Ski Trip Mount Stowe, VT

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SIGN UPS TODAY

• Ski Trip - Mount Stowe, VT
• Sat., Mar. 18 from 530 AM - 430 PM
• 65.00/person (20.00/person ski rental)
• Blue Man Group - Boston Playhouse
• Fri., Mar. 24 at 700 PM and
• Sat., Mar. 25 at 400 PM
• Free
• Guest Speaker Panel SM 105
• Mon., Mar. 20, 700 PM - 900 PM
• Free

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Quality Management
Boston University School of Management
Professor Peter Arnold
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What is Quality?
The ability of a product or service to
consistently meet or exceed customer expectations.
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The Customer

• Internal and External
• Customer Requirements
• Customer Satisfaction
• Conflict between Heterogeneous Customer
  Populations

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The Customer

• Who are the customers of the Boston University
  School of Management?

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The Customer

• Customers of the School of Management
• Alumni
• Boston University
• Employers
• Of Students
• Of Faculty (e.g. consultants)
• Faculty
• Governments
• Potential Students (applicants)
• Staff (including administration)
• Students
• Universities (other than BU)

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The Customer

• What are the requirements of the student
  customers at BU SMG?

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The Customer

• Student Requirements

Reputation
Housing
Feedback
Qualified Instructors
Convenience
Small Classes
Fun
Strong, Relevant Curriculum
Case Studies
Varied Learning Experiences
Practical Skills
Career Services
Strong Peer Groups
Campus Life
Affordable Education
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Dimensions of Quality
Performance
Primary operating characteristics
Secondary characteristics
Features
How well specifications are met
Conformance
Consistency of performance
Reliability
Product life
Durability
Brand image/reputation
Perceived quality
Ease of service/friendliness of server
Serviceability
Effect on senses
Aesthetics
Garvin
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Managing Quality

• If Quality improvement is about any one thing it
  is about variance reduction.
• Variation is a term used to describe deviation
  from the expected.
• High variation or variability creates great
  uncertainty in outcome.

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Variation
How much variation in outcome is there?
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Variation
Which has more variation in outcome?
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Variation
Source of Variation?
Source of Variation?
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Six Sigma
The statistical representation of Six Sigma
describes quantitatively how a process is
performing. To achieve Six Sigma, a process must
not produce more than 3.4 defects per million
opportunities. A Six Sigma defect is defined as
anything outside of customer specifications.
http//www.isixsigma.com/sixsigma/six_sigma.asp
Six Sigma focuses on process capability Develop
and operate processes that are capable of
producing only good units of output. Why would
that be an appealing? Savings less waste, lower
capacity utilization, lower fixed costs,
increased premium.
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Basketball and Six Sigma
Suppose there was an outcry by fans of college
basketball over the dearth of scoring in the
game. Suppose further that the czar of
basketball asked us to increase the scoring in
college basketball games. The focus of the
effort might be the process of shooting hoops.
The best field goal percentage in Mens NCAA
Division I basketball is about 65. How could
the average be improved?

• Study the data
• Identify patterns in the data
• Develop countermeasures
• Implementation
• Review

Fundamental approach to quality improvement
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F
G
C
G
F
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Division 1 NCAA Mens Basketball Statistics
2002-3 ncaa.org
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Division 1 NCAA Mens Basketball Statistics
2002-3 ncaa.org
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Improving Field Goal Percentage
Outlaw defense Do not take very many
shots Practice, Practice, Practice Only shoot
from short distances Permit only very tall
players to shoot
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Poor Quality
What happens when quality is poor?

• Costs increase
• Customers complain ? more costs
• Customers dont come back ? highest costs
• And along with increasing costs, you have fewer
  goods or services to sell.

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Cost of Quality

• Conceptual Framework
• Not Always Totally Quantifiable
• Useful for Attention Getting
• Useful as a Mechanism for Keeping Score
• Consistency of Measurement

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Four Categories of Cost
Increasing overall quality results from
investment in these

• Cost of Prevention
• Cost of Appraisal
• Cost of Internal Failure
• Cost of External Failure

Increasing overall quality results in lower
experience with these
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Total Cost
Cost
Internal and External Failures
Prevention and Appraisal
Poor
Superior
Level of Quality
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Cost of Prevention

• Quality Planning
• Design (Prototyping, Field Testing)
• Education and Training
• Process Control
• Information reporting
• Quality Improvement Programs, Quality Improvement
  Teams (QIPs and QITs)
• Supplier Involvement

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Cost of Appraisal

• Incoming Inspection
• In-Process Inspection
• Final Inspection
• Testing Devices
• Destructive Testing
• Inventory Safeguarding

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Cost of Internal Failures

• Scrap wasted materials and labor
• Rework doing the job twice
• Retesting checking the second time
• Downtime - Capacity
• Yield Losses goods unavailable for sale
• Managing Defective Materials making sure the
  bad ones do not get out.

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Calculating the Cost of Scrap Yield Loss
DataStor Perfect Quality Disk Fabrication
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Calculating the Cost of Scrap Yield Loss (cont.)
DataStor Yield Loss Disk Fabrication
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Cost of External Failures

• Customer Complaint Adjustment
• Returned Materials - Restocking and Reshipping
• Warranty Charges
• Allowances for Defective Materials
• Lost Business

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Trade-offs

• Appraisal and Prevention (Investment)
• Internal and External Failures (Expense)
• As the level of Quality Improves
• Appraisal and Prevention Increase
• Internal and External Decrease

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Cost of Prevention

• Quality Planning
• Design (Prototyping, Field Testing)
• Education and Training
• Process Control
• Quality Information Systems
• Quality Reporting
• Quality Improvement Programs, Quality Improvement
  Teams
• Supplier Involvement

What are the long-run consequences of investment
in these items?
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Total Cost
Cost
Internal and External Failures
Prevention and Appraisal
Poor
Superior
Level of Quality