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Quality Management and Purchasing
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Session 9 ObjectivesIdentify the marketplace pressures that
are driving quality standards higher in manufacturing
Describe the costs of qualityDescribe the basic attributes of normal
variabilityDefine quality in manufacturing productsUnderstand the use of Pareto analysis,
control charts, and fishbone diagram in solving quality problems
Compare process control with product inspection
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Session 9 ObjectivesDiscuss the importance of purchasing, its
objectives and the steps in the purchasing cycleIdentify the documents used to order, receive,
and make payment for goods and servicesList the factors that must be considered in
establishing specifications, and know their importance
Understand the importance of supplier selection and the factors that must be considered
Describe/list the factors to consider in establishing a supplier agreement.
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Session OutcomesState the marketplace pressures that are
driving quality standards higher in manufacturing
List and articulate the costs of qualityDescribe the basic attributes of normal
variabilityDefine quality in manufacturing productsUse of Pareto analysis, control charts, and
fishbone diagram in solving quality problemsCompare process control with product
inspection
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Session OutcomesPresent and discuss the importance of purchasing,
its objectives and the steps in the purchasing cycleList the documents used to order, receive, and
make payment for goods and servicesList the factors that must be considered in
establishing specifications, and know their importance
Present/discuss the importance of supplier selection and the factors that must be considered
List and explain the factors to consider in establishing a supplier agreement
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What is quality?
Fitness for purpose or use (Juran).
Conformance to requirement specifications ( Crosby).
Quality is the ability of a product or service to consistently meet or exceed customer expectations (ASQ).
Conformance to requirement or fitness for use…
- APICS Dictionary User satisfaction: that the goods and/or services satisfy
the needs and expectations of the user (Text book)
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What is quality? GSA defines it as: “ Meeting the customer
needs the first time and every time”. Boeing defines it as: “ Providing our
customer with products and services that consistently meet the needs and the expectation”.
Federal Express Defines it as : “ Performance to the standard expected by
customer”. Saudi Aramco defines quality as:
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Elements to Achieve Quality Quality and Product policy: deals with product
planning Market segment Estimated sales volume. Price Quality level specified by senior management
according to the wants and needs of the market segment.
Quality and Product design deals with Determine tolerances, appearance and performance Material to be used and dimensions Product cabability.
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Elements to Achieve Quality
Quality and manufacturing concerned with Meeting the minimum specification
specified in the product design Selection of the right processes.
Quality and use Communicate with and train the customer After sale service
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Dimensions of Quality Performance - main characteristics of
the product/serviceAesthetics - appearance, feel, smell,
tasteSpecial features - extra characteristicsConformance - how well product/service
conforms to customer’s expectationsSafety - Risk of injuryReliability - consistency of performance
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Dimensions of Quality
Durability - useful life of the product/service
Perceived Quality - indirect evaluation of quality (e.g. reputation)
Service after sale - handling of customer complaints or checking on customer satisfaction.
Warranty.
Price
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Product development cycle
Product Development Cycle
Market PlaceCustomer Market Research
Product Design
ProcessDesign
Operations
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Total Quality Management (TQM)
“…TQM is a management approach to long-term success through customer satisfaction. TQM is based on the participation of all members of an organization in improving processes, goods, services, and the culture in which they work”
- APICS Dictionary
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Total Quality Management (TQM)Key principles and characteristicsCustomer focus
Meeting or exceeding the user’s expectationsCost of quality
Identifying all the costs associated with qualityTaking action
Using problem-solving toolsInvolving the employeeContinuously improving the process
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Why Quality Now?Customer demands________________________________________________________________________
World competition________________________________________________________________________
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The Cost/Productivity AdvantageBefore Improvement
After Improvement
Scrap rate 13% 5%
Order size 100 100
Number produced 115 105
Production costs
@ $10 per unit $1,150 $1,050
Sales revenue
@ $15 per unit $1,500 $1,500
profit $ 350 $450
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Cost of Quality
Cost of failureInternalExternal
Costs of appraisalCosts of prevention
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Cost of Failures
Cost of failure (Internal)Scarp and reworkLost material and labor Lost capacity
Costs of failure (External) Warrants Field service Lost sales/customers.
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Cost of Appraisal
Cost of inspection Gauges and equipment Los products Higher work in process
What are other costs of appraisal?
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Cost of Prevention
Cost of maintenance Operator training Los products
What other costs of prevention?
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Total Quality Cost
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Variation
All things varyPeople
SnowflakesLengths of blades of grass
Manufactured productsetc.
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What Is A Process A process is a sequence of steps that
produces an output. Examples of processes include:
Manufacturing processes. Assembly Molding Machining
Service processes. Teaching Purchasing Participants give examples.
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Chance Variation Random variations inherent to the process. The
variation comes from: Material People Machines MethodsMeasurements.
A process that is operating under chance /natural variation is said to be under statistical control.
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Assignable Variation These are variations due to a cause other
than random variation such as tool wear, gauge movement, operator lack of training.
Process control tools specifically the control chart detects whether the process is under statistical control or not. In other words is there an assignable cause for the variation or not?
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Pattern of Variability The output of any process has a unique
pattern that can be represented by its shaper, center and spread.
The center is the average.The spread or variation is measured in
SPC by the range and standard deviation.
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Process Output Variability
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Normal Distribution
9973.0)33(
9545.0)22(
6827.0)(
XP
XP
XP
68%
- 3 - 2 - - - 2 - 3 x
95%
99.7%
f(x)
Probabilities associated with normal distribution
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Process Capability Process Capability index Cp is defined as:
Cp = (USL - LSL( / 6
If a process has a standard deviation = 0.0016 and the speciation limit is 1.000 plus or minus 0.005 compute the process capability index. Cp = ( 2* 0.005)/6*0.0016 = 0.01/0.0096 = 1.04
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Quality in Manufacturing Products
All product must meet the required specification as a minimum.
All parts must be within specifications and the less deviation from the center of the specs is the better.
Where does the specification come from?
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Manufacturing QualityDowel Dimensions (inches)Spec = 1” ± 0.10”
0.99 | 1.00 | 1.01 | 1.02 | 1.03 | 1.04 | 1.05 | 1.06 | 1.07 | 1.08 | 1.09
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Problem 9.1 A manufacturer of packaged sugar substitute has
analyzed the output of the filling machine, with results given below. The specification for the process is 140 +/- 40 milligram.
150 140 170 160 130 140 140 160 150 150 160 150 150 160 140
- Plot the data for the information given, including specification- What is the average fill weight for the process?
- What would you do to improve the process?
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Problem 9.15
4
3
2
1
100 110 120 130 140 150 160 170 180
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Quality Tools
Pareto chartCause-and-effect diagramStratification or scatter diagramsCheck sheetHistogramGraph and control chart
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Steps in Pareto Analysis1. Define the category to be analyzed2. Select the measurement unit3. Compile occurrences by unit of measure, and
calculate the total in each category4. Rank the items in descending order5. Find the total cost6. Calculate the percentage by item7. Calculate the cumulative, or running, total of the
percentage8. Graph the data9. Separate the “significant few” from the “trivial
many”
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Rental Car Problems
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Fishbone Diagram Known as cause and effect diagram or
Ishkawa diagram. It is a sinple technique that helps to solve problems.
Steps for developing fishbone diagram1. Identify the quality characteristic to be studies and enter it in the head of the diagram.2. Label the skelton with a main cause for each of the main bones of the diagram.3. Write down the factors identified under each cause and connect them to the main cause.
4. Once all the possible causes has been listed try to identify the most likely root cause and work on it.
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Fishbone Diagram
People Machines Materials
Environment
Method Measuremen
ts
Quality Problems
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Step 1: Decide on the effect to examinePhrase effect as
positive (an objective) ornegative (a problem)
Steps of Constructing the Fishbone Daigram
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Poor Gas mileage
Step2: Fill the effect box and draw the spine
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Step 3 - Identify Main CategoriesStep 3 - Identify Main Categories
Effect
Machine
Materials
Manpower
Methods
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Methods Machine
People Materials
PoorGas mileage
Step 4 - Identify Causes Influencing the EffectStep 4 - Identify Causes Influencing the Effect
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Step 5 - Add Detailed LevelsStep 6 - Analyze the DiagramStep 5 - Add Detailed LevelsStep 6 - Analyze the Diagram
impatience
Always late
Drive too fast
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Control Charts It is a chart that assist in detecting assignable
causes of variation. It has a center line ( which is the average of the averages) and upper control limit and lower control limit.
The most popular type of control charts is the x-bar and R charts.
To construct the x-bar chart usually 20 samples of size 5 are taken from the output of the process and a certain quality characteristic is measures.
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Construction of X-bar Chart
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Construction of X-bar Chart
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Control Charts
X
Upper Control Limit
Lower Control Limit
1”
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Control charts – key points
Filled in by operators, not inspectorsRecord the average and range of the processControl limits are set to indicate the normal
variation of the processControl charts do not show product
specification
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Limitations of Inspection
Is expensiveDoes not add value to the customerDoes not prevent further defectsIs not dependableGives no information at the source (feedback)
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Purchasing
“The term used in industry and management to denote the function of and the responsibility for procuring materials, supplies, and services.”
– APICS Dictionary
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Purchasing ObjectivesTo obtain goods and services of the quality
and quantity neededTo obtain goods and services at the right costTo ensure the best possible serviceTo identify qualified suppliers and maintain
good relations
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Purchasing and Profits
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Purchasing Cycle
Select and maintain qualified suppliersGenerate requisitionsIssue purchase ordersFollow upReceive goodsAuthorize payment
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Purchase Order ControlOpen ordersReleased by purchasingCopy kept on file in purchasingUsed by receiving to
Verify the order and receiptReceive and track partial shipmentsForward goods to the user
Closed ordersAll requirements completeFiled for reference
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Purchase Order Control (Cont.)
InvoiceRequest for payment by supplier
PaymentAccounting or purchasing compares theOriginal orderOrder receipt documentinvoice
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Establishing Specifications
What to buy depends onQuantityCost considerationsWhat the item should do
Quality level neededThose characteristics of product determined by
final useFunction, quality, service, and price are
interrelated
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Specification DescriptionFunction specifications may be described byBrandSpecifying physical or chemical
characteristics material, and method of manufacture
Performance requirementsEngineering drawingsMiscellaneous methods, including
Samples“Gimme one just like the last one”
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Selecting SuppliersFactors in selecting suppliersTechnical abilityManufacturing capabilityReliabilityAfter-sales serviceLocationPriceFinancial stabilityManagement attitude
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Supplier AgreementPrice
Terms
Delivery
Quality
Quantity
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Session 9: objectivesIdentify the marketplace pressures that are
driving quality standards higher in manufacturingDescribe the costs of qualityDescribe the basic attributes of normal variabilityDefine quality in manufacturing productsUnderstand the use of Pareto analysis, control
charts, and fishbone diagram in solving quality problems
Compare process control with product inspection
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Session 9: objectives (Cont.)Discuss the importance of purchasing, its
objectives and the steps in the purchasing cycleIdentify the documents used to order, receive, and
make payment for goods and servicesList the factors that must be considered in
establishing specifications, and know their importance
Understand the importance of supplier selection and the factors that must be considered
Know the factors to consider in establishing a supplier agreement