Stages of Team Growth

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Quality Management and Engineering for Business
Processes
Introduction
D. Jack Elzinga Instructor
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Introduction

• This course establishes a framework for the full
  spectrum of process improvement approaches and
  provides methods and tools for carrying out
  successful improvement projects.
• Philosophy of process improvement in
  manufacturing and service industries. Quality
  standards, project management, change management.
  Application of the basic statistical quality
  tools. Incremental improvement, reengineering.
  Teamwork and team problem-solving.

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What is Quality?

• A quality product or service meets or exceeds
  customer expectations.
• The customer is delighted rather than merely
  satisfied.
• Is not synonymous with higher costs.
• Your definition?

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Total Quality Management (TQM)

• Focuses on customer satisfaction through
  continual improvement of the quality of products
  and services.
• Was the foundation of Japans quality miracle.
• Now a term little used and not preferred. Why?

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Process InnovationThomas H. Davenport

• Adoption of a process view of the enterprise
• Application of innovation to key processes
• Encompasses
• Envisioning new work strategies
• Radical process re-design
• Implementation of change
• technological, human, organizational

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Business Process Reengineering (BPR) Michael
Hammer

• Fundamental rethinking and radical redesign of
  (key) business processes to achieve dramatic
  improvements in critical, contemporary measures
  of performance, such as cost, quality, service
  and speed.
• Hammer and Champy, Reengineering the Corporation

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Business Process Management (BPM)

• Systematic approach to analyze, improve, control
  and manage business processes to improve cost,
  quality and profitability
• Applicable to manufacturing and service
  organizations.
• Applicable to incremental as well as radical
  improvements.

Business Process Management, Elzinga et al.
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• How are TQM, BPR/PI and BPM related?
• How do they differ?
• How are they incorporated into this course?

TQM
BPR/PI
QME for BP
BPM
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TOTAL QUALITY MANAGEMENT
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IMPORTANCE OF QUALITYBad News Spreads Faster
Than Good News!

• In the package goods industry
• Satisfied customers tell 4 to 5 people about
  their experience
• Unhappy customers tell 8 to 10 people
• In the automobile industry
• Satisfied customers tell 8 to 10 people about
  their experience
• Unhappy customers tell 16 to 18 people

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IMPORTANCE OF QUALITY Customer Feedback

• 30 of customers with problems complain to the
  direct provider of the product or service
• 2 - 5 of customer complaints get to headquarters
  level
• 70 - 90 of complaining customers will do
  business again if happy with how complaint was
  handled
• Only 10 - 30 of customers with problems who do
  not complain or request assistance will do
  business with you again

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IMPORTANCE OF QUALITY Achieving Superior Quality
Does Not Always Cost More

• Superior quality can reduce total cost
• Doing things right the first time
• Less time spent on rework

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IMPORTANCE OF QUALITY Superior Quality Increases
Market Share

• Market research shows that companies that
  improved their overall perceived quality
• GAINED MARKET SHARE
• Companies that declined in overall perceived
  quality
• LOST OR MAINTAINED MARKET SHARE

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Historical Perspective of TQM

• Who Deming, Juran
• Why U.S. vs. Japan
• When Inspection Built-in Quality
• What TQMs various components
• Where Roots in manufacturing sector

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Historical Perspective of TQM

• Frederick Taylor Scientific Management
• Walter Shewart Quality Control
• J. Edwards Deming Total Quality Management
• J. M. Juran Management Role in TQM
• Kaoru Ishikawa Quality Circles, 7 Basic Tools
• Genichi Taguchi Design of Experiments
• Six Sigma Quality Quantification of Quality
• Baldrige Award U. S. TQM
• Six Sigma re-birth General Electric

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Historical Perspective of TQM

• Frederick W. Taylor, 1856 - 1915
• The Father of Industrial Engineering
• 1881 U.S. Lawn Tennis doubles champ
• 1883 Mech Engr degree, Stevens Institute
• 1884 Midville Steel
• 1898 Bethlehem Steel
• piece rate system, cut yard workers by 70,
  doubled production, cut materials cost by 50
• 1901 Fired by Bethlehem Steel!
• 1903 Presents concept of moving assembly line
  Am Society of Industrial Engineers
• 1911 Principles of Scientific Management
  published

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Historical Perspective of TQM

• TAYLORISM
• Principles of Scientific Management
• Job Science rules, motions, standardized work,
  good working conditions
• Job training Incentives
• Planning Management plans the work
• Results Increased productivity, lower costs
• Downside Monotonous work
• Became widely discredited but remains the
  foundation of many aspects of modern management.

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Historical Perspective of TQM

• Walter A. Shewhart
• Father of Statistical Quality Control
• 1917 Ph.D., Physics, University of California
• 1918 1956 Western Electric Company
• 1924 Introduced the Control Chart
• assignable causes and chance causes
• 1931 Economic Control of Quality of
  Manufactured Product
• 1939 Statistical Method from the Viewpoint of
  Quality Control
• WW II Developed standards for war production

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Historical Perspective of TQM

• J. Edwards Deming
• Father of Total Quality Management
• 1928 Ph.D., Physics, Yale
• 1928 1948 U.S. government USDA, Census, DoD
• 1946, 1948 Visits to Japan for DoD
• 1950 Visit to Japan at invitation of JUSE
• 1951 Japan establishes the Deming Prize
• 1979 If Japan Can, Why Cant We?

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Historical Perspective of TQM

• Demings New Philosophy
• The 14 Points
• Necessary for Transformation
• The 7 Deadly Diseases
• That Impede Progress

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Historical Perspective of TQM

• Demings Major Principles
• Understand Variation
• Understand Systems
• Constancy of Purpose
• Respect for People
• ( as formulated by D. Jack Elzinga)

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Historical Perspective of TQM

• J. M. Juran
• Immigrated to U.S. from Romania, 1912
• 1924 BS Electrical Engineering, U Minn
• 1935 J.D., Loyola University
• 1924 - 1941 Western Electric
• 1941 - 1944 U.S. government
• 1951 Edited Quality Control Handbook
• 1954 Visit to Japan
• Emphasized importance of Management,
  breakthrough results

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Historical Perspective of TQM

• J. M. Juran
• See Problem Solving Phases

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Jurans Problem Solving Phases
Breakthroughs in Attitudes
Organization
Breakthroughs in Results
Breakthroughs in Knowledge
Breakthroughs in Cultural Patterns
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Historical Perspective of TQM

• Kaoru Ishikawa
• 1939 BS, Chemistry, Tokyo University
• 1947 - 1989 Engineering professor,
• Tokyo University
• Developer of
• - Quality Circles
• - Cause- and- Effect Diagram
• - PDCA Cycle (?)
• - Seven Basic Tools

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Historical Perspective of TQM

• Ishikawas Seven Basic Tools
• Pareto Chart
• Vital few, trivial many
• Cause-and-Effect Diagram
• Stratification
• Check Set
• Histogram
• Scatter Diagram
• Shewhart Control Chart

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Historical Perspective of TQM

• Kaoru Ishikawa
• See Cause and Effect diagram

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Historical Perspective of TQM

• Dr. Genichi Taguchi
• Director, Electrical Communication Laboratories
• (modeled after Bell Labs)
• Developer of Design of Experiments Methodology
  Taguchi Methods

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Historical Perspective of TQM

• Genich Taguchi
• See Performance Distribution Plots

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Historical Perspective of TQM

• Genich Taguchi
• See Loss Function Plot

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Why TQM?

• Q Emphasis on quality
• Products, Services, Interactions
• T Encompasses total (extended) enterprise
• M Management is key to success
• TQM is the way to achieve a higher level of
  excellence
• TQM is the way to achieve world-class performance
• As a term, today TQM is in disfavor
• WHY?

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Traditional Organization

• The flow of information and authority flows
  downward from the top
• Employees are not part of the decision-making
  processes
• Notice the lack of presence of the customer

Director
Managers
Supervisors
Employees
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TQM Organization

• The Directors job (and managers and
  supervisors) is to support the front-line
  employees who work with the customers
• Note the presence of customers at the top of the
  hierarchy

Customers
Employees
Supervisors
Managers
Director
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Traditional TQM Approach to Solving Problems

• Understand
• Document the process flow
• Establish customer-based measures
• Characterize
• Collect on key measures
• Analyze data to find root causes
• Simplify
• Make data-driven decisions
• Eliminate waste, standardize the process

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PDCA Cycle From Shewhart/Deming
ACT
PLAN
DO
CHECK
Continuous Improvement
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PDCA Cycle

• Plan what to do
• Determine goals and priorities
• Determine process
• Determine tracking indicators
• Do it
• Apply the plan
• Train and educate workers
• Monitor tracking indicators

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PDCA Cycle

• Check it
• Check results of the implemented plan
• Identify any problems
• Act on results
• Take action to eliminate any problems found
• Standardize process if plan is successful
• Plan future improvements

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PDCA Cycle

• Repeated use of the cycle provides for continual
  process improvement

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TQM Myths and Realities

• TQM is continuous improvement
• Continuous improvement is incremental
  improvement kaizen
• TQM is the opposite of reengineering

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Steps to Success
Right Problem
Right People
Right Process
Right Performance
Do it Again
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Step 1 Identify Opportunities

• Purpose Pick a Good Target
• Products Team Champion or Sponsor
• Problem Statement and Scope of Authority
• Tools

• Data not Available
• Brainstorming (MJ-19)
• Nominal Group Technique (MJ-91)
• Pareto Analysis (MJ-95)
• Cause and Effect Diagram (MJ-23)

• Data Available
• Run Chart (MJ-141)
• Check Sheet (MJ-31)
• Histogram (MJ-66)
• Process Map (MJ-56)

MJ Memory Jogger II
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Step 2 Form Team and Scope Project
Purpose Organize and Focus Products Validate or
Revise Project Charter Appropriate Team
Membership Tools

• Customer Tree Diagram (MJ-156)
• Customer Requirements
• Process Map (MJ-56)
• Cause and Effect Diagram (MJ-23)

• Run Chart (MJ-141)
• Histogram (MJ-66)
• Pareto Analysis (MJ-95)

MJ Memory Jogger II
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Step 3 Analyze Current Process

• Purpose Evaluate the As-Is
• Products Reduce Problem Scope based on
• Customer Surveys
• Process Map
• Process Data
• Tools

• Customer Requirements
• Customer Tree Diagram (MJ-156)
• Process Map (MJ-56)

• Run Chart (MJ-141)
• Check Sheet (MJ-31)
• Histogram (MJ-66)
• Pareto Analysis (MJ-95)

MJ Memory Jogger II
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Step 4 Define Desired Outcomes for Improved
Process
Purpose Envision the To-Be Products Project
Goals Alternative New Processes Briefing
for Sponsor or Champion Tools

• Brainstorming (MJ-19)
• Nominal Group Technique (MJ-91)
• Quality Function Deployment

• Process Mapping (MJ-56)
• Entitlement
• Benchmarking
• Process Capability (MJ-132)

MJ Memory Jogger II
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Step 5 Identify Root Causes and Proposed
Solutions
Purpose Figure Out Whats Stopping
Us Products Root Causes and Barriers Prioritiz
ed List of Process Changes Tools

• Cause and Effect Diagram (MJ-23)
• Force Field Analysis (MJ-63)
• Design of Experiments

• Brainstorming (MJ-19)
• Nominal Group Technique
• (MJ-91)
• Process Mapping (MJ-56)
• Scatter Plots (MJ-145)

MJ Memory Jogger II
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Step 6 Prioritize, Plan and Test Proposed
Solutions
Purpose Try Out the Best Solutions Products Plan
for Test with Agreement of Participants Da
ta Collected and Analyzed Tools

• Run Chart (MJ-141)
• Control Chart (MJ-36)
• Process Capability (MJ-132)

• Check Sheets (MJ-31)
• Histograms (MJ-66)
• Project Management
• Gantt Charts (MJ-9)
• Milestone Plans

MJ Memory Jogger II
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Step 7 Refine and Implement Solution
Purpose Fine Tune and Standardize Products Revis
ed Process Plan for Change with Agreement of
Stakeholders Tools

• Run Chart (MJ-141)
• Control Chart (MJ-36)
• Process Capability (MJ-132)

• Check Sheets (MJ-31)
• Histograms (MJ-66)
• Project Management
• Gantt Charts (MJ-9)
• Milestone Plans

MJ Memory Jogger II
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Step 8 Measure Progress and Hold Gains
Purpose Check on Progress Products Comparison
with Planned Improvement Goals Revised
Standard Procedures Tools

• Control Chart (MJ-36)
• Process Capability (MJ-132)
• Quality Audits

MJ Memory Jogger II
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Step 9 Acknowledge Team and Communicate Results
Purpose Publicize and Celebrate Products Recogni
tion and Reward Tools

• Force Field Analysis (MJ-63)
• Brainstorming (MJ-19)

• Communication Plan
• Quality Networks and Newsletters
• Cause and Effect Diagram (MJ-23)

MJ Memory Jogger II
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TOTAL QUALITY MANAGEMENT
Total Quality Management (TQM) is a philosophy
and system that focuses on customer satisfaction
in terms of continual improvement of the quality
of products and services. TQM embodies
leadership and personal commitment by top
management in fostering team building as well as
employee dedication and empowerment. TQM is a
management system dedicated to making decisions
based upon facts, data and analysis. Improvement
is driven by the objectives of 1) providing
superior quality at a cost the customer is
willing to pay and 2) shortening response time to
customer needs, both of which confer market
advantages. Progress, measured against
quantitative performance indicators, is assessed
regularly to derive information for future cycles
of improvement.
Richard Leavenworth, Professor Emeritus,
University of Florida
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What is Business Process Reengineering?

• Reengineering is the fundamental rethinking and
  radical redesign of business processes to achieve
  dramatic improvements in critical, contemporary
  measures of performance, such as cost, quality,
  service and speed.
• Michael Hammer and James Champy,
• Reengineering the Corporation, Harper Business
  1993

aka Process Innovation
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Business Process Reengineering

• Why Focus on the Process?
• Product Process
• Kaizen
• Total Quality Management
• ISO 9000
• Malcolm Baldrige Award
• Six Sigma
• Business Process Innovation
• Reengineering
• Enterprise Resource Planning
• Supply Chain Management

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Business Process ReengineeringWhat is a Process?

• A Set of Activities Organized to Accomplish a
  Task
• A Specific Ordering of Work Activities with a
  Beginning, an End, and Inputs and Outputs
• Processes Require Mechanisms to Carry Out the
  Activities and Controls to Insure their Effective
  Accomplishment

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Business Process Reengineering

• Procurement Process
• Purchasing department writes a purchase order
  sends it to the vendor and sends a copy to
  accounts payable.
• The vendor sends an invoice to accounts payable.
• When material control receives the goods from the
  vendor, it sends a copy of the receiving document
  to accounts payable.

Reengineering Work M. Hammer
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Business Process Reengineering

• Procurement Process (contd)
• Accounts payable matches the purchase order
  against the receiving document and the invoice.
  If they match, the department issues payment.
• If they don't match, an accounts payable
  investigates and resolves the discrepancy(ies).
• When all paperwork matches, the department issues
  payment.

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Business Process Reengineering

• Procurement Process (contd)
• COMPONENTS
• Activities
• Input(s)
• Output(s)
• Mechanisms
• Control
• Customer(s)

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Business Process Reengineering

• Procurement Process (contd)
• PLAYERS INVOLVED
• Purchasing department
• Vendor
• Material control
• Accounts payable
• Customers

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Organizational Structures

• Functional Organization
• People performing similar functions
• Product Organization
• People responsible for a group of products
• Matrix Organization
• Mixture of functional and product organization
• Process Organization
• People responsible for an entire process

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Process Organization
People responsible for an entire process

• Characteristics

• Cuts through functional groups
• Chains of command changed or eliminated
• Spans of control expanded
• Teams replace departments
• Communication barriers broken down
• Better customer focus

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Process Organization
Benefits

• Better coordination of work
• Enhanced flexibility
• Quicker response times
• Simpler cost controls
• Greater creativity
• Greater job satisfaction

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Business Process Management (BPM)

• Systematic approach to analyze , improve, control
  and manage business processes to improve cost,
  quality and profitability
• Applicable to manufacturing and service
  organizations.
• Applicable to incremental as well as radical
  improvements.

Business Process Management, Elzinga et al.
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FIXING PROCESSES
Process Understanding
Implementation
Process Improvement Selection
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Business Process Management
THE BUSINESS PROCESS MANAGEMENT METHOD
Business Process Management, Elzinga et al.
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A High Level Approach to Process Innovation
Identifying Processes for Innovation
Identifying Change Levers
Developing Process Vision
Understanding Existing Processes
Designing Prototyping the New Process
Thomas H. Davenport (1992)
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A High Level Approach to Process InnovationA
New, Necessary Step
Preparing for Innovation
Identifying Change Levers
Developing Process Vision
Understanding Existing Processes
Designing Prototyping the New Process
Identifying Processes for Innovation
From Thomas H. Davenport (1992)
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Process Improvement Conclusions

• Two Basic Approaches
• Bottom-Up Inexpensive, Employee Involvement
  Improvements are Incremental
• .
• Top-Down Expensive, Led by Top Management
  Improvements Can Be Major
• Reengineering, Business Transformation
• 
  .
• Six Sigma is what Everybody is Doing
• Is Six Sigma compatible with
• Reengineering or Process Innovation?

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Process Innovation Conclusions

• Hard Processes are well studied
• - e.g., Manufacturing Processes
• Soft Processes need attention
• -e.g., Design, Marketing, Strategic Planning,
• Major Gains Possible
• Enterprise Resource Planning is Enabler of
  Process Innovation

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TQM, BPM and BPR
HOW DO THEY COMPARE? HOW ARE THEY RELATED?
See Diagrams
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TQM, BPM and BPR
TQM
BPM
BPR Proc Innov
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TQM, BPM and BPR
TQM
BPM
Kaizen
Process Simplification
Process Streamlining
Reengineering Process Innov
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INCREMENTAL AND RADICAL CHANGE
HOW ARE THEY SIMILAR? HOW ARE THEY DIFFERENT?
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Similarities
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Similarities
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Similarities
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Differences
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Differences
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Best Practices Report

• The International Quality Study (IQS), 1992
• Ernest Young / American Quality Foundation
  (ASQC)
• Launched in 1989, one year of analysis
• Four sectors
• Auto Manufacturers
• Computer Manufacturers
• Commercial Banks
• Hospitals

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Best Practices Report

• Three levels of performance
• High, Medium, Low
• 
  
• Based on Returns on Assets, Productivity
• 500 organizations from Canada, Germany, Japan,
  U.S.

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Best Practices for Lower - Performing Companies

• Do
• Emphasize teams and empowerment
• Problem-solving techniques and training
• Process value analysis
• Voice of the Customer
• Eliminate Non Value-add activities
• 
  .
• Dont
• Benchmark

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Best Practices for Medium - Performing Companies

• Do
• Establish department-level improvement teams
• Use process simplification
• Measure progress
• Analyze cycle time
• Use customer input for new products / services
• Dont
• Reduce breadth of offerings of products / services

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Best Practices for Higher - Performing Companies

• Do
• Use world-class benchmarking
• Emphasize process simplification and cycle time
  analysis
• Form strategic partnership with vendors
• 
  .
• Dont
• Focus technology on production processes

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Universal Best Practices

• Process Improvement Practices
• Process value analysis
• Process simplification
• Process cycle time analysis
• Increasing the use of process improvement
  practices can be a means to competitive
  advantage. The techniques are underutilized.

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Universal Best Practices (Contd.)

• Deploy Strategic Plan
• Inside and outside the organization
• Key Middle management and customers Also,
  suppliers
• Certify Suppliers
• Manufacturing 79
• Banks 33
• Hospitals 10

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Todays Leading Quality Systems

• Malcolm Baldrige National Quality Award Criteria
• Six Sigma
• ISO 9000

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The Malcolm Baldrige National Quality Award

• An annual award to recognize U.S. companies for
  performance excellence
• Supported and organized by U.S. Department of
  Commerce
• Joint on-going effort of government, industry and
  academia
• The codification of Total Quality Management for
  U.S. industry

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MALCOLM BALDRIGE NATIONAL QUALITY AWARD

• The Award promotes

• Understanding of the requirements for performance
  excellence and competitiveness improvement and
• Sharing of information on successful performance
  strategies and the benefits derived from using
  these strategies.

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• BRIEF HISTORY OF THE MBNQA

• 1987 U.S. Congress passes law.
• Malcolm Baldrige was the late Secretary of
  Commerce. Corporate, government and academic
  experts formulate criteria, establish three
  categories large manufacturers, large service
  companies, small businesses.
• 1988 First awards are given
• Winners Motorola, Westinghouse, Globe
  Metallurgy
• Two new categories established education,
  health care
• 2001 Awards in education (3) given for first
  time
• An award in health care given for first time
• Medrad, Boeing Aerospace Support, Caterpillar
  Financial Support, Stoner (small business),
  Palatine Ill School District, Baptist Hospital
  (Pensacola)
• More at http//www.quality.nist.gov

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MBNQA CRITERIA

• The Criteria are designed to help organizations
  use an integrated approach to organizational
  performance management that results in

• delivery of ever-improving value to customers,
  resulting in marketplace success and
• improvement of overall organizational
  effectiveness and capabilities
• organizational and personal learning

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MBNQA CRITERIA

• The Criteria have three important roles in
  strengthening U.S. competitiveness

to help improve organizational performance
practices, capabilities, and results to
facilitate communication and sharing of best
practices information among U.S. organizations of
all types to serve as a working tool for
understanding and managing performance and for
guiding organizational planning and opportunities
for learning
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MBNQA CORE VALUES AND CONCEPTS

• VISIONARY LEADERSHIP
• CUSTOMER-DRIVEN EXCELLENCE
• ORGANIZATIONAL AND PERSONAL LEARNING
• VALUING EMPLOYEES AND PARTNERS
• AGILITY
• FOCUS ON THE FUTURE
• MANAGING FOR INNOVATION
• MANAGEMENT BY FACT
• SOCIAL RESPONSIBILITY
• FOCUS ON RESULTS AND CREATING VALUE
• SYSTEMS PERSPECTIVE

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MBNQA Categories

• Leadership
• Strategic Planning
• Customer and Market Focus
• Measurement, Analysis, and
• Knowledge Management
• Human Resource Focus
• Process Management
• Business Results

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MBNQA Categories

• SEE SYSTEMS DIAGRAM

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MBNQA A SYSTEMS PERSPECTIVE
Organizational Profile Environment,
Relationships and Challenges
HR Focus
Customer Market Focus
Information and Analysis
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2004 CRITERIA FOR PERFORMANCE EXCELLENCE
MALCOLM BALDRIGE NATIONAL QUALITY AWARD

• Categories Point Values
• Leadership 120
• Strategic Planning 85
• Customer and Market Focus 85
• Meas., Analysis, Knowledge Mgt 90
• Human Resource Focus 85
• Process Management 85
• Business Results 450
• TOTAL POINTS 1000

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MBNQA 2002 Award Recipients

• Motorola Inc. Commercial, Government and
  Industrial Solutions Sector, Schaumburg, Ill.
  (manufacturing)
• Branch-Smith Printing Division , Fort Worth,
  Texas (small business)
• SSM Health Care, St. Louis, Mo. (health care)
• More at http//www.quality.nist.gov

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MBNQA 2001 Award Recipients

• Clarke American Checks, San Antonio, Texas
  (manufacturing)
• Pal's Sudden Service, Kingsport, Tenn.
• (small business)
• Chugach School District, Anchorage, Alaska
  (education)
• Pearl River School District, Pearl River, N.Y.
  (education)
• University of Wisconsin-Stout, Menomonie, Wis.
  (education)

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MBNQA 2004 Award Recipients

• Your company here?

2005 Award Recipients
Your company here?
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Floridas Sterling Award

• THE GOVERNORS STERLING AWARDSince 1992, 31
  organizations have received the Governors
  Sterling Award (GSA) for significant improvement
  and achievement of performance excellence.
• The GSA is based on the application of the
  Sterling Criteria for Organizational Performance
  Excellence, which is in turn based on the
  internationally acclaimed Baldrige Criteria for
  Performance Excellence.
• More at http//www.floridasterling.com/

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Governors Sterling Award 2004 Award
Recipients

• Motorola iDEN Subscriber Supply Chain Operations
• Cargill Phosphate Production
• Dante B. Fascell Elementary School (Miami-Dade)
• North Beach Elementary School (Miami-Dade)

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Governors Sterling Award 2003 Award
Recipients

• Boeing Special Operations Forces,Aerospace
  Support Center (Fort Walton Beach )
• Kendale Elementary School (Miami-Dade)
• City of Coral Springs 2nd award!
• Clerk of the Circuit Court, Palm Beach County

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Six Sigma
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Six Sigma

• Six Sigma is a highly disciplined process that
  helps focus on developing and delivering
  near-perfect products and services.
• The word is a statistical term that measures how
  far a given process deviates from perfection. The
  central idea behind Six Sigma is that if you can
  measure how many "defects" you have in a process,
  you can systematically figure out how to
  eliminate them and get as close to "zero
  defects.
• A vision of quality which equates with only 3.4
  defects per million opportunities for each
  product or service transaction. Strives for
  perfection.

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Six Sigma

• Where does it come from?
• Developed by the Motorola Corporation in the
  1980s
• The six-sigma concept was initially developed to
  analyze benchmarking data
• Motorolas Six Sigma program improved best
  quality levels from 4-sigma in 1986 to 5.5-sigma
  in 1995
• Motorolas Six Sigma program saved 2.2 billion
  over several years
• Motorolas Six Sigma program was adopted by
  Allied Signal in 1993 and by General Electric in
  1996
• GEs success with Six Sigma prompted numerous
  other companies to adopt it
• It has become the national standard for corporate
  quality programs

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Six Sigma

• The Need for High Quality
• 99 Quality
• No Internet access 7 hours per month
• Unsafe drinking water 15 minutes per day
• Two runways missed (short or long) per day at
  most major airports

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Six Sigma

• The Need for High Quality
• 99.4 Quality Four Sigma
• 10 parts, 6 defects
• 50 parts, 27 defects
• 100 parts, 46 defects
• 1000 parts, forget it! 99.8 defects!

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Six Sigma

• The Need for High Quality
• 99.999 Quality Six Sigma
• 10 parts, 0.003 defects
• 100 parts, 0.034 defects
• 1,000 parts, 0.34 defects
• 100,000 parts, approx 34 defects

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Six Sigma

• Statistical Basis
• Normal Distribution
• Standard deviation, or sigma measures the
  spread of the distribution
• 68.26 within /- 1 std dev
• 95.46 within /- 2 std dev
• 99.73 within /- 3 std dev
• 210(-9) within /- 6 std dev

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Six Sigma

• Statistical Basis
• Parameter values e.g., bearing diameter, color
  density have a normal distribution.
• There is a nominal (desired) value for the
  parameter.
• There are (symmetrical) upper and lower
  specification limits that separate good from
  defective performance.

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Six Sigma

• Statistical Basis
• The mean of the process varies from the nominal
  (desired) value by 1.5 std devs
• In statistics jargon, six sigma quality
  corresponds to a process capability of Cpgt2 and
  Cpkgt1.5 (See Memory Jogger II, pp. 132-136)
• Motorola had its own and independent sources for
  establishing this level of variation.

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Six Sigma

• Defects (Parts per Million)
• No Change 1.5 std dev Change
• Sigma in Mean in Mean
• 1 317,400 697,700
• 2 45,400 308,733
• 3 2,700 66,810
• 4 63 6,210
• 5 0.57 233
• 6 0.002 3.4

132
Six Sigma

• Motorolas Findings mid-1980s
• 2 Sigma
• IRS Tax Advice
• 4 Sigma
• Average U.S. company, restaurant bills, baggage
  handling
• 6 Sigma
• Airline fatalities

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Six Sigma

• Motorolas Findings mid-1980s
• 4 Sigma
• Motorola
• 5 Sigma
• Korean CD players, Japanese measurement
  instruments
• 6 Sigma
• Japanese watches, Japanese TVs, Japanese test
  equipment

134
Six Sigma

• The Need for Major Improvements
• 3 Sigma to 4 Sigma
• 66810 ppm to 6210 ppm 10X
• 4 Sigma to 5 Sigma
• 6210 ppm to 233 ppm 30X
• 5 Sigma to 6 Sigma
• 233 ppm to 3.4 ppm 70X!

135
Six Sigma

• Key Concepts of Six Sigma
• Critical to Quality Attributes most important to
  the customer
• Defect Failing to deliver what the customer
  wants
• Process Capability What your process can deliver
• Variation What the customer sees and feels
• Stable Operations Ensuring consistent,
  predictable processes to improve what the
  customer sees and feels
• Design for Six Sigma Designing to meet customer
  needs and process capability

136
Six Sigma

• Key Concepts of Six Sigma
• DEFINE subpar process
• MEASURE process performance
• ANALYZE data to understand poor performance
• IMPROVE the process
• CONTROL the process to hold the gains
• DMAIC cycle

137
Six Sigma

• Key Concepts of Six Sigma
• The DMAIC cycle is akin to the PDCA cycle
• Define, Measure, Analyze, Improve, Control vs.
• Plan, Do, Check, Act
• Define/Measure/Analyze/Design/Verify
• for new products and processes

138
Six Sigma

• GEs success with Six Sigma
• 8 billion saved in last three years
• 4,000 Six Sigma experts
• Green Belts, Black Belts, etc.
• 600 million spending in 2002
• 2.5 billion saving targeted for 2002
• Migrating Six Sigma program to customers

139
Six Sigma

• Companies that follow Six Sigma are too many to
  mention but some prominent among them are.
• Dell Computer
• Wal-Mart
• Dow Chemical
• Blue Cross Blue Shield
• 3M

140
ISO 9000
141
ISO 9000

• What are ISO 9000 Standards?
• Generic standards that provide guidance for
• Implementation of effective quality systems
• Assurance for products and services
• Improvement of existing quality systems
• International Organization for Standardization
  (IOS), Geneva, Switzerland, 1987
• Related Standards BSI, ANSI, AQAP (NATO)

142
ISO 9000

• Where did ISO 9000 come from?
• MIL STD 9858A U.S. DoD standard, led to NATO
  standard (1968) and British defence standard
  (1973)
• BSI 5179 and 5750 BSI standard for non-military
  quality assurance
• ISO International Organization for
  Standardization (IOS), Geneva, Switzerland
• ISO 9000 issued in 1987
• Derived from BSI 5750

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What is the Role of the ISO 9000 Standards?

• These standards set the basic rules for quality
  systems - from concept to implementation -
  whatever the product or service
• When implemented they provide a set of rules for
  manufacturing a product or delivering a service
• Ensure that a provider has the capability to
  produce the required goods or services using
  procedures and processes that are repeatable and
  reliable.

144
ISO 9000 Series

• International standards for design, installation
  and operation of quality management systems
• They establish conformance, specification and
  consistency in products and services
• Emphases rules, procedures, roles, regulation,
  specification, recording

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ISO 9000 Series

• ISO 9001
• A comprehensive standard for quality systems
• Assessment of ability to meet customer and
  regulatory requirements
• Addresses customer satisfaction
• This is the ISO standard for which third-party
  certification can be obtained

146
ISO 9000 Series

• ISO 9002 and ISO 9003
• GONE!
• IN MOST RECENT RELEASE YEAR 2000

More at www.iso.ch/iso/en/ISOOline.frontpage
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Introducing Ron Sedlock

• The Quality Catalyst
• Quality Training and Consulting
• Senior member, American Society for Quality
• Certified Quality Manager, Engineer, Auditor
  Certified Reliability Engineer
• 30 years experience in manufacturing, engineering
  and quality
• Studied with Deming and Juran

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ISO Quality Management Principles

• Customer focus
• Leadership
• Involvement of people
• Process approach
• Systems approach to management
• Continual(!) improvement
• Factual approach to decision making
• Mutual beneficial supplier relationships

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Steps to ISO 9000 Certification

• Evaluation of existing quality procedures against
  the ISO 9000 standards
• Identification of corrective action needed to
  conform with ISO 9000 series standards
• Preparation of a quality assurance program
• Definition, documentation and implementation of
  new procedures
• Preparation of a quality manual
• Assessment visit
• Certification

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Accreditation Process

• Third party evaluator conducts audit
• Audit consists of demonstrating conformity to the
  ISO standard
• Registration indicates conformance to documented
  evidence
• Registration lasts for up to 3 years
• December 2002 over 560,000 certificates in
  place in 159 countries
• Over half in Europe 7 in U.S.

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Role of Management

• Establish Quality System
• Philosophy and Procedures
• Commit Resources
• Time
• People
• Money
• Proactive involvement
• Implement and maintain quality systems

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Role of Employee

• Establish work instructions
• Write work instructions
• Follow work instructions
• Record results

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In other words.

• Say what you do!
• Do what you say!
• Prove it!

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ISO 9000 Bottom Line

• If it moves, train it!
• If it doesnt move, calibrate it!
• If it isnt written, it didnt happen!

More at www.iso.ch/iso/en/ISOOline.frontpage
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ISO 9000 Upside Downside

• documented system more records to keep
• clear roles/responsibilities more work, less
• discretion
• expectations known emphasis on regulation
• pride from accreditation award for the boss
• instructions are documented procedures,
  procedures,
• procedures!
• consistent product quality the same product
• The concrete life vest!
• efficiencies, cost savings cost of QMS and staff
  
• improved supplier quality supplier
  dissatisfaction
• export marketing easier disadvantages?