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Tqm vtumba module 1

This document provides definitions and perspectives on quality from various organizations such as Fedex, Boeing, and the US Department of Defense. It states that quality involves meeting or exceeding customer expectations and applies to products, services, processes, and environments. Quality is defined as a dynamic state that is associated with meeting or exceeding expectations. The document then discusses the fundamental, measurable, operational, conservational, and human aspects of quality. It provides definitions of total quality management and lists its main advantages as encouraging strategic approaches, providing high returns on investment, and fitting orientations toward collaboration.

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MODULE I INTRODUCTION TO TQM Ms. Bhavani B.S. Asst. Professor RIT, Hassan
What is Quality  FEDEX - “Performance to the standard expected by the customer”  General Services Administration - “Meeting the customer’s need the first time and every time”  BOEING - “Providing customers with products and services that consistently meet their needs and expectations.  US Department of Defense - “Doing the right thing right the first time, always striving for improvement, and always satisfying the customer”.  Quality can be defined in terms of the agent. Who is the judge of quality?
Contd…..  Quality involves meeting or exceeding customer expectations.  Quality applies to products, services, people, processes, and environments.  Quality is an ever-changing state (i.e., what is considered quality today may not be good enough to be considered quality tomorrow).  Quality (kwol’e-te’). A systematic approach to the search for excellence. (Synonyms: productivity, cost reduction, schedule performance, customer satisfaction, teamwork, the bottom line.)  Quality is a dynamic state associated with products, services, people, processes and environments that meets or exceeds expectations.
Fundamental aspects of quality   Measurable aspects of quality Consumer (marketable)   Operational aspects of quality     Conservational aspects of quality   Environmental aspects of quality     Human aspects of quality   Quality of design (specifications, standards, grades) Quality of conformance Fitness for use, performance, reliability, life, price, availability, delivery Quality of management, operations, employees, system, maximum output, minimum waste and cost, optimum delivery Optimum use of resources (materials. Machines, money, land, energy, people) Ecology, clean air, unpolluted water, potable water, tolerable noise levels, safe waste, open space, landscape, recreation, beauty Quality of life, health, education, culture, society, freedom, ethical and moral values
What is Quality?   Conformance to specifications How well a product or service meets the targets and tolerances determined by its designers. For example, the dimensions of a machine part may be specified by its design engineers as 3.05 inches. This would mean that the target dimension is 3 inches but the dimensions can vary between 2.95 and 3.05 inches. Similarly, the wait for hotel room service may be specified as 20 minutes, but there may be an acceptable delay of an additional 05 minutes. Also, consider the amount of light delivered by a 60 watt light bulb. If the bulb delivers 50 watts it does not conform to specifications
  Fitness for use A definition of quality that evaluates how well the product performs for its intended use. For example, a Mercedes Benz and a Jeep Cherokee both meet a fitness for use definition if one considers transportation as the intended function. However, if the definition becomes more specific and assumes that the intended use is for transportation on mountain roads and carrying fishing gear, the Jeep Cherokee has a greater fitness for use. You can also see that fitness for use is a user-based definition in that it is intended to meet the needs of a specific user group.
  Value for price paid is a definition of quality that consumers often use for product or service usefulness. This is the only definition that combines economics with consumer criteria; it assumes that the definition of quality is price sensitive. For example, suppose that you wish to sign up for a personal finance seminar and discover that the same class is being taught at two different colleges at significantly different tuition rates. If you take the less expensive seminar, you will feel that you have received greater value for the price.
  Support services provided are often how the quality of a product or service is judged. Quality does not apply only to the product or service itself; it also applies to the people, processes, and organizational environment associated with it. For example, the quality of a university is judged not only by the quality of staff and course offerings, but also by the efficiency and accuracy of processing paperwork.
   Psychological criteria is a subjective definition that focuses on the judgmental evaluation of what constitutes product or service quality. Different factors contribute to the evaluation, such as the atmosphere of the environment or the perceived prestige of the product. For example, a hospital patient may receive average health care, but a very friendly staff may leave the impression of high quality. Similarly, we commonly associate certain products with excellence because of their reputation; Rolex watches and Mercedes-Benz automobiles are examples.
DEFINITION OF TQM  TQM is a management approach for an organization, centered on quality, based on the participation of all its members and aiming at long-term success through customer satisfaction, and benefits to all members of the organization and to society  TQM Definitions:    Focussing on customers satisfaction. Provides best quality product at lowest possible price Prevention of defects, target is zero defects
Details About TQM Total = Quality involves everyone and all activities in the company. I.Marketing II.Finance III.Design IV.Engineering V.Production VI.Customer service
Cont… Q : quest for excellence U : understanding customer A : action for achieve customer satisfaction L : better leadership I : involvement of all people T : team spirit to work for common goal Y : yardstick to measure progress
Cont…
Total Quality Management
Approach Scope Scale Philosophy Management Led Company Wide Everyone is responsible for Quality Prevention not Detection Standard Right First Time Control Cost of Quality Theme On going Improvement
Criteria: 1. 2. 3. 4. 5. 6. 7. 8. Principles of TQM Leadership System Approach to Management Customer Driven Organization Factual Approach in Decision Making Involvement of People Process Approach Continual Improvement Mutually Beneficial Customer-Supplier Relationships
Main Advantages of TQM 1. 2. 3. 4. 5. Encourages a strategic approach to management at the operational level through involving multiple departments in cross-functional improvements and systemic innovation processes; Provides high return on investment through improving efficiency; Works equally well for service and manufacturing sectors; Allows organizations to take advantage of developments that enable managing operations as cross-functional processes; and Fits an orientation toward inter – organizational collaboration and strategic alliances through establishing a culture of collaboration among different departments within organization.
Comparison of OLD and TQM Cultures
Barriers in Successful TQM         Lack of management commitment Inability to change org. culture Improper planning Lack of continuous training and Education Lack of data & results or access to data or ineffective measurement Inadequate attention to customer (I&E) Inadequate use of empowerment & teamwork Incompatible org structure , individualistic
History of Quality Management  Frederick W. Taylor wrote Principles of Scientific Management in 1911.  Walter A. Shewhart used statistics in quality control and inspection, and showed that productivity improves when variation is reduced (1924); wrote Economic Control of Manufactured Product in 1931.  In 1942 – W. Shewart introduced statistical control charts to monitor production. In 1930 H.F. Dodge and H.G. Romig introduced tables for acceptence sampling. World War II caused a dramatic increase in Quality Control. US Universities started training engineers in the industries W. Edwards Deming (SQC) and Joseph M. Juran (Cost of Quality Approach), students of Shewhart, went to Japan in 1950; began transformation from “shoddy” to “world class” goods.    
Contd…       Armand Fiegan Baum proposed TQC which enlarged the focus of QC from manufacturing to include product design and incoming raw material. In 1960, Dr. K. Ishikawa formalized “quality circles” - the use of small groups to eliminate variation and improve processes. Around the same time the concept of “Zero-Defects” (Philip Crosby) gained favour , focused on employee motivation and awareness. Early 1970s quality assurance methods were used in services govt. operations, healthcare and banking services etc.. A Dramatic shift from Quality Assurance to Strategic Approach to Quality, i.e., from reactive approach of finding and correcting defectives in products manufactured was changed to pro-active approach of focusing on preventing defects from recurring altogether. In the late ‘70’s and early ‘80’s:  Deming returned from Japan to write Out of the Crisis, and began his famous 4-day seminars in the United States  Philp Crosby wrote Quality is Free  NBC ran “If Japan can do it, why can’t we?”  Motorola began 6 Sigma
Dimensions of Quality: Manufactured Products  Performance   Features   primary operating characteristics of a product; how well a car is handled or its gas mileage, for a television it includes sound, picture clarity, colour and ability to receive signals and other applications. “extra” items added to basic features, such as a stereo CD or a leather interior in a car, boot space, central lock system and etc…. Reliability  Probability of a product will operate properly within an expected time frame; that is, a TV will work without repair for about seven years. MTFF (Mean time to first failure) AND MTBF (Mean time between failures)
Dimensions of Quality: Manufactured Products (cont.)  Conformance   Durability   degree to which a product meets pre–established standards, For Ex: product design and stds.) how long product lasts before replacement, measure of product life, it has both economic and technical dimensions. (A light bulb will burn for certain hours) Serviceability  ease of getting repairs, speed of repairs, courtesy and competence of repair person, measured as Mean Time To Repair( MMTR)
Dimensions of Quality: Manufactured Products (cont.)  Aesthetics   Perceived Quality   how a product looks, feels, sounds, smells, or tastes subjective perceptions based on brand name, advertising, and the like Safety  assurance that customer will not suffer injury or harm from a product; an especially important consideration for automobiles
Dimensions of Quality   Reliability: involves consistency of performance and dependability. Firm performs the service right the first time. Firm should honour its promises    Accuracy in billing Keeping records correctly Performing the service at the designated time
Contd…  Responsiveness: willingness or readiness of employees to provide service     Timeliness of service Mailing a transaction slip immediately Calling the customer back quickly if necessary Giving prompt service, e.g., setting up appointments quickly
Contd…  Competence: possession of the required skills and knowledge to perform the service    Knowledge and skills of control personnel Knowledge and skills of operation support personnel Access: ease of contact and approachability     The service is easily accessible by telephone (lines are not busy and do not put you on hold) Waiting time to receive service (bank) is not extensive Convenient hours of operation Convenient location of service facility
Contd…   Courtesy: politeness, respect, consideration, and friendliness of contact personnel Communication: Keeping customers informed in the language they understand and listening to them.    Explaining the service Explaining how much the service will cost Assuring the consumer that a problem will be handled.
Contd….  Credibility: trustworthiness, believability and honesty. Having customer’s best interests at heart.    Company name Company reputation Personal characteristics and behaviour of the contact personnel.
Contd….  Security: Freedom from danger, or doubt    Physical safety: (Will I get mugged at the automatic teller machine) Financial Security (Does the company know where my stock certificate is, is my investment safe?) Confidentiality (Are my dealings with the company private?)
Contd….  Empathetic to Customer: Efforts to understand the needs of customer     Learning the customer’s specific requirements Providing individualized attention Recognizing the regular customer Tangibility: Includes physical evidence of the service such as     Physical facilities Appearance of personnel Tools or equipment used to provide the service Other service facility
Cost of Quality
Why do we need to know COQ?  This tool speaks in the language of management $$$$  Research shows that cost of poor quality can range from 15 % to 40 % of the business costs  It can prioritize quality improvement actions  Cost of quality data shows how profit is affected by quality  It helps identify the redundant activities
Hidden Failure Costs Scrap Warranty Rework Engineering time Management time Shop and field downtime Increased inventory Decreased capacity Customer dissatisfaction Lost sales Lost customer trust
Categories of Quality Costs Quality Costs Conformance Prevention Non-Conformance Appraisal Internal failure External failure
Cost of quality Cost of quality = Cost of conformance + Cost of nonconformance  Cost of conformance is the cost of providing products or services as per the required standards. This can be termed as good amount spent. (Prevention & Appraisal costs)  Cost of non-conformance is the failure cost associated with a process not being operated to the requirements. This can be termed as unnecessary amount spent.( Internal & External failure costs)
Prevention Costs Prevention costs are associated with design, implementation , maintenance, and planning prior to actual operation, in order to avoid defects from happening. The emphasis is on the prevention of defects in order to reduce the probability of producing defective products. Prevention activities lead to reduction of appraisal costs and both type of failures ( internal and external ).The motto is “Prevention rather than appraisal” .
Activities associated with Prevention costs Market research Quality training programs. Contract review Design review Field trials Supplier evaluation Process plan review Process capability review Design and manufacture of jigs and fixtures Preventive checks & maintenance
Appraisal costs Appraisal costs are spent to detect defects to assure conformance to quality standards. Appraisal cost activities sums up to the “cost of checking if things are correct”.The appraisal costs are focused on the discovery of defects rather than prevention of defects
Activities associated with Appraisal costs Proto type testing Vendor surveillance Incoming material inspection Process inspection/control Final inspection Laboratory testing / measurement Depreciation cost for measuring Quality audits.
Internal failure costs Internal failure costs occurs when results of work fail to reach designated quality standards , and are detected before transfer to the customer takes place.
Examples Internal failure costs Design changes/ corrective action Scrap due to design changes Excess inventory Rectification / reject disposition of purchased material Rework/rejection in manufacturing Downgrading of end product Downtime of plant & machinery Trouble-shooting & investigation of defects
External failure costs External failure costs occur when the product or service from a process fails to reach designated quality standards , and is not detected until after transfer to the customer.
Activities associated with External failure costs Processing / investigation of customer complaint Repair/replacement of sold goods Warranty claims Product liability & litigation costs Interest charges on delayed payment due to quality problems Loss of customer goodwill & sales.
Size of four categories of quality costs. The organizations which do not follow TQM,there is less emphasis on prevention and their main quality efforts are on appraisal with very little control on internal and external failure costs. Various studies have shown that quality cost in manufacturing companies the world over range from 20 % to 30 % of turnover and in the case of service companies it can go up to 40 % as illustrated in graph on the next slide.
Size of various quality cost elements Quality costs in % of sales 10-15% 10-12% The total quality costs 25-35 % of turnover. 4-6% 1% Preventive Appraisal Internal Failure External Failure
Impact of TQM on costs. TQM is primarily aimed to improve the quality of the product , higher customer satisfaction and better working environment for the employees. The most dramatic impact of TQM is on reduction of quality costs which directly effect the profitability . This is demonstrated by the results of TQM program in Xerox Corp . The change in various elements of quality cost before and after launching TQM by Xerox Corp is shown on the next slide.
Impact of TQM on costs. An example from Xerox Corp. 35 % of sales 30 25 Internal Failure 20 15 10 Internal Failure Appraisal Appraisal 5 0 prevention Before TQM Prevention After TQM
Stages Prevention Correction Failure Rs Rs Rs Rs Rs Rs 1 10 Rs R s 100 Rs Rs Cost of rectifying defect 1-10-100 Rule
cost of quality Traditionally recorded quality cost generally account for only 4 to 5 percent of sales which mainly comprise of cost of scrap, rework and warranty.
Hidden costs of quality There are additional costs of quality which are hidden and do not appear in the account books of the company, as they are intangible and difficult to measure. These additional costs could be as high as 20-25% of sales.
Visible and hidden costs Visible costs •Scrap •Rework •Warranty costs Hidden Costs • Conversion efficiency of materials • Inadequate resource utilization • Excessive use of material • Cost of redesign and re-inspection • Cost of resolving customer problems • Lost customers / Goodwill • High inventory
TQM V/S Traditional Management Total Quality Management Traditional Approach         Market-share focus Individuals Focus on ‘who” and “why” Short-term focus Status quo focus Product focus Innovation Fire fighting         Customer focus Cross-functional teams Focus on “what” and “how” Long-term focus Continuous improvement Process improvement focus Incremental improvements Problem solving Total Quality Management
Traditional Approach Total Quality Management Lack of communication Open communications Control of staff Empowerment Inspection & fire fighting Prevention Internal focus on rule External focus on customer Stability seeking Continuous improvement Adversarial relations Co-operative relations Allocating blame Solving problems at their roots
SCOPE of TQM TQM is the foundation for activities, which includes:            Commitment by senior management and all employees Meeting customer requirements Reducing development cycle times Just In Time/ Flow Manufacturing Improvement teams Reducing product and service costs Systems to facilitate improvement Employee involvement and empowerment Recognition and celebration Challenging quantified goals and benchmarking Focus on processes / improvement plans This shows that TQM must be practiced in all activities, by all personnel, in Manufacturing, Marketing, Engineering, R&D, Sales, Purchasing, HR, etc.
Benefits of Implementing TQM           Image of the organization has improved. Reduction in inventory. Shorter lead time in design, manufacturing, procurement service etc., Reduction in rejections and complaints. Customer satisfaction. Quality cost % to turnover reduction. Lower manufacturing cost. Reduction in deviation. Continuous improvement. Drastic reduction in defectives and number of defects.
COMPANY THAT PRACTICES TQM
FORD Motor Company o o Is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010. At the end of 2010, Ford was the fifth largest automaker in Europe. Ford is the eighth-ranked overall American-based company in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion.
TQM techniques that Ford used:     Six Sigma Quality Operating System or (QOS) developed their own quality process or 5S. The DMAIC process, or define, measure, analyze, improve, and control has built an overall strategy for consistency in their teams,
Federal Express (FedEx)  FedEx created the overnight air express business in 1973. Ten years later, it was the first U.S. company to top $1 billion in revenues in its first decade. The company is the world’s largest express transportation company: more than 110,000 employees moved more than 2million items to over 200 countries each business day. In 1990, FedEx became the first service company to win the Baldrige Award.
Leading the Transition     Commit to quality Know you Company’s Systems and Values Participate in your Company’s Quality Processes Integrate Quality in the Company’s Management model
XEROX  The Xerox Corporation started its thrive towards TQM in the 1970’s with the invention of PARC, Palo Alto Research Center.
XEROX  Xerox has established a program called Leadership Through Quality (LTQ) and a Quality Training Task Force for its company’s leadership teams. "Today, more than 100,000 Xerox employees worldwide have been trained in this process, which stresses continuous improvement and defines quality precisely as meeting customer requirements" (Evans-Correia, 1997, 135).
The XEROX Corporation focuses on: o o o Benchmarking a reduced supplier base and leadership teams
Toyota Corporation  A multinational automaker headquartered in Toyota, Aichi, Japan. In 2010, Toyota Motor Corporation employed 317,734 people worldwide. TMC is the world's largest automobile manufacturer by sales and production.
Toyota Corporation uses:      5S Lean manufacturing JIT Kaizen Six Sigma
Do the right things, right the first time, every time THANK YOU

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Tqm vtumba module 1

  • 1.
    MODULE I INTRODUCTION TOTQM Ms. Bhavani B.S. Asst. Professor RIT, Hassan
  • 2.
    What is Quality  FEDEX- “Performance to the standard expected by the customer”  General Services Administration - “Meeting the customer’s need the first time and every time”  BOEING - “Providing customers with products and services that consistently meet their needs and expectations.  US Department of Defense - “Doing the right thing right the first time, always striving for improvement, and always satisfying the customer”.  Quality can be defined in terms of the agent. Who is the judge of quality?
  • 3.
    Contd…..  Quality involves meetingor exceeding customer expectations.  Quality applies to products, services, people, processes, and environments.  Quality is an ever-changing state (i.e., what is considered quality today may not be good enough to be considered quality tomorrow).  Quality (kwol’e-te’). A systematic approach to the search for excellence. (Synonyms: productivity, cost reduction, schedule performance, customer satisfaction, teamwork, the bottom line.)  Quality is a dynamic state associated with products, services, people, processes and environments that meets or exceeds expectations.
  • 4.
    Fundamental aspects of quality   Measurableaspects of quality Consumer (marketable)   Operational aspects of quality     Conservational aspects of quality   Environmental aspects of quality     Human aspects of quality   Quality of design (specifications, standards, grades) Quality of conformance Fitness for use, performance, reliability, life, price, availability, delivery Quality of management, operations, employees, system, maximum output, minimum waste and cost, optimum delivery Optimum use of resources (materials. Machines, money, land, energy, people) Ecology, clean air, unpolluted water, potable water, tolerable noise levels, safe waste, open space, landscape, recreation, beauty Quality of life, health, education, culture, society, freedom, ethical and moral values
  • 5.
    What is Quality?   Conformanceto specifications How well a product or service meets the targets and tolerances determined by its designers. For example, the dimensions of a machine part may be specified by its design engineers as 3.05 inches. This would mean that the target dimension is 3 inches but the dimensions can vary between 2.95 and 3.05 inches. Similarly, the wait for hotel room service may be specified as 20 minutes, but there may be an acceptable delay of an additional 05 minutes. Also, consider the amount of light delivered by a 60 watt light bulb. If the bulb delivers 50 watts it does not conform to specifications
  • 6.
      Fitness for useA definition of quality that evaluates how well the product performs for its intended use. For example, a Mercedes Benz and a Jeep Cherokee both meet a fitness for use definition if one considers transportation as the intended function. However, if the definition becomes more specific and assumes that the intended use is for transportation on mountain roads and carrying fishing gear, the Jeep Cherokee has a greater fitness for use. You can also see that fitness for use is a user-based definition in that it is intended to meet the needs of a specific user group.
  • 7.
      Value for pricepaid is a definition of quality that consumers often use for product or service usefulness. This is the only definition that combines economics with consumer criteria; it assumes that the definition of quality is price sensitive. For example, suppose that you wish to sign up for a personal finance seminar and discover that the same class is being taught at two different colleges at significantly different tuition rates. If you take the less expensive seminar, you will feel that you have received greater value for the price.
  • 8.
      Support services providedare often how the quality of a product or service is judged. Quality does not apply only to the product or service itself; it also applies to the people, processes, and organizational environment associated with it. For example, the quality of a university is judged not only by the quality of staff and course offerings, but also by the efficiency and accuracy of processing paperwork.
  • 9.
       Psychological criteria isa subjective definition that focuses on the judgmental evaluation of what constitutes product or service quality. Different factors contribute to the evaluation, such as the atmosphere of the environment or the perceived prestige of the product. For example, a hospital patient may receive average health care, but a very friendly staff may leave the impression of high quality. Similarly, we commonly associate certain products with excellence because of their reputation; Rolex watches and Mercedes-Benz automobiles are examples.
  • 10.
    DEFINITION OF TQM  TQMis a management approach for an organization, centered on quality, based on the participation of all its members and aiming at long-term success through customer satisfaction, and benefits to all members of the organization and to society  TQM Definitions:    Focussing on customers satisfaction. Provides best quality product at lowest possible price Prevention of defects, target is zero defects
  • 12.
    Details About TQM Total= Quality involves everyone and all activities in the company. I.Marketing II.Finance III.Design IV.Engineering V.Production VI.Customer service
  • 13.
    Cont… Q : questfor excellence U : understanding customer A : action for achieve customer satisfaction L : better leadership I : involvement of all people T : team spirit to work for common goal Y : yardstick to measure progress
  • 14.
  • 15.
  • 16.
    Approach Scope Scale Philosophy Management Led Company Wide Everyoneis responsible for Quality Prevention not Detection Standard Right First Time Control Cost of Quality Theme On going Improvement
  • 17.
    Criteria: 1. 2. 3. 4. 5. 6. 7. 8. Principles of TQM Leadership SystemApproach to Management Customer Driven Organization Factual Approach in Decision Making Involvement of People Process Approach Continual Improvement Mutually Beneficial Customer-Supplier Relationships
  • 18.
    Main Advantages ofTQM 1. 2. 3. 4. 5. Encourages a strategic approach to management at the operational level through involving multiple departments in cross-functional improvements and systemic innovation processes; Provides high return on investment through improving efficiency; Works equally well for service and manufacturing sectors; Allows organizations to take advantage of developments that enable managing operations as cross-functional processes; and Fits an orientation toward inter – organizational collaboration and strategic alliances through establishing a culture of collaboration among different departments within organization.
  • 19.
    Comparison of OLDand TQM Cultures
  • 20.
    Barriers in SuccessfulTQM         Lack of management commitment Inability to change org. culture Improper planning Lack of continuous training and Education Lack of data & results or access to data or ineffective measurement Inadequate attention to customer (I&E) Inadequate use of empowerment & teamwork Incompatible org structure , individualistic
  • 21.
    History of QualityManagement  Frederick W. Taylor wrote Principles of Scientific Management in 1911.  Walter A. Shewhart used statistics in quality control and inspection, and showed that productivity improves when variation is reduced (1924); wrote Economic Control of Manufactured Product in 1931.  In 1942 – W. Shewart introduced statistical control charts to monitor production. In 1930 H.F. Dodge and H.G. Romig introduced tables for acceptence sampling. World War II caused a dramatic increase in Quality Control. US Universities started training engineers in the industries W. Edwards Deming (SQC) and Joseph M. Juran (Cost of Quality Approach), students of Shewhart, went to Japan in 1950; began transformation from “shoddy” to “world class” goods.    
  • 22.
    Contd…       Armand Fiegan Baumproposed TQC which enlarged the focus of QC from manufacturing to include product design and incoming raw material. In 1960, Dr. K. Ishikawa formalized “quality circles” - the use of small groups to eliminate variation and improve processes. Around the same time the concept of “Zero-Defects” (Philip Crosby) gained favour , focused on employee motivation and awareness. Early 1970s quality assurance methods were used in services govt. operations, healthcare and banking services etc.. A Dramatic shift from Quality Assurance to Strategic Approach to Quality, i.e., from reactive approach of finding and correcting defectives in products manufactured was changed to pro-active approach of focusing on preventing defects from recurring altogether. In the late ‘70’s and early ‘80’s:  Deming returned from Japan to write Out of the Crisis, and began his famous 4-day seminars in the United States  Philp Crosby wrote Quality is Free  NBC ran “If Japan can do it, why can’t we?”  Motorola began 6 Sigma
  • 23.
    Dimensions of Quality: ManufacturedProducts  Performance   Features   primary operating characteristics of a product; how well a car is handled or its gas mileage, for a television it includes sound, picture clarity, colour and ability to receive signals and other applications. “extra” items added to basic features, such as a stereo CD or a leather interior in a car, boot space, central lock system and etc…. Reliability  Probability of a product will operate properly within an expected time frame; that is, a TV will work without repair for about seven years. MTFF (Mean time to first failure) AND MTBF (Mean time between failures)
  • 24.
    Dimensions of Quality: ManufacturedProducts (cont.)  Conformance   Durability   degree to which a product meets pre–established standards, For Ex: product design and stds.) how long product lasts before replacement, measure of product life, it has both economic and technical dimensions. (A light bulb will burn for certain hours) Serviceability  ease of getting repairs, speed of repairs, courtesy and competence of repair person, measured as Mean Time To Repair( MMTR)
  • 25.
    Dimensions of Quality: ManufacturedProducts (cont.)  Aesthetics   Perceived Quality   how a product looks, feels, sounds, smells, or tastes subjective perceptions based on brand name, advertising, and the like Safety  assurance that customer will not suffer injury or harm from a product; an especially important consideration for automobiles
  • 26.
    Dimensions of Quality   Reliability:involves consistency of performance and dependability. Firm performs the service right the first time. Firm should honour its promises    Accuracy in billing Keeping records correctly Performing the service at the designated time
  • 27.
    Contd…  Responsiveness: willingness orreadiness of employees to provide service     Timeliness of service Mailing a transaction slip immediately Calling the customer back quickly if necessary Giving prompt service, e.g., setting up appointments quickly
  • 28.
    Contd…  Competence: possession ofthe required skills and knowledge to perform the service    Knowledge and skills of control personnel Knowledge and skills of operation support personnel Access: ease of contact and approachability     The service is easily accessible by telephone (lines are not busy and do not put you on hold) Waiting time to receive service (bank) is not extensive Convenient hours of operation Convenient location of service facility
  • 29.
    Contd…   Courtesy: politeness, respect,consideration, and friendliness of contact personnel Communication: Keeping customers informed in the language they understand and listening to them.    Explaining the service Explaining how much the service will cost Assuring the consumer that a problem will be handled.
  • 30.
    Contd….  Credibility: trustworthiness, believabilityand honesty. Having customer’s best interests at heart.    Company name Company reputation Personal characteristics and behaviour of the contact personnel.
  • 31.
    Contd….  Security: Freedom fromdanger, or doubt    Physical safety: (Will I get mugged at the automatic teller machine) Financial Security (Does the company know where my stock certificate is, is my investment safe?) Confidentiality (Are my dealings with the company private?)
  • 32.
    Contd….  Empathetic to Customer:Efforts to understand the needs of customer     Learning the customer’s specific requirements Providing individualized attention Recognizing the regular customer Tangibility: Includes physical evidence of the service such as     Physical facilities Appearance of personnel Tools or equipment used to provide the service Other service facility
  • 33.
  • 34.
    Why do weneed to know COQ?  This tool speaks in the language of management $$$$  Research shows that cost of poor quality can range from 15 % to 40 % of the business costs  It can prioritize quality improvement actions  Cost of quality data shows how profit is affected by quality  It helps identify the redundant activities
  • 35.
    Hidden Failure Costs Scrap Warranty Rework Engineeringtime Management time Shop and field downtime Increased inventory Decreased capacity Customer dissatisfaction Lost sales Lost customer trust
  • 36.
    Categories of QualityCosts Quality Costs Conformance Prevention Non-Conformance Appraisal Internal failure External failure
  • 37.
    Cost of quality Costof quality = Cost of conformance + Cost of nonconformance  Cost of conformance is the cost of providing products or services as per the required standards. This can be termed as good amount spent. (Prevention & Appraisal costs)  Cost of non-conformance is the failure cost associated with a process not being operated to the requirements. This can be termed as unnecessary amount spent.( Internal & External failure costs)
  • 38.
    Prevention Costs Prevention costsare associated with design, implementation , maintenance, and planning prior to actual operation, in order to avoid defects from happening. The emphasis is on the prevention of defects in order to reduce the probability of producing defective products. Prevention activities lead to reduction of appraisal costs and both type of failures ( internal and external ).The motto is “Prevention rather than appraisal” .
  • 39.
    Activities associated with Preventioncosts Market research Quality training programs. Contract review Design review Field trials Supplier evaluation Process plan review Process capability review Design and manufacture of jigs and fixtures Preventive checks & maintenance
  • 40.
    Appraisal costs Appraisal costsare spent to detect defects to assure conformance to quality standards. Appraisal cost activities sums up to the “cost of checking if things are correct”.The appraisal costs are focused on the discovery of defects rather than prevention of defects
  • 41.
    Activities associated withAppraisal costs Proto type testing Vendor surveillance Incoming material inspection Process inspection/control Final inspection Laboratory testing / measurement Depreciation cost for measuring Quality audits.
  • 42.
    Internal failure costs Internalfailure costs occurs when results of work fail to reach designated quality standards , and are detected before transfer to the customer takes place.
  • 43.
    Examples Internal failure costs Designchanges/ corrective action Scrap due to design changes Excess inventory Rectification / reject disposition of purchased material Rework/rejection in manufacturing Downgrading of end product Downtime of plant & machinery Trouble-shooting & investigation of defects
  • 44.
    External failure costs Externalfailure costs occur when the product or service from a process fails to reach designated quality standards , and is not detected until after transfer to the customer.
  • 45.
    Activities associated with Externalfailure costs Processing / investigation of customer complaint Repair/replacement of sold goods Warranty claims Product liability & litigation costs Interest charges on delayed payment due to quality problems Loss of customer goodwill & sales.
  • 46.
    Size of fourcategories of quality costs. The organizations which do not follow TQM,there is less emphasis on prevention and their main quality efforts are on appraisal with very little control on internal and external failure costs. Various studies have shown that quality cost in manufacturing companies the world over range from 20 % to 30 % of turnover and in the case of service companies it can go up to 40 % as illustrated in graph on the next slide.
  • 47.
    Size of variousquality cost elements Quality costs in % of sales 10-15% 10-12% The total quality costs 25-35 % of turnover. 4-6% 1% Preventive Appraisal Internal Failure External Failure
  • 48.
    Impact of TQMon costs. TQM is primarily aimed to improve the quality of the product , higher customer satisfaction and better working environment for the employees. The most dramatic impact of TQM is on reduction of quality costs which directly effect the profitability . This is demonstrated by the results of TQM program in Xerox Corp . The change in various elements of quality cost before and after launching TQM by Xerox Corp is shown on the next slide.
  • 49.
    Impact of TQMon costs. An example from Xerox Corp. 35 % of sales 30 25 Internal Failure 20 15 10 Internal Failure Appraisal Appraisal 5 0 prevention Before TQM Prevention After TQM
  • 50.
  • 51.
    cost of quality Traditionallyrecorded quality cost generally account for only 4 to 5 percent of sales which mainly comprise of cost of scrap, rework and warranty.
  • 52.
    Hidden costs ofquality There are additional costs of quality which are hidden and do not appear in the account books of the company, as they are intangible and difficult to measure. These additional costs could be as high as 20-25% of sales.
  • 53.
    Visible and hiddencosts Visible costs •Scrap •Rework •Warranty costs Hidden Costs • Conversion efficiency of materials • Inadequate resource utilization • Excessive use of material • Cost of redesign and re-inspection • Cost of resolving customer problems • Lost customers / Goodwill • High inventory
  • 54.
    TQM V/S TraditionalManagement Total Quality Management Traditional Approach         Market-share focus Individuals Focus on ‘who” and “why” Short-term focus Status quo focus Product focus Innovation Fire fighting         Customer focus Cross-functional teams Focus on “what” and “how” Long-term focus Continuous improvement Process improvement focus Incremental improvements Problem solving Total Quality Management
  • 55.
    Traditional Approach Total QualityManagement Lack of communication Open communications Control of staff Empowerment Inspection & fire fighting Prevention Internal focus on rule External focus on customer Stability seeking Continuous improvement Adversarial relations Co-operative relations Allocating blame Solving problems at their roots
  • 56.
    SCOPE of TQM TQMis the foundation for activities, which includes:            Commitment by senior management and all employees Meeting customer requirements Reducing development cycle times Just In Time/ Flow Manufacturing Improvement teams Reducing product and service costs Systems to facilitate improvement Employee involvement and empowerment Recognition and celebration Challenging quantified goals and benchmarking Focus on processes / improvement plans This shows that TQM must be practiced in all activities, by all personnel, in Manufacturing, Marketing, Engineering, R&D, Sales, Purchasing, HR, etc.
  • 57.
    Benefits of ImplementingTQM           Image of the organization has improved. Reduction in inventory. Shorter lead time in design, manufacturing, procurement service etc., Reduction in rejections and complaints. Customer satisfaction. Quality cost % to turnover reduction. Lower manufacturing cost. Reduction in deviation. Continuous improvement. Drastic reduction in defectives and number of defects.
  • 58.
  • 59.
    FORD Motor Company o o Isan American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010. At the end of 2010, Ford was the fifth largest automaker in Europe. Ford is the eighth-ranked overall American-based company in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion.
  • 60.
    TQM techniques thatFord used:     Six Sigma Quality Operating System or (QOS) developed their own quality process or 5S. The DMAIC process, or define, measure, analyze, improve, and control has built an overall strategy for consistency in their teams,
  • 61.
    Federal Express (FedEx)  FedExcreated the overnight air express business in 1973. Ten years later, it was the first U.S. company to top $1 billion in revenues in its first decade. The company is the world’s largest express transportation company: more than 110,000 employees moved more than 2million items to over 200 countries each business day. In 1990, FedEx became the first service company to win the Baldrige Award.
  • 62.
    Leading the Transition     Committo quality Know you Company’s Systems and Values Participate in your Company’s Quality Processes Integrate Quality in the Company’s Management model
  • 63.
    XEROX  The Xerox Corporationstarted its thrive towards TQM in the 1970’s with the invention of PARC, Palo Alto Research Center.
  • 64.
    XEROX  Xerox has establisheda program called Leadership Through Quality (LTQ) and a Quality Training Task Force for its company’s leadership teams. "Today, more than 100,000 Xerox employees worldwide have been trained in this process, which stresses continuous improvement and defines quality precisely as meeting customer requirements" (Evans-Correia, 1997, 135).
  • 65.
    The XEROX Corporation focuseson: o o o Benchmarking a reduced supplier base and leadership teams
  • 66.
    Toyota Corporation  A multinationalautomaker headquartered in Toyota, Aichi, Japan. In 2010, Toyota Motor Corporation employed 317,734 people worldwide. TMC is the world's largest automobile manufacturer by sales and production.
  • 67.
    Toyota Corporation uses:      5S Leanmanufacturing JIT Kaizen Six Sigma
  • 69.
    Do the rightthings, right the first time, every time THANK YOU

Editor's Notes