what business are you in?

Chapter 3: Quality Management 1


What business are you in?

CEO of GM announced, “GM wasn’t in the business of making cars, GM was in the business of making money”.

Taylor > Drucker > McNamara According to Tom Peters from “In Search of

Excellence” fame


Chapter 3

Quality Management

4

Chapter 3:Quality Management


Examples


West Babylon School District

Began applying continuous improvement and quality to its administrative and education processes.

TQEApplied Deming’s “14 Points” for

management to administrative process.Numerous improvements made.


National Semiconductor

Early proponent of total quality Quality circles 1981 Preventive maintenance 1982 Statistical process control 1983 Design of experiment techniques 1984 Design for manufacturing techniques 1986


National Semiconductorcontinued

Second stage of quality initiatives (1990s) Focused on customer-supplier relationships Customer satisfaction Customer score cards Process analysis Employee empowerment Team strategies Problem solving techniques Visioning


National Semiconductorcontinued

Third stage Personal mastery Shared vision Systems thinking Team learning


NCR

Produces business information processing systems

Recognized need to continuously improve its products

Major component of its continuous improvement program is use of statistical techniques


NCR continued

Began using statistical process control techniques in 1985 to monitor its autoinsertion operation on its printed circuit board assembly line. Line was producing an unacceptable

number of defects. Reasons included misinserted or broken

parts, using the wrong parts and so on.


NCR continued

Quality engineering department established process averages, control limits and guidelines for action for “out-of-control” conditions. Production was stopped when out-of-control condition

detected until cause identified. Random samples of 1000 insertions were collected each

hour and the results plotted on a c chart. Out-of-control situations were investigated to identify the

assignable cause.


NCR concluded

Learned a great deal about the autoinsertion operation using the control charts. Problem of broken parts was traced to a specific

supplier. Because of the success of this experiment,

statistical process control was implemented across the entire assembly line.

NCR has since changed its approach from “inspect and repair” to “prevent and design for quality.”


Timber Companies

Because of environmental restrictions and limited quantities of large-diameter trees, many timber companies are using statistical quality control techniques to maximize the quality and quantity of finished lumber produced


Converting Logs into Finished Lumber

Debarked log split down the middleSplit log resawed to create boardsEnds of boards trimmedBoards are stackedLog debarkedBoards dried in kiln for 2 to 30 daysBoards are planed


Applying SPCto the Stacking Operation Important because this determines

straightness of finished lumber.Lumber stacked in layers.Separators placed between layers to form air

channels and transfer weight of wood.Automated equipment used to stack lumber

making it necessary to monitor the alignment of the separators.


Stacking Operation continued

Estimated cost of misplaced separator is $31.50 owing to board warping.

Average sawmill handles upwards of 30,000 separators each day.

Measuring board placed in front of each column of separators to monitor separator alignment.

Stack of lumber contains approximately 15 columns of separators and 360 separators.


Stacking Operation concluded

Total number of misplaced separators is divided by the total number of separators in the stack of lumber and result plotted on p chart.

Using p chart, workers monitor the stacking equipment and identify problems before an out-of-control situation arises.


Quality Management Perspectives


Quality Costs

Two primary sets of costs involved in quality Control costs Failure costs

These costs are often as high as 15 to 35% of sales

Costs often broken down into four categories


Category 1:Prevention Costs

Costs associated with trying to prevent defects and errors Training for quality Educating suppliers Designing product for quality Designing production system for quality Preventive maintenance


Category 2: Appraisal Costs

Costs of determining current quality Measuring and testing parts Running special test laboratories Acquiring special testing equipment Conducting statistical process control Inspecting incoming materials


Category 3: Internal Costs of Defects

Costs incurred when defects are found before shipment/delivery to customer. Labor and materials going into scrap Reworking and retesting to correct defects Downtime of equipment and labor while

waiting for repairs Yield losses


Category 4: External Costs of Defects

Costs of trying to correct defects after receipt by customer. Lost of customer goodwill Recalls to correct problem Warranty, insurance, and legal suit

settlements


Quality Management Philosophies


W. Edwards Deming

Major source of poor quality is variationQuality improvement the responsibility

of top managementAll employees should be trained in use

of problem solving tools and especially statistical techniques


Deming’s 14 Points

Create constancy of purposeAdopt the new philosophyCease dependence on mass inspectionEnd practice of awarding business on

basis of price tags Improve constantly and forever Institute modern methods of training


Deming’s 14 Points continued

Institute modern method of supervisionDrive out fearBreakdown organizational barriersEliminate arbitrary numerical goalsEliminate work standards and quotasRemove barriers that reduce pride of

workmanship


Deming’s 14 Points continued

Institute a vigorous program of education and training

Push the other 13 points everyday


Joseph Juran


Joseph Juran

Quality Control Handbook (1951)Quality Trilogy

Quality Planning Quality Control Quality Improvement

Need to place more emphasis on planning and improvement


Joseph Juran continued

Organizations move through 4 phases1. Minimize prevention and appraisal costs –

results in increased external failure costs

2. Increase appraisal costs – finds defects sooner and raises internal costs

3. Process control introduced increasing appraisal costs but lowering internal and external failure costs

4. Prevention costs increased in effort to lower total quality costs


Phillip Crosby


Philip B. Crosby

Quality is conformance to requirements, not elegance

Better to produce item right the first time than to try to inspect quality in

Quality at the source - responsibility shifted from quality control department to workers


Total Quality Management (TQM)

Quality problems do not exist, rather organizations have functional problems

Zero defects only meaningful performance standard

Cost of quality the only performance measure


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Economic Control of Quality of Manufactured Product (1931)


History of TQM

Dr. Shewart began using statistical control at the Bell Institute in 1930s

Military standards developed in 1950sAfter World War II, Japanese Union of

Scientist and Engineers began consulting with Deming

Deming Prize introduced in Japan in 1950


History of TQM continued

Juran writes “Total Quality Control” 1951Juran makes first trip to Japan in 1954“Quality” Japan’s national slogan in 1956First quality circles created in 195710,000 quality circles by 1966100,000 quality circles by 1977First U.S. quality circle 1974


Five Steps in TQM

Determine what customers wantDevelop products and servicesDevelop production systemMonitor the system Include customers and suppliers


New Responsibilities of Quality Control Department

Training employees how to control quality

Conducting random quality auditsConsulting on quality problemsDetermining cost of qualityHelping implement quality control ideasOverseeing final test of finished goods


Quality Circles

Focus on all problems facing workersComposed of natural work groupsNot limited to shop employeesUsually spend couple hours per week

on company time analyzing problems


Quality Tools

Process analysisRuns chartControl chartPareto chartHistogram

Scatter diagramFishbone chartPresentation skillsAnalysis skillsBrainstorming


Tools for Quality Control


Tools for Quality Control continued


Insufficient Time Spent Covering Curriculum


Taguchi Methods

Design for Manufacturability (DFM)Procedure for statistical testing to

determine best combination of product and transformation system design that will make output relatively independent of normal fluctuations in the production system


Quality Function Deployment (QFD)

Tools for helping translate customer desires directly into product service attributes.


Benchmarking

Comparing an organization’s performance to performance of other organizations.


Purposes for Benchmarking

Comparing an organization’s performance to the best organization’s performance

Comparing an organization’s business processes with similar processes

Comparing products and services Identifying best practices to implementProjecting trends


Steps in Benchmarking

Preparing for the study obtaining top management support

Collecting data published data original research

Using what was learned to improve organizational performance


Benchmarking Goals

Learning from experiences of othersDetermining how organization is

performing relative to the bestHelping to prioritize improvement efforts

developing stretch goals overcoming complacency within

organization


Quality in Services

Measuring is difficultTraining in standard procedures often

used to improve qualityOne way to measure quality of services

is to use customer satisfaction surveysJ.D. Power and Associates uses

surveys to rate domestic airlines, hotel chains, and rental car companies.


Rating the Performance of Domestic Airlines

On-time performance (25%)Airport check-in (11%)Courtesy of flight attendants (11%)Seating comfort (11%)


Service Defections

Organizations should monitor customer defections feedback from defecting customers can be

used to identify problem areas can determine what is needed to win them

back changes in defection rate can be used as

early warning signal


Quality Awards/Certifications


Deming Prize Criteria

Policies and objectives

Operation of the organization

Education Information

Management Analysis

Standardization Control Quality assurance Results Future plans


2001 Malcolm Baldrige Award Criteria

Leadership (120 points) organizational leadership public responsibility and citizenship

Strategic planning (85 points) strategy development process strategy deployment


2001 Malcolm Baldrige Award Criteria continued

Customer and market focus (85 points) customer and market knowledge customer relationship and satisfaction

Information and analysis (90 points) measurement and analysis of

organizational performance information management



Human resource focus (85 points) work systems employee education, training, and

development employee well-being and satisfaction



Process management (85) product and service processes business processes support processes



Business results (450 points) Customer-focused results financial and market results human resource results organizational effectiveness results


ISO 9000

Guidelines for designing, manufacturing, selling, and servicing products.

Selecting an ISO 9000 certified supplier provides some assurance that supplier follows accepted business practices in areas covered by the standard


Elements of ISO 9000

Management Responsibility Quality System Contract Review Design Control Document and Data Control Purchasing Control of Customer Supplied

Product Product Identification and

Traceability Process Control Inspection and Testing

Control of Inspection, Measuring, and Test Equipment

Inspection and Test Status Control of Nonconforming Product Corrective and Preventive Action Handling, Storage, Packaging,

Preservation, and Delivery Internal Quality Audits Training Servicing Statistical Techniques


ISO 14000

Series of standards covering environmental management systems, environmental auditing, evaluation of environmental performance, environmental labeling, and life-cycle assessment.

Intent is to help organizations improve their environmental performance through documentation control, operational control, control of records, training, statistical techniques, and corrective and preventive actions.


Process Capability


Process Capability

TQM’s emphasis on “making it right the first time” has resulted in organizations emphasizing the ability of a production system to meet design specifications rather than evaluating the quality of outputs after the fact with acceptance sampling.

Process capability measures the extent to which an organization’s production system can meet design specifications.


Engineering Tolerance Versus Process Capability


Process Capability Depends On:

Location of the process mean.Natural variability inherent in the

process.Stability of the process.Product’s design requirements.


Natural Variation Versus Product Design Specifications


Process Capability Index

6

LSL - USL

system production theof deviations standard 6

rangeion specificatdesign sproduct'pC

Cp < 1: process not capable of meeting design specs

Cp > 1: process capable of meeting design specs

As rule of thumb, many organizations desire a Cp index of at least 1.5.

Six sigma quality (fewer than 3.4 defective parts per million) corresponds to a Cp index of 2.

72

Effect of Production System Variability on Cp


Statistical Quality Control


Chance Versus Assignable Variation

Chance variation is variability built into the system.

Assignable variation occurs because some element of the system or some operating condition is out of control.

Quality control seeks to identify when assignable variation is present so that corrective action can be taken.


Control Based on Attributes and Variables

Inspection for Variables: measuring a variable that can be scaled such as weight, length, temperature, and diameter.

Inspection of Attributes: determining the existence of a characteristic such as acceptable-defective, timely-late, and right-wrong.


Control Charts


Control Charts

Developed in 1920s to distinguish between chance variation in a system and variation caused by the system’s being out of control - assignable variation.


Control Charts continued

Repetitive operation will not produce exactly the same outputs.

Pattern of variability often described by normal distribution.

Random samples that fully represent the population being checked are taken.

Sample data plotted on control charts to determine if the process is still under control.


Control Chart with Limits Setat Three Standard Deviations


Control Charts for Variables


Two Control Charts

Sample Means ChartRange Chart


Sample Data of Weights of Tacos (ounces)

Sample Scenario 1 Scenario 2

1 4, 5, 6 4, 5, 6

2 6, 7, 8 3, 5, 7

3 7, 8, 9 2, 5, 8


Analysis of Scenario 1

Sample Mean Range

1 5 2

2 7 2

3 8 2

Sample means show problem having increased from 5 ounces to 8 ounces. Sample ranges have not changed from sample to sample.


Analysis of Scenario 2

Sample Mean Range

1 5 2

2 5 4

3 5 6

Sample ranges show problem having increased from 2 ounces to 6 ounces. Sample means have not changed from sample to sample.


Patterns of Change in Process Distributions


Control Limits

Sample Means Chart:

RAXLCL

RAXUCL

2X

2X

Range Chart:

RDLCL

RDUCL

3R

4R


Calculating the Grand Meanand the Average Range

N

RR

N

XX


Mean Age of Ice Cream


Range in Ice Cream Age


Control Charts for Attributes


Fraction-defective (p) Charts

pp

pp

p

zp

zp

n

pp

p

LCL

UCL

)1(

sampled units ofnumber total

defects ofnumber total


Number-of-defects (c) Charts

cc

cc

c

zc

zc

c

c

LCL

UCL

sampled units ofnumber

observed incidents ofnumber

what business are you in?

Documents

quality managementchapter

control limits

control charts

control conditions

control situations

techniquesvisioning

administrative process

process averages