Basic Concepts of Basic Concepts of

Quality ManagementQuality Management

OutlineOutline

1.1. IntroductionIntroduction

2.2. Quality definedQuality defined

3.3. Quality perspectiveQuality perspective

4.4. Component of product qualityComponent of product quality

5.5. The quality functionThe quality function

6.6. Managing for qualityManaging for quality

7.7. Quality management awards and frameworkQuality management awards and framework

Learning ObjectivesLearning ObjectivesWhen you complete this chapter, you should be When you complete this chapter, you should be

able to:able to:Identify or DefineIdentify or Define::

QualityQuality Quality PerspectiveQuality Perspective Component of product QualityComponent of product Quality Managing for QualityManaging for Quality Malcolm Baldrige National Quality AwardMalcolm Baldrige National Quality Award ISO International Quality StandardsISO International Quality Standards

Learning Objectives - Learning Objectives - continuedcontinuedWhen you complete this chapter, you When you complete this chapter, you

should be able to :should be able to :ExplainExplain::

Why quality is importantWhy quality is important Various perspective of QualityVarious perspective of Quality How to manage product qualityHow to manage product quality How to assest the quality management How to assest the quality management

achievementachievement

IntroductionIntroduction

““Our scraps and rework Our scraps and rework costs this year were 5 costs this year were 5 times our profit. times our profit. Because of those cost, Because of those cost, we have had to we have had to increase our selling increase our selling price and we price and we subsequently lost subsequently lost market share” Quality is market share” Quality is no longer technical no longer technical issue. It is a bussiness issue. It is a bussiness issue”issue”

Two major force after WW II:Two major force after WW II:1.1.Japanesse revolution in qualityJapanesse revolution in quality

Upper manager leading the revolutionUpper manager leading the revolution All level and function were trainedAll level and function were trained Quality improvement project were undertaken on Quality improvement project were undertaken on

a continuouing basisa continuouing basis

2.2.Prominence of Product quality in publict Prominence of Product quality in publict mind: product liability cases, environtment mind: product liability cases, environtment concern, major dissasters, pressure by concern, major dissasters, pressure by consumers organisationconsumers organisation

Changing bussiness conditionChanging bussiness condition

Reasons for quality becoming a cardinal priority for most organizations:Reasons for quality becoming a cardinal priority for most organizations: CompetitionCompetition – Today’s market demand high quality products at low cost. – Today’s market demand high quality products at low cost.

Having `high quality’ reputation is not enough! Internal cost of Having `high quality’ reputation is not enough! Internal cost of maintaining the reputation should be less.maintaining the reputation should be less.

Changing customerChanging customer – The new customer is not only commanding – The new customer is not only commanding priority based on volume but is more demanding about the “quality priority based on volume but is more demanding about the “quality system.”system.”

Changing product mixChanging product mix – The shift from low volume, high price to high – The shift from low volume, high price to high volume, low price have resulted in a need to reduce the internal cost of volume, low price have resulted in a need to reduce the internal cost of poor quality.poor quality.

Product complexityProduct complexity – As systems have become more complex, the – As systems have become more complex, the reliability requirements for suppliers of components have become more reliability requirements for suppliers of components have become more stringent.stringent.

Higher levels of customer satisfactionHigher levels of customer satisfaction – Higher customers expectations – Higher customers expectations are getting spawned by increasing competition.are getting spawned by increasing competition.

Quality DefinedQuality Defined Everyone defines Quality based on their own perspective Everyone defines Quality based on their own perspective

of it. Typical responses about the definition of quality of it. Typical responses about the definition of quality would include:would include:

1.1. PerfectionPerfection2.2. ConsistencyConsistency3.3. Eliminating wasteEliminating waste4.4. Speed of deliverySpeed of delivery5.5. Compliance with policies and proceduresCompliance with policies and procedures6.6. Doing it right the first timeDoing it right the first time7.7. Delighting or pleasing customersDelighting or pleasing customers8.8. Total customer satisfaction and serviceTotal customer satisfaction and service

Quality Quality perspectiveperspective

Judgmental perspectiveJudgmental perspective ““goodness of a product.”goodness of a product.” Shewhart’s transcendental definition of quality – “absolute and Shewhart’s transcendental definition of quality – “absolute and

universally recognizable, a mark of uncompromising standards and high universally recognizable, a mark of uncompromising standards and high achievement.”achievement.”

Examples of products attributing to this image: Rolex watches, Lexus Examples of products attributing to this image: Rolex watches, Lexus cars.cars.

Product-based perspectiveProduct-based perspective ““function of a specific, measurable variable and that differences in function of a specific, measurable variable and that differences in

quality reflect differences in quantity of some product attributes.”quality reflect differences in quantity of some product attributes.” Example: Quality and price perceived relationship.Example: Quality and price perceived relationship.

Quality Quality perspectiveperspectiveUser-based perspectiveUser-based perspective ““fitness for intended use.”fitness for intended use.” Individuals have different needs and wants, and hence different quality Individuals have different needs and wants, and hence different quality

standards.standards. Example – Nissan offering ‘dud’ models in US markets under the brand Example – Nissan offering ‘dud’ models in US markets under the brand

name Datson which the US customer didn’t prefer.name Datson which the US customer didn’t prefer.Value-based perspectiveValue-based perspective ““quality product is the one that is as useful as competing products and is quality product is the one that is as useful as competing products and is

sold at a lesser price.”sold at a lesser price.” US auto market – Incentives offered by the Big Three are perceived to US auto market – Incentives offered by the Big Three are perceived to

be compensation for lower quality.be compensation for lower quality.

Quality Quality perspectiveperspective

Manufacturing-based perspectiveManufacturing-based perspective ““the desirable outcome of a engineering the desirable outcome of a engineering

and manufacturing practice, or and manufacturing practice, or conformance to specification.”conformance to specification.”

Engineering specifications are the key!Engineering specifications are the key! Example: Coca-cola – “quality is about Example: Coca-cola – “quality is about

manufacturing a product that people can manufacturing a product that people can depend on every time they reach for it.”depend on every time they reach for it.”

Quality Quality perspectiveperspective

Quality Quality perspective perspective (cont’d)…(cont’d)…

Quality is: Quality is: Customer satisfactionCustomer satisfactionFitness for useFitness for use

What is a customer?What is a customer? Anyone who is impacted by the product or process delivered by an Anyone who is impacted by the product or process delivered by an

organization. organization. External customerExternal customer: The end user as well as intermediate processors. : The end user as well as intermediate processors.

Other external customers may not be purchasers but may have some Other external customers may not be purchasers but may have some connection with the product.connection with the product.

Internal customerInternal customer: Other divisions of the company that receive the : Other divisions of the company that receive the processed product.processed product.

What is a product?What is a product? The The output of the processoutput of the process carried out by the organization. It may be goods carried out by the organization. It may be goods

(e.g. automobiles, missile), software (e.g. a computer code, a report) or (e.g. automobiles, missile), software (e.g. a computer code, a report) or service (e.g. banking, insurance)service (e.g. banking, insurance)

Quality Quality perspective perspective (cont’d)…(cont’d)…

How is customer satisfaction achieved?How is customer satisfaction achieved? Customer satisfaction can be achieved throught 2 component:Customer satisfaction can be achieved throught 2 component:

Product featuresProduct features – Refers to – Refers to quality of designquality of design.. Examples in manufacturing industry: Performance, Reliability, Examples in manufacturing industry: Performance, Reliability,

Durability, Ease of use, Esthetics etc.Durability, Ease of use, Esthetics etc. Examples in service industry: Accuracy, Timeliness, Friendliness and Examples in service industry: Accuracy, Timeliness, Friendliness and

courtesy, Knowledge of server etc.courtesy, Knowledge of server etc. Freedom from deficienciesFreedom from deficiencies – Refers to – Refers to quality of conformancequality of conformance.. Higher conformance means fewer complaints and increased customer Higher conformance means fewer complaints and increased customer

satisfaction.satisfaction.

Summary: Quality means external and internal customer satisfactionSummary: Quality means external and internal customer satisfaction

Component of product qualityComponent of product quality

Manufacturing Industries Service Industries

Product features

performance Accurcy

Reliability Timelines

Durbility Completeness

Ease of use Friendliness

Serviceability Anticipating cust needs

Esthetics Knowledge of server

Availability of option Reputation

Reputation  

Freedom from deficiencies

Product free from defects and errors at delivery and during servicing

Service free of errors during original and future service transactions

Sales, biling and other business process free from errors

Sales, biling and other business process free from errors

The Quality FunctionThe Quality Function

Attainment of quality features requires Attainment of quality features requires activities: e.g. study customer’s needs, activities: e.g. study customer’s needs, design review, product tests and field design review, product tests and field complain analisys. These function follow a complain analisys. These function follow a sequence of event.sequence of event.

Quality function: The entire colletion of Quality function: The entire colletion of activities through which we achieve fitness activities through which we achieve fitness for use.for use.

Managing for QualityManaging for Quality

Quality management: process of Quality management: process of identifying and administering the identifying and administering the activities needed to achieve the quality activities needed to achieve the quality objectives of an organisationobjectives of an organisation

QUALITY MANAGEMENT AWARDS QUALITY MANAGEMENT AWARDS AND FRAMEWORKAND FRAMEWORK

ISO 9000: 2000ISO 9000: 2000 Malcolm Baldrige National Quality AwardMalcolm Baldrige National Quality Award Deming PrizeDeming Prize Six SigmaSix Sigma

ISO 9000: 2000ISO 9000: 2000 Created by Created by International Organization for StandardizationInternational Organization for Standardization

(IOS) which was created in 1946 to standardize quality (IOS) which was created in 1946 to standardize quality requirement within the European market.requirement within the European market.

IOS initially composed of representatives from 91 countries: IOS initially composed of representatives from 91 countries: probably most wide base for quality standards.probably most wide base for quality standards.

Adopted a series of written quality standardsAdopted a series of written quality standards in 1987 (first in 1987 (first revised in 1994, and revised in 1994, and more recently (and significantly) in more recently (and significantly) in 20002000).).

Prefix “ISO” in the name refers to the scientific term Prefix “ISO” in the name refers to the scientific term “iso” “iso” for equalfor equal. Thus, certified organizations are assured to have . Thus, certified organizations are assured to have quality equal to their peers. quality equal to their peers.

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ISO 9000: 2000ISO 9000: 2000 Defines quality systems standards based on the Defines quality systems standards based on the

premise that certain premise that certain generic characteristics of generic characteristics of management principles can be standardizedmanagement principles can be standardized. .

And that a well-designed, well-implemented and well And that a well-designed, well-implemented and well managed quality system managed quality system provides confidence that provides confidence that outputs will meet customer expectations and outputs will meet customer expectations and requirementsrequirements..

Standards are recognized by 100 countries including Standards are recognized by 100 countries including Japan and USA.Japan and USA.

Intended to apply to all types of businesses. (Recently, Intended to apply to all types of businesses. (Recently, B2B firm B2B firm bestroute.com became the first e-commerce bestroute.com became the first e-commerce company to get ISO certificationcompany to get ISO certification.).) 21

ISO 9000: 2000ISO 9000: 2000Created to meet five objectives:Created to meet five objectives:1.1. Achieve, maintain, and seek to continuously improve Achieve, maintain, and seek to continuously improve

product quality in relation to the requirements.product quality in relation to the requirements.2.2. Improve the quality of operations to continually meet Improve the quality of operations to continually meet

customers’ and stakeholders’ needs.customers’ and stakeholders’ needs.3.3. Provide confidence to internal management that quality Provide confidence to internal management that quality

requirements are being met.requirements are being met.4.4. Provide confidence to the customers that quality Provide confidence to the customers that quality

requirements are being met.requirements are being met.5.5. Provide confidence that quality system requirements are Provide confidence that quality system requirements are

fulfilled.fulfilled.22

ISO 9000: 2000 ISO 9000: 2000 STRUCTURESTRUCTURE

Consists of three documentsConsists of three documents1.1. ISO 9000 – Fundamentals and vocabulary.ISO 9000 – Fundamentals and vocabulary.

2.2. ISO 9001 – Requirements. ISO 9001 – Requirements. Organized in four sections: Management Responsibility; Organized in four sections: Management Responsibility;

Resource Management; Product Realization; and Resource Management; Product Realization; and Measurement, Analysis and Improvement.Measurement, Analysis and Improvement.

3.3. ISO 9004 – Guidelines for performance improvements. ISO 9004 – Guidelines for performance improvements.

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ISO 9000: 2000 QUALITY ISO 9000: 2000 QUALITY MANAGEMENT PRINCIPLESMANAGEMENT PRINCIPLES

Principle 1: Customer FocusPrinciple 1: Customer Focus Principle 2: LeadershipPrinciple 2: Leadership Principle 3: Involvement of peoplePrinciple 3: Involvement of people Principle 4: Process approachPrinciple 4: Process approach Principle 5: Systems approach for managementPrinciple 5: Systems approach for management Principle 6: Continual improvementPrinciple 6: Continual improvement Principle 7: Factual approach to decision makingPrinciple 7: Factual approach to decision making Principle 8: Mutually beneficial supplier Principle 8: Mutually beneficial supplier

relationships.relationships.24

ISO 9000: 2000 ISO 9000: 2000 REGISTRATIONREGISTRATION

Originally intended to be a two-party process where the Originally intended to be a two-party process where the supplier is audited by its customers, the ISO 9000 process supplier is audited by its customers, the ISO 9000 process became a became a third-party accreditation processthird-party accreditation process..

Independent laboratory or a certification agency conducts the Independent laboratory or a certification agency conducts the audit.audit.

Recertification is required Recertification is required every three yearsevery three years.. Individual sitesIndividual sites – not entire company – must achieve – not entire company – must achieve

registration individually. registration individually. All costs are to be borne by the applicant.All costs are to be borne by the applicant. A registration audit may cost anywhere from $10,000 to A registration audit may cost anywhere from $10,000 to

$40,000.$40,000.(more information at http://www.iso.ch)(more information at http://www.iso.ch)

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SIX SIGMASIX SIGMA Business improvement approach that seeks to Business improvement approach that seeks to find and find and

eliminate causes of defects and errors in processeseliminate causes of defects and errors in processes by by focusing on outputs that are critical to customers.focusing on outputs that are critical to customers.

The term Six Sigma is based on a statistical measure that The term Six Sigma is based on a statistical measure that equates equates 3.4 or fewer errors or defects per million 3.4 or fewer errors or defects per million opportunitiesopportunities..

Motorola pioneered the concept of Six Sigma.Motorola pioneered the concept of Six Sigma. The late Bill Smith, a reliability engineer is credited with The late Bill Smith, a reliability engineer is credited with

conceiving the idea of Six Sigma.conceiving the idea of Six Sigma. GE (specifically CEO Jack Welch) extensively promoted it.GE (specifically CEO Jack Welch) extensively promoted it.

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SIX SIGMASIX SIGMACore philosophy based on key concepts:Core philosophy based on key concepts: Think in terms of key business processes and customer Think in terms of key business processes and customer

requirements with focus on strategic objectives.requirements with focus on strategic objectives. Focus on corporate sponsors responsible for championing Focus on corporate sponsors responsible for championing

projects.projects. Emphasize quantifiable measures such as defects per million Emphasize quantifiable measures such as defects per million

opportunities (opportunities (dpmodpmo).). Ensure appropriate metrics is identified to maintain Ensure appropriate metrics is identified to maintain

accountability.accountability. Provide extensive training.Provide extensive training. Create highly qualified process improvement experts -“belts”.Create highly qualified process improvement experts -“belts”. Set stretch objectives for improvement.Set stretch objectives for improvement.

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SIX SIGMASIX SIGMAContrasts between traditional TQM and Six Sigma (SS) - Contrasts between traditional TQM and Six Sigma (SS) - TQM is based largely on worker empowerment and teams; TQM is based largely on worker empowerment and teams;

SS is owned by business leader champions.SS is owned by business leader champions. TQM is process based; SS projects are truly cross-functional.TQM is process based; SS projects are truly cross-functional. TQM training is generally limited to simple improvements TQM training is generally limited to simple improvements

tools and concepts; SS is more rigorous with advanced tools and concepts; SS is more rigorous with advanced statistical methods.statistical methods.

TQM has little emphasis on financial accountability; SS TQM has little emphasis on financial accountability; SS requires verifiable return on investment and focus on bottom requires verifiable return on investment and focus on bottom line.line.

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Konsep Dasar MBNQAKonsep Dasar MBNQA

Malcolm Baldrige National Quality AwardMalcolm Baldrige National Quality Award (MBNQA) merupakan program (MBNQA) merupakan program penghargaan berdasarkan pencapaian penghargaan berdasarkan pencapaian organisasi terhadap organisasi terhadap Malcolm Baldrige Malcolm Baldrige Criteria for Performance ExcellenceCriteria for Performance Excellence (MBCfPE)(MBCfPE) dan panduan manajemen dan panduan manajemen terbaik untuk membuat sebuah terbaik untuk membuat sebuah perusahaan menjadi unggul, ekselen, atau perusahaan menjadi unggul, ekselen, atau kelas duniakelas dunia

Kategori Bisnis

Tiga kategori bisnis yang berhak untuk memperoleh MBQNA, yaitu :ManufakturJasaBisnis kecil

01

Tujuan MBNQATujuan MBNQA

1.1. Membantu meningkatkan praktik-praktik kinerja Membantu meningkatkan praktik-praktik kinerja organisasi, kemampuan dan hasil-hasil.organisasi, kemampuan dan hasil-hasil.

2.2. Memudahkan komunikasi dan sharing Memudahkan komunikasi dan sharing informasi tentang praktik-praktik terbaik di informasi tentang praktik-praktik terbaik di antara organisasi-organisasi.antara organisasi-organisasi.

3.3. Berfungsi sebagai alat manajemen untuk Berfungsi sebagai alat manajemen untuk memahami dan mengelola kinerja serta untuk memahami dan mengelola kinerja serta untuk pedoman perencanaan dan kesempatan untuk pedoman perencanaan dan kesempatan untuk pembelajaran.pembelajaran.

Alasan memilih Alasan memilih MBNQAMBNQA

1.1. MBCfPE mampu mengidentifikasi kekuatan-kekuatan dan MBCfPE mampu mengidentifikasi kekuatan-kekuatan dan kesempatan untuk perbaikan dari berbagai area dalam organisasi kesempatan untuk perbaikan dari berbagai area dalam organisasi yang berkaitan dengan :yang berkaitan dengan :

• KepemimpinanKepemimpinan• Perencanaan strategisPerencanaan strategis• Fokus pasar dan pelangganFokus pasar dan pelanggan• Pengukuran, analisis dan manajemen pengetahuanPengukuran, analisis dan manajemen pengetahuan• Fokus sumber daya manusiaFokus sumber daya manusia• Manajemen prosesManajemen proses• Keunggulan kinerja yang berkaitan dengan : produk dan Keunggulan kinerja yang berkaitan dengan : produk dan

pelayanan, kepuasan pelanggan, peningkatan pasar dan pelayanan, kepuasan pelanggan, peningkatan pasar dan finansialfinansial

2.2. MBCfPE memberikan kerangka kinerja untuk peningkatan menuju MBCfPE memberikan kerangka kinerja untuk peningkatan menuju keunggulan kinerja dengan memberikan kebebasan kepada keunggulan kinerja dengan memberikan kebebasan kepada manajemen untuk melaksanakan strategi bisnis mandiri dan manajemen untuk melaksanakan strategi bisnis mandiri dan program peningkatan keunggulan kinerja.program peningkatan keunggulan kinerja.

Alasan memilih Alasan memilih MBNQA MBNQA (Lanjutan)(Lanjutan)

3.3. MBCfPE merupakan kerangka kerja manajemen MBCfPE merupakan kerangka kerja manajemen terintegrasi, mencakup semua faktor yang terintegrasi, mencakup semua faktor yang mendefenisikan organisasi, proses operasional, dan mendefenisikan organisasi, proses operasional, dan hasil kinerja yang jelas dan teratur. hasil kinerja yang jelas dan teratur.

4.4. MBCfPE berfokus pada persyaratan-persyaratan untuk MBCfPE berfokus pada persyaratan-persyaratan untuk mencapai keunggulan kinerja, bukan sekedar aplikasi mencapai keunggulan kinerja, bukan sekedar aplikasi prosedur-prosedur, alat-alat atau teknik-teknik.prosedur-prosedur, alat-alat atau teknik-teknik.

5.5. MBCfPE mudah berdaptasi dengan lingkungan bisnis, MBCfPE mudah berdaptasi dengan lingkungan bisnis, dapat diterapkan pada organisasi besar maupun kecil, dapat diterapkan pada organisasi besar maupun kecil, organisasi lokal yang hanya beroperasi di banyak organisasi lokal yang hanya beroperasi di banyak negara.negara.

6.6. MBCfPE telah terbukti merupakan praktik-praktik MBCfPE telah terbukti merupakan praktik-praktik manajemen global yang valid untuk meningkatkan manajemen global yang valid untuk meningkatkan keunggulan kinerja organisasi. keunggulan kinerja organisasi.

Tahapan Proses Penilaian Tahapan Proses Penilaian Manajemen Manajemen Malcolm BaldrigeMalcolm Baldrige Evaluasi dari suatu pertanyaan tertulisEvaluasi dari suatu pertanyaan tertulis Kunjungan lapangan ke perusahaan-Kunjungan lapangan ke perusahaan-

perusahaan yang memiliki skor tertinggi perusahaan yang memiliki skor tertinggi berdasarkan pertanyaan tertulis ituberdasarkan pertanyaan tertulis itu

Penilaian akhir untuk menentukan pemenang Penilaian akhir untuk menentukan pemenang MBNQA berdasarkan hasil keseluruhan MBNQA berdasarkan hasil keseluruhan penilaian. penilaian. Proses penilaian didaftarkan oleh Proses penilaian didaftarkan oleh suatu konsorium yang dibentuk oleh The suatu konsorium yang dibentuk oleh The American society for Quality (ASQ) dan The American society for Quality (ASQ) dan The American productivity and Qulaity Center American productivity and Qulaity Center (APQC).(APQC).

Tujuh Kategori yang Tujuh Kategori yang dinilai dinilai

1.1. Kepemimpinan (120 poin)Kepemimpinan (120 poin)

2.2. Perencanaan Strategis (85 poin)Perencanaan Strategis (85 poin)

3.3. Fokus Pasar dan Pelanggan (85 poin)Fokus Pasar dan Pelanggan (85 poin)

4.4. Pengukuran, analisis dan manajemen Pengukuran, analisis dan manajemen pengetahuan (90 poin)pengetahuan (90 poin)

5.5. Fokus sumber daya manusia (85 poin)Fokus sumber daya manusia (85 poin)

6.6. Manajemen proses (85 poin)Manajemen proses (85 poin)

7.7. Hasil-hasil (450 poin)Hasil-hasil (450 poin)

Kategori Kategori Malcolm BaldrigeMalcolm Baldrige Untuk Bidang Bisnis Non Profit Untuk Bidang Bisnis Non Profit

20082008

Pendekatan yang akan Pendekatan yang akan dijadikan ukuran pada MBNQAdijadikan ukuran pada MBNQA