Transcript AutoCAD Architecture 2008: Part I: Getting Started

Quality Management
for Organizational Excellence
By:
Dr. David L. Goetsch and Stanley Davis
Based on the book
Quality Management for Organizational Excellence (Sixth Edition)
Quality Management, 6th ed.
Goetsch and Davis
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© 2010 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
Instructor Info.
Dr. Mohammed A. Nasseef
Email:
[email protected]
 Website:
www.nasseef.info
Contact Number:
0540627773 ( SMS and whatsApp)

note: mobile number is for urgent calls, please if you call consider a
appropriate time.
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Grading Policy

case study Project
20
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Quiz 1
10
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Quiz 2
10
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Class Participation
10
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Final Exam
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TOTAL
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________________
100
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One:
The Total Quality Approach to
Quality Management
MAJOR TOPICS
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Quality Evolution
What is Quality?
The Total Quality Approach Defined
Two Views of Quality
Key Elements of Total Quality
Total Quality Pioneers
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Quality Evolution
Quality Management, 6th ed.
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Evolution of Quality I
 Finding mistakes/errors
 External assessment/control
 Inspecting
the past
 Culture of mistrust
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Evolution of Quality II
 avoid mistakes
 Looking into
the past and
plan for the
future
 personal responsibility /
ownership
 culture of trust
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Evolution of Quality III
 Systematic fulfillment of
customer requirements
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Evolution of Quality IV
 Participation of all members of
an organization
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Quality is Everywhere
people deal with the issue of quality
continually in their daily lives
We all apply a number of criteria when making a
purchase
To understand quality as a consumer-driven concept
How will you judge the quality of the restaurant?
Service
Response time
Food preparation
Atmosphere
Price
Selection
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What is Quality
* Quality must be defined comprehensively.
It is not enough to say the product is of
high quality; we must focus attention on
the quality of every facet of the organization.
* Consumers' needs and requirements
change. Therefore, the definition of quality
is ever changing.
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shikawa's
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What is Quality
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Fred Smith. CEO of FedEx defines
quality as “ performance to the
standard expected by customer “
Boeing “ providing our customer
with products and services that
consistently meet their needs and
expectations”
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So Quality Is …
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Although there is no universally accepted
definition of quality. There are some similarity
among among quality definition:
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Quality involves meeting or exceeding
customer expectations.
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Quality applies to products, services, people,
processes, and environments.
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Quality is ever changing state (i.e., what
consider quality today may not good enough
to be considered quality tomorrow).
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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
Total - made up of the whole
 Quality - degree of excellence a product or

service provides
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Management - act, art or manner of planning,
controlling, directing,….
Therefore, TQM is the art of managing the
whole to achieve excellence.
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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.
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What’s the goal of TQM?
“Do the right things right the first
time, every time.”
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Another 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,
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systems, people, suppliers, partners, products,
and services.
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Basic belief of TQM
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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 TQM
Counting
Tools, techniques, and training in
their use for analyzing,
understanding, and solving quality
problems
Customers
Quality for the customer as a
driving force and central concern.
Culture
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Shared values and beliefs,
expressed by leaders, that define
and support quality.
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Total Quality Management
and Continuous Improvement
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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.
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Continuous Improvement versus
Traditional Approach
Continuous Improvement
Traditional Approach
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Market-share focus
Individuals
Focus on ‘who” and
“why”
Short-term focus
Status quo focus
Product focus
Innovation
Fire fighting
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Customer focus
Cross-functional teams
Focus on “what” and “how”
Long-term focus
Continuous improvement
Process improvement focus
Incremental improvements
Problem solving
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Quality Throughout
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“A Customer’s impression of quality begins
with the initial contact with the company and
continues through the life of the product.”
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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 Approach
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Manufacturing
Dimensions
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Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality
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Service Dimensions
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Reliability
Responsiveness
Assurance
Empathy
Tangibles
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The TQM System
Continuous
Improvement
Objective
Principles
Elements
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Customer
Focus
Process
Improvement
Total
Involvement
Leadership
Education and Training Supportive structure
Communications
Reward and recognition
Measurement
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The Total Quality Approach to
Quality Management

Trends affecting the future of quality
management include demanding global
customers, shifting customer expectations, and
opposing economic pressures
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Total Quality Pioneers:
W. Edwards Deming
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Born on October 14,
1900
Was an American
statistician, professor,
author, lecturer, and
consultant
Widely credited with
improving production in
the United States during
the Cold War
Best known for work in
Japan
Taught top management
(1950 onwards)
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W. Edwards Deming
Quality keys:
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Understanding
customer needs
Process
improvement
Statistical analysis
Expertise of workers
PDCA cycle
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DEMING
1.
2.
3.
4.
5.
14
POINTS
Create constancy of purpose
Adopt a new philosophy
Stop dependence on inspection
Don’t focus on price tag
Improve constantly & forever
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DEMING 14 POINTS
6.
7.
8.
9.
10.
Institute training
Institute leadership
Drive out fear
Break down barriers
Eliminate slogans, exhortations
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DEMING
11.
12.
13.
14.
14
POINTS
Eliminate quotas; use leadership
Remove barriers to workmanship
strong education program
Involve everybody
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The Deming cycle, or PDSA cycle,
is a continuous quality
improvement model consisting of
a logical sequence of four
repetitive steps for continuous
improvement and learning:
Plan, Do, Study (Check) and
Act.
It is also known as
the Deming circle/cycle/whe
el, Shewhartcycle, control
circle/cycle, or plan–do–
study–act (PDSA)
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
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W. Edwards Deming in the 1950's proposed
that business processes should be analyzed
and measured to identify sources of
variations that cause products to deviate from
customer requirements.
He recommended that business processes be
placed in a continuous feedback loop so that
managers can identify and change the parts
of the process that need improvements.
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Example :
At Toyota this is also known as "Building people
before building cars.“
Toyota and other Lean companies propose that
an engaged, problem solving workforce, using
PDCA, is better able to innovate and stay ahead
of the competition through rigorous problem
solving and the subsequent innovations. This
also creates a culture of problem solvers using
PDCA and creating a culture of critical thinkers.
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Foundations of the PDCA Cycle
The foundations of the PDCA cycle and Deming’s teachings consist
of the following three principles:
1.Customer Satisfaction: Satisfying customers’ needs should be
paramount for all workers in the organization.
2.Management by Fact. Decision making must be made on data
collected from operations and analyzed using statistical tools.
Decision makers must practice and encourage a scientific approach
to problem solving.
3.Respect for People. A sustainable problem solving and
continuous improvement approach should be based on the belief
that employees are self-motivated and are capable of coming up
with effective and creative ideas.
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Steps of PDCA: The Plan step
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Recognize the problem and establish priorities.
Form the problem solving team.
Interdisciplinary teams of individuals close to the problem are best.
Define the problem and its scope clearly.
Who,What,Where and When.
Pareto Analysis can be useful in defining the problem.
Analyze the problem/process.
Process flowcharts can be useful a useful tool.
Determine possible causes.
Cause-and-effect diagrams are helpful in identifying root causes of a problem.
Data from the diagrams can be organized using check sheets, scatter diagrams,
histograms, and run charts.
Identify possible solutions.
Brainstorm to find solutions. Avoid the temptation to propose quick, immediate
fixes. Goals should be specific, measurable, achievable, and realistic.
Evaluate potential solutions.
Focus on solutions that address root causes and prevention of problem
occurrence. Solutions should be cost-effective; achieving group consensus is
important.
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Steps of PDCA (continued)
The Do step
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Implement the solution or process change
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Monitor results and collect data
The Check step
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Review and evaluate the result of the change
Measure progress against milestones
Check for any unforeseen consequences
The Act step
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If successful,
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Standardize process changes
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Communicate to all involved
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Provide training in new methods
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Problem Solving Tools
1.
Check Sheet. A simple tool for collecting data about problems or complaints.
Example 1.
Appliance Department Complaints
Late
Wrong
Month
delivery
appliance
January
February
March
April
May
June
July
August
September
October
November
December
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4
1
4
3
2
3
5
3
4
3
3
Faulty
installation
Total
Units
installed
%
Complaints
3
4
3
2
5
3
4
6
5
6
5
6
8
11
8
11
13
11
11
17
13
16
15
17
800
900
750
1050
1400
980
1030
1500
1330
1500
1320
1550
1.00%
1.22%
1.07%
1.05%
0.93%
1.12%
1.07%
1.13%
0.98%
1.07%
1.14%
1.10%
3
3
4
5
5
6
4
6
5
6
7
8
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Problem Solving Tools (continued)
2. Histogram. A graph which presents the collected data as a frequency distribution in
bar-chart form. Example 1
9
8
7
6
5
4
3
2
1
0
Late
Wrong
Faulty
Ja
nu
F ar
e y
br
ua
ry
M
ar
ch
A
pr
il
M
ay
Ju
ne
Ju
A ly
S ug
ep us
te t
m
b
O er
ct
N ob
ov er
e
D mb
ec e
em r
b
er
Frequency
Complaint Type
Month
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Problem Solving Tools (continued)
3.
Pareto Chart. Orders problems by their relative frequency in decreasing order.
Focus and priority should be given to problems that offer the largest potential
improvement.
Pareto Chart for complaints
Number of complaints
70
60
50
40
30
20
10
0
Wrong appliance
Faulty installation
Late delivery
Complaint category
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Problem Solving Tools (continued)
4. Scatter Diagram. A graphical tool to check if two relationships exist between two
variables.
Scatter Diagram for faulty installations
Number of installations per crew
180
160
140
120
100
80
60
40
20
0
0
1
2
3
4
5
Number of faulty installations
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6
7
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Problem Solving Tools (continued)
5. Flowchart. A visual representation of a process which can help in identifying
points where failures may occur and intervention is useful. Example 2
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Problem Solving Tools (continued)
6. Cause-and-effect diagram (fishbone diagram). Offers a structured approach for
identifying all possible causes of a problem. The classic diagram is as shown:
In retail, a better representation is the 5S (Pal & Byron 2003):
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COST OF QUALITY (COQ)
Any serious attempt to improve quality must take into
account the costs associated with achieving quality
since the objective of continuous improvement
programs is not only to meet customer requirements,
but also to do it at the lowest cost.
This can only happen by reducing the costs needed to
achieve quality, and the reduction of these costs is only
possible if they are identified and measured.
Therefore, measuring and reporting the cost of quality
(CoQ) should be considered an important issue for
managers.
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DEFINITION
There is no general agreement on a single broad
definition of quality costs (Machowski and Dale, 1998).
However, CoQ is usually understood as the sum of
conformance plus non-conformance costs, where cost
of conformance is the price paid for prevention of poor
quality (for example, inspection and quality appraisal)
and cost of non-conformance is the cost of poor quality
caused by product and service failure(for example,
rework and returns).
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(COQ) CONTINUE
It was Armand Feigenbaum, who in 1943 first
devised a quality costing analysis when he
and his team developed a dollar-based
reporting system.
later proposed the now widely accepted
quality cost categorization of prevention,
appraisal and failure (internal and external)
costs
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(COQ) CONTINUE
Many business executive adopt the
attitude that ensuring quality is good
thing to do until hard times set in and
cost cutting is necessary.
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GENERIC COQ MODELS
Feigenbaum Model
P-A-F models
Prevention + appraisal + failure
Crosby’s model
Conformance + non-conformance
Opportunity or intangible cost models
Prevention + appraisal + failure + opportunity
Conformance + non-conformance + opportunity
ABC models
Value-added + non-value-added
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Cost of Quality
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Cost of Achieving Good Quality
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Prevention costs
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Appraisal costs
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costs incurred during product design
costs of measuring, testing, and analyzing
Cost of Poor Quality
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Internal failure costs
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include scrap, rework, process failure, downtime,
and price reductions
External failure costs
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include complaints, returns, warranty claims,
liability, and lost sales
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Prevention Costs
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Quality planning costs
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Training costs
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Product-design costs
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costs of developing and
implementing quality
management program
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costs of designing
products with quality
characteristics
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Process costs
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Information costs
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costs expended to make
sure productive process
conforms to quality
specifications
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costs of developing and
putting on quality
training programs for
employees and
management
costs of acquiring and
maintaining data related
to quality, and
development of reports
on quality performance
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Appraisal Costs
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Inspection and testing
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Test equipment costs
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costs of testing and inspecting materials, parts, and
product at various stages and at the end of a
process
costs of maintaining equipment used in testing
quality characteristics of products
Operator costs
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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 Costs
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Scrap costs
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Rework costs
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costs of poor-quality
products that must be
discarded, including labor,
material, and indirect costs
costs of fixing defective
products to conform to
quality specifications
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costs of shutting down
productive process to fix
problem
Price-downgrading costs
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costs of determining why
production process is
producing poor-quality
products
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Process downtime costs
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Process failure costs
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costs of discounting
poor-quality products—
that is, selling products
as “seconds”
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External Failure Costs
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Customer complaint costs
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Product return costs
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costs of investigating and
satisfactorily responding to a
customer complaint resulting
from a poor-quality product
costs of handling and replacing
poor-quality products returned
by customer
Warranty claims costs
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costs of complying with
product warranties
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Product liability costs
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litigation costs
resulting from product
liability and customer
injury
Lost sales costs
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costs incurred because
customers are
dissatisfied with poor
quality products and
do not make additional
purchases
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Costs of Quality
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
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Costs of Quality Example
Vegas Photo Corporation made 10,000
photocopying machines last year.
Vegas Photo determines the costs of quality
of its photocopying machines using a 7-step
activity-based costing approach.
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Costs of Quality (Steps 1 and 2)
Step 1
Step 2
Identify cost objects.
Identify the direct costs
of quality of the products.
10,000 photocopying
machines
No direct costs of
quality
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Costs of Quality (Step 3)
Step 3
Select the cost-allocation bases to use for
allocating indirect costs of quality to the products.
•
•
•
•
Prevention
Appraisal
Internal failure
External failure
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Information on the total
quantities of each of these
cost-allocation bases used
in all of Vegas operations
is not provided.
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Costs of Quality (Step 4)
Step 4
Identify the indirect costs of quality
associated with each cost-allocation base.
Information about total (fixed and variable)
costs is not provided.
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Costs of Quality (Step 5)
Step 5
calculate the
rate per unit.
Inspection hours is one
cost-allocation base.
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Costs of Quality (Step 5)
Prevention costs:
Design engineering (R&D) $80 per hour
Process engineering (R&D) $60 per hour
Appraisal costs:
Inspection (Manufacturing) $40 per hour
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Costs of Quality (Step 5)
Internal failure costs:
Rework (Manufacturing)
$100 per hour
External failure costs:
Customer support (Marketing)
$ 50 per hour
Transportation (Distribution)
$240 per load
Warranty repair (Customer Service) $110 per hour
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Costs of Quality (Step 6)
Step 6
calculate the indirect costs of quality
allocated to the product.
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Costs of Quality (Step 6)
Prevention costs:
Design engineering (R&D)
Process engineering (R&D)
Appraisal costs:
Inspection (Manufacturing)
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20,000 hours
22,500 hours
120,000 hours
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Costs of Quality (Step 6)
Internal failure costs:
Rework (Manufacturing)
External failure costs:
Customer support (Marketing)
Transportation (Distribution)
Warranty repair (Customer Service)
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50,000 hours
6,000 hours
1,500 loads
60,000 hours
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Costs of Quality (Step 6)
What is the total cost for design engineering?
20,000 hours × $80 = $1,600,000
What is the total cost for inspection?
120,000 hours × $40 = $4,800,000
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Costs of Quality (Step 6)
Cost of Quality and
Value Chain Category
Total Costs
Prevention costs:
Design engineering (R&D)
Process engineering (R&D)
Total
$1,600,000
1,350,000
$2,950,000
Appraisal costs:
Inspection
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$4,800,000
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Costs of Quality (Step 6)
Cost of Quality and
Value Chain Category
Total Costs
Internal failure costs:
Rework (Manufacturing)
Quality Management, 6th ed.
Goetsch and Davis
$5,000,000
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Costs of Quality (Step 6)
Cost of Quality and
Value Chain Category
Total Costs
External failure costs:
Customer support (Marketing)
$ 300,000
Transportation (Distribution)
360,000
Warranty repair (Customer Service) 6,600,000
Total
$7,260,000
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Costs of Quality (Step 7)
Step 7
Compute the total costs of quality of the product.
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
$ 2,950,000
4,800,000
5,000,000
7,260,000
$20,010,000
Total
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Traditional Cost of Poor Quality
(4-5% of Sales)
When quality costs are initially determined, the
categories included are the visible ones as depicted
in the iceberg below.
Waste
Customer Returns
Rejects
Testing Costs
Inspection Costs
Rework
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Recalls
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Cost of Poor Quality
As an organization gains a broader definition of poor quality,
the hidden portion of the iceberg becomes apparent.
Waste
Testing Costs
Customer Returns
Rejects
Inspection Costs
Rework
Recalls
Excessive Overtime
Pricing or
Billing Errors
Late Paperwork
Excessive
Services Expenses
Excessive
Employee Turnover
Complaint
Handling
High Costs
Incorrectly Completed
Sales Order
Lack of Follow-up
on Current Programs
Planning Delays
Customer Allowances
Unused Capacity
Premium cargo Costs
Time with
Dissatisfied Customer
late delivery
Development Cost of Failed Product
COPQ ranges
from 15-25%
of Sales
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Hidden COPQ: The
costs incurred to
deal with these
chronic problems
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Malcolm Baldrige National Quality
Award
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MBNQA

In the 1980s, many industry and government
leaders saw that a renewed emphasis on quality
was no longer an option for American
organisations, rather, it was a necessity for doing
business in an ever expanding, and more
demanding competitive global market. The
Baldrige Award was therefore envisaged as a
standard of excellence that would help US
organisations achieve world-class quality
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Malcolm Baldrige

1981-87 secretary of Commerce.




supporter of quality management as
key to US economic survival
Helped draft early version of quality act
Resolved technology transfer
differences with China and India
First Cabinet-level meetings with Soviet
Union in 7 years

Paved way for increased access for US firms
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Champion Roper

National Cowboy Hall of Fame


July 25, 1987 N. California rodeo
Horse threw him, fell on him, and
crushed him
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WHY Baldrige ?






Purpose of MBNQA to enhance US competitivenes
Promotes quality awareness, recognizes
achievements of US companies
Vehicle for sharing success strategies
ISO covers less than 10 percent of the Baldrige
award criteria
Many apply, few are selected
MBNQA not required for business
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
Each category has several items (18 total), and
each item has several “areas to address”
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Quality Management, 6th ed.
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Point Values
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ADLI = Approach, Deployment, Learning, In
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Categories






Manufacturing
Service
Small Business
Education (added 1999)
Health Care (added 1999)
Nonprofit (2005)
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Leadership


Examines how senior executives guide the
company and how the company addresses its
responsibilities to the public and practices good
citizenship.
1.1 Organizational Leadership
1.2 Social Responsibility
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Strategic planning



Examines how the company sets strategic
directions and how it determines key action plans.
2.1Strategy Development
2.2 Strategy Deployment
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Customer and market focus



Examines how the company determines
requirements and expectations of customers and
markets.
3.1Customer and Market Knowledge
3.2 Customer Relationships and Satisfaction
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Information and analysis



Examines the management, effective use, and
analysis of data and information to support key
company processes and the company’s
performance management system.
4.1Measurement and Analysis of Organizational
Performance
4.2 Information and Knowledge Management
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Human resource focus




Examines how the company enables its workforce
to develop its full potential and how the
workforce is aligned with the company’s
objectives.
5.1 Work Systems
5.2 Employee Learning and Motivation
5.3 Employee Well-Being and Satisfaction
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Process management



Examines aspects of how key production/delivery
and support processes are designed, managed,
and improved.
6.1V alue Creation Processes
6.2 Support Processes
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Business results

Examines the company’s performance and
improvement in its key business areas:






customer satisfaction,
financial and marketplace performance,
human resources,
supplier and partner performance, and
operational performance.
The category also examines how the company
performs relative to competitors.

better market performance, gains in market share, and
customer retention and satisfaction
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Group project


Baldrige Award Recipients
http://www.baldrige.nist.gov/Contacts_Profiles
.htm
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MIDWAYUSA - customer focus
•
•
MidwayUSA, a 2009 Baldrige Award winner in the
small business category, utilizes a customer-first
culture and many customer-focused approaches to
building trust, confidence, and loyalty at all
stages of the customer relationship.
MidwayUSA’s commitment to the customer is hardwired into the company’s vision, purpose, mission, and
values; Company Goals; and Code of Conduct . The
vision itself says it all: “To be the best-run business in
America for the benefit of our Customers.”
—
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MIDWAYUSA - customer focus cont.
•
This customer-focused philosophy is carried out in
many different approaches, including the following:
- All salaried employees (including senior leaders)
spend at least one hour each week on the phone
taking orders and answering customer requests.
- Employees are selected for leadership development
based on their support of the company’s core value
of “Customer-Driven Excellence” in addition to other
performance-based criteria. Employees also are
encouraged to participate in industry-related events.
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MIDWAYUSA - customer focus cont.
- Employees’ performance reviews are aligned with
key customer requirements. For example, customer
service representatives are evaluated on their
performance in relation to the requirement for
“Friendly, Courteous, Respectful, and Ethical
Service.”
- Direct access is provided to the company’s founder
and CEO, Larry Potterfield, via the Larry Line.
Potterfield also role-models the customer-first
philosophy by being very visible and accessible
(“The Face of MidwayUSA”) to customers at industry
and other public events.
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MIDWAYUSA - customer focus cont.
Customer input on improving operations is solicited via
the company’s Web site by regularly featuring online
surveys, posting customer reviews of the company’s
products, and providing an “I’m Having Trouble
Finding” option so customers can suggest additions to
product lines.
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