Recent Issues in Management Recent Issues in Management Dr. Syed Mohammad Tariq Zafar Chapter 3 - Total Quality Chapter 3 - Total Quality Management Management (Continued) (Continued)
Jan 21, 2016
Recent Issues in ManagementRecent Issues in Management
Dr. Syed Mohammad Tariq Zafar
Chapter 3 - Total Quality Management Chapter 3 - Total Quality Management (Continued)(Continued)
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X Lecture OutlineX Lecture Outline
Quality Gurus and their ContributionQuality Gurus and their Contribution TQM in Service CompaniesTQM in Service Companies Cost of QualityCost of Quality Tools of Quality ManagementTools of Quality Management
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Quality GurusQuality Gurus
Walter ShewartWalter Shewart In 1920s, developed control chartsIn 1920s, developed control charts Introduced the term “Introduced the term “quality assurance” quality assurance”
W. Edwards DemingW. Edwards Deming Developed courses during World War II to teach Developed courses during World War II to teach
statistical quality-control techniques to engineers and statistical quality-control techniques to engineers and executives of companies that were military suppliersexecutives of companies that were military suppliers
After the war, began teaching statistical quality control After the war, began teaching statistical quality control to Japanese companiesto Japanese companies
Joseph M. JuranJoseph M. Juran Followed Deming to Japan in 1954Followed Deming to Japan in 1954 Focused on strategic quality planning Focused on strategic quality planning
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Armand V. FeigenbaumArmand V. Feigenbaum In 1951, introduced concepts of total quality control In 1951, introduced concepts of total quality control
and continuous quality improvementand continuous quality improvement Philip Crosby Philip Crosby
In 1979, emphasized that costs of poor quality far In 1979, emphasized that costs of poor quality far outweigh the cost of preventing poor qualityoutweigh the cost of preventing poor quality
In 1984, defined absolutes of quality management—In 1984, defined absolutes of quality management—conformance to requirements, prevention, and “zero conformance to requirements, prevention, and “zero defects”defects”
Kaoru IshikawaKaoru Ishikawa Promoted use of quality circlesPromoted use of quality circles Developed “fishbone” diagram Developed “fishbone” diagram Emphasized importance of internal customerEmphasized importance of internal customer
Quality Gurus (cont.)Quality Gurus (cont.)
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Deming Wheel: PDCA Deming Wheel: PDCA CycleCycle
1. PlanIdentify problem and develop plan for improvement.
2. DoImplement plan on a test basis.
3. Study/CheckAssess plan; is it working?
4. ActInstitutionalize improvement; continue cycle.
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Six SigmaSix Sigma
A process for developing and delivering A process for developing and delivering near perfect products and servicesnear perfect products and services
Measure of how much a process Measure of how much a process deviates from perfectiondeviates from perfection
3.4 defects per million opportunities3.4 defects per million opportunities ChampionChampion
an executive responsible for project successan executive responsible for project success
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3.4 DPMO3.4 DPMO
67,000 DPMOcost = 25% of
sales
67,000 DPMOcost = 25% of
sales
DEFINEDEFINE CONTROLCONTROLIMPROVEIMPROVEANALYZEANALYZEMEASUREMEASURE
Six Sigma: DMAICSix Sigma: DMAIC
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Quality Attributes in Quality Attributes in ServiceService
BenchmarkBenchmark ““best” level of quality best” level of quality
achievement one achievement one company or company or companies seek to companies seek to achieveachieve
TimelinessTimeliness how quickly a service how quickly a service
is providedis provided ““quickest, friendliest, most quickest, friendliest, most accurate service accurate service
available.”available.”
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Cost of QualityCost of Quality
Cost of Achieving Good QualityCost of Achieving Good Quality Prevention costsPrevention costs
costs incurred during product designcosts incurred during product design Appraisal costsAppraisal costs
costs of measuring, testing, and analyzingcosts of measuring, testing, and analyzing Cost of Poor QualityCost of Poor Quality
Internal failure costsInternal failure costs include scrap, rework, process failure, downtime, include scrap, rework, process failure, downtime,
and price reductionsand price reductions External failure costsExternal failure costs
include complaints, returns, warranty claims, include complaints, returns, warranty claims, liability, and lost salesliability, and lost sales
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Prevention CostsPrevention Costs
Quality planning costsQuality planning costs costs of developing and costs of developing and
implementing quality implementing quality management programmanagement program
Product-design costsProduct-design costs costs of designing costs of designing
products with quality products with quality characteristicscharacteristics
Process costsProcess costs costs expended to make costs expended to make
sure productive process sure productive process conforms to quality conforms to quality specificationsspecifications
Training costsTraining costs costs of developing and costs of developing and
putting on quality training putting on quality training programs for employees programs for employees and managementand management
Information costsInformation costs costs of acquiring and costs of acquiring and
maintaining data related maintaining data related to quality, and to quality, and development of reports on development of reports on quality performancequality performance
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Appraisal CostsAppraisal Costs
Inspection and testingInspection and testing costs of testing and inspecting materials, parts, and costs of testing and inspecting materials, parts, and
product at various stages and at the end of a product at various stages and at the end of a processprocess
Test equipment costsTest equipment costs costs of maintaining equipment used in testing costs of maintaining equipment used in testing
quality characteristics of productsquality characteristics of products Operator costsOperator costs
costs of time spent by operators to gear data for costs of time spent by operators to gear data for testing product quality, to make equipment testing product quality, to make equipment adjustments to maintain quality, and to stop work to adjustments to maintain quality, and to stop work to assess qualityassess quality
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Internal Failure CostsInternal Failure Costs
Scrap costsScrap costs costs of poor-quality costs of poor-quality
products that must be products that must be discarded, including labor, discarded, including labor, material, and indirect costsmaterial, and indirect costs
Rework costsRework costs costs of fixing defective costs of fixing defective
products to conform to products to conform to quality specificationsquality specifications
Process failure costsProcess failure costs costs of determining why costs of determining why
production process is production process is producing poor-quality producing poor-quality productsproducts
Process downtime costsProcess downtime costs costs of shutting down costs of shutting down
productive process to fix productive process to fix problemproblem
Price-downgrading costsPrice-downgrading costs costs of discounting poor-costs of discounting poor-
quality products—that is, quality products—that is, selling products as selling products as “seconds”“seconds”
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External Failure CostsExternal Failure Costs
Customer complaint costsCustomer complaint costs costs of investigating and costs of investigating and
satisfactorily responding to a satisfactorily responding to a customer complaint resulting customer complaint resulting from a poor-quality productfrom a poor-quality product
Product return costsProduct return costs costs of handling and replacing costs of handling and replacing
poor-quality products returned poor-quality products returned by customerby customer
Warranty claims costsWarranty claims costs costs of complying with costs of complying with
product warrantiesproduct warranties
Product liability costsProduct liability costs litigation costs litigation costs
resulting from product resulting from product liability and customer liability and customer injuryinjury
Lost sales costsLost sales costs costs incurred costs incurred
because customers because customers are dissatisfied with are dissatisfied with poor quality products poor quality products and do not make and do not make additional purchasesadditional purchases
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Some Tools of Quality Some Tools of Quality ManagementManagement
Pareto AnalysisPareto Analysis Flow ChartFlow Chart HistogramHistogram
Cause-and-Effect Cause-and-Effect DiagramDiagram
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NUMBER OFNUMBER OFCAUSECAUSE DEFECTSDEFECTS PERCENTAGEPERCENTAGE
Poor designPoor design 8080 6464 %%Wrong part dimensionsWrong part dimensions 1616 1313Defective partsDefective parts 1212 1010Incorrect machine calibrationIncorrect machine calibration 77 66Operator errorsOperator errors 44 33Defective materialDefective material 33 22Surface abrasionsSurface abrasions 33 22
125125 100100 %%
Pareto AnalysisPareto Analysis
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Per
cen
t f
rom
eac
h c
ause
Per
cen
t f
rom
eac
h c
ause
Causes of poor qualityCauses of poor quality
Mac
hine
cal
ibra
tions
Mac
hine
cal
ibra
tions
Defec
tive
parts
Defec
tive
parts
Wro
ng d
imen
sion
s
Wro
ng d
imen
sion
s
Poor D
esig
n
Poor D
esig
n
Ope
rato
r err
ors
Ope
rato
r err
ors
Defec
tive
mat
eria
ls
Defec
tive
mat
eria
ls
Surfa
ce a
bras
ions
Surfa
ce a
bras
ions
00
1010
2020
3030
4040
5050
6060
7070(64)(64)
(13)(13)(10)(10)
(6)(6)(3)(3) (2)(2) (2)(2)
Pareto ChartPareto Chart
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Flow ChartFlow Chart
Operation DecisionStart/ Finish
Start/ Finish
Operation
OperationOperation
Operation
Decision
Practice Problem 1Practice Problem 1
A Shoe company has Following defects while producing 10,000 shoes:A Shoe company has Following defects while producing 10,000 shoes:
1. Poor Design – 321. Poor Design – 32
2. Stitching Problem – 242. Stitching Problem – 24
3. Defective parts - 123. Defective parts - 12
4. Incorrect machine calibration - 84. Incorrect machine calibration - 8
5. Operator errors - 45. Operator errors - 4
6. Defective material - 166. Defective material - 16
Draw a neat Pareto Chart with the help of above Draw a neat Pareto Chart with the help of above information. information.
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