1、Olin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management1 1 Total Quality ManagementPart 0:What is Quality?Part 0:What is Quality?Part 1:Economics of QualityPart 1:Economics of QualityPart 2:T
2、QM:Principles and Managerial MethodsPart 2:TQM:Principles and Managerial MethodsPart 3:TQM:Improvement ToolsPart 3:TQM:Improvement ToolsOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management
3、2 2 Principal objectives of the lectureWhat is quality?What is quality?The economics of quality:The economics of quality:What is the relationship of:What is the relationship of:Quality and CostQuality and Cost Quality and ProductivityQuality and Productivity Quality and ProfitabilityQuality and Prof
4、itabilityWhat is total quality management?What is total quality management?Olin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management3 3 What is Quality?Olin School of BusinessOlin School of Bus
5、inessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management4 4 Five definitions of quality-GarvinGarvinTranscendentTranscendentProduct-basedProduct-basedUser-basedUser-basedManufacturing-basedManufacturing-basedValue-basedValue-basedOli
6、n School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management5 5 Transcendent“Quality is neither mind nor matter,but a third entity Quality is neither mind nor matter,but a third entity independent of
7、 the two Even though quality cannot be independent of the two Even though quality cannot be defined,you know what it is.”defined,you know what it is.”-Robert M.-Robert M.Pirsig PirsigOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisM
8、anufacturing ManagementManufacturing Management6 6 Product-based“Differences in quality amount to differences in the Differences in quality amount to differences in the quantity of some desired ingredient or attribute.”quantity of some desired ingredient or attribute.”-Lawrence Abbot-Lawrence AbbotO
9、lin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management7 7 User-based“Quality is fitness for use.”Quality is fitness for use.”-Joseph M.-Joseph M.Juran JuranOlin School of BusinessOlin School
10、of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management8 8 Manufacturing-based“Quality is the degree to which a specific product Quality is the degree to which a specific product conforms to a design or specification.”conforms
11、 to a design or specification.”-Harold L.Gilmore-Harold L.Gilmore“Quality is product uniformity around the target.”“Quality is product uniformity around the target.”-Genichi TaguchiGenichi TaguchiOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPa
12、nos KouvelisManufacturing ManagementManufacturing Management9 9 Value-based“Quality is the degree of excellence at an acceptable Quality is the degree of excellence at an acceptable price and the control of variability at an acceptable cost.”price and the control of variability at an acceptable cost
13、.”-Robert A.-Robert A.Broh BrohOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management1010 Dimensions of quality Performance(primary product characteristics)Performance(primary product charac
14、teristics)Features(“bells and whistles”)Features(“bells and whistles”)Reliability(frequency of field failures)Reliability(frequency of field failures)Conformance(match with specifications)Conformance(match with specifications)Durability(product life)Durability(product life)Serviceability(speed,court
15、esy,or competence of Serviceability(speed,courtesy,or competence of repair)repair)Aesthetics(“fits and finishes”)Aesthetics(“fits and finishes”)Perceived quality(reputation and intangibles)Perceived quality(reputation and intangibles)Olin School of BusinessOlin School of BusinessWashington Universit
16、yWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management1111 Dimension Product Example:Service Example:Dimension Product Example:Service Example:Stereo Amplifier Checking Account at BankStereo Amplifier Checking Account at BankPerformancePerformanceSignal-to
17、-noise ratio,powerSignal-to-noise ratio,powerTime to process customer requestsTime to process customer requestsFeaturesFeaturesRemote controlRemote controlAutomatic bill payingAutomatic bill payingReliabilityReliabilityMean time-to failureMean time-to failureVariability of time to process requestsVa
18、riability of time to process requestsDurabilityDurabilityUseful life(with repair)Useful life(with repair)Keeping pace with industry trendsKeeping pace with industry trendsServiceabilityServiceabilityEase of repairEase of repairResolution of errorsResolution of errorsCourtesy of dealerCourtesy of dea
19、lerCourtesy of tellerCourtesy of tellerEstheticsEstheticsOak-finished cabinetOak-finished cabinetAppearance of bank lobbyAppearance of bank lobbyReputationReputationConsumer ReportsConsumer Reports ranking rankingAdvice of friends,years in businessAdvice of friends,years in businessSource:Modified f
20、rom Paul E.Source:Modified from Paul E.Plsek Plsek,“Defining Quality at the Marketing/Development,“Defining Quality at the Marketing/Development Interface.”Interface.”Quality ProgressQuality Progress,June 1987,June 1987,pp pp.28-36.28-36.Olin School of BusinessOlin School of BusinessWashington Unive
21、rsityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management1212 Quality SpecificationsDesign qualityDesign quality inherent value of the product or service in the inherent value of the product or service in the marketplacemarketplaceConformance qualityConfo
22、rmance quality degree to which the product or service design degree to which the product or service design specifications are metspecifications are metDesign QualityConformanceQualityFitness of UseFitness of useo degree to which the final product or service meets the customers objectivesOlin School
23、of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management1313 Economics of QualityQualityQualityCostCostProductivityProductivityProfitabilityProfitabilityOlin School of BusinessOlin School of BusinessWashi
24、ngton UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management1414 Traditional cost/quality tradeoffCostCostQualityQualityOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturi
25、ng ManagementManufacturing Management1515 Quality and costUnavoidable costsUnavoidable costs(Price of Conformance=POC)(Price of Conformance=POC)AppraisalAppraisal PreventionPreventionAvoidable costsAvoidable costs(Price of Nonconformance=PONC)(Price of Nonconformance=PONC)Internal failureInternal fa
26、ilure External failureExternal failureOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management1616 Appraisal costsTest and inspection materials and servicesTest and inspection materials and se
27、rvicesWages of inspection personnelWages of inspection personnelProduct quality auditsProduct quality auditsMaintenance of test equipmentMaintenance of test equipmentCustomer satisfaction auditsCustomer satisfaction auditsSupplier appraisalsSupplier appraisalsEmployee surveysEmployee surveysMystery
28、shopper programMystery shopper programOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management1717 Prevention costsQuality planningQuality planningProcess controlProcess controlEducation and t
29、rainingEducation and trainingPreventive maintenancePreventive maintenanceSupplier training/certificationSupplier training/certificationFailure analysisFailure analysisCustomer relationship managementCustomer relationship managementQuality systems developmentQuality systems developmentOlin School of
30、BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management1818 Internal failure costsScrapScrapReworkReworkDowntime/overtimeDowntime/overtimeDowngrading/dispositionDowngrading/dispositionAnalysis of scrap/rewo
31、rkAnalysis of scrap/reworkAccidents/injuriesAccidents/injuriesEmployee turnoverEmployee turnoverLoss of moraleLoss of moraleHandling grievancesHandling grievancesOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing Manageme
32、ntManufacturing Management1919 External failure costsComplaints processingComplaints processingWarrantyWarrantyProduct recallProduct recallProduct liabilityProduct liabilityField serviceField serviceRepairRepairAdministrative costsAdministrative costsOlin School of BusinessOlin School of BusinessWas
33、hington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management2020 PONC estimatesCOMPANYCOMPANYYEAR PONC as percentage of salesYEAR PONC as percentage of salesIBMIBM1980198015-4015-40MotorolaMotorola198619861313HeinzHeinz19891989($350-400 Million)
34、($350-400 Million)MotorolaMotorola198919898($800 Million)8($800 Million)Olin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management2121 General electric estimatesSTAGESTAGECost per defect per pro
35、ductCost per defect per productSupplier inspection costSupplier inspection cost$0.003$0.003Incoming inspection costIncoming inspection cost$0.03$0.03Fabrication inspection costFabrication inspection cost$0.30$0.30SubproductSubproduct test cost test cost$3.00$3.00Final product test costFinal product
36、test cost$30.00$30.00Product service costProduct service cost$300.00$300.00Olin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management2222 Traditional processesCostCostConformance QualityConforma
37、nce Quality0%0%100%100%Total costTotal costPONCPONCPOCPOCOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management2323 Emerging processesCostCostConformance QualityConformance Quality0%0%100%10
38、0%Total costTotal costPONCPONCPOCPOCOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management2424 Quality and productivity Productivity=Productivity=OutputOutput Input InputCommon roots:Common
39、roots:Design forDesign for manufacturability manufacturabilitySimplicitySimplicityImproved equipmentImproved equipmentBetter maintenanceBetter maintenanceLess downtimeLess downtimeWorker motivationWorker motivationOlin School of BusinessOlin School of BusinessWashington UniversityWashington Universi
40、tyPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management2525 Quality and profitabilityProfit=Revenue-CostProfit=Revenue-Cost =(Price)(Sales)-Cost=(Price)(Sales)-CostOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos Kouve
41、lisManufacturing ManagementManufacturing Management2626 Quality and profitability1)1)Market GainsMarket GainsHigher QualityHigher Quality-GarvinGarvinImproved ReputationImproved ReputationHigher Market Higher Market ShareShareExperience-based Experience-based economieseconomiesHigher PricesHigher Pr
42、icesHigher ProfitsHigher ProfitsOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management2727 Quality and Profitability(contcont.).)2)CostHigher QualityLower per unit CostOlin School of Busines
43、sOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management2828 What is total quality management?Olin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManu
44、facturing ManagementManufacturing Management2929 The total quality management triangleBedrockBedrockprinciplesprinciplesManagerialManagerialmethodsmethodsImprovement Improvement toolstoolsT TQ MQ MOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisP
45、anos KouvelisManufacturing ManagementManufacturing Management3030 Bedrock principlesCustomer focusCustomer focusContinuous improvementContinuous improvementTotal employee involvementTotal employee involvementOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPano
46、s KouvelisPanos KouvelisManufacturing ManagementManufacturing Management3131 Customer focus“A customer is the most important person even in the A customer is the most important person even in the office in person or by mail.A customer is not an office in person or by mail.A customer is not an interr
47、uption of our work he is the purpose of it.”interruption of our work he is the purpose of it.”-L.L.Bean-L.L.BeanOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management3232 Customer focusKnow
48、thy customersKnow thy customers Who they areWho they are What their requirements areWhat their requirements areOnly the customer can define customer Only the customer can define customer satisfactionsatisfaction Quality is what the customer says it is!Quality is what the customer says it is!Organiza
49、tional self-assessmentOrganizational self-assessmentOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManufacturing ManagementManufacturing Management3333 Continuous improvementContinuous improvement of all processes-foreverContinuous
50、 improvement of all processes-foreverRESULTRESULT.ProcessProcessProcess:The way everyone thinks,behaves,and Process:The way everyone thinks,behaves,and acts every dayacts every dayOlin School of BusinessOlin School of BusinessWashington UniversityWashington UniversityPanos KouvelisPanos KouvelisManu
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