c12 quality
DESCRIPTION
Operation Management - OPM 530TRANSCRIPT
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OPM 53312-1
Operations Operations ManagementManagement
Managing QualityManaging QualityChapter 12Chapter 12
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OPM 53312-2
Ways in Which Quality Can Ways in Which Quality Can Improve ProductivityImprove Productivity
Sales Gains Improved response Higher Prices Improved reputation
Reduced Costs Increased productivity Lower rework and scrap costs Lower warranty costs
Increased Profits
Improved Quality
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OPM 53312-3
Flow of Activities Necessary to Flow of Activities Necessary to Achieve Total Quality ManagementAchieve Total Quality Management
Organizational Practices
Quality Principles
Employee Fulfillment
Customer Satisfaction
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OPM 53312-4
1.1. Organizational PracticesOrganizational Practices
Leadership Mission statement Effective operating procedure Staff support Training
Yields: What is important and what is to be accomplished
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OPM 53312-5
2.2. Quality PrinciplesQuality Principles
Customer focus Continuous improvement Employee empowerment Benchmarking Just-in-time Tools of TQMYields: How to do what is important and to
be accomplished
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OPM 53312-6
3.3. Employment FulfillmentEmployment Fulfillment
Empowerment Organizational commitment
Yields: Employees’ attitudes that they can accomplish what is important and to be accomplished
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OPM 53312-7
4.4. Customer SatisfactionCustomer Satisfaction
Winning orders Repeat customers
Yields: An effective organization with a competitive advantage
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OPM 53312-8
Definitions of QualityDefinitions of Quality
ASQ: Product characteristics & features that affect customer satisfaction
User-Based: What consumer says it is Manufacturing-Based: Degree to which a
product conforms to design specification Product-Based: Level of measurable
product characteristic
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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
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Key Dimensions of QualityKey Dimensions of QualityKey Dimensions of QualityKey Dimensions of Quality
Performance Features Reliability Conformance
Durability Serviceability Aesthetics Perceived quality Value
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OPM 53312-11
Under-standing
Tangibles
Reliability
CommunicationCredibility
Security
Responsiveness
Competence
Courtesy
Access
© 1995 Corel Corp.
Service Quality AttributesService Quality Attributes
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OPM 53312-12
Importance of QualityImportance of Quality
Costs & market share
Company’s reputation
Product liability
International implications
IncreasedProfits
Lower CostsProductivityRework/ScrapWarranty
Market GainsReputationVolumePrice
ImprovedQuality
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Quality CostQuality Cost
4 types of quality costs1. Prevention cost2. Appraisal cost3. Internal failure cost4. External failure costs1 & 2 – cost to maintain or control quality.3 & 4 – cost resulting from failure to control quality.
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Prevention costPrevention cost
Cost associated with preventing defects before they happen.
Costs of trying to prevent poor quality products from reaching the consumer.
Eg.process design, product design, employee training and vendor program.
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Appraisal costsAppraisal costs
Cost incurred in assessing or auditing the level of quality. These are the costs of measuring, testing and analyzing materials, parts, product and the production process to ensure that the product quality specifications are being conformed to.
Example cost of inspection and testing, test equipment or devices.
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Internal failure costsInternal failure costs
Cost incurred for correcting or reworking on products or services due to defects incurred during the production process.
It pertains to defects found before the product left the factory.
Example: Rework costs, process failure costs, process downtown costs and price downgrading costs.
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External failure costsExternal failure costs
External failure costs are costs incurred after the customer has received a poor-quality product.
Example: customer complaint costs, product returns costs, warranty claim costs, loss of market share and lawsuit arising from injury or property damages from use of the product or service.
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OPM 53312-18
Traditional Traditional Quality Process (Manufacturing)Quality Process (Manufacturing)
Specifies
Need
Customer
Interprets
Need
Marketing
Designs
Product
Defines
Quality
Engineering
Produces
Product
Plans
Quality
Monitors
Quality
Operations
Quality is
customer driven!
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OPM 53312-19
TQMTQM
Encompasses entire organization, from supplier to customer
Stresses a commitment by management to have a continuing, company-wide, drive
toward excellence in all aspects of products and services that are important
to the customer.
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OPM 53312-20
Organizational Practices
Quality Principles
Employee Fulfillment
Attitudes (e.g., Commitment)
How to Do
What to Do
EffectiveBusiness
EffectiveBusiness
CustomerSatisfaction
CustomerSatisfaction
AchievingAchieving Total Quality Management Total Quality Management
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OPM 53312-21
Deming’s Fourteen PointsDeming’s Fourteen Points
1. Create consistency of purpose
2. Lead to promote change
3. Build quality into the products
4. Build long term relationships
5. Continuously improve product, quality, and service
6. Start training
7. Emphasize leadership
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OPM 53312-22
Deming’s Points - continuedDeming’s Points - continued8. Drive out fear9. Break down barriers between
departments10. Stop haranguing workers11. Support, help, improve12. Remove barriers to pride in work13. Institute a vigorous program of
education and self-improvement14. Put everybody in the company to work
on the transformation
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Seven Concepts of TQMSeven 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 ImprovementContinuous Improvement
Represents continual improvement of all Represents continual improvement of all processes processes
Involves all operations and work centers Involves all operations and work centers including suppliers and customersincluding suppliers and customersPeople, Equipment, Materials, ProceduresPeople, Equipment, Materials, Procedures
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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
Figure 6.3Figure 6.3
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Six SigmaSix Sigma
Originally developed by Motorola, Six Sigma Originally developed by Motorola, Six Sigma refers to an extremely high measure of process refers to an extremely high measure of process capabilitycapability
A Six Sigma capable process will return no A Six Sigma capable process will return no more than 3.4 defects per million operations more than 3.4 defects per million operations (DPMO)(DPMO)
Highly structured approach to process Highly structured approach to process improvementimprovement
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Six SigmaSix Sigma
1.1. Define critical outputs Define critical outputs and identify gaps for improvementand identify gaps for improvement
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 make Control the new process to make sure new performance is maintainedsure new performance is maintained
DMAIC ApproachDMAIC Approach
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Six Sigma ImplementationSix Sigma Implementation
Emphasize DPMO as a standard metricEmphasize DPMO as a standard metric Provide extensive trainingProvide extensive training Focus on corporate sponsor support (Champions)Focus on corporate sponsor support (Champions) Create qualified process improvement experts (Black Create qualified process improvement experts (Black
Belts, Green Belts, etc.)Belts, Green Belts, etc.) Set stretch objectivesSet stretch objectives
This cannot be accomplished without a major commitment from top level management
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Employee EmpowermentEmployee Empowerment Getting employees involved in product and process Getting employees involved in product and process
improvementsimprovements 85% of quality problems are due to process and 85% of quality problems are due to process and
materialmaterial TechniquesTechniques
Build communication networks that include Build communication networks that include employeesemployees
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
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Quality CirclesQuality Circles
Group of employees who meet regularly to Group of employees who meet regularly to solve problemssolve problems
Trained in planning, problem solving, and Trained in planning, problem solving, and statistical methodsstatistical methods
Often led by a facilitatorOften led by a facilitator Very effective when done properlyVery effective when done properly
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Use internal
benchmarking if
you’re big
enough
BenchmarkingBenchmarking
Selecting best practices to use as a standard for Selecting best practices to use as a standard for performanceperformance
Determine what to Determine what to benchmarkbenchmark
Form a benchmark teamForm a benchmark team Identify benchmarking partnersIdentify benchmarking partners Collect and analyze benchmarking informationCollect and analyze benchmarking information Take action to match or exceed the benchmarkTake action to match or exceed the benchmark
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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 complaintsUse computers to manage complaints Recruit the best for customer service jobsRecruit the best for customer service jobs
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Just-in-Time (JIT)Just-in-Time (JIT)
Relationship to quality:
JIT cuts the cost of qualityJIT cuts the cost of quality JIT improves qualityJIT improves quality Better quality means less inventory and Better quality means less inventory and
better, easier-to-employ JIT systembetter, easier-to-employ JIT system
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Just-in-Time (JIT)Just-in-Time (JIT)
‘‘Pull’ system of production scheduling including Pull’ system of production scheduling including supply managementsupply management Production only when signaledProduction only when signaled
Allows reduced inventory levelsAllows reduced inventory levels Inventory costs money and hides process and Inventory costs money and hides process and
material problemsmaterial problems
Encourages improved process and product qualityEncourages improved process and product quality
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Taguchi ConceptsTaguchi Concepts
Experimental design methods to improve Experimental design methods to improve product and process designproduct and process design Identify key component and process variables Identify key component and process variables
affecting product variationaffecting product variation
Taguchi ConceptsTaguchi Concepts Quality robustnessQuality robustness Quality loss functionQuality loss function Target-oriented qualityTarget-oriented quality
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Quality RobustnessQuality Robustness
Ability to produce products uniformly in Ability to produce products uniformly in adverse manufacturing and environmental adverse manufacturing and environmental conditionsconditions Remove the effects of adverse conditionsRemove the effects of adverse conditions Small variations in materials and process do Small variations in materials and process do
not destroy product qualitynot destroy product quality
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Quality Loss FunctionQuality Loss Function
Shows that costs increase as the product Shows that costs increase as the product moves away from what the customer wantsmoves away from what the customer wants
Costs include customer dissatisfaction, Costs include customer dissatisfaction, warranty and service, internal scrap and warranty and service, internal scrap and repair, and costs to societyrepair, and costs to society
Traditional conformance specifications are Traditional conformance specifications are too simplistictoo simplistic
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Unacceptable
Poor
Good
Best
Quality Loss FunctionQuality Loss FunctionHigh lossHigh loss
Loss (to Loss (to producing producing organization, organization, customer, and customer, and society)society)
Low lossLow loss
FrequencyFrequency
LowerLower TargetTarget UpperUpperSpecificationSpecification
Target-oriented quality Target-oriented quality yields more product in the yields more product in the “best” category“best” category
Target-oriented quality Target-oriented quality brings product toward the brings product toward the target valuetarget value
Conformance-oriented quality Conformance-oriented quality keeps products within 3 keeps products within 3 standard deviationsstandard deviations
Figure 6.4Figure 6.4
L = DL = D22CCwherewhere
L =L = loss to societyloss to societyD =D = distance from distance from target valuetarget valueC =C = cost of deviationcost of deviation
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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 chartsFlow chartsFlow charts
Tools for Identifying ProblemsTools for Identifying ProblemsHistogramHistogramStatistical process control chartStatistical process control chart
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//
/ / /// /// ///// ////
//////
HourDefect 1 2 3 4 5 6 7 8
ABC
////
/
Seven Tools for TQMSeven Tools for TQM
(a)(a) Check Sheet: An organized method of Check Sheet: An organized method of recording datarecording data
Figure 6.5Figure 6.5
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Seven Tools for TQMSeven Tools for TQM
(b)(b) Scatter Diagram: A graph of the value of one Scatter Diagram: A graph of the value of one variable vs. another variablevariable vs. another variable
AbsenteeismAbsenteeism
Prod
uctiv
ityPr
oduc
tivity
Figure 6.5Figure 6.5
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Seven Tools for TQMSeven Tools for TQM
(c)(c) Cause and Effect Diagram: A tool that identifies Cause and Effect Diagram: A tool that identifies process elements (causes) that might effect an process elements (causes) that might effect an outcomeoutcome
Figure 6.5Figure 6.5
CauseCauseMaterialsMaterials MethodsMethods
ManpowerManpower MachineryMachinery
EffectEffect
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Seven Tools for TQMSeven Tools for TQM
(d)(d) Pareto Charts: A graph to identify and plot Pareto Charts: A graph to identify and plot problems or defects in descending order of problems or defects in descending order of frequencyfrequency
Figure 6.5Figure 6.5
Freq
uenc
yFr
eque
ncy
Perc
ent
Perc
ent
AA BB CC DD EE
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Seven Tools for TQMSeven Tools for TQM
(e)(e) Flow Charts (Process Diagrams): A chart that Flow Charts (Process Diagrams): A chart that describes the steps in a processdescribes the steps in a process
Figure 6.5Figure 6.5
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Seven Tools for TQMSeven Tools for TQM
(f)(f) Histogram: A distribution showing the frequency of Histogram: A distribution showing the frequency of occurrence of a variableoccurrence of a variable
Figure 6.5Figure 6.5
DistributionDistribution
Repair time (minutes)Repair time (minutes)
Freq
uenc
yFr
eque
ncy
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Seven Tools for TQMSeven Tools for TQM
(g)(g) Statistical Process Control Chart: A chart with time on Statistical Process Control Chart: A chart with time on the horizontal axis to plot values of a statisticthe horizontal axis to plot values of a statistic
Figure 6.5Figure 6.5
Upper control limitUpper control limit
Target valueTarget value
Lower control limitLower control limit
TimeTime
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Cause-and-Effect DiagramsCause-and-Effect Diagrams
MaterialMaterial MachineryMachinery
MethodsMethods ManpowerManpower
InadequateInadequate
supply of supply of magazinesmagazines
Inadequate special Inadequate special
meals on-boardmeals on-board
Insu
fficie
nt c
lean
In
suffi
cient
cle
an
pillo
wspi
llows
& bl
anke
ts o
n-&
blan
kets
on-
boar
dbo
ardBroken luggage Broken luggage
carouselcarousel
Mechanical delay on Mechanical delay on
planeplane
Deici
ng
Deici
ng
equi
pmen
t not
eq
uipm
ent n
ot
avai
labl
eav
aila
ble
Overbooking policiesOverbooking policies
Bumping policiesBumping policies
Mist
agge
d ba
gsM
istag
ged
bags
Poor
che
ck-in
Po
or c
heck
-in
polic
ies
polic
ies
Understaffed ticket Understaffed ticket
counterscounters
Understaffed crewUnderstaffed crew
Poor
ly tra
ined
Po
orly
train
ed
atte
ndan
tsat
tend
ants
Dissatisfied Dissatisfied Airline Airline CustomerCustomer
Figure 6.6Figure 6.6
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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 –
Freq
uenc
y (n
umbe
r)Fr
eque
ncy
(num
ber)
Causes and percentCauses and percent
Cum
ulat
ive p
erce
ntCu
mul
ative
per
cent
Data for OctoberData for October
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Shipping dock
Storage(4 to 6 hrs)
Quick freeze storage
(60 Mins)
Sealing Weighing Labeling
Flow ChartsFlow Charts
Packing and shipping processPacking and shipping process
Packing station
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Statistical Process Control (SPC)Statistical Process Control (SPC)
Uses statistics and control charts to tell when to Uses statistics and control charts to tell when to take corrective actiontake corrective action
Drives process improvementDrives process improvement Four key stepsFour key steps
Measure the processMeasure the process When a change is indicated, find the assignable When a change is indicated, find the assignable
causecause Eliminate or incorporate the causeEliminate or incorporate the cause Restart the revised processRestart the revised process
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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
Figure 6.7Figure 6.7
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InspectionInspection
Involves examining items to see if an item is Involves examining items to see if an item is good or defectivegood or defective
Detect a defective productDetect a defective product Does not correct deficiencies in process or Does not correct deficiencies in process or
productproduct It is expensiveIt is expensive
IssuesIssues When to inspectWhen to inspect Where in process to inspectWhere in process to inspect
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Purpose of InspectionPurpose of Inspection
1) To maintain certain standards in producing products2) To meet customer specifications3) To find defective products which can be reworked or correct
before the process is completed.4) To find problems in the production process that can be
corrected before defects can occur.5) To provide information concerning the effectiveness of
individual workers and particular department6) Some industries use inspection to grade products
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Types of InspectionTypes of Inspection
1) 100 % inspectionInspect each unit that is we received or produced.
When 100% inspection is used? Cost of inspection is cheaper than defective cost Probability of quality variation is high Risks of unacceptable quality are high Low volume of output Testing are not destructive
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Sampling InspectionSampling Inspection
• Sampling inspection involve the use of statistical sampling to check the quality of a batch of products or to check whether a process is working properly.
• Sampling inspection involves inspection of only a few products, which represent a sample of the total number of products produced.
When sampling inspection is used?• Mechanical production is used rather than manual production.• The cost of inspection is high.• High volume of output• Sensitive items which is easy destroy• When destructive testing is involved • Not critical product
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When and Where to InspectWhen and Where to Inspect
1.1. At the supplier’s plant while the supplier is producingAt the supplier’s plant while the supplier is producing2.2. At your facility upon receipt of goods from the supplierAt your facility upon receipt of goods from the supplier3.3. Before costly or irreversible processesBefore costly or irreversible processes4.4. During the step-by-step production processesDuring the step-by-step production processes5.5. When production or service is completeWhen production or service is complete6.6. Before delivery from your facilityBefore delivery from your facility7.7. At the point of customer contactAt the point of customer contact
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InspectionInspection Many problemsMany problems
Worker fatigueWorker fatigue Measurement errorMeasurement error Process variabilityProcess variability
Cannot inspect quality into a productCannot inspect quality into a product Robust design, empowered employees, and Robust design, empowered employees, and
sound processes are better solutionssound processes are better solutions
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Source InspectionSource Inspection
Also known as source controlAlso known as source control The next step in the process is your The next step in the process is your
customercustomer Ensure perfect product to your customerEnsure perfect product to your customer
Poka-yoke is the concept of foolproof devices or techniques designed to pass only acceptable product
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OPM 53312-59
Service quality is more difficult to measure than for goods
Service quality perceptions depend on Expectations versus reality Process and outcome
Types of service quality Normal: Routine service delivery Exceptional: How problems are handled
TQM In ServicesTQM In Services
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OPM 53312-60
Under-standing
Tangibles
Reliability
CommunicationCredibility
Security
Responsiveness
Competence
Courtesy
Access
© 1995 Corel Corp.
Service Quality AttributesService Quality Attributes
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OPM 53312-61
Determinants of Service QualityDeterminants of Service Quality Reliability – consistency and dependability Responsiveness – willingness/readiness of
employees to provide service; timeliness Competence – possession of skills and
knowledge required to perform service Access – approachability and ease of
contact Courtesy – politeness, respect,
consideration, friendliness of contact personnel
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OPM 53312-62
Determinants of Service QualityDeterminants of Service Quality Communication – keeping customers informed
in languages they understand Credibility – trustworthiness, believability,
honesty Security – freedom from danger, risk or doubt Understanding/knowing the customer –
making the effort to understands the customer’s needs
Tangibles – the physical evidence of the service