unit 5 tqm

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POM Notes for FMS MBA Students by Ms. Shuchi Singhal

These Notes are prepared by Ms. Shuchi Singhal85, Shri Gopal Nagar, Gopal Pura by pass, 5177216, 3241216

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UNIT - 5 TOTAL QUALITY MANAGEMENTConcept of TQM

To understand the TQM concept, the three words are defined separately.

(1)Total: Everyone associated with the company is involved in continuous improvement.

(2)Quality: Customers expressed and implied requirements are met fully.(3)Management: Executives (Top management people) are fully committed.

Definition given by ISO:

TQM is a management approach for an organization centered on quality, based on theparticipation of all its members and aiming at long term success through customer satisfaction,and benefit to all members of the organization and to society.

Features of Total Quality Management:

1. It is a wide concept which includes everyone and everything.2. TQM emphasis use of all people.

3. The key aspect of TQM is the prevention of defects and emphasis on quality of design.4. Focus on customer.

Benefits of Adoption of Total Quality Management:

1. Greater customer loyalty.

2. Market share improvement.3. Higher stock prices.

4. Reduced service cells.

TQM in manufacturing and service sector:

Difference between service and manufacturing sector:

Points Service Sector Manufacturing Sector

1 Customer

Contact

In service sector, the customer

contact is Direct.

In manufacturing sector, the

customer contact is Indirect.

2 Use of Machine The machine is service sector, isLimited.

The machine in manufacturingsector, is Extensive.

3 Transaction Lot of paper work, small amount

of money.

Small volume of paper work, high

amount of.4 Errors Errors are more in service sector. Errors are less in manufacturing

sector.

5 Tangibility

(Possibility ofmeasurement)

It is Intangible. It is Tangible.

6 Focus It focuses on Human factor. It focuses on Product quality.

7 Indication ofquality

Indication of quality is thecustomer compliant in the servicesector.

Indication of quality is the qualitystandard in the manufacturingsector.

8 QualityImprovement

In service sector, it is a short termplan for day to day problems.

In manufacturing sector, it is a longterm structured plan.

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Implementation of TQM in services sector:

The following steps are proposed for TQM implementation in service system:

Step 1- Formulate service quality strategy.Step 2- Analyse service process and define quality measures.Step 3- Establish process control system.

Step 4- Investigate the process to identify improvement opportunity.Step 5- Improve process quality.In India, both the public sector and top private sectors like Infosys, Tata, Wipro, Swaraj etc are

using Total Quality system in their organizations successfully.

ISO 9000 management principles:

(1) Customer focus.(2) Provide leadership(3) Involvement of people(4) Process approach(5)

System approach(6) Continuous improvement

(7) Fact based decisions(8) Relationship with supplies.

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SIX SIGMA

Meaning

Six Sigma is a business management strategy originally developed by Motorola, USA in 1986.

Six Sigma seeks to improve the quality of process outputs by identifying and removing the

causes of defects (errors) and minimizing variability in manufacturing and business processes.It uses a set ofquality management methods, including statistical methods, and creates aspecial infrastructure of people within the organization who are experts in these methods.Each Six Sigma project carried out within an organization follows a defined sequence of stepshas quantified and financial targets (cost reduction or profit increase).

The term Six Sigma originated from terminology associated with manufacturing, specificallyterms associated with statistical modeling of manufacturing processes. The maturity of amanufacturing process can be described by a sigma rating indicating its yield, or the

percentage of defect-free products it creates. A six sigma process is one in which 99.99966%of the products manufactured are statistically expected to be free of defects (3.4 defects permillion). Motorola set a goal of "six sigma" for all of its manufacturing operations, and this goal

became a byword for the management and engineering practices used to achieve it.

In Six Sigma, a defect is defined as any process output that does not meet customer

specifications, or that could lead to creating an output that does not meet customerspecifications.

The idea of Six Sigma was actually born at Motorola in the 1970s, when senior executive ArtSundry was criticizing Motorolas bad quality. Through this criticism, the company discoveredthe connection between increasing quality and decreasing costs in the production process.

Before, everybody thought that quality would cost extra money. In fact, it was reducing costs,as costs for repair or control sank. Then, Bill Smith first formulated the particulars of themethodology at Motorola in 1986. Six Sigma was heavily inspired by six preceding decades of

quality improvement methodologies such as quality control, TQM, and Zero Defects.

Origin and meaning of the term "six sigma process"

Graph of the normal distribution, which underlies the statistical assumptions of the Six Sigma

model. The Greek letter (sigma) marks the distance on the horizontal axis between themean, , and the curve's inflection point. The greater this distance, the greater is the spread ofvalues encountered. For the curve shown above, = 0 and = 1. The upper and lowerspecification limits (USL, LSL) are at a distance of 6 from the mean. Because of the propertiesof the normal distribution, values lying that far away from the mean are extremely unlikely.Even if the mean were to move right or left by 1.5 at some point in the future (1.5 sigmashift), there is still a good safety cushion. This is why Six Sigma aims to have processes where

the mean is at least 6 away from the nearest specification limit.
http://en.wikipedia.org/wiki/Strategic_managementhttp://en.wikipedia.org/wiki/Motorolahttp://en.wikipedia.org/wiki/Statistical_dispersionhttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Business_processhttp://en.wikipedia.org/wiki/Quality_managementhttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Process_capabilityhttp://en.wikipedia.org/wiki/Motorolahttp://en.wikipedia.org/wiki/Bill_Smith_%28Motorola_engineer%29http://en.wikipedia.org/wiki/Motorolahttp://en.wikipedia.org/wiki/Quality_controlhttp://en.wikipedia.org/wiki/Total_Quality_Managementhttp://en.wikipedia.org/wiki/Zero_Defectshttp://en.wikipedia.org/wiki/Quality_controlhttp://en.wikipedia.org/wiki/Normal_distributionhttp://en.wikipedia.org/wiki/Sigmahttp://en.wikipedia.org/wiki/Arithmetic_meanhttp://en.wikipedia.org/wiki/Inflection_pointhttp://en.wikipedia.org/wiki/Inflection_pointhttp://en.wikipedia.org/wiki/Arithmetic_meanhttp://en.wikipedia.org/wiki/Sigmahttp://en.wikipedia.org/wiki/Normal_distributionhttp://en.wikipedia.org/wiki/File:6_Sigma_Normal_distribution.jpghttp://en.wikipedia.org/wiki/Zero_Defectshttp://en.wikipedia.org/wiki/Total_Quality_Managementhttp://en.wikipedia.org/wiki/Quality_controlhttp://en.wikipedia.org/wiki/Motorolahttp://en.wikipedia.org/wiki/Bill_Smith_%28Motorola_engineer%29http://en.wikipedia.org/wiki/Motorolahttp://en.wikipedia.org/wiki/Process_capabilityhttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Quality_managementhttp://en.wikipedia.org/wiki/Business_processhttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Statistical_dispersionhttp://en.wikipedia.org/wiki/Motorolahttp://en.wikipedia.org/wiki/Strategic_management

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Features

Continuous efforts to achieve stable and predictable process results (i.e., reduce process

variation) are of vital importance to business success. Manufacturing and business processes have characteristics that can be measured,

analyzed, improved and controlled.

Achieving sustained quality improvement requires commitment from the entireorganization, particularly from top-level management.

A clear focus on achieving measurable and quantifiable financial returns from any SixSigma project.

An increased emphasis on strong and passionate management leadership and support A clear commitment to making decisions on the basis of verifiable data, rather than

assumptions and guesswork.

Six Sigma is a registered service mark and trademark ofMotorola Inc. As of 2006 Motorolareported over US$17 billion in savings from Six Sigma.

Other early adopters of Six Sigma who achieved well-publicized success include GeneralElectric.

Six Sigma projects follow two project methodologies inspired by Deming's Plan-Do-Check-ActCycle. These methodologies, composed of five phases each, bear the acronyms DMAIC andDMADV.

DMAIC is used for projects aimed at improving an existing business process. DMAIC ispronounced as "duh-may-ick".

DMADV is used for projects aimed at creating new product or process designs. DMADV ispronounced as "duh-mad-vee".

DMAIC

The DMAIC project methodology has five phases:

Define the problem, the voice of the customer, and the project goals, specifically. Measure key aspects of the current process and collect relevant data. Analyze the data to investigate and verify cause-and-effect relationships.

Improve or optimize the current process based upon data analysis using techniquessuch as design of experiments.

Controlthe future state process to ensure that any deviations from target are correctedbefore they result in defects. Implement control systems such as statistical processcontrol and continuously monitor the process.

DMADV or DFSS

The DMADV project methodology, also known as DFSS ("Design For Six Sigma"), features fivephases:

Define design goals that are consistent with customer demands and the enterprisestrategy.

Measure and identify CTQs (characteristics that are Critical To Quality), productcapabilities, production process capability, and risks.

Analyze to develop and design alternatives, create a high-level design and evaluatedesign capability to select the best design.

Design details, optimize the design, and plan for design verification. This phase mayrequire simulations.

Verifythe design, set up pilot runs, implement the production process and hand it overto the process owner.
http://en.wikipedia.org/wiki/Statistical_dispersionhttp://en.wikipedia.org/wiki/Service_markhttp://en.wikipedia.org/wiki/Motorolahttp://en.wikipedia.org/wiki/General_Electrichttp://en.wikipedia.org/wiki/General_Electrichttp://en.wikipedia.org/wiki/W._Edwards_Deminghttp://en.wikipedia.org/wiki/PDCAhttp://en.wikipedia.org/wiki/PDCAhttp://en.wikipedia.org/wiki/Design_of_experimentshttp://en.wikipedia.org/wiki/Control_systemshttp://en.wikipedia.org/wiki/Statistical_process_controlhttp://en.wikipedia.org/wiki/Statistical_process_controlhttp://en.wikipedia.org/wiki/Statistical_process_controlhttp://en.wikipedia.org/wiki/DFSShttp://en.wikipedia.org/wiki/DFSShttp://en.wikipedia.org/wiki/Statistical_process_controlhttp://en.wikipedia.org/wiki/Statistical_process_controlhttp://en.wikipedia.org/wiki/Control_systemshttp://en.wikipedia.org/wiki/Design_of_experimentshttp://en.wikipedia.org/wiki/PDCAhttp://en.wikipedia.org/wiki/PDCAhttp://en.wikipedia.org/wiki/W._Edwards_Deminghttp://en.wikipedia.org/wiki/General_Electrichttp://en.wikipedia.org/wiki/General_Electrichttp://en.wikipedia.org/w/index.php?title=Six_Sigma&action=edithttp://en.wikipedia.org/wiki/Motorolahttp://en.wikipedia.org/wiki/Service_markhttp://en.wikipedia.org/wiki/Statistical_dispersion

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Quality management tools and methods used in Six Sigma

Analysis of variance

Cause & effects diagram Chi-square test of independence and fits

Control chart Correlation Cost-benefit analysis

Histograms

Process capability Regression analysis

Criticisms

1. Lack of originality

2. Role of consultants3. Potential negative effects4. Based on arbitrary standards

Case Study - McDonalds

If on any day McDonalds served one million customers, how many of them experienced badservice during lunch ? If only three customers were unhappy with their Lunch, then McDonalds

achieved 6 Sigma on that day. This is because 6 Sigma is equivalent to only 3.4 bad customerexperiences for every million opportunities.

If233 bad customer experiences occurred per million McDonalds customers then McDonaldswould be a Five Sigma company. If6,210 customers had experienced soggy french fries or aninaccurate order then McDonalds would be a Four Sigma company.

If66,807 McDonalds customers opened their lunch bag and found a Big Mac when they hadordered a Quarter Pounder, McDonalds would be a Three Sigma company.

Six Sigma is a measure of customer satisfaction that is near perfection.

Case Study - DABBAWALA

Mumbais 5000 plus Dabbawalas are world famous for their impeccable service standards. Theypick up lunch boxes/ tiffin carriers from over 2,00,000 homes/ apartments, deliver them to

some 80,000 destinations and again ensure their safe return to those homes/ apartments allon the same day with each lap of journey & route accomplished within the specified time limits.The people at work are not from any high academic background; rather many of them are

almost illiterate. They face the same crowded pavements, on-road dense vehicular traffic andoverloaded suburban trains.

Their way of doing business has, therefore, become a case study destination for every

management guru and B-school. A Dabbawala figured among a handful few from India who got

invitations to witness the marriage ceremony of Prince Charles. Sometime back, there was alsoan All-Dabbawala Deal Ya No Deal show in Sony Entertainment TV. They steal all attentionjust because their service is of Six Sigma quality.

When the Defects Per Million Opportunity (DPMO) doesnt exceed 3.4, the process issaid to have met Six Sigma level. And Mumbai Dabbawalas DPMO is less than 3.4 or

precisely, it is 2!

Sigma (r) denotes Standard deviation a statistical measure of dispersion/ variance. It is thepositive square root of the arithmetic mean of the squares of deviations of given observations

from their arithmetic mean.
http://en.wikipedia.org/wiki/Analysis_of_variancehttp://en.wikipedia.org/wiki/Chi-square_testhttp://en.wikipedia.org/wiki/Control_charthttp://en.wikipedia.org/wiki/Correlationhttp://en.wikipedia.org/wiki/Cost-benefit_analysishttp://en.wikipedia.org/wiki/Histogramhttp://en.wikipedia.org/wiki/Process_capabilityhttp://en.wikipedia.org/wiki/Regression_analysishttp://en.wikipedia.org/wiki/Regression_analysishttp://en.wikipedia.org/wiki/Process_capabilityhttp://en.wikipedia.org/wiki/Histogramhttp://en.wikipedia.org/wiki/Cost-benefit_analysishttp://en.wikipedia.org/wiki/Correlationhttp://en.wikipedia.org/wiki/Control_charthttp://en.wikipedia.org/wiki/Chi-square_testhttp://en.wikipedia.org/wiki/Analysis_of_variance

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