Management of Quality

Chapter 9PP. 233-270

June 27, 2012

Learning objectives

• LO 1 – define the term quality• LO 2 – understand the evolution of quality

management• LO 3 – be familiar with most common quality

tools• LO 4 – understand the cost of quality

What is Quality?

• Oxford American Dictionary– a degree or level of excellence

• American Society for Quality– the totality of features and characteristics that

satisfy needs without deficiencies

What is Quality?

• Consumer’s perspective– Fitness for use– Quality of design

What is Quality?

• Manufacturer’s perspective– Performance• mpg

– Features• Sirrius, OnStar

– Reliability• Expected life time

– Conformance• Meets standards

What is Quality?• Manufacturer’s perspective– Durability• LL Bean boots

– Serviceability• Repair “experience”

– Aesthetics• looks

– Safety• customers

– Perceptions• Brand and image

What is Quality?

• Service’s perspective– Time and timeliness• When customer wants it

– Completeness• Dell

– Courtesy• Shown customers

– Consistency– Accessibility and convenience– Accuracy– Responsiveness

What is Quality?

• Service’s perspective– Consistency• McDonalds

– Accessibility and convenience• Return calls• Sears!!!!

– Accuracy• First time, every time

– Responsiveness• To your satisfaction?

What is Quality

• At the end of the day……– Customer’s and producer’s perspectives depend

on each other• Producer’s perspective:– production process and COST

• Customer’s perspective:– fitness for use and PRICE

• Customer’s view must dominate

The Gurus• Deming– Quality up, costs up– Quality down, costs down

–Quality up, costs down

The Gurus• Deming– Open system– Focus on quality• less waste• rework• lower turnover• greater customer loyalty

– Focus on costs• quality declines• opposite of above

The Gurus• 14 Principles– #3: “quality at the source”

• 7 Deadly sins– Lack of constancy of purpose– Emphasis on short-term profits– Performance reviews, merit rating, etc– Mobility of management– Running a company on visible figures alone– Excessive medical costs– Excessive costs of warranty

The Deming (PDCA) Cycle

Quality Tools

• Process flow chart

Quality Tools

• Process flow chart• Check sheet• Histogram • Pareto analysis

Quality Tools - Pareto Analysis

Quality Tools

• Process flow chart• Check sheet• Histogram • Pareto analysis• Scatter diagram• Process control chart

Quality Tools – Control Chart

2

17

Quality Tools

• Process flow chart• Check sheet• Histogram • Pareto analysis• Scatter diagram• Process control chart• Fishbone (“cause and effect”)

Quality Tools – Fishbone

Quality Awards

• Baldrige Award• http://www.youtube.com/watch?v=Ng8YrYiI8V

k

Quality Certification

• ISO 9000• ISO 14000• ISO 24700• ISO 26000

Six Sigma• measurement-based strategy for process

improvement and variation reduction• Focus on:– improving existing system – developing new processes or products at Six

Sigma quality levels. • $230,000 savings per project– 4-6 projects per year. – General Electric $10 billion during the first fivea.

Six Sigma Projects

• Large chemical site had significant losses due to power outages

• Large number of changes from client after approving engineering design

• Amount of product out of spec and being automatically removed is high

• Sharp differences in sales performance of people?

Variation in Sales Performance

• Define: Why is there such a difference is the sales performance of people?

• Measure: Top people have 10X volume of the bottom 25%. – Failure to meet sales quotas is a defect.

Variation in Sales Performance

• Analyze: Education, training, time in job, product line, sales area, profiles.

• Improve: Able to identify by profile 72% of the top sales people. – Use this tool to select new people into this

function.• Control: Use profiles for new hires and

continue to monitor performance levels.

Six Sigma

Why bother???

•cost of doing things right•3 to 4% of revenues

•cost of doing things wrong•20 to 35% of revenues

•And then there’s this………•http://www.youtube.com/watch?v=7rUQbTsc_ms