Department of Industrial Engineering TQM presented by Dr. Eng. Abed Schokry

Transcription

1 Department of Industrial Engineering TQM presented by Dr. Eng. Abed Schokry

2 Recognizing and rewarding Quality Promotion of high quality goods and services Malcolm Baldrige National Quality Award (MBNQA) (United States) Deming Prize (Japan) European Quality Award (European Union) ISO9000 certification

3 The integrated framework of the Baldrige Award criteria Source: 2004 Criteria for Performance Excellence, U.S. Dept. of Commerce, Baldrige National Quality Program, National Institute of Standards and Technology, Gaithersburg, MD (

4 Continual improvement of the quality management system Customers (and other interested parties) Management responsibility Customers (and other interested parties) Resource management Measurement, analysis and improvement Satisfaction Requirements Key: Value adding activity information flow Input Product realisation Product Output Source: BS EN ISO 9001:2000

5 Overview of the EFQM Excellence Model

6 Quality Award common elements All take holistic approach Customers/people Measurable characteristics Visible Basis taken from TQM

7 Measurement of Quality The role of Measurement (Why to measure) Identifying opportunities, Comparing performance against internal (process control and improvement) and external standards (benchmarking, Measures are used in process control, e.g. (exempli gratia) control charts, and e.g. quality improvement e.g. quality improvement teams, so that they should give information about how well processes and people are doing and motivate them to perform better in the future.

8 Measurement of Quality The role of Measurement (Why to measure) Problems for frustrated improvements efforts: Produce irrelevant or misleading information, Track performance in single, isolated dimensions, Generate financial measures too late, Ignoring the customer perspective, both internal and external, Misunderstanding of the management how effective the organization has been implementing its strategy, Provide behavior that undermines the achievement of the strategic objectives.

9 Measurement of Quality The measurement of harmful summary measures of local performance are purchase price, machine or plant efficiencies, direct labor cost a. o. These are not compatible with quality improvement measures such as process and throughput times, delivery performance, inventory reductions, and increase in flexibility. (non-financial aspects). Example: Return on Investment (ROI), tell us what happened and not what is happening or what will happen. Critical elements of a good performance measurement and management efforts are: Leadership and commitment, Full employee involvement, Good planning, Sound implementation strategy, Measurement and evaluating, Control and improvement, Achieving and maintaining standards of exellance.

10 Measurement of Quality Deming Cycle of CQI P D C A, But before using it, the following questions must be answered: 1. Why to measure? 2. What to measure? 3. Where to measure? 4. How to measure?

11 Measurement of Quality 1. Why to measure? To ensure customer requirements have been met. To be able to set sensible objectives and fulfill them. To provide standards for establishing comparisons. To provide visibility and provide a score- board for people to monitor their own performance level. To highlight quality problems and determine which areas require priority attention To give an indication of the costs of poor quality. To justify the use of resources. To provide feedback for driving the improvement effort.

12 Measurement of Quality 2. What to measure? Effectiveness, Productivity, Efficiency, Quality, Impact. (direct outputs, input figures, the cost of poor quality, economic data, comments and complaints of the customers, employee survey etc., continuous such as time or also discrete such as absentees)

13 Measurement of Quality 3. Where to measure? If true measures of the effectiveness of TQM are to be obtained, then the elements of Human, Technical, and Business components must be examined. The Human is the most important component and therefore, wherever measures are used, they must be: Understood by all the people being measured, Accepted by the individuals concerned, Compatible with the rewards recognition systems, Designed to offer minimal opportunity for manipulation

14 Measurement of Quality 4. How to measure?

15 Quality vs. Project Variables Scope Functionality / Services / Contents to deliver Time Effort (persons per hours) Calendar (working and not-working days) Time-to-Market Quality Product Process Capability Resource Human Skills, Methods, Tools,... Cost Budget

16 Non-Quality Cost and Impact Waste of: effort (persons-hours) materials Loss of time to be the product available Re-work For repairing / fixing defects Impact of changes Impact wrt the customer loss of the enterprise image loss in the product trustfulness likely lower sales

17 Cost of Quality: prevention costs design reviews, product qualification drawing checking, engineering quality orientation supplier evaluations, supplier quality seminars specification review, process capability studies tool control, operation training quality orientation, acceptance planning zero defects program, Quality Audits preventative maintenance

18 Cost of Quality: appraisal costs prototype inspection and test production specification conformance analysis supplier surveillance receiving inspection and test product acceptance process control acceptance packaging inspection status measurement and reporting

19 Cost of Quality: failure costs consumer affairs redesign engineering change order purchasing change order corrective action costs rework scrap warranty service after service product liability

20 Benchmarking Benchmarking is a search for best practices Benchmarking is not industrial tourism World Class vs. Industrial Benchmarking Benchmarking Clearing Houses

21 Types of Benchmarking Comparison: Internal Best in Firm Competitive Best in Industry World Class Best in World Form: Performance Benchmarking Process Benchmarking Strategic Benchmarking

22 Types of Benchmarking Competitive benchmarking Process benchmarking Strategic benchmarking

23 Bench Marking Benchmarking is a systematic method by which organization can measure themselves against the best industry practices. Essence of BM is the process of borrowing ideas and adapting them to gain competitive advantage.

24 BM Defined Bench Mark is the systematic search for best practice, innovative ideas and highly effective operating procedure W. Edward Deming It is Hazard to copy.it is necessary to understand the theory of what one wishes to do. Definition By ROBERT CAMP It is the search for the industry best practices that lead to superior performance.

25 Benchmarking is Measuring your performance against that of the best-inclass companies, determining how the best-in-class achieve those performance levels, and using the information as a basis for your own company s targets, strategies, and implementation. L.Pryor, Benchmarking: A Self Improvement Strategy, Journal of Business Strategy, Nov.-Dec

26 Why BM Defining Customer Requirements Establish Goals and Objectives Measures of Productivity Becoming Competitive Industry best practices to be achieved

27 Reasons for Bench Marking To achieve Business & Competitive Objectives. Goals & Objectives Based on External Environment. Cost Efficient. Continuous Improvement & New Development.

28 What is our performance level What are others performance levels? How did they get there Creative Adaptation Breakthrough Performance BENCHMARKING CONCEPT 28

29 The Benchmarking Process Project selection Goal and scope Understanding current process - metrics Selection of partner or clearinghouse Data collection - metrics Assessment and recommendations Planning the change Implementation Recalibration update the metrics

30 Bench Marking Process Phases S.no Steps Planning 1 Earmark what is to be Bench Marked? 2 Identify the best competitor 3 Determine the data collection method and start collecting data Analysis 4 Determine the current performance GAP 5 Project future performance levels

31 Bench Marking Process Phases S.no Steps Integration 6 Communicate bench mark findings and gain acceptance 7 Establish Functional Goals Communicate Data For analysis Acceptance for Analysis Action 8 Develop Action Plans 9 Implement specific actions and monitor Progress

32 Bench Marking Process Phases S.no Steps Maturity 10 Recalibrate Benchmarks 11 Attain the Leadership position 12 Integrate Practice into the Process

33 Performance Benchmarking Analysis of relative business performance among competitors Comparison is internal or industry Pricing, quality, technical features, performance characteristics Resource commitment low Usually through 3 rd party intermediary Global Purchasing Benchmarking Initiative Construction Industry Institute Metrics Issue: Do metrics capture the whole story?

34 Process Benchmarking Analysis of most effective practices on key work processes Comparison is usually World Class Distribution, order entry, procurement. NASCAR pit crews (NASCAR: National Association for Stock Car Auto Racing), Motorsport, Pit stop work is carried out by anywhere from five to twenty mechanics (also called a pit crew) Resource commitment is high Usually conducted by teams from process area Metrics Issue: What are important (success) metrics for process? (aim)

35 Strategic Benchmarking Analysis of alternative competitive strategies Comparison is World Class Southwest Airlines, Dell Computers Resource commitment is moderate Usually conducted by benchmarking analyst Metrics Issue: Are metrics comparable?

36 Benchmarking Pitfalls Project not aligned with competitive strategy Outcome cannot be adequately measured Scope of project too large Omission secondary but important measures Failure to establish a baseline

37 Data Envelopment Analysis Means to compare multiple similar processes with multiple inputs with multiple outputs Often used with internal benchmarking but can be used externally How it works Identifies those units getting the most output out of their inputs Uses these to derive an efficient production frontier Defines all units on frontier as efficient All units behind frontier indicate opportunity for improvement Based on Linear Programming K>2*(number of inputs and outputs)

38 DEA Example (Simplified) Summary of Outputs and Inputs for Outlets Unit Meals Labor Material Sold Hours Cost For more information see: Charnes, A., W. Cooper and E. Rhodes, Measuring Efficiency in Decision Making Units, European Journal of Operations Research, November 1978, pp Or search Data Envelopment Analysis for practitioner oriented pieces.