CHAPTER 1: TQM EVOLUTION

1. CHAPTER 1: TQM EVOLUTION Powerpoint created by: Arsenio T. Bignotia, PhD

2. Chapter Objectives: At the end of the lesson the students will be able to: • be generate the right meaning and interpretation of quality and other related terms as these will provide a strong foundatin for TQM • Identify the various dimensions of quality • Outline a historical perspective of quality and the evolution of TQM

3. Introduction: • What is Quality? • Merriam Webster’s Collegiate Dictionary, 10th Edition(1994) defines quality as “an inherent feature; degree of excellence; and superiority in kind • Some definitions that have gained wide acceptance in the corporate world • “Meeting or exceeding customer expectations” • Juran, one of the quality qurus, defined quality as; • Fitness for Use

4. Introduction • Based on Juran‘s definiton, quality therefore does not only have to be perceived by the customer, but the customer experience of quality of a product or service is more important. • Quality does not mean an expensive product

5. Introduction • The American National Standards Institute (ANSI) and the American Society for Quality (ASO) defined quality as; • The totality of features and characteristics of a product or service that bears on its ability to satisfy customer’s stated and implied needs.

6. The Importance of Quality: The Japanese Chain Reaction Improve Quality Provide more jobs Costs decreases due to fewer defects, Lesser rework, fewer delays and better use Of Men, Machine and Materials Improve Productivity Capture market with better quality and lower price Stay in business

7. Introduction • What is a customer? • Anyone who is impacted by the product or services delivered by an organization • External customer- the end user • Internal customer- other divisions of the company that receive the processed product.

8. Introduction • What is a product? • the output of a process carried by the organization. It may be goods (e.g. cellphones), software(e.g. a computer code, a report) or service (e.g. banking, insurance

9. Introduction • How is customer satisfaction achieved? Two Dimensions of Quality: • Product feature- refers to the quality of design. • In a manufacturing industry, it includes performance, reliability, durability, ease of use, esthetics, etc • In a service industry, customer satisfation is gained through accuracy, timeliness, friendliness and courtesy, knowledge of server, etc.

10. Introduction • Freedom from deficiencies – refers to quality of conformance • Conformance to standards- ability of the product or service to conform to the stated and implied requirements of customers. • Higher conformance means fewer complaint and increased customer satisfaction

11. Introduction • Why Quality? • Reasons why quality is a cardinal priority for most organizations. • Competition • Changing customer-the new customer is not only commanding priority based on volume but is more demanding about the “quality system” • Changing product mix – the shift from low volume high price to high volume, low price resulted in a need to reduce the internal cost of poor quality.

12. Introduction • Product complexity- as systems have become more complex the reliability requirments for suppliers of components have bome more stringent • Higher level of customer satisfaction- higher customer expectations are getting spawned by increasing competition.

13. History of quality management …To know the future, know the past! • Before Industrial Revolution, skilled craftsmen served both as manufacturers and inspectors, building quality into their products through their considerable pridein their workmanship. • Industrial Revolution changed this basic concept to interchangeable parts. Likes of ; • F. W. Taylor (“scientific management” fame) emphasized on the use of scientific standards equitably to managers as well as workers.

14. History of quality management …To know the future, know the past! • Adam Smith who advocated dividing the labor required to make a product into simple, repetitive tasks in order to develop workers’ skills, save time and use specialized tools • Frank and Lilian Gilbreth’s Time and Motion economy, they believed that a way a task is performed is as important as the time it takes to do it.

15. History of quality management • Statistical approaches to quality control started at Western Electric with the separation of inspection division. Pioneers like Dr. Walter Shewhart, Deming W.Edwards and Joseph M. Juran were all employees of Western Electric. • Dr. Walter Shewart (1891-1967) developed the Plan, Do, Check Act (PDCA) cycle for continuous improvement which is in use even today • After World War II, under General MacArthur's Japan rebuilding plan, Deming and Juran went to Japan. - Deming W, Edwards (1900-1993) modified PDCA cycle of Shewart to the Plan, Do, Study and Act (PDSA). He also advocated the extensive used of statistical quality control theory to Japanese industry along with Juran.

16. History of quality management • Deming stressed the importance of suppliers and customers for the business development and improvement. • He believed that people do their best and it is the system that must change to improve quality. • His 14 Points for Management formed the basis for his advise to top Japanese management.

17. History of quality management • Joseph M. Juran (1904), developed the Statistical Quality Handbook for Western Electric Company. He identified Fitness of quality and popularized the same • Juran travelled to Japan to teach is own theories- that hands-on management was necessary at all levels of corporation to ensure quality control and that problems are opportunities to make improvements. • His approach is still known today as the Juran Trilogy; quality planning, quality control and quality improvement

18. History of quality management • In Japan the following individual took seed from this training and went on to developed their own major contributions to what is now Total Quality Management: • Kaoru Ishikawa (1915-1989), strongly advocated the use of cause and effect diagram to provide a true representation of the organizational impact and procedures. He developed Fishbone or Ishikawa diagram for cause and effect analyis. • Taichi Ohno, known as the father of just-inTime production. He is also the co-creator of Toyota Production System (TPS)

19. History of quality management • Shigeo Shingo worked with Ohno on the TPS process and developed some of its popular concepts including poka-yoke (which means “mistake-proof in Japanese and refers to taking human judgement out of some types of production, thereby minimizing human errors)

20. History of quality management • Next 20 odd years, when top managers in USA focused on marketing, production quantity and financial performance, Japanese managers improved quality at an unprecedented rate. • Market started preferring Japanese products and American companies suffered immensely. • America woke up to the quality revolution in early 1980s. Ford Motor Company consulted Dr. Deming to help transform its operations. (By then, 80-year-old Deming was virtually unknown in USA. Whereas Japanese government had instituted The Deming Prize for Quality in 1950.)

21. History of quality management • Managers started to realize that “quality of management” is more important than “management of quality.” Birth of the termTotal Quality Management (TQM). • TQM – Integration of quality principles into organization’s management systems. • Early 1990s: Quality management principles started finding their way in service industry. FedEx, The Ritz-Carton Hotel Company were the quality leaders. • TQM recognized worldwide: Countries like Korea, India, Spain and Brazil are mounting efforts to increase quality awareness.

22. The Deming 14 Point Philosophy • The Deming Philosophy • Definition of quality, “A product or a service possesses quality if it helps somebody and enjoys a good and sustainable market.” Decrease cost because of less rework, fewer mistakes. Productivity improves Improve quality Capture the market with better quality and reduced cost. Long-term competitive strength Stay in business

23. Deming’s 14 Point Management • Create and publish to all employees a statement of the aims and purposes of the company. The management must demonstrate their commitment to this statement. • Learn the new philosophy. • Understand the purpose of inspection – to reduce the cost and improve the processes. • End the practice of awarding business on the basis of price tag alone. • Improve constantly and forever the system of production and service.

24. Institute training • Teach and institute leadership. • Drive out fear. Create an environment of innovation. • Optimize the team efforts towards the aims and purposes of the company. • Eliminate exhortations for the workforce. • Eliminate numerical quotas for production. • Remove the barriers that rob pride of workmanship. • Encourage learning and self-improvement. • Take action to accomplish the transformation.

25. Juran’s Quality Trilogy • Quality Trilogy – • Quality planning: Process of preparing to meet quality goals. Involves understanding customer needs and developing product features. • Quality control: Process of meeting quality goals during operations. Control parameters. Measuring the deviation and taking action. • Quality improvement: Process for breaking through to unprecedented levels of performance. Identify areas of improvement and get the right people to bring about the change.

26. Juran’s Quality Trilogy • Quality Trilogy – • Quality planning: Process of preparing to meet quality goals. Involves understanding customer needs and developing product features. • Quality control: Process of meeting quality goals during operations. Control parameters. Measuring the deviation and taking action. • Quality improvement: Process for breaking through to unprecedented levels of performance. Identify areas of improvement and get the right people to bring about the change.

27. Major Quality Concepts • 1. Balance Scorecard – Robert Kaplan and David Norton, suggest that a business’s executive team measure progress in four areas that are equally important • knowledge • financial performance • Internal business process and • Learning/growth • Using the knowledge to focus the entire organization and its • various programs on “balancing” the scorecard

28. Major Quality Concepts 2. ISO Standards - The International Standardization Organization (ISO). - headquartered in Switzerland - more than 100 nations are “members”, that define and agree on, and abide by a wide rang of product and process safety and quality standards - the idea behind ISO certification is that products made in different nations be compatible for use in others. - this allows manufacturers to buy parts from suppliers in other countries.

29. Major Quality Concepts - The Quality Management Systems (QMS) standards are know as “ISO 9000” family of standards; (ISO 9000-2000, ISO 9001-2000, ISO 9004-2000); the environmental management system are ISO 14000 and so on. 3. Just-in-Time – a manufacturing theory of producing just enough product to fill current orders as they are due. “just –in time for them to be used”

30. Major Quality Concepts 4. Kaizen – a Japanese term fro “unending improvement” -Kaizen represents a system in which management encourages and implements small, incremental improvements, involving employees as team members and creating a culture of workers who all striving to do better - it focuses on simplifying complex process and training employees to measurable improve them.

31. Major Quality Concepts 5. Quality Circles – based on a Japanese method of grouping people together in “Quality Control” (QC), meetings where they shared their expertise and worked to solved a problem or improve process. 6. Six Sigma – created by Motorola in 1980s. The name refers to a scientific way of describing quality based on variations that occur in any process-plus or minus three “sigmas.” Sigma is the Greek letter that signifies the standard deviations in a mathematical formula. -the “sigma level” quantifies defects per million opportunities (DPMO)

32. Major Quality Concepts 7. TOTAL QUALITY MANAGEMENT – a comprehensive, organization-wide effort to improve the quality of products and services, applicable to all organizations. - TQM quality is managed by the total effort of an organization, and that each department or phase of production is responsible for making its part of the product or services as flawless as possible before passing it on the next user or phase.

33. Major Quality Concepts 7. TOTAL QUALITY MANAGEMENT – a management philosophy, a paradigm, a continuous improvement approach to doing business through a new management model - TQM quality is managed by the total effort of an organization, and that each department or phase of production is responsible for making its part of the product or services as flawless as possible before passing it on the next user or phase.