Operations

Management
Managing Quality
Chapter 12

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12-1
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 Outline
♦ QUALITY AND STRATEGY
♦ DEFINING QUALITY
♦ Implications of Quality
♦ Malcolm Baldrige National Quality Award
♦ Cost of Quality (COQ)
♦ INTERNATIONAL QUALITY STANDARDS
♦ TOTAL QUALITY MANAGEMENT
♦ Continuous Improvement
♦ Employee Empowerment
♦ Benchmarking
♦ Just-in-Time (JIT)
♦ Taguchi Concepts
♦ Knowledge of TQM Tools

Prepared by: Shatina Saad @ OPM 533

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 Outline - Continued
♦ TOOLS OF TQM
♦ Check sheets
♦ Scatter Diagrams
♦ Cause-and-Effect Diagram
♦ Pareto Charts
♦ Flow Charts
♦ Histograms
♦ Statistical Process Control (SPC)

♦ TQM IN SERVICES

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 Learning Objectives
When you complete this chapter, you should
be able to:
Identify or Define:
♦ Quality
♦ Malcolm Baldrige National Quality Award
♦ ISO International Quality Standards
♦ Demings, Juran, and Crosby
♦ Taguchi Concepts

Prepared by: Shatina Saad @ OPM 533

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 Learning Objectives -
continued
When you complete this chapter, you
should be able to :
Explain:
♦ Why quality is important
♦ Total Quality Management (TQM)
♦ Pareto charts
♦ Process charts
♦ Quality robust products

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 Ways in Which Quality
Can Improve
Productivity
Sales Gains
♦ Improved response
♦ Higher Prices
♦ Improved reputation
Improv Increas
ed ed
Quality
Reduced Costs Profits
♦ Increased productivity
♦ Lower rework and
scrap costs
♦ Lower warranty costs

Prepared by: Shatina Saad @ OPM 533

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 Flow of Activities
Necessary to Achieve
Total Quality Management
♦ Organizational
Practices
♦ Quality Principles

♦ Employee
Fulfillment
♦ Customer
Satisfaction
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 1. Organizational
Practices
♦ Leadership
♦ Mission statement
♦ Effective operating procedure
♦ Staff support
♦ Training
Yields: What is important and what is to be
accomplished

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 2. Quality Principles

♦ Customer focus
♦ Continuous improvement
♦ Employee empowerment
♦ Benchmarking
♦ Just-in-time
♦ Tools of TQM
Yields: How to do what is important and to
be accomplished

Prepared by: Shatina Saad @ OPM 533

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 3. Employment
Fulfillment
♦ Empowerment
♦ Organizational commitment
Yields: Employees’ attitudes that they can
accomplish what is important and to be
accomplished

Prepared by: Shatina Saad @ OPM 533

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 4. Customer
Satisfaction
♦ Winning orders
♦ Repeat customers
Yields: An effective organization with a
competitive advantage

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 Definitions of Quality

♦ ASQ: Product characteristics & features

that affect customer satisfaction
♦ User-Based: What consumer says it is
♦ Manufacturing-Based: Degree to which a
product conforms to design specification
♦ Product-Based: Level of measurable
product characteristic

Prepared by: Shatina Saad @ OPM 533

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 Dimensions of Quality
for Goods
♦ Operation
♦ Reliability & durability
♦ Conformance Quality
♦ Serviceability
♦ Appearance
♦ Perceived quality

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 Service Quality
Attributes
Reliability Responsiveness

Tangibles Competence

Under- Access
standing

Security Courtesy
© 1995 Corel Corp.

Credibility Communication
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 Importance of Quality

♦ Costs &
market share Market Gains
♦ Company’s Reputation
reputation Volume
♦ Product Price
liability Improved Increased
Quality Profits
♦ International
Lower Costs
implications
Productivity
Rework/Scrap
Warranty
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 Malcom Baldrige
National Quality Award
♦ Established in 1988 by the U.S. government
♦ Designed to promote TQM practices
♦ Some criteria
♦ Senior executive leadership; Strategic planning;
Customer & Market focus; Information analysis;
Human Resource focus; Process management;
♦ Business results; customer satisfaction
♦ Recent winners
♦ Motorola, Xerox, Federal Express, Texas
Instruments.
Prepared by: Shatina Saad @ OPM 533
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 Costs of Quality
♦ Prevention costs - reducing the potential for
defects
♦ Appraisal costs - evaluating products
♦ Internal failure - of producing defective parts
or service
♦ External costs - occur after delivery

Costs of poor quality “are huge, but the

amounts are not known with precision. In
most companies, the accounting system
provides only a minority of the information
needed to quantify this cost of poor quality
Juranby:on
Prepared Quality
Shatina Saad by
@ Design, The Free Press (1992), p. 119
12-17 OPM 533

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 International Quality
Standards
♦ Industrial Standard Z8101-1981 (Japan)
♦ Specification for TQM
♦ ISO 9000 series (Europe/EC)
♦ Common quality standards for products sold
in Europe (even if made in U.S.)
♦ ISO 14000 series (Europe/EC)
♦ Standards for recycling, labeling etc.
♦ ASQC Q90 series; MILSTD (U.S.)

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EC Environmental Standard
ISO 14000
Core Elements:
♦ Environmental management
♦ Auditing
♦ Performance evaluation
♦ Labeling
♦ Life-cycle assessment

Advantages:
♦ Positive public image & reduced exposure to liability
♦ Good systematic approach to pollution prevention
♦ Compliance with regulatory requirements
♦ Reduction in need of multiple audits

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 Traditional
Quality Process
(Manufacturing)
Customer Marketing Engineering Operations

Specifies Interprets Designs Produces

Need Need Product Product

Defines Plans
Quality Quality
t y i s i ve n!
u a li r dr
Q e Monitors
u s tom
c Quality
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 TQM
Encompasses entire organization, from
supplier to customer
Stresses a commitment by management to
have a continuing, company-wide, drive
toward excellence in all aspects of
products and services that are important
to the customer.

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 Achieving
Total Quality
Management
Effective Customer
Business Satisfaction

Employee Attitudes
Fulfillmen (e.g.,
t Commitment)
Quality How to Do
Principle
s What to Do
Organizationa
l Practices
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 Deming’s Fourteen
Points
1. Create consistency of purpose
2. Lead to promote change
3. Build quality into the products
4. Build long term relationships
5. Continuously improve product, quality,
and service
6. Start training
7. Emphasize leadership

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 Deming’s Points -
continued
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
Prepared by: Shatina Saad @ OPM 533
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 Concepts of TQM

1. Continuous improvement
2. Employee empowerment
3. Benchmarking
4. Just-in-time (JIT)
5. Taguchi concepts
6. Knowledge of TQM tools

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 1. Continuous
Improvement
♦ Represents continual improvement of
process & customer satisfaction
♦ Involves all operations
& work units
♦ Other names
♦ Kaizen (Japanese)
♦ Zero-defects
♦ Six sigma

© 1984-1994 T/Maker Co.

Prepared by: Shatina Saad @ OPM 533
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 Shewhart’s PDCA
Model

4 1.Plan
Implem
.Act Identify the
ent the improvement
plan and make a
plan
3.Che 2.Do
Is the Test the
ck
plan plan
workin
g

Prepared by: Shatina Saad @ OPM 533

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 2. Employee
Empowerment
♦ Getting employees involved in
product & process improvements
♦ 85% of quality problems are due to
process & material
♦ Techniques
♦ Support workers © 1995 Corel Corp.

♦ Let workers make decisions

♦ Build teams & quality circles

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 Quality Circles
♦ Group of 6-12 employees from same
work area
♦ Meet regularly to solve work-related
problems
♦ 4 hours/month
♦ Facilitator trains & helps
with meetings

Prepared by: Shatina Saad @ OPM 533

© 1995 Corel Corp. 12-29
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 3. Benchmarking
“Selecting best practices to use
as a standard for performance”
♦ Determine what to benchmark
♦ Form a benchmark team
♦ Identify benchmarking partners
♦ Collect and analyze benchmarking
information
♦ Take action to match or exceed the
benchmark

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 Resolving Customer
Complaints
Best Practices
♦ Make it easy for clients to complain
♦ Respond quickly to complaints
♦ Resolve complaints on the first contact
♦ Use computers to manage complaints
♦ Recruit the best for customer service jobs

Prepared by: Shatina Saad @ OPM 533

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 4. Just-in-Time (JIT)
♦ Relationship to quality:
♦ JIT cuts cost of quality
♦ JIT improves quality
♦ Better quality means less inventory and better, easier-to-
employ JIT system
♦ ‘Pull’ system of production/purchasing
♦ Customer starts production with an order
♦ Involves ‘vendor partnership programs’ to improve
quality of purchased items
♦ Reduces all inventory levels
♦ Inventory hides process & material problems
♦ Improves process & product quality

Prepared by: Shatina Saad @ OPM 533

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 Just-In-Time (JIT)
Example

Work in process inventory level

(hides problems)

Unreliabl Capacity
Scrap
e Vendors Imbalanc
es
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 Just-In-Time (JIT)
Example
Reducing inventory
reveals
problems so they can
be solved.

Unreliable Capacity
Scrap
Vendors Imbalance
s
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 5. Taguchi Techniques
♦ Experimental design methods to
improve product & process design
♦ Identify key component & process variables
affecting product variation
♦ Taguchi Concepts
a) Quality robustness
b) Quality loss function
c) Target specifications

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 a) Quality Robustness
♦ Ability to produce © 1995 Corel Corp.

products uniformly
regardless of
manufacturing
conditions
♦ Put robustness in
House of Quality
(QFD) matrices
besides functionality
© 1984-1994 T/Maker Co.

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 Quality Function
Deployment
(QFD)
♦ Determines what will satisfy the
customer
♦ Translates those customer desires into
the target design

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 b) Quality Loss
Function
♦ Shows social cost ($) of deviation from target
value
♦ Assumptions
♦ Most measurable quality characteristics (e.g.,
length, weight) have a target value
♦ Deviations from target value are undesirable

♦ Equation: L = D2C
♦ L = Loss ($); D = Deviation; C = Cost

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 Quality Loss Function;
Distribution of Products
Produced
High loss Quality Loss Function (a)
Unacceptable
Loss (to Target-
producing Poor oriented
organizati Fair quality yields
on, Good
more product
customer, Be
in the “best”
and Low loss Target-oriented
category
st
society) quality brings
products toward
the target value
Conformance-
Frequency oriented quality
keeps product
within three
standard of
Distribution
Lower Target Upper deviations for
specifications
Specification product produced
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 c) Target Specification
Example
A study found U.S. consumers preferred
Sony TV’s made in Japan to those made in
the U.S. Both factories used the same
designs & specifications. The difference in
quality goals made the difference in
Freq. consumer preferences.
Japanese factory
(Target-oriented)
U.S. factory
(Conformance-
X oriented)
LSL Target USL
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 6. Tools of TQM
♦ Tools for generating ideas
♦ Check sheet
♦ Scatter diagram
♦ Cause and effect diagram
♦ Tools to organize data
♦ Pareto charts
♦ Process charts (Flow diagrams)
♦ Tools for identifying problems
♦ Histograms
♦ Statistical process control chart

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 Seven Tools for TQM

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 Process Chart
♦ Shows sequence of events in process
♦ Depicts activity relationships
♦ Has many uses
♦ Identify data collection points
♦ Find problem sources
♦ Identify places for improvement
♦ Identify where travel distances can be reduced

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 Process Chart Example

SUBJECT: Request tool purchase

Dist (ft) Time (min) Symbol Description
D ∇ Write order
 D ∇ On desk
75  ➨ D ∇ To buyer
 D ∇ Examine
 = Operation;  = Transport;  =
Inspect;
D = Delay; ∇ = Storage OPM 533
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 Cause and Effect
Diagram
♦ Used to find problem sources/solutions
♦ Other names
♦ Fish-bone diagram, Ishikawa diagram
♦ Steps
♦ Identify problem to correct
♦ Draw main causes for problem as ‘bones’
♦ Ask ‘What could have caused problems in these
areas?’ Repeat for each sub-area.

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 Cause and Effect
Diagram Example
Method Manpower

Drill Tired
Overtime
Slow Too many
defects
Wood Old

Steel Lathe
Material Machinery

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 Statistical Process
Control (SPC)
♦ Uses statistics & control charts to tell
when to adjust process
♦ Developed by Shewhart in 1920’s
♦ Involves
♦ Creating standards (upper & lower limits)
♦ Measuring sample output (e.g. mean wgt.)
♦ Taking corrective action (if necessary)

♦ Done while product is being produced

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 Statistical Process
Control Steps
Produce Good
Start
Provide Service
No
Assign.
Take Sample Causes?
Yes
Inspect Sample Stop Process

Create
Find Out Why
Control Chart

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 Process Control Chart
Plot of Sample Data Over Time
80
Sample
Sample Value

60 Value
UCL
40
Average
20 LCL
0
1 5 9 13 17 21
Time
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 Patterns to Look for in
Control Charts

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 TQM In Services
♦ Service quality is more difficult to measure
than for goods
♦ Service quality perceptions depend on
♦ Expectations versus reality
♦ Process and outcome

♦ Types of service quality

♦ Normal: Routine service delivery
♦ Exceptional: How problems are handled

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 Service Quality
Attributes
Reliability Responsiveness
Tangibles Competence
Under-
standing Access

Security Courtesy
© 1995 Corel Corp.

Credibility Communication

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 Determinants of
Service Quality
♦ Reliability – consistency and dependability
♦ Responsiveness – willingness/readiness of
employees to provide service; timeliness
♦ Competence – possession of skills and
knowledge required to perform service
♦ Access – approachability and ease of
contact
♦ Courtesy – politeness, respect,
consideration, friendliness of contact
personnel

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 Determinants of Service
Quality
♦ Communication – keeping customers informed
in languages they understand
♦ Credibility – trustworthiness, believability,
honesty
♦ Security – freedom from danger, risk or doubt
♦ Understanding/knowing the customer –
making the effort to understands the
customer’s needs
♦ Tangibles – the physical evidence of the
service
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