Managing For Quality
Managing For Quality MGMT 4650
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This 6 page Class Notes was uploaded by Antonietta Pacocha on Wednesday September 30, 2015. The Class Notes belongs to MGMT 4650 at Western Michigan University taught by Damodar Golhar in Fall. Since its upload, it has received 33 views. For similar materials see /class/216976/mgmt-4650-western-michigan-university in Business, management at Western Michigan University.
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Date Created: 09/30/15
Competition crates quality ocusing on Customer Needs Customer Expectations are increasing Performance Improvement uallty ch A Qcycle Time vamabllwi m r H a a U ie outsourced i i Changing workforce ECommerce Consumer Reports Role of Quality Control Dept is changing What is Quality7 0 Deming Apredictable degree of uniformity o Crosby Confonnrty to specifications 0 Juran Fitness foruse 39 New De nitions l lleetuig oi e pectauuii tcu tuiiiei changing 2 Delighting the customer iBranding lssue Critical Elements of Quality Management 0 Leadership Customer Focus Continuous improvement Employeelnvolvement Who is a Customer 0 Anyone who depends on the goodsservices the company provides 39 lntemal Customer win the boundanes of the organization divisions 39 External Customer end users consumers wholesalers retailers suppliers i DEMING s 14 POINTS n H H r ii Hi im in business and provide Jobs Adopt a new philosophy Mgmt must learn that it is a new economic age and awaken to the challenge learn their responsibilities and take on leadership for change at i i v i n u o 000 r i i 1 Stop awarding contracts on the basis of low bids T and orevei f i my r 9 plain and productivity and this consLantly reduce costs l SlJtUtelTai i on the Job institute leadership The purpose of leadership should be to help people and technology work better Drive out fear so that everyone may work e ectivel Break down barriers bw depts so that people can work as a team Eliminate lovan exhortations and tar et iui the uikiui w W E imrnate quobas and mgmt by objectives Substitute eadership Remove barriers that rob employees of theirpnde of workmanship institute a vigorous program of education and selfimprovement Make the transformation everyone s Job and put everyone to work on it t DEMING s 7DEADLY DISEASES O y i ooooooooo p ha eamarket ufficient business and provide Jobs quot l i l P l i Ui dii eiib teat ui frorhbankers and shareholders to produce dividends o monalreview mm ii 1 ieouice to f mentmtin H nfthedisease o Jobhoppingbymanagers 0 quotmg nl f inotknown orcannotbeknown o Excessivemedicalcosts 0 Excessive costs of liability driven up by lawyers that work on contingency fees J39URAN s 10 STEPS TO QUALITY IMPROVEMENT Build awareness of both the need for 39 Set goals for improvement Organize to meet the goals that have been set Provide training Implement projects aimed at solving problems Report progress Give recognition Communicate results Keep score 0 Maintain momentum by building improvement into the company s regular systems CROSBY s l4 STEPS TO QUALITY IMPROVEMENT 7 Quality is FREE Make it clear that mgmt is committed to quality for the long term Form crossdepartmental quality teams Identify where the current and potential problems exist Assess the cost of quality and explain how it is used as a management tool Take immediate action to correct problems identified Establish a Zero defects program Train supervisors to carry out their responsibilities in the quality program Hold a Zero Defects Day to ensure all employees are aware there is a new direction Encourage individuals and teams to establish both personal and team improvement goals Encourage employees to tell management about obstacles they face in trying to meet quality goals Recognize employees who participate Implement quality councils to promote continual communication Repeat everything to illustrate the quality improvement is a neverending process r 11 r OOOOOOOOO O OOOOOOOOOOOO Standing in Marketplace 7 How you compete amongst the rest Quality Culture win the Organization Operational Policies amp Procedures Cost of Poor Quality Internal and External Failure Developing Long Term Strategies 0 Internal Failure Costs Defective Product caught in production before shipped t customer scrapped cost reinspect cost of rework lower pricedowngrade cost External Failure Costs Customer received product and found defective I Cost incurred Warranty Customer Dissatisfaction Lawsuits o Appraisal Cost Inspection of Working raw goods finished production costs maintaining equipment costs 0 Prevention Costs Planning for quality training cost supplier evaluation Visible Cost 7 Reprocessing Rejects Customer Returns etc Hidden Costs 7 Lost Sales Delays Damaged Goods etc Top Management always understands figures in 39 figures as opposed to figures 0 Customers given opportunity to evaluate product vs competition 0 Constantly do market studies Customers define quality Organizational Culture Win Company Ask employees how they perceive quality win the company use focus groups Assessing Current Activities are being practiced to improve Quality ASK EMPLOYEES ISO 9000 Certified Europe 460 countries have ISO standards 50000 US Companies 600000 Worldwide 0 Say What you do Do What you say Document Everything 922 New Standard ISO 9000 vs Old one ISO 2000 o W Customer Satisfaction analyzed Continuous improvement in whole process Customer Satisfaction Resource MGMT HR is req to document training and effectiveness of it Adequate Comm System in place MGMT has to be responsible for quality Difficulties encountered w ISO 9000 in Spain I Compliance w customer satisfaction Interpretation was left to companies vs Auditors discrepancy Top MGMT is implementing changes but employees aren t following Only customer complaints are used as customer satisfaction s Info collected only stays w Quality MGMT amp not being heard by the employees No increase in financial gains Lots of falsifying training time to auditors O 0 Companies collect data but don t act on it Crosby I Prevention Costs Appraisal Costs Failure Costs I If on make every product right the rst time you will cut down cost of manufacturing and improve quality 0 Continuous Incremental Improvement Gilmore In the long run quality of serviceproduct goes up cost goes down Customer Satisfaction Goes Up Employee Involvement Goes Up 0 Rule of Thumb External Internal Failure CostsZ Appraisal Costs Prevention Costs 0 Managing for Quality in the US and in Japan Flynn o l Nationality has nothing to do w quality Quality Culture 2 Top MGMT has to be behind culture provide training to employees 0 Implementation of SPC 7 US lack of mathematical skills 0 1 Quality teams implemented 2 Getting CrossFunctional Teams 3 Employees come together to solve problems 0 Sharing of information w individuals doing the work 0 1 Cut down inventory 2 Have a better buyersupplier relationship QUALITY IMPROVEMENT Continuous Improvement 7 Kaizen Sporadic Problem comes and goes VS Chronic Problem w system forever W39hen we are part of the system chronic we don t realize the problem SPORADIC lAre obvious or dramatic amp very visible 2Need immediate attentionaddressed right away 3Payoffs are marginal if you solve the problem 4Obj ectivity is to restore status quo 5 Like putting out a re 7 Prevention 61520 of all problems 7An individual or team can solve problems 8 You use control charts to monitor activity CHRONIC lOccur over a long period oftime therefore not dramatic 2Canbe ignored for the time being 3Ifsolved the payoffs are tremendous 4Change statusquo 5Elimination of the problem 68085 of all problems 7Need crossfunctional teams amp a strategy to solve them longterm 8PDAC cycle amp 6 Sigma 9Project by project approach 0 Steps 0 1 Verify Project Needs amp Problems 2 Identify Root Causes of the Problem 0 Fish Bone Diagram Material an a Metbmd Ma me uses Find a solution 0 6 SIGMA APPROACH 5 Phases of6 Sigma DMAIC steps 1 1 De ne the project Higher PPI better the project for improvement pp Probability of Succes savings 4 ufyears to implement Cost 2 Measure the performance of the current system Baseline Performance DPMO Defects per million opportunities rotal afgefec trsr r 7 total of uppur tunites to produce defects 3 Analyze nding root cause of problem There are diff types of errors conscious subconscious technique com 4 Improve Conduct formal experiment if necessary to focus on the most important process variables an determine the process settings to optimize product results 5 Control Measures the new process capability documents the improved process and institutes controls to maintain the gain 2 Example of 6 Sigma I DEFINE Survey of 100 Customers found Complaint Related 17 Service 5 Account 3 Wait Time 25 DPMO X 10A5 I MEASURE 7 mm a E x1moaasoo 3x100 I ANALYZE Causes Customer Service 0 Wages are low amp low morale Lack ofTraining Account Enor 0 Computers are outdated Poor overhead lighting Wait Time Few tellers during peak time 2575 lcwem 5 sigma level I LMIPROVEr 1 Provide Training 2 Increase Wages 3 change Computers4 Imprch Lighting 5 Add more telleis during peak time w Afterwards Check w anothei Survcy mu 1 i Example Watcrbot c Company oz Level m Lau EvSausunlm um usLMeisi unuuuuuv P 39 quot 4Kee I 6Workwthc n i W opposition Quid Pro Quo 4 6Sigma Performance is correlated whigh set goals 4Dif typcsofproposi ons Training is impoitaut to sueeess Ifyou don t have target set impiovements llout Rcvmrd Recognition is vital TrialByFirc Tiausfomiatiou Globe Metallurgical 1 Problems Union deeisious made from top equipment outdated 39 39 Millionby1995 Cut salaried work force by 13 Computedzed furnaces a saves additional 3 Million Trained employees on ual39 shaiihg Information Guaranteed Full Employment Gainshan39 39 39 ng opportunl es Let go ofmarkcting him allowedto get closer to the customers TQM DOES WORK 1 Har eeds to be NOT top downrNccd frombottomup s Man s arm tbcing evaluated on Quality No ielatiouship w supp ieis PUBLIC SECTOR 1 Problems ofcmployccs went down ofvchiclcs weutu Budget was going to be out by 3 em found unmt Philosophy Ifit ain t luoke don t x it i Actions taken from survey Instituted preventach maintenance piogiam I Quality Planning 2 Why Assumptions are Flawed I C omplete customer satisfaction is key to developing customer loyalty Established priority list of vehicles Brought in more employees to counter other agencies customer complaints about low priority Competitive Benchm arking Benchmark is a point of reference by which performance is judged or measured 0 Strategic plans are developed and then prepared to develop or adapt the best practices 0 Process 0 Product I WHY SATISFIED CUSTOMERS DEFECT l 3 Beliefs applies to subjects such as products customer services and internal processes Identify the benchmark subjects Identify the benchmark partners Determine the data collection method and collect the data Determine the competitive gap Project the future performance of the industry and out company Communicate the results Establish functional goals Develop action plans Implement plans and monitor the results Recalibrate the benchmarks time and cost to make perform the productservice As long as customers are satisfied we are ok 7 total satisfaction not needed Won t provide financial gain Pay more attention to dissatisfied customers vs satisfied Only sure way to achieve is by providing outstanding value Loyalty is in correlation w custom er satisfaction Poor service may not be a result of service satisfaction it could be that the wrong customers are using the productservice Entire process may be incorrect 3 Different Satisfaction Levels Require Different Approaches DO NOT RELY ONLY ON CUSTOMER SATISFACTION SURVEYS Use Market Research interview customers time of arrival amp departure Frontline Personnel train employees how to interact with customers Feedback customer comment cards Strategic Activities invite customers into the hiring process CustomerSatisfaction Indices survey customers about level of satisfaction they tend to quantitative which makes this a useful tool for comparing results from different time periods locations e c 4 LOYALTY If you ask a customer if they will buy the product 50 will buy Intent to Repurchase Primary Behavior 5 categories that show actual repurchasing behavior recency frequency amount retention and longevity Secondary Behavior Customer referrals endorsements and spreading the word are extremely important forms of consumer behavior for a company Frequently it is easier for a customer to respond honestly to a question about whether he or she intended to repurchase the product or service Such indications of loyalty are often ignored bc hey are soft measures of behavior However since secondary behavior significantly leverages positive experiences it is very important to understand what type of experiences create such behav1o 139 5 TQM s Challenge to Management Theory and Practice TQM Difference Intellectual Origins 7 statistics oriented psychology Sources of Innovation 7 RampD Business schools Engineers National Origins 7 US then to Japan then back to the US Dissemination Process 7 hierarchy topdown process SPC to TQM Role of Mgmt 7 they become more of a coach than a manager Effects of Integration 7 activities working together Challenge to Management Theory Organizational Goals 0 Profit Maximization maximization of shareholder wealth 0 Firms primary objective is providing customer satisfaction o TQM doesn t reject the firm should be the pursuit of profit maximization but views it as long term profitability I 8 CRITICAL DIMENSIONS OF QUALITY l 9 Performance product s primary operating characteristics ie Auto Company handling acceleration Brands can usually be ranked objectively on individual aspects of performance Features often a secondary dimension of performance They are the bells and Whistles of products and services those that supplement their basic functionin Reliability re ects the profitability of a product malfunctioning or failing win a specific field of time Bc it requires that a product to be used for a specified period of time it is more relevant to durable goods than to services or products consumed instantly Reliability becomes more important to consumers as downtime and maintenance become more expensive Conformance the degree to which a product s design and operating characteristics meet established standards All products and services involve specifications of some sort Durability a measure of product life durability has both economic and technical dimensions Amount of use one gets from a product before it deteriorates An increase in product life may not be a result of technical improvements or the use of longerlived materials Rather the underlying economic environment simply may have changed Serviceability speed courtesy competence and ease of repair Consumers are concerned not only about a product breaking down but also about the time before service is restored timeliness of service appts are kept Customers may remain dissatisfied even after completion of repairs How these complaints are handled is important to a company s reputation for quality and service Aesthetics how a product looks sounds tastes or smells is clearly a matter of personal judgment and re ection of individual preference Aesthetic choices are not nearly universal Companies have to search for a niche On this dimension it is impossible to please everyone Perceived Quality consumers don7t always have complete information about a product or service s attributes indirect measures may be their only basis for comparing brands For instance durability can seldom be observed directly Images brand names advertising are critical Reputation in the primary stuff of perceived quality