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Chapter 8:

Managing Quality

Operations Management in the

Supply Chain: Decisions and Cases,

6th edition

8-2

Chapter 8 Outline

• Quality as Customer Judgments

• Manufacturing Quality

• Service Quality

• Quality Planning, Control, and Improvement

• Ensuring Quality in the Supply Chain

• Quality, Cost of Quality, and Financial Performance

• Quality Pioneers

• ISO 9000 Standards

• Malcolm Baldrige Award

• Why Some Quality Improvement Efforts Fail

8-3

Introduction

• Quality is one of the four key objectives of operations

(cost, flexibility, delivery, quality)

• Historical development of quality concepts

• Inspection (early 1900s)

• Statistics quality control (Shewhart - 1940s)

• Quality management (1960s)

• Quality is responsibility of everyone in the organization

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Comair Flight 5191, Lexington, KY

“The Comair Flight 5191 crew began the day by

powering up the wrong plane. They took off

down the wrong runway. The air traffic

controller, working alone in violation of FAA

policy, had turned his back to do other duties.

Investigators are uncovering a series of mistakes

before the plane crashed, killing 49 people.”

Source: www.cnn.com (2006)

Quality involves the entire organization, and the supply chain.

http://www.cnn.com/

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Quality

Meeting, or exceeding, customer

requirements now and in the future.

i.e., The product or service is fit for the

customer’s use.

Only the customer can determine quality.

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Dimensions of Quality

QUALITY Quality of

Conformance

Field

Service

Availability

Quality of

Design

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Quality of Design

• Determined before the product is produced

• Cross-functional team for product design

• Translates the “wishes” of customers into specifications

• Depends on market research, design concept,

specifications

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Quality of Conformance

• Producing a product/service that meets specifications

• Even ‘cheap’ products can have conformance quality

• May not be durable, but conformance quality is achieved if

they match their design

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The “Abilities”

Uptime Availability

Uptime Downtime 



MTBF Availability

MTBF MTTR 



• Availability

• Continuity of usefulness to customers (operational)

• Reliability

• Useful product/service time until failure

• Mean time before failure (MTBF)

• Maintainability

• Restoration of product/service after failure

• Mean time to repair (MTTR)

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Field Service

• Warranty and repair/replacement of the product after it has been sold

• Also called customer service, sales service, or just “service”

• Dimensions • Promptness

• Competence

• Integrity

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Different Types of Quality (Figure 8.1)

Quality of market research

Quality of concept

Quality of specification

Technology

Employees

Management

Reliability

Maintainability

Logistical support

Promptness

Competence

Integrity

Quality of design

Quality of conformance

Availability

Field service

Customer

satisfaction

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Service Quality

• Measures are perceptual/subjective

• SERVQUAL is most popular measure

• Tangibles: appearance

• Reliability: promised service

• Responsiveness: prompt, helpful

• Assurance: knowledge, courtesy

• Empathy: caring, individualized

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The Quality Cycle (Figure 8.2)

MARKETING Interprets customer needs

Works with customer to

design product

Interpretation of needs

CUSTOMER Quality needs

Needs

OPERATIONS Produces the product or

services

QUALITY CONTROL Plans and monitors

quality

Product

ENGINEERING Defines design concept

Prepares specifications

Defines quality

characteristics

Specifications

Concurrent

engineering

team

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Quality Cycle in Mass Transit System (Figure 8.3)

County planning

Regional planning

State transportation agency

Planner

Scheduler Routes

Schedules

Budgets

Method

Facilities

Equipment

Evaluation

Inspection

Audits

Surveys

Hearings

Public

Operations office

Rider’s

needs

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Quality Improvement through

the Quality Cycle

 Define quality attributes on the basis of

customer needs

 Decide how to measure each attribute

 Set quality standards

 Establish appropriate tests for each standard

 Find and correct causes of poor quality

 Continue to make improvements

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Poka-Yoke (poh-keh yoh-kay)

• Developed at Toyota in the 1960s

• Means ‘mistake proofing’

• Design the product and process so that mistakes cannot occur or are immediately detectable

• Examples

• In manufacturing, 2 parts are notched to

only fit together one way

• For consumers, snow blower requires

two hand levers to be held during

operation (so no hands can be in the

dangerous moving parts!)

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Suppliers and Quality

• Involve in product design

• Prevent design defects; help select materials

• Supplier certification

• Planning and control system for quality

• Manage rolled yield (cumulative defect rate)

• 10 parts (1% defects in each)

• Rolled yield = (.99)10 = .90

• 90% quality yield for final product

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Cost of Quality

• Control costs

• Prevention

• Training, data management, planning

• Appraisal

• Incoming materials inspection, final good inspection

• Failure costs

• Internal failure

• Scrap, rework, downtime

• External failure

• Warranty, returns, complaints

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Cost of Quality Trade-offs

100%

defective

100%

good

Cost/unit

Prevention

& appraisal

costs

Internal &

external

failure costs

8-20

How Quality Contributes to Profitability (Figure 8.5)

IMPROVED PROFITABILITY

QUALITY

(design and conformance)

Lower

costs

Reduced

waste

Greater

productivity

Greater

value

Increased market

Revenue

growth

Improved

margins

Improved asset

utilization

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Quality Pioneer: W. Edwards Deming

• The 14 Management Principles

• Don’t sacrifice quality for short-term profit

• Emphasis on continuous improvement

• PDCA Wheel

• Plan, do, check, act

• http://www.deming.org/

http://www.deming.org/

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Quality Pioneer: Joseph Juran • Quality “Trilogy”—planning, control and

improvement

• Solve “the vital few” quality problems

• Stressed quality control methods (Chapter 9)

• “Quality Handbook”

• http://www.juran.com

Juran lived to age 104

http://www.juran.com/

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ISO 9000 Standards

• Guidelines for designing, manufacturing, selling, and servicing products. Est. 1987.

• Selecting an ISO 9000 certified supplier provides some assurance that supplier follows accepted quality practices.

• Required by many manufacturers, especially in Europe, to be a supplier.

• www.iso.org

http://www.iso.org/

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Airports can be

ISO 9000 certified

Hotels can be

ISO 9000 certified

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ISO 14000 Standards

• Series of standards covering environmental

management systems, environmental auditing,

evaluation of environmental performance,

environmental labeling, and life-cycle assessment.

• Intent is to help organizations improve their

environmental performance through documentation

control, operational control, control of records,

training, statistical techniques, and corrective and

preventive actions.

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Malcolm Baldrige Award

• Est. 1987 to promote better quality management practices and improved quality results by U.S. industry.

• Award criteria have become standard for “best quality practice” in U.S.

• Given to at most 3 organizations in each of 6 categories.

• www.baldrige.gov

http://www.baldrige.gov/

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Categories for Baldrige Award

Applicants

• Manufacturing companies

• Service companies

• Small businesses

• Health care organizations

• Education institutions

• Non-profit organizations (including government)

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Baldrige Criteria

1. Leadership

2. Strategic Planning

3. Customer Focus

4. Measurement, Analysis, and Knowledge Management

5. Workforce Focus

6. Process Management

7. Results

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Why Some Quality

Improvement Efforts Fail • Requires change in values and management philosophy

• Focus on short-term financial results

• “Blame the employee” syndrome

• Belief in “trade-offs” (quality vs. cost)

• Management interference with teamwork

• Reward systems

• Supplier quality problems

8-30

Chapter 8 Summary