1 TQM 15.760 TOTAL QUALITY MANAGEMENT THEMES FOUR LEVELS OF QUALITY FOUR THOUGHT REVOLUTIONS Customers first Continuous Improvement Total Participation Societal Learning ORGANIZATIONAL MANAGEMENT Information & Measurement Systems Education Incentive Systems Organizational Change 2 Four 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 high cost low cost 4. FITNESS FOR LATENT REQ'TS -Listening to the voice of the customer -V-8 engine, Swatch -Uncovering latent req't adds value 3 ==> need continuous innovation 4 TQM: Four Thought Revolutions 1. Customer-First Revolution (From "Product-out to "Market-in") market-in product-out job descrip. specs purpose means work improve satisfy customers (internal & external) output no satisfy? yes Develop Product 5 2. 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; 6 ALL OTHERS BRING DATA" 3. Total Participation Revolution -Total Involvement of CEO (Leadership) -Quality Specialist ----> All Employees -Build Infrastructure: goals, training, promotion, feedback, diagnosis, etc. 7 4. Societal Learning Revolution Success stories need wide diffusion (Baldridge, Deming Awards) In Japan: progression through -Process industries -Mass Production -Small Volume Manufacturing -Construction -Services Role of outside change agents -Deming, Juran, Shiba Role of University/Industry Consortia -MIT: Center for Quality Management Leaders for Manufacturing 8 PRINCIPLES 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 PREDICTABLE 9 TQM 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 10 -Pride 11 QUALITY 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 -CIM oriented--much integration Provide Data on: -Defects, Downtime, Warranties, Returns -Inventories, Lead Times, Cycle Times -Injuries, Absenteeism, Turnover -Process Capability, Learning Rates -Vendor Quality 12 -Quality Costs 13 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 Plots 14 WE 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) MANY OF THE LANGUAGE DATA TOOLS ARE NOT WIDELY TAUGHT IN THE WEST. 15 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) 16 -Orthogonal Arrays for experimental design PRODUCT DEVELOPMENT LEVERAGE APPROXIMATELY 75% OF LIFE CYCLE (DESIGN AND MANUFACTURING) COSTS ARE DETERMINED DURING THE PRODUCT DEVELOPMENT PROCESS Concurrent Design of Products and Processes Whitney & Nevins, et al McGraw-Hill 1989 PRODUCT DEVELOPMENT IN THE JAPANESE AUTOMOBILE INDUSTRY (COMPARED WITH U.S.): --25% FASTER --50% FEWER ENGINEERING HOURS (EUROPEANS ARE FARTHER BEHIND) Product Development Performance Clark & Fujimoto HBS Press 1991 17 ACTIVE PARTICIPATION OF ALL PLAYERS IS CRITICAL 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 18 -Personnel 19 CONTINUOUS 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 LEARNING 20 SUPPLY CHAIN MANAGEMENT Schonberger on Supplier Development -RELY ON FEWER, BETTER SUPPLIERS -"TREAT THEM LIKE FAMILY" -EMPHASIZE PARTNERSHIP WITH ORGANIZATIONAL INTERACTION ON ALL LEVELS SINGLE SOURCE MULTIPLE SOURCES ______________ ________________ Get to know each supplier better less risk to supplier strikes/shutdowns QC is easier lower spot prices DFM is easier less scrutiny of each Short supply lines 21 SUPPLY CHAIN MANAGEMENT: DEMONSTRATE 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/TQC Concurrent Design Competitive Analysis Flexibility of labor and equipment Dedicated Capacity Exact counts in standard containers COMMITMENT TO World Class STATUS 22 EMPLOYEE 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 23 INCENTIVES 24 IMPLEMENTATION OF TQM -Major Cultural Transition (Trust as the lubricant) -Education and Training are Critical -Tailor the process to the specific firm -Quality Improvement Teams (Harnessing the Collective Genius) Top Management Leadership: -Importance of Quality -Goals and Objectives -Commitment to these Goals -Responsibility for these Goals 25 Dr. W. Edwards Deming’s Fourteen Points 1. Create constancy of purpose for impr. of product and service. 2. Adopt the new philosophy -- poor quality cannot be tolerated. 3. Cease dependence on inspection to achieve quality. 4. End the practice of awarding contracts on the price tag alone; work with a single supplier. 5. Improve constantly and forever every process for planning, production, and service. 6. Institute training on the job. 7. Adopt and institute leadership. 8. Drive out fear. 9. Break down barriers among staff areas. 10. Eliminate slogans, exhortations, and targets for workers. 11. Eliminate numerical quotas for the workforce and numerical goals for management. 12. Remove barriers that rob people of their pride of workmanship. Eliminate the annual rating or merit system. 13. Institute a vigorous program of education and selfimprovement for everyone. 26 14. Put everybody in the company to work to accomplish the transformation. 27 Some Words from Dr. W. Edwards Deming “The prevailing system of management has destroyed our people. People are born with intrinsic motivation, self-esteem, dignity, curiousity to learn, joy in learning. The forces of destruction begin with toddlers--a prize for the best Halloween costume, grades in school, gold stars--and on up through the university. On the job, people, teams, divisions are ranked--reward for the one at the top, punishment for the one at the bottom.” 28 -Top Management Leadership -Habitual Continuous Improvement -Rapid Feedback Systems (Who are customers/suppliers?) -Data-Driven Decision Support Tools (Statistical Quality Control, Cost of Quality, Taguchi Methods) -Continuous training and education -Company-wide participation -Supply-Chain Management -TQM Implementation -Employee Involvement 29€ Measuring Quality Customer Satisfaction Defect Rates Cost of Poor Quality Inventory Productivity Innovativeness Complexity Order Lead Times Manufacturing Cycle Times Product Development Cycle Times Injuries Machine Downtime Absenteeism and Turnover Changeover time improvements Rate of Product Introduction Rates of Learning and Process Imp. Workforce Training and Education Workforce Suggestions 30 Teamwork, Morale, Pride Vendor Cooperation 31 Baldridge Quality Award Criticisms 1. requires large expenditures 2. fails to predict financial performance 3. not focused on superior product or service quality Judging 1. Deployment - horizontal and vertical 2. Integration - alignment, communication - speed Legacy Spirit of Cooperation 32 Baldridge Quality Award Categories for Scoring 1. Leadership--symbolism & involvement 2. Info systems/analysis--internal, benchmk 3. Strategic Quality Planning Plans and Goals that are concrete, focused, integrated, aggressive 4. Human Resource Utilization -empowerment, teamwork, skills 5. Quality Assurance of Pdts & Services -process quality drives product quality 6. Quality Results -data on quality and defects, etc. 7. Customer Satisfaction -systems and results 33€ Award's Merits Award's Demerits stimulate debate raise consciousness decathalon: composite ignores finan. perf. downplays product qua. self-nominating no definition of quality examiners also consult aims too low thermometer -not instructive philosophically agnostic not focused on world-class too process oriented bureaucratic 34 Donald 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 how 35€ Peter Senge "Building Learning Organizations: The Real Message of the Quality Movement" First Wave of Quality: -champion continuous improvement -remove impediments that disempower people -support new practices Second Wave of Quality: Improve Management Processes The industrial engineering of managment work Third Wave of Quality -institutionalize learning w/5 disciplines: Shared Vision Personal Mastery Mental Models Team Learning Systems Modeling 36 Intrinsic vs. Extrinsic motivation 37 Schaffer and Thompson Successful Change Programs Begin with Results The Activity-Centered Fallacy: 1. Not keyed to specific results 2. Too large-scale and diffused 3. Results is a four-letter word (avoid appearance of short-termism) 4. Delusional Measurements 5. Staff and Consultant Driven 6. Bias to orthodoxy, not empiricism 38€ THE TIMELESS SECRETS OF INDUSTRIAL SUCCESS (R. H. HAYES, HARVARD UNIVERSITY) 1. BEWARE OF COMPLACENCY 2. CONTINUALLY ENLIST THE HELP OF EMPLOYEES TO IMPROVE PRODUCT AND PROCESS 3. DENY EVERY INCH TO COMPETITORS AND POTENTIAL COMPETITORS 4. STUDY COMPETITORS' SOURCES OF SUCCESS 5. DON'T BE TOO RATIONAL 6. YOU ARE NEVER DONE 39 Results Driven 1. Introduce Managerial and Process innovations only as needed 2. Empirical testing reveals what works 3. Frequent reinforcement energizes 4. Use lessons of each phase to design next phase (i.e., continuous process) How to get started 1. Create the context and Identify the crucial business challenges 2. Ask each unit for a few ambitious short-term goals 3. Monitor progress, capture the essential learning, reformulate strategy 40€ 4. Institutionalize only what works FALSE STARTS & FAILURE MODES IN TQM PROGRAMS 1. TRAINING CAPACITY 2. RESISTANCE TO CHANGE 3. FEAR OF FIRING 4. CAPITAL CRUNCH 5. WORK OVERLOAD 6. SATISFIED CUSTOMERS 7. COST OF QUALITY 8. LOVED TO DEATH (institutionalized)

15.760A Lecture 11 Notes

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