01. Statistical quality control Introduction.ppt

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Managing Quality
Integrating the Supply Chain
S. Thomas Foster
Chapter 1
Differing Perspectives on Quality
(© 2007 Pearson Education

Attendance
 Attendance is mandatory
 After three time unexcused absence, you will receive a
warning.
 After the fourth time, you will be denied access to the final
exam.
 Accepted absence excuses:
 Sickness: A report sign by the Academy doctor
 Sports event: Formal union letter
 Sports champions should provide the lecturer with their
formal training/ championship schedule no later than the third
week.
 You are allowed in into the lecture hall for up to 10 minutes
past the start of the lecture. No exception.

Sections
 Attendance is mandatory
 Section attendance and assignments hold 10% of your
grades
 Assignments are due in one week from the announcement
day.
 No late assignments are allowed, no exception.
 Please bring your laptop
 Email is the primarily communication method adopted in the
course. Please provide us with a valid email within the first 2
weeks and check the email on a regular basis.
 When sending an email, include AAST in the header, and
include all the necessary information in the body.

Exams
 There are three exams:
 7th week exam: 30% of your grades
 The TA will solve the exam the following week and will
provide you with your answer sheet.
 The schedule will be announced by the 5th week
 12th week exam: 20% of your grade, could be a project
depending on the class progress
 Final exam : 40% comprehensive exam
 The official grading system will be used.
 The lecturer preserves the right to normalize the result if
there is a bias provided that the student shows an adequate
participation in the course.

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Major Themes
 Today, supply chains compete, not individual firms.
 A firm’s supply chain, upstream and downstream, constrains and
enables the firm.
 Firm’s must manage quality in their supply chain, upstream and
downstream.
 Quality management is not “owned” by any one of the functional
areas such as operations, HRM, marketing, etc. All functional areas
must own their “quality management” processes.
 There is no one way to improve quality. Firms must use the
contingency approach to assess the current position of the firm
and identify an effective strategy for improvement based on a clear
understanding of their company, market, customers, suppliers, and
the quality management alternatives. Improvement is based on the
contingent variables that are operative in the firm as it exists.

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 Chapter Overview
 What is Quality?
 Differing Functional Perspectives on Quality
 The Three Spheres of Quality
 Other Perspectives on Quality
 Arriving at a Common Perspective
(
Differing Perspectives on Quality
Chapter 1
In chapter 1 through 3, we form the basis for the
contingency approach. To apply quality improvement on
a contingency basis we need to understand the foundation
that has been laid by leaders in the quality movement.

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What is Quality?
Cross-functional and Cross-firm Flows
 Quality management involves flows: process flows, information
flows, material flows, and fund flows. Each of these flows has to
operate efficiently, effectively, and with quality. Like a river, we
have upstream and downstream flows. The sums of these flows
make up the supply chain for a firm.
 Using the supply chain as the model for competition, we must
internalize external upstream and downstream processes from
raw materials to after-sale service.
 The firm must integrate differing functions, expertise, and
dimensions of quality. This integration requires flexible, cross-
functional, problem-solving and employees who can adapt to
rapidly changing markets.

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What is Quality?
Product Quality Dimensions
 Garvin’s definitions of quality based on the perspective of the
viewer (perception is reality)
 Transcendent - quality is intuitively understood but nearly
impossible to communicate
 Product-based – quality is found in the components and attributes
of a product
 User-based – if the customer is satisfied, the product has good
quality
 Manufacturing-based – if the product conforms to design
specifications, it has good quality
 Value-based – if the product is perceived as providing good value for
the price, it has good quality

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What is Quality?
 Performance
 Features
 Reliability
 Conformance
 Durability
 Serviceability
 Aesthetics
 Perceived Quality
©
Garvin’s dimensions (measures) of product quality
These different dimensions of quality are not mutually
exclusive.

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What is Quality?
(
Performance
Features
Reliability
Conformance
Efficiency with which a
product achieves its
intended purpose

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What is Quality
Performance
Features
Reliability
Conformance
 Attributes that
supplement the product’s
basic performance – bells
and whistles
© 2007 Pearson Education

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What is Quality
Performance
Features
Reliability
Conformance
Performs consistently
over the product’s useful life.

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What is Quality
Performance
Features
Reliability
Conformance
Adherence to quantifiable
specifications within a
small tolerance – the most
traditional definition of
quality

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What is Quality
 Tolerate stress or
trauma without failing
 Durability
 Serviceability
 Aesthetics

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What is Quality
 A product is serviceable if
it can be repaired easily
and cheaply
 Durability
 Serviceability
 Aesthetics

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What is Quality
 Subjective
characteristics such as
taste, feel, sound, look.
 Durability
 Serviceability
 Aesthetics

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What is Quality
 Quality as the customer
perceives it - image,
recognition, word of mouth.
 Durability
 Serviceability
 Aesthetics

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What is Quality
Service Quality Dimensions
 Tangibles
 Service Reliability
 Responsiveness
 Assurance
 Empathy
Parasuraman, Zeithamel, and Berry provide service quality
dimensions (measures):
Services have more diverse quality attributes than products
because of wide variation created by high customer involvement.

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What is Quality
 Tangibles
 Responsiveness
 Assurance
 Empathy
 Physical appearance of
the facility, equipment, and
personnel

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What is Quality
 Tangibles
 Responsiveness
 Assurance
 Empathy
 The ability of the service
provider to perform the
promised service

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What is Quality
 Tangibles
 Responsiveness
 Assurance
 Empathy
 The willingness of the
provider to be helpful and
prompt in providing service

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What is Quality
Tangibles
 Responsiveness
 Assurance
 Empathy
 The knowledge and
courtesy of the employees
and their ability to inspire
trust and confidence

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What is Quality
Tangibles
 Responsiveness
 Assurance
 Empathy
 Caring individualized
attention from the service
company
In service “If you are in it for the money, you probably won’t
survive.” If employees are constantly focused on efficiency,
they will not give the customers the feeling that they care. There
is no empathy, so there are no return customers.

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What is Quality?
Why does it matter that different definitions of quality exist?
 Different functional areas have different definitions of quality.
 However, we want everyone in all functional areas to execute from
the same playbook with regard to the meaning of quality for the firm.
 Cross-functional teams must share a common definition of quality
so these diverse teams will be working for a common goal. All
functional areas must focus on what they need to do to meet the
customer’s definition of quality.
 However, cross-functional teams have poor communication because
of their different vocabularies, priorities, and cognitive styles.
 As organizational processes become more cross-functional, many of
these communication issues will resolve themselves.

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Functional perspectives include:
 Supply Chain
 Operations
 Strategic Management
 Marketing
 Financial
 Human resource
What is Quality?
Differing Functional Perspectives on Quality

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What is Quality?
Supply Chain Management (SCM) Perspective
 Supply chain management (SCM) grew out of the concept of the value
chain.
 The value chain includes inbound logistics, core processes (operations
and marketing), and outbound logistics – processes which directly add
value to the product or service.
 Functions such as HRM, IS, and Purchasing support the core processes
in the value chain – non-value added processes which provide a
context for the value chain processes.
 Upstream activities include all of those activities involving interaction with
suppliers.
 Downstream activities include shipping and logistics, customer support,
and focusing on delivery reliability.

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What is Quality?
Supply Chain Management (SCM) Perspective
 Supplier development activities include evaluating, training, and
implementing systems with suppliers, such as electronic data
interchange (EDI) to link customer purchasing systems to supplier
enterprise resource planning systems (ERP).
 Supplier qualification involves evaluating supplier performance with
regard to conformance rates, cost levels, delivery reliability, etc. using
supplier filters, such as ISO/TS 16949 (an automotive standard), ISO
9000:2000, and QS9000.
 Value stream mapping flowcharts processes to determine where
customer value is created as well as identifying non-value-added
process steps. Value stream mapping also involves analyzing processes
from a systems perspective such that upstream and downstream effects
of core process changes can be evaluated.

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What is Quality?
Operations Management (OM) Perspective
 The OM view of quality is rooted in the engineering approach and was
the first functional field of management to adopt quality as its own.
 OM is concerned about product and process design. However, rather
than focusing on only the technical aspects of these activities, OM
concentrates on the management and continuous improvement of
conversion processes.
 OM uses the systems view which is the basis for quality management.
The systems view maintains that product quality is the result of the
interactions of several variables (manpower, materials, methods,
machinery, feedback, environment, time, and technology) which
comprise a system, and these variables and their interactions are the cause
of quality problems.

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What is Quality?
 Ferdows and Demeyer link the strategic view of OM to quality
management with their sand-cone model: quality is the basis on
which lasting improvement in other competitive dimensions (reliability
- dependability, cycle time - speed of delivery of concept to
market, and cost - efficiency) are accomplished.
Operations Management (OM) Perspective
Inputs Conversion Process Outputs Customer
Process
Control
Customer
Feedback
Planning
Organizing
Controlling
 OM has an operations-marketing interface which focuses
priorities on the customer in the product and process design and
operations decisions.

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What is Quality?
 The Sand Cone Model for Priorities
Cost (Efficiency)
Cycle Time (Speed)
Reliability (Dependability)
Quality

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What is Quality?
Strategic Management Perspective
 For Quality Management to be pervasive in a firm it needs to be included
in all of the firm’s business processes including Strategic Planning.
 Strategy is the planning process used by an organization to achieve a
set of long-term goals. This planned course of action must be cohesive
and coherent in terms of goals, policies, plans, and sequencing to
achieve quality improvement.
 Company strategies are based on a mission (why the organization exists)
and core values (guiding operating principals that simplify decision
making).
 Mission and core values influence organizational culture, a major
determinant (and sometimes roadblock) to the successful implementation
of quality improvements.

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What is Quality?
Strategic Management Perspective
 The ultimate goal of strategic quality planning is to aid an
organization to achieve sustainable competitive advantage.
 Alignment refers to consistency between different operational sub-
plans and the overall strategic plan.
 Madu and Kuei propose a strategy process based on plan-do-
check-act:
 plan – strategy formulation
 do – implement strategy in a pilot
 check – evaluate pilot implementation and make adjustments
 act – full scale strategy implementation

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What is Quality?
Financial Perspective
 “Will quality management pay us financial benefits?”
The answer is an unqualified “maybe.”
 Deming made the first theoretical link between quality improvement and
financial results: Quality Improvement leads to reduction of defects,
improved organizational performance, and increased employment.
 Finance is concerned with the relationship between the risks of investments
and their potential return on investment to maximize return for a given level of
risk.
 Finance professionals communicate using an accounting language: the
language of financial management is money.
 Quality professionals must translate the quality concerns into the costs of
(poor) quality in terms of lost sales, inspection, scrap, and rework.
 The pursuit of quality does not safeguard a company against bad management
because of intervening variables (e.g., products that don’t meet customer
needs).

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What is Quality?
Financial Perspective - The Deming Value Chain
Improve Quality
Decrease Costs
Improve Productivity
Capture Market
Stay in Business
Provide More jobs

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What is Quality?
 Finance professionals believe the law of diminishing marginal
returns applies to quality improvement.
Minimum
Cost
Total Quality Costs =
Sum of Losses +
Costs of Improving Quality
Optimum Quality Level
Cost
Quality
Costs of Improving
Quality
Losses Due to
Poor Quality
The financial perspective on quality relies on quantified measurable,
results oriented thinking.
Minimum Sum of
Losses + Costs

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What is Quality?
 Human Resources (HRM) Perspective
 It is impossible to implement quality without the commitment and
action of employees (want lions– not chickens).
 Employee empowerment moves decision making to the lowest level
possible in the organization.
 Organizational design is concerned with the design of reward
systems, pay systems, organizational structure, compensation, training
programs, and employee grievance and arbitration.
 HRM advocates the employee to management and the company’s
needs to the employee.
 Quality management flourishes where the employees’ and the
company’s needs are aligned – what’s good for the company is
good for the employees.

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What is Quality?
HRM Perspective
 HRM Functions
 Job analysis involves collecting detailed information about each job.
This information includes tasks, skills, abilities, and knowledge
requirements for each job. This information is used to define a job
description which is used to set pay levels. The bureaucratic delay
in accomplishing job analysis to modify job descriptions can limit the
ability of the organization to achieve the flexibility needed for quality
management.
 Selection in recruitment and hiring decisions involves finding
employees who have the technical and behavioral preparation to
perform the tasks for a job, and who are fast learners during quality
improvements. The selection process is critical because people,
politics, and culture constrain and enable organizational change.

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What is Quality?
HRM Perspective
 HRM Functions
 Effective training provides for standardizing methods for solving
unstructured problems in quality management. Top managers and
low-ranking employees should use similar processes for solving
problems. This is called vertical deployment of quality management.
Different departments should use similar processes for solving
problems to achieve horizontal deployment of quality management.
 Performance appraisals and evaluations are key methods for
motivating employees. Face-to-face reporting sessions and 360-
degree evaluations (an employee’s peers, supervisors, and
subordinates evaluate the employee) are used.

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What is Quality?
HRM Perspective
 The following table distinguishes between traditional HRM and total quality
human resources management.
Traditional HRM TQHRM
Process Characteristics Unilateral role Consulting role
Centralized Decentralized
Push - Demand Pull – Empower
Administrative Developmental
Content Characteristics Single-mindedness Pluralistic
Compartmentalized Holistic
Worker-oriented System-oriented
Performance Satisfaction
Job-based Person-based

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What is Quality?
 Marketing Perspective
 Traditional marketing involved directing the flows of products and services
from producer to consumer. The new relationship marketing directs its
attention toward satisfying the customer and delivering value to the customer.
 Companies are basing sales commissions on perceptual measures of
customer satisfaction rather than volume of sales because the value of the
loyal customer is much greater than an individual transaction.
 The marketer focuses on the perceived quality of products and services,
quality as the customer views it, and marketing efforts are focused on
managing quality perceptions.
 The primary marketing tools for influencing customer perceptions of quality
have been pricing and advertising, but these tools are inadequate for
influencing perceptions of quality because not all products are priced based
on cost of materials and production only.

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What is Quality?
 Marketing Perspective
 Marketing systems involve interactions between the producing organizations,
the intermediaries, and the final consumer, and it is often very difficult for firms
to agree on who the customer is.
 Marketing is also focused on service at the time of the transaction and after-
sales support.
 Marketing interacts closely with engineering and operations in product design to
bring the voice of the customer into the design process.
 Customer service surveys are used for assessing the multiple dimensions of
quality.
 The customer is the focus of marketing-related quality improvement in
developing specialized products for different customers, which is in conflict
with standardizing products to reduce complexity by operations.

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What is Quality Management?
 The focus of quality management is to manage properly the interactions
among people, technology, inputs, processes, and systems to provide
outstanding products and services to customers.
 With total quality management (TQM), the role of the quality department
has moved from a technical, inspection, policing role to a supportive
training and coaching role.
 A strong knowledge of quality is best coupled with technical expertise
in business disciplines such as materials management, supply chain
management, finance, accounting, operations management, HRM,
strategy, and industrial engineering.
 The goal is to completely immerse the organization in quality thinking
and commitment.

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The Three Spheres of Quality
Quality
Management
Quality
Assurance
(proactive)
Quality
Control
(reactive)

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 Quality Control
 The control process is based on the scientific method which includes
the phases of analysis, relation, and generalization.
• Analysis involves breaking the process into its fundamental
pieces.
• Relation involves understanding the relationships between the
parts.
• Generalization involves perceiving how interrelationships apply to
the larger phenomenon of quality being studied.

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 Quality Control
 Activities relating to quality control include:
• Monitoring process capability and stability
• Measuring process performance
• Reducing process variability
• Optimizing processes to nominal measures
• Performance acceptance sampling
• Developing and maintaining control charts

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 Quality Assurance
 Assurance refers to proactive activities associated with guaranteeing
the quality of a product or service, especially during the design phase.
 By contrast, quality control is reactive, rather than proactive, by
detecting quality problems after they occur.
 Quality assurance activities include:
• Failure mode and effects analysis
• Concurrent engineering
• Experimental design
• Process improvement
• Design team formation and management
• Off-line experimentation
• Reliability/durability product testing

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 Quality Management
 The management processes that overarch and tie together the control
and assurance activities make up quality management.
 The integrative view of quality management supports the idea that
quality is the responsibility of all management, not just quality
managers.
 All managers, supervisors, and employees are involved in the following
quality management activities:
• Planning for quality management
• Creating a quality organizational culture
• Providing leadership and support
• Providing training and retraining
• Designing an organizational system that reinforces quality ideals
• Providing employee recognition
• Facilitating organizational communication

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What is Quality?
 A customer-based perspective on quality involves the concept of
value-added. A value-added perspective on quality involves a
subjective assessment of the efficacy of every step of the process for
the customer. A value-added activity can be identified by asking ,
“Would this activity matter to the customer?” “Would the
customer pay for this activity?”
 A contingency perspective of quality is based on the theory that
businesses differ in key areas such as mission, core competence,
customer attributes, target markets, technology deployment, employee
knowledge, management style, culture, and a myriad of other
environmental variables.
 Contingency theory presupposes that there is no theory or method
for operating a business that can be applied in all instances. A
coherent quality strategy will need to address these key environmental
variables. All organizations pursue different paths and strategies
to achieve quality.
`

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