StandardsInstitute (ANSI)
purpose of ISO is to facilitate global consensus agreements on
international quality standardsresult is a system for certifying suppliers to make sure they meetinternationally accepted standards for quality management
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ISO 9000 (cont)ISO 9000 (published 1978) provides standards and guidance for using four standards - for example ISO 9001
Quality Systems - Model for Quality Assurance in
Design/Development, Production, Installation, and Servicingapplies to suppliers who have responsibility for the designand development, production, installation, and servicing of aproduct
includes set of requirements for suppliers qualitymanagement program, beginning with top management andproviding objective criteria to verify that key elements of totalquality management approach are present
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ISO 9000 (cont)three other ISO standards (ISO 9002, 9003, and 9004) existdepending on degree to which a supplier is responsible for product from design to installation and servicing
implication of ISO 9000 for US companies must be ISO 9000certified to compete
many foreign countries will not do business with supplierswho are not ISO 9000 accredited
many US companies are being pressured by US customersto ISO 9000 certified
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ISO 14000new environmental management standard in development byISO; probably adopted soon
contains five core elements environmental management,auditing, performance evaluation, labeling, and life-cycleassessment
advantages positive public image, reduced exposure toliability, good systematic approach to pollution prevention
through minimized ecological impact of products and processes,and compliance with regulatory environment