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6 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall

66 Managing QualityManaging Quality

PowerPoint presentation to accompanyHeizer and RenderOperations Management, 10ePrinciples of Operations Management, 8e

PowerPoint slides by Jeff Heyl


Quality and Strategy

Strategi manajer operasisasarannya adalah membangun

sistem TQM yang mengidentifikasidan memuaskan pelanggan.


Quality and Strategy

Managing quality supportsdifferentiation, low cost, andresponse strategies

Quality helps firms increasesales and reduce costs

Building a quality organization isa demanding task

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Two Ways QualityImproves Profitability

ImprovedQuality

IncreasedProfits

Increased productivity Lower rework and scrap costs Lower warranty costs

Reduced Costs via

Improved response Flexible pricing Improved reputation

Sales Gains via

Figure 6.1


The Flow of ActivitiesOrganizational Practices

Leadership, Mission statement, Effective operatingprocedures, Staff support, TrainingYields: What is important and what is to be

accomplishedQuality Principles

Customer focus, Continuous improvement, Benchmarking,Just-in-time, Tools of TQMYields: How to do what is important and to be

accomplishedEmployee Fulfillment

Empowerment, Organizational commitmentYields: Employee attitudes that can accomplish

what is importantCustomer Satisfaction

Winning orders, Repeat customersYields: An effective organization with

a competitive advantageFigure 6.2


Defining Quality

The totality of features andcharacteristics of a product or

service that bears on its ability tosatisfy stated or implied needs

American Society for Quality

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Different Views

User-based: better performance,more features

Manufacturing-based:conformance to standards,making it right the first time

Product-based: specific andmeasurable attributes of theproduct


Implications of Quality1. Company reputation

Perception of new products Employment practices Supplier relations

2. Product liability Reduce risk

3. Global implications Improved ability to compete


Key Dimensions of QualityKey Dimensions of Quality

Performance Features Reliability Conformance

Durability Serviceability Aesthetics Perceived quality Value

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Costs of Quality

Prevention costs - reducing thepotential for defects

Appraisal costs - evaluatingproducts, parts, and services

Internal failure - producing defectiveparts or service before delivery

External costs - defects discoveredafter delivery


External Failure

Internal Failure

Prevention

Costs of Quality

Appraisal

TotalCost

Quality Improvement

Total Cost


Ethics and QualityManagement

Operations managers must deliverhealthy, safe, quality products andservices

Poor quality risks injuries, lawsuits,recalls, and regulation

Organizations are judged by howthey respond to problems

All stakeholders much beconsidered

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International QualityStandards

ISO 9000 series (Europe/EC) Common quality standards for products

sold in Europe (even if made in U.S.) 2008 update places greater emphasis on

leadership and customer requirementsand satisfaction

ISO 14000 series (Europe/EC)


ISO 14000Environmental Standard

Core Elements:

Environmental management Auditing Performance evaluation Labeling Life cycle assessment


ISO 14000Environmental Standard

Advantages: Positive public image and reduced

exposure to liability Systematic approach to pollution

prevention Compliance with regulatory

requirements and opportunities forcompetitive advantage

Reduction in multiple audits

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TQM

Encompasses entire organization,from supplier to customer

Stresses a commitment bymanagement to have a continuing,

companywide drive towardexcellence in all aspects of productsand services that are important to the

customer


Seven Concepts of TQM1. Continuous improvement2. Six Sigma3. Employee empowerment4. Benchmarking5. Just-in-time (JIT)6. Taguchi concepts7. Knowledge of TQM tools


Continuous Improvement

Represents continualimprovement of all processes

Involves all operations and workcenters including suppliers andcustomersPeople, Equipment, Materials,

Procedures

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Six Sigma

Two meanings Statistical definition of a process that

is 99.9997% capable, 3.4 defects permillion opportunities (DPMO)

A program designed to reducedefects, lower costs, and improvecustomer satisfaction


Two meanings Statistical definition of a process that

is 99.9997% capable, 3.4 defects permillion opportunities (DPMO)

A program designed to reducedefects, lower costs, and improvecustomer satisfaction

Six Sigma

Mean

Lower limits Upper limits

3.4 defects/million

±6

2,700 defects/million

±3

Figure 6.4


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

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BenchmarkingSelecting best practices to use as astandard for performance

1. Determine what tobenchmark

2. Form a benchmark team3. Identify benchmarking partners4. Collect and analyze benchmarking

information5. Take action to match or exceed the

benchmark


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


Just-in-Time (JIT)

‘Pull’ system of production schedulingincluding 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

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Just-In-Time (JIT) Example

ScrapUnreliableVendors

CapacityImbalances

Work in processinventory level

(hides problems)


Just-In-Time (JIT) Example

Reducing inventory revealsproblems so they can be solved

ScrapUnreliableVendors

CapacityImbalances


Taguchi Concepts Engineering and experimental

design methods to improve productand process design Identify key component and process

variables affecting product variation Taguchi Concepts

Quality robustness Quality loss function Target-oriented quality

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Quality Robustness

Ability to produce productsuniformly in adverse manufacturingand environmental conditions Remove the effects of adverse

conditions Small variations in materials and

process do not destroy productquality


Quality Loss Function Shows that costs increase as the

product moves away from whatthe customer wants

Costs include customerdissatisfaction, warrantyand service, internalscrap and repair, and costs tosociety

Traditional conformancespecifications are too simplistic


Unacceptable

Poor

GoodBest

Fair

Quality Loss FunctionHigh loss

Loss (toproducingorganization,customer,and society)

Low loss

Frequency

Lower Target UpperSpecification

Target-oriented qualityyields more product inthe “best” category

Target-oriented qualitybrings product towardthe target valueConformance-orientedquality keeps productswithin 3 standarddeviations

Figure 6.5

L = D2Cwhere

L = loss to societyD = distance from

target valueC = cost of deviation

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Tools of TQM

Tools for Generating Ideas Check sheets Scatter diagrams Cause-and-effect diagrams

Tools to Organize the Data Pareto charts Flowcharts


Tools of TQM Tools for Identifying Problems

Histogram Statistical process control chart


//

/ / /// /// ///// ////

//////

HourDefect 1 2 3 4 5 6 7 8

ABC

////

/

Seven Tools of TQM(a) Check Sheet: An organized method of

recording data

Figure 6.6

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Seven Tools of TQM(b) Scatter Diagram: A graph of the value

of one variable vs. another variable

Absenteeism

Prod

uctiv

ity

Figure 6.6


Seven Tools of TQM(c) Cause-and-Effect Diagram: A tool that

identifies process elements (causes) thatmight effect an outcome

Figure 6.6

CauseMaterials Methods

Manpower Machinery

Effect


Seven Tools of TQM(d) Pareto Chart: A graph to identify and plot

problems or defects in descending order offrequency

Figure 6.6

Freq

uenc

y

Perc

ent

A B C D E

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Seven Tools of TQM(e) Flowchart (Process Diagram): A chart that

describes the steps in a process

Figure 6.6


Seven Tools of TQM(f) Histogram: A distribution showing the

frequency of occurrences of a variable

Figure 6.6

Distribution

Repair time (minutes)

Freq

uenc

y


Seven Tools of TQM(g) Statistical Process Control Chart: A chart with

time on the horizontal axis to plot values of astatistic

Figure 6.6

Upper control limit

Target value

Lower control limit

Time

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Cause-and-Effect DiagramsMaterial

(ball)Method

(shooting process)

Machine(hoop &

backboard)Manpower(shooter)

Missedfree-throws

Figure 6.7

Rim alignment

Rim size

Backboardstability

Rim height

Follow-through

Hand position

Aiming point

Bend knees

Balance

Size of ball

Lopsidedness

Grain/Feel(grip)

Air pressure

Training

Conditioning Motivation

Concentration

Consistency


Pareto Charts

Number ofoccurrences

Room svc Check-in Pool hours Minibar Misc.72% 16% 5% 4% 3%

124 3 2

54

– 100– 93– 88

– 72

70 –

60 –

50 –

40 –

30 –

20 –

10 –

0 –

Freq

uenc

y (n

umbe

r)

Causes and percent of the total

Cum

ulat

ive

perc

ent

Data for October


Flow Charts

MRI Flowchart1. Physician schedules MRI2. Patient taken to MRI3. Patient signs in4. Patient is prepped5. Technician carries out MRI6. Technician inspects film

7. If unsatisfactory, repeat8. Patient taken back to room9. MRI read by radiologist10. MRI report transferred to

physician11. Patient and physician discuss

11

10

20%

9

880%

1 2 3 4 5 6 7

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Statistical Process Control(SPC)

Uses statistics and control charts totell 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


An SPC Chart

Upper control limit

Coach’s target value

Lower control limit

Game number

| | | | | | | | |1 2 3 4 5 6 7 8 9

20%

10%

0%

Plots the percent of free throws missed

Figure 6.8


Inspection Involves examining items to see if

an item is good or defective Detect a defective product

Does not correct deficiencies inprocess or product

It is expensive Issues

When to inspect Where in process to inspect

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When and Where to Inspect1. At the supplier’s plant while the supplier is

producing2. At your facility upon receipt of goods from

the supplier3. Before costly or irreversible processes4. During the step-by-step production

process5. When production or service is complete6. Before delivery to your customer7. At the point of customer contact


Inspection Many problems

Worker fatigue Measurement error Process variability

Cannot inspect quality into aproduct

Robust design, empoweredemployees, and sound processesare better solutions


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 devicesor techniques designed to pass only

acceptable product

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Service Industry Inspection

Organization What isInspected Standard

Jones Law Office ReceptionistperformanceBilling

Attorney

Is phone answered by thesecond ringAccurate, timely, andcorrect formatPromptness in returningcalls

Table 6.4




Hard Rock Hotel ReceptiondeskDoorman

Room

Minibar

Use customer’s name

Greet guest in less than 30secondsAll lights working, spotlessbathroomRestocked and chargesaccurately posted to bill

Table 6.4




Arnold PalmerHospital

Billing

Pharmacy

LabNurses

Admissions

Accurate, timely, andcorrect formatPrescription accuracy,inventory accuracyAudit for lab-test accuracyCharts immediatelyupdatedData entered correctly andcompletely

Table 6.4

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Olive GardenRestaurant

Busboy

Busboy

Waiter

Serves water and breadwithin 1 minuteClears all entrée items andcrumbs prior to dessertKnows and suggestspecials, desserts

Table 6.4




NordstromDepartmentStore

Display areas

Stockrooms

Salesclerks

Attractive, well-organized,stocked, good lightingRotation of goods,organized, cleanNeat, courteous, veryknowledgeable

Table 6.4


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

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TQM In Services

Service quality is more difficult tomeasure than the quality of goods

Service quality perceptions dependon Intangible differences between

products Intangible expectations customers

have of those products


Service QualityThe Operations Manager mustrecognize:

1. The tangible component ofservices is important

2. The service process is important3. The service is judged against the

customer’s expectations4. Exceptions will occur


ServiceSpecifications

at UPS

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Determinants of ServiceQuality

Reliability Consistency of performance and dependability

Responsiveness Willingness or readiness of employees

Competence Required skills and knowledge

Access Approachability and ease of contact

Courtesy Politeness, respect, consideration, friendliness

Communication Keeping customers informed

Credibility Trustworthiness, believability, honesty

Security Freedom from danger, risk, or doubtUnderstanding/knowing the customer Understand the customer’s needs

Tangibles Physical evidence of the service

Table 6.5


Service Recovery Strategy

Managers should have a plan forwhen services fail

Marriott’s LEARN routine Listen Empathize Apologize React Notify


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