TOTAL QUALITY

MANAGEMENT AND
LEAN MANAGEMENT
 Quality and Strategy

► Managing quality supports differentiation,

low cost, and response strategies
► Quality helps firms increase sales and
reduce costs
► Building a quality organization is a
demanding task
 Two Ways Quality
Improves Profitability
The Flow of Activities
 Defining Quality
An operations manager’s objective is to build a
total quality management system that identifies
and satisfies customer needs

The totality of features and characteristics of a

product or service that bears on its ability to
satisfy stated or implied needs
 Different Views

► User based: better performance, more

features
► Manufacturing based: conformance to
standards, making it right the first time
► Product based: specific and measurable
attributes of the product
Implications of Quality
1. Company reputation
► Perception of new products
► Employment practices
► Supplier relations
2. Product liability
► Reduce risk
3. Global implications
► Improved ability to compete
 Costs of Quality

► Prevention costs - reducing the potential for

defects
► Appraisal costs - evaluating products, parts, and
services
► Internal failure costs - producing defective parts
or service before delivery
► External failure costs - defects discovered after
delivery
Costs of Quality
 Takumi

A Japanese character that

symbolizes a broader
dimension than quality, a
deeper process than
education, and a more
perfect method than
persistence
 Leaders in Quality
TABLE Leaders in the Field of Quality Management

LEADER PHILOSOPHY/CONTRIBUTION

W. Edwards Deming Deming insisted management accept responsibility for building good systems. The employee
cannot produce products that on average exceed the quality of what the process is capable of
producing. His 14 points for implementing quality improvement are presented in this chapter.

Joseph M. Juran A pioneer in teaching the Japanese how to improve quality, Juran believed strongly in top-
management commitment, support, and involvement in the quality effort. He was also a believer
in teams that continually seek to raise quality standards. Juran varies from Deming somewhat in
focusing on the customer and defining quality as fitness for use, not necessarily the written
specifications.
 Leaders in Quality
TABLE Leaders in the Field of Quality Management

LEADER PHILOSOPHY/CONTRIBUTION

Armand Feigenbaum His 1961 book Total Quality Control laid out 40 steps to quality improvement processes. He
viewed quality not as a set of tools but as a total field that integrated the processes of a company.
His work in how people learn from each other’s successes led to the field of cross-functional
teamwork.

Philip B. Crosby Quality Is Free was Crosby’s attention-getting book published in 1979. Crosby believed that in the
traditional trade-off between the cost of improving quality and the cost of poor quality, the cost of
poor quality is understated. The cost of poor quality should include all of the things that are
involved in not doing the job right the first time. Crosby coined the term zero defects and stated,
“There is absolutely no reason for having errors or defects in any product or service.”
 Other quality gurus

• Karou Ishikawa
– Cause & Effect (Fishbone) Diagram
– Cause & Effect Diagram with Action Card (CEDAC)
• Shigeo Shingo
– Poka Yoke
• Genichi Taguchi
– Loss function
– Design of experiments
Ethics and Quality Management
► Operations managers must deliver healthy,
safe, quality products and services
► Poor quality risks injuries, lawsuits, recalls,
and regulation
► Ethical conduct must dictate response to
problems
► All stakeholders must be considered
 Total Quality Management
► Encompasses entire organization from
supplier to customer
► Stresses a commitment by management to
have a continuing companywide drive
toward excellence in all aspects of
products and services that are important to
the customer
 Deming's Fourteen Points
TABLE Deming's 14 Points for Implementing Quality Improvement

1. Create consistency of purpose

2. Lead to promote change

3. Build quality into the product; stop depending on inspections to catch problems

4. Build long-term relationships based on performance instead of awarding business on price

5. Continuously improve product, quality, and service

6. Start training

7. Emphasize leadership
 Deming's Fourteen Points
TABLE Deming's 14 Points for Implementing Quality Improvement

8. Drive out fear

9. Break down barriers between departments Plan – Do –

10. Stop haranguing workers Check – Act
(PDCA)
11. Support, help, and improve
Cycle
12. Remove barriers to pride in work

13. Institute a vigorous program of education and self-improvement

14. Put everyone in the company to work on the transformation

 Seven Concepts of
TQM
Elements
1) Six Sigma
2) Continuous improvement
3) Employee empowerment
4) Benchmarking
5) Just-in-time (JIT)
6) Taguchi concepts
7) Knowledge of TQM tools
Continuous Improvement

► Never-ending process of continuous

improvement
► Covers people, equipment, suppliers, materials,
procedures
► Every operation can be improved
Shewhart's PDCA
Model
Continuous Improvement
► Kaizen describes the ongoing
process of unending
improvement
► TQM and zero defects also used
to describe continuous
improvement
 Six Sigma
► Two meanings
► Statistical definition of a process that is 99.9997%
capable, 3.4 defects per million opportunities
(DPMO)
► A program designed to reduce defects, lower costs,
save time, and improve customer satisfaction
► A comprehensive system for achieving and sustaining
business success
Six Sigma
Six Sigma Program
Six Sigma
 Implementing Six
Sigma
► Emphasize defects per million opportunities as a standard
metric
► Provide extensive training
► Focus on top management leadership (Champion) This cannot be
accomplished
► Create qualified process improvement experts (Black without a major
Belts, Green Belts, etc.) commitment
► Set stretch objectives from top level
management
Employee Empowerment
 Quality Circles
► Group of employees who meet regularly to solve
problems
► Trained in planning, problem solving, and statistical
methods
► Often led by a facilitator
► Very effective when done properly
 Benchmarking
Selecting best practices to use as a standard for
performance

1. Determine what to benchmark

2. Form a benchmark team
3. Identify benchmarking partners
4. Collect and analyze benchmarking
information
5. Take action to match or exceed the
benchmark
Best Practices for Resolving Customer
Complaints
Table

BEST PRACTICE JUSTIFICATION

Make it easy for clients to complain It is free market research

Respond quickly to complaints It adds customers and loyalty

Resolve complaints on first contact It reduces cost

Use computers to manage complaints Discover trends, share them, and align your
services

Recruit the best for customer service jobs It should be part of formal training and career
advancement
 Internal Benchmarking
▶ When the organization is large enough
▶ Data more accessible
▶ Can and should be established in a
variety of areas
 Just-in-Time (JIT)
► 'Pull' system of production scheduling including supply
management
► Production only when signaled
► Allows reduced inventory levels
► Inventory costs money and hides process and material
problems
► Encourages improved process and product quality
https://www.youtube.com/watch?v=zG0wBJQJaK8
 Just-in-Time (JIT)
Relationship to quality:
► JIT cuts the cost of quality
► JIT improves quality

► Better quality means less inventory and

better, easier-to-employ JIT system
https://www.youtube.com/watch?v=JUMrFfWJjNM
 Taguchi Concepts
► Engineering and experimental design methods to
improve product and process design
► Identify key component and process variables affecting
product variation
► Taguchi Concepts
► Quality robustness
► Target-oriented quality
► Quality loss function
 Quality Robustness
► Ability to produce products uniformly in
adverse manufacturing and environmental
conditions
► Remove the effects of adverse conditions
► Small variations in materials and process do
not destroy product quality
 Quality Loss Function
Target-oriented
► Shows that costs increase as the quality
product moves away from what
the customer wants
► Costs include customer
dissatisfaction, warranty
and service, internal
scrap and repair, and costs to
society
► Traditional conformance
specifications are too simplistic
Quality Loss Function
 TQM Tools
► Tools for Generating Ideas
► Check Sheet ► Tools for Identifying
► Scatter Diagram Problems
► Cause-and-Effect Diagram ► Histogram
► Tools to Organize the Data ► Statistical Process Control
► Pareto Chart Chart
► Flowchart (Process
Diagram)
Seven Tools of TQM
Seven Tools of TQM
 Inspection

► Involves examining items to see if an item is good or

defective
► Detect a defective product
► Does not correct deficiencies in process or product
► It is expensive
► Issues
► When to inspect
► Where in process to inspect
 When and Where to Inspect
1. At the supplier’s plant while the supplier is producing
2. At your facility upon receipt of goods from your
supplier
3. Before costly or irreversible processes
4. During the step-by-step production process
5. When production or service is complete
6. Before delivery to your customer
7. At the point of customer contact
 Inspection

► Many problems
► Worker fatigue

► Measurement error

► Process variability

► Cannot inspect quality into a product

► Robust design, empowered employees, and
sound processes are better solutions
Source Inspection
Source Inspection
Service Industry Inspection
 Assignment
The quality of food services in MDI’S hostel
mess/your organisation’s mess is a cause of
great concern among the students. Use the
fishbone diagram and show how one
should go about studying this problem.
END