OMIS 442

Grade

refers to intended level of features, performance, or sophistication designed into a product or service

• High grade = more features and premium materials 

• Grade is a design choice driven by

  • Target market

  • Price positioning

  • Competitive strategy 

Quality Dimensions of Manufactured Items 

• Performance

• Features

• Reliability

• Durability

• Conformance

• Aesthetics

• Serviceability

• Perceived quality

Quality dimensions of service

• Tangibility

• Reliability

• Responsiveness  

• Assurance

• Empathy

Customer driven quality

 the totality of features and characteristics of a product or service that bear on its ability to satisfy given needs.

• Meeting or exceeding customer expectations

Different Quality Perspectives

• Customers 

  • Product Based Perspective - Quantities of product attributes

  • Transcendent (Judgemental) - Excellence 

  • Value-Based Perspective - (Usefulness or satisfaction)/ price 

• Marketing

  • User based perspective - fitness for intended use

• Design 

  • Value-based perspective - (usefulness or satisfaction)/ price 

• Manufacturing

  • Manufacturing based perspective: conformance to specifications 

• Regulators

  • Compliance and safety

Small q

a narrow, operational focus on making sure a specific product or service meets basic requirements and is free from defects

• Inspection to identify defects

• Narrow

• Technical view of quality, product focused, manufacturing centric

Big Q

• Quality in the entire system

• System is an interconnected process, resource, and policy to achieve an organization’s results 

• Broad 

• Strategic view of quality

• organization wide, strategic, building a proper system, strategy and culture for better quality

• Everyone's responsibility and leadership accountability

TQM Principles

• Customer focus

• Leadership/ Top management commitment

• Employee involvement

• Process orientation

• Systems thinking

• Continuous improvement

• Fact based decision making 

• Supplier relationships  

Malcolm Baldridge National Award

• Created by US congress 1987

• Incorporates core TQM principles

• Given annual to US companies that excel in Big Q

• Strategy to increase US competitiveness

Malcolm Baldridge award criteria

1. Leadership 

2. Strategic planning

3. Customer focus

4. Measurement, analysis, knowledge management 

5. Workforce focus

6. Process management (-> operations focus) 

7. Business results

W. Edward Deming 

• Quality management philosopher “Quality problems are primarily management problems, not worker problems”

• Applied statistical methods to large scale data problems 

• Not embraced by management after war 

• Created the PDCA cycle 

• Created Deming’s 14 points

• Systems of profound knowledge (theoretical foundation behind deming’s advice)

PDCA Cycle

disciplined method for continuous learning and improvement, not just one time problem solving 

• Use a synthetic data drive loop to make small changes 

(Plan, do, check, act) (aka Deming Wheel)

PDCA Cycle Steps

1. Plan

   1. Understand the current process

   2. Identify a problem or opportunity 

   3. Make a hypothesis and measures

2. Do

   1. Try the change plan on a test basis

   2. An experiment on a small scale

   3. Collect data 

3. Check

   1. Evaluate the results

   2. Compare them to expectations

   3. Study who it worked or failed

   4. What did we learn? (Knowledge building) 

4. Act

   1. Standardize and implement improvements

   2. Revise the plan and cycle again 

Deming’s 14 Points

1. Create constancy of purpose: Focus on long-term planning & continuous improvement rather than short-term profit

2. Adopt the new philosophy: Reject high levels of defective products and mistakes.

3. Cease dependence on inspection: Build quality into the product from the start instead of trying to inspect quality into finished product.

4. End awarding business on price alone

5. Improve constantly and forever

6. Provide proper modern training on the job

7. Adopt and institute leadership rather than micromanaging

8. Drive out fear:

9. Break down barriers between departments: Be a team

10. Eliminate slogans and targets: Stop giving empty exhortations or zero-defect targets

11. Eliminate numerical quotas

12. Remove barriers to pride of workmanship: Abolish annual merit ratings and performance appraisals that demoralize employees and destroy teamwork.

13. Institute continuous education and self-improvement

14. Put everyone to work: Create a structure in top management that pushes every day to accomplish the transformation

Systems of Profound Knowledge

1. Appreciation for a system 

2. Understanding variation

3. Theory of knowledge

4. Psychology

Appreciation for systems

management must optimize the system as a whole, not the individual subsystems

• Local optimization hurts the whole

Most organizational processes are interdependent and cross functional

Understanding variation

deviation from your target

• Many sources of variation exist in any process

• Common cause (i.e. acceptable noise) 

• Excessive variation results in product/ process failures, unhappy customers and unnecessary costs

  • Special cause

  • Try to get rid of this 

  • Statistical methods - can be used to (proactively) identify and quantify variation due to special cases

Theory of knowledge

management is a series of predictions

• Theory shows cause and effect relationships that can be used for prediction

  • If we change x, y will happen 

  • Experiences alone does not establish a theory; it only describes

• Learning requires (Basis for PDCA Cycle)

  • Theory

  • Testing 

  • Reflection 

Psychology

how are people motivated

• Extrinsically (merit pay, ranking systems)

• Intrinsically (autonomy and meaning)

  • Intrinsic motivation is more powerful 

• Psychological safety

  • Belief that one will not be punished or humiliated for ideas, questions, speaking up, or mistakes

  • Fear is always demotivating 

  • Check in on who took risks and share the experience 

Joseph juran

• Practical foundation for quality management

• Juran's cost of quality

• Pareto analysis

• The Juran Trilogy 

• Vital few issues 20% will resolve 80% of problems

Juran’s Cost of Quality

1. Cost of poor quality

   1. External failure costs

• Costs that arise when a defect is discovered after the customer receives the service or product 

2. Internal failure costs 

• Costs resulting from defects that are discovered during the production of a service or product 

2. Cost of avoiding poor quality 

   1. Appraisal costs

      1. Costs a company incurs to assess the performance of its processes

   2. Prevention costs

      1. Costs associated with preventing defects before they happen 

Total Quality Control Costs

cost of defective products to customers (external) + cost of scrap work & rework (internal) + appraisal 

The main question of traditional quality management -

 how many products to inspect to balance costs

• But prevention costs are not considered 

Optimal level of inspection (40%)

• Where total quality control costs at its lowest

• where cost of scrap & rework (internal) meets cost of defective products to customers

Juran’s Definition of quality

• Fitness for use

  • Customers should be able to use it because it satisfies their actual needs 

Juran’s pareto chart

 applied to quality management, looks at the frequency of issues, and cumulative probability of issues

• 80/20 rule 

• Focus on the virtual few issues or causes (20%) then you can resolve 80% of the problems  

Juran’s trilogy 

1. Quality management - involves 3 basic sequential processes

2. Quality planning (designing quality)

3. Quality control (maintaining quality)

4. Quality improvement (raising quality)

Phillip B Crosby

• Wrote the 1979 book “Quality is Free”

• Emphasized that the costs of poor quality outweigh the costs of preventing poor quality

• Crosby’s zero defects

  • The only performance standard

Quality drives production

• Estimated 20-25% of cogs are spent on finding and correcting errors

• If production does it right the first time producing defect free product and services waste is eliminated and costs reduced 

ISO 9001 (Quality Management Systems)

the international standard that provides a globally recognized framework to help organizations consistently deliver products and services that meet customer and regulatory expectations

• ISO 9000 is the dictionary book that includes definitions and vocabulary 

ISO 9001 Quality Management Principles

• Codified version of TQM

• Customer focus

• Leadership

• engagement of people

• process approach

  • Quality is achieved by managing processes,  not just outcomes, results are achieved more efficiently when activities are managed as interrelated processes

• Improvement 

  • Successful organizations have an ongoing focus on continuous improvement (The PDCA cycle) 

• Evidence based decision making

• Relationship management

Implementation of ISO 9001

• Types of Audits

  • First party (internal) - company audits itself to find gaps 

  • Second party (supplier) - company audits ots own suppliers

  • Third part (certification) an independent registrar audits the company to issue the official ISO 90001 certificate 

• Auditing Process

  • Document review

  • Onsite audit (interviews/ observations)

  • Closing meeting and corrective action

  • Certification (every 3 years) and surveillance (annual) 

• Industry specific standards 

  • QS 9000/ IAFT 16949 - the rigorous requirements for the automotive supply chain

  • ISO 14000: environmental management systems (sustainability as quality)

Difference between grade and quality

grade is the intended level of features, performance, or sophistication designed into a product or service, quality is how well you actually deliver that promise to customers

Importance of customers

businesses succeed by getting, keeping, and growing customers. Customers are the only reasons that businesses exist. 

Customer is the principal judge of quality

understand customers needs and expectations to meet and exceed them

• Build relationships with customers

• Internal and external customers

Customers include

employees and society at large

• Business ethics

• Public health and safety

• Social responsibility

• Sustainability 

Key customer focused practices

• Identify the most important customer groups and markets

• Understand both near term and long term customer needs nad expectations (“voice of customer”

• Use voice of customer information to identify and innovate product offerings and customer support processes

• Create an organization culture and manage customer relationship

• Develop effective complaint management process

• Measure customer satisfaction, engagement, dissatisfaction 

Customer satisfaction facts

• Costs 5 times more to find a new customer than to keep an existing one happy

• Loyal customers spend more, willing to pay higher prices

• Dissatisfied customers tell more ppl about experiences than satisfied customers

American Customer satisfaction index (ACSI)

Measures customer satisfaction at the national level

Underlying theory of ACSI

• Perceived quality (performance), perceived value, customer expectations (expectations) affect ACSI

• ACSI affects the number of customer complaints and customer loyalty 

• Need to compare expected quality to actual quality (i.e. performance)

Measuring customer loyalty

• Likelihood of a first time purchaser to repurchase

• Likelihood to recommend

• Likelihood to continue purchasing the same products of service

• Likelihood to purchase different products or services

• Likelihood to increase the frequency of purchasing 

• Likelihood to stay with the same provider 

Net promoter score (NPS)

“What is the likelihood that you would recommend us?” Was evaluated on a scale from 0 to 10

1. Promoters - scores of 9 or 10 associated with loyal customers who will typically be repeat customers

2. Passives - scores 7 or 8 associated with customers who are satisfied but may switch to competitors

3. Detractors - scores of 6 or below represent unhappy customers who amy spread negative comments 

Customer segmentation for customer identification 

• volumes/ frequency

• Demographics

• Geography

• Profit potential 

Voice of customer (VOC)

• Direct customer contact

• Customer listening posts

• Comment cards

• Rating request

• Formal survey 

• Focus group interview 

• Field intelligence 

• Internet monitoring 

• Complaint analysis (reason for returns) 

Kano model

 understand the specific needs of identified target customers

• Categorize or prioritize features 

1. Dissatisfiers (must be, basic needs)

   1. Expected requirements

   2. Taken for granted

   3. Customers are furious if they are missing 

2. Satisfiers (performance)

   1. Expressed requirements

   2. The more, the better

3. Delighters (exciters)

   1. Unexpected features that create high satisfaction

Moments of truth MOT

every interaction between a customer and the organization

• Customer satisfaction or dissatisfaction takes place during MOT

Customer focus in the baldridge criteria

 This category examines an organization’s processes for determining product offerings and mechanisms to support customers’ use of products, and how an organization builds a customer-focused culture.

Customer Expectation (VOC)

– Customer listening

– Determine customer needs and expectations

– Analysis and use of customer data

Customer Engagement

– Product offerings and customer support

– Building a customer culture and relationship

– Customer experience management

Customer focus in ISO 9001 Clauses

top management will ensure that customer requirements are determined and are met with the aim of enhancing customer satisfaction

Strategy

 plan that integrates an orgs primary goals, policies, and action sequences into a cohesive whole 

Understanding internal and external environment 

• SWOT analysis 

  • Strength & weaknesses (internal)

  • Opportunities & threats (external)

Vision

where is the org headed and what it intends to be

• Focuses on tomorrow 

• Vision state should be 

• Descriptive of an ideal state

• inspiring/ challenging & creates excitement 

• Brief and memorable

Mission

focuses on today

• Describes what and why org does

• Destination

• Purpose

• Defines daily operations

Values

define attitudes and policies for all employees, which are reinforced through conscious and subconscious behavior at all levels of organization

Strategic objectives - 

• What do we need to change or improve

• Long term perspective (1-3 yrs)

• Corporate level outcomes and results

Develop specific action plans

• Operational level activities and tasks to achieve the above strategic objectives

• Short term milestones (weeks to months)

Critical to quality (CTQ) 

Bridge between voice of the customer and technical specifications 

Three levels in a CTQ tree

1. Need - broad customer desires

2. Driver - factors the customer uses to judge the need

3. Requirement - measurable specification, the metric

primary difference between service and manufactured good

services are produced and consumed simultaneously

tangibility

physical facilities, equipment, and appearance of personnel

what was the top priority of US manufacturing in time period immediately following WW2?

Mass production to respond to high demand

value based perspective on quality implies

a ratio of usefulness to price

Marketing

Views quality primarily as fitness for intended use

Big Q

An organization wide strategic view encompassing all processes

reliability

ability to perform the promised service correctly, accurately, and consistently

Responsiveness

willingness to help customers and provide prompt service 

difference between assurance and empathy

assurance is the knowledge and skills of employees, ability to convey trust and confidence and empathy is carrying, individualized attention

Deming’s definition of ‘Special Cause’ of variation

excessive variation that results in process failures

Performance

what are the basic operating characteristics of the product or service

Features

what extra characteristics does the product or service have, beyond the basic performance operating characteristics

Reliability

how long can a product go between failures or need for maintenance

• Failure rate per unit of time

Durability

• What is the useful life of a product? (Amount of use)

  • How will the product hold up under extended or extreme use?

Conformance

was the product made or service performed to specifications? 

Aesthetics

how well the product or service appeals to the senses

Serviceability

 how easy it is to repair, maintain, or support the product or service

Perceived quality

 the reputation or image of the product or service

juran believes that to get top managements attention, quality issues must be translated into the “language” of

dollars

Appraisal cost example

factory pays a team of inspectors to test batches of products before they are shipped out. Type of cost that the inspection wages are according to Jurans cost of quality

How to calculate Net Promoter Score (NPS)

percentage of promotors minus percentage of dectractors

Quality function deployment

structured customer driven method to guide the design, manufacturing, quality control, and marketing of goods by integrating the voice of customer throughout the org

House of Quality

 is a core planning matrix used in Quality Function Deployment (QFD) to systematically translate customer desires into measurable engineering and design requirements

Steps to translating the VOC to design 

Steps to translating the VOC to design 

1. Identify customer requirements

2. Identifying technical requirements 

3. Relate customer requirements to technical requirements 

4. Conduct competitive evaluation 

5. Develop deployment targets

4 linked houses of quality in the QFD process 

1. Product planning 

   1. Voc -> design requirements

2. Part deployment 

   1. Design requirements -> component specs

3. Process planning

   1. component specs → manufacturing/ assembly processes

4. Production planning 

   1. manufacturing/ process time → production control/ operational requirements

Strategic planning

systematic process of envisioning a desired future and translating that vision into concrete goals, actionable steps, and measurable outcomes

Key practices for strategic focus

• understand orgs external environment

  • external environment comprises uncontrollable forces operating outside of it

• Understand orgs internal environment missing 

  • consists of controllable factors residing inside the company