MGT 449 Quality Management

and Productivity

MGT 449 Quality Management

and Productivity

WELCOME!WELCOME!

Facilitator: Alan Hoffmanner858-485-9226

alan@agiledge.com

MGT/449 – UOP – Chula VistaSeptember - October, 2008

Alan Hoffmanner, FacilitatorNameName

Briefly describe your experience with Briefly describe your experience with Operations, if any?Operations, if any?

Briefly describe your experience, if any, Briefly describe your experience, if any, with Process Improvement, Quality with Process Improvement, Quality Assurance, Lean, TQM, Theory of Assurance, Lean, TQM, Theory of Constraints or Six SigmaConstraints or Six Sigma

Think of and briefly describe a process you Think of and briefly describe a process you that you think needs improving.that you think needs improving.

What do you do now?What do you do now?

How many classes leftHow many classes left

Identify What you think the problem is

Define/ Describe the

ProblemAnalyze

Total Quality and Business Planning

• History of Total Quality (TQ)– Pioneers of TQ– 1920: Shewart/Control Chart– Introduction to Continuous

Improvement– 1940: World War II Economic Impact– 1950: US Has Zero Competition

• Deming: PDCA Cycle…

– 1960: Complacency

Total Qualityand Business Planning

• History of Total Quality (TQ)History of Total Quality (TQ)– 1970: Paralysis1970: Paralysis

– 1980: Wake-Up1980: Wake-Up

– 1990: Action and some Successes1990: Action and some Successes

Problems in the Automobile IndustryProblems in the Automobile IndustryProblems in the Semiconductor IndustryProblems in the Semiconductor IndustryMalcolm Baldridge National Quality Award (MBNQA)Malcolm Baldridge National Quality Award (MBNQA)Total Quality ManagementTotal Quality Management

The 1990sWorld Trade

The International Standards Organization: ISO 9000Huge Growth in Global trade/Trade Agreements

GE/Motorola Continuation of Japanese influence

Kanban, Kaizen, Toyota Production System, LEAN

The GE Work-out Process

Six SigmaLeanAgile Manufacturing

Five American Quality Leaders

– Walter A. Shewhart– W. Edwards Deming– Joseph M. Juran– Armand V. Feigenbaum– Philip B. Crosby

• Quality in Japan/Their Contribution– Kaoru Ishikawa– Japan's Contributions

TQM- What is it? Employee Empowerment/Participatory Management Data Measurement, Evaluation & Communication in Group Problem Solving Quality Focus Self-Directed Teams Internal & External customer concept Focus on Customer Communication and Customer Retention Process & Process Improvement Focus

Process Mapping and Process Capability

Lessons Learned

There are lessons to be learned from the experiences of the successful companies. The common success

factors are:– Focusing on customer needs

– Upper managers in charge of quality

– Training the entire hierarchy to manage for quality

– Employee involvement

—Joseph M. Juran

Total Quality and Business Planning

• Effects of Poor Quality– Financial Issues: It costs money!

• Lost customers• Wasted effort and wasted materials…

– Employee Issues• It wastes effort• It lowers morale• It lowers productivity

– Customer Issues• Loses them• Costs them money• Loses referrals they may provide• Causes them to produce negative third party feedback…

Quality Deficiencies:

Impact on Society?

Cost of Quality Concept

• Cost of Prevention• Cost of Appraising/Checking

for quality• Cost of failures/errors…

Costs of Prevention• Selling top management

• Plans for quality improvement

• Installation of standards, methods, and procedures

• Installation of tools

• Quality training and education

• Quality awareness and motivation

• Preventive maintenance

• Other quality improvement projects

• Report of quality status

• Quality assurance consultation

• Quality assessments

• Evaluation of vendors and subcontractors

Cost of Checking for it

• Walkthroughs and inspections

• Preparation for reviews

• Quality reviews

• Preparation for product testing

• Product testing

• Quality audits

Costs of Failures and Errors and Not Meeting Expectations

• Cost of recalling faulty products• Repair and rework• Staff turnover caused by quality problems• Lost production due to quality problems• Cost of projects canceled because of quality

problems• Assets lost because of quality problems• Benefits lost because of quality problems• Legal liability from poor quality

Key Concepts

Quality is FreeIt is always cheaper to do a job right the

first time than to do it over.• Quality Improvement Cuts Costs• Lower Costs Allow Lower Prices• Lower Price Brings Increased Market Share• Increased Market Share Brings Benefits of Scale• Scale Benefits Generate Further Cost Reductions• . Quality of Design Increases Demand

Other Key concepts

•CRM

BPR/

•Product vs. Process

Productivity

What is a Process?• A process transforms inputs into outputs, or products.

The actions or operations that transform might be performed by people, by machines/computers, or both

• a logically related collection of actions or operations that work together to produce a specific result – Or achieve a specific goal

• A process requires certain inputs, which are then transformed by the process into outputs.

• • Every important process should be constructed; the task of constructing a process is an example of a project..

What is a System

• A system is a method for accomplishing that transformation; it is a group of components/sub systems that interact to achieve some goal or produce a product

• A system facilitates a process- it’s part of HOW a process is accomplished. – an accounting system helps facilitate the Accounts

Receivable process. • The major reason for distinguishing a process

from a system is to emphasize the difference between the function required and the means of accomplishing the function.

The Options for Changing a Process:

1. Improvement / Continuous Improvement

2. Innovate

3. Re-engineer

“As Is” Process Map/Flow Chart

Xxxx contract addendum

request process

Submitproposal

to Lennar

Hasproject mgr.

approvedproposal?

Has proposal been approvedby all required

managers?

Execute contract

addendumEnd

Receive proposal

Yes

Receive proposal

Receive proposal

Receive proposal

Who gets the

proposal?

Who gets the

proposal?

Yes

No

No

Subcontractor

FieldManager

ContractAdministrator

Purchasing Manager

Project Manager

ContractAdministrator

Purchasing Manager

To Purchasing Manager

Project Manager

To Purchasing Manager

Field Manager

Send toProject

Manager

No

Complete aNon-PO Form

Gain Supervisor’s Signature, order item And Give all forms toAP for processing

Complete PORequest Form

Review form

No

Yes

Submit to VP

Yes

No

Update PO

Order Item/ServiceOrder.

Print Hard Copy of Documents.Email EE informing

them Of ETA.

Product/ServiceArrives

No

Update POAnd re-submitFor approval

Wait for ProductTo Arrive

Give Product toOriginal Requestor

matchPO to Invoice and

Invoice is paid By Payment Terms

Receives itemIn Oracle

Yes

EE = Employee

Submit completed

PO Request form

Log POIn

Database

Sub-total$200 or more?

DoesInformation

Match?

Approved?

Submit to Supervisor forAuthorization

Yes

Approved?

Approved?Yes

No

Generate PO in Oracle

NO

Purchasing

Employee

EmployeeEmployee

All Fields completed?

No

Yes

Purchasing

Purchasing

Purchasing

Purchasing

Does QuantityAnd Price on Invoice

Match PO?

YesStart

End

AP Purchasing

End

ReceivingDepartment

“As Is” Banana Process Map Customers

Product received off

Dole Ship

Truck from SD

via private carrier

Dole Inspects

and checksbad

Yes

GasBananas

“Rack”Bananas inwarehouse

unload produce delivery

Pick andShip

Banana orders

Inspect?

Open cases

and crack stack

MerchandiseBananas for sale

GOOD

No

BananasChecked

ThrowBananas

Away

Too Ripe- YES END

Bad Bananas

InspectBananas

Receiver

SelectBananas

Customers

HiringProcess

Define Job Description

Request Form From HR

DetermineClassification

Regular

Hire?

Post Job SuitableCandidate?

SuitableCandidate?

Examine Other

Resumes

DevelopAlternativeRecruitingStrategy

ResumeQualified? Arrange

Meeting

PreliminaryInterview

Return To Candidate

Pool

DevelopInterviewQuestions

Conduct Interview

Candidate

Qualified?Check

References

ReferencesOK?

SelectCandidate

DeterminePay Rate

Make Verbal& Written Offer

Candidate

Accepts?Hire

Candidate

NO

YES

NO

YES

YES

No

YES

HR ManagerGets Involved

YES

YESNO

NO

YES

HireTemp

NO

END

No

Process Flowchart / Process Map

• Exercise• Brainstorm• Round 1

– Volunteers

– MapProcess

Step

ConnectorWhich Choice?

Flow

Delay

A Pre-DefinedProcess(Black Box)

The Key: Focus on Variation and on Processes being in Control

• Special (Assignable) vs. Common (Random/Noise) Causes

• Deming’s 2 “famous” experiments– 50 Marbles

– Funnel

Variation

Life Rules• Every process exhibits variability, which may

be due to assignable or special causes or common or random causes (noise).

• Tampering with a stable system will increase process variability.

• Tampering with a single result or a snapshot of a process where you don’t now it’s capability or if under control usually makes things worse.

Products consist of good and services. An essential requirement of products is that they meet the needs of those who will actually use them.

• “Fitness for use” applies to a variety of users [—the manufacturer who enhances the product, the merchant who buys the enhanced product, the purchaser, and the maintenance shop].

• A product has many elements of fitness for use, called “quality characteristics”; these are the fundamental building blocks out of which quality is constructed. Quality characteristics are the means by which “fitness for use” is translated into the language of the technologist.

• Quality characteristics can be grouped into various species, such as structural (e.g.,length), sensory (e.g., taste), time-oriented (e.g., reliability), commercial (e.g., warranty), and ethical (e.g., courtesy)

• Quality characteristics can be classified into categories known as “parameters.” Two major parameters are quality of design and quality of conformance. Quality of conformance is the extent to which goods and services conform to the intent of the design. Quality of conformance is the extent to which goods and services conform to the intent of the design.

Conformance to Specifications or Requirements - Quality means “meets requirements.”

Customer Satisfaction

ISO International Standard 8402: Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

Aim of quality is to give customers the product they want. The challenge is to understand true customer needs and translate these into products/services that will satisfy those needs.

The consumer is the most important part of the production line so….

Quality is simply delivering what was promised. meets its requirements.

Quality applies to all physical products, all information products, and all service products. Because it applies to all products, effective quality improvement must be organization-wide.

Quality is an investment, a profitable investment—you invest today and reap the benefits in the future.

Long-term profitability belongs to the companies with the lowest operating costs and the ingrained reputation for quality

Quality must be part of the organization's basic belief system. This means changing the culture to make quality a principle in all operations.

If top management is not solidly behind a quality effort, forget it—it won't happen.

Quality improvement requires top management's time and effort; it cannot be delegated.

To satisfy customers, it is necessary to produce quality products in all operations: requirements, design, advertising, marketing, manufacturing, servicing, billing, personnel, finance…

Each individual is responsible for the quality of his or her work products. Management must encourage teams and local units to innovate and find ways to improve quality and productivity.

To produce quality products consistently, the organization must do a good job of development, manufacturing, sales, and service.

The wealth of a nation depends on its people, management, and government, more than on its natural resources. The problem is where to find good management.

Business is accomplished through people operating systems. But it is also people who build the systems and maintain them. So ultimately quality depends entirely on people.

To achieve quality, an organization must convince its people to make a commitment to quality. Doing things right is a matter of having proper systems, procedures, instructions, raw materials, equipment, and training. But it is also a matter of attitude.

Work in an organization is accomplished through processes. Therefore, the way to improve quality is to improve all of the organization's processes - They should be documented to stabilize them, measured to learn their behavior, and improved to make them more effective. To accomplish these ends, a structure for managing change must be in place.

Top managers must understand that quality improvement takes time. They must be prepared to take a long-term view of quality, not deviating from their direction because of momentary changes in the business cycle or corporate profits.

Quality must be a fundamental goal. It should be viewed as a strategy to increase sales,

reduce costs, and help to secure jobs for employees. If a company follows the principle of “quality first,” its profits

will increase in the long-run. If a company pursues the goal of attaining a short-term profit, it will lose competitiveness in the international market, and will lose profit in the long run. —Ishikawa —

Construct continuous chain at lowest cost

Break a link = $ 2.00

Weld a link = $ 1.00

The Steps1. Problem Identification

2. Analysis

3. Problem Description4. Identify Potential Root Causes of

Problems 5. Development of alternative

Solutions/Actions

6. Decision and Implementation Plan

7. Measurement and Follow up plan

Moving from the current problematic state to the desired state

Emergent Mature Crisis

Time

and

Energy Required to Solve

Time

Energy

1. Problem Identification

2. Analysis

3. Problem Description

4. Identify Potential Root Causes of Problems

5. Development of alternative Solutions/Actions

6. Decision and Implementation Plan

7. Measurement and Follow up plan

PROBLEM SOLVING TOOLS

Brainstorming Nominal Group Technique Delphi Technique Cause and Effect Diagrams Check Sheets Mind Mapping Process Analysis Run Charts/Control Charts Graphs/Pie Charts Histograms Pareto Diagrams Force Field Analysis Expert Testimony Benchmarking

Brainstorming Force Field Analysis Management Presentation Process Chart Process Capability Analysis Mind Mapping Project Planning and Analysis Development of Tracking System

History Why used? When used? How used?

“Quality begins with education and ends with education.”Kaoru Ishikawa 1944

1. Identify the key (specific) symptom of the problem you want to solve Examples: Customers are Dissatisfied

Product Lead Times are two weeks too long/longer than competitionOur Customer Satisfaction level is 70 out of 100, 20 points short of our goal.In Process Inventories are $200,000 higher than competition (relative).Gas mileage has dropped to 12 MPG from an average of 30 MPGMy grilled hamburgers have no taste

2. Choose the specific problem statement or Goal. You can either state it as a problem or as a positive.Examples: •For “Customers are Dissatisfied”, you use it or state it as a goal: 100% Customer satisfaction or use an existing measurement to more specifically state the problem (if it exists).For “Product Lead Times are two weeks too long/longer than competition,”

You can use it as is…Change it to Product lead times of X weeks (the goal)….

So to operationalize, place your problem statement or goal on the right side of your paper, whiteboard, easel…in a box with an arrow coming into it from across the page...

Product LeadTimes are 2weeks too long

3. Consider the major factors that are responsible for potentially causing the problem or which may be responsible for meeting the goal… Generally, this means selecting several of the following: People Machines Methods/Processes MaterialsEnvironment InformationLabel your selection as primary ‘limbs’ along the main arrow with the most important toward the right or front.

Product LeadTimes are 2weeks too long

People

Machines

Methods/P

rocesse

s

Materials

Environment

Inform

ation

1. Problem Identification (What you think it is)

2. Analysis

3. Problem Description

4. Identify Potential Root Causes of Problems

5. Development of alternative Solutions/Actions

6. Decision and Implementation Plan

7. Measurement and Follow up plan

Define

ID Root Cause/Plan

ACT

Verify

Left SideDefine problemGather informationAnalyze information(Steps 1-3)

Evaluate solutionsImplement solutionMeasure results(Steps 6-7)

Right Side

Incubate information

Look for root causes

Free-associateIntuitive flashAlternative

solutions(Steps 4-5)

Brainstorming and Creative ThinkingExercise

“A problem well stated is a problem half solved.” Charles Kettering

“If you don’t know where you are going, you might wind up someplace else.” Yogi Berra

Internal vs. External vs. Society

Flow

Define theValue Added

Map & Line up the Value Stream

of Activities

Pull

Perfection

START

StabilizeStabilize

Create FlowCreate Flow

Standardize

Standardize

LevelLevel

Incrementally

Incrementally

Stab

ilize

Stab

ilize

Create

Flow

Create

Flow

StandardizeStandardize

LevelLevelIncrementally

IncrementallyStabilize

Stabilize

Create FlowCreate Flow

Standardize

Standardize

LevelLevel

Incrementally

Incrementally

StabilizeStabilize

Create FlowCreate Flow

Standardize

Standardize

LevelLevelIncrementallyIncrementally

StabilizeStabilize

The 5S The 5S PROCESSPROCESS

The 7s Strategy Structure Skills Staff Style Shared Values/Culture Systems/Processes Customer Suppliers/Partners

Bottleneck activities limit process capacity. Philosophy of the Theory of

Constraints Variability destroys capacity. Structure follows process priorities. Metrics drive the process.

1. Create constancy of purpose for improvement of product and service.

2. Adopt the new philosophy- continuous improvement3. Cease dependence on mass inspection.. Quality does not

come from inspection but from improvement in the process. With instruction, workers can be enlisted in this improvement

4. End the practice of awarding business on price tag alone.5. Improve constantly and forever the system of production

and service.6. Institute training: How?7. Institute Leadership: The job of a supervisor is not to tell

people what to do nor to punish them but to lead. Leading consists of helping people do a better job and of learning by objective methods who is in need of individual help.

Drive out fear. Many employees are afraid to ask questions or to take a position even when they do not understand what their job is or what is right and what is wrong. They will continue to do things the wrong way or not do them at all. The economic losses from this are appalling. To assure better quality and productivity, it is necessary that works feel secure.

Break down barriers between staff areas. Often a company’s departments are competing with each other or have goals in conflict

Eliminate slogans, exhortations and targets for the work force. Let them formulate their own.

Eliminate numerical quotas: Quotas take into account only numbers not quality or methods. They are usually a guarantee of inefficiency and high cost.

Remove barriers to pride of workmanship. People are eager to dod a good job and distressed when they cannot. Too often, misguided supervisors, faulty equipment and defective materials stand in the way of good performance. These barriers must be removed.

Institute a vigorous program of education and retraining. Both management and the work force will have to be educated int the new methods including teamwork and statistical techniques.

Take action to accomplish the transformation. It will require a special top management team with aplan of action to carry out the quality mission. Workers cannot do it on their won, nor can managers. A critical mass

1. Lack of constancy of purpose2. Emphasis on short term profits 3. Evaluation by performance, merit rating or

annual review of performance: The effects are devastating: teamwork is destroyed, rivalry is nurtured, fear is built,, They also encourage defection in the management ranks.

4. Mobility of management5. Running a company on visible figures alone.6. Excessive medical costs for employee health

care, which increases the final costs of goods and services.

7. Excessive costs of warranty fueled by lawyers who work on contingency fees.

1. Hope for instant pudding2. The supposition that solving

problems, automation, gadgets and new machinery will transform industry

3. Search for examples instead of mapping your own road

4. Our problems are different5. QC department takes care of quality6. We installed quality control

TRAFFIC JAM

LEGAL MOVESLEGAL MOVES You may move into any empty space in front of you. You may move around a person facing you to an empty space.

ILLEGAL MOVESILLEGAL MOVES Any move backwards. Any move around someone facing the same way you are -- (i.e.

you are looking at his/her back.) Any move that involves 2 people moving at once.