Chapter Management of Quality McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All Rights Reserved Chapter 9: Learning Objectives • You should be able to: – – – – – – – – – – Define the term quality Explain why quality is important and the consequences of poor quality Identify the determinants of quality Describe the costs associated with quality Describe the quality awards Discuss the philosophies of quality gurus Describe TQM Give an overview of problem solving Give an overview of process improvement Describe and use various quality tools 9-2 Quality • What does the term quality mean? • Quality – is the ability of a product or service to consistently meet or exceed customer expectations 9-3 Quality Contributors 9-4 Deming’s 14 Points 9-5 Determinants of Quality Conformance to Design Design Ease of Use After-Sale Service 9-6 Costs of Quality • Failure Costs – Costs incurred by defective parts/products or faulty services • Appraisal Costs – Costs of activities designed to ensure quality or uncover defects • Prevention Costs – All TQ training, TQ planning, customer assessment, process control, and quality improvement costs to prevent defects from occurring 9-7 Quality Awards and Certification • Quality Awards – Deming Prize – Malcolm Baldrige National Quality Award • Quality Certifications – ISO 9000 – ISO 14000 – ISO 24700 9-8 Recent Baldrige Winners • 2007 – – – – – PRO-TEC Coating Co – small business Mercy Health System – healthcare Sharp HealthCare– healthcare City of Coral Springs– nonprofit U.S Army Armament Research, Development, and Engineering Center– nonprofit • 2006 – Premier, Inc.– service – MESA Products, Inc.– small business – North Mississippi Medical Center– healthcare • 2005 – – – – – – Sunny Fresh Foods, Inc.– manufacturing DynMcDermott Petroleum Operations Company– service Park Place Lexus– small business Jenks Public Schools– education Richland College– education Bronson Methodist Hospital healthcare 9-9 Total Quality Management T Q M • A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction 9-10 TQM Culture 9-11 Six Sigma • Six Sigma – A business process for improving quality, reducing costs, and increasing customer satisfaction – Statistically • Having no more than 3.4 defects per million – Conceptually • Program designed to reduce defects • Requires the use of certain tools and techniques 9-12 Quality Tools • Seven basic quality tools: – – – – – – – Flowcharts Checksheets Histograms Pareto Analysis Scatter Diagrams Control Charts Cause-and-Effect Diagrams • Run Charts 9-13 Methods for Generating Ideas • Brainstorming • Affinity Diagram • Quality circles • Interviewing • Benchmarking • 5W2H 9-14 Operations Strategy • Quality is a strategic imperative for organizations – Customers are very concerned with the quality of goods and services they receive • Quality is a never-ending journey – It is important that most organizational members understand and buy into this idea • Customer satisfaction ≠ customer loyalty • Quality needs to be incorporated throughout the entire supply chain, not just the organization itself 9-15 ... Petroleum Operations Company– service Park Place Lexus– small business Jenks Public Schools– education Richland College– education Bronson Methodist Hospital healthcare 9- 9 Total Quality Management. .. Contributors 9- 4 Deming’s 14 Points 9- 5 Determinants of Quality Conformance to Design Design Ease of Use After-Sale Service 9- 6 Costs of Quality • Failure Costs – Costs incurred by defective parts/products... occurring 9- 7 Quality Awards and Certification • Quality Awards – Deming Prize – Malcolm Baldrige National Quality Award • Quality Certifications – ISO 90 00 – ISO 14000 – ISO 24700 9- 8 Recent