Chapter 5 Total Quality Management Overview

Chapter 5: Total Quality Management

Operations Management Seventh Edition R. Dan Reid & Nada R. Sanders ©2020 John Wiley & Sons, Inc. All rights reserved.

Learning Objectives

• Explain the meaning of total quality management (TQM).

• Identify costs of quality.

• Describe the evolution of TQM.

• Identify features of the TQM philosophy.

• Describe quality awards and quality certifications.

• Understand why and how TQM efforts fail.

Learning Objective 1: Explain the Meaning of Total Quality Management (TQM)

• Total Quality Management (TQM) refers to a comprehensive and structured approach to organizational management that seeks to improve the quality of products and services through continuous refinement in response to continuous feedback.

• TQM emphasizes customer satisfaction, continuous improvement, and employee involvement as key factors for organizational success.

Defining Quality

• The definition of quality is subjective and depends on individual perspectives.

• There is no singular definition that fits universally. Common perspectives of quality include:

  • Performance to Standards: Meeting predefined standards or criteria.

  • Meeting Customer's Needs: Satisfying the requirements and expectations of customers.

  • Satisfying the Customer: Ensuring customer satisfaction as a core objective.

Five Ways to Define Quality

1. Conformance to Specifications:

   • How well a product or service matches the targets and tolerances set by its design specifications.

2. Fitness for Use:

   • Evaluates how well the product or service performs its intended function.

3. Value for Price Paid:

   • Comparison of the utility of the product or service against its cost, assessing if it offers good value for the price.

4. Support Services:

   • Quality of after-sale services and support provided post-purchase, influencing overall customer experience.

5. Psychological Criteria:

   • Subjective assessment of what constitutes quality from a customer's viewpoint, integrating personal biases and perceptions.

Manufacturing Quality Versus Service Quality

• Manufacturing Quality: Focused on tangible product features, assessed based on:

  • Conformance

  • Performance

  • Reliability

  • Features

  • Durability

  • Serviceability

• Service Quality: Revolves around the intake of intangible products that require experiential evaluation, involving:

  • Intangible factors

  • Consistency

  • Responsiveness

  • Courtesy and friendliness

  • Promptness and timeliness

  • Atmosphere

Learning Objective 2: Identify Costs of Quality

• Quality has significant financial implications for organizations, which can be categorized into several types of costs that impact overall profitability and efficiency.

Cost of Quality

• Costs associated with quality can be divided into two main categories:

  • Quality Control Costs (Preventive): Incurred to ensure high-quality outputs, including:

  • Prevention Costs: Expenses related to preparing and implementing quality management plans.

  • Appraisal Costs: Costs associated with testing, evaluating, and inspecting quality.

  • Quality Failure Costs (Reactive): High costs resulting from poor quality, divided into:

  • Internal Failure Costs: Costs related to defects found before delivery to the customer, including scrap, rework, and material losses.

  • External Failure Costs: Costs arising from defects found after delivery, including customer returns, repairs, and recalls.

Cost of Quality: Four Categories

Learning Objective 3: Describe the Evolution of TQM

• TQM has evolved over decades, signaling a shift from traditional approaches to a more quality-centric philosophy within organizations.

Quality Gurus and Their Contributions

Learning Objective 4: Identify Features of the TQM Philosophy

• The TQM philosophy integrates multiple concepts emphasizing quality and continuous improvement across an organization.

Concepts of the TQM Philosophy

Customer Focus and Continuous Improvement

• Customer Focus:

  • Understanding and anticipatively meeting customer needs, ensuring quality is driven by customer expectations and market trends (e.g., changes in fashion).

• Continuous Improvement (Kaizen):

  • A philosophy embodying ongoing enhancement across operations via methods like the Plan-Do-Study-Act (PDSA) cycle and benchmarking practices to learn from others.

The PDSA Cycle

1. Plan:

   • Evaluate the current process, document procedures, collect data, and identify issues; develop a plan for improvement.

2. Do:

   • Execute the plan on a trial basis.

3. Study:

   • Gather data and assess results against objectives.

4. Act:

   • Communicate trial results; if successful, roll out the new process.

• Cycle Repeats: Post-Act, engage in planning anew to reiterate the improvement process.

Employee Empowerment in TQM

• Empowerment of all employees is crucial for engaging them in quality initiatives.

• Distinction between external versus internal customers is vital.

• Collaborative teamwork includes forming quality circles (8–10 people) that convene regularly to identify and solve quality challenges.

Use of Quality Tools

• Continuing education and training on the usage and analysis through quality tools are essential.

• Seven Tools of Quality Control include:

  1. Cause-and-effect diagrams (fishbone diagrams)

  2. Flowcharts

  3. Checklists

  4. Control charts

  5. Scatter diagrams

  6. Pareto analysis

  7. Histograms

The Seven Tools of Quality Control

1. Cause-and-Effect Diagrams:

   • Utilized to identify potential causes of quality challenges, fostering brainstorming among quality control teams.

2. Flowcharts:

   • Diagrams representing the sequences of activities in a process.

3. Checklists:

   • Data sheets for recognizing common quality issues at different stations or shifts.

4. Control Charts:

   • Utilize Upper Control Limit (UCL) and Lower Control Limit (LCL) to signal when processes are in or out of control; a primary tool in statistical process control.

5. Scatter Diagrams:

   • Graphical representation depicting the relationship between pairs of variables.

6. Pareto Analysis:

   • Focuses on identifying quality issues by the significance of their impact, often embodying the 80/20 rule (80% of problems arise from 20% of causes).

7. Histograms:

   • Visual representations showing the distribution of data points for a variable, helping to convey symmetrical properties or skewness.

Product Design: Quality Function Deployment (QFD)

• A vital process ensuring product designs align with customer expectations, promoting better internal communications.

• QFD Tool Components include:

  • Customer requirements

  • Competitive evaluation

  • Product feature sets

  • Relationship and trade-off matrices

  • Target setting

Reliability in Product Design

• Reliability Definition: Probability that a product performs as expected for a specified duration under normal conditions.

• Reliability cannot be guaranteed at 100%, involving component functionalities and dependencies.

Reliability and Its Component Parts

• Formula defining reliability of a system as a product of its components:
  RS = (R1)(R2)(R3)…(R_n)
  Where:

• R_S = reliability of the overall system or product

• R1…Rn = reliability of each respective component (from 1 to n).

Increasing Reliability through Redundancy

• Reliability can be enhanced by integrating components in parallel, enabling system function even upon component failure.

Product Design: Process Management

• Continuous quality embedding within processes is paramount, with emphasis on identifying sources of quality deficiencies.

• The belief in Quality at the Source posits preemptive measures against quality issues should be taken as a priority.

Managing Supplier Quality in TQM

• Quality standards should extend beyond the firm, encompassing suppliers to ensure consistent quality outputs.

Learning Objective 5: Describe Quality Awards and Quality Certifications

• Recognition and standards for achieving excellence in quality include:

• Malcolm Baldrige National Quality Award (MBNQA)

• Deming Prize

• ISO 9000 Standards

• ISO 26000

• ISO 14000

MBNQA: Overview

• Established to honor and encourage quality-focused initiatives in organizations, attributed to Malcolm Baldrige.

• Limited to a maximum of two companies in each of three classifications: manufacturing, service, and small business.

• Noteworthy past recipients include: Motorola Corp., Xerox, FedEx, 3M, IBM, and Ritz-Carlton.

MBNQA: Criteria and Scoring

The Deming Prize

• Founded by the Union of Japanese Scientists and Engineers, awarded since 1951 and named after W. Edwards Deming.

• Initially focused on Japanese industries, the prize began to accept international applicants in 1984; the first U.S. winner in 1989 was Florida P & L.

ISO Standards Overview

• ISO 9000: A globally recognized standard set created by the International Organization for Standardization; it involves periodic audits for certification and encompasses:

  • ISO 9000:2008 - Fundamentals and Standards

  • ISO 9001:2008 - Requirements

  • ISO 9004:2008 - Guidelines for Performance

  • Over 40,000 organizations hold certification.

• ISO 14000: Focuses on environmental duties of organizations.

• ISO 26000: Provides frameworks for organizations to assess and manage social responsibility initiatives.

Learning Objective 6: Understand Why and How TQM Efforts Fail

• Successful TQM implementation often faces challenges that can lead to failures. Key reasons include:

  • Absence of a substantive quality culture within the organization.

  • Inadequate support and commitment from top management.

  • Misguided reliance on statistic process control methods, leading to over/underestimation of quality initiatives.

TQM's Impact on Operations Management

• Implementing TQM requires extensive organizational transformations and influences various departments such as:

  • Marketing: Generates valuable customer insights.

  • Finance: Assesses financial implications of quality initiatives.

  • Accounting: Provides accurate costing data.

  • Engineering: Converts customer requirements into technical definitions.

  • Purchasing: Sources materials essential for product development.

  • Human Resources: Ensures hiring aligns with necessary skill sets.

  • Information Systems: Addresses the augmented demand for accessible organizational data.

Chapter 5 Highlights (Learning Objectives 1-3)

• TQM contrasting with older quality models emphasizes customer service, quality roots investigations, and prefabricated quality in production processes.

• Categories of Quality Costs: Defined as prevention, appraisal, internal, and external - underpinning the financial implications of quality.

• The historic perspective of quality advancement indicates contemporary models embedding quality within processes as opposed to post-production quality checks.

Chapter 5 Highlights (Learning Objectives 4-6)

• TQM comprises seven pivotal characteristics that set its philosophy apace with customer focus, ongoing improvement, employee engagement, quality tools, product design, process management, and supplier quality control.

• QFD: A tool translating customer requirements into precise engineering terms for product design improvement.

• Recognition Through Awards: Such as the Malcolm Baldrige Award, spotlighting proficient organizations in adherence to evaluated quality factors.

• The foundational commitment within the organization plays a pivotal role concerning the nourishment of successful TQM initiatives.

Conclusion

• Comprehensive studying of Total Quality Management emphasizes a multi-faceted approach toward enhancing quality practices across organizational surfaces, aiming to achieve total customer satisfaction and operational excellence.