530 Quality
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Quality Defined
ASQC – totality of features and characteristics of a product or service that bears on its ability to satisfy given needs
fitness for its use – how well does the product do what the customer thinks it should do and wants it to do
Dimensions of Quality
quality of design - degree to which quality characteristics are designed into a product
products or services designed with different levels of quality for different types of customers
customer determines quality
Dimensions of Quality (cont)
customer dimensions of product quality
performance, features, reliability
conformance, durability, serviceability
aesthetics, safety, other perceptions
Dimensions of Quality (cont)
customer dimensions of service quality
time and timeliness, completeness, courtesy, consistency
accessibility and convenience, accuracy, responsiveness
quality characteristics weighed by customer relative to cost of product or service
Dimensions of Quality (cont)
quality from producer perspective
quality of conformance – product is produced according to design specifications
achieving quality of conformance
design of production process equipment, technology, materials employees, use of statistical quality control (SQC)
TQM
TQM – total commitment to quality throughout the entire organization
Deming approach to quality management
continuous improvement of production process to achieve conformance to specifications and reduce variation
two primary sources of process improvement
common causes of quality problems – poor product design or insufficient employee training special causes of quality problems – improperly operating equipment or a poor operator
TQM (cont)
emphasizes extensive use of SQC to reduce variability in production process
dismisses extensive use of inspections as coming too late to reduce product defects
primary responsibility for quality is with employee and manager, not quality manager or inspection technician
TQM (cont)
Deming's 14 points
create constancy pf purpose toward product improvement prevent poor-quality products rather than acceptable levels of poor quality eliminate need for inspection to achieve quality and rely on SQC to improve product and process design select a few suppliers or vendors based on quality commitment rather than competitive prices
TQM (cont)
constantly improve production process by focus on two primary sources of quality problems, the system and workers institute worker training on prevention of quality problems and use of SQC instill leadership among supervisors to help workers perform better encourage employee involvement by eliminating fear of reprisal for asking questions and identifying quality problems
TQM (cont)
eliminate barriers between departments and promote cooperation and a team approach eliminate slogans and numerical targets that encourage workers to achieve higher performance levels without first showing them how to do it eliminate numerical quotas which employees attempt to meet at any cost without regard for quality enhance worker pride, artistry, and self-esteem by improving supervision and the production process so that workers can perform to their capabilities
TQM (cont)
institute training programs in methods of quality improvement throughout the entire organization develop a commitment from top management to implement previous points
Deming Wheel (PDCA Cycle) – plan, do, study/check, act
TQM (cont)
Joseph Juran - included quality in strategic planning process
strategic quality planning - determine desired quality level and design production process to achieve desired quality characteristics emphasizes quality improvement by focus on chronic quality problems and securing a ‘break-thru’ solution hundreds, or even thousands, of quality improvement projects going on at any one time
TQM (cont)
Phillip Crosby – author of 1979 book Quality is Free
emphasized the cost of poor quality cost of poor quality far outweighs cost of preventing poor quality
TQM (cont)
Armand Feigenbaum – introduced ‘total quality control’ in 1980s
total quality control – total commitment of management and employees throughout the organization to improve quality Japanese adopt this approach – referred to as companywide quality control Japanese believe all employees at all levels are responsible for continuous quality improvement
TQM (cont)
TQM and continuous process improvement
focus of continuous process improvement is business processes rather than business functions
continuous process improvement
identify critical processes analyze processes to find out how all tasks and functions are interrelated objective is to determine how to improve process while improving quality of work performed
TQM (cont)
principles of TQM
TQM is set of principles that focus on quality improvement as driving force in all functional areas and in all levels in an organization
principles of TQM
customer defines quality and customer needs are top priority top management must provide leadership for quality quality is a strategic issue quality is the responsibility of all employees at all levels
TQM (cont)
all functions within an organization must focus on continuous quality improvement quality problems are solved through cooperation among employees and management problem solving and continuous quality improvement are SQC methods training and education of all employees is the basis for continuous quality improvement
TQM (cont)
TQM throughout the organization
marketing and R&D, engineering
purchasing, human resources
management, shipping
customer service
TQM (cont)
strategic implications of TQM
quality as core competency
quality as order qualifier or order winner quality as means to position firm to compete
Cost of Quality
costs of quality fall into two categories
cost of quality assurance – cost of achieving quality
prevention costs
reflect philosophy of doing it right first time
examples of prevention costs - quality planning costs, product design costs, process costs, training costs, and information costs
Cost of Quality (cont)
appraisal costs
catch mistakes after the fact
examples of appraisal costs – inspection and testing, test equipment, and operator costs
cost of not conforming to specifications – costs associated with poor quality
cost of failures is difference between what it actually costs to produce a product and what it would cost if there were no failures cost of poor quality is usually largest quality cost source in organization
Cost of Quality (cont)
two types of cost of nonconforming
internal failure costs
discovered before product is delivered to customer lower for service than manufacture examples of internal failure costs – scrap, rework, process failure, process downtime, pricedowngrading
Cost of Quality (cont)
external failure costs discovered after customer receives poor quality product
examples of external failure costs – customer complaint, product return, warranty claims, product liability, and lost sales
Cost of Quality (cont)
index numbers are one means of measuring and reporting quality costs
index numbers are ratios which measure quality costs against a base value
general form is quality index = (total quality cost / base) x 100
useful as standard to make comparisons over time
Cost of Quality (cont)
labor index
(total quality cost / direct labor hours) x 100 may not be appropriate for comparisons where technology change reduces labor usage
cost index
(total quality cost / manufacturing cost) x 100
not affected by technology change
Cost of Quality (cont)
sales index
(total quality cost / sales) x 100
may be distorted by changes in selling price or costs
production index
(total quality cost / # units final product) x 100 may not be as effective where have number of different products
Cost of Quality (cont)
quality-cost relationship
as prevention and appraisal costs increase, internal and external failure costs typically decrease
as company focuses on achieving quality, cost of achieving good quality goes down – leads companies to frequently seek 100% quality or zero defects
Cost of Quality (cont)
Japanese focus on improving quality at minimum cost
improve capabilities and training of employees rather than on engineering solutions concentrate on quality characteristics in design stage rather than trying to build quality in production process
long-term view of firm success suggests firms who take long-term focus on quality do increase profitability
Cost of Quality (cont)
impact of quality management on productivity
productivity = output / input
quality impact on productivity – fewer defects increases output while quality improvement reduces inputs
Cost of Quality (cont)
product yield (Y) for single stage production process
Y = (I) (%G) + (I) (1 - %G) (%R) where
I = planned number of units started in the production process
%G = % good units produced %R = % reworked units
any increase in % of good products produced will increase product yield
Cost of Quality (cont)
product yield for multiple stage production process with no rework
Y = (I) (%g1) (%g2) . . . (%gi) where I = input of items in the production process that will result in finished products %gi = good quality, work-in-progress products at stage I
Cost of Quality (cont)
product manufacturing cost
cost = ((Kd) (I) + (Kr) (R)) / (Y) where
Kd = direct manufacturing cost per unit I = input Kr = rework cost per unit
R = reworked units
Y = yield
Cost of Quality (cont)
quality-productivity ratio (QPR)
QPR = (good quality units)(100) / ((input) (processing cost) + (defective units) (rework cost)) QPR increases if either processing cost or rework cost or both decrease
more good quality units are produced relative to total product input (number of units that begin production process)
Cost of Quality (cont)
indirect productivity gains
quality improvement may have indirect as well as direct impact of productivity in general, any quality improvements or improved designs which enhance the workplace, reduce congestion, or smooth out and speed up production process increase productivity
Cost of Quality (cont)
quality improvement and role of employees
participative problem solving – involves employees directly in quality management process quality circles – group of workers from same area who address production problems process improvement teams – includes members from inter-related functions that make up a process
QC Improvement Tools
Pareto analysis
flow charts (process flow chart)
check sheets
histograms
scatter diagrams statistical process control (SPC) charts cause-and effect diagrams
Quality Awards
Malcolm Baldridge National Quality Award (since 1987)
given annually to one or two companies in each of three categories: manufacturing, services, and small businesses (less than 500 full-time employees)
award criteria – leadership, information and analysis, strategic quality planning, human resource utilization, quality assurance of products and service, quality results, and customer satisfaction
marked increase in productivity in firms who have been finalists or winners
Quality Awards (cont)
Deming Prize
created in 1957 in Japan to honor Edwards Deming
highly coveted and sought after in Japan companies from other countries can apply as well
ISO 9000
standards are set forth by the International Organization for Standardization (ISO) located in Geneva, Switzerland
members are national standards organizations for more than 90 countries ISO member for US is the American National Standards Institute (ANSI)
purpose of ISO is to facilitate global consensus agreements on international quality standards
result is a system for certifying suppliers to make sure they meet internationally accepted standards for quality management
ISO 9000 (cont)
ISO 9000 (published 1978) provides standards and guidance for using four standards - for example ISO 9001 Quality Systems - Model for Quality Assurance in Design/Development, Production, Installation, and Servicing
applies to suppliers who have responsibility for the design and development, production, installation, and servicing of a product
includes set of requirements for supplier’s quality management program, beginning with top management and providing objective criteria to verify that key elements of total quality management approach are present
ISO 9000 (cont)
three other ISO standards (ISO 9002, 9003, and 9004) exist depending on degree to which a supplier is responsible for product from design to installation and servicing
implication of ISO 9000 for US companies – must be ISO 9000 certified to compete
many foreign countries will not do business with suppliers who are not ISO 9000 accredited
many US companies are being pressured by US customers to ISO 9000 certified
ISO 9000 (cont)
ISO 9000 accreditation
accredited registrar assesses a company for a fee to determine if it complies with ISO 9000 standards
for US supplier to export ISO 9000 regulated products to an EC (European Community) country, it must be accredited by European registrars; more and more EC companies are requiring ISO 9000 certification (EC conformity mark) for unregulated products eventually all products exported to EC will probably require ISO 9000 certification
ISO 14000
new environmental management standard in development by ISO; probably adopted soon
contains five core elements – environmental management, auditing, performance evaluation, labeling, and life-cycle assessment
advantages – positive public image, reduced exposure to liability, good systematic approach to pollution prevention through minimized ecological impact of products and processes, and compliance with regulatory environment
ASQC – totality of features and characteristics of a product or service that bears on its ability to satisfy given needs
fitness for its use – how well does the product do what the customer thinks it should do and wants it to do
Dimensions of Quality
quality of design - degree to which quality characteristics are designed into a product
products or services designed with different levels of quality for different types of customers
customer determines quality
Dimensions of Quality (cont)
customer dimensions of product quality
performance, features, reliability
conformance, durability, serviceability
aesthetics, safety, other perceptions
Dimensions of Quality (cont)
customer dimensions of service quality
time and timeliness, completeness, courtesy, consistency
accessibility and convenience, accuracy, responsiveness
quality characteristics weighed by customer relative to cost of product or service
Dimensions of Quality (cont)
quality from producer perspective
quality of conformance – product is produced according to design specifications
achieving quality of conformance
design of production process equipment, technology, materials employees, use of statistical quality control (SQC)
TQM
TQM – total commitment to quality throughout the entire organization
Deming approach to quality management
continuous improvement of production process to achieve conformance to specifications and reduce variation
two primary sources of process improvement
common causes of quality problems – poor product design or insufficient employee training special causes of quality problems – improperly operating equipment or a poor operator
TQM (cont)
emphasizes extensive use of SQC to reduce variability in production process
dismisses extensive use of inspections as coming too late to reduce product defects
primary responsibility for quality is with employee and manager, not quality manager or inspection technician
TQM (cont)
Deming's 14 points
create constancy pf purpose toward product improvement prevent poor-quality products rather than acceptable levels of poor quality eliminate need for inspection to achieve quality and rely on SQC to improve product and process design select a few suppliers or vendors based on quality commitment rather than competitive prices
TQM (cont)
constantly improve production process by focus on two primary sources of quality problems, the system and workers institute worker training on prevention of quality problems and use of SQC instill leadership among supervisors to help workers perform better encourage employee involvement by eliminating fear of reprisal for asking questions and identifying quality problems
TQM (cont)
eliminate barriers between departments and promote cooperation and a team approach eliminate slogans and numerical targets that encourage workers to achieve higher performance levels without first showing them how to do it eliminate numerical quotas which employees attempt to meet at any cost without regard for quality enhance worker pride, artistry, and self-esteem by improving supervision and the production process so that workers can perform to their capabilities
TQM (cont)
institute training programs in methods of quality improvement throughout the entire organization develop a commitment from top management to implement previous points
Deming Wheel (PDCA Cycle) – plan, do, study/check, act
TQM (cont)
Joseph Juran - included quality in strategic planning process
strategic quality planning - determine desired quality level and design production process to achieve desired quality characteristics emphasizes quality improvement by focus on chronic quality problems and securing a ‘break-thru’ solution hundreds, or even thousands, of quality improvement projects going on at any one time
TQM (cont)
Phillip Crosby – author of 1979 book Quality is Free
emphasized the cost of poor quality cost of poor quality far outweighs cost of preventing poor quality
TQM (cont)
Armand Feigenbaum – introduced ‘total quality control’ in 1980s
total quality control – total commitment of management and employees throughout the organization to improve quality Japanese adopt this approach – referred to as companywide quality control Japanese believe all employees at all levels are responsible for continuous quality improvement
TQM (cont)
TQM and continuous process improvement
focus of continuous process improvement is business processes rather than business functions
continuous process improvement
identify critical processes analyze processes to find out how all tasks and functions are interrelated objective is to determine how to improve process while improving quality of work performed
TQM (cont)
principles of TQM
TQM is set of principles that focus on quality improvement as driving force in all functional areas and in all levels in an organization
principles of TQM
customer defines quality and customer needs are top priority top management must provide leadership for quality quality is a strategic issue quality is the responsibility of all employees at all levels
TQM (cont)
all functions within an organization must focus on continuous quality improvement quality problems are solved through cooperation among employees and management problem solving and continuous quality improvement are SQC methods training and education of all employees is the basis for continuous quality improvement
TQM (cont)
TQM throughout the organization
marketing and R&D, engineering
purchasing, human resources
management, shipping
customer service
TQM (cont)
strategic implications of TQM
quality as core competency
quality as order qualifier or order winner quality as means to position firm to compete
Cost of Quality
costs of quality fall into two categories
cost of quality assurance – cost of achieving quality
prevention costs
reflect philosophy of doing it right first time
examples of prevention costs - quality planning costs, product design costs, process costs, training costs, and information costs
Cost of Quality (cont)
appraisal costs
catch mistakes after the fact
examples of appraisal costs – inspection and testing, test equipment, and operator costs
cost of not conforming to specifications – costs associated with poor quality
cost of failures is difference between what it actually costs to produce a product and what it would cost if there were no failures cost of poor quality is usually largest quality cost source in organization
Cost of Quality (cont)
two types of cost of nonconforming
internal failure costs
discovered before product is delivered to customer lower for service than manufacture examples of internal failure costs – scrap, rework, process failure, process downtime, pricedowngrading
Cost of Quality (cont)
external failure costs discovered after customer receives poor quality product
examples of external failure costs – customer complaint, product return, warranty claims, product liability, and lost sales
Cost of Quality (cont)
index numbers are one means of measuring and reporting quality costs
index numbers are ratios which measure quality costs against a base value
general form is quality index = (total quality cost / base) x 100
useful as standard to make comparisons over time
Cost of Quality (cont)
labor index
(total quality cost / direct labor hours) x 100 may not be appropriate for comparisons where technology change reduces labor usage
cost index
(total quality cost / manufacturing cost) x 100
not affected by technology change
Cost of Quality (cont)
sales index
(total quality cost / sales) x 100
may be distorted by changes in selling price or costs
production index
(total quality cost / # units final product) x 100 may not be as effective where have number of different products
Cost of Quality (cont)
quality-cost relationship
as prevention and appraisal costs increase, internal and external failure costs typically decrease
as company focuses on achieving quality, cost of achieving good quality goes down – leads companies to frequently seek 100% quality or zero defects
Cost of Quality (cont)
Japanese focus on improving quality at minimum cost
improve capabilities and training of employees rather than on engineering solutions concentrate on quality characteristics in design stage rather than trying to build quality in production process
long-term view of firm success suggests firms who take long-term focus on quality do increase profitability
Cost of Quality (cont)
impact of quality management on productivity
productivity = output / input
quality impact on productivity – fewer defects increases output while quality improvement reduces inputs
Cost of Quality (cont)
product yield (Y) for single stage production process
Y = (I) (%G) + (I) (1 - %G) (%R) where
I = planned number of units started in the production process
%G = % good units produced %R = % reworked units
any increase in % of good products produced will increase product yield
Cost of Quality (cont)
product yield for multiple stage production process with no rework
Y = (I) (%g1) (%g2) . . . (%gi) where I = input of items in the production process that will result in finished products %gi = good quality, work-in-progress products at stage I
Cost of Quality (cont)
product manufacturing cost
cost = ((Kd) (I) + (Kr) (R)) / (Y) where
Kd = direct manufacturing cost per unit I = input Kr = rework cost per unit
R = reworked units
Y = yield
Cost of Quality (cont)
quality-productivity ratio (QPR)
QPR = (good quality units)(100) / ((input) (processing cost) + (defective units) (rework cost)) QPR increases if either processing cost or rework cost or both decrease
more good quality units are produced relative to total product input (number of units that begin production process)
Cost of Quality (cont)
indirect productivity gains
quality improvement may have indirect as well as direct impact of productivity in general, any quality improvements or improved designs which enhance the workplace, reduce congestion, or smooth out and speed up production process increase productivity
Cost of Quality (cont)
quality improvement and role of employees
participative problem solving – involves employees directly in quality management process quality circles – group of workers from same area who address production problems process improvement teams – includes members from inter-related functions that make up a process
QC Improvement Tools
Pareto analysis
flow charts (process flow chart)
check sheets
histograms
scatter diagrams statistical process control (SPC) charts cause-and effect diagrams
Quality Awards
Malcolm Baldridge National Quality Award (since 1987)
given annually to one or two companies in each of three categories: manufacturing, services, and small businesses (less than 500 full-time employees)
award criteria – leadership, information and analysis, strategic quality planning, human resource utilization, quality assurance of products and service, quality results, and customer satisfaction
marked increase in productivity in firms who have been finalists or winners
Quality Awards (cont)
Deming Prize
created in 1957 in Japan to honor Edwards Deming
highly coveted and sought after in Japan companies from other countries can apply as well
ISO 9000
standards are set forth by the International Organization for Standardization (ISO) located in Geneva, Switzerland
members are national standards organizations for more than 90 countries ISO member for US is the American National Standards Institute (ANSI)
purpose of ISO is to facilitate global consensus agreements on international quality standards
result is a system for certifying suppliers to make sure they meet internationally accepted standards for quality management
ISO 9000 (cont)
ISO 9000 (published 1978) provides standards and guidance for using four standards - for example ISO 9001 Quality Systems - Model for Quality Assurance in Design/Development, Production, Installation, and Servicing
applies to suppliers who have responsibility for the design and development, production, installation, and servicing of a product
includes set of requirements for supplier’s quality management program, beginning with top management and providing objective criteria to verify that key elements of total quality management approach are present
ISO 9000 (cont)
three other ISO standards (ISO 9002, 9003, and 9004) exist depending on degree to which a supplier is responsible for product from design to installation and servicing
implication of ISO 9000 for US companies – must be ISO 9000 certified to compete
many foreign countries will not do business with suppliers who are not ISO 9000 accredited
many US companies are being pressured by US customers to ISO 9000 certified
ISO 9000 (cont)
ISO 9000 accreditation
accredited registrar assesses a company for a fee to determine if it complies with ISO 9000 standards
for US supplier to export ISO 9000 regulated products to an EC (European Community) country, it must be accredited by European registrars; more and more EC companies are requiring ISO 9000 certification (EC conformity mark) for unregulated products eventually all products exported to EC will probably require ISO 9000 certification
ISO 14000
new environmental management standard in development by ISO; probably adopted soon
contains five core elements – environmental management, auditing, performance evaluation, labeling, and life-cycle assessment
advantages – positive public image, reduced exposure to liability, good systematic approach to pollution prevention through minimized ecological impact of products and processes, and compliance with regulatory environment
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