Introduction to Materials Management
Ninth Edition
Chapter 17
Total Quality Management
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What is Quality?
• Quality
– User satisfaction
– Goods or services satisfy the needs and expectations
of the user
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Quality and Product Planning
• Products or services firm will market
• Product planning
– Market segment to be served
– Level of performance expected
– Price to be charged
– Expected sales volume
• Specified by management per wants and needs of market
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Quality and Product Design
• General specifications from marketplace
– Expected performance, appearance, price, volume
– Form-fit-function
• Product designers build quality level into product
– Materials to be used, dimensions, tolerances, product
capability, service requirements
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Quality and Manufacturing
• Meeting minimum specifications of product design
• Tolerances—the amount of allowable variation around the
desired amount
• Less variation from the nominal value the better
• Strive for excellent products
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Quality and Use
• Fitness for use
• Performance—reliability, durability, maintainability
• Features and options
• Conformance
• Warranty
• Service
• Aesthetics
• Perceived quality
• Price
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Product Development Cycle
Figure 17.1 Product development cycle
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Total Quality Management (T Q M)
“is based on the participation of all members of an
organization in improving processes, goods, services, and
the culture in which they work.”
A P I C S Dictionary, 16th
edition
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T Q M—Basic Concepts
1. A committed and involved management
2. Focus on the customer
3. Total employee involvement
4. Continuous process improvement
5. Supplier partnering
6. Performance measures
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Management Commitment
• Vision statement
– What the organization will become in 5 to 10 years
• Mission statement
– Who we are, who are our customers, what we do,
how we do it
• Quality policy
– How products and services are provided
• Strategic plan
– T Q M goals and objectives and how to achieve them
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Customer Focus
• Meeting and exceeding customer expectations
• External customers—purchase goods or services
• Internal customers—people or departments who receive
output from another person or department
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Customer Requirements
1. High quality level
2. High flexibility to change volume, specifications and
delivery
3. High service level
4. Accurate lead times
5. Low variability in meeting targets
6. Low cost
Customers expect improvements in all requirements
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Employee Involvement
• T Q M is everyone’s responsibility
• Employees are expected to do their jobs and to work at
improving their jobs
• Motivation needs employee commitment to the
organization
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Commitment to T Q M
1. Training
– Job specific skills
– Cross-trained on other jobs
– Tools of continuous improvement, problem solving, S P C
2. Organization
– To keep close contact with suppliers and customers
3. Local ownership
– Ownership of their processes
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Empowerment
• Giving people the authority to make decisions and take
action in work areas without prior approval
• Motivation to take ownership of jobs to accomplish the
goals and objectives of the organization
• Personnel involved in a particular process are best
source of information for how to improve that process and
eliminate waste
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Teams
• Move beyond the contribution of individuals
• Sum of the total effort is greater than individual effort
• Requires skill and training
• Fundamental part of T Q M
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Communication
• Disseminating T Q M concepts across all levels of
organization
• Goals, purposes, and benefits
• Fostering continuous improvement, maintaining morale,
and motivating to be involved
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Continuous Process Improvement
• P D C A Cycle (Deming circle)
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Supplier Partnerships
• Used in lean production and T Q M
• Provide clear requirements
• Pay fairly and on time
• Applies to both external and internal suppliers
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Performance Measures (1 of 2)
“What gets measured gets done”
- Tom Peters
• Discover which processes need improvement
• Evaluate alternative processes
• Compare actual performance with targets
• Evaluate employee performance
• Show trends
• Improve decision-making
• Achieve consensus
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Measurements (1 of 2)
• Need to give valid and useful feedback
– Quantity
– Cost
– Time/delivery
– Quality
▪ Function
▪ Aesthetics
▪ Accuracy
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Performance Measures (2 of 2)
• Simple
• Easy to understand
• Relevant to the user
• Visible to the user
• Preferably developed by the user
• Designed to promote improvement
• Few in number
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Possible Measurement Areas
• Customer • Production
– # of complaints – Inventory turns
• Scheduling • Suppliers
– # of changes – Billing accuracy
• Material planning • Sales
– % of orders released – Expense to revenue
w/no shortages • Operating costs
• Capacity planning – Ratio of value-added
– % of W/Cs overloaded cost to total cost
• Inventory control • Data accuracy
– % increase in turns – B O M accuracy
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Measurements (2 of 2)
• Key performance indicators (K P I)
– Specific measures linked to strategic objectives
• Balanced scorecard
– List of financial and operational measurements used
to evaluate performance
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Costs of Failure
• Internal failure costs • External failure costs
– While goods are in – After customer
production receives the goods
– Scrap – Warranty/field service
– Rework – Replacements
– Spoilage – Other costs to satisfy
– Disappear with no the customer
rejects – Costliest
– Disappear with no
rejects
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Costs of Controlling Quality
• Prevention costs • Appraisal costs
– Training – Inspection
– Statistical process – Quality audits
control – Testing
– Machine maintenance – Calibration
– Design improvements
– Quality planning
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Impact of Quality Improvements
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Variation
Figure 17.3 Frequency distribution (histogram) of shaft diameters
All things vary—The question is how much variation is
acceptable?
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Random Variation (1 of 2)
1. People—poorly trained v s. well-trained
2. Machine—well maintained v s. poorly maintained
3. Material—consistent raw materials v s. poor quality
4. Method—changes will alter quality
5. Environment—effect of temperature, humidity, dust
6. Measurement—incorrect adjustments and poor
performance
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Random Variation (2 of 2)
• No way to alter random variation except to change
process
• If process products too many defects, it must be changed
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Assignable Variation
• Specific reason for cause of variation
– Tool wear, movement
– Operator error
– Changes in the process
– Changes to surrounding conditions
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Statistical Control
• Detects presence of assignable causes of variation
• Helps select processes capable of producing required
quality with minimal defects
• Monitors process to be sure it continues to produce at
required quality and no assignable cause of variation
exists
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Patterns of Variability (1 of 2)
• Determine distribution or pattern of variability
• Sampling process
• Distribute values of a large amount of data
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Patterns of Variability (2 of 2)
• Shape
– Normal distribution—bell curve
– No bias left or right
• Center (mean)
– Computed as the average
– Represented by Greek letter ‘mu’
• Spread
– Range and standard deviation
– Measured and represented by Greek letter or sigma
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Normal Distribution
Figure 17.4 Normal distribution
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Process Capability (1 of 5)
• Compares the spread of a process with the specification
limits
– L S L—lower specification limit
– U S L—upper specification limit
– Specification doorway = U S L − L S L
• A spread of the process smaller than the specification
doorway is said to be capable
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Process Capability (2 of 5)
Figure 17.5 Effect of process spreads
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Process Capability (3 of 5)
Figure 17.6 Effect of shift in mean
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Process Capability (4 of 5)
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Process Capability (5 of 5)
• The capability of the process is a measure of the process
spread compared to the specification limits
• A process must be selected that can meet the
specifications
• Processes can produce defects in two ways:
– Having too big a spread
– A shift in the average
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Process Capability Index C sub p (1 of 2)
• If the is greater than one, then the process is capable
of producing 99.7% of parts within tolerance
• Many companies use a of 1.33 or 2 since processes
may shift
• Note: assumes the process is centered
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Process Capability Index C sub p (2 of 2)
Figure 17.7 C p index greater than 1.
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C sub p —Example Problem
The specifications for the weight of a chemical in a
compound is grams. If the standard deviation of
the weighing scales is grams, is the process
considered capable?
= 0.83
Since 0.83 is less than one, the process is not capable.
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Process Capability C sub pk Index
or
C sub pk Value Evaluation
Less than +1 Unacceptable process
+1 to +1.33 Marginal process
Greater than +1.33 Acceptable process
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C sub pk Index
Figure 17.8 index
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C sub pk —Example Problem (1 of 2)
A company produces shafts with a nominal diameter of
and a tolerance of on a lathe. The process has a
standard deviation of For each of the following cases
calculate the and evaluate the process capability.
a. A sample has an average of .997.
b. A sample has an average of .998.
c. A sample has an average of
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C sub pk —Example Problem (2 of 2)
a.
is less than 1. Process is not capable
b.
is 1. Process is marginal
c.
is 1.33. Process is capable
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Process Control
• Attempts to prevent defects by showing when standard
deviation increases or when there is a significant change
in the average, there is an assignable cause for variation
• Process must be designed so spread will be small
enough to produce a minimum number of defects
• This variation is monitored on a control chart
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Control Charts
• Run chart—Visual description of what is happening with
the process
• X-bar (averages) chart—Average, X-bar, is used to
evaluate the stability of the process level
• R chart—Range, R, is used to evaluate the stability or
variability within a process
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Run Charts
Figure 17.9 Run chart
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X bar (X-bar) and R Charts
• Small samples (3 - 9 pieces) are taken on a regular basis
to find the average and range (R) of the sample
• These values are then plotted on X-bar and R charts
• Samples are used because average values will indicate a
change in variation much faster.
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Control Limits
• Lines on a control chart to help in assessing the
significance of the variation produced by the process.
• Set so that there is a 99.7% probability that if the process
is in control, the sample value will fall within the control
limits.
• Readings (X-bar or R) outside of these limits indicate
assignable cause of variation
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X-Bar and R Control Charts
Figure 17.10 X-bar and R control chart
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Figure 17.10
Interpretation
• Left side of x-bar chart is in control
• Right side of x-bar chart is out of control
– Find out what went wrong
– Correct the problem
– Prevent the problem from re-occurring
• R chart is in control
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Interpreting Control Charts
• A shift in the average (X-bar)
– Something has moved
– Change in method or material
• A change in the spread of distribution (R)
– Loose tools
– Change in method or material
– Worn tools
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Control Charts for Attributes
• Attributes—quality characteristics that conform to
specifications or do not
• Cannot be measured but can be counted
• Plotted with p chart
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Other Quality Control Tools
1. Pareto diagrams
2. Check sheets
3. Process flow diagrams
4. Scatter charts
5. Cause-and-effect (fishbone) diagrams
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Pareto Diagrams
• Histograms reorganized in descending order
– Typically problems or defects (scrap, customer
complaints)
• Identifies most important issues
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Check Sheets
• Lists of problems
• Occurrences are checked
on the sheet
• Number of checks shows
major issue
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Process Flow Diagrams
• Show in detail the steps required to produce the product or
service
• Data collected to determine problems
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Scatter Charts
• Shows the relationship
between two variables
– Temperature and
strength
– Length of stay and
satisfaction
– Price and number sold
– Study hours and grade
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Cause-and-Effect (Fishbone)
Diagrams (1 of 2)
• Plots potential causes of an identified problem
• Specific problems branch out from major area
• Sorts by category
– People
– Machine
– Method
– Material
– Measurement
– Environment
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Cause-and-Effect (Fishbone)
Diagrams (2 of 2)
Figure 17.11 The structure for a cause-and-effect diagram.
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Sample Inspection
• 100% inspection
– Test every unit
– When cost of inspection cost of loss
– When its easy to do or part of the process
– When the cost of failure is exceptionally high
– Medical, aerospace industries
• Acceptance sampling
– Take a sample of product to estimate overall quality
– Accept or reject the entire batch
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Reasons for Sampling Inspection
• Testing the product is destructive
– Pull strength of rope, sweetness of apple
• Not enough time for 100% inspection
– Would delay shipment
• It is too expensive to test all of the batch
– Market surveys
• Human error is estimated to be as high as 20% when
performing long-term repetitive testing
– Subjectivity is involved
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Conditions Necessary for Sampling
Inspection
• All items must be produced under similar or identical
conditions
– Same machine, same farm
• A random sample of the lot must be taken
– Every item has equal chance of being selected
• The lot to be sampled should be homogeneous mixture
– Start, middle and end of the batch
• Batches to be inspected should be large
– Need enough samples to be accurate
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Sampling Plans (1 of 2)
• A Q L—acceptable quality level
– Minimum allowable number or % of defects to accept
the lot
• Consumer’s risk
– The probability of accepting a bad lot
• Producer’s risk
– The probability of rejecting a good lot
• Cost
– Inspection costs money
• The objective is to balance the consumer’s risk and the
producer’s risk against the cost of the sampling plan
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Sampling Plans (2 of 2)
Figure 17.12 Sampling plan
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I S O Standards
• International Organization for
Standardization—Non-governmental organization based
in Geneva Switzerland
• “I s o s” = Greek for equality
• Standards and certifications in various areas
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I S O 9000 Principles
1. Customer focus
2. Leadership
3. Engagement of people
4. Process approach
5. Improvement
6. Evidence-based decision making
7. Relationship management
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I S O 9001
• Applies to any organization seeking
– Sustained success through implementation of quality
management system
– Confidence in ability to consistently provide products/
services which conform to requirements
– Confidence in supply chain to meet requirements
– Improvement in communication through common
understanding of quality management vocabulary
– Ability to perform conformity assessments
– Provide training/assessment in quality management
– Develop related quality standards
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I S O Documentation Pyramid
Figure 17.13 Documentation pyramid example
1. Quality manual, indexed
to Level 2
2. What the firm does to
meet Level 1 policies,
indexed to Level 3
3. Work instructions and
procedures
4. Records of what was
done
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I S O 26000
• Guidelines for sustainability and social responsibility
– Organization governance
– Human rights
– Labor practices
– The environment
– Fair operating practices
– Consumer issues
– Community involvement and development
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I S O 14001
• Structure and system to help companies minimize harmful
effects on the environment
– Framework for environmental management system (E M
S)
– Identify and control impact of activities, products, and
services on the environment through life cycle
– Improve environmental performance
– Contribute to sustainability
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Benchmarking
• Compares performance to a “best in class” organization
• Looks outward to see what competitors and excellent
performers outside the industry are doing
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Benchmarking Steps
1. Select the process to benchmark
2. Identify an organization that is best in class in performing
the process to study
3. Study the benchmarked organization
4. Analyze the data
– Comparing the process
– Measuring the performance to a standard or metric
▪ Quality, response time, cost per order
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Six Sigma (1 of 4)
• Scope—Systematic reduction of process variability
• Quality definition—Defects per million
• Purpose—Improve profits by reducing variation
• Measurement—Defects per million
• Focus—Locate and eliminate sources of process error
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Six Sigma (2 of 4)
• Striving for failure rates less than 3.4 out of one million
possibilities
• Focus on improving all business processes
• Initiated by upper management
• Middle management translates business goals into
process goals and measures
• System of problem solving with projects and project
managers
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Six Sigma—D M A I C
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Six Sigma Responsibilities
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Six Sigma Project
1. Select the appropriate metrics
2. Determine how metrics will be tracked
3. Determine current baseline performance
4. Determine input variables
5. Determine changes needed to input variables
6. Make the changes
7. Determine if changes positively affect output
8. Establish controls at the new level
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Six Sigma (3 of 4)
• Achieved when process capability is equal to 2 or greater
• Specification doorway is twice the width of the six sigma
process spread, and the long-term failure rate would be
3.4 parts per million.
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Six Sigma Training
• White belts—basic level
• Yellow belts—principles, problem-solving support
• Green belts—advanced analysis
– Lead projects with savings of $10,000
• Black belts—experts, train others
– Lead projects with savings of $100,000
• Master black belts—highest level, shape strategy and
metrics
– Lead projects with savings of $1,000,000
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Six Sigma (4 of 4)
• Extension of statistical process control to business
processes
• Customer focus
• Well-defined steps for business process improvement
• Leads to:
– Reduced waste
– Decreased costs
– Improved opportunities
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Quality Function Deployment
• Decision-making technique for development of new
products or improvement of existing products
• Helps ensure customer wants, needs and expectations
are in design
• Voice of the customer (V O C)
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House of Quality—Example
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Relationship of Lean Production, T Q M,
and E R P
• Lean production seeks to eliminate waste, decrease
non-value-added activities
– Inward looking
• T Q M places emphasis on customer satisfaction
– Outward looking
• E R P objective is to maximize use of resources and
provide required level of customer service
• All are involved in satisfying the customer
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E R P, Lean Production, T Q M
Figure 17.17 E R P, Lean Production, and T Q M
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