THE PHILOSOPHY OF TQM

In the two sessions today and in a third session, if necessary, we shall be looking at: The quality philosophies of Deming Crosby Juran & Taguchi The PDSA cycle The costs of Quality Measuring quality costs & The Malcolm Balrige Award

 The Quality Philosophies of the Gurus The common thread in the philosophies of all the gurus is that quality improvement is a continuous process and is never static. The differences in their philosophies are more a matter of emphasis rather than of substance.

 W. Edwards Deming Our first and best known Guru is W. Edwards Deming. He provides 14 points that form the basis for his theory of quality improvement. The PDSA cycle is also his contribution to the framework of quality improvement. The 14 points of his philosophy are:

1. Create and Publish the Aims and Purposes of the Organization 2. Learn the new philosophy 3. Understand the purpose of Inspection 4. Stop awarding business based on Price alone 5. Improve constantly and forever the system 6. Institute training 7. Teach and institute Leadership

 8. Drive out Fear, Create Trust and Create a climate for Innovation 9. Optimize the efforts of Teams, Groups and Staff areas 10. Eliminate exhortations for the workforce 11. a. Eliminate numerical quotas for the workforce b. Eliminate Management by Objective 12. Remove barriers that rob people of pride of workmanship 13. Encourage education and self-improvement for everyone 14. Take action to accomplish the transformation.

 Learn the new philosophy Organizations must seek never-ending improvement and refuse to accept nonconformance. Customer satisfaction is number one priority. The organization should concentrate on defect prevention rather than defect detection. Management, the workers, staff and union must learn this new philosophy.

 Understand the purpose of Inspection Management must understand that the purpose of inspection is to improve the process and reduce the cost. Mostly, mass inspection is both costly and unreliable. Wherever possible, it should be replaced by never-ending improvement using statistical techniques. Every effort should be made to reduce and then eliminate acceptance sampling. Mass inspection is managing for failure and defect prevention is managing for success.

 Eliminate numerical quotas for the workforce and numbers in MBO The focus should be on quality and not quantity of work done. Quotas encourage poor workmanship in order to meet them. Quotas should be replaced with statistical methods of process control. Similarly, instead of MBO, management must learn the capabilities of the processes and how to improve them. Management by numerical goals is an attempt to manage without knowledge of what to do.

 Phillip B. Crosby Crosby argued that doing it right the first time is less expensive than the costs of detecting and correcting non-conformities. His first book, in 1979, Quality is Free has been translated into 15 languages. In 1984, he authored Quality Without Tears which contained his four absolutes of quality management.

 These are: 1. Quality is conformance to requirements 2. Prevention of non-conformance and not appraisal, is the objective 3. The performance standard is zero defects; not thats close enough 4. The measurement of quality is the cost of nonconformance.

 Joseph M. Juran Juran emphasized the necessity for management at all levels to be committed to the quality effort with hands-on involvement. The Juran Trilogy for managing quality is carried out by three inter-related processes of planning, control and improvement. The first edition of Jurans Quality Control Handbook was published in 1951.

 Planning begins with the external customers. Interacting with them, defining the core customers in case of numerous ones and establishing quality goals is the essential first step. Identifying the internal customers and their needs is the next step. Developing the product or service that responds to customer needs is then done. Approaches that include QFD, Taguchis quality engineering and quality by design are used for this.

 The third step is to develop the processes to produce the product/service package. Facilities, training, operations planning and control form part of this exercise. The final step is transferring plans to operations. Process validation is done to ensure that the process will produce the product/service with a high degree of validation, meeting all the requirements.

 Control is used by the operating arm of the organization to meet the product, process and service requirements. It uses the feedback loop and consists of the following steps: 1. Determine items/subjects to be controlled and their units of measure. 2. Set goals for the controls and determine what sensors need to be put in place to ensure the product, process or service. 3. Measure actual performance 4. Compare actual performance to goals 5. Act on the difference

 Statistical process control (SPC) is the primary technique for achieving control. SPC tools like Pareto diagrams, flow diagrams, cause and effect diagrams control charts etc are used to determine if the process is capable and centered.

 Improvement is the third part of the trilogy that aims to attain levels of performance that are significantly higher than current levels. There are four primary improvement strategies Repair, Refinement, Renovation and Reinvention. Proper integration of these strategies will produce never-ending improvement.

 Repair a simple strategy: anything broken is fixed so that it functions as designed. This is essentially a short term strategy which does not improve the process over the original design. Refinement Activities that continually improve a process that is not broken, usually on an incremental basis. This is the underlying principle of Kaizen. It needs to be made part of everyday life in the organization to succeed.

 Renovation - The strategy results in major or breakthrough improvements. Innovation and technological advancements are key factors in this approach.
Reinvention is the most demanding improvement strategy. It requires that a fresh start to be made in devising a method/product/service to satisfy the customers need.

 Genichi Taguchi Taguchi developed the loss function concept that combines cost, target, and variation into one metric. Since the loss function is reactive, he developed the signal to noise ratio as a proactive element. We shall study his approach in greater detail in some of the later sessions.

 The PDSA Cycle The Plan-Do-Study-Act cycle is an effective improvement technique developed by Deming. It can be represented as below: 1. Identify the opportunity 2. Analyze the current process 3. Develop the optimal solution(s) 4. Implement changes 5. Study the results 6. Standardize the solution 7. Plan for the future

Identify the opportunity

Plan for the future Analyze the process

Act Standardize the solution

Plan Develop optimal solutions

Study

Do

Study the results

Implement

 Costs of Quality The effect of any economic activity in an organization has to be finally reflected in its cost and its impact on the profitability of the operation. Quality is no exception and the value of quality must be based on its ability to contribute to profits. Quality costs are defined as those costs associated with the non-achievement of product/service quality as defined by the requirements established by the organization and its contracts with customers and society.

 Quality costs are spread throughout the organization and a comprehensive cost program identifies and highlights hidden and buried costs in all functional areas. The costs can broadly be classified into four areas: 1. Preventive costs 2. Appraisal costs 3. Internal failure costs 4. External failure costs

 1. Preventive Costs 1.1 Marketing/Customer/User Costs that are incurred in the accumulation and continued evaluation of customer and user quality needs. Market research, customer surveys, focus groups and related costs are sub-elements. 1.2 Product/Service/Design Development Costs that are incurred to translate user needs into reliable quality standards etc prior to the release of authorized documentation for initial production. Field trials, product design qualification tests, design quality progress reviews etc are sub-elements of this component.

 1.3 Purchasing Costs that are incurred to assure conformance to requirements of supplier inputs and to minimize the impact of supplier nonconformance on the quality of the final product/service. Vendor ratings, technical review of items for purchase and supplier quality planning are sub-elements of this cost.
1.4 Operations Cost incurred in ensuring the capability and readiness of operations to meet the quality standards and requirements. Quality control planning and quality education of operating personnel, operations process validation, design and development of quality measurement and control equipment and collecting quality costs are some of the elements in this area.

 1.5 Quality administration Costs are incurred in the overall administration of the quality function. Administrative salaries performance reporting, quality education, quality audits, documenting and evaluating quality costs are all part of this cost.

 2. Appraisal costs 2.1 Purchasing Appraisal costs 2.2 Operations Appraisal costs 2.3 External appraisal costs 2.4 Review of Test & Inspection data 2.5 Miscellaneous quality evaluations

 . Internal Failure costs 3.1 Product/service design failure 3.2 Purchasing failure 3.3 Operations failure

 4. External failure costs 4.1 Complaint investigation of customer or user service 4.2 Returned goods 4.3 Retrofit and recall costs 4.4 Warranty claims 4.5 Liabilities 4.6 Penalties 4.7 Customer or user goodwill 4.8 Lost sales

 Measuring and reporting quality costs The repository of all cost information in any organization is the accounting system and the books of accounts. Accounting systems, as designed, are good at generating data on costs for the traditional heads of accounts in a company. The type of costs that would be required in a TQM program, as listed above, may not be readily or easily available from such a system.

 So, in most cases the relevant cost data need to be designed into the existing system through the use of appropriate classifications and codes so that the information can be extracted routinely. Furthermore, the accounting personnel need to be trained to bifurcate overall costs of an activity into the relevant quality components before data entry and storage so that meaningful extraction is possible.

 The first step would be to build a set of quality cost bases the baseline or datum against which improvements and impact of changes can be measured. Typically, the bases are labor, production, sales with quality cost obtained as an index quality cost/labor hour, qc/$production cost, qc/$sales etc. The next step would be to extract real time data and accumulate the costs in the required heads of quality costs (preventive, appraisal, etc).

 The total costs so extracted are then used to calculate the indices in the datum and compared with the datum values. The difference report and exception report gives a direction to the further effort needed to achieve improvement in the quality program. Consistently improved figures over the datum values over a period of time would indicate that a paradigm shift in the quality level has occurred. It may be an indicator to management to set these improved figures as the datum and use the PDSA cycle to take the program to the next level.