BUSMGMT 3230 FINAL CHP 1 What does the quality of a product or a service mean The level of satisfaction by the customer How do the dimensions of conformance to specification value fitness for use support and psychological impressions relate to customer satisfaction o Conformance to specifications processes that produced the service or product that are really being judges o Value0 how well the service or product serves its intended purpose at a price customers are wiling to pay o Fitness for Use consider the convenience of a service mechanical features of a product or other features such as appearance durability reliability o Support want financial statements to be correct don t like if warrant claims are delayed or ads are misleading o Psychological impressions atmosphere image or aesthetics What three key principles constitute the definition and philosophy of TQM Customer satisfaction customers are satisfied when their expectations regarding a service or product has been met or exceeded Employee involvement o Cultural change o Teams Problem solving teams small groups of supervisors and employees who meet to identify analyze and solve process and quality problems Special purpose teams address issues of paramount concern to management labor or both Self managed teams takes worker participation to its highest level Continuous Improvement o Plan document the process that needs improvement and then set qualitative goals and ways to achieve those goals o Do implements and monitor progress o Study analyzes data collected during the do step to find out how closely the results correspond to the goals in the plan step o Act if it work It then becomes he standard process Can teams be effective without employee empowerment No because all types of teams use some amount of employee empowerment which moves responsibility for decisions further down the organizational chart to the level of employee actually doing the job What is six Sigma Where did it come from Comprehensive and flexible system for achieving sustaining and maximizing business success by minimizing defects and variability in processes Driven by a close understanding of customer needs disciplined use of facts data and statistical analysis and diligent attention to managing improving and reinventing business processes 5 step process o Define determine characteristics of the process s output that are critical to customer and satisfaction and identify any gaps between these characteristics and the processes capabilities o Measure quantifies the work the process does that affects the gap Select what to measure identify data sources and prepare a data collection plan o Analyze use the data on measures to perform process analysis to determine where improvements are necessary o Improve modifies or redesign existing methods to meet the new performance objectives Implement the changes o Control monitor the process to make sure that high performance levels are maintained What is the Baldrige Performance Excellence Program Leadership leaders actions guide and sustain the organization Strategic Planning how org establishes its strategy to address its strategic challenges Customer Focus how org offers products customers want Measurement Analysis and Knowledge Management how they measure and analysis performance at all levels Workforce Force how they engage compensate and reward workers Operations focus how systems work and their key processes to deliver Results process and improvements The Baldrige Performance Excellence Program helps firms define what customer value quality means for the Are practices that achieve quality also ethical Environmentally friendly Socially responsible What are the benefits 1 2 ISO 9001 2008 documentation standards Addresses quality management by specifying what the firm does to fulfill the customers quality requirements and applicable regulatory requirements while aiming to enhance customers satisfaction and achieve continual improvements ISO 14000 2004 environmental management system Specifies what he firm does to reduce harmful effects on the environment caused by activities and achieve continual improvement o Environmental management system o Environmental performance evaluation o Environmental labeling o Life cycle assessment 3 ISO 26000 2010 social responsibility guidelines What are the costs in managing for quality Human rights labor practices environment fair operating practices consumer issues community involvement and development and organization 4 Benefits of ISO Certification External benefits potential sales advantage that companies in compliance have Internal benefits increase in profitability and marketing Provides them with a jump start in pursuing TQM programs 1 Prevention associated with preventing defects before they happen Include costs of redesigning the process to remove the causes of poor performance redesigning the service or product to make it simpler to produce training employees for continuous improvement Firms must invest additional time efforts and money Should be maximized 2 Appraisal Costs incurred when the firm assess the level of performance of its processes AS the costs of prevention increase and performance improves appraisal costs decrease b c fewer resources are needed for quality inspections Internal Failure costs result from defects that are discovered during the production of a service or product 3 Rework incurred if some aspect of a service must be performed again or if a defective item must be rerouted to some previous operation to correct the defect Scrap incurred if a defective item is unfit for furthering processing 4 External Failure costs arise when a defect is discovered after the customer receives the service or product Most difficult to estimate Should be minimized Warranty written guarantee that the producer will replace or repair defective parts or perform the service to the customers satisfaction Defects should be identified internally That is why more money should be put into prevention so failures don t happen later on How can a product or service be designed to minimize external failure costs according to Genichi Taguchi Quality loss function is zero when the quality characteristic of the service or product is exactly on the target value and that the quality loss function rises exponentially as the quality characteristic gets closer tot eh specification limits Managers should continually search for ways to reduce al variability from the target value in the