Strategic Quality Management

Prof G R C Nair

Measurement

Mea

sure

men

tM

easurement

Measurement

Empowerment/ Shared Leadership

Process Improvement/

Problem Solving

Team Management

Customer Satisfaction

Business Results

Strategy for Continuous Improvement

Prof G R C Nair

Six Sigma is not the limit

·

10

1

100

1K

10K

100K

765432

(66810 ppm)· IRS – Tax Advice (phone-in)

Best in Class

(3.4 ppm)

Domestic AirlineFlight Fatality

Rate

(0.43 ppm)

·(2330 ppm)

AverageCompany

Purchased MaterialLot Reject Rate

Air Line Baggage HandlingWire Transfers

Journal VouchersOrder Write-up

Payroll ProcessingDoctor Prescription Writing

Restaurant Bills·······

Def

ects

Per

Mill

ion

Opp

ortu

niti

es (

DPM

O)

SIGMAProf G R C Nair

Improvement MethodsDMAIC vs. DMADV

Define

Measure

Analyze

Design

Validate

Improve

Control

Continuous Improvement Re engineering

Prof G R C Nair

DMAIC Process

Measure

Control

Define

Analyze

ImproveDefine: Define who your customers are, and what their requirements are for your products and services – Their expectations. Define your team goals, project boundaries, what you will focus on and what you won’t. Define the process you are striving to improve by mapping the process.

Prof G R C Nair

DMAIC Process

Measure

Control

Define

Analyze

Improve

Measure: Eliminate guesswork and assumptions about what customers need and expect and how well processes are working. Collect data from many sources to determine speed in responding to customer requests, defect types and how frequently they occur, client feedback on how processes fit their needs, how clients rate us over time, etc. The data collection may suggest process revision.

Prof G R C Nair

DMAIC Process

Measure

Control

Define

Analyze

Improve

Analyze: Grounded in the context of the customer and competitive environment, analyze is used to organize data and look for process problems and opportunities. This step helps to identify gaps between current and goal performance, prioritize opportunities to improve, identify sources of variation and root causes of problems in the process.

Prof G R C Nair

DMAIC Process

Measure

Control

Define

Analyze

Improve Improve: Generate both obvious and creative solutions to fix and prevent problems. Finding creative solutions by correcting root causes requires innovation, technology and discipline.

Prof G R C Nair

DMAIC Process

Measure

Control

Define

Analyze

Improve Control: Insure that the process improvements, once implemented, will “hold the gains” rather than revert to the same problems again. Various control tools such as statistical process control can be used. Other tools such as procedure documentation helps institutionalize the improvement.

Prof G R C Nair

DMADV Process

Measure

Validate

Define

Analyze

DesignDesign: Develop detailed design for new process. Determine and evaluate enabling elements. Create control and testing plan for new design. Use tools such as simulation, benchmarking, DOE, Quality Function Deployment (QFD), FMEA analysis, and cost /benefit analysis.

Prof G R C Nair

DMADV Process

Measure

Validate

Define

Analyze

DesignValidate: Test detailed design with a pilot implementation. If successful, develop and execute a full-scale implementation. Tools in this step include: planning tools, flowcharts/other process management techniques, and work documentation.

Prof G R C Nair

QUALITY CIRCLE

• Kaoru Ishikawa credited with the concept of quality circle who also suggested the use of fishbone diagram.

• Quality circle is a small group of employees – the average number is nine – who volunteer to meet regularly to undertake work related projects to advance the Company , improve working conditions and spur mutual self development all by using quality control concepts

Prof G R C Nair

• QC circles are encouraged by Japanese Companies and receive substantial training in quality control concepts and techniques.

• Membership in QC circles is purely voluntary and there are no direct cash incentives . Members give the principal reasons for belonging to the group as personal satisfaction from achievement and from recognition given at meetings

Prof G R C Nair

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 Circle

Prof G R C Nair

InnovationInnovation as an economic concept includes

development of new:Products and services

Methods of production or provisionMethods of transportation or service delivery

Business models Markets

Forms of organization

Stereotypically innovation is considered a product of genius, a flash of light

Innovation can be systematically planned and organized

Prof G R C Nair

Core Competencies

• Organizational structure designed to cultivate an experimental and risk taking attitude

• It is no longer sufficient to be an expert manager, marketing professional, or engineer.– Competitors in low-cost countries increasingly also have

experts who are more inexpensive• In addition to being an expert, professionals must be

well-trained and experienced in Six Sigma type systematic innovation skills– Emphasis on scientific approach to problem solving

Prof G R C Nair

Systematic Innovators

• Organizations should decentralize quality departments

• Instead, quality initiatives will be delegated to innovation agents, namely black belts and green belts throughout the organization

• Innovation should be seen as an integral part of everyone’s task rather than the responsibility of a separate department and a few specialists

Prof G R C Nair

Systematic Innovation

• The scientific approach to problem solving has been with us since Shewhart’s days– Foundation for the quality profession

• Six Sigma body of knowledge can, with minor adjustments to scope and terminology, be applied to systematize the innovation process

• Guides upper management to realize the strategic importance of our work, leading to better recognition

Prof G R C Nair

Business Process Reengineering

• The radical redesign of business processes for dramatic improvement.

• Mid- to Late-80’s: global competition.• Existing tools were no longer improving cost, poor

quality & bad service.• Good news and Bad news

– Far exceeded expectations– Unrecognizable

Prof G R C Nair

The Link Between Quality and Productivity

• Effective quality improvement can be instrumental in increasing productivity and reducing cost.

• The cost of achieving quality improvements and increased productivity is often negligible.

Economic Focus

• Ultimate quality award is improved bottom line profitability

• More than defects and operations management

• Economic Focus– Evaluate cost of poor quality– Project savings

Prof G R C Nair

TQM Results : A Manufacturing Case Study : Before & After

• In house Rejection down 23:1 • Supplier Rejection down 50:1• Customer returns down 16:1• Inventory Turnover increased 4 times• Manufacturing Cost halved• Manufacturing line stoppage down to zero• Sales per employee increased 1:3• New Product Development time halved

Prof G R C Nair

TQM Results : A Manufacturing Case Study

• Accidents down to zero • Training per person up six-fold• Suggestions per person quadrupled• Absenteeism almost halved• Share of self-designed products up 4 times• … and many more benefits!

Prof G R C Nair

Quality Management

Time

Perf

orm

ance

Lev

els

Control Focused management

• Reduced Rejection & rework • Reduced Cost of Poor Quality• Reduced Cost of operations!!• Reduced Customer Dissatisfaction• Improved Profitability!!

Time

Perf

orm

ance

Lev

els

Continuous Incremental Improvement

• Improved throughput, higher quality of consistency, lower cost

• Improved Customer satisfaction• Improved Volume & market share• Improved Profitability

Quality must add to the Business results and Bottom-line … it certainly DOES!! ..but it does NOT change Business!!

Prof G R C Nair

Three fundamental management themes

III

III

Example!! ISO 9000 / QA Systems

TQM, Six Sigma

Toyota Production

SystemStructure & Key players

Hypothesis of Human

behavior!!Theory X!! Theory Y!! Theory Z

Crazy!!

Nature of leaders’ contribution and the role they play differs fundamentally in each thematic model !!

Control Improvement Breakthrough

Prof G R C Nair

Three fundamental management themes

III

III

What changes!!

Procedures& Processes

Standards &benchmarks

Business Model

DATA Numeric DominantlyNumeric

Language & ImageData!!

Nature of leaders’ competencies & skills required to make meaningful contributions too differs fundamentally!

What does not change!!

Standards &benchmarks

Business Model

Values?? & Business Domain??

Symptoms & Cues

Visible Observable & analyzable

Invisible & unknown

Control Improvement Breakthrough

Prof G R C Nair

Holistic comprehension of all three dimensions and close vigil essential for CEO!

• If you lose Control – on product, ethics, people, earnings – you lose business!

• Lost control brings in societal & customer wrath!!• If you lose out on continuous improvement - you lose

competitiveness – hence business• If you lose out on breakthrough – you have no future

business• CEOs need to keep all three eyes open … all the time

– particularly for high clock speed business

Prof G R C Nair