heizer om10 ch06-managing quality

10/16/2010

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66 Managing QualityManaging Quality

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

PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8ePrinciples of Operations Management, 8e

PowerPoint slides by Jeff Heyl

OutlineOutlineGlobal Company Profile: Arnold Palmer HospitalQuality and StrategyDefining Quality


g Q yImplications of QualityMalcolm Baldrige National Quality AwardCost of Quality (COQ)Ethics and Quality Management

Outline Outline –– ContinuedContinued

International Quality StandardsISO 9000ISO14000



Total Quality ManagementContinuous ImprovementSix Sigma


Employee EmpowermentBenchmarkingJust-in-Time (JIT)Taguchi ConceptsKnowledge of TQM Tools


Tools of TQMCheck SheetsScatter Diagrams


Cause-and-Effect DiagramsPareto ChartsFlowchartsHistogramsStatistical Process Control (SPC)


The Role of InspectionWhen and Where to InspectSource Inspection


pService Industry InspectionInspection of Attributes versus Variables

TQM in Services

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Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:

1. Define quality and TQM2. Describe the ISO international

quality standards


quality standards3. Explain Six Sigma4. Explain how benchmarking is used 5. Explain quality robust products and

Taguchi concepts6. Use the seven tools of TQM

Managing Quality Provides a Managing Quality Provides a Competitive AdvantageCompetitive Advantage

Arnold Palmer HospitalDeliver over 16,000 babies annuallyVirtually every type of quality tool is


Virtually every type of quality tool is employed

Continuous improvementEmployee empowermentBenchmarkingJust-in-timeQuality tools

Quality and StrategyQuality and Strategy

An operations manager’s objective An operations manager’s objective is to build a total quality is to build a total quality

management system that identifies management system that identifies


g yg yand satisfies customer needsand satisfies customer needs

Quality and StrategyQuality and Strategy

Managing quality supports differentiation, low cost, and response strategies


Quality helps firms increase sales and reduce costsBuilding a quality organization is a demanding task

Two Ways Quality Two Ways Quality Improves ProfitabilityImproves Profitability

Improved responseFlexible pricing

Sales Gains via


Improved Quality

Increased Profits

Increased productivityLower rework and scrap costsLower warranty costs

Reduced Costs via

Improved reputation

Figure 6.1

The Flow of ActivitiesThe Flow of ActivitiesOrganizational Practices

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

accomplishedQuality Principles

Customer focus, Continuous improvement, Benchmarking, Just in time Tools of TQM


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

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Defining QualityDefining Quality

The totality of features and characteristics of a product or


service that bears on its ability to satisfy stated or implied needs

American Society for Quality

Different ViewsDifferent Views

UserUser--basedbased: better performance, more featuresManufacturingManufacturing--basedbased:

f t t d d


conformance to standards, making it right the first timeProductProduct--basedbased: specific and measurable attributes of the product

Implications of QualityImplications of Quality1. Company reputation

Perception of new productsEmployment practices


Supplier relations2. Product liability

Reduce risk3. Global implications

Improved ability to compete

Key Dimensions of QualityKey Dimensions of QualityKey Dimensions of QualityKey Dimensions of Quality

PerformanceFeatures

DurabilityServiceability


ReliabilityConformance

AestheticsPerceived qualityValue

Malcolm Baldrige National Malcolm Baldrige National Quality AwardQuality Award

Established in 1988 by the U.S. governmentDesigned to promote TQM practices


Recent winners includeHoneywell Federal, Midway USA,AtlantiCare, Heartland Health, Cargill Corn Milling, PRO-TEC Coating Co., City of Coral Springs, Premier Inc., Sunny Fresh Foods, Park Place Lexus, Richland College

Baldrige CriteriaBaldrige CriteriaApplicants are evaluated on:

Categories PointsLeadership 120Strategic Planning 85


Customer & Market Focus 85Measurement, Analysis, and Knowledge Management 90Workforce Focus 85Process Management 85Results 450

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TakumiTakumi

A Japanese character that symbolizes a broader dimension


than quality, a deeper process than education, and a more perfect method than persistence

Costs of QualityCosts of Quality

Prevention costsPrevention costs - reducing the potential for defectsAppraisal costsAppraisal costs - evaluating


products, parts, and servicesInternal failureInternal failure - producing defective parts or service before deliveryExternal costsExternal costs - defects discovered after delivery

External Failure

Costs of QualityCosts of Quality

Total Cost

Total Cost


Internal Failure

Prevention

Appraisal

Quality Improvement

Leaders in QualityLeaders in QualityLeader Philosophy/ContributionW. Edwards Deming 14 Points for

ManagementJoseph M. Juran Top management

6 - 22© 2011 Pearson Education, Inc. publishing as Prentice HallTable 6.1

p p gcommitment, fitness for use

Armand Feigenbaum Total Quality ControlPhilip B. Crosby Quality is Free, zero

defects

Ethics and Quality Ethics and Quality ManagementManagement

Operations managers must deliver healthy, safe, quality products and services


Poor quality risks injuries, lawsuits, recalls, and regulationOrganizations are judged by how they respond to problemsAll stakeholders much be considered

International Quality International Quality StandardsStandards

ISO 9000 series (Europe/EC)Common quality standards for products sold in Europe (even if made in U S )


sold in Europe (even if made in U.S.)2008 update places greater emphasis on leadership and customer requirements and satisfaction

ISO 14000 series (Europe/EC)

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ISO 14000ISO 14000Environmental StandardEnvironmental Standard

Core Elements:

Environmental management


gAuditingPerformance evaluationLabelingLife cycle assessment

ISO 14000ISO 14000Environmental StandardEnvironmental Standard

Advantages:Positive public image and reduced exposure to liability


p ySystematic approach to pollution preventionCompliance with regulatory requirements and opportunities for competitive advantageReduction in multiple audits

TQMTQM

Encompasses entire organization, from supplier to customer

Stresses a commitment by


ymanagement to have a continuing,

companywide drive toward excellence in all aspects of products and services that are important to the

customer

Deming’s Fourteen PointsDeming’s Fourteen Points1. Create consistency of purpose 2. Lead to promote change3. Build quality into the product; stop

depending on inspections


depe d g o spect o s4. Build long-term relationships based on

performance instead of awarding business on price

5. Continuously improve product, quality, and service

Deming’s Fourteen PointsDeming’s Fourteen Points6. Start training7. Emphasize leadership8. Drive out fear9 B k d b i b t


9. Break down barriers between departments

10. Stop haranguing workers11. Support, help, and improve

Deming’s Fourteen PointsDeming’s Fourteen Points12. Remove barriers to pride in work13. Institute education and self-

improvement14. Put everyone to work on the


14. Put everyone to work on the transformation

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Seven Concepts of TQMSeven Concepts of TQM1. Continuous improvement2. Six Sigma3. Employee empowerment


4. Benchmarking5. Just-in-time (JIT)6. Taguchi concepts7. Knowledge of TQM tools

Continuous ImprovementContinuous Improvement

Represents continual improvement of all processes Involves all operations and work


Involves all operations and work centers including suppliers and customers

People, Equipment, Materials, Procedures

4. ActImplement

the plan document

1.PlanIdentify the pattern and make a plan

Shewhart’s PDCA ModelShewhart’s PDCA Model


2. DoTest the

plan

3. CheckIs the plan working?

Figure 6.3

Six SigmaSix Sigma

Two meaningsStatistical definition of a process that is 99.9997% capable, 3.4 defects per million opportunities (DPMO)


million opportunities (DPMO)A program designed to reduce defects, lower costs, and improve customer satisfaction

Two meaningsTwo meaningsStatistical definition of a process that Statistical definition of a process that is 99.9997% capable, 3.4 defects per is 99.9997% capable, 3.4 defects per million opportunities (DPMO)million opportunities (DPMO)

Six SigmaSix SigmaLower limits Upper limits

3.4 defects/million

2,700 defects/million


million opportunities (DPMO)million opportunities (DPMO)A program designed to reduce A program designed to reduce defects, lower costs, and improve defects, lower costs, and improve customer satisfactioncustomer satisfaction

Mean

±6σ

±3σ

Figure 6.4

Six Sigma ProgramSix Sigma ProgramOriginally developed by Motorola, adopted and enhanced by Honeywell and GEHighly structured approach to


Highly structured approach to process improvement

A strategyA discipline - DMAIC 6σ6σ

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Six SigmaSix Sigma1. Define critical outputs

and identify gaps for improvement

2. Measure the work and collect process data

DMAIC Approach


collect process data3. Analyze the data4. Improve the process5. Control the new process to

make sure new performance is maintained

Six Sigma ImplementationSix Sigma ImplementationEmphasize defects per million opportunities as a standard metricProvide extensive trainingFocus on corporate sponsor support


(Champions)Create qualified process improvement experts (Black Belts, Green Belts, etc.)Set stretch objectivesThis cannot be accomplished without a major

commitment from top level management

Employee EmpowermentEmployee EmpowermentGetting employees involved in product and process improvements

85% of quality problems are due to process and material

Techniques


TechniquesBuild communication networks that include employeesDevelop open, supportive supervisorsMove responsibility to employeesBuild a high-morale organizationCreate formal team structures

Quality CirclesQuality Circles

Group of employees who meet regularly to solve problemsTrained in planning, problem

l i d t ti ti l th d


solving, and statistical methodsOften led by a facilitatorVery effective when done properly

BenchmarkingBenchmarkingSelecting best practices to use as a standard for performance

1. Determine what to benchmark


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

information5. Take action to match or exceed the

benchmark

Best Practices for Resolving Best Practices for Resolving Customer ComplaintsCustomer Complaints

Best Practice Justification

Make it easy for clients to complain

It is free market research

Respond quickly to It adds customers and loyalty


Respond quickly to complaints

It adds customers and loyalty

Resolve complaints on first contact

It reduces cost

Use computers to manage complaints

Discover trends, share them, and align your services

Recruit the best for customer service jobs

It should be part of formal training and career advancement

Table 6.3

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JustJust--inin--Time (JIT)Time (JIT)

Relationship to quality:

JIT cuts the cost of qualityJIT i lit


JIT improves qualityBetter quality means less inventory and better, easier-to-employ JIT system

JustJust--inin--Time (JIT)Time (JIT)

‘Pull’ system of production scheduling including supply management

Production only when signaled


Allows reduced inventory levelsInventory costs money and hides process and material problems

Encourages improved process and product quality

JustJust--InIn--Time (JIT) ExampleTime (JIT) Example

Work in process


ScrapUnreliable Vendors

Capacity Imbalances

Work in process inventory level

(hides problems)

JustJust--InIn--Time (JIT) ExampleTime (JIT) Example

Reducing inventory revealsproblems so they can be solved


ScrapUnreliable Vendors

Capacity Imbalances

Taguchi ConceptsTaguchi ConceptsEngineering and experimental design methods to improve product and process design

Identify key component and process i bl ff ti d t i ti


variables affecting product variationTaguchi Concepts

Quality robustnessQuality loss functionTarget-oriented quality

Quality RobustnessQuality Robustness

Ability to produce products uniformly in adverse manufacturing and environmental conditions


Remove the effects of adverse conditionsSmall variations in materials and process do not destroy product quality

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Quality Loss FunctionQuality Loss FunctionShows that costs increase as the product moves away from what the customer wantsCosts include customer


dissatisfaction, warranty and service, internal scrap and repair, and costs to societyTraditional conformance specifications are too simplistic

Unacceptable

Poor

GoodBest

Fair

Quality Loss FunctionQuality Loss FunctionHigh loss

Loss (to producing organization, customer, and society)

Low loss T t i t d lit

L = D2Cwhere

L = loss to societyD = distance from

target valueC = cost of deviation


Low loss

Frequency

Lower Target UpperSpecification

Target-oriented quality yields more product in the “best” category

Target-oriented quality brings product toward the target valueConformance-oriented quality keeps products within 3 standard deviations

Figure 6.5

Tools of TQMTools of TQM

Tools for Generating IdeasCheck sheetsScatter diagrams


Cause-and-effect diagramsTools to Organize the Data

Pareto chartsFlowcharts

Tools of TQMTools of TQMTools for Identifying Problems

HistogramStatistical process control chart


HourD f t 1 2 3 4 5 6 7 8

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

recording data


//

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

//////

Defect 1 2 3 4 5 6 7 8ABC

////

/

Figure 6.6

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

of one variable vs. another variable


Absenteeism

Prod

uctiv

ity

Figure 6.6

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

identifies process elements (causes) that might effect an outcome

Cause


Figure 6.6

Materials Methods

Manpower Machinery

Effect

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

problems or defects in descending order of frequency


Figure 6.6

Freq

uenc

y

Perc

ent

A B C D E

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

describes the steps in a process


Figure 6.6

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

frequency of occurrences of a variableDistribution

cy


Figure 6.6Repair time (minutes)

Freq

uen

Seven Tools of TQMSeven 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

Upper control limit

Target value

Lower control limit

Time

CauseCause--andand--Effect DiagramsEffect DiagramsMaterial

(ball)Method

(shooting process)

Hand position

Aiming point

Bend knees

Balance

Size of ball

L id d

Grain/Feel (grip)

Air pressure


Machine(hoop &

backboard)Manpower(shooter)

Missed free-throws

Figure 6.7

Rim alignment

Rim size

Backboard stability

Rim height

Follow-throughLopsidedness

Training

Conditioning Motivation

Concentration

Consistency

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Pareto ChartsPareto Charts

54

– 100– 93– 88

– 72

70 –

60 –

50 –mbe

r)

rcen

t

Data for October


Number of occurrences

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

124 3 2

40 –

30 –

20 –

10 –

0 –

Freq

uenc

y (n

u

Causes and percent of the total

Cum

ulat

ive

per

Flow ChartsFlow Charts

MRI Flowchart1. Physician schedules MRI2. Patient taken to MRI3. Patient signs in4. Patient is prepped

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


p pp5. Technician carries out MRI6. Technician inspects film

pphysician

11. Patient and physician discuss

11

10

20%

9

880%

1 2 3 4 5 6 7

Statistical Process Control Statistical Process Control (SPC)(SPC)

Uses statistics and control charts to tell when to take corrective actionDrives process improvement


p pFour key steps

Measure the processWhen a change is indicated, find the assignable causeEliminate or incorporate the causeRestart the revised process

An SPC ChartAn SPC Chart

Upper control limit20%

Plots the percent of free throws missed


Coach’s target value

Lower control limit

Game number

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

10%

0%

Figure 6.8

InspectionInspectionInvolves examining items to see if an item is good or defectiveDetect a defective product

Does not correct deficiencies in


process or productIt is expensive

IssuesWhen to inspectWhere in process to inspect

When and Where to InspectWhen 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 processes


3. 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

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InspectionInspectionMany problems

Worker fatigueMeasurement errorProcess variability


Process variabilityCannot inspect quality into a productRobust design, empowered employees, and sound processes are better solutions

Source InspectionSource Inspection

Also known as source controlThe 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

Service Industry InspectionService Industry Inspection

Organization What is Inspected Standard

Jones Law Office Receptionist performanceBilli

Is phone answered by the second ringA i l d


Billing

Attorney

Accurate, timely, and correct formatPromptness in returning calls

Table 6.4



Hard Rock Hotel Reception deskD

Use customer’s name

G i l h 30


Doorman

Room

Minibar

Greet guest in less than 30 secondsAll lights working, spotless bathroomRestocked and charges accurately posted to bill

Table 6.4



Arnold Palmer Hospital

Billing

Ph

Accurate, timely, and correct formatP i i


Pharmacy

LabNurses

Admissions

Prescription accuracy, inventory accuracyAudit for lab-test accuracyCharts immediately updatedData entered correctly and completely

Table 6.4



Olive Garden Restaurant

Busboy

B b

Serves water and bread within 1 minuteCl ll é i d


Busboy

Waiter

Clears all entrée items and crumbs prior to dessertKnows and suggest specials, desserts

Table 6.4

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Nordstrom Department Store

Display areas

S k

Attractive, well-organized, stocked, good lightingR i f d


Store Stockrooms

Salesclerks

Rotation of goods, organized, cleanNeat, courteous, very knowledgeable

Table 6.4

Attributes Versus VariablesAttributes Versus VariablesAttributes

Items are either good or bad, acceptable or unacceptableDoes not address degree of failure


VariablesMeasures dimensions such as weight, speed, height, or strengthFalls within an acceptable range

Use different statistical techniques

TQM In ServicesTQM In Services

Service quality is more difficult to measure than the quality of goodsService quality perceptions depend on


on Intangible differences between productsIntangible expectations customers have of those products

Service QualityService QualityThe Operations Manager must recognize:

1. The tangible component of services is important


services is important2. The service process is important3. The service is judged against the

customer’s expectations4. Exceptions will occur

ServiceServiceSpecificationsSpecifications

at UPSat UPS


Determinants of Service Determinants of Service QualityQuality

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

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Service Recovery StrategyService Recovery Strategy

Managers should have a plan for when services failMarriott’s LEARN routine


ListenEmpathizeApologizeReactNotify


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