Operations Management (opm530) -c12 Quality

Operations Management Managing Quality Chapter 12 Prepared by: Shatina Saad @ FPP

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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 @ FPP

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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

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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 ed Quality

Reduced Costs Increased productivity ♦ Lower rework and scrap costs ♦ Lower warranty costs ♦

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Increas ed Profits

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Flow of Activities Necessary to Achieve Total Quality Management ♦ Organizational Practices ♦ Quality Principles ♦ Employee Fulfillment ♦ Customer Satisfaction Prepared by: Shatina Saad @ FPP

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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 Prepared by: Shatina Saad @ FPP

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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 @ FPP

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

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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

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

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Quality

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Service Quality Attributes Reliability

Responsiveness

Tangibles

Competence

Understanding

Access

Security

Courtesy © 1995 Corel Corp.

Credibility Prepared by: Shatina Saad @ FPP

Communication 12-14

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Importance of Quality ♦ Costs & market share ♦ Company’s reputation ♦ Product liability ♦ International implications

Market Gains Reputation Volume Price Improved Quality

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Increased Profits Lower Costs 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.

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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 Quality Prepared Shatina Saad by @ FPP

OPM 533 Design, The Free Press (1992), p. 119 12-17

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.) Prepared by: Shatina Saad @ FPP

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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 Need

Interprets Need

Designs Product

Produces Product

Defines Quality

Plans Quality

s n! i e y v i t li dr a r u e Q tom s u c Prepared by: Shatina Saad @ FPP

Monitors Quality 12-20

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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 Customer Satisfaction

Effective Business Employee Fulfillmen t Quality Principle s Organizationa l Practices Prepared by: Shatina Saad @ FPP

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Attitudes (e.g., Commitment) How to Do What to Do

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Deming’s Fourteen Points 1. 2. 3. 4. 5. 6. 7.

Create consistency of purpose Lead to promote change Build quality into the products Build long term relationships Continuously improve product, quality, and service Start training Emphasize leadership

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1. 2. 3. 4. 5. 6. 7.

Deming’s Points continued

Drive out fear Break down barriers between departments Stop haranguing workers Support, help, improve Remove barriers to pride in work Institute a vigorous program of education and self-improvement Put everybody in the company to work on the transformation

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Concepts of TQM 1. 2. 3. 4. 5. 6.

Continuous improvement Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts 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.

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Shewhart’s PDCA Model 4 1.Plan Identify the Implem .Act

ent the improvement and make a plan plan

3.Che 2.Do Is the Test the ck plan workin g

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plan

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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 Let workers make decisions Build teams & quality circles

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© 1995 Corel Corp.

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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 @ © 1995 Corel Corp. FPP

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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 Prepared by: Shatina Saad @ FPP

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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

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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-toemploy 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 @ FPP

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Just-In-Time (JIT) Example

Work in process inventory level (hides problems)

Unreliabl e Vendors

Scrap

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Capacity Imbalanc es OPM 533

Just-In-Time (JIT) Example Reducing inventory reveals problems so they can be solved.

Unreliable Vendors

Scrap

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Capacity Imbalance s OPM 533

5. Taguchi Techniques ♦ Experimental design methods to improve product & process design ♦

Identify key component & process variables affecting product variation

♦ Taguchi Concepts a) b) c)

Quality robustness Quality loss function Target specifications

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a) Quality Robustness ♦ Ability to produce products uniformly regardless of manufacturing conditions ♦ Put robustness in House of Quality (QFD) matrices besides functionality

© 1995 Corel Corp.

© 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 Quality Loss Function (a)

High loss Unacceptable

Loss (to producing organizati on, customer, and Low loss society)

Poor Fair Good Be st

Frequency

Lower Prepared by: Shatina Saad @ FPP

Target Upper Specification 12-39

Targetoriented quality yields more product in the “best” Target-oriented category quality brings products toward the target value Conformanceoriented quality keeps product within three standard of Distribution deviations for specifications product produced OPM 533 (b)

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 consumer preferences. Freq. Japanese factory (Target-oriented)

LSL

Target

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USL 12-40

X

U.S. factory (Conformanceoriented) OPM 533

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 Prepared by: Shatina Saad @ FPP

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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  ➨ D ∇ To buyer

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 D ∇ Examine  = Operation;  = Transport;  = Inspect; D = Delay; ∇ = Storage

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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 Tired Overtime

Drill Slow

Old

Wood Steel Material

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Too many defects

Lathe 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 Prepared by: Shatina Saad @ FPP

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Statistical Process Control Steps Start

Produce Good Provide Service Take Sample

No Assign. Causes? Yes

Inspect Sample

Stop Process

Create Control Chart

Find Out Why

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Process Control Chart Plot of Sample Data Over Time Sample Value

80 Sample Value UCL

60 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

Prepared by: Shatina Saad @ FPP

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Service Quality Attributes Reliability Responsiveness Tangibles

Competence

Understanding

Access

Security

Courtesy © 1995 Corel Corp.

Credibility Prepared by: Shatina Saad @ FPP

Communication 12-52

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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 Prepared by: Shatina Saad @ FPP

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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 Prepared by: Shatina Saad @ FPP

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