CHAPTER 6

TOTAL QUALITY MANAGEMENT

QUALITY AS A PHILOSOPHY

As competitive weapon that must be produced efficiently : high performance design and consistency

TQM is stressing on customer satisfaction, employee involvement and continuous improvement in quality

Quality is the responsibility of management Clearly defining quality and bridging the gap between

customer expectation and operating capabilities

CUSTOMER-DRIVEN DEFINITIONS OF QUALITY

The ability to meet or exceeding the expectations of

customers : conformance to specifications value fitness for use support psychological impression

THE COST OF QUALITY (see Russell & Taylor)

The cost of achieving good quality : Prevention costs : preventing defects before they happened

or preventing poor quality products from reaching the customer (quality planning, process, training and information costs)

Appraisal costs : assessing the level of quality attained by the operating system or cost of measuring, testing and analyzing the inputs and processes to ensure that product quality specifications are being met (operator, test equipment, inspection and testing costs)

THE COST OF QUALITY (continued)

The cost of poor quality or the cost of nonconformance

or failure cost Internal failure costs : defects discovered during the

production or before they are delivered to the customer (scrap, rework, process failure, process downtime, price-downgrading costs)

External failure costs : defects discovered after the customer received the product or service (customer complain, product return, warranty claim, product liability, lost sale costs)

THE QUALITY-COST RELATIONSHIP (see Russell & Taylor)

Less cost if the defect is detected early in the process A service entity has little opportunity to examine and

correct the defective internal process before the employee-customer interaction is happened. So in this case it becomes an external failure

When the sum of prevention and appraisal costs increased, internal and external failure cost decreased

Increase in sales and market share resulting from increased customer confidence in quality will offset the high cost of achieving good quality

THE QUALITY-COST RELATIONSHIP (continued)

The cost of achieving good quality will be less because of the innovations in technology, processes & work methods. Higher quality products charge higher prices

Achieving quality at minimum cost by focusing more on improving the capabilities & training of employees, getting them more involved in preventing poor quality and focusing less on engineering solutions

Improving quality at the new product development stage rather than in the production process of developed product to reduce appraisal cost

EMPLOYEE INVOLVEMENT

Cultural change : instilling the awareness of the importance of quality to all employees and functions

Teams : small group, commitment, leadership role, common goals and approaches

Individual development : training program Awards and incentives : the role of monetary and

non monetary incentives for improving quality

CONTINUOUS IMPROVEMENT

Continually seeking ways to improve operations (quality and process improvement)

Benchmarking Sense of employees’ ownership Any aspects of operations to be improved Five steps to get started Problem-solving process (plan-do-check-act)

IMPROVING QUALITY THROUGH TQM

Purchasing considerations - the quality of inputs : high quality products/services (defect-free parts) at reasonable cost, clear and realistic specifications, process capability studies, cross function coordination with engineering and quality control

Product and service design : influence methods, materials and specifications that consequently affect defect rate, market share, reliability, added time and cost

IMPROVING QUALITY THROUGH TQM (continued)

Process design : shorten the waiting time, investing new machinery

Quality function deployment : translating customers’ requirements into the design of products/services and their processes that requires inter functional communication and coordination

Benchmarking (competitive, functional and internal) : measures the firm’s products/services and process against the industry leaders

IMPROVING QUALITY THROUGH TQM (continued)

Data analysis tools : data collection to identify quality problems and causes (see more detail and examples on Russell & Taylor)

Data snooping : using different data analysis tools together