© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-1 Operations Management Managing Quality Chapter 6.

© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J. 074586-1

Operations Operations ManagementManagement

Managing QualityManaging QualityChapter 6Chapter 6


Ways Quality Can Improve ProfitabilityWays Quality Can Improve Profitability

Sales Gains Improved response Higher Prices Improved reputation

Reduced Costs Increased productivity Lower rework / scrap costs Lower warranty costs

Increased Profits

Improved Quality


Flow of Activities Necessary to Flow of Activities Necessary to Achieve Total Quality ManagementAchieve Total Quality Management

Organizational Practices

Quality Principles

Employee Fulfillment

Customer Satisfaction


TQM – Organizational PracticesTQM – Organizational Practices

Leadership Mission statement Effective operating procedure Staff support Training

What is important and what is to be accomplished


Quality Principles




TQM – Quality PrinciplesTQM – Quality Principles

Customer focus Continuous improvement Employee empowerment Benchmarking Just-in-time Tools of TQM

How to do what is important and to be accomplished


Quality Principles




TQM – Employee FulfillmentTQM – Employee Fulfillment

Empowerment Organizational commitment

Employees’ attitudes that they can accomplish what is important and to be accomplished


Quality Principles




TQM – Customer SatisfactionTQM – Customer Satisfaction

Winning orders Repeat customers

An effective organization with a competitive advantage


Quality Principles




Definitions of QualityDefinitions of Quality ASQ: The totality of features and characteristics of a

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

User-Based: What consumer says it is Product-Based: Level of measurable product characteristic Manufacturing-Based: Degree to which a product

conforms to design specification

CATAGORIES

CONFORMANCE IS THE JOB OF OPERATIONS


Operation Reliability & durability Serviceability Appearance Perceived quality Conformance

Dimensions of Quality for GoodsDimensions of Quality for Goods


Under-standing

Tangibles

Reliability

CommunicationCredibility

Security

Responsiveness

Competence

Courtesy

Access

© 1995 Corel Corp.

Service Quality AttributesService Quality Attributes

How do we build quality into our service offerings?


Costs of QualityCosts of Quality

Prevention costs Appraisal costs Internal failure costs External failure costs

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

Juran on “Quality by Design” The Free Press (1992)


Prevention CostsPrevention Costs

Costs associated with preventing defects before they happen Redesigning the process to remove

causes of defects Redesigning the product or service Training employees in continuous improvement Working with suppliers to improve quality


Appraisal CostsAppraisal Costs

Costs to assess / appraise quality Test / inspection to identify quality problems Used to screen out defective product

… this is NOT best practice As preventive measures improve quality,

appraisal costs decrease


Internal Failure CostsInternal Failure Costs

Costs resulting from defects discovered during production of the product or service Yield / scrap Rework / correcting mistakes

(note may also affect delivery)


External Failure CostsExternal Failure Costs

Costs resulting from defects discovered after delivery of the product or service to the customer Warranty service expense Customer returns Dissatisfied customers / repeat business Poor publicity Lawsuits


Cost of Detecting DefectsCost of Detecting Defects

Process Final testing CustomerWhere defect is detected

Co

st

of

de

tec

tio

n a

nd

co

rre

cti

on

Prevention, not inspection or correction


Traditional Quality Process Traditional Quality Process (Manufacturing)(Manufacturing)

Specifies

Need

Customer

Interprets

Need

Marketing

Designs

Product

Defines

Quality

Engineering

Produces

Product

Plans

Quality

Monitors

Quality

Operations

Quality is

Quality is

customer driven!

customer driven!


TQMTQM

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.


Concepts of TQMConcepts of TQM

Continuous improvement Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of TQM tools


Continuous ImprovementContinuous Improvement Continual improvement of people, equipment, suppliers,

materials, process & customer satisfaction Based on philosophy that every aspect of

an operation can be improved Involves all operations

and work units Other names

Kaizen Zero-defects Six sigma

PlanPlan

DoDo

CheckCheck

ActAct

TQM CONCEPTS


Employee EmpowermentEmployee Empowerment

Involving employees in product & process improvement 85% of quality problems are due to processes & materials The people most closely associated with an operation are in

the best position to identify the changes that should be made Techniques

Support workers Let workers make decisions Build teams & quality circles Training

TQM CONCEPTS


BenchmarkingBenchmarking

Selecting best practices in products, services, processes, or costs 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

TQM CONCEPTS


Best Practices Example – Best Practices Example – Resolving Customer ComplaintsResolving Customer Complaints

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

TQM CONCEPTS


Just-in-Time (JIT)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

TQM CONCEPTS

JIT

QUALITY


Taguchi ConceptsTaguchi Concepts Experimental design methods to improve product

and process design

Quality Robustness – Ability to produce products uniformly regardless of manufacturing conditions– Removing the effects is often cheaper than removing the causes

Quality loss function Target specifications

TQM CONCEPTS



and process design Quality Robustness

Quality loss function – Identifies all costs (loss to society) connected with poor quality – Costs increase as the product moves away from the target

Target specifications

LowLoss

HighLoss

Quality Loss Function

Unacceptable

Poor

Fair

Good

Best

UpperLowerTarget

Specification

TQM CONCEPTS



and process design Quality Robustness Quality loss function

Target-oriented quality – Philosophy of continuous improvement to bring the product exactly on target – Traditional conformance- oriented specs produce more units farther from

the target (greater loss)

Low loss

High loss

Frequency

Lower Target UpperSpecification

Quality Loss Function (a)

Unacceptable

Poor

Fair

GoodBest

Target-oriented quality yields more product in the “best” category and brings products toward the target level

Conformance-oriented quality keeps product within three standard deviations

Distribution of specs for product produced (b)

TQM CONCEPTS


Seven Tools of TQMSeven Tools of TQMTQM CONCEPTS


Shows sequence of events in process Depicts activity relationships Has many uses

Identify data collection points Find problem sources Identify areas for improvement Identify where travel distances

can be reduced

Process ChartProcess ChartTQM CONCEPTS

Distance Time Description Key

60 min. Raw storage Operation

40 1 min. To drill press Transport

90 min Wait for Operator toset-up

Delay /Storage

1 min Drill holes Inspection

94 feet 1.5 min. De-burring

6 min. Operator set-up

1.3 min. De-burr

100 feet To lathe


Distance Time Description Key

60 min. Raw storage Operation

40 1 min. To drill press Transport

90 min Wait for Operator toset-up

Delay /Storage

1 min Drill holes Inspection

94 feet 1.5 min. De-burring

6 min. Operator set-up

1.3 min. De-burr

100 feet To lathe

Process Chart exampleProcess Chart exampleTQM CONCEPTS


Main Cause

SpecificSpecificcausecauseSpecificSpecificcausecause


Cause and Effect Diagram Cause and Effect Diagram TQM CONCEPTS

Main Cause Main Cause

Main Cause




Effect(problem)


Method Manpower

Material Machinery

DrillingDrillingtoo slowtoo slowDrillingDrillingtoo slowtoo slow Overtime/Overtime/

fatiguefatigueOvertime/Overtime/fatiguefatigue

SteelSteelSteelSteel

WoodWoodWoodWood

Lathe not Lathe not calibratedcalibratedLathe not Lathe not calibratedcalibrated

Cause and Effect Diagram Cause and Effect Diagram ExampleExample

TQM CONCEPTS

Too manydefects



Examining items to see if they are good or defective Does not correct deficiencies in process or product Does not add value to the product / service

Why inspect – to ensure that we are producing at the expected quality level

Issues When to inspect Where in process to inspect

InspectionInspectionTQM CONCEPTS


When and Where to InspectWhen and Where to Inspect At the supplier’s plant while the supplier is producing At your facility upon receipt of goods from the supplier Before costly or irreversible processes During the step-by-step production process When production or service is complete Before delivery from your facility At the point of customer contact

The best inspection can be thought of as no inspection at all: Source inspection – controlling or monitoring at the point of production or purchase

TQM CONCEPTS


Ship

Process

Rework Scrap

100%Inspection

Normal varianceor

cause for concern?

Process

Ship

Sample

Feedback

SPC(Control

Charting)

100% Inspection vs. SPC100% Inspection vs. SPCTQM CONCEPTS


It is more difficult to measure quality for services than for goods Intangible differences between products (services) Intangible expectations of customers

TQM In ServicesTQM In Services

TangiblesReliability

CommunicationCredibility

Security

ResponsivenessCompetence

Courtesy

Access

© 1995 Corel Corp.

Under-standing


The tangible component of many services is important

Operations can design processes (service products) that have quality attributes

Customers’ perceptions are the quality standard – Operations can influence both the quality of the service and the expectation

Preparation for exceptions – contingency plans for sub-optimal operating conditions

Operations Role in Service QualityOperations Role in Service Quality


SummarySummary TQM is a supply chain-wide philosophy

to continuously improve processes to make products that will satisfy our customers.

TQM and Just-in-Time support each other In the process of getting better, most companies

also reduce costs and lead time through elimination of waste. So TQM is a way to get faster,

better and cheaper simultaneously.

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-1 Operations Management Managing Quality Chapter 6.

Documents

prentice hall

upper saddle river

ways quality

profits improved quality

service quality attributes

definitions of quality

tqm customer satisfaction

cost of poor quality