Total Quality Management

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Chapter 6

• Total Quality Management

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Chapter Outline

• Quality imperative

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Quality and Productivity
I. Market Gains

• Improved
• Performance
• Reliability
• Features
• etc.

Improved reputation for quality
Increased Market share
Experience-based scale economies
Increased Profits
Higher Prices
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Quality and Productivity
II. Cost Savings
Increased productivity
Lower manufacturing costs

• Improved reliability or conformance

Lower rework and scrap costs
Increased Profits
Lower service costs
Lower warranty and product liability costs
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Relative Quality Boosts rates of return

20
40
60
80
Relative quality (percentile)
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The Costs of Poor Quality

• Prevention Costs
• Appraisal Costs
• Internal Failure Costs
• External Failure Costs

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Costs of quality assurancePrevention Costs

• QC administration and systems planning
• Quality training
• Quality planning (QC engineering work) Incoming,
  in-process, final inspection
• Special processes planning
• Quality data analysis
• Procurement planning
• Vendor surveys
• Reliability studies
• Quality measurement and control equipment
• Qualification of material

Source Adapted form J. W. Gavett, Production and
Operations Management (New York Harcourt Brace
Jovanovich
8
Costs of quality assuranceAppraisal Costs

• Testing
• Inspection
• Quality audits
• Incoming test and inspection and laboratory
  acceptance
• Checking labor
• Laboratory or other measurement service
• Setup for test and inspection
• Test and inspection material
• Outside endorsement
• Maintenance and calibration
• Product engineering review and shipping release
• Field testing

Source Adapted form J. W. Gavett, Production and
Operations Management (New York Harcourt Brace
Jovanovich
9
Costs of quality assuranceInternal Failure Costs

• Scrap, at full shop cost
• Rework, at full shop cost
• Scrap and rework , fault of vendor
• Material procurement
• Factory contact engineering
• QC investigations (of failures)
• Material review activity
• Repair and troubleshooting

Source Adapted form J. W. Gavett, Production and
Operations Management (New York Harcourt Brace
Jovanovich
10
Costs of quality assuranceExternal Failure Costs

• Complaints and loss of customer goodwill
• Warranty costs
• Field maintenance and product service
• Returned material processing and repair
• Replacement inventories
• Strained distributor relations

Source Adapted form J. W. Gavett, Production and
Operations Management (New York Harcourt Brace
Jovanovich
11
Costs of Detecting Defects
Cost of detection and correction
Process Final testing
Customer Where defect is detected
Figure 6.3
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Percentage Cost Distribution by Category Watches
Fourth-Quarter Indexes
Appraisal 16
Internal failure 29
Prevention 3
External failure 52
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Hidden costs of poor Quality
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Chapter Outline

• Quality imperative
• Defining quality

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TOTAL QUALITY INTERFACES
CONSUMER NEEDS/REQUIREMENTS
QUALITY
QUALITY OF PERFORMANCE
QUALITY OF DESIGN
QUALITY OF CONFORMANCE
WORK PROCESS/SYSTEM
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Chapter Outline

• Quality imperative
• Defining quality
• Contrasting approaches to quality

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Approaches To QM
Traditional
New

• Passive
• Find it and fix it
• Emphasize on AQL
• It is a job of QC department
• Quantity is top priority
• Quality is expensive

• Active
• Build Q into the product
• Focus on PC and CI
• It is a company-wide concern
• Quality is top priority
• Higher Q means lower cost

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Chapter Outline

• Quality imperative
• Defining quality
• Contrasting approaches to quality
• How to build quality

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TQMWheel
Figure 6.1
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Employee Involvement

• Cultural change
• Teams
• Three types
• Individual development
• Awards and incentives

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The Deming (PDCA) Cycle
Never-ending improvement
Quality
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TQMWheel
Figure 6.1
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Chapter Outline

• Quality imperative
• Defining quality
• Contrasting approaches to quality
• How to build quality
• Quality awards and certification

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ISO 9000 Standards and Their Areas of Application
in Production Flow
Design Development
Procurement
Production
Installation
Servicing
ISO9003
ISO9002
ISO9001
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ACCREDITATION REGISTRATION PROCESS
Registrar Accreditation Board
Accredit ISO Guide 40, EN 45012
Certify ISO 10011
Recognize
Registrars
Auditors
Course Providers
Employ
Register ISO Guide 48
Train
Assure ISO 9000 Series
Suppliers
Audit
Registered to ISO 9001, 9002, or 9003
Assure ISO 9000 Series
Purchasers
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Criteria for Performance Excellence

• Category 1 - Leadership 110 points
• Category 2 - Strategic Planning 80 points
• Category 3 - Customer and Market Focus 80 points
• Category 4 - Information and Analysis 80 points
• Category 5 - Human Resource Focus 100 points
• Category 6 - Process Management 100 points
• Category 7 - Business Results 450 points

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• Leadership - The organizations
  leadership system and senior leaders personal
  leadership
• Strategic Planning - How the organization sets
  strategic directions and how it develops the
  critical strategies and action plans
• Customer and Market Focus - How the company
  determines requirements, expectations, and
  preferences of customers and markets
• Information and Analysis - The selection,
  management, and effectiveness of use of
  information and data to support key company
  processes and action plans, and the companys
  performance management system
• Human Resource Focus - How the company enables
  employees to develop and utilize their full
  potential, aligned with the companys
  objectives
• Process Management - How key processes are
  designed, implemented, managed, and improved
• Business Results - The organizations performance
  and improvement in key business areas