section 8 quality management

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Section # 8 Quality ManagementTopic Covered: Definition of Quality Quality Movement Taguchi Approach The Malcolm Baldridge National Q. Award. ISO 9000 Quality Management Concepts Cost of Quality Responsibility for Quality Just-In Time manufacturing (JIT) Total Quality Management (TQM)

Definition of Quality (WHAT IS QUALITY?):

Quality is by no menus a new concept in modern business. In October 1887,William Cooper Procter, grandson of the founder of Procter and Gamble, told hisemployees, "The first job we have is to him out quality merchandise thatconsumers will buy and keep on buying. If we produce it efficiently andeconomically, we will earn a profit, in which you will share." Procter's statementaddresses three issues that are critical to managers of manufacturing and serviceorganizations: productivity, cost, and quality. Productivity (the measure ofefficiency defined as the amount of output achieved per unit of input), the cost ofoperations, and the quality of the goods and services that create customersatisfaction all contribute to profitability. Of these three determinants ofprofitability, the most significant factor in determining the long-run success orfailure of any organization is quality. High quality goods and services canprovide an organization with a competitive edge. High quality reduces costs dueto returns, rework, and scrap. It increases productivity, profits, and othermeasures of success. Most importantly, high quality generates satisfiedcustomers, who reward the organization with continued patronage and word-of-mouth advertising.

Quality can be a confusing concept, partly because people view quality inrelation to differing criteria based on their individual roles in the production-marketing value chain. In addition, the meaning of quality continues to evolve as

the quality profession grows and matures. Neither consultants nor businessprofessionals agree on a universal definition. A study that asked managers of 86firms in the eastern United States to define quality produced several dozendifferent responses, including the following:

1. Perfection2. Consistency


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3. Eliminating waste4. Speed of delivery5. Compliance w i th policies and procedures6. Providing a good, usable product7. Doing it right the first time

8. Delighting or pleasing customers9. Total customer service and satisfaction

Quality Movement:

During the past 100 years, the views of quality have changed dramatically. Priorto World War I, quality was viewed predominantly as inspection, sorting out thegood items from the bad. Emphasis was on problem identification. FollowingWorld War I and up to the early 1950s, emphasis was still on sorting good itemsfrom bad. However, quality control principles were now emerging in the form

of:

Statistical and mathematical techniques Sampling tables Process control charts

From the early 1950s to the late 1960s, quality control evolved into qualityassurance, with its emphasis on problem avoidance rather than problemdetection. Additional quality assurance principles emerged, such as:

The cost of quality Zero-defect programs Reliability engineering Total quality control

TAGUCHI'S APPROACH:

The old traditional definition of quality states quality is conformance tospecifications. This definition was expanded by Joseph M. Juran (1904-) in 1974and then by the American Society for Quality Control (ASQC) in 1983. Juran

observed that "quality is fitness for use." The ASQC defined quality as" thetotality of features and characteristics of a product or service that bear on itsability to satisfy given needs."

Taguchi presented another definition of quality. His definition stressed the lossesassociated with a product. Taguchi stated that "quality is the loss a productcauses to society after being shipped, other than losses caused by its intrinsic


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functions." Taguchi asserted that losses in his definition "should be restricted totwo categories:

(1) loss caused by variability of function, and(2) loss caused by harmful side effects."

Taguchi is saying that a product or service has good quality if it "performs itsintended functions without variability, and causes little loss through harmfulside effects, including the cost of using it."

It must be kept in mind here that "society" includes both the manufacturer andthe customer. Loss associated with function variability includes, for example,energy and time (problem fixing), and money (replacement cost of parts). Lossesassociated with harmful side effects could be market shares for the manufacturerand/or the physical effects, such as of the drug thalidomide, for the consumer.

Consequently, a company should provide products and services such thatpossible losses to society are minimized, or, "the purpose of quality improvement is to discover innovative ways of designing products and processes that willsave society more than they cost in the long run." The concept of reliability isappropriate here. The next section will clearly show that Taguchi's loss functionyields an operational definition of the term "loss to society" in his definition ofquality

The Malcolm Baldrige National Quality Award (MBNQA):

The Malcolm Baldrige National Quality Award recognizes U.S. organizations inthe business, health care, education, and nonprofit sectors for performanceexcellence. The Baldrige Award is the only formal recognition of the performanceexcellence of both public and private U.S. organizations given by the President ofthe United States. It is administered by the Baldrige Performance ExcellenceProgram, which is based at and managed by the National Institute of Standardsand Technology, an agency of the U.S. Department of Commerce. Up to 18awards may be given annually across six eligibility categoriesmanufacturing,service, small business, education, health care, and nonprofit. As up-till year2010, 91 organizations had received the award.

The Baldrige National Quality Program and the associated award wereestablished by the Malcolm Baldrige National Quality Improvement Act of 1987(Public Law 100107). The program and award were named for MalcolmBaldrige, who served as United States Secretary of Commerce during the Reaganadministration, from 1981 until Baldriges 1987 death in a rodeo accident. In2010, the program's name was changed to the Baldrige Performance ExcellenceProgram to reflect the evolution of the field of quality from a focus on product,


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service, and customer quality to a broader, strategic focus on overallorganizational qualitycalled performance excellence

Organizations that apply for the Baldrige Award are judged by an independentboard of examiners. Recipients are selected based on achievement and

improvement in seven areas, known as the Baldrige Criteria for PerformanceExcellence as follows:

1. Leadership: How upper management leads the organization, and how theorganization leads within the community.

2. Strategic planning: How the organization establishes and plans to implementstrategic directions.

3. Customer and market focus: How the organization builds and maintainsstrong, lasting relationships with customers.

4. Measurement, analysis, and knowledge management: How the organizationuses data to support key processes and manage performance.

5. Human resource focus: How the organization empowers and involves itsworkforce.

6. Process management: How the organization designs, manages and improveskey processes.

7. Business/organizational performance results: How the organization performsin terms of customer satisfaction, finances, human resources, supplier andpartner performance, operations, governance and social responsibility, andhow the organization compares to its competitors

The award promotes awareness of performance excellence as an increasinglyimportant element in competitiveness. It also promotes the sharing of successfulperformance strategies and the benefits derived from using these strategies. Toreceive a Baldrige Award, an organization must have a role-modelorganizational management system that ensures continuous improvement indelivering products and/or services, demonstrates efficient and effectiveoperations, and provides a way of engaging and responding to customers andother stakeholders. The award is not given for specific products or services

Quality Management & Its Six Major Concepts:

During the past twenty years, there has been a revolution toward improvedquality. The improvements have occurred not only in product quality, but also inquality leadership and quality project management. Unfortunately, it takes aneconomic disaster or a recession to get management to recognize the need forimproved quality. Prior to the recession of 19791982, Ford, General Motors, andChrysler viewed each other as the competition rather than the Japanese. Prior tothe recession of 19891994, high-tech engineering companies never fully


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recognized the need for shortening product development time and therelationship between project management, total quality management, andconcurrent engineering. The push for higher levels of quality appears to becustomer driven. Customers are now demanding:

Higher performance requirements Faster product development Higher technology levels Materials and processes pushed to the limit Lower contractor profit margins Fewer defects/rejects

One of the critical factors that can affect quality is market expectations. Thevariables that affect market expectations includes:

Salability: the balance between quality and cost

Produceability: the ability to produce the product with availabletechnology and workers, and at an acceptable cost

Social acceptability: the degree of conflict between the product or processand the values of society (i.e., safety, environment)

Operability: the degree to which a product can be operated safely Availability: the probability that the product, when used under given

conditions, will perform satisfactorily when called upon

Reliability: the probability of the product performing without failureunder given conditions and for a set period of time

Maintainability: the ability of the product to be retained in or restored to aperformance level when prescribed maintenance is performed

Customer demands are now being handled using total quality management(TQM). Total quality management is an ever-improving system for integratingvarious organizational elements into the design, development, andmanufacturing efforts, providing cost-effective products or services that are fullyacceptable to the ultimate customer. Externally, TQM is customer oriented andprovides for more meaningful customer satisfaction. Internally, TQM reducesproduction line bottlenecks and operating costs, thus enhancing product qualitywhile improving organizational morale.

The Six Major Concept for Quality Management are as:

1. Total Quality Management (TQM).2. ISO 9000 (International Standards Organization 9000)3. DMAIC (Define, Measure, Analyze, Determine, Improve, Control)4. Six Sigma (Continued..)


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5. Just-In Time Manufacturing (JIT).6. Business Process Re-engineering (BPR).Each concept is explained as follows:

1. Total Quality Management (TQM):

Total Quality Management (TQM) is a management strategy aimed atembedding awareness of quality in all organizational processes. Total QualityManagement (TQM) has been widely used in manufacturing, education,government, and service industries, as well as NASA space and scienceprograms. Total Quality provides an umbrella under which everyone in theorganization can strive and create customer satisfaction at continually lower realcosts.

Total Quality Management (TQM) is the management of total quality. We knowthat management consists of planning, organizing, directing, control, andassurance. Then, one has to define "total quality". Total quality is called totalbecause it consists of the following three qualities:

1. Quality of return to satisfy the needs of the shareholders2. Quality of products and services to satisfy some specific needs of the Cnsumer3. Quality of life - at work and outside work - to satisfy the needs of the people inthe organization2. ISO 9000 (International Standards Organization 9000):

The ISO 9000 family of standards relate to quality management systems and aredesigned to help organizations ensure they meet the needs of customers andother stakeholders. The standards are published by ISO, the InternationalOrganization for Standardization and available through National standardsbodies.

ISO 9000 deals with the fundamentals of quality management systems, includingthe eight management principles, on which the family of standards is based. ISO

9001 deals with the requirements that organizations wishing to meet thestandard have to meet.

Independent confirmation that organizations meet the requirements of ISO 9001may be obtained from third party certification bodies. Over a millionorganizations worldwide are independently certified making ISO 9000 one of themost widely used management tools in the world today


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The Company establishes, documents, implements, and maintains a qualitymanagement system and continually improves its effectiveness in accordancewith the requirements of the ISO 9000 International Standard.

ISO 9000, standard deals with capability of organizations to design and supplygoods and services of predetermined quality as per customer requirements.

The Quality Management System standards created by ISO are meant to certifythe processes and the system of an organization, not the product or service itself.ISO 9000 standards do not certify the quality of the product or service.

3. DMAIC (Define, Measure, Analyze, Determine, Improve, Control):

The DMAIC project methodology has five phases as under:

1. Define the problem, the voice of the customer, and the project goals,specifically.

2. Measure key aspects of the current process and collect relevant data.3. Analyze the data to investigate and verify cause-and-effect relationships.4. Determine what the relationships are, and attempt to ensure that all factors

have been considered. Seek out root cause of the defect under investigation.

5. Improve or optimize the current process based upon data analysis usingtechniques such as design of experiments, poka yoke or mistake proofing,and standard work to create a new, future state process. Set up pilot runs toestablish process capability.

6. Control the future state process to ensure that any deviations from target arecorrected before they result in defects. Implement control systems such asstatistical process control, production boards , visual workplaces, andcontinuously monitor the process.

4. Six Sigma:

Six Sigma is a business management strategy originally developed by Motorola,USA in 1986. As up to year 2010, it is widely used in many sectors of industry. InSix Sigma, a defect is defined as any process output that does not meet customerspecifications, or that could lead to creating an output that does not meetcustomer specifications.


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Six Sigma seeks to improve the quality of process outputs by identifying andremoving the causes of defects (errors) and minimizing variability inmanufacturing and business processes. It uses a set of quality managementmethods, including statistical methods, and creates a special infrastructure ofpeople within the organization ("Black Belts", "Green Belts", etc.) who are experts

in these methods. Each Six Sigma project carried out within an organizationfollows a defined sequence of steps and has quantified financial targets (costreduction and/or profit increase).

Six Sigma originated as a set of practices designed to improve manufacturingprocesses and eliminate defects, but its application was subsequently extended toother types of business processes as well.

5. Just-In Time Manufacturing (JIT):

Just in time (JIT) is a production strategy that strives to improve a businessreturn on investment by reducing in-process inventory and associated carryingcosts. Just-in-time production method is also called the Toyota ProductionSystem. To meet JIT objectives, the process relies on signals between differentpoints in the process, which tell production when to make the next part. signalsare usually 'tickets' but can be simple visual signals, such as the presence orabsence of a part on a shelf. Implemented correctly, JIT focuses on continuousimprovement and can improve a manufacturing organization's return oninvestment, quality, and efficiency. To achieve continuous improvement keyareas of focus could be flow, employee involvement and quality.

Quick notice that stock depletion requires personnel to order new stock is criticalto the inventory reduction at the center of JIT. This saves warehouse space andcosts. However, the complete mechanism for making this work is oftenmisunderstood.

6. Business Process Re-engineering (BPR).

Business process re-engineering is the analysis and design of workflows andprocesses within an organization. According to Davenport (1990) a businessprocess is a set of logically related tasks performed to achieve a defined businessoutcome. Re-engineering is the basis for many recent developments inmanagement. The cross-functional team, for example, has become popularbecause of the desire to re-engineer separate functional tasks into complete cross-functional processes. Also, many recent management information systemsdevelopments aim to integrate a wide number of business functions. Enterpriseresource planning, supply chain management, knowledge management systems,


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groupware and collaborative systems, Human Resource Management Systemsand customer relationship management.

Business process re-engineering is also known as business process redesign,business transformation, or business process change management.

Cost of Quality:

To verify that a product or service meets the customer's requirements requires themeasurement of the cost of quality. For simplicity's sake, the costs can be classified as"the cost of conformance" and "the cost of nonconformance." Conformance costs includeitems such as training, indoctrination, verification, validation, testing, maintenance,calibration, and audits. Nonconforming costs include items such as scrap, rework,warranty repairs, product recalls, and complaint handling.

Trying to save a few project dollars by reducing conformance costs could prove

disastrous. For example, an American company won a contract as a supplier of Japaneseparts. The initial contract called for the delivery of 10,000 parts. During inspection andtesting at the customer's (that is, Japanese) facility, two rejects were discovered. The

Japanese returned all 10,000 components to the American supplier stating that this batchwas not acceptable. In this example, the nonconformance cost could easily be an order ofmagnitude greater than the conformance cost. The moral is clear:

Feigenbaum divided cost of quality into two categories and four sub categories:

Costs of Control:

Prevention costs Appraisal costs

Costs of Failure of Control:

Internal defect costs External defect costs

Cost of Quality


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Prevention costsare the up-front costs oriented toward the satisfaction of customer'srequirements with the first and all succeeding units of product produced withoutdefects. Included in this are typically such costs as design review, training, qualityplanning, surveys of vendors, suppliers, and subcontractors, process studies, and related

preventive activities.

Appraisal costs are costs associated with evaluation of product or process toascertain how well all of the requirements of the customer have been met. Included inthis are typically such costs as inspection of product, lab test, vendor control, in-processtesting, and internalexternal design reviews.

Internal failure costsare those costs associated with the failure of the processes tomake products acceptable to the customer, before leaving the control of theorganization. Included in this area are scrap, rework, repair, downtime, defectevaluation, evaluation of scrap, and corrective actions for these internal failures.

External failure costs are those costs associated with the determination by thecustomer that his requirements have not been satisfied. Included are customer returnsand allowances, evaluation of customer complaints, inspection at the customer, andcustomer visits to resolve quality complaints and necessary corrective action.

section 8 quality management

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