Quality Management: Strategies and Improvement

• Managing quality builds strategies of differentiation, low cost, and response
• Defining customer quality expectations helped Bose Corp differentiate its stereo speakers
• Nucor produces quality steel cheaply using efficient processes
• Dell Computers responds rapidly to customer orders due to quality systems with minor rework, which allows for rapid throughput
• Quality is a key success factor, and high-quality products and services are the most profitable

Quality Improvement

• Quality improvements help firms increase sales and reduce costs, which increases profitability
• Firms speed response, increase, or lower selling prices, and improve their reputation for quality products, leading to increased sales
• Improved quality decreases costs as firms increase productivity and lower rework, scrap, and warranty costs
• Companies with the highest quality are five times as productive as companies with the poorest quality

Quality Chains and Processes

• Quality chains trace through an organization’s business or service processes
• A process transforms inputs into outputs that satisfy customer needs through products, information, or services
• Everything done is a process occurring in each area of an organization
• A finance department handles budgeting, accounting, salary, wage, and costing processes
• Examining inputs and outputs analyzes processes
• Necessary actions can be determined to improve quality

Dimensions of Product Quality

• Performance refers to a product's main operating characteristics
• Aesthetics refers to a product's appearance, feel, smell, or taste
• Special Features enhance a product's appeal
• Conformance measures how well a product corresponds to design specifications
• Reliability is the likelihood that a product will not fail within a specific period
• Durability is the length of a product’s life
• Perceived Quality is the indirect evaluation of quality
• Serviceability is the speed with which a product can be repaired
• Consistency is the ability of the product to provide the same level of quality throughout its usage

Dimensions of Service Quality

• Convenience is the availability and accessibility of the service
• Reliability means performing a service dependably, consistently, and accurately
• Responsiveness is the willingness of service providers to help customers and deal with problems
• Time is the speed with which service is delivered
• Assurance is the knowledge exhibited by personnel who come into contact with customers
• Courtesy refers to how customers are treated by employees
• Tangibles include the physical appearance of facilities, equipment, personnel, and communication materials
• Consistency means repeatedly providing the same level of good quality
• Expectations are the ability to meet (or exceed) customer expectations

Total Quality Management (TQM)

• Total Quality Management (TQM) is a quality emphasis encompassing the entire organization
• TQM emphasizes a continuing companywide drive towards excellence in all aspects important to the customer

Continuous Improvement

• Total quality management requires a never-ending continuous improvement process
• It covers people, equipment, suppliers, materials, and procedures
• Focus is on every aspect of an operation being improved

Plan-Do-Check-Act (PDCA) Cycle

• Developed by Walter Shewhart, it is a circular model for continuous improvement, also known as the Deming circle or Shewhart circle
• Plan: Identify problems or goals
• Do: Formulate a theory or solution, establish metrics, and implement a solution
• Check: Track the solution’s efficacy, adjust solutions, and watch for new areas
• Act: Apply learnings on a broader scale or restart the cycle

Six Sigma

• Six Sigma is designed to reduce defects, lower costs, save time, and improve customer satisfaction
• It is a strategy that focuses on total customer satisfaction
• Is a discipline that follows the Six Sigma Improvement Model known as DMAIC
• DMAIC:
  • Defines the project’s purpose
  • Measures the process and collects data
  • Analyzes the data, ensuring repeatability and reproducibility
  • Improves by modifying or redesigning existing processes and procedures
  • Controls the new process to maintain performance levels

Motorola and Six Sigma

• Motorola developed Six Sigma in the 1980s, after getting customer complaints
• Motorola's goal to reduce defects by 90% was achieved within a year
• Benchmarking competitors, soliciting employee ideas, changing reward plans, adding training, and revamping critical processes were imporatnt adjustments

Employee Empowerment

• Employee empowerment means involving employees in every step of the production process
• 85% of quality problems are due to materials and processes, not employee performance
• Task is to design equipment and processes that produce the desired quality, which can be done with high involvement by those with a complete understanding of the system

Techniques for employee empowerment

• Building communication networks includes employees
• Developing open, supportive supervisors
• Moving responsibility from managers and staff to production employees
• Building high-morale organizations
• Creating formal organization structures like teams and quality circles

Quality Circles

• A group of employees who regularly meet to solve work-related problems
• Members receive group planning, problem-solving, and statistical quality control training
• Meetings are weekly, usually after work or during company time
• Members receive recognition but are not financially rewarded
• A trained team member (facilitator) helps train members and keeps meetings running smoothly
• Teams with a quality focus are cost-effective

Benchmarking

• Select a demonstrated standard of products, services, costs, or practices that represent the best performance for similiar processes
• The concept is to develop a target and a standard or benchmark to which to compare your performance

Best Practices for Resolving Customer Complaints

Steps for developing benchmarks

• Determine what to benchmark
• Form a benchmark team
• Identify benchmarking partners
• Collect and analyze benchmarking information
• Take action to match or exceed the benchmark

Performance Measures Used in Benchmarking

• Percentage of defects
• Cost per unit or order
• Processing time per unit
• Service response time
• Return on investment
• Customer satisfaction rates
• Customer retention rates
• Find similar organizations which are leaders
• Compare yourself (benchmark yourself) to the leaders
• The company need not be in your industry

Just-In-Time (JIT)

• Focuses on continuing improvement and enforced problem-solving
• Systems are designed to produce or deliver goods as needed
• Suppliers make frequent, on-time deliveries of small quantities of materials, parts, and components straight to the point of use
• Stocks are kept to a minimum
• It requires an effective supplier network producing trusted goods and services
• Ensures the correct quantities are purchased or produced at the right time to avoid waste

Check Sheets (Tools of TQM)

• Form designed for recording data to easily see patterns
• Help analysts find facts or patterns for analysis

Scatter Diagrams

• Determines the relationship between two characteristics or variables
• An example is the positive relationship between the length of a service call and the number of trips a repair person makes back to the truck for parts

Cause-and-Effect Diagrams

• Tool for identifying quality issues and inspection points
• Also known as an Ishikawa diagram or fishbone chart
• Each “bone” represents a possible source of error
• The operations manager starts with 4 categories: material, machinery/equipment, manpower, and methods
• The four (4) M's are the "causes," and provide a good checklist for initial analysis
• Individual causes are tied in as separate bones, often through brainstorming
• Highlights possible quality problems and inspection points

Chart Features

• Tool is not based on statistics
• Means of visualizing how factors affect process output
• Can be interpreted by the brain more easily

Pareto Charts

• Organize errors, problems, or defects to focus problem-solving efforts, which is based on the work of Vilfredo Pareto, a 19th-century economist
• 80% of a firm’s problems result from only 20% of the causes

Flowcharts

• Graphically present a process or system using interconnected annotated boxes
• Flowcharting a process is a necessary step for improving it
• Reveals when all parties involved begin with the same understanding of said process
• Ask several team members who know the process to flowchart it independently

Histograms

• Show the range of measurement values and frequency
• They show the most frequently occurring readings and variations
• Descriptive statistics can be calculated
• A visual presentation of the distribution helps cause of variation