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LSM733-PRODUCTION OPERATIONS MANAGEMENT
By: OSMAN BIN SAIF
LECTURE 8
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Issues for Product DesignRobust DesignModular DesignComputer-Aided Design (CAD)Computer-Aided Manufacturing (CAM)Virtual Reality TechnologyValue AnalysisEthics and Environmentally Friendly Design
Summary of last Session
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Time-Based CompetitionPurchasing Technology by Acquiring a Firm Joint VenturesAlliances
Defining a ProductMake-or-Buy DecisionsGroup Technology
Summary of last Session(Contd.)
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Documents For ProductionProduct Life-Cycle Management (PLM)
Service DesignDocuments for Services
Application of Decision Trees to Product Design
Transition to Production
Summary of last Session(Contd.)
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Global Company Profile: Arnold Palmer Hospital
Quality and Strategy Defining Quality
Implications of QualityMalcolm Baldrige National Quality
AwardCost of Quality (COQ)Ethics and Quality Management
Agenda for this session
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International Quality Standards ISO 9000 ISO14000
Agenda for this session (Contd.)
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Total Quality ManagementContinuous ImprovementSix SigmaEmployee EmpowermentBenchmarkingJust-in-Time (JIT)Taguchi ConceptsKnowledge of TQM Tools
Agenda for this session (Contd.)
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Managing Quality Provides a Competitive Advantage
Arnold Palmer Hospital
Deliver over 13,000 babies annually Virtually every type of quality tool is
employed Continuous improvement Employee empowerment Benchmarking Just-in-time Quality tools
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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 PracticesLeadership, Mission statement, Effective operating procedures, Staff support, TrainingYields: What is important and what is to be
accomplishedQuality Principles
Customer 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 important
Customer SatisfactionWinning orders, Repeat customersYields: An effective organization with
a competitive advantageFigure 6.2
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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
1. Company reputation Perception of new products Employment practices Supplier relations
2. Product liability Reduce risk
3. Global implications Improved ability to compete
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Key Dimensions of QualityKey Dimensions of Quality
Performance Features Reliability Conformance
Durability Serviceability Aesthetics Perceived quality Value
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Malcom Baldrige National Quality Award
Established in 1988 by the U.S. government
Designed to promote TQM practices Few winners
Premier Inc., MESA Products, Sunny Fresh Foods, Park Place Lexus, North Mississippi Medical Center, The Bama Companies, Richland College, Texas Nameplate Company, Inc.
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Baldrige CriteriaApplicants are evaluated on:
Categories PointsLeadership 120Strategic Planning 85Customer & Market Focus 85Measurement, Analysis, and Knowledge Management 90Workforce Focus 85Process Management 85Results 450
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Costs of Quality
Prevention costs - reducing the potential for defects
Appraisal costs - evaluating products, parts, and services
Internal failure - producing defective parts or service before delivery
External costs - defects discovered after delivery
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External Failure
Internal Failure
Prevention
Costs of Quality
Appraisal
Total Cost
Quality Improvement
Total Cost
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Leaders in Quality
W. Edwards Deming 14 Points for Management
Joseph M. Juran Top management commitment, fitness for use
Armand Feigenbaum Total Quality Control
Philip B. Crosby Quality is Free, zero defects
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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
Organizations are judged by how they respond to problems
All stakeholders much be considered
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International Quality Standards
ISO 9000 series (Europe/EC) Common quality standards for products sold in Europe (even
if made in U.S.) 2000 update places greater emphasis on leadership and
customer satisfaction
ISO 14000 series (Europe/EC)
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ISO 14000Environmental Standard
Core Elements:
Environmental management Auditing Performance evaluation Labeling Life cycle assessment
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TQMEncompasses entire organization, from supplier
to customerStresses 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 Points1. Create consistency of purpose2. Lead to promote change3. Build quality into the product; stop depending
on inspection4. Build long-term relationships based on
performance, not price5. Continuously improve product, quality, and
service6. Start training7. Emphasize leadership
Table 6.1
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Deming’s Fourteen Points8. 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
Table 6.1
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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
Represents continual improvement of all processes
Involves all operations and work centers including suppliers and customersPeople, 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 Model
Figure 6.3
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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, and improve customer satisfaction
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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, and improve customer satisfaction
Six Sigma
Mean
Lower limits Upper limits
3.4 defects/million
±6
2,700 defects/million
±3
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 6
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Six Sigma
1. Define critical outputs and identify gaps for improvement
2. Measure the work and collect process data
3. Analyze the data
4. Improve the process
5. Control the new process to make sure new performance is maintained
DMAIC Approach
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Six Sigma Implementation Emphasize defects per million opportunities
as a standard metric Provide extensive training Focus on corporate sponsor support
(Champions) 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 process and material 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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Use internal
benchmarking if you’re
big enough
BenchmarkingSelecting 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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Benchmarking Factors for Web Sites
Use of meta tags Yes: 70%, No: 30%
Meaningful homepage title Yes: 97%, No: 3%
Unique domain name Yes: 91%, No: 9%
Search engine registration Above 96%
Average loading speed 28K: 19.31, 56K: 10.88, T1: 2.59
Average number of spelling errors 0.16
Visibility of contact information Yes: 74%, No: 26%
Presence of search engine Yes: 59%, No: 41%
Translation to multiple languages Yes: 11%, No: 89%
Table 6.3
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Best Practices for Resolving Customer Complaints
Make it easy for clients to complain Respond quickly to complaints Resolve complaints on first contact Use computers to manage complaints Recruit the best for customer service
jobs
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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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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) Example
ScrapUnreliable Vendors Capacity Imbalances
Work in process inventory level
(hides problems)
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Just-In-Time (JIT) Example
Reducing inventory revealsproblems so they can be solved
ScrapUnreliable Vendors Capacity Imbalances
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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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Taguchi Concepts Engineering and experimental design
methods to improve product and process design Identify key component and process
variables affecting product variation
Taguchi ConceptsQuality robustnessQuality loss functionTarget-oriented quality
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Quality Robustness
Ability to produce products uniformly in adverse manufacturing and environmental conditionsRemove the effects of adverse
conditionsSmall 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
GoodBest
Fair
Quality Loss FunctionHigh loss
Loss (to producing organization, customer, and society)
Low loss
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
Figure 6.5
L = D2C
whereL = loss to societyD = distance from target valueC = cost of deviation
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Global Company Profile: Arnold Palmer Hospital
Quality and Strategy Defining Quality
Implications of QualityMalcolm Baldrige National Quality
AwardCost of Quality (COQ)Ethics and Quality Management
Summary of this session
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International Quality Standards ISO 9000 ISO14000
Summary of this session (Contd.)
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Total Quality ManagementContinuous ImprovementSix SigmaEmployee EmpowermentBenchmarkingJust-in-Time (JIT)Taguchi ConceptsKnowledge of TQM Tools
Summary of this session (Contd.)
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THANK YOU