Managing Quality 6 Which are Quality Products / Services? Meaning of Quality ➢ Webster’s Dictionary: Degree of excellence of a thing ➢ American Society for Quality: Totality of features and characteristics that satisfy needs ➢ Consumer’s and Producer’s perspective may be different 3-3 Meaning of Quality: Consumer’s Perspective ➢Fitness for Use How well Product or Service does what it is supposed to do! ➢Quality of Design How well quality characteristics is designed into the Product or Service A Ferrari 488 Spider and a Fiat 500 are equally “Fit for Use” but, with different “Design Dimensions” 3-4 Dimensions of Quality in Manufactured Products 1. Performance: Basic operating characteristics of a product; (e.g., Car’s handling or gas mileage) 2. Conformance: Degree to which a product meets pre–established standards 3. Features: “Extra” items added to basic features, (e.g., Navigation or a Leather Interior) 4. Safety: Assurance that customer will not suffer injury or harm from a product; an especially important consideration for automobiles 5. Reliability: Probability that a product will operate properly within an expected time frame; (e.g., A TV will work without repair for about seven years) 6. Durability: How long product lasts before replacement 7. Serviceability: Ease and speed of repairs 8. Aesthetics: How a product looks, feels, sounds, smells, or tastes 9. Perceptions: Subjective perceptions based on brand name, advertising, etc. 3-5 Dimensions of Quality in Service 1. Accessibility and Convenience: How easy is it to obtain service? (e.g., Does a service representative answer you calls quickly?) 2. Time and Timeliness: How long must a customer wait for service, and is it completed on time? (e.g., Is an overnight package delivered overnight?) 3. Completeness: Is everything customer asked for provided? ( e.g., Is a mail order from a catalogue company complete when delivered?) 4. Accuracy: Is the service performed right every time? (e.g., Is your cellphone bill correct every month?) 5. Consistency: Is the same level of service provided to each customer each time? (e.g., Is your newspaper delivered on time every morning?) 6. Courtesy: How are customers treated by employees? (e.g., Are catalogue phone operators nice and are their voices pleasant?) 7. Responsiveness: How well does the company react to unusual situations? (e.g., How well is a telephone operator able to respond to a customer’s questions?) 3-6 Cost of Quality ➢ Cost of Achieving Good Quality – Prevention Costs Costs incurred during Product & Process 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 3-7 Costs of Quality Total Cost Total Cost External Failure Internal Failure Appraisal Prevention Quality Improvement Internal 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 poorquality 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” 3-9 External 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 3-10 Conformance vs. Nonconformance Costs ➢ Cost of doing things right: 25% of revenues ➢ Phil Crosby: “In the long run, quality is free” (by paying back its cost and brings more money to the organization) 3-11 Quality as a Strategy ► Operations Manager’s objective is to build: A Total Quality Management system that Identifies and Satisfies Customer Needs! ► Managing Quality Supports all three Strategies: ❖ Low Cost Strategies ❖ Differentiation Strategies ❖ Response Strategies Quality Gurus ➢ Walter Shewhart (1920’s) – – Introduced the term “Quality Assurance” Developed Control Charts, in 1920’s ➢ W. Edwards Deming (1950’s) – – 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 (1950’s) – – Followed Deming to Japan in 1950’s Focused on Strategic Quality Planning, Quality Controlling & Quality Improvement 3-13 Quality Gurus (cont.) ➢ Armand V. Feigenbaum (1950’s) ▪ Introduced concepts of Total Quality Control and Continuous Quality Improvement ➢ Kaoru Ishikawa (1960’s & 1970’s) ▪ Promoted use of Quality Circles ▪ Developed “Fishbone Diagram” (Cause & Effect Diagram) ▪ Emphasized importance of “Internal Customer” ➢ Philip Crosby (1970’s & 1980’s) ▪ Emphasized that costs of poor quality far outweigh the cost of preventing poor quality ▪ Defined Conformance to Requirements, Prevention, and “Zero Defects” 3-14 Total Quality Management Commitment to Quality Throughout Organization Principles of TQM: ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ Customer-oriented Leadership Driven Strategic Planning Employee Responsibility Continuous Improvement Cooperation Statistical Methods Training and Education 3-15 Seven Concepts of TQM 1. Continuous Improvement 2. Lean Six Sigma 3. Employee Empowerment 4. Benchmarking 5. Just-In-Time (JIT) 6. Taguchi Concepts 7. Knowledge of TQM Tools 1- Continuous Improvement 1. Never-ending process of Continual Improvement 2. Covers: People, Equipment, Materials, Procedures 3. Every Operation & System can be Improved Deming Wheel: PDCA Cycle 4. Act 1. Plan Institutionalize improvement; continue cycle. Identify problem and develop plan for improvement. 3. Study / Check 2. Do Assess plan; is it working? Implement plan on a test basis. 3-18 Continuous Improvement / Kaizen W. Edwards Deming ➢ Understanding of Variation is essential to improving quality ➢ Importance of understanding how companies operate as systems (e.g., Sales, Design, Procurement, Prod., etc.) ➢ Managers’ need for insight of company systems to accurately foresee potential Quality issues ➢ Leaders’ need to understand Individual Motivations and the power of Employee Empowerment TQM Quality Delivery System Analysis Resources • Input Adjustment • Feedback Input • Qualities • Characteristics • Standards • Timing • Conditional Needs Deliverables • Qualities • Characteristics • Standards • Timing • Conditional Needs • Deliverable Adjustment • Feedback Information Technology Infrastructure of hardware, networks, and software necessary to support a quality program Deming’s 14 Points 1. Create consistency of purpose to improve product & service. 8. Drive out fear. 2. Adopt the new philosophy. 9. Break down barriers between departments. 3. Cease dependence on inspection to improve quality. 10. Eliminate slogans. 4. End the practice of awarding business on the basis of price. 11. Eliminate quotas. 12. Remove barriers to pride of workmanship. 5. Constantly improve the production 13. Institute program of & service system. self-improvement 6. Institute training on the job. 14. Involve everyone to 7. Institute leadership. accomplish the transformation 2- Lean Six Sigma (LSS) ➢ Lean is a systematic approach for waste elimination, from customer’s perspective. ➢ Six Sigma (6) is a process for developing and delivering near perfect products and services. ➢ 6 is the measure of how much a process deviates from a perfect output. ➢ In 6 Defects are measured in “Per Million Opportunities” (DPMO). ➢ The goal is to develop and maintain system processes with
Purchase answer to see full attachment