QM4901

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Learning Objectives
— Explain the meaning of TQM

— Identify the costs of Quality

— Describe the evolution of TQM

— Identify Quality leaders and their contributions

— Identify key features of the TQM philosophy

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What is Total Quality Management?

— All integrated effort designed to improve quality

performance at every level of the organization to meet
or exceed customers expectations.

— Purpose:
— Meeting (nowadays the talk is about exceeding) quality
expectations as defined by the customer.

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Defining Quality
— Definition of quality is dependent on the people defining it

— There is no single, universal definition of quality

— Five common definitions include: (See next 2 slides)

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 Defining Quality – 5 Ways
— Conformance to specifications
— How well a product or service meet the targets and tolerances defined by designers.
— For example, the dimensions of a machine part may be specified by its design engineers as 3 +
or - .05 cm. This would mean that the target dimension is 3 centimeters but the dimensions can
vary between 2.95 and 3.05 cm. Similarly, the wait for hotel room service may be specified as 20
minutes, but there may be an acceptable delay of an additional 10 minutes.

— 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.

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 Defining Quality – 5 Ways
— Value for price paid
— Quality defined in terms of product or service usefulness for the price paid.
— 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
— Quality defined in terms of the support provided after the product or service is purchased.
— 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 students’ paperwork.

— Psychological
— A way of defining quality that focuses on judgmental evaluations of what constitutes
product or service excellence.
— 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.

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Manufacturing Quality vs. Service Quality
— Manufacturing quality focuses on tangible products that
can be seen, touched, and measured.
— Conformance, Performance, Reliability, Features, Durability,
Serviceability.

— Service organizations produce intangible products that

must be experienced, since a service is experienced, perceptions
can be highly subjective.
— Quality often defined by perceptional factors like courtesy,
friendliness, promptness in resolving complaints, atmosphere,
wait time, consistency.

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Evolution of TQM – New Focus

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Quality Gurus
— Walter A. Shewhart (1920s & 1930s)
Grandfather of quality control
Contributed to understand the process of variability
Developed concept of statistical control charts

— W. Edwards Deming (1940s & 1950s)

Father of quality control
Stressed management’s responsibility for quality
Developed “14 points” to guide companies in quality improvement
Japanese established “Deming Prize” in his name
15% of quality problems are actually due to worker error
85% of quality problems are caused by systems and errors

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Quality Gurus
— Joseph M. Juran (1950s)
Defined quality as “fitness for use”
Developed concept of cost of quality
Originated idea of quality triology
Quality planning
Quality control
Quality improvement

— Armand V. Feigenbaum (1960s)

Introduced the concept of total quality control

— Philip B. Crosby (1970s)

Coined phrase “quality is free”
Introduced concept of zero defects
Developed the phrase “Do it right the first time”
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Quality Gurus
— Kaoru Ishikawa
Developed cause-and-effect diagrams
Identified concept of “internal customer”
Introduced the concept of “quality circles”

— Genichi Taguchi
Focused on product design quality
Developed Taguchi loss function
Costs of quality increase as a quadratic function as conformance values
move away from target

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TQM Philosophy
n TQM Focuses on identifying quality problem root causes
n Encompasses the entire organization
n Involves the technical as well as people
n Relies on 7 basic concepts of
n Customer focus

n Continuous improvement

n Employee empowerment

n Use of quality tools

n Product design

n Process management

n Managing supplier quality

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 TQM Philosophy - concepts
— Focus on Customer
— Identify and meet customer needs
— Stay tuned to changing needs, e.g. fashion styles

— Continuous Improvement
— Continuous learning and problem solving, e.g. Kaizen(philosophy of never-ending
improvement), 6 sigma
— Plan-Do-Study-Act (PDSA)
Benchmarking: is studying the business practices of other leading companies for
purposes of comparison.
— Employee Empowerment
— Empower all employees to seek out quality problems and correct them.
— External customers are those that purchase the company’s goods and services.
— Internal customers are employees of the company that receive goods and services
from others in the organization.

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TQM Philosophy– Concepts continued…
— Team Approach
— TQM stresses that quality is an organizational effort. To facilitate the solving of quality
problems, it places great emphasis on teamwork.
— The use of teams is based on the old adage that “two heads are better than one.”Using
techniques such as brainstorming, discussion, and quality control tools, teams work
regularly to correct problems. The contributions of teams are considered vital to the
success of the company. For this reason, companies set aside time in the workday for
team meetings.
— Teams are formed around processes (8-10 people)
— Quality circle: a team of volunteer production employees and their supervisors
who meet regularly to solve quality problems.
— Use of Quality Tools
— If employees are to identify and correct quality problems, they need proper training. They
need to understand how to assess quality by using a variety of quality control tools, how to
interpret findings, and how to correct problems.
— Studying practices at “best in class” companies.

— Product Design (Robust)

— A design that results in a product that can perform over a wide range of conditions
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 Process Management & Managing
Supplier Quality
— Quality products come from quality sources.

— In order to achieve a quality product, Quality must be built into the

process. Thus according to TQM, a quality product comes from a
quality process.

— Quality at the source is belief that it is better to uncover source of

quality problems and correct it

— TQM extends to quality of product from company’s suppliers

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The Walt Disney company
The importance of exceptional quality
is demonstrated by The Walt Disney
Company in operating its theme parks.
The focus of the parks is customer
satisfaction. This is accomplished
through meticulous attention to every
detail, with particular focus on the role
of employees in service delivery.
Employees are viewed as the most
important organizational resource
and great care is taken in employee
hiring and training. All employees are called “cast members,” regardless of whether they are
janitors or performers. Employees are extensively trained in customer service,
communication, and quality awareness. Continual monitoring of quality is considered
important, and employees meet regularly in teams to evaluate their effectiveness. All
employees are shown how the quality of their individual jobs contributes to the success of the
park.

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Apple’s 5 steps of service?
— [Link] 5.5min

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Ways of Improving Quality
— Plan-Do-Study-Act Cycle (PDSA)
— Also called the Deming Wheel after originator
— Circular, never ending problem solving process

— Seven Tools of Quality Control

— Tools typically taught to problem solving teams

— Quality Function Deployment

— Used to translate customer preferences to design

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 PDSA Details
— Plan
— Evaluate current process
— Collect procedures, data, identify problems
— Develop an improvement plan as well as specific steps to evaluate
performance.
— Do (execute)
— Implement the plan as a trial – Managers should document all changes made
and collect data for evaluation.
— Study
— Collected data is evaluated to see whether the goals established in the
Plan phase are reached.
— Act
— Communicate the results from trial to others members of the
company.
— If successful, implement new process

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PDSA Details… What next?

— Cycle is repeated
— After Act phase, start planning and repeat process

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Why TQM Efforts Fail

1. Lack of a genuine quality culture.

2. Lack of top management support and

commitment.

3. Over- and under-reliance on SPC methods.

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TQM Path to Success
— To be successful, TQM requires broad sweeping
organizational changes.

— How major participants help achieve TQM success:

— Marketing – providing key inputs of customer information.
— Finance – evaluating and monitoring financial impact.
— Accounting – provides exact costing.
— Engineering – translate customer requirements into specific
engineering terms.
— Purchasing – acquiring materials to support product development.
— Human Resources – hire employees with right skills and attitude.
— Information systems – increased need for accessible information.

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Cost of Quality
— Quality affects all aspects of the organization.
— Quality has dramatic or huge cost implications of:

— Quality control costs: are costs that are necessary for

achieving high quality.
— Prevention costs
— Appraisal costs

— Quality failure costs: which consists of the cost consequences

of poor quality.
— Internal failure costs
— External failure costs
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 Cost of Quality
— Quality control costs
— Prevention costs are all costs incurred in the process of preventing poor quality from
occurring.
— They include quality planning costs, such as the costs of developing and implementing a
quality plan. Cost of process design, and cost of employee training.
— Examples: Market surveys, Customer survey, Pilot projects, design review, training and
education, process/procedure writing, vendor/supplier evaluation.

— Appraisal costs are incurred in the process of uncovering defects. These are the costs
associated with measuring, evaluating, and auditing products and services.
— They include the cost of quality inspections, product testing, and performing audits to
make sure that quality standards are being met.
— Examples: Calibration costs, Incoming material inspection, Final product inspection.

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 Cost of Quality
— Quality failure costs
— Internal failure costs are associated with discovering poor product quality before the
product reaches the customer site.
— One type of internal failure cost is rework, which is the cost of correcting the defective
item.
— Sometimes the item is so defective that it cannot be corrected and must be thrown away.
This is called scrap, and its costs include all the material, labor, and machine cost spent in
producing the defective product.
— Examples: Redesign, overtime, Excess inventory and material, retesting.

— External failure costs are associated with quality problems that occur at the customer site.
These costs can be particularly damaging because customer faith and loyalty can be
difficult to regain. (causes loss of reputation)
— They include everything from customer complaints, bad, customer review, product returns,
cost of freight, and repairs, to warranty claims, product recalls, and even litigation costs
resulting from product liability issues. A final component of this cost is lost sales and lost
customers.
— Example: Airline that overbooked flights, long delays in service, and lost luggage, other
penalties. Time spent to resolve customer complaints.

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Cost of Quality – 4 Categories

Early detection/prevention is less costly

(Maybe by a factor of 10)
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Measuring Cost of Quality (COQ)
— COQ data can be measured and presented in many
different ways:

— Percentage of sales.
— Percentage of profits.
— Percentage of manufacturing cost.
— Rates per direct labor hour.
— Rates per unit of product.

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 Conclusion

— When the cost of achieving good quality increases, cost

of poor quality decreases automatically.

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