mgt330

1. Dr. Ziaul Haq Adnan
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Total Quality Management, Lean, and
Six-Sigma

2. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Quality and Performance
• Quality
– Quality is the ability of a product or service to
consistently meet or exceed customer expectations.
• Defect
– Any instance when a process fails to satisfy its customer

3. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Costs of Quality
• Prevention costs
– Costs associated with preventing defects before they happen
[All TQ training, TQ planning, customer assessment, process
control, and quality improvement costs to prevent defects from
occurring]
• Appraisal costs
– Costs incurred when the firm assesses the performance level of
its processes
• Internal Failure costs
– Costs resulting from defects that are discovered during the
production of a service or product
• External Failure costs
– Costs that arise when a defect is discovered after the customer
receives the service or product

4. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Total Quality Management
• Total Quality Management
– A philosophy that stresses three principles (customer
satisfaction, employee involvement and continuous
improvement) for achieving high level of process
performance and quality

5. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Total Quality Management (1 of 4)
Figure 3.1 TQM Wheel

6. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Total Quality Management (2 of 4)
• Customer Satisfaction
– Conformance to Specifications
– Value
– Fitness for Use
– Support
– Psychological Impressions

7. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Total Quality Management (3 of 4)
• Employee Involvement
– Cultural Change
 Quality at the Source
– Teams
 Employee Empowerment
– Problem-solving teams
– Special-purpose teams
– Self-managed teams

8. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Total Quality Management (4 of 4)
• Continuous Improvement
– Kaizen
– Problem-solving tools
– Plan-Do-Study-Act Cycle

9. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
What is a Lean System?
Lean Systems
• Operations systems that maximize the value added by
each of a company’s activities by removing waste and
delays from them.

10. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Eight Types of Waste or Muda
1. Overproduction
2. Inappropriate Processing
3. Waiting
4. Transportation
5. Motion
6. Inventory
7. Defects
8. Underutilization of Employees

11. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Process Considerations in Lean
Systems (1 of 4)
Pull Method of Workflow (LEAN)
• A method in which customer demand activates the
production of the service or item.
Push Method of Workflow (NOT LEAN)
• A method in which production of the item begins in
advance of customer needs.
Just-in-time (JIT) philosophy (Lean)
• The belief that waste can be eliminated by cutting
unnecessary capacity or inventory and removing non-
value-added activities in operations.

12. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
5S
Table 6.2 5S Defined
5S Term Definition
1. Sort Separate needed items from unneeded items (including tools, parts,
materials, and paperwork), and discard the unneeded.
2. Straighten Neatly arrange what is left, with a place for everything and everything in
its place. Organize the work area so that it is easy to find what is needed.
3. Shine Clean and wash the work area and make it shine.
4. Standardize Establish schedules and methods of performing the cleaning and sorting.
Formalize the cleanliness that results from regularly doing the first three
S practices so that perpetual cleanliness and a state of readiness are
maintained.
5. Sustain Create discipline to perform the first four S practices, whereby everyone
understands, obeys, and practices the rules when in the plant. Implement
mechanisms to sustain the gains by involving people and recognizing
them through a performance measurement system.

13. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
House of Toyota
Figure 6.3 House of Toyota

14. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
What is a Value Stream Mapping (VSM)?
Value Stream Mapping
• A widely used qualitative lean
tool aimed at eliminating waste
or muda.
Figure 6.6 Value Stream
Mapping Steps

15. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
VSM Icons
Figure 6.7 Selected Set of Value Stream Mapping Icons

16. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Six Sigma (1 of 2)
• Six Sigma
– A comprehensive and flexible system for achieving,
sustaining, and maximizing business success by
minimizing defects and variability in processes
• Goal of achieving low rates of defective output by
developing processes whose mean output for a
performance measure is +/− six standard deviations
(sigma) from the limits of the design specifications
for the service or product.

17. Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved.
Six Sigma (2 of 2)
Figure 3.3 Six Sigma Approach Focuses on
Reducing Spread and Centering the Process