MODULE I

INTRODUCTION TO TQM

Ms. Bhavani B.S.Asst. Professor RIT, Hassan

What is Quality FEDEX - “Performance to the standard expected by the customer”

General Services Administration - “Meeting the customer’s need the first time and every time”

BOEING - “Providing customers with products and services that consistently meet their needs and expectations.

US Department of Defense - “Doing the right thing right the first time, always striving for improvement, and always satisfying the customer”.

Quality can be defined in terms of the agent. Who is the judge of quality?

Contd….. Quality involves meeting or exceeding customer expectations.

Quality applies to products, services, people, processes, and environments.

Quality is an ever-changing state (i.e., what is considered quality today may not be good enough to be considered quality tomorrow).

Quality (kwol’e-te’). A systematic approach to the search for excellence. (Synonyms: productivity, cost reduction, schedule performance, customer satisfaction, teamwork, the bottom line.)

Quality is a dynamic state associated with products, services, people, processes and environments that meets or exceeds expectations.

Fundamental aspects of quality Measurable aspects of qualityConsumer (marketable) Operational aspects of quality  Conservational aspects of quality Environmental aspects of quality  Human aspects of quality 

Quality of design (specifications, standards, grades)Quality of conformanceFitness for use, performance, reliability, life, price, availability, deliveryQuality of management, operations, employees, system, maximum output, minimum waste and cost, optimum delivery Optimum use of resources (materials. Machines, money, land, energy, people)Ecology, clean air, unpolluted water, potable water, tolerable noise levels, safe waste, open space, landscape, recreation, beautyQuality of life, health, education, culture, society, freedom, ethical and moral values

What is Quality? Conformance to specifications How well a product or service meets the

targets and tolerances determined by its designers. For example, the dimensions of a machine part may be specified by its

design engineers as 3.05 inches. This would mean that the target dimension is 3 inches but the dimensions can vary between 2.95 and 3.05 inches. Similarly, the wait for hotel room service may be specified as 20 minutes, but there may be an acceptable delay of an additional 05 minutes. Also, consider the amount of light delivered by a 60 watt light bulb. If the bulb delivers 50 watts it does not conform to specifications

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.

Value for price paid is a definition of quality that consumers often use for product or service usefulness. This is the only definition that combines economics with consumer criteria; it assumes that the definition of quality is price sensitive.

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 provided are often how the quality of a product or service is judged. Quality does not apply only to the product or service itself; it also applies to the people, processes, and organizational environment associated with it.

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 paperwork.

Psychological criteria is a subjective definition that focuses on the judgmental evaluation of what constitutes product or service quality. Different factors contribute to the evaluation, such as the atmosphere of the environment or the perceived prestige of the product.

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.

DEFINITION OF TQM TQM is a management approach for an

organization, centered on quality, based on the participation of all its members and aiming at long-term success through customer satisfaction, and benefits to all members of the organization and to society

TQM Definitions: Focussing on customers satisfaction. Provides best quality product at lowest possible price Prevention of defects, target is zero defects

Details About TQM

Total = Quality involves everyone and all activities in the company. I.Marketing II.FinanceIII.DesignIV.EngineeringV.ProductionVI.Customer service

Cont…Q : quest for excellenceU : understanding customerA : action for achieve customer satisfactionL : better leadershipI : involvement of all people T : team spirit to work for common goalY : yardstick to measure progress

Cont…

Total Quality Management

Scope Company Wide

Scale Everyone is responsible for Quality

Philosophy Prevention not Detection

Standard Right First Time

Control Cost of Quality

Theme On going Improvement

Approach Management Led

Principles of TQMCriteria:

1. Leadership2. System Approach to Management3. Customer Driven Organization4. Factual Approach in Decision Making5. Involvement of People6. Process Approach7. Continual Improvement8. Mutually Beneficial Customer-Supplier Relationships

Main Advantages of TQM1. Encourages a strategic approach to management at the operational

level through involving multiple departments in cross-functional improvements and systemic innovation processes;

2. Provides high return on investment through improving efficiency;3. Works equally well for service and manufacturing sectors;4. Allows organizations to take advantage of developments that enable

managing operations as cross-functional processes; and5. Fits an orientation toward inter – organizational collaboration and

strategic alliances through establishing a culture of collaboration among different departments within organization.

Comparison of OLD and TQM Cultures

Barriers in Successful TQM Lack of management commitment Inability to change org. culture Improper planning Lack of continuous training and Education Lack of data & results or access to data or

ineffective measurement Inadequate attention to customer (I&E) Inadequate use of empowerment & teamwork Incompatible org structure , individualistic

History of Quality Management Frederick W. Taylor wrote Principles of Scientific Management in 1911.

Walter A. Shewhart used statistics in quality control and inspection, and showed that productivity improves when variation is reduced (1924); wrote Economic Control of Manufactured Product in 1931.

In 1942 – W. Shewart introduced statistical control charts to monitor production.

In 1930 H.F. Dodge and H.G. Romig introduced tables for acceptence sampling.

World War II caused a dramatic increase in Quality Control. US Universities started training engineers in the industries W. Edwards Deming (SQC) and Joseph M. Juran (Cost of Quality

Approach), students of Shewhart, went to Japan in 1950; began transformation from “shoddy” to “world class” goods.

Contd… Armand Fiegan Baum proposed TQC which enlarged the focus of QC from

manufacturing to include product design and incoming raw material. In 1960, Dr. K. Ishikawa formalized “quality circles” - the use of small groups to

eliminate variation and improve processes. Around the same time the concept of “Zero-Defects” (Philip Crosby) gained

favour , focused on employee motivation and awareness. Early 1970s quality assurance methods were used in services govt. operations,

healthcare and banking services etc.. A Dramatic shift from Quality Assurance to Strategic Approach to Quality, i.e.,

from reactive approach of finding and correcting defectives in products manufactured was changed to pro-active approach of focusing on preventing defects from recurring altogether.

In the late ‘70’s and early ‘80’s: Deming returned from Japan to write Out of the Crisis,

and began his famous 4-day seminars in the United States Philp Crosby wrote Quality is Free NBC ran “If Japan can do it, why can’t we?” Motorola began 6 Sigma

Dimensions of Quality:Manufactured Products Performance

primary operating characteristics of a product; how well a car is handled or its gas mileage, for a television it includes sound, picture clarity, colour and ability to receive signals and other applications.

Features “extra” items added to basic features, such as a stereo CD or a leather

interior in a car, boot space, central lock system and etc….

Reliability Probability of a product will operate properly within an expected time

frame; that is, a TV will work without repair for about seven years. MTFF (Mean time to first failure) AND MTBF (Mean time between failures)

Dimensions of Quality:Manufactured Products (cont.) Conformance

degree to which a product meets pre–established standards, For Ex: product design and stds.)

Durability how long product lasts before replacement, measure of

product life, it has both economic and technical dimensions. (A light bulb will burn for certain hours)

Serviceability ease of getting repairs, speed of repairs, courtesy and

competence of repair person, measured as Mean Time To Repair( MMTR)

Dimensions of Quality:Manufactured Products (cont.) Aesthetics

how a product looks, feels, sounds, smells, or tastes Perceived Quality

subjective perceptions based on brand name, advertising, and the like

Safety assurance that customer will not suffer injury or

harm from a product; an especially important consideration for automobiles

Dimensions of Quality Reliability: involves consistency of

performance and dependability. Firm performs the service right the first time.

Firm should honour its promises Accuracy in billing Keeping records correctly Performing the service at the designated time

Contd… Responsiveness: willingness or readiness of

employees to provide service Timeliness of service Mailing a transaction slip immediately Calling the customer back quickly if necessary Giving prompt service, e.g., setting up

appointments quickly

Contd… Competence: possession of the required skills and

knowledge to perform the service Knowledge and skills of control personnel Knowledge and skills of operation support personnel

Access: ease of contact and approachability The service is easily accessible by telephone (lines are not

busy and do not put you on hold) Waiting time to receive service (bank) is not extensive Convenient hours of operation Convenient location of service facility

Contd… Courtesy: politeness, respect, consideration,

and friendliness of contact personnel Communication: Keeping customers informed

in the language they understand and listening to them. Explaining the service Explaining how much the service will cost Assuring the consumer that a problem will be

handled.

Contd…. Credibility: trustworthiness, believability and

honesty. Having customer’s best interests at heart. Company name Company reputation Personal characteristics and behaviour of the

contact personnel.

Contd…. Security: Freedom from danger, or doubt

Physical safety: (Will I get mugged at the automatic teller machine)

Financial Security (Does the company know where my stock certificate is, is my investment safe?)

Confidentiality (Are my dealings with the company private?)

Contd…. Empathetic to Customer: Efforts to understand the needs of

customer Learning the customer’s specific requirements Providing individualized attention Recognizing the regular customer

Tangibility: Includes physical evidence of the service such as Physical facilities Appearance of personnel Tools or equipment used to provide the service Other service facility

Cost of Quality

Why do we need to know COQ? This tool speaks in the language of management $$$$

Research shows that cost of poor quality can range from 15 %

to 40 % of the business costs

It can prioritize quality improvement actions

Cost of quality data shows how profit is affected by quality

It helps identify the redundant activities

Hidden Failure Costs

Scrap Warranty Rework

Decreased capacity

Increased inventory

Shop and field downtime

Management time

Engineering time

Customer dissatisfactionLost sales

Lost customer trust

Categories of Quality Costs

Conformance Non-Conformance

Quality Costs

Appraisal Prevention External failure Internal failure

Cost of quality

Cost of quality = Cost of conformance + Cost of non-conformance

Cost of conformance is the cost of providing products or services as per the required standards. This can be termed as good amount spent. (Prevention & Appraisal costs)

Cost of non-conformance is the failure cost associated with a process not being operated to the requirements. This can be termed as unnecessary amount spent.( Internal & External failure costs)

Prevention Costs

Prevention costs are associated with design, implementation , maintenance, and planning prior to actual operation, in order to avoid defects from happening.

The emphasis is on the prevention of defects in order to reduce the probability of producing defective products. Prevention activities lead to reduction of appraisal costs and both type of failures ( internal and external ).The motto is “Prevention rather than appraisal” .

Activities associated with Prevention costs

Market research Quality training programs. Contract review Design review Field trials Supplier evaluation Process plan review Process capability review Design and manufacture of jigs and fixtures Preventive checks & maintenance

Appraisal costs

Appraisal costs are spent to detect defects to assure conformance to quality standards. Appraisal cost activities sums up to the “cost of checking if things are correct”.The appraisal costs are focused on the discovery of defects rather than prevention of defects

Activities associated with Appraisal costs

Proto type testing Vendor surveillance Incoming material inspection Process inspection/control Final inspection Laboratory testing / measurement Depreciation cost for measuring Quality audits.

Internal failure costs

Internal failure costs occurs when results of work fail to reach designated quality standards , and are detected before transfer to the customer takes place.

ExamplesInternal failure costs

Design changes/ corrective action Scrap due to design changes Excess inventory Rectification / reject disposition of

purchased material Rework/rejection in manufacturing Downgrading of end product Downtime of plant & machinery Trouble-shooting & investigation of defects

External failure costs

External failure costs occur when the product or service from a process fails to reach designated quality standards , and is not detected until after transfer to the customer.

Activities associated with External failure costs

Processing / investigation of customer complaint Repair/replacement of sold goods Warranty claims Product liability & litigation costs Interest charges on delayed payment due to quality problems Loss of customer goodwill & sales.

Size of four categories of quality costs.

The organizations which do not follow TQM,there is less emphasis on prevention and their main quality efforts are on appraisal with very little control on internal and external failure costs.

Various studies have shown that quality cost in manufacturing companies the world over range from 20 % to 30 % of turnover and in the case of service companies it can go up to 40 % as illustrated in graph on the next slide.

Size of various quality cost elements

Preventive

1%

Appraisal

4-6%

Internal Failure

10-12%

External Failure

10-15%

The total qualitycosts 25-35 %of turnover.

Qua

lity

cos

ts in

% o

f sa

les

Impact of TQM on costs.

TQM is primarily aimed to improve the quality of the product , higher customer satisfaction and better working environment for the employees. The most dramatic impact of TQM is on reduction of quality costs which directly effect the profitability .

This is demonstrated by the results of TQM program in Xerox Corp . The change in various elements of quality cost before and after launching TQM by Xerox Corp is shown on the next slide.

Impact of TQM on costs.

prevention

Appraisal

InternalFailure

Prevention

Appraisal

InternalFailure

0

5

10

15

20

25

30

35

% o

f sa

les

An example from Xerox Corp.

Before TQM After TQM

1-10-100 Rule

1

10

100

Rs

Rs

Rs

Rs

RsRs

Rs

Rs

Rs

Rs

Prevention

Correction

Failure

Cost

of

recti

fyin

g d

efe

ct

Sta

ges

cost of quality

Traditionally recorded quality cost generally account for only 4 to 5 percent of sales which mainly comprise of cost of scrap, re-work and warranty.

Hidden costs of quality

There are additional costs of quality which are hidden and do not appear in the account books of the company, as they are intangible and difficult to measure. These additional costs could be as high as 20-25% of sales.

•Scrap•Rework•Warranty costs

Hidden Costs

Visible costs

• Excessive use of material

• High inventory

• Inadequate resource utilization

• Cost of redesign and re-inspection

• Cost of resolving customer problems

• Lost customers / Goodwill

Visible and hidden costs

• Conversion efficiency of materials

Total Quality Management

TQM V/S Traditional Management

Market-share focus Individuals Focus on ‘who” and “why” Short-term focus Status quo focus Product focus Innovation Fire fighting

Customer focus Cross-functional teams Focus on “what” and “how” Long-term focus Continuous improvement Process improvement focus Incremental improvements Problem solving

Traditional Approach Total Quality ManagementTotal Quality ManagementTotal Quality ManagementTotal Quality Management

Traditional Approach

Lack of communication

Control of staff

Inspection & fire fighting

Internal focus on rule

Stability seeking

Adversarial relations

Allocating blame

Total Quality Management

Open communications

Empowerment

Prevention

External focus on customer

Continuous improvement

Co-operative relations

Solving problems at their roots

SCOPE of TQMTQM is the foundation for activities, which includes:

Commitment by senior management and all employees Meeting customer requirements Reducing development cycle times Just In Time/ Flow Manufacturing Improvement teams Reducing product and service costs Systems to facilitate improvement Employee involvement and empowerment Recognition and celebration Challenging quantified goals and benchmarking Focus on processes / improvement plans

This shows that TQM must be practiced in all activities, by all personnel, in Manufacturing, Marketing, Engineering, R&D, Sales, Purchasing, HR, etc.

Benefits of Implementing TQM Image of the organization has improved. Reduction in inventory. Shorter lead time in design, manufacturing,

procurement service etc., Reduction in rejections and complaints. Customer satisfaction. Quality cost % to turnover reduction. Lower manufacturing cost. Reduction in deviation. Continuous improvement. Drastic reduction in defectives and number of

defects.

COMPANY THAT

PRACTICES TQM

FORD Motor Companyo Is an American multinational automaker based

in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903.

o Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010. At the end of 2010, Ford was the fifth largest automaker in Europe. Ford is the eighth-ranked overall American-based company in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion.

TQM techniques that Ford used:

 Six Sigma Quality Operating System or (QOS) developed their own quality process or 5S. The DMAIC process, or define, measure,

analyze, improve, and control has built an overall strategy for consistency in their teams,

Federal Express (FedEx) FedEx created the overnight air express

business in 1973. Ten years later, it was the first U.S. company to top $1 billion in revenues in its first decade. The company is the world’s largest express transportation company: more than 110,000 employees moved more than 2million items to over 200 countries each business day. In 1990, FedEx became the first service company to win the Baldrige Award.

Leading the Transition Commit to quality Know you Company’s Systems and Values Participate in your Company’s Quality

Processes Integrate Quality in the Company’s

Management model

XEROX The Xerox Corporation started its thrive

towards TQM in the 1970’s with the invention of PARC, Palo Alto Research Center.

XEROX Xerox has established a program called

Leadership Through Quality (LTQ) and a Quality Training Task Force for its company’s leadership teams. "Today, more than 100,000 Xerox employees worldwide have been trained in this process, which stresses continuous improvement and defines quality precisely as meeting customer requirements" (Evans-Correia, 1997, 135).

The XEROX Corporation focuses on:

o Benchmarkingo a reduced supplier baseo and leadership teams

Toyota Corporation A multinational automaker headquartered

in Toyota, Aichi, Japan. In 2010, Toyota Motor Corporation employed 317,734 people worldwide. TMC is the world's largest automobile manufacturer by sales and production.

Toyota Corporation uses: 5S Lean manufacturing JIT Kaizen Six Sigma

THANKTHANK YOU YOU

Do the right things, right the first time, every time