TQM 15.760 TOTAL QUALITY MANAGEMENT FOUR LEVELS OF QUALITY FOUR THOUGHT REVOLUTIONS Customers first Continuous Improvement Total Participation Societal Learning ORGANIZATIONAL MANAGEMENT Information & Measurement Systems Education Incentive Systems Organizational ChangeFour Levels of Quality 1. FITNESS FOR STANDARD -inspection oriented -no consciousness to customer/mkt 2. FITNESS FOR USE -Must satisfy customer need for use -Hotel shampoo & body oil 3. FITNESS FOR MARKET -Must achieve low cost as well as 1 & 2 4. FITNESS FOR LATENT REQ'TS -Listening to the voice of the customer -V-8 engine, Swatch -Uncovering latent req't adds value ==> need continuous innovationTQM: Four Thought Revolutions 1. Customer-First Revolution From "Product-out (PUSH what you can do) to "Market-in” (Learn and develop what the market wants)PRODUCT DEVELOPMENT LEVERAGE APPROXIMATELY 75% OF LIFE CYCLE (DESIGN AND MANUFACTURING) COSTS ARE DETERMINED DURING THE PRODUCT DEVELOPMENT PROCESS See Concurrent Design of Products and Processes Whitney & Nevins, et al McGraw-Hill 1989 PRODUCT DEVELOPMENT IN THE JAPANESE AUTO INDUSTRY (COMPARED WITH U.S.): --25% FASTER --50% FEWER ENGINEERING HOURS (EUROPEANS ARE FARTHER BEHIND) see Product Development Performance Clark, K. & Fujimoto, T. HBS Press 1991DEMONSTRATE TO CUSTOMERS: Quality at the Source Process Capability Declining Nonconformities Declining WIP, LT, Space, Flow Dists Operators -cross-trained, doing Prev Maint -presenting on SPC, Setup Reduction-charting probs, processes/methods-trained in JIT/TQCConcurrent Design Competitive Analysis Flexibility of labor and equipment Dedicated Capacity Exact counts in standard containers2. Continuous Improvement Revolution Fundamental Concept: PDCA(Observe, Assess, Design, Intervene) Quality Control:Manage known sources of variation-process control charts-management by exception-ROI control Reactive Quality Management:Problem solving-application of SQC tools(Pareto anlysis, proeess flow chart,fishbone diagrams, histograms) Proactive Quality Management:Finding hidden opportunities MANAGEMENT BY FACT: "IN GOD WE TRUST;ALL OTHERS BRING DATA"QUALITY DECISION TOOLS AND DATA ANALYSIS DEMING: SIX SQC TOOLS THAT EVERYONE SHOULD KNOW AND USE 1. Pareto Analysis 2. Process Flow Chart 3. Fishbone (Cause & Effect) Diagrams 4. Histograms 5. Control Charts 6. Scatter PlotsDonald Berwick "Controlling Variation in Health Care" Subject: Control & Reduction of Variation TQM = customer satisfaction + organ. culture (empowerment) + continuous improvement Concept of variation categorized by -special causes -common causes Identify disconnected alarm systems Beware: local excellence, systemic garbage Tells what (articulately) but not howQUALITY INFORMATION SYSTEMS OBJECTIVE: RAPID FEEDBACK From Customers: -Field personnel reports-Customer interviews & surveys From Competitors/External Studies:-Benchmarking In the Production/Delivery System:Rapid Feedback Systems: Detailed, Comprehensive, Fast -Who are customers/suppliers?-Faster flow times==>less tracking-Tight Feedback Loops Provide Data on: -Defects, Downtime, Warranties, Returns -Inventories, Lead Times, Cycle Times-Injuries, Absenteeism, Turnover-Process Capability, Learning Rates-Vendor Quality-Quality CostsMeasuring QualityCustomer Satisfaction Defect Rates Cost of Poor QualityInventoryProductivityInnovativeness ComplexityOrder Lead Times Manufacturing Cycle TimesProduct Development Cycle TimesInjuriesMachine Downtime Absenteeism and Turnover Changeover time improvementsRate of Product Introduction Rates of Learning and Process Imp.Workforce Training and EducationWorkforce SuggestionsTeamwork, Morale, Pride Vendor CooperationWE HAVE TOOLS FOR TWO TYPES OF DATA: 1. NUMERICAL DATA -HISTOGRAMS -PARETO DIAGRAMS -CONTROL CHARTS -SCATTER PLOTS -PROCESS CAPABILITY 2. LANGUAGE DATA -CAUSE & EFFECT DIAGRAMS -KJ (or “LP” PROCESS (AFFINITY DIAGRAMS) M ANY OF THE LANGUAGE DATA TOOLS ARE NOT WIDELY TAUGHT IN THE W EST.Quality Economics -Macro: International Competitiveness -Micro: Quality/Productivity Relation (Economics of DIRTFT) -Cost of Quality: Careful Analysis and Accounting -Failure Costs -Appraisal Costs -Prevention Investments -Revenue effects of quality Contributions of Taguchi -Quality Loss Function -Two-step process for parameter optimization (control variance and mean) -Orthogonal Arrays for experimental design3. Total Participation Revolution -Total Involvement of CEO (Leadership) -Quality Specialist ----> All Employees -Build Infrastructure: goals, training, promotion, feedback, diagnosis, etc. Customer-driven Requirements Suppliers (Vendor Management) Company-wide Involvement -Manufacturing -Marketing -Engineering (Design of Products, Processes, Systems) -Purchasing -Quality Assurance -Workforce Participation -Distribution and Field Service -PersonnelEMPLOYEE INVOLVEMENT "IF A FIRM THAT UTILIZES THE MINDS OF ONLY 50% OF ITS EMPLOYEES COMPETES WITH A FIRM THAT UTILIZES THE MINDS OF 100% OF ITS EMPLOYEES, WHICH DO YOU THINK WILL PREVAIL?" EI OBJECTIVES: EMPLOYEE INITIATIVE OWNERSHIP ENTHUSIASM LOYALTY EI METHODS: STRONG LEADERSHIP TEAMWORK PROGRAMS RECOGNITION AND REWARDS INDIVIDUAL RESPONSIBILITY TRAINING AND TOOLS INCENTIVESPRINCIPLES OF LEADERSHIP 1. LEADERS LEAD BY EXAMPLE -LEADERS MUST BE ROLE MODELS -LIVE YOUR LIFE AS A LEADER 2. LEADERS LEAD BY THEIR COMMITMENT -STATE CLEARLY YOUR COMMITMENTS -DEMONSTRATE YOUR COMMITMENT -HONOR YOUR COMMITMENTS 3. SET STANDARDS FOR -DISCIPLINE -ETHICS -ENTHUSIASM 4. MAKE EACH EMPLOYEE FEEL THAT HE/SHE MATTERS 5. CELEBRATE/RECOGNIZE ACHIEVEMENTS 6. BE A GOOD LISTENER 7. BE CONSISTENT AND PREDICTABLECONTINUOUS TRAINING AND EDUCATION -General Quality Concepts -Statistical Quality Control -Cost of Quality -Problem Solving -Decision Making -Teamwork -Experimental Design -Parameter Optimization -Customer/Supplier Analysis -Design for Manufacturability WHO GETS WHAT TRAINING? WHO DOES THE TRAINING? WHO DESIGNS THE CURRICULUM? MOTIVATION FOR LEARNINGTQM GOAL: HABITUAL, CONTINUOUS IMPROVEMENT IN PURSUIT OF PERFECT PRODUCTION -Zero Defects -Zero Inventories -Zero Lead Times & Cycle Times -Zero Injuries -Zero Machine Downtime -Zero Customer Returns -Zero Warranty Costs -Zero Absenteeism -Process Capability > 2 and incr. -Rapid Product Introduction -Rapid Learning -Teamwork -High Morale -Pride4. Societal Learning Revolution Success stories need wide diffusion (Baldridge, Deming Awards) In Japan: progression through -Process