Business Finance - Operations Management OPMT 620: Operations Management - Case Study McDonalds Assignment
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Stevenson7ce_PPT_Ch09.pptxManagement of Quality
Chapter
Sam Lampropoulos George Brown College
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Discuss evolution of quality management, and philosophies of quality gurus.
Discuss quality management, dimensions and determinants of quality, various benefits, cost of quality, ethics and quality management, quality and the global supply chain, and total quality management (TQM).
Describe methodology of problem solving and process improvement, including plan-do-study-act, eight quality tools, Six Sigma, and the Taguchi quality loss function.
Describe the Canada Awards for Excellence, the Baldrige Award, the European Quality Award, and the Deming Prize.
Describe ISO 9000, ISO 14000, ISO 24700, and HACCP.
Learning Objectives
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Introduction
Evolution of Quality Management
Quality Gurus
Dimensions and Determinants of Quality
Benefits of Good Quality, Costs of Quality
Taguchi Quality Loss Function
ISO 9001 and ISO 14001
Hazard Analysis Critical Control Point
Canada Awards for Excellence
Total Quality Management
Problem Solving and Continuous Improvement
Six Sigma
Basic Quality Tools
Methods for Generating Ideas and Reaching Consensus
Methods for Problem Solving and Continuous Improvement
Chapter Outline
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What is Quality?
Quality is the ability of a product or service to consistently meet or exceed customer expectations.
Quality control is monitoring, testing, and correcting quality problems after they occur.
Quality assurance ensuring a products quality will be good by preventing defects before they occur.
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Page#303. Prior to 1980s, in North America, the focus was on: quantity, cost, productivity
It was not that quality was unimportant, it just was not very important
The Quality Gurus
W. Edwards Deming
Joseph M. Juran
Armand Feigenbaum
Philip B. Crosby
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14 points
Mgmt must fix system
Reduce variation
SPC, PDSA
Fitness-as-use
Trilogy: planning, control & improvement
Continuous improvement
Cost of quality
“Total field”
Quality at the source
Zero defects
“Do it right the first time.”
Quality is free
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Ask students what each contributed.
See Tables 9-3 and 9-4 and Page #309-311 to see lists of the gurus’ points, respectively.
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Quality - Ch10.pptx
1. Create constancy of purpose toward improvement.
2. Management must adopt the TQM philosophy.
3. Cease dependence on inspection.
4. Award based on quality and price.
5. Find problems, Improve constantly and forever
6. Institute training.
7. Institute leadership to act on quality issues.
Deming’s 14 Steps to Quality
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1."Create constancy of purpose towards improvement". Replace short-term reaction with long-term planning.
2.Adopt the new philosophy. Management must learn its responsibilities, and take on leadership for change.
The implication is that management should actually adopt his philosophy, rather than merely expect the workforce to do so.
3.Cease dependence on inspection to achieve quality. Build quality into the product from the start.
4.Minimize total cost. Stop making decisions based on cost alone. Award business based on quality and price.
5. Improve constantly and forever the system of production and service. Constantly strive to reduce variation
6.Institute training on the job. If people are inadequately trained, they will not all work the same way, and this will introduce variation. 7."Institute leadership". Deming makes a distinction between leadership and mere supervision. The latter is quota- and target-based.
Quality - Ch10.pptx
8. Drive out fear.
9. Work as a team. Break down barriers.
10. Eliminate exhortations and fix the system.
11. Eliminate work quota standards and MBO.
12. Remove barriers to pride of workmanship.
13. Institute education and self-improvement.
14. The transformation is everybody’s job.
Deming’s 14 Steps to Quality
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8."Drive out fear". Deming sees management by fear as counter- productive in the long term, because it prevents workers from acting in the organization's best interests. 9."Break down barriers between departments". Another idea central to TQM is the concept of the 'internal customer', that each department serves not the management, but the other departments that use its outputs. People must work as a team, to foresee problems of production and in use of the product.
10."Eliminate slogans". Eliminate slogans, exhortations, and targets for the workforce asking for zero defects and new levels of productivity. The bulk of the causes of low quality and low productivity belong to the system not the workforce. Another central TQM idea is that it's not people who make most mistakes - it's the process they are working within. Harassing the workforce without improving the processes they use is counter-productive. 11."Eliminate work standards and management by objectives". Substitute leadership.
Deming saw production targets as encouraging the delivery of poor-quality goods. 12."Remove barriers to pride of workmanship". Many of the other problems outlined reduce worker satisfaction. 13."Institute education and self-improvement". 14."The transformation is everyone's job". TAKE ACTION
Quality - Ch10.pptx
Evolution of Quality Management
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Pre-Industrial Revolution
Industrial Revolution
1950s
1970s
1980s
Today
Craftsmanship: each craftsman responsible for quality.
Division of labour: quality control shifts to full time inspectors
quality assurance
quality management systems
TQM, continuous improvement
Six Sigma, statistical tools
Dimensions of Quality: Goods
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Performance - main characteristics of the product/service
Aesthetics - appearance, feel, smell, taste
Special Features - extra characteristics
Conformance - how well product/service conforms to customer’s expectations
Reliability - consistency of performance
Durability - useful life of the product/service
Perceived Quality - indirect evaluation of quality (e.g. reputation)
Serviceability - service after sale
Performance
Aesthetics
Special features
Conformance
Reliability
Durability and Perceived Quality
Serviceability
Quality Dimensions: Car
| Dimension | Examples |
| 1. Performance | Everything works, ride, handling, leg room |
| 2. Aesthetics | Interior design, soft touch, fit and finish, grade of materials used |
| 3. Special features | |
| Convenience | Placement of gauges and controls |
| High tech | GPS, DVD player |
| Safety | Antilock brakes, airbags |
| 4. Conformance | Car matches manufacturer’s specifications |
| 5. Reliability | No breakdowns in the first 5 years |
| 6. Durability | Long life, resistance to rust and corrosion |
| 7. Perceived quality | Top-rated car, e.g., Cadillac |
| 8. Serviceability | Warranty, handling of complaints, maintenance |
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Table 9-1
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Table 9-1 Page #304
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Service Quality
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Tangibles—the physical appearance of facility, equipment, personnel, and communication materials.
Convenience—the availability and accessibility of the service.
Reliability—the ability to perform a service dependably, consistently, and accurately for certain length of time.
Responsiveness—the willingness of service providers to help customers in unusual situations and to deal with problems.
Time—the speed with which service is delivered.
Assurance—the knowledge exhibited by personnel and their ability to convey trust and confidence.
Courtesy—the way customers are treated by employees.
Consistency—the ability to provide the same level of good quality repeatedly.
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Tangibles
Convenience
Reliability/ Consistency
Responsiveness
Timeliness
Assurance
Courtesy/empathy
Service Quality Dimensions: Car Repair
| Dimension | Examples |
| 1. Tangibles | Clean facilities and neat personnel |
| 2. Convenience | Convenient location of repair shop and open evenings and weekends |
| 3. Reliability | Problem fixed right every time |
| 4. Responsiveness | Willing and able to answer questions |
| 5. Time | Reasonable wait time |
| 6. Assurance | Staff knowledgeable about the repair |
| 7. Courtesy/empathy | Friendly and courteous treatment of customers by staff |
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Table 9-2
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Table 9-2 Page # 305
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Determinants of Quality
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Product design
Intention of designers to include or exclude features that customers require
Production Process design
Translating product characteristics into process specifications and tolerances
Production
The degree to which goods or services conform to design specification
Use
Ease of use and user instructions and support.
Benefits of Good Quality
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Page #306
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Costs of Quality
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A methodology to determine the resources used to prevent poor quality, appraise the quality of the products, and deal with internal and external failures.
Failure Costs - costs incurred by defective parts/products.
Internal Failure Costs - fixing problems during production
External Failure Costs - fixing problems after delivery to customer
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Costs of Quality (continued)
Appraisal Costs
Inspection and testing
Prevention Costs
Quality training, planning, customer assessment, creating SOPs
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Hidden Costs of Quality
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Hidden Costs of Quality. When managers think about the costs of quality, those categories that typically come to mind are the most visible ones, such as the costs associated with buying high quality materials, investing in employee training, and paying for inspections. However, this is just the tip of the iceberg. When managers attempt to cut costs by choosing lower quality materials, reducing employee training, or reducing inspections, the hidden costs of poor quality become larger
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Failure Costs Increase Over Time
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Graphic is not in text.
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Total Quality Management (TQM)
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A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.
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This expands on some text concepts
Continuous Improvement: make never-ending improvements to critical processes
Employee empowerment: Giving workers responsibility and training
Team Approach
Suppliers: encourage partnership and long term relationships
Data driven
Fail-safing: designing in elements that prevent errors
The TQM Approach
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1. Find out what the customer wants
2. Design a product or service that meets or exceeds customer wants
3. Design processes that facilitates doing the job right the first time
4. Keep track of results
5. Extend these concepts to suppliers
Comparing the Cultures of TQM and Traditional Organizations
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| Aspect | Traditional | TQM |
| Overall mission | Maximize return on investment | Meet or exceed customer expectations |
| Objectives | Emphasis on short term | Balance of long term and short term |
| Management | Not always open; at times inconsistent objectives | Open; encourages employee input; consistent objectives |
| Role of manager | Issue orders; enforce | Coach, remove barriers, build trust |
| Customer Requirements | Not highest priority; may be unclear | Highest priority; important to identify and understand |
| Problems | Assign blame; punish | Identify and resolve |
| Problem solving | Not systematic; individuals | Systematic; teams |
| Improvement | Erratic | Continuous |
| Supplier relations | Adversarial | Partners |
| Jobs | Narrow, specialized; much individual effort | Broad, more general; much team effort |
| Focus | Product-oriented | Process-oriented |
Table 9-6
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Table 9-5 Page #325
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Problem Solving and Continuous Improvement
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Basic steps in problem solving.
Table 9-7
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Table 9-6 Page # 326
Define problem and establish improvement goals
Define measures and collect data
Analyze the problem
Generate potential solutions
Choose a solution
Implement the solution
Monitor solution to see if goals are accomplished
The PDSA Cycle
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Figure 9-1
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Similar to Figure 9-1 Page # 327
The Seven Basic Quality Tools
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Basic Quality Tools
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Figure 9-2
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Figure 9-2 Page #329
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Basic Quality Tools
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Figure 9-2
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Figure 9-2 Page #329
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Basic Quality Tools
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Cause-and-Effect Diagram
Figure 9-10
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Similar to Figure 9-2 Page #329
Methods for Problem Solving and Continuous Improvement
Brainstorming: Technique for generating a free flow of ideas in a group of people
Affinity Diagram: Shows the relationships among large numbers of ideas
Quality Circles: Groups of workers who meet to discuss ways of improving products or processes
Interviewing: Technique for identifying problems and collecting information
Benchmarking: Process of measuring performance against the best in the same or another industry
The 5W2H Approach: A method of asking questions about a process/problem that include what, why, where, who, how, and how much
5 Whys: Systematically drilling down to a real root cause of a problem by asking “Why?” five times
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Reaching Consensus
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1. List reduction is applied to a list of possible solutions. Its purpose is to clarify items and, in the process, reduce the list of items by posing questions about affordability, feasibility, and likelihood of solving the problem (or improving the quality).
2. A balance sheet approach lists the pros and cons of each item and focuses discussion on important issues.
3. Paired comparisons is a process by which each item on a list is compared with every other item, two at a time. For each pair, team members select the preferred item. This approach forces a choice between items. It works best when the list of items is small: say, five or fewer.
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List reduction
Clarify and eliminate options
Balance Sheet
List pros and cons
Paired Comparisons
Select preferred item from 2 at a time
Six Sigma
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Six Sigma is a more sophisticated statistical approach to problem solving and quality improvement. It is a business process for improving quality, reducing costs, and increasing customer satisfaction. Six Sigma has five steps: define, measure, analyze, improve, and control (DMAIC).
Statistically
Having no more than 3.4 defects per million
Conceptually
Program designed to reduce defects
Requires the use of certain tools and techniques
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Six Sigma Process
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6 DMAIC
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| Define | Determine the customers and critical-to-quality procedures. |
| Measure | Identify and measure the quality problem, determine the baseline sigma, and identify possible influencing factors. |
| Analyze | Test the influencing factors and identify the vital few. |
| Improve | Select the solution method, prove its effectiveness, and implement it. |
| Control | Develop process control plan. |
Six Sigma Improvement Methodology DMAIC
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| Six Sigma Quality | Continuous Improvement | |
| Objective | Product and process perfection | Product and process improvement |
| Tools | Statistical, e.g., design of experiments and analysis of variance | Simple data analysis, e.g., Pareto chart, cause-and-effect diagram |
| Methodology | Define, measure, analyze, improve, control (DMAIC) | Plan, do, study, act (PDSA) |
| Team leader | Black belt | Champion |
| Training | Long/formal | Short/informal |
| Culture change | Usually enforced | Sometimes enforced |
| Project time frame | Months/years | Days/weeks |
Comparing Six Sigma to Continuous Improvement
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Taguchi Quality Loss Function
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The graphical representation of how an increase in deviation from the target value leads to a faster rate of increase in customer dissatisfaction.
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Page #308-309 Taguchi quality loss function, and claimed that the quality loss increases at a faster rate the farther the measurement is from the target (illustrated in the bottom figure
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Excellence Canada (CAE)
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Canada Awards for Excellence recognize outstanding excellence by Canadian organizations. The six main categories of the criteria, called drivers of excellence, are displayed below.
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Page #320-321
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Canada Awards for Excellence (CAE)
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Administered by Excellence Canada:
4 Stages
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Quality Certification
ISO 9001
Set of international standards for a quality management and quality assurance system, critical to international business.
Standards Council of Canada
> 100 countries and 180 technical committees
Documentation and assessment process takes 12 – 18 months for certification
Re-register every 3 years
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Two of the most well-known certifications are ISO 9000 and ISO 14000, which relate to an organization’s processes rather than its products and services
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ISO 14000
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ISO 14000 is a family of standards related to environmental management.
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Management systems – System development and integration of environmental responsibilities into business planning.
Operations – Consumption of natural resources and energy.
Environmental systems – Measuring, assessing, and managing emissions, effluents, and other waste streams.
The ISO 14001 standard8 is very similar to the ISO 9001 standard (it has the same 10 requirements), but instead of quality it relates to environment.
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Mgmt. Systems
Operations
Environmental Systems
Hazard Analysis Critical Control Point (HACCP)
A quality control system, similar to ISO 9001, designed for food processors.
Deals with food safety (biological, chemical, and physical hazards)
Main steps:
Hazard Analysis
Determination of the Critical Control Points
Creation of the HACCP Plan
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Quality has evolved to quality assurance and prevention of defects, and finally to total quality management.
Dimensions of quality of goods are performance, aesthetics, reliability, and durability.
Dimensions of service quality include convenience, responsiveness, timeliness, assurance, courtesy/empathy.
Quality is determined during product design, process design, production, and use.
Costs of quality include external and internal failure costs.
Measurable characteristics of a product are specified by the lower spec limit and upper spec limit. In Taguchi quality loss function, dissatisfaction increases faster the larger the deviation is from the target value.
Summary
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Key contributors (gurus) to quality management.
The ISO 9001 standard for quality management (QMS).
Hazard Analysis Critical Control Point (HACCP) is also a QMS, but its focus is on food safety.
The Canada Awards for Excellence (CAE) is awarded by Excellence Canada to organizations that have shown great achievement in quality management.
Total quality management (TQM) is a never-ending pursuit of quality, it’s driving force is continuous improvement.
Seven basic quality tools used in problem solving and quality improvement.
Problem solving and quality improvement methods.
Summary
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Learning Checklist
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Define the term quality.
Describe the main ideas of the quality gurus.
Explain why quality is important and the consequences of poor quality.
Identify the determinants of quality.
Describe the costs associated with quality.
Outline the key elements of ISO 9001, ISO 14001 and HACCP.
Describe the key ideas of TQM.
Give an overview of the problem solving process for quality improvement.
Describe the various quality tools.
Describe the Canada Awards of Excellence.
Explain the Taguchi loss function.
Describe some methods for generating ideas regarding quality issues.
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