Quality Management

Quality
– refer to the ability of the product and services to meet consistently the expectation
and requirement of the customer.

1970 -1980 – US business focused more on cost and productivity than quality.
– That give the Japanese the opportunity to capture a significant share in the
market by focusing in the quality.

Evolution of Quality
Prior to Industrial revolution
– Skilled craftsman performed all stages in the production
During 1950’s
– The quality movement evolved in quality assurance.
– Quality efforts focus not only manufacturing but also in product design and
incoming raw materials.

During 1960’s
– The “zero defect” evolved and gain favor.
– Focus on employee motivation, awareness and the expectation of perfection from
employee.
During 1970’s
– Quality assurance methods gained increasing emphasis in services include
government operation, health care, banking and travel industry.

During 1980’s
– Focus on improve quality and lowering cost
ISO’s (International Organization for Standardization ) was born
– Promotes worldwide standard for the improvement of quality, productivity and
operation efficiency through a series of standard and guidelines.
– Increase the level of quality, reliability, productivity and safety in making product
and services affordable.
– Helps facilitate international trade
– Provide governments with a base for health, safety and environmental legislation.
– Aids in transferring technology

Two well known ISO 8. Mutually beneficial supplier

a. ISO 9000
– A set of international standards
on management and quality
assurance, critical to
international business.
Categories:
1. System requirements
2. Management requirements
3. Resources requirements
4. Realization requirements
5. Remedial requirements
8 Quality management principles:
1. A customer fucos
2. Leadership
3. Involvement of people
4. A process approach
5. A system approach to
management
6. Continual improvement
7. Use of factual approach in
decision making
relationship
a. ISO 14000
– A set of international standards
that focus on assessment of a
company’s environmental
performance.
Three major areas;
a. Management system
– Focus on system development
and integration of environmental
responsibility into business
planning
a. Operation
– Consumption of natural
resources and energy
a. Environmental system
– Measuring, assessing and
managing emissions, effluents
and other waste streams.
The GURUS of Management

1. Walter Shewhart
– Key contribution : Control chart, variance reduction
– Known as father of statistical control
– Develop methods for analyzing output of process to determine when corrective
action was necessary.
– Focus primarily on technical and process

1. W. Edwards Deming
– Key contribution : 14 points (Key element), special vs common cause of variation
– The cause of inefficiency and poor quality is the system, not the employees. –felt
that it was the managements responsibility.
– Stressed the need to reduce variation in output (deviation from standard), which
can be accomplished by distinguishing between special causes of variation (i.e.
correctable) and common causes of variation (i.e. rondom)
– Continual improvement and profound knowledge
Profound knowledge includes;
a. An appreciation for a system
b. A theory of variation
c. Theory of knowledge
d. Psychology

Demings 14 points
1. Create constancy purpose towards improvement of product and services
2. Adopt new philosophy
3. Cease dependence on mass inspection (prevent defect rather than detect defect)
4. Eliminate supplier that cannot qualify with the statistical evidence of quality.
5. Find problem and solve it
6. Institute modern methods on job training
7. Management take action on report for improvement
8. Drive out fear, so that everyone may work effectively
9. Breakdown barrier between department
10.Improving productivity by improving methods
11.Eliminate work standard that prescribe numerical quotas
12.Remove barriers that stand between the hourly worker and his right to pride of
workmanship
13.Institute a vigorous program of education and training
14.Create a structure in top management that will push everyday on the above stated 13
points.

1. Joseph M. Juran
– Contributions: Quality is fitness –for- use, Quality Trilogy
– Quality begins by knowing what customer wants
– Quality is fitness –for- use - believes that 80% of quality defect are management
controllable and has the responsibility to correct them.
– Quality Trilogy (quality planning, quality control, quality improvement)

1. Armand Feigebaum
– Contributions: Quality is a total field, the customer defines quality
– Recognized that quality is not simply a collection of tools and technique but a “
total field.”

1. Philip B. Crosby
– Contributions: Zero defect, Do it right at the first time
 1. Kauro Ishikawa
– Contributions: Cause-and-effect diagram, quality circles
– Cause-and-effect diagram – fish bone analysis ( problem- solving technique)
– quality circles –group discussion on quality
– Make a quality control “ user friendly” for worker

1. Genichi Taguchi
– Contribution: Taguchi loss function
– Formula in determining the cost of poor quality

1. Taiichi Ohno and Shigeo Shingo

– Continuous improvement

Product Quality is often judge on 8 dimensions of quality

1. Performance – main characteristic of the product and services
2. Aesthetics – appearance, feel smell, taste
3. Special features – extra characteristic
4. Conformance – how well a product and services corresponds to design specifications
5. Reliability – consistency of performance
6. Durability – the useful life of the product or services
7. Perceived quality- indirect evaluation of quality (i.e. reputation)
8. Serviceability – handling complaints or repairs.

Service Quality is often judge on 7 dimensions of quality

1. Convenience – the availability and accessibility of the service
2. Reliability – the ability to perform a service dependably, consistently and accurately.
3. Responsiveness – the willingness to help the customer in unusual situations and to
deal with problems
4. Time- the speed with which service is delivered
5. Assurance – the ability to convey the trust and confidence
6. Courtesy – the way the customer are treated
7. Tangible – physical appearance of facilities, equipment also ambiance

2. Design
Determinants of Quality 3. Procurement
1. Design 4. Production/operation
2. How well it conform with the design 5. Quality assurance
3. Ease of use 6. Packaging shipping
4. Service after delivery 7. Marketing and sales
8. Customer services
Consequences of Poor Quality
1. Loss of Business The cost of Quality
2. Liability 1. Appraisal cost
3. Productivity – Cost related to measuring,
4. Cost evaluating and auditing
1. Prevention Cost
Benefits of Good Quality – Cost related to reducing the
1. Ability to command premium price potential for quality problem
2. Increased in market share 1. Failure cost
3. Greater customer loyalty – Cost are incurred by defective
4. Lower liability cost parts or products by faulty
5. Higher productivity service
6. High sales 2 Kinds
7. Few complaint a. Internal failure cost – cost on
8. Low cost defective parts occurred
9. High profit during production
b. External failure cost – cost
Key areas of responsibility in Quality incurred/ contributed by
1. Top management suppliers
Total Quality Management (TQM)
– Is a philosophy that involved everyone in the organization in a continual effort to
improve quality and achieved customer ‘s satisfaction.

Three Key’s
1. A never ending push to improve which refer to as continuous improvement
2. The involvement of everyone in the organization
3. Customer satisfaction

Elements of TQM
1. continuous improvement
2. competitive bench marking
3. employee empowerment
4. team approach
5. decision on facts
6. knowledge tools
7. supplier quality
8. quality at source
9. promote TQM at all times

Process improvement
– a systematic approach of improving a process
Steps:
Map the process – collection of info and data
Analyze the process
Redesign the process
Implement the process
Audit the process

Quality Tools
1. Flow chart
– A diagram of the steps in a process
1. Check sheet
– a tool for organizing and collecting data; a tally of problems or other events by
category
2. Histogram
– A chart that shows empirical frequency distribution
1. Pareto chart
– a diagram that arrange a categories from highest to lowest frequency occurence
2. Scatter diagram
– A graph that shows the degree of relationship between two variables
1. Control Chart
– A statistical chart of time order values of a sample statistic
1. Cause and effect diagram
– A diagram that organize a search for cause(s) of a problem; also known a fish
bone analysis

Methods in Generating idea in TQM

1. Brainstorming – technique of generating free flow of ideas in a group of people
2. Affinity diagram – a tool used to organized data in to logical categories
3. Quality circle – groups of workers who meet to discuss ways of improving products
4. Interviewing- technique for identifying problems and collection of information
5. Benchmarking – process of measuring performance against the best in the same or
another industry.
6. 5W2H approach – asking on the current process can lead into ideas to improve it

Supply Chain Management

Supply chain

– is the sequence of organizations – their facilities, functions, activities – that are involved in
producing and delivering a product or services.
– The sequence begins from supplier of raw materials and extended all the way until it reach its
customer
– Are sometimes referred as value chain

Two (2) components;

1. Supply component
– Start at the beginning of the chain and end with the internal operation of the organization
1. Demand component
– Start at the point where the organization’s output is delivered to its immediate customer and
ends with the final customer in the chain.

Organizations in the supply chain are; 3. Inventory mgt

4. Information mgt
1. Customer 5. Quality assurance
2. suppliers 6. Scheduling
7. Production
Functions and activities includes; 8. Delivery
9. Customer services
1. Forecasting
2. Purchasing

Three (3) kinds of movement in these system;

1. The physical movement of materials

2. Generally on the direction to the end of the chain
3. Exchange information which moves in both direction along the chain

Supply Chain Management (SCM)

– Is the strategic coordination of business functions within the business organization and through-
out its supply chain for the of integrating supply and demand management.

Goal of supply chain management

– Is to link all components of the supply chain so that market demand is met as efficiently as
possible across the entire chain.

Two (2) types of decision relevant to SCM

1. The strategic decision – are design and policy decisions

2. The operational decision – relate to day to day activities; managing everything in accordance
with the strategic decision.

Major areas for decisions;

1. Location
2. Production
3. Distribution
4. inventory

Logistic

– Is the part of supply chain involved with the forward and reverse flow of goods, services, cash
and information.
– The movement of materials, services, cash and information in a supply chain.
Logistic management

– Includes management of inbound and outbound transportation , material handling, warehousing,

inventory, order fulfillment and distribution, third party logistics and reverse logistic ( the return
goods from customer)

Reverse Logistic

– Refers to backward flow of goods returned to the supply chain from their destination.(returned
defective goods)

Goals: to recapture or create value in returned goods or properly dispose of goods that cannot be re
sold

Two (2) key element of managing returns are;

1. Gate keeping –screening returned goods to prevent in correct acceptance of goods

2. Avoidance – finding ways to minimize the number of items that are returned.

Traffic Management

– Overseeing the shipment of incoming and outgoing goods.

Distribution requirements planning (DRP)

– A system for inventory management and distribution planning

Supply chain is essential for the following issues;

1. The need to improved operation

-lean production and TQM
2. Increasing levels of outsourcing
Outsourcing – buying goods or services instead of producing or providing them in house
3. Increasing transportation cost
– Transportation is increasing need to addressed
1. Competitive pressures
– Increasing new products
– Shorter product development cycles
– Increased demand for customization
1. Increasing globalization
– Lead time, currency differences, monetary fluctuation, language and cultural differences
1. Increasing importance of e business
– Buying and selling presented new challenges eg ebay
1. The complexity of supply chains
– Dynamic, inherent uncertainty –adversely affect on supply chain
– Inaccurate forecasting, late deliveries, substandard, machine breakdown, cancelled or changed
order
1. Need to manage inventories
– Shortages, far reaching impacts, excess inventories add unnecessary costs

Bullwhip effect

– Occurred when inventory variability tends to increase, moving backward through the chain from
the final customers . Even a small demand in the customer demand can result in large variation
in order placed upstream, causing inventories to oscillates in a large swing when seeks to solve
the problem. Shortages and increased costs also has adversely effects.

Vendor managed inventory

– Vendors monitor goods and replenish retail inventories when supplies are low.
Global Supply Chain

– When your products and services are sold globally a chain for supply has been interlinked with
other function of business organization globally.

Complexity in Global Supply Chain 4. Transportation

5. Communications
1. Language 6. Governmental requirements
2. Cultural differences 7. Environmental
3. Currency fluctuation 8. Regulatory issues
4. Armed conflict 9. Political issues
5. Increase in transportation cost
6. Lead time Benefits of effective supply chain management
7. The increase need for trust
8. Cooperation among supply chain 1. Lower inventories
partners 2. Lower cost
3. Higher productivity
Global supply chain manager must be able; 4. Greater agility (quickness/ alertness)
5. Shorter lead time
1. To identify and analyze factors that differ 6. High profits
from country to country 7. Greater customer loyalty
2. Local capabilityies
3. Financials

Inventory – is a essential in most supply chains; balance is the main objective.

Purchasing
– is the link between an organization and its suppliers.
– Is responsible in obtaining goods and services that will be used in the production in producing
product and services.
– Select suppliers, negotiates contract, establish alliances and act as a liaison between suppliers
and various internal department

Goal : Is to develop and implement purchasing plan for product and services that support the operation
strategies

Duties of purchasing

1. Identifying sources of supply

2. Negotiating contracts
3. Maintaining a data base of suppliers
4. Obtaining goods and services that meet operation requirements in a timely and costly manners
5. Managing suppliers
6. Established alliances
7. Acts as a liaison between supplier and various internal department

Purchasing Cycle

1. Purchasing receives the requisition

2. Purchasing selects a supplier
3. Purchasing places the order with a vendor
4. Monitoring orders
5. Receiving orders

Centralized Purchasing

– Purchasing is handled by one special department

Decentralized Purchasing
 – Individual departments on separate location handled their own purchasing requirements.

Principle in Purchasing

1. Loyalty to employer
2. Justice to those you deal with
3. Faith in your profession

Reliable and trustworthy suppliers are a vital link in an effective SCM.

Vendor analysis 3. Access inventory data of partners

- evaluating the sources of supply in terms of Eg.Walmart in USA

price, quality, reputation and services.
Requirements for a successful supply chain
Supplier certification
1. Trust
– Is a detailed examination of the policies 2. Effective communication
and capabilities of a suppliers. 3. Supply chain visibility
– Verify that a supplier meet or exceed the 4. Event management capability
expectation of the buyer. -ability to detect and respond to
unplanned event
E- Business 5. Performance metrics

– Refer to the use of electronic technology

to facilitate business transaction.
– Sometimes refer as to e – commerce.
Use e- business
1. To promote their product and services
2. Provide info about them/ company
EG UPS and Fed ex
Two (2) essential features of e business;
1. Web site
2. Order fulfillment
Parties/participants in supply chain must share;
Radio frequency identification (RFID)
– A technology that uses radio waves to
identity objects, such as goods in supply
chain.
– This identify by a radio tag that is
attached to an object.
– The tag has an integrated circuit and an
antenna that project info or other data to
network connected RFID reader using
radio waves.
Provide;
1. Unique identification
2. Enabling business to identify, track,
monitor
3. Locating it

1. Forecast
2. Determine order status in real time
Collaborative planning, forecasting and replenishment (CPFR)
– A supply chain initiative that focuses on information sharing among supply chain trading
partners in planning, forecasting and inventory replenishment.

Strategic partnering
– Two or more business organizations that have complementary products or services join so that
each may realize a strategic benefits.

Step in creating an effective supply chain

1. Develop strategic objectives and tactics
2. Integrate and coordinate activities in the internal portion of the chain
3. Coordinate activities with suppliers and with customers
4. Coordinate planning and execution across supply chain
5. Consider the possibility of forming strategic partnerships

Performance drivers;
1. Quality
2. Cost
3. Flexibility – refer to the ability to adjust to change in order quantity
4. Velocity – refer to the rate or speed of travel through the system
Two (2) area
a. Inventory velocity – the rate at which inventory (material) goes through supply chain.
b. Information velocity – the rate at which information is communicated in supply chain
1. Customer services

Optimizing the supply chain

– Means maximizing shareholder and customer value.

Disintermediation- reducing one or more steps in a supply chain by cutting out one or more
intermediaries.