ops mgmt session-12-15-aug 2012.pdf

7/29/2019 Ops mgmt Session-12-15-Aug 2012.pdf

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Operations Management

Basics of Quality Control,Statistical Quality Control And Total Quality Management

By Chithur Devaraj

On Thu, Oct 25, 2012 Sec B @02.30 AM 05:30 PM

On Thu, Oct 25,2012 Sec A @04:00PM to 07:00 PM

Session - X I I

MMS I Sec A (Thu) & Sec B (Wed)


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Quality managementUntil late 1980s, Indian industries had a comfortable

period, due to License Raj & it was opened up in1991.

In the mean time Japanese industries followed thepath of Quality Gurus and followed TQM. Hence by

1970s, Japanese became world leaders in manyindustries and consumer products. Examples: Sonyin consumer electronics, Toyota and Honda in four-

wheeler automobile industry, Honda and Yamaha in

two-wheeler Industry, Seiko and Citizen in WatchIndustry and Mitsubishi in heavy industry etc.,

followed TQM principles and became world famous

J apanese companies.


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What is good or not good quality ?

customer decides it

However, not everything that the

customers want can be given by the firm

Hence, the firm has to take a strategic

decision regarding quality

3


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4

What is Quality ? Defining 5 Ways

1. Conformance to specificationsDoes product/service meet targets and tolerancesdefined by designers?

2. Fitness for useProduct is considered to be of good quality, if it is fi t forintended use

3. Value for price paidEvaluation of usefulness vs. price paid. e.g. Axe made ofgold for wood cut ting is not good quality. Only axe madeof steel is of good quality

4. Support servicesQuality of support after sale

5. Psychologicale.g. Ambiance, prestige, friendly staff

J uran defined quality as fitness for purpose.

Philip Crosby defined quality as conformance tospecifications.


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Manufacturing Quality vs. ServiceQuality

Manufacturing quality focuses ontangible product features Conformance, performance, reliability, features

Service organizations produceintangible products that must beexperienced Quality often defined by perceptional factors like

courtesy, friendliness, promptness, waiting time,consistency

5


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6

Evolution of Quality & TQM

New Focus


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Cost of Quality

Early detection/prevention is less costly

May be less by a factor of 10

7


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Quality at Every Stage

Transformation

process

Feedback Mechanisms

INPUTS OUTPUTS

Random

disturbances

Monitoring Quality Levels at Every Stage

of the Transformation Process

Quality of inputs

monitored

(AcceptanceSampling)

Quality of outputs

monitored

(AcceptanceSampling)

Statistical Process

Control (SPC)


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Phases of Quality Assurance There are 3 aspects of assuring quality:

1. Assurance of incoming Raw materials Quality2. Assurance of processes operating on the RM

3. Assurance of quality of the outgoing finished

goods

Inputs Transformation Outputs

Acceptance

samplingProcess

control

Acceptance

sampling

SPC

InspectionHow Much/How Often/Where/When ?


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What is SQC & SPC ?

Task of exercising control over the incomingraw materials and the outgoing finished goodsis usually called Acceptance Sampling. Itdeals with accepting or rejecting the RM or the

FG. Statistical tools used here are generallycalled SQC.

The control exercised over the processes

operating on the raw materials or semi finishedgoods is called process Control. Statisticaltechniques used here is called SPC.


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Three SQC Categories Statistical quality control (SQC) refers to statist ical

tools used by quality professionals

SQC can be categorized into three broad categories of;

Descriptive statistics (Traditional statistical tools)

e.g. the mean, standard deviation, and range..

Statistical process control (SPC)

Involves inspecting the output from a process

Quality characteristics are measured and charted

Helpful in identifying in-process variations

Acceptance sampling used to randomly inspect abatch of goods to determine acceptance/rejection

Does not help to catch in-process problems


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Sources of Variation Variation exists in all processes E.g. Sharpness

of a cutting tool decreases over time-surfacefinish variation

Variation can be categorized as either;

Common or Random causes of variation, or

Random causes that we cannot identify (Naturalvariations)

Unavoidable countless minor factors which are inherent

e.g. slight differences in process variables like

diameter, weight, service time, temperature Assignable causes of variation

Causes can be identified and eliminated

e.g. poor employee training, worn tool, machine

needing repair


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Control Charts-Accuracy Vs Precision ?

Variations can be controlled by controlling

both Central tendency using X-bar charts andDispersion using R-bar charts.

E.g. Mr. X weighs 75 Kg and there are 2machines showing following readings:-

M/c 1 : 70,75.5,79.5 Kg

M/c 2: 69.5,69.75,70 kgs.

Now, M/c1 gives average of 75Kg and therefore isaccurate as its central tendency does not show

deviation, but has lot of dispersion. M/c 2 isprecise, but not accurate because its centraltendency is 69.75, which is far away from actual Wt,whereas its dispersion is quite low ranging 139 to140. Hence both controls are necessary.


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Statistical Process Control

6.95 mm

7.05 mm

Central Line (CL)

Upper Specification Limit (USL)

Upper Control Limit (UCL)

Lower Control Limit (LCL)

Lower Specification Limit (LSL)

Specification & Control Limits for the

Diameter of a Pencil

M - 3.M

M + 3.M

Targeted or Aimed-at Mean M = 7.00 mm


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15

Trends in process capablility chart suggesting out-of-control situation

LCL

UCL

CL

UCL

LCL

CL

UCL

LCL

CL

Trends in chart

suggesting out of

control situation

Time

Time

Time

A po int exceed ing the LCL (or UCL) A dec reasing (or i ncreasin g) tr end

of 7 or 8 successive points

5 or more successive point s on one side of t he CL

Upper Control Limit(UCL)

Lower Control Limit(LCL)

Upper WarningLimit (UWL)

Lower Warning

Limit (LWL)

Central Line (CL)

+

3.s +

2.s

-

3.s

-

2.s

Warning Limits in chart (two out of three

successive points beyond a warning limit

suggest an out of control situation)


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Acceptance Sampling

Definition: Acceptance sampling refers to the SQCprocess ofrandomly inspecting a certain numberof items from a lot or batch in order to decide

whether to accept orreject the entire batch

SQC is Different from SPC, because acceptance

sampling is performed eitherbefore orafterthe

process rather than during

Sampling before typically is done to suppliers material

Sampling after involves sampling finished items before

shipment or finished components prior to assembly Used where inspection is expensive, volume is

high, or inspection is destructive


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SQC in Services Service Organizations have lagged behind

manufacturers in the use of statistical qualitycontrol

Statistical measurements are required and it is more

difficult to measure the quality of a service

Services produce more intangible products Perceptions of quality are highly subjective

A way to deal with service quality is to devise

quantifiable measurements of the service element

Check-in time at a hotel Number of complaints received per month at a restaurant

Number of telephone rings before a call is answered

Acceptable control l imits can be developed and charted


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DEFINITION, CONCEPTS & FEATURES OF TQM

TQM can be defined as an organized scientific

approach towards continuous improvement of quality involving every one in the Organizationaimed towards total customer satisfaction.

Total quality management is both a philosophy anda set of guiding principles that represent the

foundation of a continuously improving organization. It, encompasses mobilizing the entire organization

(involve everyone) to satisfy the demands of thecustomers and systematic improvement of quality.

TQM provides a way of life to constantly improveperformance by creating a positive environment forcontinuous improvement based on Team work,

Trustand Respect.


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TQM Framework


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TQM Philosophy

TQM Focuses on identifying root causes of quality problem It encompasses the entire organization It provides guidance on ways of improving quality Relies on seven basic concepts

Customer focus Continuous improvement Employee empowerment (quality circles) Use of quality tools

Product design (QFD- Useful tool for translatingcustomer specifications into technical requirements) Process management ( kaizen & PDCA) Managing supplier quality


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TQM Philosophy - concepts Focus on Customer

Identify and meet customer needs

Stay tuned to changing needs, e.g. fashion styles

Continuous Improvement

Continuous learning and problem solving, e.g.

Kaizen, 6 sigma

Employee Empowerment

Empower all employees; external and internal

customers

Teams formed around processes 8 to 10

persons (Quality circles)

Meet weekly to analyze and solve problems

Quality Function Deployment

Used to translate customer preferences to

product design


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TQM Philosophy Concepts (continued) Seven Tools of Quality Control

Tools typically taught to problem solving teams(Cause-and-Effect Diagrams, Flowcharts, Checklists,Control Charts ,Scatter Diagrams, Pareto Analysis,Histograms)

Walter Stewart's Plan-Do-Check-Act Cycle(PDCA) popularized by Edward Deming

Also called the Deming Wheel after originator

Circular, never ending problem solving process

Benchmarking

It refers to continuous measurement of anorganizations products and processes against a

company recognized as a leader in that industry


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7 basic tools of Quality

Scatter Diagrams,Flow Charts,Run Charts,Control Charts


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IMPLEMENTATION OF TQM

TQM can be implemented by practicing thefollowing processes in the organization:

KAIZEN POKA-YOKE 6 ISO:9000 (will be discussed in next session) LEAN MANUFACTURING SYSTEM QUALITY CIRCLES STATISTICAL PROCESS CONTROL J UST IN TIME

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Poka Yoke Technique used to prevent errors being

converted into defects. Based on assumption that mistakes will

occur until preventive measures are taken.

Formidable tool for achieving zero defect.

E.g. Opening of brief case If you open itupside down by mistake, the contents willspill out.

- A simple lever in the opening deviceprevents the briefcase opening if it isupside down at no extra cost.

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6 Sigma versus 3 Sigma

Motorola coined six-sigma todescribe their higher qualityefforts back in 1980s

Six-sigma quality standard isnow a benchmark in manyindustries

Before design, marketing ensurescustomer product characteristics

Operations ensures that productdesign characteristics can be metby controlling materials andprocesses to 6 levels

Other functions like finance andaccounting use 6 concepts to

control all of their processes

PPM Defective for 3versus 6 quality

Wiley 2007

Level of performance with 3.4 defects per million


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Why TQM Efforts Fail

Lack of a genuine quality culture

Lack of top management support andcommitment

Over- and under-reliance on SPCmethods

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SRF Limited TQM J ourney

SRF Limited is a Indian motor component manufacturer,

had a J V with a J apanese company called Denso in 1980s.

With their support it started QC circles in India but failed

because there was no preparation nor ground work. In

1994 SRF went through a major union strike and plant wasclosed for more than 5 months.

In 1995, SRF engaged Prof. Kune from J apan-one of the

doyens of TQM movement in J apan and a Deming Prize

winner. With his support the top management introduced

TQM from the top right down to the lowest levels.


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SRF Limited TQM J ourneycontinued

SRF first started with a massive communication driveexplaining how it would be in the interest of the workersto return to normal working conditions, and how imbibingthe TQM methodology and the concepts would providethem opportunities for growth. Simultaneously anintensive training programme was started for top andmiddle level executives on TQM to bring in changes intheir mindset.When SRF started the plant in Chennai in 1974-75 ,70%

Of the workers were illiterate. The TQM programmehelped them to become literate and they startedparticipating in the new culture, which gave themimmense satisfaction.


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SRF Limited TQM J ourneycontinued

They understood the 7 tools of QC and actively participated in QC circles and put

forward ideas through Kaizen movement.

This TQM journey facilitated SRF to put in place better workplace management

systems. In later years, SRF devised a system of management diagnosis, which

included new elements such as leadership, strategy and technology, which is a muchmore robust system of measuring Organizations capability.

This SRF journey offers interesting lessons for launching successful TQM movement.

Transformation of company takes more than 3 years thru TQM. The main lesson in

TQM is are we continuously improving. SRF got Deming Prize in 2004.

Today SRF is a leading Indian player with global positions in Tyre Cord Fabric,

Refrigerant Gases and Industrial Fabrics.


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Basics of Environmental Management Basics of ISO 14000 / 9000 Basics of Value Engineering & Analysis

Session - X I I I


By Chithur DevarajHoliday on Oct 24

On Thu, Oct 25, 2012 Sec B @02.30 AM 05:30 PM

On Thu, Oct 25,2012 Sec A @04:00PM to 07:00 PM


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What does a system comprise of ? A system is a collection of sub-systems.

A subsystem is a collection of processes. A process is a collection of tasks.

A task or activity is the smallest parcel of work to becarried out by a person or group of people.

A procedure is just a way of doing things.

Of all QMS regimes, ISO 9000 and ISO 14000 seriesare probably the most widely implemented systemsworldwide

To manage the process, the organization developsmanagement systems & 1SO is a system of Internationalstandards

QMS in INDIAN NAVY-signs defense deal with Solas

Marine Lanka pvt ltd,Dubai based company


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ISO 9001 and ISO 14001 in brief ISO 9001 and ISO 14001 are among ISO's most wellknown standards ever.

They are implemented by more than a millionorganizations in some 175 countries.

ISO 9001 helps organizations to implement qualitymanagement. Targets Customers

ISO 14001 helps organizations to implement

environmental management. It targets -Regulators &OHSAS (ISO 18001)-Employees

Both these standards are applicable to anyorganization, large or small, whatever its product or

service, and in any sectorof activity


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What is Quality management ?

ISO 9001 is for quality management. Quality refers to all those features of a product (or

service) which are required by the customer.

Quality management means what the

organization does to ensure that its products or services satisfy the

customer's quality requirements and

comply with any regulations applicable to those

products or services. ISO 9001 are not product standards. They are not

service standards. What are they?

They are process standards.


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ISOInternational Organization

for Standardization

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1947-93-Product Standards (E.g. ASTM,IST,DIN,ISI)1994->process/system standards

ISO 9000 refers to a set of three standards (ISO 9000,

ISO 9001,and ISO 9004). All three make up the ISO 9000

series and are referred to as quality management

system standards.

ISO was derived from the greek word Isos meaning equal


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ISO 9001:2008 WHAT IS ISO?

ISO is the International Organization for Standardization:q Founded in 1946 to promote the development of international

standards

q The ISO 9000 series was published in 1987, developed by the

technical Committee 176, in relation to quality systemsq In 1994, a new version was published from standards 9001,

9002 and 9003. India represented through BIS

q Revision of standard so far

1994 (1st Revision)2000 (2nd Revision) (9001,9002,9003 guidelines)2008 (3rd Revision) (9001:2008 R&D+mfg+Servicemerged)

q These standards focuses on Quality Management Systems and

Processes


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Implications of ISO 9000 for U.S.

Companies Many overseas companies

will not do business with a

supplier unless it has ISO9000 certification

ISO 9000 accreditation

ISO registrars

A total commitment toquality is requiredthroughout an organization


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Popular international standards

ISO 9001 - Quality Management Systems (QMS)

ISO 14001 Environmental Management

Systems(EMS)

ISO 18001 - OHSAS and so on

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QMS - targets the Customer

EMS -Stakeholders, Regulators

OH&S -Primarily Employees

ISO 9001 focuses mainly on Statutory (e.g.Mah.

Regn.) and regulatory (Country law,E.g. VAT)

requirements and customer satisfaction


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ISO 9001 and ISO 14001 in brief

ISO 9001 and ISO 14001 are among ISO's most wellknown standards ever.

They are implemented by more than a millionorganizations in some 175 countries.

ISO 9001 helps organizations to implement qualitymanagement. Targets Customers

ISO 14001 helps organizations to implement

environmental management. It targets -Regulators &OHSAS (ISO 18001)-Employees

Both these standards are applicable to anyorganization, large or small, whatever its product or

service, and in any sectorof activity

8 Principles of Quality Management System


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8 Principles of Quality Management System

ISO 9000:2008

Principle 1 Customer Focus

Organizations should understand current and future customer needs,satisfy customer requirements and strive to exceed customerexpectations.

Principle 2 - Leadership

Leaders establish objectives, unity of purpose and direction of theorganization. Create an adequate internal environment to achieve

goals.

Principle 3 Involvement of People

Employees at all levels are the essence of an organization. Their fullinvolvement enables their abilities to be used for the benefit of theorganization.

Principle 4 - Process Approach Activities and related resources are managed as a process.


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Quality Management Principles

ISO 9000:2008

Principle 5 - System Approach to Management Identifying, understanding and managing interrelated processes as

a system contributes to firms effectiveness in achieving objectives

Principle 6 Continual Improvement Continual improvement as a permanent objective

Principle 7 - Factual Approach to Decision-making Decisions are based on analysis of data and information

Principle 8 - Mutually Beneficial Supplier Relationship Mutually beneficial relationships with suppliers enhances the

ability of both to create value.

Th 8 QM i i l if t th l


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These 8 QM principles manifest themselves

through the 4 main clauses of the standard

Management Responsibility: definingrequirements

Resource management: determining and

establishing necessary resources Product realization: establish and implement

processes

Measurement, Analysis and Improvement:of results

The main clauses are structured around the

Plan-Do-Check-Act cycle and contain a

number of individual clauses.


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ISO 9001 :2008 Clauses

1. Scope

2. Normative Reference

3. Terms and Definitions

4. Quality Management System-QP, QM, Pr, Doc to control

5. Management Responsibility-commitment,MRM,Auth.resp.

6. Resource Management-Training

7. Product Realization-Mfg,calibration,Sales,Purchase,Design

8. Measurement, Analysis and Improvement-controlProcess

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Benefits of ISO 9001 :2008


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Benefits of ISO 9001 :2008

Certification

1. Customer Satisfaction2. International Recognition

3. Enhancement of the Process Performance

4. Continual Improvement of the Managementsystem of the Organization

5. Consistency in product and service

6. Compliance with Regulatory requirements.

7. Enhancement in the competence level ofEmployee.

8. Enhancement of Employee satisfaction.44


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Environmental management

ISO 14001 is for environmentalmanagement. This means what the

organization does to: minimize harmful effects on the

environment caused by its activities,

to conform to applicable regulatoryrequirements, and to

achieve continual improvement of its

environmental performance.

ISO 14001


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ISO 14001

Certification and registration


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Certification and registration Certification is known in some countries

as registration. It means that an independent, external

body has audited an organization'smanagement system and verified that itconforms to the requirements specified in

the standard (ISO 9001 or ISO 14001).Accreditation

Accreditation is certification by the certification body.It means formal approval by accreditation body likeBVQI,TUV etc to carry out ISO 9001:2008 or ISO14001:2004 certification

These Certificates may be perceived on the market ashaving increased credibility.

Resources


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Resources


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Value Analysis and ValueEngineering

Can be defined as an organised and

systematic approach to provide therequired function at the lowest costconsistent with specific performance,

quality and reliability.


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Concept of Value

1) Use Value

2) Esteem value


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Steps in Value Analysis

1. Collect data on cost, customer needs, history,future developments.

2.Develop alternative designs.

3. Ascertain the cost of the alternative.

4. Evaluate the alternatives.

5. Recommend and implement the best solution

Factors Influencing Product


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Factors Influencing ProductDesign or Redesign

Customers perspectives- Functions- Aesthetics- User friendliness

- Esteem associated with possession

Organisational perspective- Intrinsic cost of Material- Intrinsic cost of Labour- Replacement, Exchange and Disposal


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Methods of Value Analysis

1. Eliminate parts in operation.

2. Simplify parts in operation.

3. Substitute alternative materials.4. Use standard parts in materials.

5. Relax manufacturing tolerances.

6. Use standard manufactured parts.

7. Eliminate unnecessary design features.

Ch D i S i M f i


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Change Design to Suit Manufacturing

1. Buy if cheap, if not than make.2. Use pre-finished materials.

3. Use pre-finished parts.

4. Rationalize product range.

5. Substitute labour cost manufacturing process

6. Rationalize and standardise low costpurchased parts.

7. Eliminate material waste.


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Innovation !


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Innovation !!


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Case Studies and Presentation

Session - X I V


By Chithur Devaraj

On Wed, Oct 31,2012 Sec B @09.30 AM 12:20 PM

On Thu, Oct 3, 2012 Sec A @02:30PM to 05:20 PM

QUIZ


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Class Test 2Operations Management

MMS I Section B & A

Wed. Oct 31, & Nov 1,2012

100% attendance is compulsory

No marks will be given for absent students for the test

QUIZ

Prof. Chithur Devaraj


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Case Studies and Presentation

Session - X V


By Chithur Devaraj

On Wed, Nov 07,2012 Sec B @10.30 AM 12:30 PM

On Thu, Nov 08,2012 Sec A @02:30PM to 05:30 PM

ops mgmt session-12-15-aug 2012.pdf

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