Manufacturing-Based Definition: Quality is “conformance to specifications.”
Value-Based Definition: Quality is defined in terms of costs and prices. A quality product is one that provides performance at an acceptable price or conformance at an acceptable costs.
Quality Revolution or Quality Confusion? Quality Circles Total Quality Management Statistical Process Control Six Sigma Quality Control Zero Defects Defect Prevention Quality Function Deployment Continuous Quality Improvement Quality Assurance Quality Planning
Hidden costs of poor quality Sea of Competition Reprocessing Rejects Sorting Inspection Customer returns Warranty expenses Downgrading of product Lost sales Process downtime Extra inventory Lost discounts Damaged goods Premium freight costs Customer allowances Overtime to correct errors Loss of good will Paperwork errors Delays Obsolete inventory Incorrect orders shipped Extra process capacity Competitor Competitor Competitor
Optimum Cost of Quality Quality of Conformance % Cost per Good Unit of Product 100 0 (Perfection) (No quality) Total quality costs per good unit of product Failure costs Costs of appraisal plus prevention Optimum cost
Quality Progress Market research Customer service Marketing, administrative support Inspection Test Production Process Control Operations planning Specification Product development and design Market research Wholesaling Retailing Use Feedback Purchasing Suppliers
Continuous Improvement 1. Agree on and document my requirements with my supplier. 2. Return defective inputs to my supplier promptly and tactfully. 3. Feedback input quality data to my supplier. 1. Understand my customer requirements, and agree on and document my deliverables. 2. Reduce defects and variations in my output. 3. Measure my output quality from my customer’s perspective. 1. Learn to apply the tools of quality - teach others. 2. Continuously improve my process - reduce defects, cycle time, and know benchmarks. 3. Document and display my process, defect levels, and CI projects. I Am Responsible for Quality As a Good Process Owner or User I will: As a Good Supplier I will: As a Good Customer I will: Requirements and feedback My input My supplier My customer Requirements and feedback My output
Use a successful case history to justify a broader program.
If all else fails, take pictures of waste and/or hazards (EIMCO example).
Are Quality Approaches Influenced By Culture? Quality Approaches are Influence by Culture The US approach has historically been command-and-control oriented. The Japanese approach is based on an ethic of consistency and emphasis on reduction of waste. The Europeans have adopted broad standards that can be adapted to the diverse nation states of the EC.
The President of the United States traditionally presents the Awards at a special ceremony in Washington, DC. Awards are made annually to recognize U.S. organizations for performance excellence. The Award eligibility categories are:
health care organizations
Recipients are expected to share information about their successful performance strategies with other U.S. organizations.
The Award is named for Malcolm Baldrige, who served as Secretary of Commerce from 1981 until his tragic death in a rodeo accident in 1987. His managerial excellence contributed to long-term improvement in efficiency and effectiveness of government.
The Criteria are the basis for organizational self-assessments,for making Awards, and for giving feedback to applicants. In addition, 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
The Malcolm Baldrige National Quality Award Baldrige Award Framework 4 Information and analysis 3 Customer and market focus 6 Process management 1 Leadership 7 Business results 2 Strategic planning 5 HR develop. & management Customer and Market Focused Strategy and Action Plans
In the second phase, Board of Examiners to conduct a rigorous evaluation of an organization's performance management system and the results of its processes. The first phase of the Award cycle is to establish that the applicant meets the eligibility requirements. Applicants submit an Eligibility Certification Package certifying that the organization is eligible to apply for the Award. The third phase of the Award cycle involves the review of the application package. Applications are reviewed and evaluated by members of the Board of Examiners, all of whom adhere to strict rules regarding conflict of interest. The review is conducted in three stages: Stage 1 - Independent Review Stage 2 - Consensus Review Stage 3 - Site Visit Review
The Deming Application Prize Given to companies or divisions of companies that have achieved distinctive performance improvement through the application of TQM in a designated year.
The Deming Prize for Individuals Given to individuals who have made outstanding contributions to the study of TQM or statistical methods used for TQM, or individuals who have made outstanding contributions in the dissemination of TQM.
The Quality Control Award for Operations Business Units Given to operations business units of a company that have achieved distinctive performance improvement through the application of quality control/management in the pursuit of TQM in a designated year.
ISO 9000 and ISO 14000 are known as generic management system standards . Generic means that the same standards can be applied to any organization, large or small, whatever its product - including whether its "product" is actually a service - in any sector of activity, and whether it is a business enterprise, a public administration, or a government department.
Management system refers to what the organization does to manage its processes, or activities in order that the products or services that it produces meet the objectives it has set itself, such as the following:
Value Engineering (VE) is an intensive, interdisciplinary problem solving activity that focuses on improving the value of the functions that are required to accomplish the goal, or objective of any product, process, service, or organization.
VALUE METHODOLOGY “The systematic application of recognized techniques which identify the functions of the product or service, establish the worth of those functions, and provide the necessary functions to meet the required performance at the lowest overall cost.”
* John M. Bryant, VM Standard , Society of American Value Engineers, Oct. 1998
Value Engineering/Value Analysis - Why is it important?
Last 3 years, 2.7 million manufacturing jobs left the U.S.
The U.S. is loosing the battle to foreign competition.
Labor costs $12 to $30 per hour in U.S., less than $1 elsewhere.
Fewer and fewer people will be required to produce the world’s goods.
Quality is defined as “conformance to specification.”
Value is defined as:
You can’t have one without the other!
Competitive Advantage = Quality + Value
Six Step Value Engineering Job Plan Information Phase Creativity Phase Evaluation Phase Planning Phase Reporting Phase Implementation Phase
Clearly identify the problem(s) to be solved, and gather information on the background, functions and requirements of the product, process, or system.
Brainstorm ideas on how to improve the high cost, broken, or inadequately performed key functions.
Screen ideas for acceptance, score remaining ideas on a scale and group ideas into categories. Develop design scenarios, and selection criteria. Rate and rank ideas.
Plan how to sell ideas to management, identify key recommendations, plan management presentation.
Give oral presentation to management, or develop written report.
Get management approval for go-ahead, make management plan, make assignments, implement, follow-up.
Mapping VE to 6 VA/VE 6 Information Phase Creativity Phase Evaluation Phase Planning Phase Reporting Phase Implementation Phase D efine the Problem M easure A nalyze I mprove C ontrol
Vilfredo Pareto Vilfredo Pareto (1848-1923) was an Italian economist and a political sociologist. He devised the law of the trivial many and the critical few, known as the 80:20 rule. Pareto’s Law states that in many business activities 80% of the potential value can be achieved from just 20% of the effort. The remaining 80% of effort shows relatively little return.
Sporadic problems are solved by fixing the control process.
Chronic problems are solved using process improvement techniques such as Value Engineering and/or Six Sigma.
Value Engineering may be applied to sporadic problems as well, e.g., Boeing 737/757 elevator feel computer problem.
Sporadic and chronic quality problems Loss due to defects Time Sporadic departure from historic level Historic level Improved level The difference between historic and improved levels is caused by a chronic disease that can be eliminated economically through process improvement techniques.