Lecture 30

Total Quality Management (Continued)

Books• Introduction to Materials Management, Sixth Edition, J. R. Tony Arnold, P.E., CFPIM, CIRM, Fleming

College, Emeritus, Stephen N. Chapman, Ph.D., CFPIM, North Carolina State University, Lloyd M. Clive, P.E., CFPIM, Fleming College

• Operations Management for Competitive Advantage, 11th Edition, by Chase, Jacobs, and Aquilano, 2005, N.Y.: McGraw-Hill/Irwin.

• Operations Management, 11/E, Jay Heizer, Texas Lutheran University, Barry Render, Graduate School of Business, Rollins College, Prentice Hall

Objectives• Variables and attributes • Control charts for variables• Parameters• Control charts for attributes• Tolerances• Process capability• Understanding continuous improvement• Deming 14 points• TQM• Seven quality tools• Maintenance and reliability• Reliability• Product failure rate• Providing redundancy• Maintenance cost• Total productive maintenance

Variables and Attributes

• Attributes data refers to quality characteristics that either conform to specification or do not (examples: visual inspection for color, missing parts, scratches, go-no-go gauging) Either the part is within tolerance or it is not.

Control Charts for Variables

• The purpose of control charts is to help distinguish between chance variations and variations due to assignable causes.

• Variables are characteristics that have continuous dimensions.

• Control charts for the mean, (x-bar), and the range, (R), are used to monitor processes that have continuous dimensions.

Control Charts for Variables

• The x-bar chart tells whether changes have occurred in the central tendency of a process.

The R-chart values indicate that a gain or loss in uniformity has occurred.

Parameters

• Two basic parameters used:

– Mean - measure of central tendency

– Range - measure of dispersion

• The range is defined as the difference between the largest and smallest items in one sample.

Control Charts for Attributes

• Attributes are typically classified as defective or nondefective.

• Two kinds of attribute control charts:

Those that measure the percent defective in a sample - p-charts.

Those that count the number of defects per unit of output - c-charts.

Tolerances

• Tolerances are limits of deviation from perfection and are established by the product design engineers to meet a particular design function

• Both the USL and LSL are related to the product specification and are independent of any process.

Two Types of Defect

• Excessive Spread, Incapable Process

– Range

– Standard deviation

• Mean Shift

• Both the USL and LSL are related to the product specification and are independent of any process.

Variables and Attributes

• Variables data can be measured on a continuous scale (examples: weight, dimensions, pH, temperature, pressure, etc.)

Process Capability

• The capability of the process is not related to the product specifications

• A process must be selected that can meet the specifications

• Processes can produce defects in two ways, by having too big a spread or by a shift in the average

Model for Improvement

Customer Need:What Results will meet the customer need?Current Knowledge:How well do we meet the customer need?What are the measures and processes?

Cycle for Learning and Improvement:Plan a specific change that results

in improvement.Test the change on a small scale.Study and learn from the test results.Act to implement the change.

PlanAct

Study Test

Customer Need

Current Knowledge

Understanding the Continuous Improvement Process

• There is variation in everything.• Reducing variation improves systems.• We are all in the system.• Teamwork is vital to improve systems.• A few simple tools will help.• Management must lead, but improvement is

everyone’s responsibility!

Deming’s 14 Points

1. Create constancy of purpose for improvement of product and service.

2. Adopt the new philosophy.

3. Cease dependence on inspection to achieve quality.

4. End the practice of awarding business on the basis of price tag alone.

5. Improve constantly and forever every process for planning, production, and service.

6. Institute training on the job.

7. Adopt and institute leadership.

Deming’s 14 Points

8. Drive out fear.

9. Break down barriers between staff areas.

10. Eliminate slogans, exhortations, and targets for the work force.

11. Eliminate numerical quotas for the work force and numerical goals for management.

12. Remove barriers that rob people of pride of workmanship. (annual rating system).

13. Institute a vigorous program of education and self-improvement for everyone.

14. Put everybody in the company to work to accomplish the transformation.

TQM

“No manufacturer that I know of possesses

enough knowledge and manpower to work

effectively with more than one vendor for

any item.”W. Edwards Deming, Out of the Crisis

The Limitations of Inspection

• Boredom• Fatigue• Unclear instructions• Noise• Laziness

Seven Quality Tools

• Process flow diagrams• Checklists• Check sheets• Pareto charts• Histograms• Cause and Effect (fishbone) Diagrams• Run charts

How do I know when to adjust?Statistical Process Control

• A tool for making economical decisions on when to make adjustments

• A tool with some statistical foundation

Maintenance and Reliability

Strategic Importance of Maintenance and Reliability

Failure has far reaching effects on a firm’s Operation Reputation Profitability Dissatisfied customers Idle employees Profits becoming losses Reduced value of investment in plant and

equipment

Maintenance and Reliability

The objective of maintenance and reliability is to maintain the capability of the system while controlling costsMaintenance is all activities involved in

keeping a system’s equipment in working order

Reliability is the probability that a machine will function properly for a specified time

Important Tactics

Reliability1. Improving individual components

2. Providing redundancy

Maintenance1. Implementing or improving preventive

maintenance

2. Increasing repair capability or speed

Maintenance Strategy

Employee Involvement

Information sharingSkill trainingReward systemEmployee empowerment

Maintenance and Reliability Procedures

Clean and lubricateMonitor and adjustMake minor repairKeep computerized records

Results

Reduced inventoryImproved qualityImproved capacityReputation for qualityContinuous improvementReduced variability

Reliability

Improving individual components

Rs = R1 x R2 x R3 x … x Rn

where R1 = reliability of component 1R2 = reliability of component 2

and so on

Overall System ReliabilityR

elia

bili

ty o

f th

e sy

stem

(pe

rcen

t)

Average reliability of each component (percent)

| | | | | | | | |

100 99 98 97 96

100 –

80 –

60 –

40 –

20 –

0 –

n = 10

n = 1

n = 50n = 100n = 200n = 300

n = 400

Rs

R3

.99

R2

.80

Reliability Example

R1

.90

Reliability of the process is

Rs = R1 x R2 x R3 = .90 x .80 x .99 = .713 or 71.3%

Product Failure Rate (FR)

Basic unit of measure for reliability

FR(%) = x 100%Number of failures

Number of units tested

FR(N) = Number of failuresNumber of unit-hours of operating time

Mean time between failures

MTBF =1

FR(N)

Failure Rate Example

20 air conditioning units designed for use in NASA space shuttles operated for 1,000 hoursOne failed after 200 hours and one after 600 hours

FR(%) = (100%) = 10%220

FR(N) = = .000106 failure/unit hr220,000 - 1,200

MTBF = = 9,434 hrs1.000106

Failure Rate Example

20 air conditioning units designed for use in NASA space shuttles operated for 1,000 hoursOne failed after 200 hours and one after 600 hours

FR(%) = (100%) = 10%2

20

FR(N) = = .000106 failure/unit hr2

20,000 - 1,200

MTBF = = 9,434 hr1

.000106

Failure rate per trip

FR = FR(N)(24 hrs)(6 days/trip)FR = (.000106)(24)(6)FR = .153 failures per trip

Providing Redundancy

Provide backup components to increase reliability

+ x

Probability of first

component working

Probability of needing second

component

Probability of second

component working

(.8) + (.8) x (1 - .8)

= .8 + .16 = .96

Redundancy Example

A redundant process is installed to support the earlier example where Rs = .713

R1

0.90

0.90

R2

0.80

0.80

R3

0.99

= [.9 + .9(1 - .9)] x [.8 + .8(1 - .8)] x .99

= [.9 + (.9)(.1)] x [.8 + (.8)(.2)] x .99

= .99 x .96 x .99 = .94

Reliability has increased

from .713 to .94

Maintenance

Two types of maintenancePreventive maintenance – routine

inspection and servicing to keep facilities in good repair

Breakdown maintenance – emergency or priority repairs on failed equipment

Implementing Preventive Maintenance

Need to know when a system requires service or is likely to fail

High initial failure rates are known as infant mortality

Once a product settles in, MTBF generally follows a normal distribution

Good reporting and record keeping can aid the decision on when preventive maintenance should be performed

Computerized Maintenance System

Output Reports

Inventory and purchasing reports

Equipment parts list

Equipment history reports

Cost analysis (Actual vs. standard)

Work orders– Preventive

maintenance– Scheduled

downtime– Emergency

maintenance

Data entry– Work requests– Purchase

requests– Time reporting– Contract work

Data Files

Personnel data with skills, wages,

etc.

Equipment file with parts list

Maintenanceand work order

schedule

Inventory of spare parts

Repair history file

Maintenance Costs

The traditional view attempted to balance preventive and breakdown maintenance costs

Typically this approach failed to consider the true total cost of breakdowns Inventory Employee morale Schedule unreliability

Maintenance Costs

Total costs

Breakdown maintenance costs

Cos

ts

Maintenance commitment

Traditional View

Preventive maintenance costs

Optimal point (lowestcost maintenance policy)

Maintenance Costs

Cos

ts

Maintenance commitment

Full Cost View

Optimal point (lowestcost maintenance policy)

Total costs

Full cost of breakdowns

Preventive maintenance costs

Maintenance Cost Example

Should the firm contract for maintenance on their printers?

Number of Breakdowns

Number of Months That Breakdowns Occurred

0 2

1 8

2 6

3 4

Total: 20

Average cost of breakdown = $300

Maintenance Cost Example

1. Compute the expected number of breakdowns

Number of Breakdowns

Frequency Number of Breakdowns

Frequency

0 2/20 = .1 2 6/20 = .3

1 8/20 = .4 3 4/20 = .2

∑ Number of breakdowns

Expected number of breakdowns

Corresponding frequency= x

= (0)(.1) + (1)(.4) + (2)(.3) + (3)(.2)

= 1.6 breakdowns per month

Maintenance Cost Example

2. Compute the expected breakdown cost per month with no preventive maintenance

Expected breakdown cost

Expected number of breakdowns

Cost per breakdown= x

= (1.6)($300)

= $480 per month

Maintenance Cost Example

3. Compute the cost of preventive maintenance

Preventive maintenance cost

Cost of expected breakdowns if service contract signed

Cost of service contract

=

+

= (1 breakdown/month)($300) + $150/month= $450 per month

Hire the service firm; it is less expensive

Increasing Repair Capabilities

1. Well-trained personnel2. Adequate resources3. Ability to establish repair plan and priorities4. Ability and authority to do material planning5. Ability to identify the cause of breakdowns6. Ability to design ways to extend MTBF

How Maintenance is Performed

Operator Maintenance department

Manufacturer’s field service

Depot service(return equipment)

Preventive maintenance costs less and is faster the more we move to the left

Competence is higher as we move to the right

Total Productive Maintenance (TPM)

Designing machines that are reliable, easy to operate, and easy to maintain

Emphasizing total cost of ownership when purchasing machines, so that service and maintenance are included in the cost

Developing preventive maintenance plans that utilize the best practices of operators, maintenance departments, and depot service

Training workers to operate and maintain their own machines

Establishing Maintenance Policies

SimulationComputer analysis of complex

situationsModel maintenance programs before

they are implementedPhysical models can also be used

Expert systemsComputers help users identify problems

and select course of action

End of Lecture 30