Quản trị kinh doanh - Total quality management

Total Quality ManagementLearning outcomesAt the end of this lecture, students should be able toDefine quality and Total Quality managementUnderstand why manufacturers care about qualityUnderstand the Six Basic Concepts TQMWhy care about qualityincrease productivityexpand market shareraise customer loyaltyenhance competitiveness of the firmat a minimum, serve as a price of entryTotal Quality ManagementThe way of managing organization to achieve excellenceTotal – everythingQuality – degree of excellenceManagement – art, act or way of organizing, controlling, planning, directing to achieve certain goalsThe Three Quality GurusDeming: the best known of the “early” pioneers, is credited with popularizing quality control in Japan in early 1950s.Today, he is regarded as a national hero in that country and is the father of the world famous Deming prize for quality.JURANJuran, like Deming was invited to Japan in 1954 by the union of Japanese Scientists and engineers.Juran defines quality as fitness for use in terms of design, conformance, availability, safety and field use. He focuses on top-down management and technical methods rather than worker pride and satisfaction. Philip Crosby: author of popular book Quality is Free. His absolutes of quality are:Quality is defined as conformance to requirements, not “goodness”The system for achieving quality is prevention, not appraisal.The performance standard is zero defects, not “that’s close enough”The measurement of quality is the price of non-conformance, not indexes.DIFINITION OF QUALITYThe concept and vocabulary of quality are elusive. Different people interpret quality differently. Few can define quality in measurable terms that can be proved operationalized. When asked what differentiates their product or service; The banker will answer” service” The healthcare worker will answer “quality health care” The hotel employee will answer “customer satisfaction” The manufacturer will simply answer “quality product” Five Approaches of Defining QualityHarvard professor David Garvin, in his book Managing Quality summarized five principal approaches to define quality. TranscendentProduct basedUser basedManufacturing basedValue basedTranscendental viewThose who hold the transcendental view would say “I can’t define it, but I know it when I see it”Advertisers are fond of promoting products in these terms. “ Where shopping is a pleasure” (supermarket). “We love to fly and it shows" (airline). Television and print media are awash with such indefinable claims and therein lies the problem:Quality is difficult to define or to operationalize. It thus becomes elusive when using the approach as basis for competitive advantage. Moreover, the functions of design, production and service may find it difficult to use the definition as a basis for quality management.PRODUCT BASEDQuality is viewed as a quantifiable or measurable characteristic or attribute. For example durability or reliability can be measured and the engineer can design to that benchmark. Quality is determined objectively.Although this approach has many benefits, it has limitation as well. Where quality is based on individual taste or preference, the benchmark for measurement may be misleading.USER BASEDIt is based on idea that quality is an individual matter and products that best satisfy their preferences are those with the highest quality. This is rational approach but leads to two problems; Consumer preference vary widely and it is difficult to aggregate these preferences into products with wide appeal. This leads to the choice between a niche strategy or a market aggregation approach which tries to identify those product attributes that meet the needs of the largest number of consumers. Another problem concerns the answer to the question “Are quality and customer satisfaction the same?” the answer is probably not. One may admit that a Lincoln continental has many quality attribute, but satisfaction may be better achieved with an Escort.MANUFACTURING BASEDManufacturing-based definitions are concerned primarily with engineering and manufacturing practices and use the universal definition of “conformance to requirements”. Requirements or specifications are established by design and any deviation implies a reduction in quality. The concept applies to services as well as product. Excellence in quality is not necessarily in the eye of the beholder but rather in the standards set by the organization.This approach has the serious weakness. The consumer’s perception of quality is equated with conformance and hence is internally focused.Value BasedIt is defined in term of costs and prices as well as number of other attributes. Thus, the consumer’s purchased decision is based on quality at an acceptable price. This approach is reflected in the popular Consumer Reports magazine which ranks products and services based on two criteria: Quality and Value.The highest quality is not usually the best value. That designation is assigned to the “best- buy” product or service.Definition of TQM (BS4778:1991) A management philosophy embracing all activities through which the needs and expectations of the CUSTOMER and COMMUNITY, and the objectives of the organization are satisfied in the most efficient and cost effective manner by maximising the potential of ALL employees in a continuing drive for improvement.”Definition contThe essence of Total Quality Management is a common sense dedication to understanding what the customer wants and then using people and science to set up systems to deliver products and services that delight the customer.Greg HughesPresidentAT&T Transmission SystemsDefinition contWhat is TQM?TQM is the integration of all functions and processes within an organization in order to achieve continuous improvement of the quality of goods and services. The goal is customer satisfaction. Total Quality ManagementQuality elementPrevious stateTQMDefinitionProduct-orientedCustomer-orientedPrioritiesSecond to service and costFirst among equals of service and costDecisionsShort-termLong-termEmphasisDetectionPreventionErrorsOperationsSystemResponsibilityQuality ControlEveryoneProblem solvingManagersTeamsProcurementPriceLife-cycle costsManager’s rolePlan, assign, control, and enforceDelegate, coach, facilitate, and mentorTotal Quality ManagementRequires cultural change – prevention not detection, pro-active versus fire-fighting, life-cycle costs not price, etcMany companies will not start this transformation unless faced with disaster/problems or forced by customersImprove Quality (Product/Service)Increase Productivity (less rejects, faster job)Lower Costs and Higher ProfitBusiness Growth, Competitive, Jobs, InvestmentEffect of Quality ImprovementScope of the TQM activityTQMPrinciples & PracticesLeadershipCustomer satisfactionEmployee improvementContinuous improvementSupplier partnershipPerformance measuresTools & TechniquesQuantitativeNon-quantitativeSPCISO 9000ISO 14000Acceptance SamplingReliabilityBenchmarkingExperimental designFMEAQFDTotal productive maintenanceManagement toolsConcurrent engineeringTQM Six Basic ConceptsLeadershipCustomer SatisfactionEmployee InvolvementContinuous Process ImprovementSupplier PartnershipPerformance Measures(All these present an excellent way to runa business)Criteria 1Leadership Top management must realize importance of qualityQuality is responsibility of everybody, but ultimate responsibility is CEOInvolvement and commitment to CQIQuality excellence becomes part of business strategyLead in the implementation process Characteristics of Successful LeadersGive attention to external and internal customersEmpower, not control subordinates. Provide resources, training, and work environment to help them do their jobsEmphasize improvement rather than maintenanceEmphasize preventionEncourage collaboration rather than competitionTrain and coach, not direct and superviseLearn from problems – opportunity for improvementContinually try to improve communicationsContinually demonstrate commitment to qualityChoose suppliers on the basis of quality, not priceEstablish organisational systems that supports quality effortsImplementation ProcessMust begin from top management, most important CEO commitmentCannot be delegated (indifference, lack of involvement cited as principle reason for failure)Top/senior management must be educated on TQM philosophy and concepts, also visit successful companies, read books, articles, attend seminarsTiming of implementation – is the org ready, re-organization, change in senior personnel, current crisis – then need to postpone to favourable timeNeed a roadmap/framework for implementation Formation of Quality Council – policies, strategies, programmesImplementation ProcessQuality council job– Develop core values, vision statement, mission statement, and quality policy statementDevelop strategic long-term plan with goals and annual quality improvement program with objectivesCreate total education and training planDetermine and continually monitor cost of poor qualityDetermine performance measures for the organization, approve them for functional areas, and monitor them.Continually determine projects that improve processes, particularly those affect external and internal customer satisfactionEstablish multifunctional project and departmental or work group teams and monitor progressEstablish or revise the recognition and reward system to account new way of doing business. Must begin from top management, most important CEO commitmentImplementation ProcessCore values- foster TQM behaviour and define the culture- need to develop own valuesExamples from Malcolm Baldrige National Quality Award Customer-driven excellenceVisionary leadershipOrganizational and personal learningValuing employees and partnersAgilityManagement for innovationManagement by factSystems perspectiveSocial responsibilityFocus results and creating valueCriteria 2Customer SatisfactionCustomer is always right – in Japan customer is “King”Customer expectations constantly changing – 10 years ago acceptable, now not any more!Delighting customers (Kano Model)Satisfaction is a function of total experience with organizationMust give customers a quality product or service, reasonable price, on-time delivery, and outstanding serviceNeed to continually examine the quality systems and practices to be responsive to ever – changing needs, requirements and expectations – Retain and Win new customersIssues for customer satisfactionChecklist for both internal and external customersWho are my customers?What do they need?What are their measures and expectations?Does my product/service exceed their expectations?How do I satisfy their needs?What corrective action is necessary?Customer Feedback To focus on customer, an effective feedback program is necessary, objectives of program are to:Discover customer dissatisfactionDiscover priorities of quality, price, deliveryCompare performance with competitorsIdentify customer’s needsDetermine opportunities for improvementCustomer Feedback Tools/MethodWarranty cards/QuestionnaireTelephone/Mail SurveysFocus GroupsCustomer ComplaintsCustomer Satisfaction Index Good experience are told to 6 people while bad experience are repeated to 15 peopleCriteria 3Employee InvolvementPeople – most important resource/assetQuality comes from peopleDeming – 15% operator errors, 85% management systemProject teams – Quality Control Circles (QCC)Education and training – life long, continuous both knowledge and skillsSuggestion schemes; Kaizen, 5S teamsMotivational programmes, incentive schemesConducive work culture, right attitude, commitmentCriteria 4Continuous Process ImprovementView all work as process – production and businessProcess – purchasing, design, invoicing, etc.Inputs – PROCESS – outputsProcess improvement – increased customer satisfactionImprovement – 5 ways; Reduce resources, Reduce errors, Meet expectations of downstream customers, Make process safer, make process more satisfying to the person doingContinuous ImprovementInputs – processing – outputsInputMaterialsInfo, DataPeopleMoneyProcessWork methodsProceduresToolsProduction – Cutting, Welding, etc.Bank – deposit/withdrawal process, Kad Pintar Application Process at NRDOutputsProductsDelivered serviceIn-process jobs – forms signed, drawing completedOthersAlso by-products, wastesConditionsfeedbackProblem – Solving MethodIdentify the opportunity (for improvement)Analyze the current processDevelop the optimal solution(s)Implement changesStudy the resultsStandardize the solutionPlan for the future Identify the opportunity (for improvement)Phase 1 – Identify problemsUse Pareto Analysis – external & internal failures, returnsPhase 2 – Form a team (same function of multifunctional)Phase 3 – Define scope of problem (Paint process – data collected for a week showed high 30% ‘runs’ defect)Pareto Charts: Organize data on a histogram based on frequency from most prevalent to least. Help identify major causes or occurrences (80:20 rule)Pareto DiagramsPurpose:helps organize data to show major factorsdisplays data in the order of importanceorganize based on fact rather than perceptionTo construct:use data from a check sheet or similar instrumentanalyze data to determine frequencyidentify the vital fewcalculate percentagesadd percentages to find vital few (80%)draw cumulative curveTypical Application:display relative importance of different factorschoose starting point for problem solvingmonitor successidentify basic cause of a problemuse a selling tool to gain supportPareto Diagram ExampleProcess Flow Chart – Ink filling processAnalyze the current processUnderstand the current process, how it is performedDevelop process flow diagramDefine target performanceCollect data, informationDetermine causes not solution (use cause and effect diagram)Root cause if possible Affinity diagram ExampleDevelop the optimal solution(s)To establish solutionsRecommended optimal solution to improve processCreate new process, combine different process, modify existing processCreativity (rubber pad adhesive, door trim)Brainstorming, Delphi, Nominal Group TechniqueEvaluate and testing of ideas/possible solutionsImplement changesTo prepare implementation plan, obtain approval, conduct process improvements, study resultsWhy is it done? How, When, Who, When it will be done?Criteria 5Supplier Partnership40% product cost comes from purchased materials, therefore Supplier Quality Management importantSubstantial portion quality problems from suppliersNeed partnership to achieve quality improvement – long-term purchase contract Supplier Management activitiesCriteria 5Supplier PartnershipDefine product/program requirements;Evaluate potential and select the best suppliersConduct joint quality planning and executionRequire statistical evidence of qualityCertify suppliers, e.g. ISO 900, Ford Q1Develop and apply Supplier Quality RatingsDefects/Percent non-conformingPrice and Quality costsDelivery and ServiceCriteria 6Performance MeasuresManaging by fact rather than gut feelingsEffective management requires measuringUse a baseline, to identify potential projects, to asses results from improvementE.g. Production measures – defects per million, inventory turns, on-time deliveryService – billing errors, sales, activity timesCustomer SatisfactionMethods for measuringCost of poor qualityInternal failureExternal failurePrevention costsAppraisal costsPerformance Measures Award Models Benchmarking – grade to competitors, or best practiceStatistical measures – control chartsCertificationsISO 9000:2000 Quality Mgt SystemISO 14000 Environmental Mgt System, Underwriters Lab (UL), GMPQS 9000, ISO/TS 16949Deming’s 14 Points for ManagementCreate constancy of purpose towards improvement of product and service with aim to be competitive, stay in business and provide jobs.Adopt a new philosophy – new economic age, learn responsibilities and take on leadership for future change.Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into product in the first palace.Deming’s 14 Points for ManagementEnd the practice of awarding business on the basis of price, instead, minimize total costs.Improve constantly and forever the system of production and service, to improve quality and productivity, thus decreasing costs.Institute training on the jobInstitute leadership, supervision to help do a better job.Drive out fear, everyone can work effectively for company.Deming’s 14 Points for ManagementBreakdown barriers between departments. Work as teams to foresee production problems.Eliminate slogans, exhortations, and targets for workforce.Eliminate numerical quotas on the workforce.Remove barriers that rob people pride of workmanship.Institute a vigorous program of education and self-improvement.Put everybody to work to accomplish the transformation. Remember the earth revolves around the CUSTOMER. Quality begets customers and customers beget quality. Let us all have action plans to support quality, this will make the world happy and earn us the blessing of God Almighty.54Akpe na mi!