Total Quality Management (TQM) 101 slide.ppt

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Concepts
• What is quality?
Dictionary has many definitions: “Essential characteristic,”
“Superior,” etc.
• Some definitions that are accepted in various organizations:
– “Quality is customer satisfaction,”
– “Quality is Fitness for Use.”
• What is TQM?
A comprehensive, organization-wide effort to improve the
quality of products and services, applicable to all
organizations.

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Concepts
• What is a customer?
Anyone who is impacted by the product or process delivered by
an organization.
External customer: The end user as well as intermediate
processors. Other external customers may not be purchasers
but may have some connection with the product.
Internal customer: Other divisions of the company that receive
the processed product.
• What is a product?
The output of the process carried out by the organization. It may
be goods (e.g. automobiles, missile), software (e.g. a computer
code, a report) or service (e.g. banking, insurance)

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Concepts
• How is customer satisfaction achieved?
Two dimensions: Product features and Freedom from
deficiencies.
• Product features – Refers to quality of design.
Examples in manufacturing industry: Performance, Reliability,
Durability, Ease of use, Esthetics etc.
Examples in service industry: Accuracy, Timeliness, Friendliness
and courtesy, Knowledge of server etc.
• Freedom from deficiencies – Refers to quality of conformance.
Higher conformance means fewer complaints and increased
customer satisfaction. (This is related to free from defects.)

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Why Quality?
Reasons for quality becoming a cardinal priority for most
organizations:
• Competition – Today’s market demand high quality products
at low cost. Having `high quality’ reputation is not enough!
Internal cost of maintaining the reputation should be less.
• Changing customer – The new customer is not only
commanding priority based on volume but is more demanding
about the “quality system.”
• Changing product mix – The shift from low volume, high
price to high volume, low price have resulted in a need to
reduce the internal cost of poor quality.

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Why Quality?
• Product complexity – As systems have become more complex,
the reliability requirements for suppliers of components have
become more stringent.
• Higher levels of customer satisfaction – Higher customers
expectations are getting spawned by increasing competition.
Relatively simpler approaches to quality viz. product inspection
for quality control and incorporation of internal cost of poor
quality into the selling price, might not work for today’s
complex market environment.

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Quality perspectives
Everyone defines Quality based on their own perspective of it.
Typical responses about the definition of quality would
include:
1. Perfection
2. Consistency
3. Eliminating waste
4. Speed of delivery
5. Compliance with policies and procedures
6. Doing it right the first time
7. Delighting or pleasing customers
8. Total customer satisfaction and service

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Quality levels
At organizational level, we need to ask following questions:
• Which products and services meet your expectations?
• Which products and services you need that you are not
currently receiving?
At process level, we need to ask:
• What products and services are most important to the external
customer?
• What processes produce those products and services?
• What are the key inputs to those processes?
• Which processes have most significant effects on the
organization’s performance standards?

Additional Views of Quality in Services
• Technical Quality versus Functional Quality
–Technical quality—the core element of the good or service.
–Functional quality—customer perception of how the good functions
or the service is delivered.
• Expectations and Perceptions
–Customers’ prior expectations (generalized and specific service
experiences) and their perception of service performance affect
their satisfaction with a service.
• Satisfaction = (Perception of Performance) – (Expectation)

Historical Philosophies of Quality
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The Quality Gurus
• Quality Gurus
–Individuals who have been identified as making a significant
contribution to improving the quality of goods and services.
• Walter A. Shewhart
• W. Edwards Deming
• Joseph M. Juran
• Armand Feigenbaum
• Philip Crosby
• Genichi Taguchi
• Kaoru Ishikawa

Three of the Quality Gurus Compared
Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Professional Publishing Ltd., 1989),
pp. 291–92.

Three of the Quality Gurus Compared (cont’d)
Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann
Professional Publishing Ltd., 1989), pp. 291–92.

Three of the Quality Gurus Compared (cont’d)
Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Professional
Publishing Ltd., 1989), pp. 291–92.

The Quality Gurus (cont’d)
• Walter A. Shewhart
–Statistician at Bell Laboratories
• Developed statistical control process methods to
distinguish between random and nonrandom
variation in industrial processes to keep processes
under control.
• Developed the “plan-do-check-act” (PDCA) cycle that
emphasizes the need for continuous improvement.
• Strongly influenced Deming and Juran.

Shewhart’s Plan-Do-Check-Act (PDCA) Cycle
Source: “The PDCA Cycle” from Deming Management at Work by Mary Walton, copyright © 1990
by Mary Walton. Used by permission of G. P. Putnam’s Sons, a division of Penguin Putnam, Inc.

• W. Edwards Deming
–Advocated Statistical Process Control (SPC)
• Methods which signal shifts in a process that will likely lead to
products and/or services not meeting customer requirements.
• Emphasized an overall organizational approach to managing
quality.
• Demonstrated that quality products are less costly than poor
quality products.
• Identified 14 points critical for improving quality.
–The Deming Prize
• Highest award for industrial excellence in Japan.

Deming’s 14-Point Program for Improving Quality
1. Create constancy of purpose for improvement of product and service.
2. Adopt the new philosophy.
3. Cease dependence on mass inspection.
4. End the practice of awarding business on the price tag alone.
5. Improve constantly and forever the system of production and training.
6. Institute training.
7. Institute leadership.
8. Drive out fear.
9. Break down barriers between staff areas.
10. Eliminate slogans, exhortations, and targets for the workforce.
11. Eliminate numerical quotas.
12. Remove barriers to pride in workmanship.
13. Institute a vigorous program of education and retraining.
14. Take action to accomplish the program.
Source: “14 Point System” from Deming Management at Work by Mary Walton, copyright © 1990 by Mary
Walton. Used by permission of G. P. Putnam’s Sons, a division of Penguin Putnam, Inc.

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The Deming philosophy
14 points for management:
1. Create and publish to all employees a statement of the aims
and purposes of the company. The management must
demonstrate their commitment to this statement.
2. Learn the new philosophy.
3. Understand the purpose of inspection – to reduce the cost
and improve the processes.
4. End the practice of awarding business on the basis of price
tag alone.
5. Improve constantly and forever the system of production and
service.

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6. Institute training
7. Teach and institute leadership.
8. Drive out fear. Create an environment of innovation.
9. Optimize the team efforts towards the aims and purposes of
the company.
10. Eliminate exhortations for the workforce.
11. Eliminate numerical quotas for production.
12. Remove the barriers that rob pride of workmanship.
13. Encourage learning and self-improvement.
14. Take action to accomplish the transformation.

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• “A System of Profound Knowledge”
1. Appreciation for a system - A system is a set of functions or
activities within an organization that work together to
achieve organizational goals. Management’s job is to
optimize the system. (not parts of system, but the whole!).
System requires co-operation.
2. Psychology – The designers and implementers of decisions
are people. Hence understanding their psychology is
important.

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3. Understanding process variation – A production process
contains many sources of variation. Reduction in variation
improves quality. Two types of variations- common causes
and special causes. Focus on the special causes. Common
causes can be reduced only by change of technology.
4. Theory of knowledge – Management decisions should be
driven by facts, data and justifiable theories. Don’t follow
the managements fads!

• Joseph M. Juran
–Emphasized the importance of producing quality products through
an approach focused on quality planning, control, and
improvement.
–Defined product quality as “fitness for use” as viewed by the
customer in:
• Quality of design • Quality of conformance
• Availability • Safety • Field use
–Categorized the cost of quality as:
• Cost of prevention
• Cost of detection/appraisal
• Cost of failure

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The Juran philosophy
• Pursue quality on two levels:
1. The mission of the firm as a whole is to achieve high
product quality.
2. The mission of each individual department is to achieve
high production quality.
• Quality should be talked about in a language senior
management understands: money (cost of poor quality).
• At operational level, focus should be on conformance to
specifications through elimination of defects- use of
statistical methods.

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The Juran philosophy
Quality Trilogy –
1. Quality planning: Process of preparing to meet quality
goals. Involves understanding customer needs and
developing product features.
2. Quality control: Process of meeting quality goals during
operations. Control parameters. Measuring the deviation and
taking action.
3. Quality improvement: Process for breaking through to
unprecedented levels of performance. Identify areas of
improvement and get the right people to bring about the
change.

• Armand Feigenbaum
–Proposed the concept of “total quality control,” making quality
everyone’s responsibility.
• Stressed interdepartmental communication.
• Emphasized careful measurement and report of quality costs
• Philip Crosby
–Preached that “quality is free.”
–Believed that an organization can reduce overall costs by
improving the overall quality of its processes.

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The Crosby philosophy
Absolute’s of Management
• Quality means conformance to requirements not elegance.
• There is no such thing as quality problem.
• There is no such thing as economics of quality: it is always
cheaper to do the job right the first time.
• The only performance measurement is the cost of quality: the
cost of non-conformance.
Basic Elements of Improvement
• Determination (commitment by the top management)
• Education (of the employees towards Zero Defects (ZD))
• Implementation (of the organizational processes towards ZD)

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History of quality management
• Next 20 odd years, when top managers in USA focused on marketing,
production quantity and financial performance, Japanese managers improved
quality at an unprecedented rate.
• Market started preferring Japanese products and American companies suffered
immensely.
• America woke up to the quality revolution in early 1980s. Ford Motor
Company consulted Dr. Deming to help transform its operations.
(By then, 80-year-old Deming was virtually unknown in USA. Whereas Japanese
government had instituted The Deming Prize for Quality in 1950.)
• Managers started to realize that “quality of management” is more important
than “management of quality.” Birth of the term Total Quality Management
(TQM).
• TQM – Integration of quality principles into organization’s management
systems.

• Genichi Taguchi
–Emphasized the minimization of variation.
• Concerned with the cost of quality to society.
• Extended Juran’s concept of external failure.
• Kaoru Ishikawa
–Developed problem-solving tools such as the cause-and-effect
(fishbone) diagram.
–Called the father of quality circles.

Defining the Dimensions of Quality
• Quality in Goods
–Performance
–Features
–Reliability
–Durability
–Conformance
–Serviceability
–Aesthetics
–Perceived quality
• Quality in Services
–Reliability
–Tangibles
–Responsiveness
–Assurance
–Empathy

The Cost of Quality
• Cost of Quality
–Framework for identifying quality components that are
related to producing both high quality products and low
quality components, with the goal of minimizing the
total cost of quality.
–Costs of poor quality:
• Detection/appraisal costs
• Internal failure costs
• External failure costs

“Costs” of Quality
Category Definition Example
Prevention
Costs associated with preventing
defects.
Training, early reviews, quality planning,
tools, process improvement initiatives.
Appraisal
Costs associated with analyzing
and testing the product to ensure it
conforms to specifications.
Inspections, testing, audits, quality
control.
Internal
Failure
Costs associated with fixing
defects found prior to release.
Repair, retesting, updating
documentation.
External
Failure
Costs associated with fixing
defects found after release.
Technical support, defect reporting and
tracking, field updates, loss of future
sales.

Quality Cost Management shows how increased
Prevention Costs reduce the Total Quality Costs.

The equation “Cost of Quality“ (COQ) allows to quantify
the impact of POOR quality. It is used as a monitoring
tool to track costs for inspection, internal errors, external
errors, and prevention. As the prevention efforts are
increased, the costs for inspection, internal failures and
external failures drop.
E: External Failure Costs
I: Internal Failure Costs
A: Appraisal Costs
P: Prevention Costs
S: Sales

Typical Quality Cost Ratios
Source: A. V. Feigenbaum, Total Quality Control, 3rd ed. (New York: McGraw-Hill, 1983), p. 112;
and Joseph M. Juran and F. M. Gryna, Quality Planning and Analysis (New York: McGraw-Hill,
1970), p. 60.

The Cost of Quality (Juran’s Model)
Cost Category
Cost of prevention Costs associated with the development of
programs to prevent defectives from
occurring in the first place
Cost of detection/
appraisal
Costs associated with the test and
inspection of subassemblies and products
after they have been made.
Cost of failure Costs associated with the failure of a
defective product.
Internal failure costs—producing
defective products that are identified
before shipment.
External failure costs—producing
defective products that are delivered to
the customer.

Assuring Customer Satisfaction
• Service Recovery
–How quickly a firm rectifies a service mistake has a strong effect
on establishing customer loyalty and creating customer
satisfaction.
• Service Guarantees
–Provide customer feedback on service operations
–Effective guarantees
• Unconditional
• Easy to understand
• Meaningful
• Easy and painless to invoke
• Easy and quick to collect on

Elements of TQM & Implementation
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Elements of TQM
• Leadership
–Top management vision, planning and support
• Employee involvement
–All employees assume responsibility for inspecting the quality of
their work.
• Product/Process Excellence
–Involves product design quality and monitoring the process for
continuous improvement.
• Poka-yokes are devices that prevent defects from being
produced.

Elements of TQM (cont’d)
• Continuous Improvement
–A concept that recognizes that quality improvement is a journey
with no end and that there is a need for continually looking for new
approaches for improving quality.
• Customer Focus (on “Fitness for Use”)
–Design quality
• Specific characteristics of a product that determine its value in
the marketplace.
–Conformance quality
• The degree to which a product meets its design specifications.

Implementing TQM
• Successful Implementation of TQM
–Requires total integration of TQM into day-to-day
operations.
• Causes of TQM Implementation Failures
–Lack of focus on strategic planning and core
competencies.
–Obsolete, outdated organizational cultures.

Communication
For TQM to be successful, the organization must
concentrate on the following key elements:
Ethics
Integrity
Trust
Training
Teamwork
Leadership
Recognition
Implementation of TQM

Roof: Recognition (Motivation)
The key elements of TQM can be divided into four
groups according to their function:
Foundation: Integrity, Ethics, Trust
Building Bricks: Leadership, Teamwork,Training
Binding Mortar: Communication
Implementation of TQM

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Hoshin planning
• Hoshin kanri: Japanese for management cycle build around
Plan, Do, Check, Act. Elements of this cycle include –
 Quality policies
 Quality goals
 Deployment of goals
 Plans to meet goals
 Organizational structure
 Resources
 Measurement feedback
 Review of progress
 Training

Process Management
Statistical Process Control (SPC)

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Process management
• Planning and administrating the activities necessary to achieve
high quality in business processes; and also identifying
opportunities for improving quality and operational
performance – ultimately, customer satisfaction.
• Process simplification reduces opportunities for errors and
rework.
• Processes are of two types – value-added processes and
support processes.
• Value-added processes – those essential for running the
business and achieving and maintaining competitive
advantage. (Design process, Production/Delivery process)

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Process management
• Support processes – Those that are important to an
organization’s value-creation processes, employees and daily
operations.
• Value creation processes are driven by external customer
needs while support processes are driven by internal needs.
• To apply the techniques of process management, a process
must be repeatable and measurable.
• Process owners are responsible for process performance and
should have authority to manage the process. Owners could
range from high-level executive to workers who run a cell.
• Assigning owners ensures accountability.

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Process control
• Control is the activity of ensuring the conformance to the
requirements and taking corrective action when necessary.
• Two reasons for controlling the process
1. Process control methods are the basis of effective daily
management of processes.
2. Long-term improvements can not be made to a process
unless the process is first brought under control.
• Short-term corrective action should be taken by the process
owners. Long-term remedial action should be the
responsibility of the management.

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Process control
Effective quality control systems include
1. Documented procedures for all key processes
2. A clear understanding of the appropriate equipment and
working environment
3. Methods of monitoring and controlling critical quality
characteristics
4. Approval processes for equipment
5. Criteria for workmanship: written standards, samples etc.
6. Maintenance activities

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Process improvement
• Customer loyalty is driven by delivered value.
• Delivered value is created by business processes.
• Sustained success in competitive markets require a business to
continuously improve delivered value.
• To continuously improve value creation ability, a business
must continuously improve its value creation processes.
• Continuous process improvement is an old management
concept dating back to 1895. However, those approaches were
mainly productivity related.
• More recently (1951) Toyota implemented Just-In-Time which
relies on zero defects and hence continuous improvement!

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Process improvement: Kaizen
• Japanese for gradual and orderly continuous improvement
over a long period of time with minimum financial investment,
and with participation by everyone in the organization.
• Improvement in all areas of business serves to enhance quality
of the firm.
• Three things required for successful kaizen program: operating
practices, total involvement, and training.
• Operating practices expose opportunities for improvement.
JIT reveals waste and inefficiency as well as poor quality.

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Process improvement: Kaizen
• Every employee strives for improvement. Top management
views improvement as part of strategy and supports it. Middle
management can implement top management’s improvement
goals by establishing, maintaining, and upgrading operating
standards. Workers can engage through suggestions, small
group activity.
• Middle management can help create conducive environment
for improvement by improving cooperation amongst
departments, and by making employees conscious of their
responsibilities for improvement.
• Supervisors can direct their attention more on improvement
than supervision, which will facilitate communication.

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Kaizen: Implementation
• The Deming cycle: Originally developed by Walter Shewart,
but renamed in 1950s because Deming promoted it
extensively.

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• Plan – Study the current system; identifying problems; testing
theories of causes; and developing solutions.
• Do – Plan is implemented on a trial basis. Data collected and
documented.
• Study – Determine whether the trial plan is working correctly
by evaluating the results.
• Act – Improvements are standardized and final plan is
implemented.
• Variation of PDSA cycle: FADE – Focus, Analyze, Develop,
Execute cycle!

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Juran’s breakthrough sequence:
1. Proof of the need
2. Project identification
3. Organization for breakthrough – two paths identified:
symptom to cause (diagnostic) and cause to remedy
(remedial) paths.
4. Diagnostic journey
5. Remedial journey
6. Holding the gains.

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Process improvement tools
Seven QC Tools
1. Flow charts
2. Check sheets
3. Histograms
4. Pareto diagrams
5. Cause-and-effect diagrams
6. Scatter diagrams
7. Control charts

With correct implemention of the Seven TQM
Tools 95% of quality related problems can be
solved.
The Seven TQM Tools

2. Histograms
1. Check Sheets
4. Control Charts
5. Run Charts
3. Scatter Diagrams
6. Ishikawa Diagram
7. Pareto Diagram
The Seven TQM Tools

Check Sheets are simple documents
that are used for collecting data in
real-time.
A Check Sheet is typically a blank
form that is designed for the quick,
easy and efficient recording of the desired information,
which can be either quantitative or qualitative.
When the information is quantitative, the check sheet is
called a Tally Sheet.
Check Sheets

A histogram divides
up the range of
possible values in a
data set into classes or
groups.
For each group, a
rectangle is constructed
with a base length equal to the range of values in that
specific group, and an area proportional to the number
of observations falling into that group.
Histograms

Scatter Diagrams are
used to present
measurements of two
or more related variables.
A Scatter Diagram does
not specify dependent or
independent variables.
Either type of variable can be plotted on either axis.
Scatter Diagrams represent the association (not
causation) between two variables.
Scatter Diagrams

A control chart consists
of the following:
A Centre Line (CL) drawn
at the process mean value.
Lower and Upper Control Limits that indicate the
threshold at which the process output is considered
statistically unlikely.
Control Charts
CL

Run Charts are
similar in some
regards to Contol
Charts, but do
not show the
control limits of
the process.
They are therefore
simpler to produce, but do not allow for the full range of
analytic techniques supported by Control Charts.
• Run chart: Measurement against progression of time.
• Control chart: Add Upper Control Limit and Lower Control Limit
to the run chart.
Run Charts

Machine Manpower
Method Material
Problem
Ishikawa Diagram is also called Cause-and-Effect
Diagram. Often are four generic heading used: 4 M´s!
Ishikawa Diagram
Also called fishbone diagrams (because of
their shape) or Ishikawa diagrams.
Helps in identifying root causes of the
quality failure. (Helps in the diagnostic
journey.)

The purpose of the Pareto Diagram is to highlight the
most important set of factors among a typically large
amount of causes for a problem.
In order to develop the Pareto Diagram for a specific
process, the knowledge of Frequncy, Relative
Frequency, Cumulative Frequency and Percentage
Frequency is needed.
Pareto Diagram

It can be noted that the 3 defects of out-of-dimension,
poor surface finish and loose joints account for 75% of
the rejections.
Pareto Diagram

1920 1940 1960 1980 2000
Quality
Improved
Design
Total Quality
Management
(TQM)
Statistical
Process
Control
(SPC)
Inspection
Quality
Through
Design
Quality as a Function of Time and Methods

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Other tools: Flow charts
• Process map identifies the sequence of activities or the flow in
a process.
• Objectively provides a picture of the steps needed to
accomplish a task.
• Helps all employees understand how they fit into the process
and who are their suppliers and customers.
• Can also pinpoint places where quality-related measurements
should be taken.
• Also called process mapping and analysis.
• Very successfully implemented in various organizations. e.g.
Motorola reduced manufacturing time for pagers using flow
charts.

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Scatter diagrams
• Graphical components of the regression analysis.
• Often used to point out relationship between variables.
Statistical correlation analysis used to interpret scatter
diagrams.

TQM for the Workforce
Kaizen teams
Quality Circles

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Quality circles
• Teams of workers and supervisors that meet regularly to address
work-related problems involving quality and productivity.
• Developed by Kaoru Ishikawa at University of Tokyo.
• Became immediately popular in Japan as well as USA.
• Lockheed Missiles and Space Division was the leader in
implementing Quality circles in USA in 1973 (after their visit to
Japan to study the same).
• Typically small day-to-day problems are given to quality circles.
Since workers are most familiar with the routine tasks, they are
asked to identify, analyze and solve quality problems in the
routine processes.

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Additional process improvement tools
Kaizen blitz
• An intense and rapid improvement process in which a team or
a department throws all its resources into an improvement
project over a short period of time.
• Short time “burst” rather than long range simmer- hence the
name.
• Blitz teams usually comprise of employees from all areas
involved in the process who understand it and can implement
the changes on the spot.

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Additional process improvement tools
Poka-Yoke (Mistake proofing)
• Approach for mistake-proofing processes using automatic
devises or methods to avoid simple human error.
• Developed and refined in the 1960s by the late Shigeo
Shingo, a Japanese manufacturing engineer who developed
the Toyota production system.
• Focused on two aspects:
1. Prediction – Recognizing that a defect is about to occur and
provide a warning.
2. Detection – Recognizing that a defect has occurred and stop
the process.

Quality Management Awards and
Framework
•ISO 9000: 2000
•Six Sigma
•Awards: Malcolm Baldrige National Quality
Award, EFQM Model, Deming Prize

ISO 9000
• The International Organization for Standardization (ISO)
• ISO 9000 Series of Quality Standards
–An international set of standards for documenting the
processes that an organization uses to produce its
goods and services.
ISO 9001:2000 Quality Management Systems:
Requirements
ISO 9004:2000 Quality Management Systems: Guidelines
for Performance Improvement
ISO 9000:2000 Quality Management Systems:
Fundamentals and Standards

ISO 9000 (cont’d)
• ISO 9000 Certification
–First party certification—A firm audits itself.
–Second party certification—Customers audit their suppliers.
–Third party assessment—Company is assessed by outside
registrars from ASQ’s Registration Accreditation Board
(RAB).
–ISO 9000/Q90 Registration Process
• Application to registrar
• Preliminary assessment
• Full audit

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ISO 9000: 2000
• Created by International Organization for Standardization
(IOS) which was created in 1946 to standardize quality
requirement within the European market.
• IOS initially composed of representatives from 91 countries:
probably most wide base for quality standards.
• Adopted a series of written quality standards in 1987 (first
revised in 1994, and more recently (and significantly) in
2000).
• Prefix “ISO” in the name refers to the scientific term “iso” for
equal. Thus, certified organizations are assured to have quality
equal to their peers.

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ISO 9000: 2000
• Defines quality systems standards based on the premise that
certain generic characteristics of management principles can
be standardized.
• And that a well-designed, well-implemented and well
managed quality system provides confidence that outputs will
meet customer expectations and requirements.
• Standards are recognized by 100 countries including Japan and
USA.
• Intended to apply to all types of businesses. (Recently, B2B
firm bestroute.com became the first e-commerce company to
get ISO certification.)

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ISO 9000: 2000
Created to meet five objectives:
1. Achieve, maintain, and seek to continuously improve
product quality in relation to the requirements.
2. Improve the quality of operations to continually meet
customers’ and stakeholders’ needs.
3. Provide confidence to internal management that quality
requirements are being met.
4. Provide confidence to the customers that quality
requirements are being met.
5. Provide confidence that quality system requirements are
fulfilled.

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ISO 9000: 2000 structure
• Consists of three documents
1. ISO 9000 – Fundamentals and vocabulary.
2. ISO 9001 – Requirements.
Organized in four sections: Management Responsibility;
Resource Management; Product Realization; and
Measurement, Analysis and Improvement.
3. ISO 9004 – Guidelines for performance improvements.

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ISO 9000: 2000 Quality Management
Principles
• Principle 1: Customer Focus
• Principle 2: Leadership
• Principle 3: Involvement of people
• Principle 4: Process approach
• Principle 5: Systems approach for management
• Principle 6: Continual improvement
• Principle 7: Factual approach to decision making
• Principle 8: Mutually beneficial supplier relationships.

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ISO 9000: 2000 registration
• Originally intended to be a two-party process where the
supplier is audited by its customers, the ISO 9000 process
became a third-party accreditation process.
• Independent laboratory or a certification agency conducts the
audit.
• Recertification is required every three years.
• Individual sites – not entire company – must achieve
registration individually.
• All costs are to be borne by the applicant.
• A registration audit may cost anywhere from $10,000 to
$40,000.
(more information at http://www.iso.ch)

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Six Sigma
• Business improvement approach that seeks to find and
eliminate causes of defects and errors in processes by
focusing on outputs that are critical to customers.
• The term Six Sigma is based on a statistical measure that
equates 3.4 or fewer errors or defects per million
opportunities.
• Motorola pioneered the concept of Six Sigma.
• The late Bill Smith, a reliability engineer is credited with
conceiving the idea of Six Sigma.
• GE (specifically CEO Jack Welch) extensively promoted it.

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Six Sigma
Core philosophy based on key concepts:
• Think in terms of key business processes and customer
requirements with focus on strategic objectives.
• Focus on corporate sponsors responsible for championing
projects.
• Emphasize quantifiable measures such as defects per million
opportunities (dpmo).
• Ensure appropriate metrics is identified to maintain
accountability.
• Provide extensive training.
• Create highly qualified process improvement experts -“belts”.
• Set stretch objectives for improvement.

87
Six Sigma
Contrasts between traditional TQM and Six Sigma (SS) -
• TQM is based largely on worker empowerment and teams; SS
is owned by business leader champions.
• TQM is process based; SS projects are truly cross-functional.
• TQM training is generally limited to simple improvements
tools and concepts; SS is more rigorous with advanced
statistical methods.
• TQM has little emphasis on financial accountability; SS
requires verifiable return on investment and focus on bottom
line.

Copyright © 2005 The
McGraw-Hill
McGraw-Hill/Irwin 9–88
Quality Performance Levels
for Various Processes
Source: Dave Harold, “Designing for Six Sigma Capability,”
Control Engineering, January, 1999. Exhibit 9.7

Recognizing and Rewarding Quality
• Promotion of High Quality Goods and Services
–Malcolm Baldrige National Quality Award (MBNQA)
(United States)
–Deming Prize (Japan)
–European Quality Award (European Union)
–ISO9000 certification

Malcolm Baldrige National Quality Award
(MBNQA)
• Background
–Established in 1987 to recognize total quality management in
American industry.
• Purpose
–Stimulate U.S. companies to improve quality and productivity.
–Establish guidelines and criteria to evaluate quality.
–Recognize those firms that improve their quality.
–Provide guidance in how to achieve quality.

McGraw-Hill
The Integrated Framework of
the Baldrige Award Criteria
Source: 2004 Criteria for Performance Excellence, U.S. Dept. of Commerce,
Baldrige National Quality Program, National Institute of Standards and
Technology, Gaithersburg, MD 20899. (www.quality.nist.gov) Exhibit 9.9

2001 Award Criteria—Item Listing
Source: 2004 Criteria for Performance Excellence, U.S. Dept. of Commerce,
Baldrige National Quality Program, National Institute of Standards and
Technology, Gaithersburg, MD 20899. (www.quality.nist.gov)

Benefits of the Baldrige Quality Criteria
• Baldrige guidelines can be used to:
–Help define and design a total quality system.
–Evaluate ongoing internal relationships among
department, divisions, and functional units within an
organization.
–Assess and assist outside suppliers of goods and
services to a company.
–Assess customer satisfaction.

European Quality Award (EQA)
• European Foundation for Quality Management (EFQM)
–Stimulate and assist European organizations in quality
improvement activities.
–Support managers in the adoption of TQM.
• EFQM Excellence Model
–A non-prescriptive frame work based on nine criteria
that recognizes that there are many approaches to
achieving sustainable excellence.

McGraw-Hill
Overview of the EFQM Excellence Model
Exhibit 9.11

McGraw-Hill
Recent Winners of the European Quality Award
Exhibit 9.11

The Deming Prize
• Deming Prize
–Initiated by Japan in 1951 to recognize the importance of high
quality products.
–Name after W. Edwards Deming
–Categories of the Deming Prize:
• The Deming Prize for Individuals
• The Deming Application Prize
• The Quality Control Award for Operations/ Business Units

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