Chapter 16: Quality Management

Quality Management

refers to systematic policies, methods, and procedures used to ensure that goods and services are produced with appropriate levels of quality to meet the needs of customers.

Six Sigma

a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers, resulting in a clear financial return for the organization.

Quality

meeting or exceeding customers’ expectations

Quality of conformance

the extent to which a process is able to deliver output that conforms to the design specifications.

Specifications

are targets and tolerances determined by designers of goods and services

Service quality

consistently meeting or exceeding customer expectations (external focus) and service-delivery system performance criteria (internal focus) during all service encounters.

SERVQUAL

An established instrument for measuring customer perceptions of service quality

Tangibles

what the customer sees, such as physical facilities, equipment, and the appearance of service employees.

Reliability

the ability to provide what was promised, dependably and accurately.

Responsiveness

the willingness to help customers and provide prompt service.

Assurance

the knowledge and courtesy of service providers and their ability to convey trust and confidence.

Empathy

is caring, individual attention the firm provides its customers.

The Principles of total quality

1. A focus on customers and stakeholders.

2. A process focus supported by continuous improvement and learning.

3. Participation and teamwork by everyone in the organization.

Quality 4.0

about aligning the practice of quality management with the emerging capabilities of Industry 4.0 to help drive organizations toward operational excellence.

The Deming Philosophy

focuses on bringing about improvements in product and service quality by reducing variability in goods and services design and associated processes.

Jospeh Juran

taught quality principles to the Japanese in the 1950s and was a principal force in their quality reorganization. Proposed a simple definition of quality: “fitness for use.”

Philip B. Crosby

1. Quality means conformance to requirements, not elegance.

2. There is no such thing as a quality problem.

3. There is no such thing as the economics of quality; doing the job right the first time is always cheaper.

4. The only performance measurement is the cost of quality, which is the expense of nonconformance.

5. The only performance standard is “Zero Defects”

Gap 1

the discrepancy between customer expectations and management perceptions of those expectations

Gap 2

the discrepancy between management perceptions of what features constitute a target level of quality and the task of translating these perceptions into executable specifications.

Gap 3

the discrepancy between quality specifications documented in operating and training manuals and plans and their implementation.

Gap 4

the discrepancy between actual manufacturing and service-delivery system performance and external communications to the customers.

Gap 5

the difference between the customer’s expectations and perceptions.

Quality Management System (QMS)

a formalized system that documents processes, procedures, and responsibilities for achieving quality policies and objectives.

Defect

any mistake or error that is passed on to the customer

Unit of work

the output of a process or an individual process step

Cost of quality

the costs associated with avoiding poor quality or those incurred as a result of poor quality.

Prevention costs

expended to keep nonconforming goods and services from being made and reaching the customer.

Quality planning costs

such as salaries of individuals associated with quality planning and problem-solving teams, the development of new procedures, new equipment design, and reliability studies

process-control costs

which include costs spent on analyzing processes and implementing process control plans

information-systems costs

which are expended to develop data requirements and measurements

training and general management costs

which include internal and external training programs, clerical staff expenses, and miscellaneous supplies.

Appraisal costs

Costs for inspecting and testing to ensure products meet
quality standards. This includes audits, inspections, and quality checks

test and inspection costs

those associated with incoming materials, work-in-process, and finished goods, including equipment costs and salaries;

instrument maintenance costs

those associated with the calibration and repair of measuring instruments

process-measurement and process-control costs

which involve the time spent by workers to gather and analyze quality measurements.

Internal failure costs

costs incurred as a result of unsatisfactory quality that is found before the delivery of a good or service to the customer

External failure costs

incurred after poor-quality goods or services reach the customer.

Run chart

a line graph in which data are plotted over time

Control chart

a run chart to which two horizontal lines, called control limits, are added: the upper control limit (UCL) and lower control limit (LCL)

Checksheets

special types of data-collection forms in which the results may be interpreted on the form directly without additional processing.

Histograms

a basic statistical tool that graphically shows the frequency or number of observations of a particular value or within a specified group

Pareto Diagrams

shows that about 70 percent of defects result from the top two categories, Incomplete and Surface scars.

cause and effect diagrams

a simple, graphical method for presenting a chain of causes and effects and for sorting out causes and organizing relationships between variables.

Scatter diagram

the graphical component of regression analysis.

Deming Cycle

a simple adaptation of the scientific method for process improvement

Kaizen

focuses on small, gradual, and frequent improvements over the long term, with minimum financial investment and with participation by everyone in the organization.

Kaizen Event

an intense and rapid improvement process in which a team or a department throws all its resources into an improvement project over a short time period, as opposed to traditional kaizen applications, which are performed on a part-time basis

Breakthrough improvement

discontinuous change, as opposed to the gradual, continuous improvement philosophy of kaizen.

Benchmarking

the search for industry best practices that lead to superior performance

Best practices

approaches that produce exceptional results, are usually innovative in terms of the use of technology or human resources, and are recognized by customers or industry experts.