Total Quality Management Chapter 7: Performance Measures Atit Patumvan Faculty of Management and Information Sciences, Naresuan University 1
Agenda • Objectives • Partnering • Sourcing • Supplier Selection • Supplier Rating • Relationship DevelopmentAtit Patumvan, Faculty of Management and Information Sciences, Naresuan University
Objectives• Establish baseline measures and reveal trends.• Determine which processes need to be improved.• Indicate process gains and losses.• Compare goals with actual performance.
Objectives• Provide information for individual and team evaluation.• Provide information to make informed decisions• Determine the overall performance of organization.
Administration Human ResourcesR&D Production Typical MeasurementMarket & Sales Suppliers Customer
Criteria• Simple • Cost• Few in number • Visible• Developed by users • Timely• Relevance to customer • Aligned• Improvement • Results
Strategy Quality• Percent reduction in cost of poor quality• Percent reduction in noncomformities• Percent of certiﬁed suppliers• Percent reduction in supplier base• Percent reduction in corrective action cycle time Cost• Percent increase in inventory turnover• Percent reduction in data transactions• Percent increase in materials shipped direct to work-in-process by the supplier• Percent increase in output dollars per employee• Percent reduction in ﬂoor space utilization
Strategy Flexibility• Percent reduction in cycle time• Percent reduction in setup time• Percent reduction in lot/batch size• Percent increase in number of jobs mastered per employee• Percent increase in common materials used per product Reliability• Percent of process capable of Cp =2.0• Percent reduction in downtime• Percent reduction in warranty costs• Percent reduction in design changes• Percent increase in on-time delivery
Strategy Innovation• Percent reduction in new product introduction time• Percent increase in new product sales revenues as a percent of total sales revenue• Percent increase in new patents granted• Customer perception as a leader in innovation• Percent of management time spent or leading innovation
Performance Measure Presentation• Time Series Graphs• Control Chart• Capability Index: • ability of process to meet speciﬁcations • centering of the process on the target
Performance Measure Presentation• Taguchi’s loss function• cost of poor quality• Malcolm Baldrige National Quality Award