Total Quality Management And Applications
- 1. Total Quality Management Eng. Uditha Wijayaratne B.Sc. (Eng.) Hons, ACMA (UK), CGMA, ACCA (UK), MBA (PIM-SJP), AMIESL (SL)
- 2. Chapter 07 • The Meaning of Quality • Cost of Quality • TQM Principles • Identifying Quality Problems and Causes • Quality Standards and Awards • Quality Management in Services • Issues in TQM • Success and Failure Stories
- 3. The Meaning of Quality • Quality from the Customer’s Perspective • Developing Quality Specifications • Quality of Design - is the quality which the producer or supplier is intending to offer to the customer. • Quality of Conformance- is the level of the quality of product actually produced and delivered through the production or service process of the organization as per the specifications or design.
- 4. The Dimensions of Design Quality Dimension Meaning Performance Primary product or service characteristics Features Added touches, bells and whistles, secondary characteristics Reliability Consistency of performance over time Durability Useful life Serviceability Resolution of problems and complaints Response Characteristics of the human-to-human interface Aesthetics Sensory characteristics (Sound, feel, look, etc.) Reputation Past performance and other intangibilities
- 5. Cost of Quality External Failure Costs Appraisal Costs Prevention Costs Internal Failure Costs Costs of Quality
- 6. Appraisal Cost • Appraisal costs (also known as inspection costs) are those cost that are incurred to identify defective products before they are shipped to customers. All costs associated with the activities that are performed during manufacturing processes to ensure required quality standards are also included in this category. Test and inspection of incoming materials Final product testing and inspection Supplies used in testing and inspection Supervision of testing and inspecting activities Depreciation of test equipment Maintenance of test equipment Plant utilities in inspection area Field testing and appraisal at customer site
- 7. Prevention Cost • The costs incurred to avoid or minimize the number of defects at first place are known as prevention costs. • System development • Quality engineering • Quality training • Quality circles • Statistical process control • Supervision of prevention • Quality improvement projects • Technical support to suppliers • Quality data gathering, analysis and reporting • Audit of the quality system
- 8. Internal Failure Costs • Internal failure costs are those costs that are incurred to remove defects from the products before shipping them to customers. Examples of internal failure costs include cost of rework, rejected products, scrap etc. • Net cost of scrap • Net cost of spoilage • Rework labor and overhead • Re-inspection of reworked products • Disposal of defective products • Down time caused by quality problems • Analysis of the cause of defects in the production • Retesting of reworked products • Re-entering data because of keying • Debugging software errors
- 9. External Failure Costs • If defective products have been shipped to customers, external failure costs arise. External failure costs include warranties, replacements, lost sales because of bad reputation, payment for damages arising from the use of defective products etc. The shipment of defective products can dissatisfy customers, damage goodwill and reduce sales and profits. • Cost of field servicing and handling complaints • Warranty repairs and replacement costs • Liability arising from defective products • Lost sales arising from a reputation of poor quality • Returns and allowances arising from quality problems • Product recalls • Repairs and replacements beyond the warranty period
- 10. Two Ways Quality Improves Profitability Improved Quality Increased Profits Increased productivity Lower rework and scrap costs Lower warranty costs Reduced Costs via Improved response Flexible pricing Improved reputation Sales Gains via
- 12. Total Quality Management A way of life an organization as a whole, committed to total customer satisfaction through a continuous process of improvement and contribution and involvement of people. Inspection Quality Control Quality Assurance TQM
- 13. TQM Principles Customer-oriented – Customer defines quality and customer satisfaction is the top priority Leadership – Top management must provide the leadership for quality Strategic planning – Quality is a strategic issue and requires a strategic plan. Employee responsibility- Quality is the responsibility of all the employees
- 14. Continuous improvement- All functions of the organization must focus on continuous quality improvement to achieve the strategic goals. Cooperation – Quality problems are solved through cooperation among employees and management Statistical methods - Use of statistical quality control methods Training and education – Training and education of all employees are the basis for continuous quality improvement Cont.…
- 15. Identifying Quality Problems and Causes • Checklist Headliner Defects Defect type Tally Total A. Tears in fabric //// 4 B. Discolored fabric /// 3 C. Broken fiber board //// //// //// //// //// //// //// / 36 D. Ragged edges //// // 7 Total 50 Headliner Defects Defect type Tally Total A. Tears in fabric //// 4 B. Discolored fabric /// 3 C. Broken fiber board //// //// //// //// //// //// //// / 36 D. Ragged edges //// // 7 Total 50
- 16. Identifying Quality Problems and Causes • Checklist • Pareto chart Number of defects 100 80 60 40 20 0 50 40 30 20 10 0 Cumulative percentage Defect type C D A B
- 17. Identifying Quality Problems and Causes • Checklist • Pareto chart • Scatter Diagram Y X
- 18. Identifying Quality Problems and Causes • Checklist • Pareto chart • Scatter Diagram • Flow Chart Operation Decision Start Finish Operation Operation Operation Operation Decision
- 19. Identifying Quality Problems and Causes • Checklist • Pareto chart • Scatter Diagram • Flow Chart • Control Chart Upper control limit Target value Lower control limit Sample number | | | | | | | | | 1 2 3 4 5 6 7 8 9 20% 10% 0% Plots the percent of defects
- 20. ISO 9000 - Quality management •The ISO 9000 family addresses various aspects of quality management and contains some of ISO’s best known standards. The standards provide guidance and tools for companies and organizations who want to ensure that their products and services consistently meet customer’s requirements, and that quality is consistently improved. ISO 14000 - Environmental management •The ISO 14000 family of standards provides practical tools for companies and organizations of all kinds looking to manage their environmental responsibilities.
- 21. Quality Management in Services The delivery of excellent or superior service relative to customer expectation. Process vs. Technical Outcome Quality Perception of technical outcome provided How that outcome was delivered
- 22. Service Quality Dimensions Reliability: Delivers on its promises Responsiveness: Willingness to help customers Assurance: Ability to inspire trust and confidence Empathy: Caring individualized attention Tangibles: Appearance of physical facilities, equipment, personnel, and communication materials
- 23. Issues of TQM High initial cost Considerable failure rate Costs may outweigh the benefits Benefits may not be seen for several years Quality based on statistics does not always ensure customer loyalty Focus on Quality may restrain Innovation May not be suitable for highly competitive high tech industries
- 24. Success or Failure Stories Analyzed
- 25. Success Stories • TOYOTA • Highest quality cars in the world • Operate a machine until it broke • Toyota completely changed the way it operated its plants • Preventative maintenance • Today Toyota is the most profitable car manufacturer in the world by a large margin
- 26. Success Stories Cont… • XEROX • Programs such as benchmarking, reduced supplier base, and leadership teams • Employee and customer support given to the company • Other Intangible benefits
- 27. Failures • General Motors (GM) • When General Motors realized they were loosing market share to the Japanese the company began using TQM. • GM has yet to reach the level of successful TQM implementation, but in the meantime continue to have ongoing problems and loss of market share • A basic concept of TQM • To develop a partnership with the supplier, but GM failed to maintain a good relationship with suppliers because they ripped up contracts, prices cuts of 20% with no promise of future business
- 28. Failures • 3M – James McNerney hired from GM as CEO – He is one of the most highly regarded followers of Jack Welch – Implemented Sigma program—a series of management techniques designed to decrease production defects and increase efficiency – It leads to high efficiency, But made 3M a less creative company – 3M identity is built on innovation – After 4 years lot of issue faced by new CEO George Buckley
- 29. Main reasons to failure • Lack of top & middle management support • Commitment in only one department • Short-term commitment • Failure to stay on course • Haphazard approach • A little of this and that with no meaningful change in the system • Failure to acquire the services of a competent statistician or to provide statistical training for employees • Measure success and guide program on the basis of short-term profits • Failure to solicit worker input • Over dependence on computerized quality control
- 30. Main reasons to failure • Funding failure • Lack of funds to make meaningful changes in the system (new machinery, training, improved raw materials, etc.) • No market research, requirements are not known • No testing of incoming materials • Garbage in - garbage out • Adversarial management • Management by fear
- 31. Thank You!