Operations Management - 5 th Edition Chapter 3 Roberta Russell & Bernard W. Taylor, III Quality Management.

Operations Management - 5th EditionOperations Management - 5th Edition

Chapter 3Chapter 3

Roberta Russell & Bernard W. Taylor, III

Quality ManagementQuality Management

3-2

Meaning of QualityMeaning of Quality

Webster’s DictionaryWebster’s Dictionary Degree of excellence of a thingDegree of excellence of a thing

American Society for QualityAmerican Society for Quality Totality of features and Totality of features and

characteristics that satisfy needscharacteristics that satisfy needs

Google’s Definition?Google’s Definition? Are there different perspectives?Are there different perspectives?

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Meaning of Quality:Meaning of Quality:Consumer’s PerspectiveConsumer’s Perspective

Fitness for useFitness for use How well product or How well product or

service does what it is service does what it is supposed tosupposed to

Quality of designQuality of design Designing quality Designing quality

characteristics into a characteristics into a product or serviceproduct or service

A Mercedes sports car and a A Mercedes sports car and a Ford truck are equally “fit for Ford truck are equally “fit for use,” but with different design use,” but with different design dimensionsdimensions

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Dimensions of QualityDimensions of Quality

What are some of the dimensions of What are some of the dimensions of quality for a manufactured product?quality for a manufactured product?

What about for a service?What about for a service? Do they differ?Do they differ?

If yes, should they?If yes, should they? If no, why not?If no, why not?

3-5

Dimensions of Quality:Dimensions of Quality:Manufactured ProductsManufactured Products

Performance Performance Basic operating characteristics of a product; how Basic operating characteristics of a product; how

well a car handles or its gas mileagewell a car handles or its gas mileage Features Features

““Extra” items added to basic features, such as a Extra” items added to basic features, such as a leather interior in a carleather interior in a car

ReliabilityReliability Probability that a product will operate properly Probability that a product will operate properly

within an expected time frame; that is, a TV will within an expected time frame; that is, a TV will work without repair for about seven yearswork without repair for about seven years

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ConformanceConformance Degree to which a product meets pre–established Degree to which a product meets pre–established

standardsstandards DurabilityDurability

How long product lasts before replacementHow long product lasts before replacement What’s the life expectancy of the tires on your car?What’s the life expectancy of the tires on your car?

ServiceabilityServiceability Ease of getting repairs, speed of repairs, courtesy Ease of getting repairs, speed of repairs, courtesy

and competence of repair personand competence of repair person iPhone, anyone?iPhone, anyone?

Dimensions of Quality:Dimensions of Quality:Manufactured Products (cont.)Manufactured Products (cont.)

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AestheticsAesthetics How a product looks, feels, sounds, How a product looks, feels, sounds,

smells, or tastessmells, or tastes Safety Safety

Assurance that customer will not suffer Assurance that customer will not suffer injury or harm from a product; an injury or harm from a product; an especially important consideration for especially important consideration for automobilesautomobiles

PerceptionsPerceptions Subjective perceptions based on brand Subjective perceptions based on brand

name, advertising, etc.name, advertising, etc.

Dimensions of Quality:Dimensions of Quality:Manufactured Products (cont.)Manufactured Products (cont.)

3-8

Dimensions of Quality:Dimensions of Quality:ServiceService

Time and TimelinessTime and Timeliness How long must a customer wait for service, How long must a customer wait for service,

and is it completed on time?and is it completed on time? Is an overnight package delivered overnight?Is an overnight package delivered overnight?

CompletenessCompleteness Is everything customer asked for provided?Is everything customer asked for provided? Is a mail order from a catalogue company Is a mail order from a catalogue company

complete when delivered?complete when delivered?

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Dimensions of Quality:Dimensions of Quality:Service (cont.)Service (cont.)

CourtesyCourtesy How are customers treated by employees?How are customers treated by employees? Are catalogue phone operators nice and are Are catalogue phone operators nice and are

their voices pleasant?their voices pleasant? ConsistencyConsistency

Is the same level of service provided to each Is the same level of service provided to each customer each time?customer each time?

Is your newspaper delivered on time every Is your newspaper delivered on time every morning?morning?

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Accessibility and convenienceAccessibility and convenience How easy is it to obtain service?How easy is it to obtain service? Does a service representative answer you calls quickly?Does a service representative answer you calls quickly?

AccuracyAccuracy Is the service performed right every time?Is the service performed right every time? Is your bank or credit card statement correct every month?Is your bank or credit card statement correct every month?

ResponsivenessResponsiveness How well does the company react to unusual situations?How well does the company react to unusual situations? How well is a telephone operator able to respond to a How well is a telephone operator able to respond to a

customer’s questions?customer’s questions? What about Internet-based service – does it differ?What about Internet-based service – does it differ?

Dimensions of Quality:Dimensions of Quality:Service (cont.)Service (cont.)

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Meaning of Quality:Meaning of Quality:Producer’s PerspectiveProducer’s Perspective

Quality of ConformanceQuality of Conformance Making sure a product or service is Making sure a product or service is

produced according to designproduced according to design If new tires do not conform to specifications, they If new tires do not conform to specifications, they

wobblewobble If a hotel room is not clean when a guest checks If a hotel room is not clean when a guest checks

in, the hotel is not functioning according to in, the hotel is not functioning according to specifications of its designspecifications of its design

3-12

Meaning of Quality:Meaning of Quality:A Final PerspectiveA Final Perspective

Consumer’s and producer’s Consumer’s and producer’s perspectives depend on each otherperspectives depend on each other

Consumer’s perspective: PRICE Consumer’s perspective: PRICE Producer’s perspective: COSTProducer’s perspective: COST Consumer’s view must dominateConsumer’s view must dominate

Why?Why?

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Fitness forConsumer Use

Fitness forConsumer Use

Producer’s PerspectiveProducer’s Perspective Consumer’s PerspectiveConsumer’s Perspective

Quality of ConformanceQuality of Conformance

• Conformance to specifications

• Cost

Quality of DesignQuality of Design

• Quality characteristics• Price

MarketingMarketingProductionProduction

Meaning of Quality Meaning of Quality

Meaning of QualityMeaning of Quality

3-14

Total Quality ManagementTotal Quality Management

Commitment to quality throughout the organizationCommitment to quality throughout the organization

Principles of TQMPrinciples of TQM Customer-orientedCustomer-oriented LeadershipLeadership Strategic planningStrategic planning Employee responsibilityEmployee responsibility Continuous improvementContinuous improvement CooperationCooperation Statistical methodsStatistical methods Training and educationTraining and education

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Deming Wheel: PDCA Deming Wheel: PDCA CycleCycle

1. PlanIdentify problem and develop plan for improvement.

2. DoImplement plan on a test basis.

3. Study/CheckAssess plan; is it working?

4. ActInstitutionalize improvement; continue cycle.

3-16

Quality Improvement Quality Improvement and Role of Employeesand Role of Employees

Should employees Should employees be involved?be involved?

Participative Participative problem solvingproblem solving Employees involved in Employees involved in

quality management quality management Every employee has Every employee has

undergone extensive undergone extensive training to provide quality training to provide quality service to Disney’s guestsservice to Disney’s guests

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PresentationImplementation

Monitoring

SolutionProblem results

Problem Analysis

Cause and effectData collection and analysis

Problem IdentificationList alternatives

ConsensusBrainstorming

TrainingGroup processes

Data collectionProblem analysis

Organization8-10 members

Same areaSupervisor/moderator

Quality CircleQuality Circle

3-18

Strategic Implications of Strategic Implications of TQMTQM

Strong leadershipStrong leadership GoalsGoals, , visionvision, or , or missionmission Operational plans and policiesOperational plans and policies Mechanism for feedbackMechanism for feedback

3-19

Six SigmaSix Sigma

A process for developing and delivering A process for developing and delivering near perfect products and servicesnear perfect products and services

Measure of how much a process Measure of how much a process deviates from perfectiondeviates from perfection

3.4 defects per million opportunities3.4 defects per million opportunities ChampionChampion

An executive responsible for project successAn executive responsible for project success

3-20

Black Belts and Black Belts and Green BeltsGreen Belts

Black BeltBlack Belt Project leaderProject leader

Master Black BeltMaster Black Belt A teacher and mentor A teacher and mentor

for Black Beltsfor Black Belts

Green BeltsGreen Belts Project team Project team

membersmembers

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3.4 DPMO3.4 DPMO

67,000 DPMOcost = 25% of

sales

67,000 DPMOcost = 25% of

sales

DEFINEDEFINE CONTROLCONTROLIMPROVEIMPROVEANALYZEANALYZEMEASUREMEASURE

Six Sigma: DMAICSix Sigma: DMAIC

3-22

TQM in Service TQM in Service CompaniesCompanies

Principles of TQM apply equally well to Principles of TQM apply equally well to services and manufacturingservices and manufacturing

Services and manufacturing companies Services and manufacturing companies have similar inputs but different processes have similar inputs but different processes and outputsand outputs

Services tend to be labor intensiveServices tend to be labor intensive Service defects are not always easy to Service defects are not always easy to

measure because service output is not measure because service output is not usually a tangible itemusually a tangible item

3-23

Quality Attributes in Quality Attributes in ServiceService

BenchmarkBenchmark ““Best” level of quality Best” level of quality

achievement one achievement one company or company or companies seek to companies seek to achieveachieve

TimelinessTimeliness How quickly a service How quickly a service

is providedis provided ““quickest, friendliest, most quickest, friendliest, most accurate service accurate service

available.”available.”

3-24

Cost of QualityCost of Quality

Cost of Achieving Good QualityCost of Achieving Good Quality Prevention costsPrevention costs

Costs incurred during product designCosts incurred during product design Appraisal costsAppraisal costs

Costs of measuring, testing, and analyzingCosts of measuring, testing, and analyzing Cost of Poor QualityCost of Poor Quality

Internal failure costsInternal failure costs Include scrap, rework, process failure, downtime, Include scrap, rework, process failure, downtime,

and price reductionsand price reductions External failure costsExternal failure costs

Include complaints, returns, warranty claims, Include complaints, returns, warranty claims, liability, and lost salesliability, and lost sales

3-25

Quality Management Quality Management and Productivityand Productivity

ProductivityProductivity Ratio of output to inputRatio of output to input

Yield: Yield: a measure of productivitya measure of productivity

Yield=(total input)(% good units) + (total input)(1-%good units)(% reworked)Yield=(total input)(% good units) + (total input)(1-%good units)(% reworked)

or

Y=(I)(%G)+(I)(1-%G)(%R)Y=(I)(%G)+(I)(1-%G)(%R)

or

Y=(I)(%G)+(I)(1-%G)(%R)Y=(I)(%G)+(I)(1-%G)(%R)

3-26

Product CostProduct Cost

Y

RKIK rd ))(())(( Product Cost

where:Kd = direct manufacturing cost per unitI = inputKr = rework cost per unitR = reworked unitsY = yield

3-27

Computing ProductComputing ProductYield for Multistage ProcessesYield for Multistage Processes

Y = (I)(%g1)(%g2) … (%gn)

where:I = input of items to the production process that will result in finished productsgi = good-quality, work-in-process products at stage i

3-28

Quality–Productivity RatioQuality–Productivity Ratio

QPRQPR Productivity index that includes productivity and Productivity index that includes productivity and

quality costsquality costs

QPR =(non-defective units)

(input) (processing cost) + (defective units) (reworked cost)

Microsoft Excel Worksheet

3-29

Seven Quality Control ToolsSeven Quality Control Tools

Pareto AnalysisPareto Analysis Flow ChartFlow Chart Check SheetCheck Sheet HistogramHistogram

Scatter DiagramScatter Diagram

SPC ChartSPC Chart Cause-and-Effect Cause-and-Effect

DiagramDiagram

3-30

NUMBER OFNUMBER OFCAUSECAUSE DEFECTSDEFECTS PERCENTAGEPERCENTAGE

Poor designPoor design 8080 6464 %%Wrong part dimensionsWrong part dimensions 1616 1313Defective partsDefective parts 1212 1010Incorrect machine calibrationIncorrect machine calibration 77 66Operator errorsOperator errors 44 33Defective materialDefective material 33 22Surface abrasionsSurface abrasions 33 22

125125 100100 %%

Pareto AnalysisPareto Analysis

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Per

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Causes of poor qualityCauses of poor quality

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00

1010

2020

3030

4040

5050

6060

7070(64)(64)

(13)(13)(10)(10)

(6)(6)(3)(3) (2)(2) (2)(2)

Pareto ChartPareto Chart

3-32

Flow ChartFlow Chart

Operation DecisionStart/ Finish

Start/ Finish

Operation

OperationOperation

Operation

Decision

3-33

Check SheetCheck Sheet

COMPONENTS REPLACED BY LABTIME PERIOD: 22 Feb to 27 Feb 2002REPAIR TECHNICIAN: Bob

TV SET MODEL 1013

Integrated Circuits ||||Capacitors |||| |||| |||| |||| |||| ||Resistors ||Transformers ||||CommandsCRT |

3-34

HistogramHistogram

0

5

10

15

20

1 2 6 13 10 16 19 17 12 16 2017 13 5 6 2 1

3-35

Scatter DiagramScatter Diagram

YY

XX

3-36

Control ChartControl Chart

1818

1212

66

33

99

1515

2121

2424

22 44 66 88 1010 1212 1414 1616

Sample numberSample number

Nu

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of

def

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UCL = 23.35

LCL = 1.99

c = 12.67

3-37

Cause-and-Effect Diagram Cause-and-Effect Diagram

QualityProblemQuality

Problem

Out of adjustmentOut of adjustment

Tooling problemsTooling problems

Old / wornOld / worn

MachinesMachinesFaultyFaulty testing equipmenttesting equipment

Incorrect specificationsIncorrect specifications

Improper methodsImproper methods

MeasurementMeasurement

Poor supervisionPoor supervision

Lack of concentrationLack of concentration

Inadequate trainingInadequate training

HumanHuman

DeficienciesDeficienciesin product designin product design

Ineffective qualityIneffective qualitymanagementmanagement

Poor process designPoor process design

ProcessProcess

InaccurateInaccuratetemperature temperature controlcontrol

Dust and DirtDust and Dirt

EnvironmentEnvironment

Defective from vendorDefective from vendor

Not to specificationsNot to specifications

Material-Material-handling problemshandling problems

MaterialsMaterials

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American Customer American Customer Satisfaction Index (ACSI)Satisfaction Index (ACSI)

Measures customer satisfactionMeasures customer satisfaction Established in 1994Established in 1994 Web site: Web site: www.theacsi.orgwww.theacsi.org

Who do you think is top in ‘Breweries’?Who do you think is top in ‘Breweries’? Automobiles?Automobiles?