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Managing Quality

PowerPoint presentation to accompany

Heizer, Render, Munson

Operations Management, Twelfth Edition, Global Edition

Principles of Operations Management, Tenth Edition, Global Edition

PowerPoint slides by Jeff Heyl

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Outline

Global Company Profile: Arnold Palmer Hospital

Quality and Strategy

Defining Quality

Total Quality Management

Tools of TQM

The Role of Inspection

TQM in Services

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Managing Quality Provides a Competitive Advantage

Arnold Palmer Hospital

Delivers over 12,000 babies annually

Virtually every type of quality tool is employed

Continuous improvement

Employee empowerment

Benchmarking

Just-in-time

Quality tools

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Learning Objectives

When you complete this chapter you should be able to:

6.1 Define quality and TQM

6.2 Describe the ISO international quality standards

6.3 Explain Six Sigma

6.4 Explain how benchmarking is used in TQM

6.5 Explain quality robust products and Taguchi concepts

6.6 Use the seven tools of TQM

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Quality and Strategy

Managing quality supports differentiation, low cost, and response strategies

Quality helps firms increase sales and reduce costs

Building a quality organization is a demanding task

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Two Ways Quality Improves Profitability

Improved Quality

Increased Profits

Increased productivity

Lower rework and scrap costs

Lower warranty costs

Reduced Costs via

Improved response

Flexible pricing

Improved reputation

Sales Gains via

Figure 6.1

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The Flow of Activities

Organizational Practices

Leadership, Mission statement, Effective operating procedures, Staff support, Training

Yields: What is important and what is to be accomplished

Quality Principles

Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQM

Yields: How to do what is important and to be accomplished

Employee Fulfillment

Empowerment, Organizational commitment

Yields: Employee attitudes that can accomplish what is important

Customer Satisfaction

Winning orders, Repeat customers

Yields: An effective organization with a competitive advantage

Figure 6.2

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Defining Quality

An operations manager’s objective is to build a total quality management system that identifies and satisfies customer needs

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Defining Quality

The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs

American Society for Quality

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Different Views

User based: better performance, more features

Manufacturing based: conformance to standards, making it right the first time

Product based: specific and measurable attributes of the product

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Implications of Quality

Company reputation

Perception of new products

Employment practices

Supplier relations

Product liability

Reduce risk

Global implications

Improved ability to compete

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Malcolm Baldrige National Quality Award

Established in 1988 by the U.S. government

Designed to promote TQM practices

Recent winners include

MidwayUSA, Charter School of San Diego, Mid-America Transplant Services, Hill Country Memorial, PricewaterhouseCoopers Public Sector Practice, Elevations Credit Union, Lockheed Martin Missiles and Fire Control, MESA Products Inc.

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Baldrige Criteria

Applicants are evaluated on:

CATEGORIES	POINTS
Leadership	120
Strategic Planning	85
Customer Focus	85
Measurement, Analysis, and Knowledge Management	90
Workforce Focus	85
Operations Focus	85
Results	450

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ISO 9000 International Quality Standards

International recognition

Encourages quality management procedures, detailed documentation, work instructions, and recordkeeping

2015 revision gives greater emphasis to risk-based thinking

Over one million certifications in 206 countries

Critical for global business

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ISO 9000 International Quality Standards

Management principles

Top management leadership

Customer satisfaction

Continual improvement

Involvement of people

Process analysis

Use of data-driven decision making

A systems approach to management

Mutually beneficial supplier relationships

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Costs of Quality

Prevention costs - reducing the potential for defects

Appraisal costs - evaluating products, parts, and services

Internal failure costs - producing defective parts or service before delivery

External failure costs - defects discovered after delivery

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Costs of Quality

External Failure

Total Cost

Internal Failure

Prevention

Appraisal

Total Cost

Quality Improvement

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Takumi

A Japanese character that symbolizes a broader dimension than quality, a deeper process than education, and a more perfect method than persistence

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Leaders in Quality

TABLE 6.1	Leaders in the Field of Quality Management
LEADER		PHILOSOPHY/CONTRIBUTION
W. Edwards Deming		Deming insisted management accept responsibility for building good systems. The employee cannot produce products that on average exceed the quality of what the process is capable of producing. His 14 points for implementing quality improvement are presented in this chapter.
Joseph M. Juran		A pioneer in teaching the Japanese how to improve quality, Juran believed strongly in top-management commitment, support, and involvement in the quality effort. He was also a believer in teams that continually seek to raise quality standards. Juran varies from Deming somewhat in focusing on the customer and defining quality as fitness for use, not necessarily the written specifications.

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Leaders in Quality

TABLE 6.1	Leaders in the Field of Quality Management
LEADER		PHILOSOPHY/CONTRIBUTION
Armand Feigenbaum		His 1961 book Total Quality Control laid out 40 steps to quality improvement processes. He viewed quality not as a set of tools but as a total field that integrated the processes of a company. His work in how people learn from each other’s successes led to the field of cross-functional teamwork.
Philip B. Crosby		Quality Is Free was Crosby’s attention-getting book published in 1979. Crosby believed that in the traditional trade-off between the cost of improving quality and the cost of poor quality, the cost of poor quality is understated. The cost of poor quality should include all of the things that are involved in not doing the job right the first time. Crosby coined the term zero defects and stated, “There is absolutely no reason for having errors or defects in any product or service.”

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Ethics and Quality Management

Operations managers must deliver healthy, safe, quality products and services

Poor quality risks injuries, lawsuits, recalls, and regulation

Ethical conduct must dictate response to problems

All stakeholders must be considered

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Total Quality Management

Encompasses entire organization from supplier to customer

Stresses a commitment by management to have a continuing companywide drive toward excellence in all aspects of products and services that are important to the customer

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Deming's Fourteen Points

TABLE 6.2	Deming's 14 Points for Implementing Quality Improvement
1. Create consistency of purpose
2. Lead to promote change
3. Build quality into the product; stop depending on inspections to catch problems
4. Build long-term relationships based on performance instead of awarding business on price
5. Continuously improve product, quality, and service
6. Start training
7. Emphasize leadership

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Deming's Fourteen Points

TABLE 6.2	Deming's 14 Points for Implementing Quality Improvement
8. Drive out fear
9. Break down barriers between departments
10. Stop haranguing workers
11. Support, help, and improve
12. Remove barriers to pride in work
13. Institute a vigorous program of education and self-improvement
14. Put everyone in the company to work on the transformation

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Seven Concepts of TQM

Continuous improvement

Six Sigma

Employee empowerment

Benchmarking

Just-in-time (JIT)

Taguchi concepts

Knowledge of TQM tools

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Continuous Improvement

Never-ending process of continuous improvement

Covers people, equipment, suppliers, materials, procedures

Every operation can be improved

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4. Act

Implement the plan, document

2. Do

Test the plan

3. Check

Is the plan working?

Plan

Identify the pattern and make a plan

Shewhart's PDCA Model

Figure 6.3

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Continuous Improvement

Kaizen describes the ongoing process of unending improvement

TQM and zero defects also used to describe continuous improvement

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Six Sigma

Two meanings

Statistical definition of a process that is 99.9997% capable, 3.4 defects per million opportunities (DPMO)

A program designed to reduce defects, lower costs, save time, and improve customer satisfaction

A comprehensive system for achieving and sustaining business success

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Six Sigma

Two meanings

Statistical definition of a process that is 99.9997% capable, 3.4 defects per million opportunities (DPMO)

A program designed to reduce defects, lower costs, save time, and improve customer satisfaction

A comprehensive system for achieving and sustaining business success

Mean

Lower limits

Upper limits

±6

3.4 defects/million

±3

2,700 defects/million

Figure 6.4

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Six Sigma Program

Originally developed by Motorola, adopted and enhanced by Honeywell and GE

Highly structured approach to process improvement

A strategy

A discipline – DMAIC

A set of 7 tools

6

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Six Sigma

Defines the project’s purpose, scope, and outputs, then identifies the required process information keeping in mind the customer’s definition of quality

Measures the process and collects data

Analyzes the data ensuring repeatability and reproducibility

Improves by modifying or redesigning existing processes and procedures

Controls the new process to make sure performance levels are maintained

DMAIC Approach

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Implementing Six Sigma

Emphasize defects per million opportunities as a standard metric

Provide extensive training

Focus on top management leadership (Champion)

Create qualified process improvement experts (Black Belts, Green Belts, etc.)

Set stretch objectives

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Implementing Six Sigma

Emphasize defects per million opportunities as a standard metric

Provide extensive training

Focus on top management leadership (Champion)

Create qualified process improvement experts (Black Belts, Green Belts, etc.)

Set stretch objectives

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

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Employee Empowerment

Getting employees involved in product and process improvements

85% of quality problems are due to materials and process

Techniques

Build communication networks that include employees

Develop open, supportive supervisors

Move responsibility to employees

Build a high-morale organization

Create formal team structures

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Quality Circles

Group of employees who meet regularly to solve problems

Trained in planning, problem solving, and statistical methods

Often led by a facilitator

Very effective when done properly

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Benchmarking

Selecting best practices to use as a standard for performance

Determine what to benchmark

Form a benchmark team

Identify benchmarking partners

Collect and analyze benchmarking information

Take action to match or exceed the benchmark

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Best Practices for Resolving Customer Complaints

Table 6.3
BEST PRACTICE		JUSTIFICATION
Make it easy for clients to complain		It is free market research
Respond quickly to complaints		It adds customers and loyalty
Resolve complaints on first contact		It reduces cost
Use computers to manage complaints		Discover trends, share them, and align your services
Recruit the best for customer service jobs		It should be part of formal training and career advancement

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Internal Benchmarking

When the organization is large enough

Data more accessible

Can and should be established in a variety of areas

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Just-in-Time (JIT)

'Pull' system of production scheduling including supply management

Production only when signaled

Allows reduced inventory levels

Inventory costs money and hides process and material problems

Encourages improved process and product quality

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Just-in-Time (JIT)

Relationship to quality:

JIT cuts the cost of quality

JIT improves quality

Better quality means less inventory and better, easier-to-employ JIT system

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Taguchi Concepts

Engineering and experimental design methods to improve product and process design

Identify key component and process variables affecting product variation

Taguchi Concepts

Quality robustness

Target-oriented quality

Quality loss function

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Quality Robustness

Ability to produce products uniformly in adverse manufacturing and environmental conditions

Remove the effects of adverse conditions

Small variations in materials and process do not destroy product quality

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Quality Loss Function

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

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

Traditional conformance specifications are too simplistic

Target-oriented quality

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Unacceptable

Poor

Good

Best

Fair

Quality Loss Function

High loss

Loss (to producing organization, customer, and society)

Low loss

Figure 6.5

Frequency

Lower

Target

Upper

Specification

Target-oriented quality yields more product in the "best" category

Target-oriented quality brings product toward the target value

Conformance-oriented quality keeps products within 3 standard deviations

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TQM Tools

Tools for Generating Ideas

Check Sheet

Scatter Diagram

Cause-and-Effect Diagram

Tools to Organize the Data

Pareto Chart

Flowchart (Process Diagram)

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TQM Tools

Tools for Identifying Problems

Histogram

Statistical Process Control Chart

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Hour

Defect 1 2 3 4 5 6 7 8

Seven Tools of TQM

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

Figure 6.6

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Seven Tools of TQM

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

Absenteeism

Productivity

Figure 6.6

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Seven Tools of TQM

Figure 6.6

Cause

Materials

Methods

Manpower

Machinery

Effect

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Seven Tools of TQM

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

Figure 6.6

Frequency

Percent

A B C D E

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Seven Tools of TQM

(e) Flowchart (Process Diagram): A chart that describes the steps in a process

Figure 6.6

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Seven Tools of TQM

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

Figure 6.6

Distribution

Repair time (minutes)

Frequency

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Seven Tools of TQM

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

Figure 6.6

Upper control limit

Target value

Lower control limit

Time

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Cause-and-Effect Diagrams

Material

(ball)

Method

(shooting process)

Machine

(hoop &

backboard)

Manpower

(shooter)

Missed free-throws

Figure 6.7

Rim alignment

Rim size

Backboard stability

Rim height

Follow-through

Hand position

Aiming point

Bend knees

Balance

Size of ball

Lopsidedness

Grain/Feel (grip)

Air pressure

Training

Conditioning

Motivation

Concentration

Consistency

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Pareto Charts

Number of occurrences

Room svc Check-in Pool hours Minibar Misc.

72% 16% 5% 4% 3%

– 100

– 93

– 88

– 72

70 –

60 –

50 –

40 –

30 –

20 –

10 –

0 –

Frequency (number)

Causes and percent of the total

Cumulative percent

Data for October

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Flow Charts

MRI Flowchart

Physician schedules MRI

Patient taken to MRI

Patient signs in

Patient is prepped

Technician carries out MRI

Technician inspects film

If unsatisfactory, repeat

Patient taken back to room

MRI read by radiologist

MRI report transferred to physician

Patient and physician discuss

20%

80%

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Statistical Process Control (SPC)

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

Drives process improvement

Four key steps

Measure the process

When a change is indicated, find the assignable cause

Eliminate or incorporate the cause

Restart the revised process

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Control Charts

Upper control limit

Coach’s target value

Lower control limit

Game number

| | | | | | | | |

1 2 3 4 5 6 7 8 9

40%

20%

Plot the percent of free throws missed

Figure 6.8

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Inspection

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

Detect a defective product

Does not correct deficiencies in process or product

It is expensive

Issues

When to inspect

Where in process to inspect

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When and Where to Inspect

At the supplier’s plant while the supplier is producing

At your facility upon receipt of goods from your supplier

Before costly or irreversible processes

During the step-by-step production process

When production or service is complete

Before delivery to your customer

At the point of customer contact

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Inspection

Many problems

Worker fatigue

Measurement error

Process variability

Cannot inspect quality into a product

Robust design, empowered employees, and sound processes are better solutions

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Source Inspection

Also known as source control

The next step in the process is your customer

Ensure perfect product to your customer

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Source Inspection

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

Checklists ensure consistency and completeness

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Service Industry Inspection

TABLE 6.4	Examples of Inspection in Services
ORGANIZATION		WHAT IS INSPECTED	STANDARD
Alaska Airlines		Last bag on carousel Airplane door opened	Less than 20 minutes after arrival at the gate Less than 2 minutes after arrival at the gate
Jones Law Office		Receptionist performance Billing Attorney	Phone answered by the second ring Accurate, timely, and correct format Promptness in returning calls
Hard Rock Hotel		Reception desk Doorman Room Minibar	Use customer’s name Greet guest in less than 30 seconds All lights working, spotless bathroom Restocked and charges accurately posted to bill

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Service Industry Inspection

TABLE 6.4	Examples of Inspection in Services
ORGANIZATION		WHAT IS INSPECTED	STANDARD
Arnold Palmer Hospital		Billing Pharmacy Lab Nurses Admissions	Accurate, timely, and correct format Prescription accuracy, inventory accuracy Audit for lab-test accuracy Charts immediately updated Data entered correctly and completely
Olive Garden Restaurant		Busboy Busboy Waiter	Serves water and bread within 1 minute Clears all entrée items and crumbs prior to dessert Knows and suggest specials, desserts

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Service Industry Inspection

TABLE 6.4	Examples of Inspection in Services
ORGANIZATION		WHAT IS INSPECTED	STANDARD
Nordstrom Department Store		Display areas Stockrooms Salesclerks	Attractive, well-organized, stocked, good lighting Rotation of goods, organized, clean Neat, courteous, very knowledgeable

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Attributes Versus Variables

Attributes

Items are either good or bad, acceptable or unacceptable

Does not address degree of failure

Variables

Measures dimensions such as weight, speed, height, or strength

Falls within an acceptable range

Use different statistical techniques

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TQM In Services

Service quality is more difficult to measure than the quality of goods

Service quality perceptions depend on

Intangible differences between products

Intangible expectations customers have of those products

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Service Quality

The operations manager must recognize:

The tangible component of services is important

The service process is important

The service is judged against the customer’s expectations

Exceptions will occur

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Service Specifications

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Determinants of Service Quality

Table 6.5
Reliability involves consistency of performance and dependability
Responsiveness concerns the willingness or readiness of employees to provide service
Competence means possession of the required skills and knowledge to perform the service
Access involves approachability and ease of contact
Courtesy involves politeness, respect, consideration, and friendliness
Communication means keeping customers informed and listening to them
Credibility involves trustworthiness, believability, and honesty
Security is the freedom from danger, risk, or doubt
Understanding/knowing the customer involves making the effort to understand the customer's needs
Tangibles include the physical evidence of the service

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Service Recovery Strategy

Managers should have a plan for when services fail

Marriott's LEARN routine

Listen

Empathize

Apologize

React

Notify

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