OPSM 301 Operations Management Class 16: Quality (All of Chapter 6 included) Koç University Zeynep Aksin [email protected].

OPSM 301 Operations Management

Class 16:

Quality(All of Chapter 6 included)

Koç University

Zeynep [email protected]

Total Quality Management Defined Quality Specifications and Costs Six Sigma Quality and Tools External Benchmarking ISO 9000 Service Quality

Objectives Objectives

Total Quality Management (TQM)Defined

Total Quality Management (TQM)Defined

Total quality management is defined as

managing the entire organization so that it

excels on all dimensions of products and

services that are important to the customer

Quality ManagementQuality Management

What does the term quality mean?

– Product-based definition

– User-based definition

– Manufacturing based definition

Product-Based Definition

According to this view, differences in quality reflect differences in the quantity of some ingredient or attribute possessed by a product (Example: Fine rugs have a large number of knots per square centimeter)

This approach seems appropriate only if the attributes in question are considered preferable by virtually all buyers

Manufacturing-Based Definition

This approach identifies quality as “conformance to requirements”

This approach's primary focus is internal, however, the consumers’ interest in quality is implicitly recognized

According to the manufacturing-based approach, improvements in quality lead to lower costs

User-Based Definition

This approach starts from the opposite premise that quality “lies in the eyes of the beholder”

The goods that best satisfy consumers' preferences are those that they regard as having the highest quality

Shifting Definitions

The characteristics that connote quality must be

first identified through market research

These characteristics must then be translated

into identifiable product attributes

And finally, manufacturing process must be

organized to ensure that products are made

precisely to these specifications

Ways in Which Quality Can Improve Productivity

Sales Gains– Improved response– Higher Prices– Improved reputation

Reduced Costs– Increased productivity– Lower rework and scrap

costs– Lower warranty costs

Increased Profits

Improved Quality

Quality SpecificationsQuality Specifications

Quality: Inherent value of the product in the

marketplace

– Dimensions include: Performance, Features,

Reliability, Conformance, Durability, Serviceability,

Aesthetics, and Perceived Quality (Reputation)

Eight Dimensions of QualityEight Dimensions of Quality

Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived quality

Performance

Performance refers to a product's primary operating characteristics (Acceleration of a car, brightness of a TV set)

Different brands can easily be ranked objectively on individual aspects of performance

Features

Features are the bells and whistles of products and services, they supplement their basic functioning (Push-button windows)

It is hard to draw the line separating primary performance characteristics from secondary features

Many customers may wish to customize or personalize their purchases, and availability of different features plays an important role in meeting these requirements

Reliability

Reliability reflects the probability of a product malfunctioning or failing within a specified time period (Mean time to first failure, mean time between failures)

These measures are most relevant to durable goods than to products and services that are consumed instantly

Reliability normally becomes more important to consumers as down time and maintenance become more expensive

Conformance

Conformance is the degree to which a product's design and operating characteristics meet established standards

These standards are normally expressed as a target or center, and deviance from the center is permitted within a specified range

Durability

Durability is a measure of product life and may be defined as the amount of use one gets from a product before it breaks down and replacement is preferable to continued repair

Serviceability, Aesthetics, and Perceived Quality

Serviceability is a measure of speed, courtesy, competence, and ease of repair

Aesthetics (how a product looks, feels, sounds, tastes or smells) is a very subjective quality dimension

Perceived quality is the set of inferences we make about quality rather than the reality of itself

Quality Strategies

Certain dimensions may be pushed to the forefront to gain market share

Some of the dimensions are mutually reinforcing, some are not

The challenge is to compete on selected dimensions

Quality CostsQuality Costs

Cost of Control (Quality, Conformance)– Prevention costs: reducing the potential for

defects– Appraisal costs: evaluating products

Cost of Failure of Control (Unquality, non-conformance)– Internal failure costs:of producing defective

parts or service– External failure costs: occur after delivery

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.

Six Sigma Quality

A philosophy and set of methods companies use

to eliminate defects in their products and

processes

Seeks to reduce variation in the processes that

lead to product defects

The name “six sigma” refers to the variation that

exists within plus or minus six standard

deviations of the process outputs 6

Six Sigma Quality

Six Sigma Quality (Continued)

Six Sigma allows managers to readily describe process performance using a common metric: Defects Per Million Opportunities (DPMO)

1,000,000 x

units of No. x

unit per error for

iesopportunit ofNumber

defects ofNumber

DPMO

Six Sigma Quality (Continued)

Example of Defects Per Million Opportunities (DPMO) calculation: Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered. What is the DPMO in this situation?

000,1 1,000,000 x

200,000 x 1

200DPMO

So, for every one million letters delivered this city’s postal managers can expect to have 1,000 letters incorrectly sent to the wrong address.

Cost of Quality: What might that DPMO mean in terms of over-time employment to correct the errors?

Six Sigma Quality: DMAIC Cycle

Define, Measure, Analyze, Improve, and Control (DMAIC)

Developed by General Electric as a means of focusing effort on quality using a methodological approach

Overall focus of the methodology is to understand and achieve what the customer wants

DMAIC consists of five steps….

Six Sigma Quality: DMAIC Cycle (Continued)

5. Control (C)

Customers and their prioritiesProcess and its performanceCauses of defects

Remove causes of defectsMaintain quality

1. Define (D)

2. Measure (M)3. Analyze (A)

4. Improve (I)

DEFINEDEFINE

MEASUREMEASURE

ANALYZEANALYZE

IMPROVEIMPROVE

CONTROLCONTROL

MODIFY DESIGN?MODIFY

DESIGN? REDESIGNREDESIGNRedesign — Revise current measurement systems if incorrect

Redesign — Revise current measurement systems if incorrect

Define — Select Critical To Satisfaction (CTS) characteristics and performanceDefine — Select Critical To Satisfaction (CTS) characteristics and performance

Measure — Create/validate measurement systemsMeasure — Create/validate measurement systems

Analyze — Identify sources of variation from performance objectivesAnalyze — Identify sources of variation from performance objectives

Improve — Discover process relationships and establish new procedures

Improve — Discover process relationships and establish new procedures

Control — Implement process controlsControl — Implement process controls

The DMAIC Road Map (Ford)The DMAIC Road Map (Ford)

Analytical Tools for Six Sigma andContinuous Improvement

Analytical Tools for Six Sigma andContinuous Improvement

Process Analysis Run Charts Pareto Charts Histograms Scatter Diagrams Fish-Bone Charts Control Charts (not covered in this course)

Pareto Analysis

The purpose of Pareto Analysis is to identify and highlight major symptoms of major quality problems

It is based on the premise that usually a small number of faults cause the majority of malfunctions (to separate the vital few and trivial many)

Developing Pareto Analysis

Define classification of defects to be monitored

Define the period of time over which the assessment will be made

Total the frequency of occurrence of each class of defects over the period

Plot the histogram and cumulative distribution of the classes in descending order of the frequency occurrence

Identify the classes that constitute the majority of

defect occurrences

Pareto Analysis

Frequency Percentage-100%

-0%

-50%

A B C D E F

Pareto Law (80/20 Rule):

“80 percent of the problems are due to 20 percent of the causes”

Scatter Diagrams

A Scatter Diagram is used to interpret data by graphically displaying the relationship between two variables.

Fish-Bone Diagram

Also known as cause-and-effect diagram, or Ishikawa diagram

Pareto analysis is used to identify key problems or symptoms,

Fish-Bone diagram is used to sort causes of the problems

Brain storming sessions of groups of workers needed

It is a very valuable educational tool

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.

Fish-Bone Diagram

Causes and Effect Diagram

Fishbone diagram - Ishikawa Chart

Effect

Machine Man

MaterialMethod

Method Manpower

Material Machinery

Too many defects

Too many defects

Main Cause

Main Cause

Cause and Effect Diagram Example

Method Manpower

Material Machinery

DrillDrillDrillDrillOvertimeOvertimeOvertimeOvertime

SteelSteelSteelSteelWoodWoodWoodWood

LatheLatheLatheLathe

Too many defects

Too many defects

Sub-Cause

Cause and Effect Diagram Example

Method Manpower

Material Machinery

DrillDrillDrillDrillOvertimeOvertimeOvertimeOvertime

SteelSteelSteelSteelWoodWoodWoodWood

LatheLatheLatheLathe

Too many defects

Too many defects

TiredTiredTiredTired

OldOldOldOld

SlowSlowSlowSlow

Cause and Effect Diagram Example

Example: why isn't the phone being answered on time?

Analytical Tools for Six Sigma and Continuous Improvement: Control Charts

Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality

Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality

970

980

990

1000

1010

1020

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

LCL

UCL

UCL

LCL

UCL

LCL

UCL

LCL

StatisticalProcessControl

with

Control Charts

StatisticalProcessControl

with

Control Charts

Six Sigma Roles and Responsibilities

1. Executive leaders must champion the

process of improvement

2. Corporation-wide training in Six Sigma

concepts and tools

3. Setting stretch objectives for improvement

4. Continuous reinforcement and rewards

The Shingo System: Fail-Safe DesignThe Shingo System: Fail-Safe Design

Shingo’s argument:– Defects arise when people make errors– Defects can be prevented by providing employees with

feedback on errors and putting controls in the process

Poka-Yoke includes: – Checklists– Special tooling that prevents employees from making errors– (Poka-Yoke: Japanese slang for “avoiding inadvertent errors” )

Which dial turns on the burner?

Knowledge in the World:

Stove A

Stove B

BenchmarkingBenchmarking

1. Identify those processes needing improvement

2. Identify a firm that is the world leader in performing the process

3. Contact the managers of that company and make a personal visit to interview managers and workers

4. Analyze data

ISO 9000ISO 9000

Series of standards agreed upon by the International Organization for Standardization (ISO)

Adopted in 1987

Awarded in 152 countries

A prerequisite for global competition?

ISO 9000 directs you to "document what you do and then do as you documented"

Three Forms of ISO CertificationThree Forms of ISO Certification

1. First party: A firm audits itself against ISO

9000 standards

2. Second party: A customer audits its supplier

3. Third party: A "qualified" national or

international standards or certifying agency

serves as auditor

ISO 9000 Standards: Application in Production Flow