total quality management cii institute of logistics total quality management
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Total Quality ManagementTotal Quality Management
CII Institute of Logistics Total Quality Management
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Meaning of Quality:Meaning of Quality:Consumer’s PerspectiveConsumer’s Perspective
Fitness for use how well product or
service does what it is supposed to
Quality of design designing quality
characteristics into a product or service
A Mercedes and a Ford are equally “fit for use,” but with different design dimensions
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Dimensions of Quality:Dimensions of Quality:Manufactured ProductsManufactured Products
Performance basic operating characteristics of a product; how
well a car is handled or its gas mileage Features
“extra” items added to basic features, such as a stereo CD or a leather interior in a car
Reliability probability that a product will operate properly
within an expected time frame; that is, a TV will work without repair for about seven years
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Conformance degree to which a product meets pre–established
standards Durability
how long product lasts before replacement Serviceability
ease of getting repairs, speed of repairs, courtesy and competence of repair person
Dimensions of Quality:Dimensions of Quality:Manufactured Products (cont.)Manufactured Products (cont.)
CII Institute of Logistics Total Quality Management
Aesthetics how a product looks, feels, sounds, smells, or
tastes Safety
assurance that customer will not suffer injury or harm from a product; an especially important consideration for automobiles
Perceptions subjective perceptions based on brand name,
advertising, and the like
Dimensions of Quality:Dimensions of Quality:Manufactured Products (cont.)Manufactured Products (cont.)
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Dimensions of Quality:Dimensions of Quality:ServiceService
Time and Timeliness How long must a customer wait for service,
and is it completed on time? Is an overnight package delivered overnight?
Completeness: Is everything customer asked for provided? Is a mail order from a catalogue company
complete when delivered?
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Dimensions of Quality:Dimensions of Quality:Service (cont.)Service (cont.)
Courtesy: How are customers treated by employees? Are catalogue phone operators nice and are
their voices pleasant? Consistency
Is the same level of service provided to each customer each time?
Is your newspaper delivered on time every morning?
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Accessibility and convenience How easy is it to obtain service? Does a service representative answer you calls quickly?
Accuracy Is the service performed right every time? Is your bank or credit card statement correct every month?
Responsiveness How well does the company react to unusual situations? How well is a telephone operator able to respond to a customer’s
questions?
Dimensions of Quality:Dimensions of Quality:Service (cont.)Service (cont.)
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Meaning of Quality:Meaning of Quality:Producer’s PerspectiveProducer’s Perspective
Quality of Conformance Making sure a product or service is
produced according to design if new tires do not conform to
specifications, they wobble if a hotel room is not clean when a
guest checks in, the hotel is not functioning according to specifications of its design
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Meaning of Quality:Meaning of Quality:A Final PerspectiveA Final Perspective
Consumer’s and producer’s perspectives depend on each other
Consumer’s perspective: PRICE Producer’s perspective: COST Consumer’s view must dominate
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Fitness forConsumer Use
Fitness forConsumer Use
Producer’s PerspectiveProducer’s Perspective Consumer’s PerspectiveConsumer’s Perspective
Quality of ConformanceQuality of Conformance
• Conformance to specifications
• Cost
Quality of DesignQuality of Design
• Quality characteristics• Price
MarketingMarketingProductionProduction
Meaning of Quality Meaning of Quality
Meaning of QualityMeaning of Quality
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Why TQM?Why TQM?
Ford Motor Company had operating losses of $3.3 billion between 1980 and 1982.
Xerox market share dropped from 93% in 1971 to 40% in 1981.
Attention to quality was seen as a way to combat the competition.
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TQM: A “Buzzword” Losing TQM: A “Buzzword” Losing PopularityPopularity
For many companies, the term TQM is associated with corporate programs (mid 1980s ~ early 1990s) aimed at implementing employee teams and statistical process control.
Unfortunately, many companies were dissatisfied with the perceived results of these programs, concluding TQM does not work.
Question: Why were they dissatisfied? Were they justified?
CII Institute of Logistics Total Quality Management
Total Quality Management
TQMTQM Total - made up of the whole Quality - degree of excellence a product
or service provides Management - act, art or manner of
planning, controlling, directing,….
Therefore, TQM is the art of managing Therefore, TQM is the art of managing the whole to achieve excellencethe whole to achieve excellence.
What does TQM mean?What does TQM mean?
Total Quality Management means that the organization's culture is defined by and supports the constant attainment of customer satisfaction through an integrated system of tools, techniques, and training. This involves the continuous improvement of organizational processes, resulting in high quality products and services.
CII Institute of Logistics Total Quality Management
CII Institute of Logistics Total Quality Management
What’s the goal of TQM?What’s the goal of TQM?What’s the goal of TQM?What’s the goal of TQM?
“Do the right things right the first time, every time.”
Another way to put itAnother way to put itAnother way to put itAnother way to put it At it’s simplest, TQM is all managers
leading and facilitating all contributors in everyone’s two main objectives:
(1) total client satisfaction through quality products and services; and
(2) continuous improvements to processes, systems, people, suppliers, processes, systems, people, suppliers, partners, products, and services.partners, products, and services.
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Productivity and TQMProductivity and TQM Traditional view:
• Quality cannot be improved without significant losses in productivity.
TQM view:• Improved quality leads to improved
productivity.
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Basic Tenets of TQMBasic Tenets of TQM 1. The customer makes the ultimate
determination of quality. 2. Top management must provide leadership
and support for all quality initiatives. 3. Preventing variability is the key to
producing high quality. 4. Quality goals are a moving target, thereby
requiring a commitment toward continuous improvement.
5. Improving quality requires the establishment of effective metrics. We must speak with data and facts not just opinions.
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The three aspects of TQMThe three aspects of TQM
Counting
Customers
Culture
Counting
Customers
Culture
Tools, techniques, and training in their use for analyzing, understanding, and solving quality problems
Quality for the customer as a driving force and central concern.
Shared values and beliefs, expressed by leaders, that define and support quality.
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Total Quality Management
Total Quality ManagementTotal Quality Managementand Continuous Improvementand Continuous Improvement
TQM is the management process used to make continuous improvements to all functions.
TQM represents an ongoing, continuous commitment to improvement.
The foundation of total quality is a management philosophy that supports meeting customer requirements through continuous improvement.
Continuous Improvement versus Continuous Improvement versus Traditional ApproachTraditional Approach
Market-share focus Individuals Focus on ‘who” and “why” Short-term focus Status quo focus Product focus Innovation Fire fighting
Customer focus Cross-functional teams Focus on “what” and “how” Long-term focus Continuous improvement Process improvement
focus Incremental improvements Problem solving
Traditional Approach Continuous ImprovementContinuous ImprovementContinuous ImprovementContinuous Improvement
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Quality ThroughoutQuality Throughout “A Customer’s impression of quality begins
with the initial contact with the company and continues through the life of the product.”• Customers look to the total package - sales,
service during the sale, packaging, deliver, and service after the sale.
• Quality extends to how the receptionist answers the phone, how managers treat subordinates, how courteous sales and repair people are, and how the product is serviced after the sale.
“All departments of the company must strive to improve the quality of their operations.”
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Value-based ApproachValue-based Approach Manufacturing
Dimensions• Performance• Features• Reliability• Conformance• Durability• Serviceability• Aesthetics• Perceived quality
Service Dimensions• Reliability• Responsiveness• Assurance• Empathy• Tangibles
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The TQM SystemThe TQM System
CustomerFocus
ProcessImprovement
TotalInvolvement
LeadershipEducation and Training Supportive structureCommunications Reward and recognition
Measurement
ContinuousImprovement
Objective
Principles
Elements
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Total Quality ManagementTotal Quality Management Commitment to quality throughout organization
Principles of TQMPrinciples of TQM• Customer-orientedCustomer-oriented• LeadershipLeadership• Strategic planningStrategic planning• Employee responsibilityEmployee responsibility• Continuous improvementContinuous improvement• CooperationCooperation• Statistical methodsStatistical methods• Training and educationTraining and education
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Quality GurusQuality Gurus Walter Shewart
• In 1920s, developed control charts• Introduced the term “quality assurance”
W. Edwards Deming • Developed courses during World War II to teach
statistical quality-control techniques to engineers and executives of companies that were military suppliers
• After the war, began teaching statistical quality control to Japanese companies
Joseph M. Juran• Followed Deming to Japan in 1954• Focused on strategic quality planning
CII Institute of Logistics Total Quality Management
Armand V. Feigenbaum In 1951, introduced concepts of total quality
control and continuous quality improvement Philip Crosby
In 1979, emphasized that costs of poor quality far outweigh the cost of preventing poor quality
In 1984, defined absolutes of quality management—conformance to requirements, prevention, and “zero defects”
Kaoru Ishikawa Promoted use of quality circles Developed “fishbone” diagram Emphasized importance of internal customer
Quality Gurus (cont.)Quality Gurus (cont.)
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Deming’s 14 PointsDeming’s 14 Points
1.1. Create constancy of purposeCreate constancy of purpose
2.2. Adopt philosophy of preventionAdopt philosophy of prevention
3.3. Cease mass inspectionCease mass inspection
4.4. Select a few suppliers based on Select a few suppliers based on qualityquality
5.5. Constantly improve system and Constantly improve system and workersworkers
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6.6. Institute worker trainingInstitute worker training
7.7. Instill leadership among Instill leadership among supervisorssupervisors
8.8. Eliminate fear among employeesEliminate fear among employees
9.9. Eliminate barriers between Eliminate barriers between departmentsdepartments
10.10.Eliminate slogansEliminate slogans
Deming’s 14 Points (cont.)Deming’s 14 Points (cont.)
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11.11. Remove numerical quotasRemove numerical quotas
12.12.Enhance worker prideEnhance worker pride
13.13. Institute vigorous training and Institute vigorous training and education programseducation programs
14.14.Develop a commitment from top Develop a commitment from top management to implement management to implement above 13 pointsabove 13 points
Deming’s 14 Points (cont.)Deming’s 14 Points (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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TQM and…TQM and… … Partnering
• a relationship between a company and its supplier based on mutual quality standards
… Customers• system must measure customer
satisfaction … Information Technology
• infrastructure of hardware, networks, and software necessary to support a quality program
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Quality Improvement and Role Quality Improvement and Role of Employeesof Employees
Participative problem solving
• employees involved in quality management
• every employee has undergone extensive training to provide quality service to Disney’s guests
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PresentationImplementation
Monitoring
SolutionProblem results
Problem Analysis
Cause and effectData collection and analysis
Problem IdentificationList alternatives
ConsensusBrainstorming
TrainingGroup processes
Data collectionProblem analysis
Organization8-10 members
Same areaSupervisor/moderator
Quality CircleQuality Circle
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Strategic Implications of Strategic Implications of TQMTQM
Strong leadership Goals, vision, or mission Operational plans and policies Mechanism for feedback
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Six SigmaSix Sigma
A process for developing and delivering near perfect products and services
Measure of how much a process deviates from perfection
3.4 defects per million opportunities Champion
• an executive responsible for project success
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Black Belts and Black Belts and Green BeltsGreen Belts
Black Belt• project leader
Master Black Belt• a teacher and mentor
for Black Belts Green Belts
• project team members
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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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TQM in Service CompaniesTQM in Service Companies
Principles of TQM apply equally well to services and manufacturing
Services and manufacturing companies have similar inputs but different processes and outputs
Services tend to be labor intensive Service defects are not always easy to
measure because service output is not usually a tangible item
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Quality Attributes in ServiceQuality Attributes in Service
Benchmark• “best” level of quality
achievement one company or companies seek to achieve
Timeliness• how quickly a service
is provided ““quickest, friendliest, quickest, friendliest, most accurate service most accurate service
available.”available.”
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Cost of QualityCost of Quality Cost of Achieving Good Quality
• Prevention costs• costs incurred during product design
• Appraisal costs• costs of measuring, testing, and analyzing
Cost of Poor Quality• Internal failure costs
• include scrap, rework, process failure, downtime, and price reductions
• External failure costs• include complaints, returns, warranty claims,
liability, and lost sales
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Prevention CostsPrevention Costs Quality planning costs
• costs of developing and implementing quality management program
Product-design costs• costs of designing products
with quality characteristics Process costs
• costs expended to make sure productive process conforms to quality specifications
Training costs• costs of developing and
putting on quality training programs for employees and management
Information costs• costs of acquiring and
maintaining data related to quality, and development of reports on quality performance
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Appraisal CostsAppraisal Costs
Inspection and testing• costs of testing and inspecting materials, parts, and
product at various stages and at the end of a process
Test equipment costs• costs of maintaining equipment used in testing
quality characteristics of products Operator costs
• costs of time spent by operators to gar data for testing product quality, to make equipment adjustments to maintain quality, and to stop work to assess quality
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Internal Failure CostsInternal Failure Costs Scrap costs
• costs of poor-quality products that must be discarded, including labor, material, and indirect costs
Rework costs• costs of fixing defective
products to conform to quality specifications
Process failure costs• costs of determining why
production process is producing poor-quality products
Process downtime costs• costs of shutting down
productive process to fix problem
Price-downgrading costs• costs of discounting poor-
quality products—that is, selling products as “seconds”
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External Failure CostsExternal Failure Costs
Customer complaint costs• costs of investigating and
satisfactorily responding to a customer complaint resulting from a poor-quality product
Product return costs• costs of handling and replacing
poor-quality products returned by customer
Warranty claims costs• costs of complying with
product warranties
Product liability costs• litigation costs
resulting from product liability and customer injury
Lost sales costs• costs incurred
because customers are dissatisfied with poor quality products and do not make additional purchases
Measuring and Reporting Quality Measuring and Reporting Quality CostsCosts
Index numbers• ratios that measure quality costs against a
base value• labor index
• ratio of quality cost to labor hours• cost index
• ratio of quality cost to manufacturing cost• sales index
• ratio of quality cost to sales• production index
• ratio of quality cost to units of final product
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Quality–Cost RelationshipQuality–Cost Relationship
Cost of quality• Difference between price of
nonconformance and conformance• Cost of doing things wrong
• 20 to 35% of revenues
• Cost of doing things right• 3 to 4% of revenues
• Profitability • In the long run, quality is free
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Quality Management Quality Management and Productivityand Productivity
Productivity• ratio of output to input
Yield: a measure of productivity
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Quality–Productivity RatioQuality–Productivity Ratio
QPR• productivity index that includes productivity and
quality costs
QPR =(non-defective units)
(input) (processing cost) + (defective units) (reworked cost)
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Seven Quality Control ToolsSeven Quality Control Tools
Pareto Analysis Flow Chart Check Sheet Histogram
Scatter Diagram SPC Chart Cause-and-Effect
Diagram
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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 fr
om
eac
h c
ause
Per
cen
t fr
om
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
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Check SheetCheck SheetCOMPONENTS REPLACED BY LABTIME PERIOD: 22 Feb to 27 Feb 2002REPAIR TECHNICIAN: Bob
TV SET MODEL 1013
Integrated Circuits ||||Capacitors |||| |||| |||| |||| |||| ||Resistors ||Transformers ||||CommandsCRT |
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HistogramHistogram
0
5
10
15
20
1 2 6 13 10 16 19 17 12 16 2017 13 5 6 2 1
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Scatter DiagramScatter Diagram
YY
XX
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Control ChartControl Chart
1818
1212
66
33
99
1515
2121
2424
22 44 66 88 1010 1212 1414 1616
Sample numberSample number
Nu
mb
er o
f d
efec
tsN
um
ber
of
def
ects
UCL = 23.35
LCL = 1.99
c = 12.67
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Cause-and-Effect Diagram Cause-and-Effect Diagram
QualityProblemQuality
Problem
Out of adjustmentOut of adjustment
Tooling problemsTooling problems
Old / wornOld / worn
MachinesMachinesFaultyFaulty testing equipmenttesting equipment
Incorrect specificationsIncorrect specifications
Improper methodsImproper methods
MeasurementMeasurement
Poor supervisionPoor supervision
Lack of concentrationLack of concentration
Inadequate trainingInadequate training
HumanHuman
DeficienciesDeficienciesin product designin product design
Ineffective qualityIneffective qualitymanagementmanagement
Poor process designPoor process design
ProcessProcess
InaccurateInaccuratetemperature temperature controlcontrol
Dust and DirtDust and Dirt
EnvironmentEnvironment
Defective from vendorDefective from vendor
Not to specificationsNot to specifications
Material-Material-handling problemshandling problems
MaterialsMaterials
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Baldrige AwardBaldrige Award
Created in 1987 to stimulate growth of quality management in the United States
Categories• Leadership• Information and analysis• Strategic planning• Human resource• Focus• Process management• Business results• Customer and market focus
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Other Awards for QualityOther Awards for Quality National individual awards
• Armand V. Feigenbaum Medal
• Deming Medal• E. Jack Lancaster Medal• Edwards Medal• Shewart Medal• Ishikawa Medal
International awards• European Quality Award• Canadian Quality Award• Australian Business
Excellence Award• Deming Prize from Japan