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Quality Management Chapters 1-3

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Proctor and Gamble – Focus on repeat customers * Practical satisfaction of meeting customer requirements.

* Review of modern quality – Skilled craftsman on 1 to 1 basis. Blacksmith.. one on one negotiation face to face relations with customers.

* Industrial Revolution – Henry Ford – Mass production. Quality once a post production review. Reactive approach.

* Bell System Statistical – Shurart.

* WWII Post War l 40’sand 50’s- Beming and Juran concepts fell on deaf ears. This message brought to Japan where concepts were embraced. Outperforming US counterparts.

* Fast forward to 1980s… Crisis around globe. Total Quality was reactive approach to crisis. Total quality Shift in vision from reactive little q (reactive post production inspection ) to big Q. – Total Quality approach with no external department but integrated with all responsible for their own quality. Late 80’s-`987 Malcolm Baldrige Award. TQM wasn’t an integrated function at that point.

Emergence of quality management - in service industries, government, health care and education.
Evolution of quality to the broader concept of performance excellence
Growth and adoption of Six Sigma

Current and future challenge: continue to apply the principles of quality and performance excellence. Quality is a “race without a finish line”. It is ongoing and continuous.

Contemporary Influences on Quality.
Social Responsibility
New Dimensions of quality
Aging population
Heath care
Environmental concerns
21st Century Technology
Definition Change in Cycle – Flow Charge of Quality
Marketing (User based definition)….….Design (value based)…Manufacturing based…..Distribution……Customer (Could be Transcedent and Product Based)
Establish Definition – Meeting or Exceeding Customer Expectations. Other definitions can apply depending upon where we are I the supply chain. We know it when we see it..
Transcendent Definition: Know it when we see it
Product – based definitions
User-based definition – Fitness for intended use
Value based definition: quality vs price
Manufacturing based definition: Conformance to specifications which are known understood and complied with
Product Based….Return too this…

Who is the customer – The next USER and/or ultimate consumer of a product or service?

Our Definition – Meeting or Exceeding Customer Expectations
Definition of Quality can change or evolve…
Customers – Customer- Driven Quality
Either our end users or consumer or external that is or is not ultimate consumer..
End Users or Consumers
May be an external
External Customer –
Internal Customer- Follows you in an assembly line. If you generate a report and hand it to someone.. Anyone who stands to value from work you provide is an internal customer

Delivered through Principals with is the foundation of the Philosophy
Practices – Activities by which principles are implemented
Techniques – Tools and approaches to make practices effective

Variation – From customer expectations resulting from natural and special causes.

Anything that doesn’t Add Value = WASTE, Output…Not Specified by Customer

Value – An Assessment of Worth compared to price or cost..

Learning Objectives
Customer Focus.. Maximize Value.. Minimize Variation and Do that by focus on Process (Inputs and Outputs)…
Some refer to as Customer Satisfactions, Continuous Improvement Operational Excellence, Zix Sigma, Lean Operating Systems, In Control and Capable..

Total Quality Principles (3)
1) Customer and Stakeholder Focus - Customer is the principal judge of quality - Organizations must 1st understand customers needs and expectations in order to meet and exceed them - Organizations must build relationships with customers - Customers include employees and society at large. 2) Employee Engagement and Teamwork * Employees know their jobs best and therefore know best how to improve them * Management must develop the systems and procedures that foster participation. (Responsibility of Leadership) * Empowerment better serves customers and creates trust and motivation * Teamwork and partnerships must exist both horizontally and vertically * Must exist both horizontally and vertically

3) Process Focus Supported Supported by Continuous Engagement and Learning * A PROCESS is how work creates value for customers * A Process transform Inputs (facilities, materials, capital, equipment, people and energy) into output (goods and energy) into Outputs (goods and services). Then passed on to a customer * Most processes are cross-functional.

Process is the starting point for how work creates value for customers……
New and improved processes can impact upstream processes..
Shouldn’t be a conflict for shared resources

Continuous Improvement * Incremental changes as well as larger, rapid improvements
* Enhancing value through new products and services * Reducing errors defects, waste and costs * Increasing productivity and Effectiveness * Improving responsiveness and cycle time performance

Deming’s View of a Production System * Intuitively we look at the output itself.. Try to understand all the functions and specifications. * Attention shifts upstream.. to the entire supply chain to ensure quality to end customer. * If look at all the processes that improve..
Inspection Techniques..
Inputs… Process…. Outputs…..
Tests.. machines… methods.
Production Assembly inspection techniques.. Consumer.. and Distribution
Consumer Research
Design and Redesign
Suppliers of Materials and Equipment..

Learning is the foundation for improvement
Understanding why changes are successful through feedback between practices and results which leads to new goals and approaches….
Don’t just accept the way we do things today…
Learning cycle
Execution of Plans
Assessment of Progress
Revision of Plans based upon Assessment of Findings
Plan DO Check Act… Continuous Assessment…

TQ Practices
Statistical methods
Visual aids for problem solving such as flow charts
Techniques specific to quality assurance activities such as control charts measurement systems analysus, reliability models and so on.
If we want to encourage Total Quality Culture you need sound practices……

Competitive Advantage * Is driven by customer wants and needs * Makes significant contribution to business success * Matches organizations unique resources with opportunities * Is durable and lasting * Provides basis for further improvement * Provides direction and motivation
Quality Supports each of these characteristics….
As business leaders you can instill these in organization while supporting these characteristics.

Quality and Profitability Chart
(Left) Improved quality of design (robust product)……… Higher Perceived Value
Higher Prices through increase market share.. increase revenue… higher profitability
Improved quality conformance… Lower manufacturing and Service costs… higher profits

Quality and Business Results Studies… * General Accounting Office study of Baldrige Award applicants * Hendricks and Singhal study of quality award winners * Performance results of Baldrige Award

Three Levels of Quality

* Organizational Level: meeting external customers requirements * Process level linking external and internal customers (Deming suggests) * Performance/job level meeting internal customer requirements

People have tools to do jobs.. Satisfied employees.. Creating satisfied customers..
Quality begins with personal attitudes which can be changed with awarenss and effort) e.g. personal quality checklists).

Topics for Discussion * Quality and Systems Thinking * Quality in Manufacturing * Quality in Services * Quality in Health Care * Quality in Education * Quality in Small Businesses and Not-for-Profits * Quality in the Public Sector

Growth of Modern Quality Management
Chart with Circles showing all within… and within..
Processes which are tied together are a SYSTEM A network of interrelated processes
* A system is a set of functions or activities within an organization that work together for the aim of the organization. * Subsystems of an organization are linked together as internal customers and suppliers. * A systems perspective acknowledges the importance of the interactions of subsystems, not the actions of them individually.
Manufacturing Systems * Marketing and sales * Product design and engineering * Purchasing and receiving * Production planning and scheduling * Manufacturing and assembly

Relationships in a Typical Manufacturing System (Fig.2.1

Customers – Marketing and sales – product design and engr – purchasing and receiving (suppliers)
Installation and service – Industrial Engineering and process design…. Tool engineering… Production planning and scheduling…………..Manufacturing and assembly…packaging, shipping and warehousing… finished good, inspection and testing…

Quality in Marketing
Marketing and sales personnel are responsible for determining the needs and expectations of consumers.

Quality in Product Design
Product design and engineering functions develop technical specifications for products and production processes to meet the requirements determined by the marketing function. Quality in Finished Goods, Inspection and Testing..
The purposes of final product inspection are to judge the quality of manufacturing, to discover and help to resolve production problems that may arise, and to ensure that no defective items reach the customer

Quality in Business Support Functions for Manufacturing

* Finance and accounting * Quality assurance * Legal services

Quality in Services * Service is defined as “any primary or complementary activity that does not directly produce a physical product – that is, the non-goods part of the transaction between buyer (customer) and seller (provider).”

Critical Differences Between Service and Manufacturing (1 of 2) * Customer needs and performance standards are more difficult to identify and measure * Services requires a higher degree of customization * Output is intangible

Components of Service System Quality * Employees * Information technology

Quality in Health Care * Joint Commission on Accreditation of Healthcare Organizations (JCAHO) * National Committee for Quality Assurance (NCQA) * Agency for Healthcare Research and Quality (AHRQ) * Institute for Healthcare Improvement (IHI) * 1999 expansion of the Baldrige Award to nonprofit health care organizations; first recipient (SSM Health Care) in 2002

Quality Issues in Health Care

* Avoidable errors * Underutilization of services * Overuse of services * Variation in services

Quality in Higher Education
Business plays an important role in fostering quality improvement efforts in higher education by transferring knowledge and expertise on quality processes and implementation practices

Academic Quality Improvement Project (AQIP)
AQIP criteria focuses on institutional practices for helping students learn, accomplishing other distinct objectives, understanding student and stakeholder needs, valuing people, leading and communicating, supporting institutional operations, measuring effectiveness, planning continuous improvement, and building collaborative relationships—all of which are key elements of TQ.
Quality in Small Business and Not-for-Profits

* Slow to adopt quality approaches * General lack of understanding and knowledge about quality * Focus on sales and market growth, cash flow, and routine fire fighting * Lack of resources for formal quality systems
Quality in the Public Sector * Quality in the Federal Government * Federal Quality Institute * President’s Quality Award * State and Local Quality Efforts
Summary of Key Ideas * As consumer expectations have risen, a focus on quality has permeated other key sectors of the economy, most notably health care, education, not-for-profits, and government. * Successful management relies on a systems perspective, one of the most important elements of total quality. * Traditional quality assurance systems in manufacturing focus primarily on technical issues such as equipment reliability, inspection, defect measurement, and process control. * In many organizations, quality is seldom considered in financial analysis and decision making. * Every manager is responsible for studying and improving the quality of the process for which he or she is responsible; thus, every manager is a quality manager. * The American Management Association estimates that the average company loses as many as 35 percent of its customers each year, and that about two-thirds of these are lost because of poor customer service.

CHAPTER 3 - Philosophies and Frameworks

Topics for Discussion * The Deming Philosophy * The Juran Philosophy * The Crosby Philosophy * Comparisons of Quality Philosophies * Other Quality Philosophers * Quality Management Awards and Frameworks * The Malcolm Baldrige National Quality Award * International Quality Award Programs * Six Sigma Leaders in Quality Revolution * W. Edwards Deming * Joseph M. Juran * Philip B. Crosby * Armand V. Feigenbaum * Kaoru Ishikawa * Genichi Taguchi

Chain Reaction 1) Improve Quality… 2) Costs decrease 3) Productivity improves 4) Increase in market share with better quality and lower prices 5) Stay in business 6) Provide jobs and more jobs

Demings System of Profound Knowledge * Appreciation for a System * Understanding Variation * Theory of Knowledge * Psychology

Appreciation for a System * Most organizational processes are cross-functional * Parts of a system must work together * Every system must have a purpose * Management must optimize the system as a whole

Understanding Variation

* Many sources of uncontrollable variation exist in any process * Excessive variation results in product failures, unhappy customers, and unnecessary costs * Statistical methods can be used to identify and quantify variation to help understand it and lead to improvements

Theory of Knowledge * Knowledge is not possible without theory * Experience alone does not establish a theory, it only describes * Theory shows cause-and-effect relationships that can be used for prediction Psychology * Knowledge is not possible without theory * Experience alone does not establish a theory, it only describes * Theory shows cause-and-effect relationships that can be used for prediction

Deming’s 14 Points (abridged)
1. Create and publish a company mission statement and commit to it.
2. Learn the new philosophy.
3. Understand the purpose of inspection.
4. End business practices driven by price alone.
5. Constantly improve system of production and service.
6. Institute training.
7. Teach and institute leadership.
8. Drive out fear and create trust.
9. Optimize team and individual efforts.
10. Eliminate exhortations for work force.
11. Eliminate numerical quotas and M.B.O. Focus on improvement.
12. Remove barriers that rob people of pride of workmanship.
13. Encourage education and self-improvement.
14. Take action to accomplish the transformation.

Seven Deadly Diseases

1. Lack of constancy of purpose 2. Emphasis on short-term profits 3. Evaluation of performance 4. Mobility of management 5. Management by numbers 6. Excessive medical costs 7. Excessive liability (warranty) costs

Juran’s Quality Trilogy

* Quality Planning – process of preparing to meet quality goals * Quality Control – process of meeting quality goals during operations * Quality Improvement – process of breaking through to unprecedented levels of performance
Phillip Crosby
Quality is free . . .
... It’s not a gift, but it is free. What costs money are the unquality things -- all the actions that involve not doing jobs right the first time.” A.V. Feigebaum * Three Steps to Quality * Quality Leadership, with a strong focus on planning * Modern Quality Technology, involving the entire work force * Organizational Commitment, supported by continuous training and motivation

Kaoru Ishikawa

* Instrumental in developing Japanese quality strategy * Influenced participative approaches involving all workers * Advocated the use of simple visual tools and statistical techniques Diagram.. Fishbone…

Manpower…… Methods………


Genichi Taguchi

Pioneered a new perspective on quality based on the economic value of being on target and reducing variation and dispelling the traditional view of conformance to specifications

Malcolm Baldrige National Quality Award * Help improve quality in U.S. companies * Recognize achievements of excellent firms and provide examples to others * Establish criteria for evaluating quality efforts * Provide guidance for other American companies

Criteria for Performance Excellence * Leadership * Strategic Planning * Customer Focus * Measurement, Analysis, and Knowledge Management * Workforce Focus * Process Management * Business Results

The Baldrige Framework –
A Systems Perspective Chart….

Category Structure

* Items (1.1, 1.2, 3.1, etc.) * Areas to address (6.1a, 6.1b, etc.) * Questions (How, What, Who…?) * Example: Leadership Category 1
1.1 Senior Leadership
a. Vision, Values, and Mission
b. Communication and Organizational Performance
1.2 Governance and Social Responsibilities
a. Organizational Governance
b. Legal and Ethical Behavior
c. Societal Responsibilities and Support of Key Communities

Questions from Vision, Values, and Mission Area to Address

How do senior leaders set organizational vision and values? How do senior leaders deploy your organization’s vision and values through your leadership system, to the workforce, to key suppliers and partners, and to customers and other stakeholders, as appropriate? How do senior leaders’ personal actions reflect a commitment to the organization’s values?
2. How do senior leaders promote an environment that fosters, requires, and results in legal and ethical behavior?
3. How do senior leaders create a sustainable organization? How do senior leaders create an environment for organizational performance improvement, the accomplishment of your mission and strategic objectives, innovation, competitive, or role-model performance leadership, and organizational agility? How do they create an environment for organizational and workforce learning? How do they develop and enhance their personal leadership skills? How do they personally participate in succession planning and the development of future organizational leaders?

Core Values * Visionary Leadership * Customer-Driven Excellence * Organizational and Personal Learning * Valuing Workforce Members and Partners * Agility * Focus on the Future * Managing for Innovation * Management by Fact * Societal Responsibility * Focus on Results and Creating Value * Systems Perspective

Criteria Evolution * 1988: primarily a manufacturing model with “little q” emphasis * 1995: revised to capture a more comprehensive business model; focus on overall performance more than just quality * Updated regularly to reflect current issues in business; for example, organizational governance and sustainability, customer and workforce engagement

Impacts of Baldridge * Net social benefits exceeding $24 billion in 2000 dollars * Changed the way many organizations around the world now manage their operations * Improved results for all stakeholders * Spawned a network of local, state, and national award programs around the world

Make sure people at operational level are working on things that align with goals. Clearly aligned with customer needs.

Deming Prize

* Instituted 1951 by Union of Japanese Scientists and Engineers (JUSE) * Several categories including prizes for individuals, factories, small companies, and Deming application prize * American company winners include Florida Power & Light and AT&T Power Systems Division

Other Quality Awards * European Quality Award * Canadian Awards for Business Excellence * Australian Business Excellence Award * Chinese National Quality Award * Many others…

ISO 9000:2000

* Quality system standards adopted by International Organization for Standardization in 1987; revised in 1994 and 2000; minor revision in 2008 * Technical specifications and criteria to be used as rules, guidelines, or definitions of characteristics to ensure that materials, products, processes, and services are fit for their purpose.

Objectives of ISO Standards

* Achieve, maintain, and continuously improve product quality * Improve quality of operations to continually meet customers’ and stakeholders’ needs * Provide confidence to internal management and other employees that quality system requirements are being fulfilled * Provide confidence to customers and other stakeholders that quality requirements are being achieved

Six Sigma * Based on a statistical measure that equates to 3.4 or fewer errors or defects per million opportunities * Pioneered by Motorola in the mid-1980s and popularized by the success of General Electric

Concepts of Six Sigma * Think in terms of key business processes, customer requirements, and overall strategic objectives. * Focus on corporate sponsors responsible for championing projects, support team activities, help to overcome resistance to change, and obtaining resources. * Emphasize such quantifiable measures as defects per million opportunities (dpmo) that can be applied to all parts of an organization * Ensure that appropriate metrics are identified early and focus on business results, thereby providing incentives and accountability. * Provide extensive training followed by project team deployment * Create highly qualified process improvement experts (“green belts,” “black belts,” and “master black belts”) who can apply improvement tools and lead teams. * Set stretch objectives for improvement. *
Summary of Key Idea * The Deming philosophy focuses on continual improvements in product and service quality by reducing uncertainty and variability in design, manufacturing, and service processes, driven by the leadership of top management. * The aim of any system should be for all stakeholders—stockholders, employees, customers, community, and the environment—to benefit over the long term. * Juran proposed a simple definition of quality: “fitness for use.” This definition of quality suggests that it should be viewed from both external and internal perspectives; that is, quality is related to “(1) product performance that results in customer satisfaction; (2) freedom from product deficiencies, which avoids customer dissatisfaction.” * The Baldrige criteria define both an integrated infrastructure and a set of fundamental practices for a high-performance management system. * Approaches that organizations use to address the Baldrige criteria requirements need not be formal or complex, and can easily be implemented by small businesses.

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...of major business functions (management, production, marketing, finance and accounting, human resource management, and various support functions). Offers an overview of business organizations and the business environment, strategic planning, international business, and quality assurance. INSTRUCTIONAL MATERIALS Required Resources Kelly, M., McGowen, J., & Williams, C. (2014). BUSN (6th ed.). Mason, OH: South-Western Cengage Learning. (Note: This is a textbook uniquely created for Strayer and can only be purchased via Strayer’s Virtual Bookstore, available through iCampus. The chapters within this custom textbook are the same as those from the national title, only rearranged in a different order.) Supplemental Resources Asare, S. K., & Wright, A. M. (2012). Investors’, auditors’, and lenders’ understanding of the message conveyed by the standard audit report on financial statements. Accounting Horizon, 26(2), 193-217. Aytaç, G., & Turan, O. Z. (2012). Issues of business ethics in domestic and international businesses: A critical study. International Journal of Business Administration, 3(5), 82-88. Bulu, I., Radojicic, M., & Nesic, Z. (2012). Some considerations on modern aspects of marketing promotion. Technics Technologies Education Management, 7(4), 1741-1750. Franks, R. A., & Spalding, A. D. (2013). Business ethics as an accreditation requirement: A knowledge mapping approach. Business Education & Accreditation, 5(1), 17-30. Pathak, A.......

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...------------------------------------------------- Supplements Project Manager: Andra Skaalrud ------------------------------------------------- Copyright © 2015 Pearson Education, Inc. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to 201-236-3290. | 10 9 8 7 6 5 4 3 2 1ISBN-13: 978-0-13-342877-3ISBN 10: 0-13-342877-X | TABLE OF CONTENTS Preface iv Dedication v...

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