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Managing Quality

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Title: Managing Quality


1
Operations Management
Chapter 6 Managing Quality
PowerPoint presentation to accompany
Heizer/Render Operations Management, 11 Ed.
Extensive chages have been made to this slide set
by Ömer Yagiz.

March 2014
2
Outline
  • Global Company Profile Arnold Palmer Hospital
  • Quality and Strategy
  • Defining Quality
  • Implications of Quality
  • Malcolm Baldrige National Quality Award
  • Cost of Quality (COQ)
  • Ethics and Quality Management

3
Outline Continued
  • International Quality Standards
  • ISO 9000
  • ISO14000

4
Outline Continued
  • Total Quality Management
  • Continuous Improvement
  • Six Sigma
  • Employee Empowerment
  • Benchmarking
  • Just-in-Time (JIT)
  • Taguchi Concepts
  • Knowledge of TQM Tools

5
Outline Continued
  • Tools of TQM
  • Check Sheets
  • Scatter Diagrams
  • Cause-and-Effect Diagrams
  • Pareto Charts
  • Flowcharts
  • Histograms
  • Statistical Process Control (SPC)

6
Outline Continued
  • The Role of Inspection
  • When and Where to Inspect
  • Source Inspection
  • Service Industry Inspection
  • Inspection of Attributes versus Variables
  • TQM in Services

7
Learning Objectives
  • When you complete this chapter you should be able
    to
  • Define quality and TQM
  • Describe the ISO international quality standards
  • Explain Six Sigma
  • Explain how benchmarking is used
  • Explain quality robust products and Taguchi
    concepts
  • Use the seven tools of TQM

8
Managing Quality Provides a Competitive Advantage
Arnold Palmer Hospital
  • Deliver over 13,000 babies annually
  • Virtually every type of quality tool is employed
  • Continuous improvement
  • Employee empowerment
  • Benchmarking
  • Just-in-time
  • Quality tools

9
To Make the Quality Focus Work
  • Motorola
  • Aggressively began a worldwide education program
    to be sure that employees understood quality and
    statistical process control
  • Established goals
  • stretch goal - a goal which is very ambitious
  • Established extensive employee participation and
    employee teams
  • originator of the six-sigma approach to quality
  • winner of the Baldrige national quality award

10
What is a stretch goal ?
  • A stretch goal is an ambitious goal. Sometimes
    it is called a breakthrough objective. Stretch
    goals force an organization to think radically
    different to encourage major improvements, as
    well as incremental ones. Stretch goals can be
    set for all areas of the company, including
    manufacturing, sales, accounting, product design,
    etc.

11
MOTOROLA Co. --A famous illustration of stretch
goal
  • Six Sigma Quality concept of Motorola
  • Motorola set the following stretch goal in 1987.
  • Improve product and services quality ten times
    by 1989, and at least one hundred fold by 1991.
    Achieve six sigma capability by 1992. With a deep
    sense of urgency, spread dedication to quality to
    every facet of the corporation, and achieve a
    culture of continuous improvement to assure total
    customer satisfaction. There is only one ultimate
    goal zero defects--in everything we do.

12
MOTOROLA Co. --A famous illustration of stretch
goal
  • Concept of six-sigma quality
  • Shrinking process variation (as indicated by 6
    sigma) to half of the design tolerance so that
    only 3.4 parts out of 1 million are defective.
  • At Motorola, six sigma became part of the common
    language of all employees. To them it meant near
    perfection, even if some did not understand the
    statistical details.

13
Quality and Strategy
  • Managing quality supports differentiation, low
    cost, and response strategies
  • Quality helps firms increase sales and reduce
    costs
  • Building a quality organization is a demanding
    task

14
Two Ways Quality Improves Profitability
Figure 6.1
15
The Flow of Activities to achieve TQM
Organizational Practices Leadership, Mission
statement, Effective operating procedures, Staff
support, Training Yields What is important and
what is to be accomplished
Figure 6.2
16
Defining Quality
An operations managers objective is to build a
total quality management system that identifies
and satisfies customer needs
17
Defining Quality
The totality of features and characteristics of a
product or service that bears on its ability to
satisfy stated or implied needs
ASQ - American Society for Quality
18
Other Definitions of Quality
  • QUALITY MEANS FITNESS FOR USE.
  • QUALITY IS MEETING OR EXCEEDING CUSTOMER
    EXPECTATIONS.
  • QUALITY IS INVERSELY PROPORTIONAL TO VARIABILITY.
    What does this mean?

19
Different Views of Quality
  • Depending on who/where you are..
  • User-based better performance, more features
  • fitness for intended use, or how well the
    product/service performs its intended function

20
Different Views of Quality
  • Manufacturing-based conformance to
    standards, making it right the first time
  • quality is conformance to specifications.
    Specifications are targets and tolerances
    determined by designers of products and services.
    This is a key definition of quality for the
    technical aspects of quality planning and control.

21
Different Views of Quality
  • Product-based specific and measurable
    attributes of the product
  • quality is a function of a specific, measurable
    variable and differences in the quality reflect
    differences in quantity of some product attribute
    ( number of knots on carpets, number of cylinders
    in an auto engine, percentage of silk in a shirt
    or blouse).

22
Implications of Quality
  • Company reputation
  • Perception of new products
  • Employment practices
  • Supplier relations
  • Product liability
  • Reduce risk of faulty products or services
  • Global implications
  • Improved ability to compete

23
Key Dimensions of Quality for goods
  • Performance
  • Features
  • Reliability
  • Conformance
  • Durability
  • Serviceability
  • Aesthetics
  • Perceived quality
  • Value

24
Key Dimensions of Quality for goods
  • Performance A products primary operating
    characteristics. Will the product do the intended
    job? (Car example -- acceleration, braking
    distance, steering, maneuverability.)
  • Performans, birincil (temel) islevler

25
Key Dimensions of Quality for goods
  • Features Characteristics of secondary importance
    for the functioning of a product. In other words,
    the bells and whistles of a product. ( Power
    steering, antilock brakes, tape/CD deck, A/C,
    reclining seats.)
  • Ikincil özellikler

26
Key Dimensions of Quality for goods
  • Reliability probability of a products surviving
    over a specified period of time under stated
    conditions of use. Consistency of performance
    over time. How often does the product fail?
    (Ability to start on cold days, frequency of
    failure of various components).
  • Güvenilirlik

27
Key Dimensions of Quality for goods
  • Conformance Degree to which physical and
    performance characteristics of a product match
    preestablished standards. Is the product made
    exactly as the designer intended? (fit and
    finish, aerodynamic properties-drag coefficient,
    freedom from noise, fuel consumption.)
  • Uygunluk (spesifikasyonlara)

28
Key Dimensions of Quality for goods
  • Durability Amount of use one gets from a product
    before it physically deteriorates or until
    replacement is preferable. How long does the
    product last ? (Corrosion resistance, wear of
    seat cover material, wiper blades motor, AC
    compressor, etc.)
  • Dayaniklilik

29
Key Dimensions of Quality for goods
  • Serviceability The speed, courtesy, and
    competence of maintenance and repair. How easy is
    it to service and repair the product? (Access to
    spare parts, the number of kilometers between
    major maintenance service, ease and expense of
    service.)
  • Bakim / onarim kolayligi

30
Key Dimensions of Quality for goods
  • Aesthetics How a product looks, feels, sounds,
    tastes, or smells. What does the product look
    like? (Color, instrument panel design, placement
    of controls, and feel of the road.)
  • Estetik özellikler

31
Key Dimensions of Quality for goods
  • Perceived Quality Subjective assessment of
    quality resulting from image, advertising, or
    brand names. What is the reputation of the
    company or its product? (Brand image of car,
    repair history reported by trade magazines or
    friends.)
  • Tüketici tarafindan algilanan kalite

32
Service Quality Attributes
Under-standing
33
Malcom Baldrige National Quality Award
  • Established in 1988 by the U.S. government
  • Designed to promote TQM practices
  • Recent winners
  • Premier Inc., MESA Products, Sunny Fresh Foods,
    Park Place Lexus, North Mississippi Medical
    Center, The Bama Companies, Richland College,
    Texas Nameplate Company, Inc.

Click
34
Baldrige Criteria
Applicants are evaluated on
35
Baldrige Excellence Model
36
Other well-known awards
  • European Foundation for Quality Management (EFQM)
    (established in 1988 by the European Commission)
  • Deming Prize (established in 1951 in honor of
    Deming, the quality guru who helped Japan
    establish its famous quality system)

37
Other well-known awards
  • KALDER Quality Award (established in 1991 by
    Turkish Quality Association Kalite Dernegi
  • Has been very successful in Turkeys bid for
    quality excellence

38
EFQM Quality Model
39
Takumi
  • A Japanese character that symbolizes a broader
    dimension than quality, a deeper process than
    education, and a more perfect method than
    persistence

40
International Quality Standards
ISO 9000 Series
  • International recognition
  • Encourages quality management procedures,
    detailed documentation, work instructions, and
    recordkeeping
  • 2009 revision emphasized sustained success
  • Over one million certifications in 178 countries
  • Critical for global business

41
International Quality Standards
ISO 14000 Environmental Standard
  • Core Elements
  • Environmental management
  • Auditing
  • Performance evaluation
  • Labeling
  • Life cycle assessment

42
Costs of Quality
  • Prevention costs - reducing the potential for
    defects (training, quality improvement programs)
  • Appraisal costs - evaluating products, parts, and
    services (testing, labs, inspectors)
  • Internal failure - producing defective parts or
    service before delivery (scrap, rework, downtime
    of machinery)
  • External costs - defects discovered after
    delivery to customer (returned product,
    liabilities, loss of goodwill, warranty repair,
    costs to society)

43
Costs of Quality
44
Leaders in Quality
W. Edwards Deming 14 Points for Management Joseph
M. Juran Top management commitment, fitness for
use Armand Feigenbaum Total Quality
Control Philip B. Crosby Quality is Free, zero
defects
45
History of Development of TQM
  • PLEASE REFER TO SLIDE SET TITLED
  • HISTORY OF DEVELOPMENT OF TQM

46
Ethics and Quality Management
  • Operations managers must deliver healthy, safe,
    quality products and services
  • Poor quality risks injuries, lawsuits, recalls,
    and regulation
  • Organizations are judged by how they respond to
    problems
  • All stakeholders much be considered

47
TQM
  • Encompasses entire organization, from supplier to
    customer
  • Stresses a commitment by management to have a
    continuing, companywide drive toward excellence
    in all aspects of products and services that are
    important to the customer

48
Demings Fourteen Points
  1. Create consistency of purpose
  2. Lead to promote change
  3. Build quality into the product stop depending on
    inspection
  4. Build long-term relationships based on
    performance, not price
  5. Continuously improve product, quality, and
    service
  6. Start training
  7. Emphasize leadership

Table 6.1
49
Demings Fourteen Points
  1. Drive out fear
  2. Break down barriers between departments
  3. Stop haranguing workers
  4. Support, help, improve
  5. Remove barriers to pride in work
  6. Institute a vigorous program of education and
    self-improvement
  7. Put everybody in the company to work on the
    transformation

Table 6.1
50
Seven Concepts of TQM
  • Continuous improvement
  • Six Sigma
  • Employee empowerment
  • Benchmarking
  • Just-in-time (JIT)
  • Taguchi concepts
  • Knowledge of TQM tools

51
Continuous Improvement
  • Represents continual improvement of all processes
  • Involves all operations and work centers
    including suppliers and customers
  • People, Equipment, Materials, Procedures

52
Continuous ImprovementKAIZEN
  • PLEASE REFER TO SLIDE SET TITLED
  • CONTINUOUS IMPROVEMENT (KAIZEN)

53
Shewharts PDCA Model
Figure 6.3
54
Six Sigma
  • Two meanings
  • Statistical definition of a process that is
    99.9997 capable, 3.4 defects per million
    opportunities (DPMO)
  • A program designed to reduce defects, lower
    costs, and improve customer satisfaction

55
Six Sigma
  • Two meanings
  • Statistical definition of a process that is
    99.9997 capable, 3.4 defects per million
    opportunities (DPMO)
  • A program designed to reduce defects, lower
    costs, and improve customer satisfaction

Figure 6.4
56
Six Sigma Program
  • Originally developed by Motorola, adopted and
    enhanced by Honeywell and GE
  • Highly structured approach to process improvement
  • A strategy
  • A discipline - DMAIC

57
Six Sigma
DMAIC Approach
58
Six Sigma Implementation
  • Emphasize defects per million opportunities as a
    standard metric
  • Provide extensive training
  • Focus on corporate sponsor support (Champions)
  • Create qualified process improvement experts
    (Black Belts, Green Belts, etc.)
  • Set stretch objectives

This cannot be accomplished without a major
commitment from top level management
59
Employee Empowerment
  • Getting employees involved in product and process
    improvements
  • 85 of quality problems are due to process and
    material
  • Techniques
  • Build communication networks that include
    employees
  • Develop open, supportive supervisors
  • Move responsibility to employees
  • Build a high-morale organization
  • Create formal team structures

60
Quality Circles
  • Group of employees who meet regularly to solve
    problems
  • Trained in planning, problem solving, and
    statistical methods
  • Often led by a facilitator
  • Very effective when done properly

61
Benchmarking
Selecting best practices to use as a standard for
performance
Use internal benchmarking if youre big enough
  • Determine what to benchmark
  • Form a benchmark team
  • Identify benchmarking partners
  • Collect and analyze benchmarking information
  • Take action to match or exceed the benchmark

62
Benchmarking Factors for Web Sites
Use of meta tags Yes 70, No 30
Meaningful homepage title Yes 97, No 3
Unique domain name Yes 91, No 9
Search engine registration Above 96
Average loading speed 28K 19.31, 56K 10.88, T1 2.59
Average number of spelling errors 0.16
Visibility of contact information Yes 74, No 26
Presence of search engine Yes 59, No 41
Translation to multiple languages Yes 11, No 89
Table 6.3
63
Best Practices for Resolving Customer Complaints
  • Make it easy for clients to complain
  • Respond quickly to complaints
  • Resolve complaints on first contact
  • Use computers to manage complaints
  • Recruit the best for customer service jobs

64
Just-in-Time (JIT)
  • Relationship to quality
  • JIT cuts the cost of quality
  • JIT improves quality
  • Better quality means less inventory and better,
    easier-to-employ JIT system

65
Just-in-Time (JIT)
  • Pull system of production scheduling including
    supply management
  • Production only when signaled
  • Allows reduced inventory levels
  • Inventory costs money and hides process and
    material problems
  • Encourages improved process and product quality

66
Just-In-Time (JIT) Example
Work in process inventory level(hides problems)
67
Just-In-Time (JIT) Example
Reducing inventory revealsproblems so they can
be solved
Unreliable Vendors
Capacity Imbalances
Scrap
68
Taguchi Concepts
  • Engineering and experimental design methods to
    improve product and process design
  • Identify key component and process variables
    affecting product variation
  • Taguchi Concepts
  • Quality robustness
  • Quality loss function
  • Target-oriented quality

69
Quality Robustness
  • Ability to produce products uniformly in adverse
    manufacturing and environmental conditions
  • Remove the effects of adverse conditions
  • Small variations in materials and process do not
    destroy product quality

70
Quality Loss Function
  • Shows that costs increase as the product moves
    away from what the customer wants
  • Costs include customer dissatisfaction, warranty
    and service, internal scrap and repair, and
    costs to society
  • Traditional conformance specifications are too
    simplistic

Target-oriented quality
71
Quality Loss Function
Figure 6.5
72
Tools of TQM
  • Tools for Generating Ideas
  • Check sheets
  • Scatter diagrams
  • Cause-and-effect diagrams
  • Tools to Organize the Data
  • Pareto charts
  • Flowcharts
  • Tools for Identifying Problems
  • Histogram
  • Statistical process control chart

73
Seven Tools of TQM
(a) Check Sheet An organized method of recording
data
/ /
/ / /// / // ///
// ////
/// // /
Hour Defect 1 2 3 4 5 6 7 8 A B C
/ / //
/
Figure 6.6
74
Seven Tools of TQM
(b) Scatter Diagram A graph of the value of one
variable vs. another variable
Figure 6.6
75
Seven Tools of TQM
(c) Cause-and-Effect Diagram A tool that
identifies process elements (causes) that might
effect an outcome
Figure 6.6
76
Seven Tools of TQM
(d) Pareto Chart A graph to identify and plot
problems or defects in descending order of
frequency
Figure 6.6
77
Seven Tools of TQM
(e) Flowchart (Process Diagram) A chart that
describes the steps in a process
Figure 6.6
78
Seven Tools of TQM
(f) Histogram A distribution showing the
frequency of occurrences of a variable
Figure 6.6
79
Seven Tools of TQM
(g) Statistical Process Control Chart A chart
with time on the horizontal axis to plot values
of a statistic
Figure 6.6
80
Cause-and-Effect Diagrams
Figure 6.7
81
Pareto Charts
82
Flow Charts
MRI Flowchart
  1. Physician schedules MRI
  2. Patient taken to MRI
  3. Patient signs in
  4. Patient is prepped
  5. Technician carries out MRI
  6. Technician inspects film
  1. If unsatisfactory, repeat
  2. Patient taken back to room
  3. MRI read by radiologist
  4. MRI report transferred to physician
  5. Patient and physician discuss

83
Statistical Process Control (SPC)
  • Uses statistics and control charts to tell when
    to take corrective action
  • Drives process improvement
  • Four key steps
  • Measure the process
  • When a change is indicated, find the assignable
    cause
  • Eliminate or incorporate the cause
  • Restart the revised process

84
An SPC Chart
Figure 6.8
85
Inspection
  • Involves examining items to see if an item is
    good or defective
  • Detect a defective product
  • Does not correct deficiencies in process or
    product
  • It is expensive
  • Issues
  • When to inspect
  • Where in process to inspect

86
When and Where to Inspect
  1. At the suppliers plant while the supplier is
    producing
  2. At your facility upon receipt of goods from the
    supplier
  3. Before costly or irreversible processes
  4. During the step-by-step production process
  5. When production or service is complete
  6. Before delivery to your customer
  7. At the point of customer contact

87
Inspection
  • Many problems
  • Worker fatigue
  • Measurement error
  • Process variability
  • Cannot inspect quality into a product
  • Robust design, empowered employees, and sound
    processes are better solutions

88
Source Inspection
  • Also known as source control
  • The next step in the process is your customer
  • Ensure perfect product to your customer

Poka-yoke is the concept of foolproof devices or
techniques designed to pass only acceptable
product
89
Service Industry Inspection
Organization What is Inspected Standard
Jones Law Office Receptionist performance Billing Attorney Is phone answered by the second ring Accurate, timely, and correct format Promptness in returning calls
Table 6.5
90
Service Industry Inspection
Organization What is Inspected Standard
Hard Rock Hotel Reception desk Doorman Room Minibar Use customers name Greet guest in less than 30 seconds All lights working, spotless bathroom Restocked and charges accurately posted to bill
Table 6.5
91
Service Industry Inspection
Organization What is Inspected Standard
Arnold Palmer Hospital Billing Pharmacy Lab Nurses Admissions Accurate, timely, and correct format Prescription accuracy, inventory accuracy Audit for lab-test accuracy Charts immediately updated Data entered correctly and completely
Table 6.5
92
Service Industry Inspection
Organization What is Inspected Standard
Olive Garden Restaurant Busboy Busboy Waiter Serves water and bread within 1 minute Clears all entrée items and crumbs prior to dessert Knows and suggest specials, desserts
Table 6.5
93
Service Industry Inspection
Organization What is Inspected Standard
Nordstrom Department Store Display areas Stockrooms Salesclerks Attractive, well-organized, stocked, good lighting Rotation of goods, organized, clean Neat, courteous, very knowledgeable
Table 6.5
94
Attributes Versus Variables
  • Attributes
  • Items are either good or bad, acceptable or
    unacceptable
  • Does not address degree of failure
  • Variables
  • Measures dimensions such as weight, speed,
    height, or strength
  • Falls within an acceptable range
  • Use different statistical techniques

95
TQM In Services
  • Service quality is more difficult to measure than
    the quality of goods
  • Service quality perceptions depend on
  • Intangible differences between products
  • Intangible expectations customers have of those
    products

96
Service Quality
The Operations Manager must recognize
  1. The tangible component of services is important
  2. The service process is important
  3. The service is judged against the customers
    expectations
  4. Exceptions will occur

97
ServiceSpecificationsat UPS
98
Determinants of Service Quality
  • Reliability
  • Responsiveness
  • Competence
  • Access
  • Courtesy
  • Communication
  • Credibility
  • Security
  • Understanding/ knowing the customer
  • Tangibles

99
Service Recovery Strategy
  • Managers should have a plan for when services
    fail
  • Marriotts LEARN routine
  • Listen
  • Empathize
  • Apologize
  • React
  • Notify
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