© 2008 prentice hall, inc.6 – 1 operations management chapter 6 – managing quality powerpoint...

© 2008 Prentice Hall, Inc. 6 – 1

Operations ManagementOperations ManagementChapter 6 – Chapter 6 – Managing QualityManaging Quality

PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer/Render Heizer/Render Principles of Operations Management, 7ePrinciples of Operations Management, 7eOperations Management, 9e Operations Management, 9e


Managing Quality Provides a Managing Quality Provides a Competitive AdvantageCompetitive Advantage

Arnold Palmer HospitalArnold Palmer Hospital

Deliver over 13,000 babies annuallyDeliver over 13,000 babies annually

Virtually every type of quality tool is Virtually every type of quality tool is employedemployed Continuous improvementContinuous improvement

Employee empowermentEmployee empowerment

BenchmarkingBenchmarking

Just-in-timeJust-in-time

Quality toolsQuality tools


Quality and StrategyQuality and Strategy

Managing quality supports Managing quality supports differentiation, low cost, and differentiation, low cost, and response strategiesresponse strategies

Quality helps firms increase sales Quality helps firms increase sales and reduce costsand reduce costs

Building a quality organization is Building a quality organization is a demanding taska demanding task


Two Ways Quality Two Ways Quality Improves ProfitabilityImproves Profitability

Improved Improved QualityQuality

Increased Increased ProfitsProfits

Increased productivity

Lower rework and scrap costs

Lower warranty costs

Reduced Costs via

Improved response

Flexible pricing

Improved reputation

Sales Gains via

Figure 6.1Figure 6.1


The Flow of ActivitiesThe Flow of Activities

Organizational PracticesLeadership, Mission statement, Effective operating procedures, Staff support, TrainingYields: What is important and what is to be

accomplished

Quality PrinciplesCustomer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQMYields: How to do what is important and to be

accomplished

Employee FulfillmentEmpowerment, Organizational commitmentYields: Employee attitudes that can accomplish

what is importantCustomer SatisfactionWinning orders, Repeat customersYields: An effective organization with

a competitive advantage



Defining QualityDefining Quality

The totality of features and The totality of features and characteristics of a product or characteristics of a product or

service that bears on its ability to service that bears on its ability to satisfy stated or implied needssatisfy stated or implied needs

American Society for QualityAmerican Society for Quality


Different ViewsDifferent Views

User-based – better performance, User-based – better performance, more featuresmore features

Manufacturing-based – Manufacturing-based – conformance to standards, conformance to standards, making it right the first timemaking it right the first time

Product-based – specific and Product-based – specific and measurable attributes of the measurable attributes of the product product


Implications of QualityImplications of Quality

1.1. Company reputationCompany reputation Perception of new productsPerception of new products

Employment practicesEmployment practices

Supplier relationsSupplier relations

2.2. Product liabilityProduct liability Reduce riskReduce risk

3.3. Global implicationsGlobal implications Improved ability to competeImproved ability to compete


Key Dimensions of QualityKey Dimensions of QualityKey Dimensions of QualityKey Dimensions of Quality

PerformancePerformance

FeaturesFeatures

ReliabilityReliability

ConformanceConformance

DurabilityDurability

ServiceabilityServiceability

AestheticsAesthetics

Perceived qualityPerceived quality

ValueValue


Malcom Baldrige National Malcom Baldrige National Quality AwardQuality Award

Established in 1988 by the U.S. Established in 1988 by the U.S. governmentgovernment

Designed to promote TQM practicesDesigned to promote TQM practices

Recent winnersRecent winners Premier Inc., MESA Products, Sunny Premier Inc., MESA Products, Sunny

Fresh Foods, Park Place Lexus, North Fresh Foods, Park Place Lexus, North Mississippi Medical Center, The Bama Mississippi Medical Center, The Bama Companies, Richland College, Texas Companies, Richland College, Texas Nameplate Company, Inc.Nameplate Company, Inc.


Baldrige CriteriaBaldrige Criteria

Applicants are evaluated on:Applicants are evaluated on:

Categories Points

Leadership 120

Strategic Planning 85

Customer & Market Focus 85

Measurement, Analysis, and Knowledge Management 90

Workforce Focus 85

Process Management 85

Results 450


External Failure

Internal Failure

Prevention

Costs of QualityCosts of Quality

Appraisal

Total Cost

Quality Improvement

Total CostTotal Cost


Leaders in QualityLeaders in Quality

W. Edwards DemingW. Edwards Deming 14 Points for 14 Points for ManagementManagement

Joseph M. JuranJoseph M. Juran Top management Top management commitment, commitment, fitness for usefitness for use

Armand FeigenbaumArmand Feigenbaum Total Quality Total Quality ControlControl

Philip B. CrosbyPhilip B. Crosby Quality is Free, Quality is Free, zero defectszero defects


International Quality International Quality StandardsStandards

ISO 9000 series (Europe/EC)ISO 9000 series (Europe/EC) Common quality standards for products Common quality standards for products

sold in Europe (even if made in U.S.)sold in Europe (even if made in U.S.)

2000 update places greater emphasis on 2000 update places greater emphasis on leadership and customer satisfactionleadership and customer satisfaction

ISO 14000 series (Europe/EC)ISO 14000 series (Europe/EC)


ISO 14000ISO 14000Environmental StandardEnvironmental Standard

Core Elements:Core Elements:

Environmental managementEnvironmental management

AuditingAuditing

Performance evaluationPerformance evaluation

LabelingLabeling

Life cycle assessmentLife cycle assessment


TQMTQM

Encompasses entire organization, Encompasses entire organization, from supplier to customerfrom supplier to customer

Stresses a commitment by Stresses a commitment by management to have a continuing, management to have a continuing,

companywide drive toward companywide drive toward excellence in all aspects of products excellence in all aspects of products and services that are important to the and services that are important to the

customercustomer


Deming’s Fourteen PointsDeming’s Fourteen Points

1.1. Create consistency of purposeCreate consistency of purpose

2.2. Lead to promote changeLead to promote change

3.3. Build quality into the product; stop Build quality into the product; stop depending on inspectiondepending on inspection

4.4. Build long-term relationships based on Build long-term relationships based on performance, not priceperformance, not price

5.5. Continuously improve product, quality, Continuously improve product, quality, and serviceand service

6.6. Start trainingStart training

7.7. Emphasize leadershipEmphasize leadershipTable 6.1Table 6.1


Deming’s Fourteen PointsDeming’s Fourteen Points

8.8. Drive out fearDrive out fear

9.9. Break down barriers between Break down barriers between departmentsdepartments

10.10. Stop haranguing workersStop haranguing workers

11.11. Support, help, improveSupport, help, improve

12.12. Remove barriers to pride in workRemove barriers to pride in work

13.13. Institute a vigorous program of Institute a vigorous program of education and self-improvementeducation and self-improvement

14.14. Put everybody in the company to work Put everybody in the company to work on the transformationon the transformation

Table 6.1Table 6.1


Seven Concepts of TQMSeven Concepts of TQM

Continuous improvementContinuous improvement

Six SigmaSix Sigma

Employee empowermentEmployee empowerment


Just-in-time (JIT)Just-in-time (JIT)

Taguchi conceptsTaguchi concepts

Knowledge of TQM toolsKnowledge of TQM tools


Continuous ImprovementContinuous Improvement

Represents continual Represents continual improvement of all processes improvement of all processes

Involves all operations and work Involves all operations and work centers including suppliers and centers including suppliers and customerscustomersPeople, Equipment, Materials, People, Equipment, Materials,

ProceduresProcedures


2. DoTest the

plan

3. CheckIs the plan working?

4. ActImplement

the plan

1.PlanIdentify the

improvement and make

a plan

Shewhart’s PDCA ModelShewhart’s PDCA Model



Six SigmaSix Sigma

Two meaningsTwo meanings Statistical definition of a process that Statistical definition of a process that

is 99.9997% capable, 3.4 defects per is 99.9997% capable, 3.4 defects per million opportunities (DPMO)million opportunities (DPMO)

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


Two meaningsTwo meanings Statistical definition of a process that Statistical definition of a process that

is 99.9997% capable, 3.4 defects per is 99.9997% capable, 3.4 defects per million opportunities (DPMO)million opportunities (DPMO)

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

Six SigmaSix Sigma

Mean

Lower limits Upper limits

3.4 defects/million

±6

2,700 defects/million

±3

Figure 6.4


Six Sigma ProgramSix Sigma Program

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

Highly structured approach to Highly structured approach to process improvementprocess improvement A strategyA strategy

A discipline - DMAICA discipline - DMAIC 66


Six SigmaSix Sigma

1.1. Define critical outputs Define critical outputs and identify gaps for and identify gaps for improvementimprovement

2.2. Measure the work and Measure the work and collect process datacollect process data

3.3. Analyze the dataAnalyze the data

4.4. Improve the processImprove the process

5.5. Control the new process to Control the new process to make sure new performance make sure new performance is maintainedis maintained

DMAIC ApproachDMAIC Approach


Six Sigma ImplementationSix Sigma Implementation

Emphasize defects per million Emphasize defects per million opportunities as a standard metricopportunities as a standard metric

Provide extensive trainingProvide extensive training Focus on corporate sponsor support Focus on corporate sponsor support

(Champions)(Champions) Create qualified process improvement Create qualified process improvement

experts (Black Belts, Green Belts, etc.)experts (Black Belts, Green Belts, etc.) Set stretch objectivesSet stretch objectives

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


Employee EmpowermentEmployee Empowerment

Getting employees involved in product Getting employees involved in product and process improvementsand process improvements 85% of quality problems are due 85% of quality problems are due

to process and materialto process and material TechniquesTechniques

Build communication networks Build communication networks that include employeesthat include employees

Develop open, supportive supervisorsDevelop open, supportive supervisors Move responsibility to employeesMove responsibility to employees Build a high-morale organizationBuild a high-morale organization Create formal team structuresCreate formal team structures


Quality CirclesQuality Circles

Group of employees who meet Group of employees who meet regularly to solve problemsregularly to solve problems

Trained in planning, problem Trained in planning, problem solving, and statistical methodssolving, and statistical methods

Often led by a facilitatorOften led by a facilitator

Very effective when done Very effective when done properlyproperly


Use internal

benchmarking

if you’re big

enough


Selecting best practices to use as a Selecting best practices to use as a standard for performancestandard for performance

Determine what to Determine what to benchmarkbenchmark

Form a benchmark teamForm a benchmark team Identify benchmarking partnersIdentify benchmarking partners Collect and analyze benchmarking Collect and analyze benchmarking

informationinformation Take action to match or exceed the Take action to match or exceed the

benchmarkbenchmark


Just-in-Time (JIT)Just-in-Time (JIT)

Relationship to quality:Relationship to quality:

JIT cuts the cost of qualityJIT cuts the cost of quality

JIT improves qualityJIT improves quality

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


Just-in-Time (JIT)Just-in-Time (JIT)

‘‘Pull’ system of production scheduling Pull’ system of production scheduling including supply managementincluding supply management Production only when signaledProduction only when signaled

Allows reduced inventory levelsAllows reduced inventory levels Inventory costs money and hides process Inventory costs money and hides process

and material problemsand material problems

Encourages improved process and Encourages improved process and product qualityproduct quality


Just-In-Time (JIT) ExampleJust-In-Time (JIT) Example

ScrapUnreliable Vendors

Capacity Imbalances

Work in process inventory level

(hides problems)


Just-In-Time (JIT) ExampleJust-In-Time (JIT) Example

Reducing inventory revealsReducing inventory revealsproblems so they can be solvedproblems so they can be solved

ScrapUnreliable Vendors

Capacity Imbalances


Taguchi ConceptsTaguchi Concepts

Engineering and experimental Engineering and experimental design methods to improve product design methods to improve product and process designand process design Identify key component and process Identify key component and process

variables affecting product variationvariables affecting product variation

Taguchi ConceptsTaguchi Concepts Quality robustnessQuality robustness

Quality loss functionQuality loss function

Target-oriented qualityTarget-oriented quality


Quality RobustnessQuality Robustness

Ability to produce products Ability to produce products uniformly in adverse manufacturing uniformly in adverse manufacturing and environmental conditionsand environmental conditions Remove the effects of adverse Remove the effects of adverse

conditionsconditions

Small variations in materials and Small variations in materials and process do not destroy product process do not destroy product qualityquality


Tools of TQMTools of TQM Tools for Generating IdeasTools for Generating Ideas

Check sheetsCheck sheetsScatter diagramsScatter diagramsCause-and-effect diagramsCause-and-effect diagrams

Tools to Organize the DataTools to Organize the DataPareto chartsPareto chartsFlowchartsFlowcharts

Tools for Identifying ProblemsTools for Identifying ProblemsHistogramHistogramStatistical process control chartStatistical process control chart


/

/

/ / /// /

// ///

// ////

///

//

/

Hour

Defect 1 2 3 4 5 6 7 8

A

B

C

/

/

//

/

Seven Tools of TQMSeven Tools of TQM

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




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

AbsenteeismAbsenteeism

Pro

du

cti

vit

yP

rod

uc

tiv

ity




(c)(c) Cause-and-Effect Diagram: A tool that Cause-and-Effect Diagram: A tool that identifies process elements (causes) that identifies process elements (causes) that might effect an outcomemight effect an outcome


CauseCause

MaterialsMaterials MethodsMethods

ManpowerManpower MachineryMachinery

EffectEffect


Cause-and-Effect DiagramsCause-and-Effect DiagramsMaterialMaterial

(ball)(ball)MethodMethod

(shooting process)(shooting process)

MachineMachine(hoop &(hoop &

backboard)backboard)

ManpowerManpower(shooter)(shooter)

Missed Missed free-throwsfree-throws


Rim alignmentRim alignment

Rim sizeRim size

Backboard Backboard stabilitystability

Rim heightRim height

Follow-throughFollow-through

Hand positionHand position

Aiming pointAiming point

Bend kneesBend knees

BalanceBalance

Size of ballSize of ball

LopsidednessLopsidedness

Grain/Feel Grain/Feel (grip)(grip)

Air pressureAir pressure

TrainingTraining

ConditioningConditioning MotivationMotivation

ConcentrationConcentration

ConsistencyConsistency



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


Fre

qu

en

cyF

req

ue

ncy

Pe

rce

nt

Pe

rce

nt

AA BB CC DD EE


Pareto ChartsPareto Charts

Number of Number of occurrencesoccurrences

Room svcRoom svc Check-inCheck-in Pool hoursPool hours MinibarMinibar Misc.Misc.72%72% 16%16% 5%5% 4%4% 3%3%

1212

44 33 22

5454

– 100100– 9393– 8888

– 7272

70 70 –

60 60 –

50 50 –

40 40 –

30 30 –

20 20 –

10 10 –

0 0 –

Fre

qu

ency

(n

um

ber

)F

req

uen

cy (

nu

mb

er)

Causes and percent of the totalCauses and percent of the total

Cu

mu

lati

ve p

erce

nt

Cu

mu

lati

ve p

erce

nt

Data for OctoberData for October



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



Flow ChartsFlow Charts

MRI FlowchartMRI Flowchart1.1. Physician schedules MRIPhysician schedules MRI2.2. Patient taken to MRIPatient taken to MRI3.3. Patient signs inPatient signs in4.4. Patient is preppedPatient is prepped5.5. Technician carries out MRITechnician carries out MRI6.6. Technician inspects filmTechnician inspects film

7.7. If unsatisfactory, repeatIf unsatisfactory, repeat8.8. Patient taken back to roomPatient taken back to room9.9. MRI read by radiologistMRI read by radiologist10.10. MRI report transferred to MRI report transferred to

physicianphysician11.11. Patient and physician discussPatient and physician discuss

1111

1010

20%20%

99

8880%80%

11 22 33 44 55 66 77



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


DistributionDistribution

Repair time (minutes)Repair time (minutes)

Fre

qu

en

cyF

req

ue

ncy



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


Upper control limitUpper control limit

Target valueTarget value

Lower control limitLower control limit

TimeTime


Statistical Process Control Statistical Process Control (SPC)(SPC)

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

Drives process improvementDrives process improvement

Four key stepsFour key steps Measure the processMeasure the process

When a change is indicated, find the When a change is indicated, find the assignable causeassignable cause

Eliminate or incorporate the causeEliminate or incorporate the cause

Restart the revised processRestart the revised process


An SPC ChartAn SPC Chart

Upper control limitUpper control limit

Coach’s target valueCoach’s target value

Lower control limitLower control limit

Game numberGame number

| | | | | | | | |

11 22 33 44 55 66 77 88 99

20%20%

10%10%

0%0%

Plots the percent of free throws missedPlots the percent of free throws missed



InspectionInspection

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

Detect a defective productDetect a defective product Does not correct deficiencies in Does not correct deficiencies in

process or productprocess or product It is expensiveIt is expensive

IssuesIssues When to inspectWhen to inspect Where in process to inspectWhere in process to inspect


InspectionInspection

Many problemsMany problems Worker fatigueWorker fatigue

Measurement errorMeasurement error

Process variabilityProcess variability

Cannot inspect quality into a Cannot inspect quality into a productproduct

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


Source InspectionSource Inspection

Also known as source controlAlso known as source control

The next step in the process is The next step in the process is your customeryour customer

Ensure perfect product Ensure perfect product to your customerto your customer

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

acceptable product


Service Industry InspectionService Industry Inspection

OrganizationOrganization What is What is InspectedInspected StandardStandard

Jones Law OfficeJones Law Office Receptionist Receptionist performanceperformance

BillingBilling

AttorneyAttorney

Is phone answered by the Is phone answered by the second ringsecond ring

Accurate, timely, and Accurate, timely, and correct formatcorrect format

Promptness in returning Promptness in returning callscalls

Table 6.5Table 6.5




Hard Rock HotelHard Rock Hotel Reception Reception deskdesk

DoormanDoorman

RoomRoom

MinibarMinibar

Use customer’s nameUse customer’s name

Greet guest in less than 30 Greet guest in less than 30 secondsseconds

All lights working, spotless All lights working, spotless bathroombathroom

Restocked and charges Restocked and charges accurately posted to billaccurately posted to bill

Table 6.5Table 6.5




Arnold Palmer Arnold Palmer HospitalHospital

BillingBilling

PharmacyPharmacy

LabLab

NursesNurses

AdmissionsAdmissions

Accurate, timely, and Accurate, timely, and correct formatcorrect format

Prescription accuracy, Prescription accuracy, inventory accuracyinventory accuracy

Audit for lab-test accuracyAudit for lab-test accuracy

Charts immediately Charts immediately updatedupdated

Data entered correctly and Data entered correctly and completelycompletely

Table 6.5Table 6.5




Olive Garden Olive Garden RestaurantRestaurant

BusboyBusboy

BusboyBusboy

WaiterWaiter

Serves water and bread Serves water and bread within 1 minutewithin 1 minute

Clears all entrée items and Clears all entrée items and crumbs prior to dessertcrumbs prior to dessert

Knows and suggest Knows and suggest specials, dessertsspecials, desserts

Table 6.5Table 6.5




Nordstrom Nordstrom Department Department StoreStore

Display areasDisplay areas

StockroomsStockrooms

SalesclerksSalesclerks

Attractive, well-organized, Attractive, well-organized, stocked, good lightingstocked, good lighting

Rotation of goods, Rotation of goods, organized, cleanorganized, clean

Neat, courteous, very Neat, courteous, very knowledgeableknowledgeable

Table 6.5Table 6.5


TQM In ServicesTQM In Services

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

Service quality perceptions depend Service quality perceptions depend on on Intangible differences between Intangible differences between

productsproducts

Intangible expectations customers Intangible expectations customers have of those productshave of those products


Service QualityService Quality

The Operations Manager must The Operations Manager must recognize:recognize:

1.1. The tangible component of The tangible component of services is importantservices is important

2.2. The service process is importantThe service process is important

3.3. The service is judged against the The service is judged against the customer’s expectationscustomer’s expectations

4.4. Exceptions will occurExceptions will occur


ServiceServiceSpecificationsSpecifications

at UPSat UPS


Determinants of Service Determinants of Service QualityQuality

ReliabilityReliability

ResponsivenessResponsiveness

CompetenceCompetence

AccessAccess

CourtesyCourtesy

CommunicationCommunication

CredibilityCredibility

SecuritySecurity

Understanding/ Understanding/ knowing the knowing the customercustomer

TangiblesTangibles


Service Recovery StrategyService Recovery Strategy

Managers should have a plan for Managers should have a plan for when services failwhen services fail

Marriott’s LEARN routineMarriott’s LEARN routine ListenListen

EmpathizeEmpathize

ApologizeApologize

ReactReact

NotifyNotify


Best Practices for Resolving Best Practices for Resolving Customer ComplaintsCustomer Complaints

Make it easy for clients to complainMake it easy for clients to complain

Respond quickly to complaintsRespond quickly to complaints

Resolve complaints on first contactResolve complaints on first contact

Use computers to manage Use computers to manage complaintscomplaints

Recruit the best for customer Recruit the best for customer service jobsservice jobs

© 2008 prentice hall, inc.6 – 1 operations management chapter 6 – managing quality powerpoint...

Documents

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quality organization

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ways quality

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