Management Chapter 6: Managing Quality

Quality Management

(1) top management leadership (2) customer satisfaction (3) continual improvement, (4) involvement of people, (5) process analysis (6) use of data-driven deci- sion making (7) a systems approach to management (8) mutually beneficial supplier relationships.

To become ISO 9000 certified, organizations must:

- have an onsite asessment -document quality procedures -have an ongoing series of audits on their products or service

Malcom Baldrige National quaity Award

-Award for quality achievement

Managing quality

-Helps build sucesful strategies of differentiation, low cost and response -improvements in quality help firms increase sales and reduce costs which can increase profitability

Quality circle

A group of employees meeting regularly with a facilitator to solve work related problems in their work area

Inspection

A means of ensuring that an operation is producing at the quality level expected

Six sigma

A program to save time, improve quality, and lower costs. -increases acuracy DMAIC. This five-step process improvement model (1) *D*efines the project's purpose, scope, and outputs and then identifies the required process information, keeping in mind the customer's definition of quality; (2) *M*easures the process and collects data; (3) *A*nalyzes the data, ensuring repeatability (the results can be duplicated) and reproduc- ibility (others get the same result); (4) *I*mproves, by modifying or redesigning, existing processes and procedures; (5) *C*ontrols the new process to make sure performance levels are maintained. ◆ It is a set of seven tools that we introduce shortly in this chapter: check sheets, scatter diagrams, cause-and-effect diagrams, Pareto charts, flowcharts, histograms, and statistical process control.

ISO 9000 International Quality Standards

A set of quality standards developed by the international organization for standardization

A successful quality strategy features which of the following elements? a. an organizational culture that fosters quality b. an understanding of the principles of quality c. engaging employees in the necessary activities to implement quality d. all of the above

All of the above

PDCA is most often applied with regard to which aspect of TQM?

Continuous improvement

Employee empowerment

Engaging employee jobs so that added responsibility and authority is moved to the lowest possible level of the organization -85% of the quality problems have to do with materials and processes not employee performance -giving employees the ability and responsibility to acess what is wrong will help with quality and can even cut costs

Among the tools of TQM, the tool ordinarily used to aid in understanding the sequence of events through which a product travels is a:

Flow chart

PDCA (continuous improvement)

Plan- identify the problem and make a plan do- test the plan check- is the plan working Act- implement the plan, document

Total Qualuty Management

Refers to a quality emphasis that encompassess the entire organization from supplier to customer. -Management of an entire organization so that it excels in all aspects of products and services that are important to the customer.

Which of the determinants of service quality involves performing the service right the first time?

Reliability

Two ways quality improves profitability

Sales gains via: -improved response -flexible pricing -improved reputation Reduced costs via: -increased profuctivity -lower network scrap costs -lower warranty costs Leads to: - improved quality -increased profits

Benchmarking

Selecting a demonstrated standard of performance that represents the very best performance for a process or activity -can be internal -ex. Benchmarking a company off of wallmart and do things the way they do it.

Quality

The ability of a product or service to meet customer needs

Cost of Quality (COQ)

The cost of doing things wrong- that is the price of nonconformance

Total quality management emphasizes:

a comitment to quality that goes beyond internal company issues to suppliers and customers

"Making it right the first time" is:

a manufacturing based definition of quality

Taguchi concepts

concepts aimed at improbing product and process quality - Quality robust - produxts that can be produced uniformly and consistently in adverse manufacturing and environmental conditions (remove the effects of adverse conditions instead of removing the causes) -Target oriented quality - a philosophy of continuous improvement to bring a product exactly on target -Quality loss function - mathematical function that identifies all costs connected with poor quality and shows how these costs increase as output moves away from the target value

The goal of inspection is to:

detect a bad process immediately

Consumer product safety act

enforces product standards in the US

Just in time

system that produces or delivers goods just as they are needed ◆ JIT cuts the cost of quality: This occurs because scrap, rework, inventory investment, and damage costs are directly related to inventory on hand. Because there is less inventory on hand with JIT, costs are lower. In addition, inventory hides bad quality, whereas JIT imme- diately exposes bad quality. ◆ JIT improves quality: As JIT shrinks lead time, it keeps evidence of errors fresh and limits the number of potential sources of error. JIT creates, in effect, an early warning system for quality problems, both within the firm and with vendors. ◆ Better quality means less inventory and a better, easier-to-employ JIT system: Often the purpose of keeping inventory is to protect against poor production performance resulting from unreliable quality. If consistent quality exists, JIT allows firms to reduce all the costs associated with inventory.

Three broad categories of definitions of quality are:

-user based -manufacturing based -product based

Knowlege of TQM tools

1. Check sheets- An organized method of recording data 2. scatter diagram - a graph of the value of one variable vs another variable. 3. Cause and effect diagrams-identifies process elements (causes) that may affect an outcome 4. Pareto chart - a graphic way of classifying problems by their level of importance often refered to as the 80- 20 rule. Identifies problems or defecrs in descending order of frequency 5. Flowcharts- a chart that describes the steps in a process 6. Histograms - a distribution that shows the frequency of occurrences of a variable 7. Statistical process control chart- a chart eith time on the horizontal axis for plotting values of a statistic

3 Reasons why quality is important

1. Company reputation - quality is a factor of the customer's perception of a company 2. Product Liability- liable for damages or injurys resulting from product use 3. Global Implications- products must meet global quality, design and price expectations. Inferior products harm a firms profitability and a nations balance of payments

7 Concepts for an effective TQM program

1. Continuous improvement -every aspect of the operation can be improved 2. Six sigma 3. Employee empowerment 4. Bench Marking 5. Just in time 6. Taguchi concepts 7. Knowledge of TQM tools

A Six Sigma program has how many defects per million?

3.4

Four major categories of costs are associated with quality called the Cost of Quality

◆ Prevention costs: costs associated with reducing the potential for defective parts or services (e.g., training, quality improvement programs). ◆ Appraisal costs: costs related to evaluating products, processes, parts, and services (e.g., test- ing, labs, inspectors). ◆ Internal failure costs: costs that result from production of defective parts or services before delivery to customers (e.g., rework, scrap, downtime). ◆ External failure costs: costs that occur after delivery of defective parts or services (e.g., rework, returned goods, liabilities, lost goodwill, costs to society). - *hardest to estimate*