OM_PPT 01 Quality Management.ppt

Quality Management Quality Management

Sanjay Choudhari

Indian Institute of Management Indore

Learning Objectives Learning Objectives

• Evolution of Quality

• Quality Gurus (Deming, Joseph and Crosby)

• Tools for Quality Improvement

• Eight Dimensions of Quality

• Cost of Quality (Juran)

• Statistical Quality Control Statistical Process Control Acceptance Sampling

• Process capability and capability index

Evolution of QualityEvolution of Quality

• Product inspection

• Statistical quality control (SQC)

• Quality programs

• Total Quality Management

Quality GurusQuality Gurus

View of Deming, Juran and Crosby

• Prevention rather than cure /detection

• Believe Top management must be integral part of quality

• Quality as powerful competitive weapon

Quality GurusQuality Gurus

Edwards Deming

• Created a quality revolution in Japan.

• Approach focus on process improvement

• Introduced a statistical approach to solving quality problems defines quality as “Reduced variation” and their causes.

• 85 % of quality problems, Management should take a lead

• Believed that the pursuit of quality results in lower costs, improved productivity, and competitive success.

• Workers – management relationship

• 14 points

Quality GurusQuality Gurus

Joseph Juran

• Defined Quality as “fitness for use”. Quality of design , Quality of conformance ,

Availability, Safety, Field Use

• Advocated Cost of quality accounting system.

• Believed that the pursuit of quality pays for itself only up to a certain point.

• Role of quality professionals who assist management

• Stressed on the need to set goals and targets by improvement project.

Quality GurusQuality Gurus

Phillip Crosby

• Defines quality as “conformance to requirements”.

• Believes that quality is free. Relies on the notion that cost of prevention will

always be lower than the cost of after-the-fact detection and correction.

• Focuses on the motivational aspects of people.

• Communicate problems to the next level of management

• 14 points program for quality improvement (e.g. Zero defect day)

• Quality management maturity grid

Quality GurusQuality Gurus

Taguchi

• Quality is function of Good/Robust Design

Minimum acceptable value

Maximum acceptable value

Target value

Quality

Good

Bad

Performance Metric

Target value

QualityLoss

Performance Metric, x

Loss = C(x-T)2

It is not enough to look at “Good” vs “Bad” Outcomes

Quality GurusQuality GurusTaguchi

• Even Small Deviations are Quality Losses

Tools for Quality ImprovementTools for Quality Improvement1. Frequency histogram

2. Pareto chart

3. Cause and Effect diagram

4. Scatter diagram

5. Process flow chart/ process analysis

6. Run chart

7. Control charts

Tools for Quality ImprovementTools for Quality Improvement1. Frequency histogram

- Shows the frequency distribution of a variable of interest between the high and low range of data.

Medication error by shift

Tools for Quality ImprovementTools for Quality Improvement2. Pareto chart

- Helps in separating the important few factors from the trivial many.

Circuit board defects

Tools for Quality ImprovementTools for Quality Improvement3. Cause and effect diagram

- Helps in identifying the source of problems

Fast food restaurant

Tools for Quality ImprovementTools for Quality Improvement3. Cause and effect diagram

- Helps in identifying the source of problems

ATM

Tools for Quality ImprovementTools for Quality Improvement4. Scattered diagram

- Shows the correlation between two variables.

- Used to infer the causality of problems.

Meditation error Vs. Number of patient per nurses

Tools for Quality ImprovementTools for Quality Improvement5. Process flow chart

- Flow chart of how a system works, showing the inputs, operations and outputs of the process.

- Helps in identifying the source of a problem

Processing in Department 2

Dept. 1 Dept. 3

Operation 1

StorageInspection

Rework

Operation 2NoYes

Tools for Quality ImprovementTools for Quality Improvement6. Run chart

- Shows how a variable has changed over time.

- Displays excessive variation of data or disturbing trends.

Oil consumption of a specific machine over a period of time.

Time

Mea

sure

men

t

Tools for Quality ImprovementTools for Quality Improvement7. Control charts

- By putting control limits, we can determine whether the process is in control or not.

Y

X

Upper limit

Lower limit

Average

1- Provide Training in Thinking 2- Raise People’s Problem Solving Confidence 3- Increase People’s Ability to Predict Future Events

Benefits of Seven Q.C. Tools

1- Express verbal data diagrammatically 2- Make information visible 3- Organize information intelligibly 4- Clarify overall picture and fine details 5- Get more people involved

Roles of Seven Q.C. Tools

Tools for Quality ImprovementTools for Quality Improvement

Eight Dimension of QualityEight Dimension of Quality

Performance Refers to primary operating characteristics of a

product. e.g. Automobile, TV, Airline

Features Secondary characteristics that supplement product’s

basic function.

Reliability Reflects the probability of a product’s failure within

a specified time.

Conformance Degree to which a product’s design and operating

characteristics match pre-established standards.

Eight Dimension of QualityEight Dimension of Quality

Durability A measure of product life.

Serviceability The speed, courtesy, and competence of repair.

Aesthetics How a product looks, feels, sounds, and tastes-

subjective assessment in these dimensions.

Perceived quality Inference about quality rather than reality itself .

Eight Dimension of QualityEight Dimension of Quality

Pursue a selective quality niche to distinguish your product or service from those of your competitors.

Conduct market research to determine which of your dimension of quality are more important to your customers. Do not insist the one that are not important to your customer.

Costs of Quality Costs of Quality (Juran, Quality planning)(Juran, Quality planning)

A failure to satisfy a customer is considered a defect

Failure cost Internal failure costs External failure costs

Control Cost Appraisal costs Prevention costs

Costs of QualityCosts of Quality

Internal failure costsCosts from product defect before shipment

to the customer Scrap Reworks Retest Downtime Yield losses Disposition

Costs of QualityCosts of Quality

External failure costsCost associated with defects found after shipment to

customer. Complaints adjustment Returned materials Warranty charges Allowances

Toyota to recall 7.4 million cars (10 October 2012) BBC news

Toyota is voluntarily recalling more than seven million vehicles worldwide, including some Yaris, Corolla and Camry models, over faulty window switches.

Costs of QualityCosts of Quality

Appraisal costsCost associated with discovering the

condition of products and raw materials Incoming material inspection Inspection and test Maintaining accuracy of test equipment Materials and services consumed Evaluation of stocks

Costs of QualityCosts of Quality

Prevention costsCost associated with preventing defects and

limiting failure and appraisal cost Quality planning New product review Training Process control Quality data acquisition and analysis Quality reporting Improvement projects

Costs of Quality (COQ) ?Costs of Quality (COQ) ?

COQ helps in focusing manager’s attention on the cost of poor quality

It assists in problem solving by comparing costs and benefits of different quality-improvement programs and setting priorities for cost reduction

COQ provides a single, summary measure of quality performance for evaluating Prevention/appraisal/failure cots

An example..An example.. An item with sales price (P)= Rs 70/unit Planned items per month = 1300 Planned revenue: Rs 91,000 /month Actual items performed in field = 1243 Actual revenue= Rs 87,010 (i.e. 70 x 1243) Assume Man-Hour cost : Rs 7.05/hr Time spent on inspection & control of bought-

out item = 3.5 hrs/month Validation inspection = 169 hrs/month Commercial testing = Rs 113/month Repair & rectification = 500 hours/month

Example (contd.)Example (contd.)

(A) Cost of Inspection & control = Rs 3.5 hrs x Rs 7.05/hr = Rs 24.67

(B) Validation Inspection & testing cost = 169 hrs x Rs 7.05/hr + Rs 113= Rs 1191.45

(C) Cost of repair & rectification = 500 hrs x Rs 7.05 /hr= Rs 3525

(D) Replacement cost = 57 items failed in field x Rs 70 /item = Rs 3990

Total Quality related Cost = (A) +(B) +( C) +(D)

= Rs 8844.12/monthQuality costs as % of expected revenue = Rs 8844.12/91,000 = 9.72 %