Business operating management discussion

Yuzhi Zhao

chapter15.pptx

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Quality Management

COLLIER/EVANS

Operations + Supply Chain Management

LEARNING OUTCOMES, Part 1

Explain the concepts and definitions of quality

Describe the quality philosophies and principles of Deming, Juran, and Crosby

Explain the GAP model and its importance

Describe the concepts and philosophy of ISO 9000:2000

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LEARNING OUTCOMES, Part 2

Describe the philosophy and methods of Six Sigma

Explain the categories of cost-of-quality measurement

Describe how to apply the Seven QC Tools

Explain the concepts of kaizen and poka-yoke

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Quality Management

LO 15-1

Systematic policies, methods, and procedures

Used to ensure that goods and services are produced with appropriate levels of quality to meet the needs of customers

Deals with issues relating to how goods and services are designed, created, and delivered to meet customer expectations

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Quality, Part 1

LO 15-1

Meeting or exceeding customers' expectations

How well outputs of a manufacturing or service process conform to the design specifications

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Quality, Part 2

LO 15-1

Quality of conformance: Extent to which a process is able to deliver outputs that conform to the design specifications

Specifications: Targets and tolerances determined by designers of goods and services

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Service Quality

LO 15-1

Consistently meeting or exceeding customer expectations and service-delivery system performance criteria

Dimensions

Tangibles

Reliability

Responsiveness

Assurance

Empathy

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Principles of Total Quality

LO 15-1

Focus on customers and stakeholders

Process focus supported by continuous improvement and learning

Participation and teamwork by an organization’s employees

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W. Edwards Deming’s Quality Management Philosophy

LO 15-2

Focuses on improving product and service quality by reducing variability in goods and services design

Higher quality leads to higher productivity and lower costs

Leads to improved market share and long-term competitive strength

Deming cycle - Plan, do, study, and act (PDSA)

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Joseph Juran Principle

LO 15-2

Defined quality as fitness for use

Sought to improve quality by working within a familiar cultural system

Advocated the use of quality cost measurement

Focused on elimination of defects using statistical tools for analysis

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Crosby’s Absolutes of Quality Management

LO 15-2

Quality means conformance to requirements, not elegance

There is no such thing as a quality problem

Doing the job right the first time is always cheaper

Only performance measurement is the cost of quality, which is the expense of nonconformance

Only performance standard is Zero Defects

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GAP Model, Part 1

LO 15-3

Evaluates the quality of both goods and services

Identifies where to focus design and improvement efforts

Recognizes that there are several ways to mismanage the creation and delivery of high levels of quality

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Exhibit 15.1

Gap Model of Quality

LO 15.3

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GAP Model, Part 2

LO 15-3

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GAP Model, Part 3

LO 15-3

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ISO 9000:2000 Standards

LO 15-4

Define quality system standards, based on the premise that management practices can be standardized

Help outputs meet customer expectations and requirements

Internationally recognized

Prescribe documentation for all processes affecting quality

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Principles of ISO 9000:2000 Standards

LO 15-4

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Six Sigma, Part 1

LO 15-5

Business improvement approach

Seeks to find and eliminate causes of defects and errors in manufacturing and service processes

Focuses on outputs that are critical to customers

Results in a clear financial return for the organization

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Six Sigma, Part 2

LO 15-5

Level of capability indicates a level of near-zero defects

Defect: Mistake or error that is passed on to the customer

Unit of work: Output of a process or an individual process step

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Six Sigma, Part 3

LO 15-5

Quantifies quality performance by defects per million opportunities (dpmo)

In service applications, the term errors per million opportunities (epmo) is used

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Six Sigma, Part 4

LO 15-5

Quality level corresponds to a dpmo or epmo equal to 3.4

Calculated using an Excel spreadsheet using the cell formula of:

NORM.S.INV(1 – Number of defects/number of opportunities) + 1.5

or,

NORM.S.INV(1 – dpmo/1,000,000) + 1.5

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Key Concepts of Implementing Six Sigma, Part 1

LO 15-5

Emphasizing dpmo or epmo as a standard metric that can be applied to all parts of an organization

Providing extensive training followed by project team deployment

Focusing on corporate sponsors responsible for supporting team activities

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Key Concepts of Implementing Six Sigma, Part 2

LO 15-5

Creating highly qualified process improvement experts

Ensuring that appropriate metrics are identified early in the process and that they focus on business results

Setting stretch objectives for improvement

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DMAIC Process for Implementation of Six Sigma, Part 1

LO 15-5

Define (D)

Identify customers and their priorities

Identify and define a suitable project

Identify CTQs (critical-to-quality characteristics)

Measure (M)

Determine how to measure a process and how it is performing

Identify key internal processes that influence CTQs

Measure current defects

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DMAIC Process for Implementation of Six Sigma, Part 2

LO 15-5

Analyze (A)

Determine likely causes of defects

Understand why defects are generated by identifying the key variables that cause process variation

Improve (I)

Identify means to remove the causes of defects

Confirm key variables and quantify their effects on CTQs

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DMAIC Process for Implementation of Six Sigma, Part 3

LO 15-5

Identify the maximum acceptable ranges of key variables and a system for measuring deviations of the variables

Modify the process to stay within an acceptable range

Control (C)

Determine how to maintain the improvements

Put tools in place to ensure that the key variables remain within acceptable ranges under the modified process

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Cost-of-Quality Measurement

LO 15-6

Cost of quality: Costs associated with avoiding poor quality or those incurred as a result of poor quality

Helps operations managers:

Communicate better between operations managers and senior-level managers

Identify and justify major improvement opportunities

Evaluate the importance of quality and improvement in operations

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Categories of Quality Costs, Part 1

LO 15-6

Prevention costs: Expended to keep nonconforming goods and services from being made and reaching the customer

Quality planning costs

Process-control costs

Information-systems costs

Training and general management costs

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Categories of Quality Costs, Part 2

LO 15-6

Appraisal costs: Help ascertain quality levels through measurement and data analysis to detect and correct problems

Test and inspection costs

Instrument maintenance costs

Process-measurement and process-control costs

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Categories of Quality Costs, Part 3

LO 15-6

Internal failure costs: Incurred as a result of unsatisfactory quality that is found before the delivery of a good or service

Scrap and rework costs

Costs of corrective action

Downgrading costs

Process failures

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Categories of Quality Costs, Part 4

LO 15-6

External failure costs: Incurred after poor-quality goods or services reach the customer

Costs due to customer complaints and returns

Goods and services recall costs and warranty and service guarantee claims

Product-liability costs

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Seven QC Tools, Part 1

LO 15-7

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Seven QC Tools, Part 2

LO 15-7

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5-Why Technique of Root Cause Analysis

LO 15-7

Helps redefine a problem statement as a chain of causes and effects to identify the source of the symptoms

Asks why, ideally five times

Uses the Seven QC tools

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Kaizen Quality Improvement Approach

LO 15-8

Focuses on small, gradual, and frequent improvements over a long term, with:

Minimum financial investment

Participation by everyone in the organization

Kaizen event: Intense and rapid improvement process

All resources of a team or a department are directed into an improvement project over a short time period

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Poka-Yoke Quality Improvement Approach

LO 15-8

Processes mistake-proofing

Uses automatic devices or methods to avoid simple human error

Uses applications that are simple, creative, and inexpensive to implement

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KEY TERMS

Quality management

Quality

Quality of conformance

Specifications

Service quality

Six Sigma

Defect

Unit of work

Cost of quality

Prevention costs

Appraisal costs

Internal failure costs

External failure costs

Kaizen

Kaizen event

Poka-yoke

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SUMMARY

GAP model helps identify and close the largest gaps and improve quality

ISO 9000:2000 provides a set of good basic practices for initiating a basic quality management system

Six Sigma seeks to find and eliminate causes of defects and errors in manufacturing and service processes

Kaizen and Poka-yoke approach help in quality improvement

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4LTR Press

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