Chapter 6 Quality Management - The WA Franke College of Business

Overview
Chapter 6
Quality Management

Quality & Strategy

What is quality?


Dimensions of Quality for Goods


Malcom Baldridge Quality Award

Total quality management (TQM)

Facets of TQM

Tools of TQM
Six Sigma
Service Quality Attributes
Operation
Reliability & durability

Conformance

Serviceability

Appearance

Perceived quality
Reliability
Responsiveness
Tangibles
Quality
Malcom Baldrige
National Quality Award
Competence
Understanding
Access
Security
Courtesy
© 1995 Corel Corp.
Credibility
2005 Baldrige Awards
Communication
Manufacturing
Sunny Fresh Foods
Monticello, MN
Service
DynMcDermott Petroleum
Operations Company
New Orleans, LA

Established in 1988 by the U.S. government

Designed to promote TQM practices
Small Business
Park Place Lexus
Plano, TX
Education
Richland College
Dallas, TX
Jenks Public Schools
Jenks, OK
Chapter 06 Quality
Health Care
Bronson Methodist Hospital
Kalamazoo, MI
1
TQM – Total Quality Management


Deming’s Fourteen Points
Create consistency of purpose
Lead to promote change
 Build quality into the products
 Build long term relationships
 Continuously improve product, quality, and
service
 Start training
 Emphasize leadership
Encompasses entire organization, from supplier to

customer

Stresses a commitment by management to have a
continuing company-wide drive toward excellence in all
aspects of products and services that are important to
the customer.
Deming’s Points - continued







Drive out fear
Break down barriers between departments
Stop haranguing workers
Support, help, improve
Remove barriers to pride in work
Institute a vigorous program of education and
self-improvement
Put everybody in the company to work on the
transformation
Continuous Improvement



Represents continual improvement of
process & customer satisfaction
Involves all operations
& work units
Other names
Kaizen (Japanese)
 Zero-defects
 Six sigma

Chapter 06 Quality
Concepts of TQM






Continuous improvement
Employee empowerment
Benchmarking
Just-in-time (JIT)
Taguchi concepts
Knowledge of tools
Employee Empowerment

Getting employees involved in product &
process improvements


85% of quality problems are due to process
& material
Techniques

Support workers

Let workers make decisions

Build teams & quality circles
2
Benchmarking
Selecting best practices to use
as a standard for performance





Determine what to benchmark
Form a benchmark team
Identify benchmarking partners
Collect and analyze benchmarking
information
Take action to match or exceed the
benchmark
Benchmarking examples

Xerox

Pioneered benchmarking

1989 Baldrige Award winner

Benchmarked competitors. WHY?

Benchmarked American Express. WHY?

Benchmarked L.L. Bean. WHY?
Benchmarking examples

Granite Rock


1992 Baldrige Award winner
produce aggregate and concrete

Benchmarked companies in their industry

Benchmarked Dominoes’ Pizza. WHY?
Tools for TQM
Just-in-Time (JIT)
Relationship to quality:

JIT cuts cost of quality

JIT improves quality

Better quality means less inventory and better,
easier-to-employ JIT system
Perroti’s Pizza Pareto Chart

The manager of Perroti’s Pizza collects data concerning
customer complaints about delivery.

He created a frequency distribution of the problems from a
check sheet.

Check sheets (read)

Scatter diagrams (read)

Histograms (read)
Problem

Flow charts (read)
Topping stuck to box
17
Pizza is late
35
Wrong topping
9
Wrong crust
6
Wrong size
4
Partially eaten (?!)
3
Pizza didn’t show
6

Pareto charts

Cause-and-effect diagrams

Statistical process control (Chapter 6S)
Chapter 06 Quality
Frequency
3
Perroti’s Pareto Chart
Perroti’s Pareto Chart

What does the chart show?

35
30
25
20
15
10
5
0
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Cumulative
Percent
Frequency
Perroti's Pareto Chart
Pizza isTopping Wrong Wrong Pizza Wrong Partially
late stuck totopping crust didn’t size eaten
box
show
(?!)

Worst problem?

What is it?

What percent of all problems?
If you want to solve 80% of the problems, which
problems should you solve?
Problem
Perrotti’s Pizza Pareto Chart
Problem
Frequency
Pizza is late
35
Topping stuck to box
17
Wrong topping
9
Wrong crust
6
Pizza didn’t show
6
Wrong size
4
Partially eaten (?!)
3
Sort frequency
distribution
from highest
frequency to
lowest
frequency.
Perrotti’s Pizza Pareto Chart
Problem
Frequency Cum Freq
Pizza is late
35
35
Topping stuck to box
17
Wrong topping
9
Wrong crust
6
Pizza didn’t show
6
Wrong size
4
Partially eaten (?!)
3
Create the cumulative frequency distribution.
Perrotti’s Pizza Pareto Chart
Perrotti’s Pizza Pareto Chart
Calculate the cumulative percent frequency distribution
Problem
Frequency Cum Freq Cum Percent
Pizza is late
35
35
Topping stuck to box
17
52
Wrong topping
9
61
Wrong crust
6
67
Pizza didn’t show
6
73
Wrong size
4
77
Partially eaten (?!)
3
80
Chapter 06 Quality
Problem
Frequency Cum Freq Cum Percent
Pizza is late
35
35
43.8%
Topping stuck to box
17
52
65.0%
Wrong topping
9
61
76.3%
Wrong crust
6
67
83.8%
Pizza didn’t show
6
73
91.3%
Wrong size
4
77
96.3%
Partially eaten (?!)
3
80
100.0%
4
Perroti’s Pareto Chart
Perrotti’s Pizza Pareto Chart
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Cumulative
Percent
Frequency
Perroti's Pareto Chart
35
30
25
20
15
10
5
0
Problem
Frequency Cum Freq Cum Percent
Pizza is late
35
35
43.8%
Topping stuck to box
17
52
65.0%
Wrong topping
9
61
76.3%
Wrong crust
6
67
83.8%
Pizza didn’t show
6
73
91.3%
Wrong size
4
77
96.3%
Partially eaten (?!)
3
80
100.0%
Pizza isTopping Wrong Wrong Pizza Wrong Partially
late stuck totopping crust didn’t size eaten
box
show
(?!)
Problem
Checksheet: Airline Complaints
Ticketing error
||||| |||
|
|||

Used to find problem sources/solutions

Other names

14
0.74
Missed
connections
7
0.88
Lost Baggage
4
0.96
2
1
Ticketing error
Fish-bone diagram, Ishikawa diagram
Identify problem to correct

Draw main causes for problem as ‘bones’

Ask ‘What could have caused problems in these areas?’
Repeat for each sub-area.
Chapter 06 Quality
Complaint
50
Cause-and-Effect
Diagrams
Machines
Personnel
Steps

Cumulative percent
Poor cabin
service
1.2
1
0.8
0.6
0.4
0.2
0
ice
0.46
|
Cause and Effect Diagram

23
se
rv
||||| |||||
|||
|||
|
Baggage delay
Airline Complaints
25
20
15
10
5
0
co
nn
ec
t io
ns
Lo
st
Ba
gg
ag
e
Tic
ke
ti n
g
er
ro
r
||||| ||||
|
||
|
Cumulative
Percent
ca
bin
Baggage Delay
|
Frequency
M
is
se
d
||
Complaint
Frequency
|
|||
Wk 3 Wk 4 Total
de
la
y
Lost Baggage
Missed
connections
Poor cabin service
Wk 2
Ba
gg
ag
e
Wk 1
Po
or
Type
Pareto Chart: Airline Complaints
Effect
Materials
Process
5
Six Sigma
Checker Board Airlines
Passenger processing at gate
Aircraft late to gate
Other

Personnel
Equipment
Late cabin cleaners
Mechanical failures

Unavailable cockpit crew
Weather
Late cabin crew
Air traffic delays
Reduce defects to 4 defects per million
Reduce cycle time
 Reduce costs

Late baggage to aircraft
Poor announcement of departures
Delayed
flight
departures

Late fuel
Weight/balance sheet late
Late food service
Contractor not provided
updated schedule
Materials
Quality improvement and business strategy
developed at Motorola in the 1980’s
Goals
Delayed check-in procedure
Waiting for late passengers
Procedures

Utilize an organization infrastructure and
statistical tools to implement
Source: Adapted from D. Daryl Wyckoff, “New Tools for Achieving Service Quality.” The Cornell Hotel and Restaurant
Administration Quarterly, November 1984, pg. 89. © 1984 Cornell H.R.A. Quarterly. Used by permission. All rights reserved.
Six Sigma at Motorola
Motorola ROI
1987-1994
•Reduced in-process defect levels by a
factor of 200.
• Reduced manufacturing costs by $1.4
billion.
• Increased employee production on a
dollar basis by 126%.
Six Sigma at GE
GE is the current benchmark for Six Sigma
success.
General Electric ROI 1995-1998
• Company wide savings of over $1 Billion.
• Estimated annual savings to be $6.6 Billion by
the year 2000
• Increased stockholders share value
fourfold.
Six Sigma Lessons

Implement in BOTH manufacturing and nonmanufacturing areas – Jack Welch, former CEO
of GE
Chapter 06 Quality
6