c12 quality

OPM 53312-1

Operations Operations ManagementManagement

Managing QualityManaging QualityChapter 12Chapter 12

OPM 53312-2

Ways in Which Quality Can Ways in Which Quality Can Improve ProductivityImprove 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

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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

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1.1. Organizational PracticesOrganizational Practices

Leadership Mission statement Effective operating procedure Staff support Training

Yields: What is important and what is to be accomplished

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2.2. Quality PrinciplesQuality Principles

Customer focus Continuous improvement Employee empowerment Benchmarking Just-in-time Tools of TQMYields: How to do what is important and to

be accomplished

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3.3. Employment FulfillmentEmployment Fulfillment

Empowerment Organizational commitment

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

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4.4. Customer SatisfactionCustomer Satisfaction

Winning orders Repeat customers

Yields: An effective organization with a competitive advantage

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Definitions of QualityDefinitions 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

Implications of QualityImplications of Quality

1.1. Company reputationCompany reputation Perception of new productsPerception of new products Employment practicesEmployment practices Supplier relationsSupplier relations

2.2. Product liabilityProduct liability Reduce riskReduce risk

3.3. Global implicationsGlobal implications Improved ability to competeImproved ability to compete

Key Dimensions of QualityKey Dimensions of QualityKey Dimensions of QualityKey Dimensions of Quality

Performance Features Reliability Conformance

Durability Serviceability Aesthetics Perceived quality Value

OPM 53312-11

Under-standing

Tangibles

Reliability

CommunicationCredibility

Security

Responsiveness

Competence

Courtesy

Access

© 1995 Corel Corp.

Service Quality AttributesService Quality Attributes

OPM 53312-12

Importance of QualityImportance of Quality

Costs & market share

Company’s reputation

Product liability

International implications

IncreasedProfits

Lower CostsProductivityRework/ScrapWarranty

Market GainsReputationVolumePrice

ImprovedQuality

Quality CostQuality Cost

4 types of quality costs1. Prevention cost2. Appraisal cost3. Internal failure cost4. External failure costs1 & 2 – cost to maintain or control quality.3 & 4 – cost resulting from failure to control quality.

Prevention costPrevention cost

Cost associated with preventing defects before they happen.

Costs of trying to prevent poor quality products from reaching the consumer.

Eg.process design, product design, employee training and vendor program.

Appraisal costsAppraisal costs

Cost incurred in assessing or auditing the level of quality. These are the costs of measuring, testing and analyzing materials, parts, product and the production process to ensure that the product quality specifications are being conformed to.

Example cost of inspection and testing, test equipment or devices.

Internal failure costsInternal failure costs

Cost incurred for correcting or reworking on products or services due to defects incurred during the production process.

It pertains to defects found before the product left the factory.

Example: Rework costs, process failure costs, process downtown costs and price downgrading costs.

External failure costsExternal failure costs

External failure costs are costs incurred after the customer has received a poor-quality product.

Example: customer complaint costs, product returns costs, warranty claim costs, loss of market share and lawsuit arising from injury or property damages from use of the product or service.

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

Specifies

Need

Customer

Interprets

Need

Marketing

Designs

Product

Defines

Quality

Engineering

Produces

Product

Plans

Quality

Monitors

Quality

Operations

Quality is

customer driven!

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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.

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Organizational Practices

Quality Principles

Employee Fulfillment

Attitudes (e.g., Commitment)

How to Do

What to Do

EffectiveBusiness

EffectiveBusiness

CustomerSatisfaction

CustomerSatisfaction

AchievingAchieving Total Quality Management Total Quality Management

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Deming’s Fourteen PointsDeming’s Fourteen Points

1. Create consistency of purpose

2. Lead to promote change

3. Build quality into the products

4. Build long term relationships

5. Continuously improve product, quality, and service

6. Start training

7. Emphasize leadership

OPM 53312-22

Deming’s Points - continuedDeming’s Points - continued8. Drive out fear9. Break down barriers between

departments10. Stop haranguing workers11. Support, help, improve12. Remove barriers to pride in work13. Institute a vigorous program of

education and self-improvement14. Put everybody in the company to work

on the transformation

Seven Concepts of TQMSeven Concepts of TQM

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

Continuous ImprovementContinuous Improvement

Represents continual improvement of all Represents continual improvement of all processes processes

Involves all operations and work centers Involves all operations and work centers including suppliers and customersincluding suppliers and customersPeople, Equipment, Materials, ProceduresPeople, Equipment, Materials, Procedures

2. DoTest the

plan

3. CheckIs the plan working?

4. ActImplement

the plan

1.PlanIdentify the

improvement and make a plan

Shewhart’s PDCA ModelShewhart’s PDCA Model

Figure 6.3Figure 6.3

Six SigmaSix Sigma

Originally developed by Motorola, Six Sigma Originally developed by Motorola, Six Sigma refers to an extremely high measure of process refers to an extremely high measure of process capabilitycapability

A Six Sigma capable process will return no A Six Sigma capable process will return no more than 3.4 defects per million operations more than 3.4 defects per million operations (DPMO)(DPMO)

Highly structured approach to process Highly structured approach to process improvementimprovement

Six SigmaSix Sigma

1.1. Define critical outputs Define critical outputs and identify gaps for improvementand identify gaps for improvement

2.2. Measure the work and Measure the work and collect process datacollect process data

3.3. Analyze the dataAnalyze the data

4.4. Improve the processImprove the process

5.5. Control the new process to make Control the new process to make sure new performance is maintainedsure new performance is maintained

DMAIC ApproachDMAIC Approach

Six Sigma ImplementationSix Sigma Implementation

Emphasize DPMO as a standard metricEmphasize DPMO as a standard metric Provide extensive trainingProvide extensive training Focus on corporate sponsor support (Champions)Focus on corporate sponsor support (Champions) Create qualified process improvement experts (Black Create qualified process improvement experts (Black

Belts, Green Belts, etc.)Belts, Green Belts, etc.) Set stretch objectivesSet stretch objectives

This cannot be accomplished without a major commitment from top level management

Employee EmpowermentEmployee Empowerment Getting employees involved in product and process Getting employees involved in product and process

improvementsimprovements 85% of quality problems are due to process and 85% of quality problems are due to process and

materialmaterial TechniquesTechniques

Build communication networks that include Build communication networks that include employeesemployees

Develop open, supportive supervisorsDevelop open, supportive supervisors Move responsibility to employeesMove responsibility to employees Build a high-morale organizationBuild a high-morale organization Create formal team structuresCreate formal team structures

Quality CirclesQuality Circles

Group of employees who meet regularly to Group of employees who meet regularly to solve problemssolve problems

Trained in planning, problem solving, and Trained in planning, problem solving, and statistical methodsstatistical methods

Often led by a facilitatorOften led by a facilitator Very effective when done properlyVery effective when done properly

Use internal

benchmarking if

you’re big

enough

BenchmarkingBenchmarking

Selecting best practices to use as a standard for Selecting best practices to use as a standard for performanceperformance

Determine what to Determine what to benchmarkbenchmark

Form a benchmark teamForm a benchmark team Identify benchmarking partnersIdentify benchmarking partners Collect and analyze benchmarking informationCollect and analyze benchmarking information Take action to match or exceed the benchmarkTake action to match or exceed the benchmark

Best Practices for Resolving Best Practices for Resolving Customer ComplaintsCustomer Complaints

Make it easy for clients to complainMake it easy for clients to complain Respond quickly to complaintsRespond quickly to complaints Resolve complaints on first contactResolve complaints on first contact Use computers to manage complaintsUse computers to manage complaints Recruit the best for customer service jobsRecruit the best for customer service jobs

Just-in-Time (JIT)Just-in-Time (JIT)

Relationship to quality:

JIT cuts the cost of qualityJIT cuts the cost of quality JIT improves qualityJIT improves quality Better quality means less inventory and Better quality means less inventory and

better, easier-to-employ JIT systembetter, easier-to-employ JIT system

Just-in-Time (JIT)Just-in-Time (JIT)

‘‘Pull’ system of production scheduling including Pull’ system of production scheduling including supply managementsupply management Production only when signaledProduction only when signaled

Allows reduced inventory levelsAllows reduced inventory levels Inventory costs money and hides process and Inventory costs money and hides process and

material problemsmaterial problems

Encourages improved process and product qualityEncourages improved process and product quality

Taguchi ConceptsTaguchi Concepts

Experimental design methods to improve Experimental design methods to improve product and process designproduct and process design Identify key component and process variables Identify key component and process variables

affecting product variationaffecting product variation

Taguchi ConceptsTaguchi Concepts Quality robustnessQuality robustness Quality loss functionQuality loss function Target-oriented qualityTarget-oriented quality

Quality RobustnessQuality Robustness

Ability to produce products uniformly in Ability to produce products uniformly in adverse manufacturing and environmental adverse manufacturing and environmental conditionsconditions Remove the effects of adverse conditionsRemove the effects of adverse conditions Small variations in materials and process do Small variations in materials and process do

not destroy product qualitynot destroy product quality

Quality Loss FunctionQuality Loss Function

Shows that costs increase as the product Shows that costs increase as the product moves away from what the customer wantsmoves away from what the customer wants

Costs include customer dissatisfaction, Costs include customer dissatisfaction, warranty and service, internal scrap and warranty and service, internal scrap and repair, and costs to societyrepair, and costs to society

Traditional conformance specifications are Traditional conformance specifications are too simplistictoo simplistic

Unacceptable

Poor

Good

Best

Quality Loss FunctionQuality Loss FunctionHigh lossHigh loss

Loss (to Loss (to producing producing organization, organization, customer, and customer, and society)society)

Low lossLow loss

FrequencyFrequency

LowerLower TargetTarget UpperUpperSpecificationSpecification

Target-oriented quality Target-oriented quality yields more product in the yields more product in the “best” category“best” category

Target-oriented quality Target-oriented quality brings product toward the brings product toward the target valuetarget value

Conformance-oriented quality Conformance-oriented quality keeps products within 3 keeps products within 3 standard deviationsstandard deviations


L = DL = D22CCwherewhere

L =L = loss to societyloss to societyD =D = distance from distance from target valuetarget valueC =C = cost of deviationcost of deviation

Tools of TQMTools of TQM Tools for Generating IdeasTools for Generating Ideas

Check sheetsCheck sheetsScatter diagramsScatter diagramsCause and effect diagramsCause and effect diagrams

Tools to Organize the DataTools to Organize the DataPareto chartsPareto chartsFlow chartsFlow charts

Tools for Identifying ProblemsTools for Identifying ProblemsHistogramHistogramStatistical process control chartStatistical process control chart

//

/ / /// /// ///// ////

//////

HourDefect 1 2 3 4 5 6 7 8

ABC

////

/

Seven Tools for TQMSeven Tools for TQM

(a)(a) Check Sheet: An organized method of Check Sheet: An organized method of recording datarecording data



(b)(b) Scatter Diagram: A graph of the value of one Scatter Diagram: A graph of the value of one variable vs. another variablevariable vs. another variable

AbsenteeismAbsenteeism

Prod

uctiv

ityPr

oduc

tivity



(c)(c) Cause and Effect Diagram: A tool that identifies Cause and Effect Diagram: A tool that identifies process elements (causes) that might effect an process elements (causes) that might effect an outcomeoutcome


CauseCauseMaterialsMaterials MethodsMethods

ManpowerManpower MachineryMachinery

EffectEffect


(d)(d) Pareto Charts: A graph to identify and plot Pareto Charts: A graph to identify and plot problems or defects in descending order of problems or defects in descending order of frequencyfrequency


Freq

uenc

yFr

eque

ncy

Perc

ent

Perc

ent

AA BB CC DD EE


(e)(e) Flow Charts (Process Diagrams): A chart that Flow Charts (Process Diagrams): A chart that describes the steps in a processdescribes the steps in a process



(f)(f) Histogram: A distribution showing the frequency of Histogram: A distribution showing the frequency of occurrence of a variableoccurrence of a variable


DistributionDistribution

Repair time (minutes)Repair time (minutes)

Freq

uenc

yFr

eque

ncy


(g)(g) Statistical Process Control Chart: A chart with time on Statistical Process Control Chart: A chart with time on the horizontal axis to plot values of a statisticthe horizontal axis to plot values of a statistic


Upper control limitUpper control limit

Target valueTarget value

Lower control limitLower control limit

TimeTime

Cause-and-Effect DiagramsCause-and-Effect Diagrams

MaterialMaterial MachineryMachinery

MethodsMethods ManpowerManpower

InadequateInadequate

supply of supply of magazinesmagazines

Inadequate special Inadequate special

meals on-boardmeals on-board

Insu

fficie

nt c

lean

In

suffi

cient

cle

an

pillo

wspi

llows

& bl

anke

ts o

n-&

blan

kets

on-

boar

dbo

ardBroken luggage Broken luggage

carouselcarousel

Mechanical delay on Mechanical delay on

planeplane

Deici

ng

Deici

ng

equi

pmen

t not

eq

uipm

ent n

ot

avai

labl

eav

aila

ble

Overbooking policiesOverbooking policies

Bumping policiesBumping policies

Mist

agge

d ba

gsM

istag

ged

bags

Poor

che

ck-in

Po

or c

heck

-in

polic

ies

polic

ies

Understaffed ticket Understaffed ticket

counterscounters

Understaffed crewUnderstaffed crew

Poor

ly tra

ined

Po

orly

train

ed

atte

ndan

tsat

tend

ants

Dissatisfied Dissatisfied Airline Airline CustomerCustomer


Pareto ChartsPareto Charts

Number of Number of occurrencesoccurrences

Room svcRoom svc Check-inCheck-in Pool hoursPool hours MinibarMinibar Misc.Misc.72%72% 16%16% 5%5% 4%4% 3%3%

1212

44 33 22

5454

– 100100– 9393– 8888

– 7272

70 70 –

60 60 –

50 50 –

40 40 –

30 30 –

20 20 –

10 10 –

0 0 –

Freq

uenc

y (n

umbe

r)Fr

eque

ncy

(num

ber)

Causes and percentCauses and percent

Cum

ulat

ive p

erce

ntCu

mul

ative

per

cent

Data for OctoberData for October

Shipping dock

Storage(4 to 6 hrs)

Quick freeze storage

(60 Mins)

Sealing Weighing Labeling

Flow ChartsFlow Charts

Packing and shipping processPacking and shipping process

Packing station

Statistical Process Control (SPC)Statistical Process Control (SPC)

Uses statistics and control charts to tell when to Uses statistics and control charts to tell when to take corrective actiontake corrective action

Drives process improvementDrives process improvement Four key stepsFour key steps

Measure the processMeasure the process When a change is indicated, find the assignable When a change is indicated, find the assignable

causecause Eliminate or incorporate the causeEliminate or incorporate the cause Restart the revised processRestart the revised process

An SPC ChartAn SPC Chart

Upper control limitUpper control limit

Coach’s target valueCoach’s target value

Lower control limitLower control limit

Game numberGame number

| | | | | | | | |

11 22 33 44 55 66 77 88 99

20%20%

10%10%

0%0%

Plots the percent of free throws missedPlots the percent of free throws missed


InspectionInspection

Involves examining items to see if an item is Involves examining items to see if an item is good or defectivegood or defective

Detect a defective productDetect a defective product Does not correct deficiencies in process or Does not correct deficiencies in process or

productproduct It is expensiveIt is expensive

IssuesIssues When to inspectWhen to inspect Where in process to inspectWhere in process to inspect

Purpose of InspectionPurpose of Inspection

1) To maintain certain standards in producing products2) To meet customer specifications3) To find defective products which can be reworked or correct

before the process is completed.4) To find problems in the production process that can be

corrected before defects can occur.5) To provide information concerning the effectiveness of

individual workers and particular department6) Some industries use inspection to grade products

Types of InspectionTypes of Inspection

1) 100 % inspectionInspect each unit that is we received or produced.

When 100% inspection is used? Cost of inspection is cheaper than defective cost Probability of quality variation is high Risks of unacceptable quality are high Low volume of output Testing are not destructive

Sampling InspectionSampling Inspection

• Sampling inspection involve the use of statistical sampling to check the quality of a batch of products or to check whether a process is working properly.

• Sampling inspection involves inspection of only a few products, which represent a sample of the total number of products produced.

When sampling inspection is used?• Mechanical production is used rather than manual production.• The cost of inspection is high.• High volume of output• Sensitive items which is easy destroy• When destructive testing is involved • Not critical product

When and Where to InspectWhen and Where to Inspect

1.1. At the supplier’s plant while the supplier is producingAt the supplier’s plant while the supplier is producing2.2. At your facility upon receipt of goods from the supplierAt your facility upon receipt of goods from the supplier3.3. Before costly or irreversible processesBefore costly or irreversible processes4.4. During the step-by-step production processesDuring the step-by-step production processes5.5. When production or service is completeWhen production or service is complete6.6. Before delivery from your facilityBefore delivery from your facility7.7. At the point of customer contactAt the point of customer contact

InspectionInspection Many problemsMany problems

Worker fatigueWorker fatigue Measurement errorMeasurement error Process variabilityProcess variability

Cannot inspect quality into a productCannot inspect quality into a product Robust design, empowered employees, and Robust design, empowered employees, and

sound processes are better solutionssound processes are better solutions

Source InspectionSource Inspection

Also known as source controlAlso known as source control The next step in the process is your The next step in the process is your

customercustomer Ensure perfect product to your customerEnsure perfect product to your customer

Poka-yoke is the concept of foolproof devices or techniques designed to pass only acceptable product

OPM 53312-59

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

TQM In ServicesTQM In Services

OPM 53312-60

Under-standing

Tangibles

Reliability

CommunicationCredibility

Security

Responsiveness

Competence

Courtesy

Access

© 1995 Corel Corp.

Service Quality AttributesService Quality Attributes

OPM 53312-61

Determinants of Service QualityDeterminants 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

OPM 53312-62

Determinants of Service QualityDeterminants 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

c12 quality

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