Chapter 6

Quality Management &

International Standards
 Quality and Strategy
A success or failure of an organization partly depends on its visions. Quality
is a wonderful tonic and key success factor for improving operations.
Managing quality helps build successful strategy of differentiation, low
cost and response that we have studied in previous chapter.
• Differentiation: “Mobile World” focuses on professional employees and
high quality products from prestigious distributors, high warranty policy
to differentiate the brand among many mobile retail competitors.
• Low cost: Kia Morning provides customers with quality but low cost
products for those who have lower income.
• Response: Apple releases its new products like Iphone an average a year
per product. Now we have Iphone Xs with higher advanced technology for
their fans but still keep the older versions such as Iphone 6 7 8 X.
 Quality and Strategy
From the figure, we can see that quality
products help gain sales and reduce cost,
with directly increase profits. For example,
Mercedes has many salon auto in Vietnam
that customers come there to buy or keep
their cars in good repair. They also have
segments A C E S that makes the brand of
Mercedes with flexible pricing for each
segment. Moreover, they have good
manufacturing that produces cars with high
quality employees and modern engineering
systems. Therefore, they can reduce the
warranty and rework cost and effectively
increase profits
Quality and Strategy
Building a quality organization is a
demanding task, which combines of 4
main activities as shown in figure 6.2. The
organization initially has to set its mission
statement, leadership and training,
‘should we focus on quality?’ and then
start to think of methods and ways to
improve and accomplish; Engage
professional employees to support to
manufacture and then orders, customer
satisfactions will be organization ‘s result
after performing the quality strategy.
 Defining Quality
We have discussed a lot about high quality products, employees, but in
fact, What is Quality? It is the ability of product or service to meet and
satisfy customer needs.
There are 3 main categories of quality:
User based: products are evaluated by the views of customers.
Manufacturing based: make it right in the first time and follow the
enforced standard.
Product bases: customer identify products by special features
As a result, a process that ignores any one of these steps will not result
in a quality product.
What Is Quality?
 Oxford American Dictionary
 a degree or level of excellence
 American Society for Quality
 totality of features and characteristics that satisfy needs without
deficiencies
 Consumer’s and producer’s perspective

Copyright 2009 John Wiley & Sons, Inc. 2-6

What Is Quality:
Customer’s Perspective
 Fitness for use
 how well product or service does what it is supposed to
 Quality of design
 designing quality characteristics into a product or service
 A Mercedes and a Ford are equally “fit for use,” but with different design dimensions.
What Is Quality:Producer’s Perspective

 Quality of conformance
 making sure product or service is produced according to design
 if new tires do not conform to specifications, they wobble
 if a hotel room is not clean when a guest checks in, hotel is not functioning according to
specifications of its design

Copyright 2009 John Wiley & Sons, Inc. 2-8

Meaning of Quality
What Is Quality: A Final Perspective
 Customer’s and producer’s perspectives depend on each other
 Producer’s perspective: production process and COST
 Customer’s perspective: fitness for use and PRICE
 Customer’s view must dominate
 Implications of Quality
Quality besides satisfying demands of customers, it also has 3 other important reasons:
1. Company reputation: Perception of new products, Employment practices, Supplier
relations.
2. When we talk about fast-food hamburger, we will think of McDonald’s and Burger King
for their delicious, quality products and professional employees, which make the
reputation of their brands.
3. Product liability, which aims to reduce risk
4. We have GOV standard policy for food safety to protect customers from risks. And
McDonald’s has to continue improving their products’ quality to meet the food
standard.
5. Global implications: improved ability to compete
6. We are in technological ages so quality is international. Wanting to expand products
outside, McDonald’s must meet the global quality, design and price expectations for
particular regions to be suitable with the living conditions.
Malcolm Badrige National Quality Award

• Established in 1988 by the U.S. government for

quality achievements.
• Designed to promote TQM practices
ISO 9000 International Quality Standards
• ISO 9000 is a set of quality standards developed by the ISO and has
international recognition. It Encourages quality management
procedures, detailed documentation, work instructions, and
recordkeeping.
• It focuses on 8 quality management principles: Top management
leadership, Customer satisfaction, Continual improvement ,
Involvement of people, Process analysis, Use of data-driven decision
making, A systems approach to management, Mutually beneficial
supplier relationships.
 Cost of Quality
It is the cost when you produce wrong products . there are 4 major categories:
- Prevention costs, Appraisal costs, Internal failure costs, External failure costs -
• For example, Toyota’s products debuts to customers, they must ensure that their
products are good and safe. In some case, their products are wrong. This is
because their employees and manufacturers work badly(Prevention costs). They
have to turn back to repair and test the mistakes (Appraisal costs). It leads them to
rework and downtime (Internal failure costs). If their products are bought to
consumers, they must pay cost for delivery or lose goodwill if they are
published(External failure costs.). Therefore, they waste money on cost of quality.
• In real life, there are some outstanding leaders in quality that give us business
lessons such as; W. Edwards Deming, Joseph M. Juran, Philip B. Crosby
Ethics & Quality
Management
 Ethics & Quality Management
• As the operations managers’, they should focus on deliver healthy,
safe and quality goods and services to customers.
• If not, it will cause higher costs in the process, and even injuries,
lawsuits, regulation.
• If there are any doubt or questionable products in the firm, even the
smallest, should be dictate to the problems and take responsibilities.
• Any of the stakeholders also involved in the poor-quality products and
should be considered to participate in solving problems process.
 Total Quality Management

Include the entire organization from supplier to customer

Stresses a commitment by management to have a continuing
companywide drive toward excellence in all aspects of products
and services that are important to the customer
TQM and QMS
• Total Quality Management (TQM)
• customer-oriented, leadership, strategic planning, employee responsibility,
continuous improvement, cooperation, statistical methods, and training and
education
• Quality Management System (QMS)
• system to achieve customer satisfaction that complements other company
systems
 Deming’s 14 Points for Implementing Quality Improvement

1. Create consistency of purpose 8. Drive out fear

2. Lead to promote change 9. Break down barriers between
3. Build quality into the product; stop departments
depending on inspections to catch
10.Stop haranguing workers
problems
4. Build long-term relationships based 11.Support, help, and improve
on performance instead of awarding 12.Remove barriers to pride in work
business on price
13.Institute a vigorous program
5. Continuously improve product, of education and self- improvement
quality, and service
6. Start training
14.Put everyone in the company
to work on the transformation
7. Emphasize leadership
Deming Wheel: PDCA Cycle
(Plan-Do-Check-Act )
 Total Quality Management
From those 14 points, being conducted into 7 concepts for an effective
TQM program:
1. Continuous improvement
2. Six Sigma
3. Employee empowerment
4. Benchmarking
5. Just-in-time (JIT)
6. Taguchi concepts
7. Knowledge of TQM tools
 Continuous Improvement
• Based on the philosophy that every aspect of an operation
can be improved and always seek for perfection.
• TQM requires a never-ending process of continuous
improvement covers the assets of the firm including: people,
equipment, suppliers, materials and procedures.
 Plan-Do-Check-Act
( the continuous nature of the improvement process)

4. Act 1. Plan
Implement Identify the
the plan, pattern and
document make a plan

3. Check 2. Do
Is the plan Test the
working? plan
Quality Tools

• Process Flow Chart • Histogram

• Cause-and-Effect Diagram • Scatter Diagram
• Check Sheet • Statistical Process
• Pareto Analysis Control Chart

Copyright 2009 John Wiley & Sons, Inc. 2-24

 7 Tools of TQM

Tools for generating ideas: Tools for Organizing Tools for Identifying
the Data: problems:

• Check sheet • Pareto Chart • Histogram

• Scatter diagram • Flowchart ( Process • Statistial Process
• Cause-and-Effect Diagram Diagram) Control Chart
Flow Chart

Copyright 2009 John Wiley & Sons, Inc. 2-26

Flow Charts
MRI Flowchart
1. Physician schedules MRI 7. If unsatisfactory, repeat
2. Patient taken to MRI 8. Patient taken back to room
3. Patient signs in 9. MRI read by radiologist
4. Patient is prepped 10. MRI report transferred to
5. Technician carries out MRI physician
6. Technician inspects film 11. Patient and physician
discuss

8
80%
1 2 3 4 5 6 7 11
9 10
20%
Seven Tools of TQM
(e) Flowchart (Process Diagram): A chart
that describes the steps in a process

Figure 6.6
 Cause-and-Effect Diagram
• Cause-and-effect diagram (“fishbone” diagram)
• chart showing different categories of problem causes

Copyright 2009 John Wiley & Sons, Inc. 2-29

 Cause-and-Effect Matrix
• Cause-and-effect matrix
• grid used to prioritize causes of quality problems

Copyright 2009 John Wiley & Sons, Inc. 2-31

Check Sheets and Histograms

Copyright 2009 John Wiley & Sons, Inc. 2-32

 Pareto Analysis
• Pareto analysis
• most quality problems result from a few causes

Copyright 2009 John Wiley & Sons, Inc. 2-35

Pareto Chart

Copyright 2009 John Wiley & Sons, Inc. 2-36

Scatter Diagram

Copyright 2009 John Wiley & Sons, Inc. 2-38

Control Chart

Copyright 2009 John Wiley & Sons, Inc. 2-39

Control Charts
Figure 6.8

Plot the percent of free throws missed

40%

Upper control limit

20%

Coach’s target value

0%

| | | | | | | | |
Lower control limit
1 2 3 4 5 6 7 8 9

Game number
 Total Quality Management

Kaizen is used in Japan

and it describes the
ongoing process of
unending improvement.
Even if already achieve
the goal, the firm must
achieve higher goal and
never stop.
 Total Quality Management
• In U.S., TQM and zero defects are also used to described continuous
improvement efforts.
• No matter what term the operation uses, the operation manager is
the key factor that support the continuous improvement.
 Six Sigma (6σ)
This is a set of techniques and tools for process improvement. It was
introduced by engineer Bill Smith while working at Motorola in 1986.The term
"six sigma" comes from statistics and is used in statistical quality control,
which evaluates process capability. It has 2 meanings:
• Statistical: high capability 99.9997% accuracy, 3.4/1mil opportunities (if 1
mil passengers pass through Airport with checked baggage, 6Sigma will
result only 3.4 passengers with misplaced luggage)
• Programm: it was designed to reduce defects. It seeks out the defects of
process, not product. The aim of 6Sigma is long term solution, enhance
quality of the process to lower cost, save time, improve customer
satisfaction
 Six Sigma (6σ)
• Six Sigma: comprehensive system for achieving and sustaining
business success
• Strategy: focus on total customer satisfaction
• Discipline: six sigma improvement model: DMAIC
 Six Sigma:
Breakthrough Strategy—DMAIC
DEFINE
DEFINE MEASURE
MEASURE ANALYZE
ANALYZE IMPROVE
IMPROVE CONTROL
CONTROL

3.4
3.4 DPMO
DPMO

67,000
67,000 DPMO
DPMO
cost
cost == 25%
25% of
of sales
sales
Copyright 2009 John Wiley & Sons, Inc. 2-46
 DMAIC
• Defines: project’s purpose, scope and outputs then required process information
• Measures: the process and collect necessary data, How does the process currently
perform? Or in other words, what is the magnitude of the problem? Measurement
is critical throughout the life of the project. As the team starts collecting data they
focus on both the process as well as measuring what customers care about
• Analyzes: the data, ensures the repeatability,(the results can be duplicated) and re-
productibility (others get the same results) What is causing the problem? without
analysis, teams jump to solutions before knowing the true root causes of the issues.
• Improves: by modifying and redesigning, existing procedures. brainstorms
solutions, implements solutions and lastly, collects data to confirm there is
measurable improvement.
• Controls: How do you sustain the improvement? the team must ensure that the
process maintains the gains.
• Set of 7 tools: check sheets, scatter, cause-effect, Pareto, flowcharts, histograms,
statistical process control
 Six Sigma (6σ)
Implementing Six Sigma
• Emphasize defects per million opportunities as a standard metric
• Provide extensive training: The person leading the Six Sigma implementation
project has to be knowledgeable about Six Sigma methods and principles. The
business can hire "black belt" expert
• Focus on corporate sponsor support (Champions) they are responsible for
establishing project goals and scope. They are also responsible for providing
resources and general project support for Green Belts and Black Belts. If required,
Sponsors must work with GBs / BBs to break down organizational barriers in order
to be successful. Finally, Sponsors are responsible for the controls and methods to
sustain the desired results once the process improvements are implemented.
• Create qualified process improvement experts (Black Belts, Green Belts,..)
• Set stretch objectives
• This cannot be accomplished without a major commitment from top level of
management
 Employee Empowerment

Involving employees in every step of the production process

• Responsibility is added and authority is moved to the lowest possible I
the organization
• Ex: empowered employee groups are encouraged to create their own
structure so that the team can feel comfortable in the way,it works
and increase productivity. The manage monitors the team
performance but only interferes if necessary
 Employee Empowerment

Techniques
• Build communication networks that include employees
• Develop open, supportive supervisors
• Move responsibility to employees
• Build a high-morale organization
• Create formal team structures
 Employee Empowerment

Quality circle: group of employees who meet regularly to solve work-

related problem
• Trained in planning, problem solving, and statistical methods
• Often led by a facilitator(train members and keeps meeting running
smoothly)
• Cost-effective way when done properly to increase productivity as
well as quality
 Brief meaning

It involves selecting a
demonstrated standard of products,
services, cots, or practices that
represent the very best
performance for processes or
activities very similar to your own

Marketing Services
An airline hires a consultant to benchmark An ecommerce firm benchmarks its average
Examples customer service metrics such as customer
satisfaction against key competitors.
fulfillment and delivery speed against key
competitors.
Selecting best practices to use as a standard for
performance

1. Determine what to benchmark

2. Form a benchmark team
3. Identify benchmarking partners
4. Collect and analyze benchmarking information
5. Take action to match or exceed the benchmark
 Internal Benchmarking
• Data more accessible from
outside firms r na l
in te g i f
Us e r kin gh
h m a u
n c e n o
• Benchmarks can and should be be
’ re b ig
you
established in a variety of areas
Definition: Just-in-time (JIT)
is one of continuing
improvement and enforced
problem solving.

JIT cuts the cost of quality JIT improves quality Better quality means less
inventory and a better, easier-
to-employ JIT system
Advantages of Just-in-time
 Taguchi Concepts
Most quality problems are the results of poor product and process design. 3 concepts of Taguchi help us improving
both product and process quality:

• Quality robust products: Products that are consistently built to meet customer
needs in spite of adverse condition in the production process
+ Remove the effects of adverse conditions instead of removing the causes
+ Small variations in materials, process don’t destroy product quality

• Targer-oriented quality: A philosophy of continuous improvement to bring a

product on target.
 Quality Loss Function
High loss
L = D2C
Unacceptable where
Loss (to L = loss to society
producing Poor
organization, D2 = square of the
customer, Fair distance from
target value
and society) Good
C = cost of
Best deviation
Low loss Target-oriented quality
yields more product in
the “best” category
Target-oriented quality
brings product toward
Frequency the target value
Conformance-oriented
quality keeps products
within 3 standard
deviations
Lower Target Upper
Specification Figure 6.5