Total Quality Management
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What is TQM?
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Meeting quality expectations as defined
by the customer
Integrated organizational effort
designed to improve quality of
processes at every business level
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Defining Quality – 5 Ways
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1. Conformance to specs - designer based
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2. Fitness for use - user based definition
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Does product/service meet tolerances defined by
designers? E.g. 20 min wait for pizza (average) +
10 min acceptable (?) delay. What about a
customer? Is a 30 min. delay acceptable?
Evaluates performance for intended use. E.g. Jeep
vs. Jaguar on mountain roads?
3. Value for price paid - user based def.
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Evaluation of usefulness vs. price paid. E.g.
receive the same value but at a lower price
3
Defining Quality – 5 Ways
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4. Support services - user based def.
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Quality of support after sale. E.g. excellent
warranty service
5. Psychological criteria - user based
definition
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e.g. ambiance, prestige, friendly staff may
leave the impression of higher quality
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Case: Gold Coast Advertising
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Evolution of TQM – New Focus
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TQM Philosophy – What’s Different?
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1. Focus on Customer
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Identify and meet customer needs
Stay tuned to changing needs, e.g. fashion styles
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96% of customers do not complain (stop buying and/or
tell others 9-11 people); satisfied customers  1 person
Fixing the problem after the complaint  customers
become more loyal than if they had not had the problem in
the first place
It costs more to obtain a new customer than to retain one
Customers increase their spending the longer they buy
from a company
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TQM Philosophy – What’s Different?

2. Continuous Improvement
 Continuous learning and problem
solving
 (jap.) Kaizen: requires that the
company continually strive to do
better through learning and problem
solving (“small doses of medicine
are better than one large dose”)

Perfection can NEVER be achieved
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TQM Philosophy – What’s Different?
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2. Continuous Improvement
 Continuous learning and problem solving
 6 sigma: 3.4 defects per one million.
Example: If 20 mln passengers per year
pass through London’s Heathrow Airport,
only 68 passengers per year will have
misplaced luggage
 3 sigma: 2.6 defects per one thousand
=> 2,600 per million
 52,000 passengers per year will
have misplaced luggage
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TQM Philosophy – What’s Different?
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3. Quality at the Source
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4. Employee Empowerment (they are
expected to seek out, identify, and correct
problems)
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Inspection (before) vs. prevention & problem
solving (now)
Employees no longer afraid of reporting problems
5. Focus on both external (who purchase
company’s goods/services) and internal
customers (e.g., packaging department is an
internal customer of assembly department)
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TQM Philosophy– What’s Different?
(continued)
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6. Team Approach – Quality Circles (“two
heads are better than one”)
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7. Benchmarking
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Teams formed around processes – 8 to 10 people
Meet weekly to analyze and solve problems
Studying practices at “best in class” companies;
e.g. many companies use Amex to benchmark
conflict resolution
8. Managing Supplier Quality
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Certifying suppliers vs. receiving inspection
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TQM Philosophy– What’s Different?
(continued)
9. Just-in-Time
 ‘Pull’ system of production/purchasing
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Involves ‘vendor partnership programs’
to improve quality of purchased items
Reduces all inventory levels
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Customer starts production with an order
Inventory hides process & material
problems
Improves process & product quality
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Just-In-Time (JIT) Example
Work in process inventory level
(hides problems)
Unreliable
Vendors
Scrap
Capacity
Imbalances
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Just-In-Time (JIT) Example
Reducing inventory reveals
problems so they can be solved.
Unreliable
Vendors
Scrap
Capacity
Imbalances
13
Cost of Quality – 4 Categories
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I. Quality Control Costs (Prevention & Appraisal)
II. Quality Failure Costs (Internal & External Failure)
Early detection/prevention is less costly
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May be less by a factor of 10
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Case: Delta Plastics Inc. (A): Question 1. Identify the different costs of quality described in the case.
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Ways of Improving Quality
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1. Plan-Do-Study-Act Cycle (PDSA)
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2. Quality Function Deployment
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Also called the Deming Wheel after originator
Circular, never ending problem solving process
Used to translate customer preferences to design
3. Seven Tools of Quality Control
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Tools typically taught to problem solving teams
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Ad 1. PDSA Details
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Plan
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Do
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Implement the plan – trial basis
Study
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Evaluate current process
Collect procedures, data, identify problems
Develop an improvement plan, performance
objectives
Collect data and evaluate against objectives
Act
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Communicate the results from trial
If successful, implement new process
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PDSA
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(continued)
Cycle is repeated
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After act phase, start planning and repeat process
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Ad 2. QFD Details
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Process used to ensure that the product meets customer
specifications (Example: Student’s backpack)
3. Voice of the
engineer
1. Voice
of the
customer
2. Customer-based
benchmarks
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QFD - House of Quality
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Adding trade-offs, targets & developing product
specifications
4. Trade-offs
6. Targets
5. Technical
Benchmarks
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Ad 3. Seven Problem Solving
Tools
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(i) Cause-and-Effect Diagrams
(ii) Flowcharts
(iii) Checklists
(iv) Control Charts
(v) Scatter Diagrams
(vi) Pareto Analysis
(vii) Histograms
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Cause-and-Effect Diagrams
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Called Fishbone Diagram
Focused on solving identified quality problem
Used to find problem sources/solutions
Steps
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Identify the problem to correct
Draw main causes for problem as ‘bones’
Ask ‘What could have caused problems in these
areas?’ Repeat for each sub-area.
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Fishbone Chart - Problems
with Airline Customer Service
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Fishbone Chart - Problems
with Getting to Work on Time
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Consider the everyday task of getting to
work on time or arriving at your first
class on time in the morning. Draw a
fish-bone chart showing reasons why
you might arrive late in the morning.
4 M: Method, Material, Machinery,
Manpower
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Flowcharts
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Used to document the detailed steps in a
process
Often the first step in Process Re-Engineering
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Checklist
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Simple data check-off sheet designed to
identify type of quality problems at each work
station; per shift, per machine, per operator
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Control Charts
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Important tool used in Statistical Process
Control
The UCL and LCL are calculated limits used to
show when process is in or out of control
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Scatter Diagrams
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A graph that shows how two variables are
related to one another
Data can be used in a regression analysis to
establish equation for the relationship
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Linear regression - example
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No. of shipments:
Weeks 1 – 8:
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All shipmnts: 23, 31, 28, 37, 35, 40, 41, 44
With defects: 5, 8, 6, 11, 10, 14, 12, 15
Employee turnover (new hires +
terminations)
Weeks 1 – 8:
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1, 3, 5, 2, 4, 6, 5, 5
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Pareto Analysis
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Technique that displays the degree of
importance for each element
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Named after the 19th century Italian economist
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Often called the 80-20 Rule
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Principle is that quality problems are the result
of only a few problems e.g. 80% of the
problems caused by 20% of causes
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Pareto Analysis
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Develop a Pareto analysis of the following reasons of
delay in a production process. What do you conclude?
Reason for Delay
Frequency
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Awaiting engineering decision
11
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No schematic available
10
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Test equipment down
22
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Delay in inspection
15
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Inadequate parts
40
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Lack of personnel available
3
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Pareto Analysis of Wine Glass
Defects (Total Defects = 77)
60
88%
54
50
97%
93%
100% 100%
80%
72%
40
60%
30
40%
20
12
10
5
4
20%
Cumulative Percent
Frequency (Number)
70
2
0
0%
Scratches
Porosity
Nicks
Contamination
Misc.
Causes, by percent total defects
31
Histograms
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A chart that shows the frequency distribution of
observed values of a variable like service time
at a bank drive-up window
Displays whether the distribution is symmetrical
(normal) or skewed
32
Quality Awards and Standards
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Malcolm Baldrige National Quality
Award
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The Deming Prize
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ISO 9000 Certification
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ISO 14000 Standards
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MBNQA- What Is It?
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Award named after the former Secretary of
Commerce – Reagan Administration
Intended to reward and stimulate quality
initiatives
Given to no more that two companies in each
of three categories; manufacturing, service,
and small business
Past winners; FedEx, 3M, IBM, Ritz-Carlton
Typical winners have scored around 700
points
34
The Deming Prize
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Given by the Union of Japanese Scientists and
Engineers since 1951
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Named after W. Edwards Deming who worked
to improve Japanese quality after WWII
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Not open to foreign companies until 1984
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Florida Power & Light was first US company
winner
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ISO Standards
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ISO 9000 Standards (published in 1987):
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Certification developed by International
Organization for Standardization
Set of internationally recognized quality standards
Companies are periodically audited & certified
ISO 9000:2000 Quality Management Systems
(QMS) – Fundamentals and Standards
ISO 9001:2000 QMS – Requirements (customer)
ISO 9004:2000 QMS - Guidelines for Performance
ISO 14000: Focuses on a company’s environmental
responsibility
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ISO Standards
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(1) Design/Development -> (2)
Procurement -> (3) Production -> (4)
Installation -> (5) Servicing
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ISO 9001: 2000 (1)  (5)
ISO 9002, ISO 9003: withdrawn,
incorporated into ISO 9001: 2000
ISO 10011: Guidelines for Auditing &
Quality Management
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Quality Gurus
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Walter A. Shewhart
W. Edwards Deming
Joseph M. Juran
Armand V. Feigenbaum
Phillip Crosby
Kaoru Ishikawa
Genichi Taguchi
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Why TQM Efforts Fail
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Lack of a genuine quality culture
Lack of top management support and
commitment
Over- and under-reliance on SPC
methods
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