operation management chapter 7

Managing qualityAlex Hill and Terry Hill

Lecture outline

• INTRODUCTION

• Defining QUALITY and its role

• Quality PHILOSOPHIES

• STEPS to effectively managing quality- TOOLS and TECHNIQUES

• APPROACHES to managing quality

• Critical REFLECTIONS

• SUMMARY

Defining quality and its role

OPERATION MANAGERS SHOULD Ensures that the actual service or product CONFORMS to its INTERNALLY SPECIFIED quality level

Quality conformance means: CONSISTENTLY delivering services and products in line with their DESIGN SPECIFICATIONS, which, in turn need to reflect customer needsQuality conformance means: CONSISTENTLY delivering services and products in line with their DESIGN SPECIFICATIONS, which, in turn need to reflect customer needs

Quality conformance meansCONSISTENTLY delivering services and products in line with their DESIGN SPECIFICATIONS, which, in turn need to reflect customer needs

Quality philosophies

W Edwards DEMING

Joseph M JURANPhilip B CROSBY

ways for improving the quality consistency of organization

Deming

1. Clear quality VISION2. Focus on correcting SYSTEMS and PROCEDURES3. Drive to eliminate ERRORS4. Build LONG-TERM supplier relationships5. Continuously reduce WASTE6. Centre TRAINING on producing acceptable work7. LEAD rather than supervise8. Encourage QUESTIONS9. Use cross-functional TEAMS10.Give employees the right TOOLS to do the job11.Focus quotas and targets on QUALITY not output12.Encourage PRIDE in one’s work13.Continuously TRAIN people on new tools and

techniques14.Work CONTINUOUSLY on the other 13 points

IMPROVING QUALITY

Juran

• INTERNAL cost of failure- Defects, rework, losses, re-inspection, removal

• EXTERNAL cost of failure- Complaints, returns, field service support,

repairs

• APPRAISAL costs- Inspection, test, checks, assurance and control

• PREVENTION costs- Planning, reviews, controls, analysis, reporting

COSTS OF QUALITY

Crosby

• Apparent management COMMITMENT• Improvement supported by MULTI-FUNCTIONAL team• Quality MEASURES in place• Quality AWARENESS promoted throughout organisation• Improvement ideas ACTIONED• Goal is to achieve ZERO DEFECTS• Improvement based on EDUCATION and TRAINING• Make EVERYONE responsible for identifying and fixing

errors• Form quality COUNCIL to help share knowledge• CONTINUOUSLY improve quality by returning to step 1

IMPROVING QUALITY

Steps to effectively manage quality

CONTROL

IMPROVEMENT

Steps to effectively manage quality

Control

1.Define quality CHARACTERISTICS (E.g. reliability, durability, appearance)

•Decide how to MEASURE characteristics•Set quality STANDARDS•CONTROL quality against standards

Steps to effectively manage quality

DECIDE HOW TO MEASURE CHARACTERISTICS•VARIABLES- Measured on a continuous

SCALE- E.g. length, weight or time•ATTRIBUTES- Have TWO states- Assessed by JUDGEMENT- DESCRIPTIVE- E.g. right/wrong, looks OK/NOT

OK

Control

SETTING QUALITY STANDARDS

E.g. customers should be served within 90 seconds of

arriving

That LEVEL of quality whichdefines the boundary

between ACCEPTABLE and unacceptable

CONTROL

•Find and correct CAUSES of poor quality•CONTINUE to make improvements

Improvement

Quality conformance must be CONTROLLED before it be IMPROVED

> KEY IDEA

Organizations mustPROACTIVELY improve quality byCONTINUALLY identifying what could go wrong before it does and thenPREVENTING these problems from occurring

CASE 10.3

REGAINING CONSUMER CONFIDENCE AT COCA-COLA AND PERRIER

1.How did they REACT to the quality conformance problems?

2.Was quality conformance an ORDER-WINNER or QUALIFIER in their markets?

3.How did this affect their MARKETS?

Question Answer

Reaction

Order-winner or qualifier

Market impact

• Lost consumer CONFIDENCE• Lost SALES- Perrier has never really regained market

share

CASE 10.3

• SLOW to react• Initially DENIED that there was a

problem

• QUALIFIER

Question Answer

Point

Importance

• One of the key FIRST STEPS in any improvement program must be to:

- EDUCATE staff in the use of quality improvement TOOLS and TECHNIQUES

HAVING THE RIGHT TOOLS TO DO THE JOB

• Managers need to equip employees with the right TOOLS to do the job

• It is NOT ENOUGH to simply motivate and support them

•CHECKLISTS•PARETO analysis•CAUSE and EFFECT diagram•GAP analysis•CONTROL charts•Statistical process control (SPC)•SIX-SIGMA quality

> KEY IDEA

Quality conformance can be IMPROVED by changing how services or products are eitherDESIGNED or DELIVERED

Tools and techniques

Checklists record how OFTEN a problem occurs

Pareto analysis: Pareto analyses identify the MOST FREQUENT causes of a problem and thereby help FOCUS improvement activities and resource

Cause and effect diagrams1. Identify the PROBLEM to be addressed2. Identify the major CATEGORIES of causes3. List all the DETAILED causes4. Identify the PRINCIPAL causes

The diner

Five Easy Pieces(1970)

•What is the OUTCOME? What are the CAUSES of this?

Breakfast at Tiffany’s

(1961)

Film clip The Diner

FilmTitleDirector (year)

Five Easy PiecesRafelson (1970)

ClipStartFinish

00:45:4200:46:13

What clip shows A group of people being served in a diner

Key learning objective

Identifying why the customers’ expectations were not met

Cause and effect diagrams

Film clip Tiffany’s

FilmTitleDirector (year)

Breakfast at Tiffany’sEdwards (1961)

ClipStartFinish

01:05:4101:09:49

What clip shows A couple being served in Tiffany’s

Key learning objective

Identifying how the business identified and met the customers’ expectations

Cause and effect diagrams

The Diner

PeopleSystems

Materials Customer

OutcomeInflexible

Unprofessional

Not empowered

High expectation

Customers do not eat and leave upset

Low variety

Inflexible

Tools and techniquesTiffany’s

PeopleSystems

Materials Customer

OutcomeFlexible

Skilled / professional

Empowered

Low expectation

Satisfied customers will come again

High variety

Flexible

Gap analysis

1.KNOWLEDGE gap2.DESIGN gap3.PERFORMANCE gap4.COMMUNICATION gap5.OVERALL gap

Gap analysis helps identify why customers’ PERCEPTIONS of the quality of a service or product are LESS THAN their EXPECTATIONS

Control charts

•WHAT- aspects of PERFORMANCE need to be measured•WHERE- which POINT in the delivery system•HOW- which TYPE of control chart - attribute or variable- FREQUENCY of measurement•By WHOM- who will MEASURE performance- who will take corrective ACTION when it moves

outside of its limits

Control charts can be used to control a process and ensure that it PERFORMS within specified SPECIFIC LIMITS

Six-sigma quality

1.Critical to Quality: Attributes most important to the customer

2.Defect: Failing to deliver what the customer wants

3.Process Capability: What your process can deliver

4.Variation: What the customer sees and feels

5.Stable Operations:Ensuring consistent, predictable processes to improve what the customer sees and feels

6.Design for Six Sigma:

Designing to meet customer needs and process capability

Key Concepts of Six SigmaAt its core, Six Sigma revolves around a few key concepts.

Approaches to managing qualityTotal quality managementMANAGEMENT PHILOSOPHY

•Meet CUSTOMER needs and expectations

•Cover all FUNCTIONS•Involve all LEVELS•Examine the current COST of quality•Deliver services and products RIGHT

first time•Develop a quality management

APPROACH•CONTINUOUSLY look for ways to

improve

IMPLEMENTATION

•Develop a quality STRATEGY•Get top-management SUPPORT•Use a TQM group•Use improvement TEAMS•RECOGNISE success•Use quality TOOLS and TECHNIQUES•TRAIN staff in the aims and tools of

TQM

To implement TQM, companies must broaden their SKILLS and be more INNOVATIVE. This requires CHANGES in attitude, behavior and working practices

A number of FRAMEWORKS are available to help organizations consistently DESIGN and DELIVER services and products

for example :Systems and procedures• ISO 9000

ISO 9000HELPS CONTROL BUSINESS PROCESSES

•DESIGNING and DEVELOPING new services and products

•Control MATERIALS•DELIVER services and products•INSPECT, MEASURE and TEST services and

products •HANDLE, STORE and PACK products•SERVICE products after installation•Maintain and audit quality RECORDS for the

above

Summary

• QUALITY conformance: Either order-winner or qualifier in most markets

• MANAGING quality: Characteristics, measures, levels and monitors

• Quality LEVELS must be: Controlled before they can be improved

• TOOLS and TECHNIQUES for improving quality: Checklists, Pareto analysis, cause and effect, gap analysis

SYSTEMS and PROCEDURES: ISO 9000, Baldrige Award, EFQM Excellence Award