lecture 6 mbf2213 |operations management...as inspection of product, lab test, vendor control,...
TRANSCRIPT
Lecture 6
MBF2213 | Operations ManagementPrepared by Dr Khairul Anuar
L6: Quality Management
Quality management
Design
Planning and control
Operations strategy
Improvement
The operation supplies…the consistent delivery of products and services at
specification or above
The market requires…consistent quality of
products and services
Capacity planning and control
2
Quality planning and control – Slack et al. identify the following key questions:
• What is quality and why is it so important?
• How can quality problems be diagnosed?
• What steps lead towards conformance to specification?
• What is Total Quality Management (TQM)?
Key operations questions
3
Introduction to Quality Management
• During the past twenty years, there has been a revolution in quality.
• Improvements have occurred not only in product quality, but also in leadership quality and project management quality.
• The changing views of quality appear in Table 20–1.
• The push for higher levels of quality appears to be customer driven. Customers are now demanding: Higher performance requirements Faster product development Higher technology levels Materials and processes pushed to the limit Lower contractor profit margins Fewer defects/rejects
4
Introduction to Quality Management
5
Introduction to Quality Management
• One of the critical factors that can affect quality is market expectations. The variables that affect market expectations include:
Salability: the balance between quality and cost
Produceability: the ability to produce the product with available technology and workers, and at an acceptable cost
Social acceptability: the degree of conflict between the product or process and the values of society (i.e., safety, environment)
Operability: the degree to which a product can be operated safely
Availability: the probability that the product, when used under given conditions, will perform satisfactorily when called upon
Reliability: the probability of the product performing without failure under given conditions and for a set period of time
Maintainability: the ability of the product to be retained in or restored to a performance level when prescribed maintenance is performed
6
Definition of Quality
• Mature organizations readily admit that they cannot accurately define quality. The reason is that quality is defined by the customer.
• The Kodak definition of quality is those products and services that are perceived to meet or exceed the needs and expectations of the customer at a cost that represents outstanding value.
• The ISO 9000 definition is “the totality of feature and characteristics of a product or service that bears on its ability to satisfy stated or implied needs.”
7
Definition of Quality
• Terms such as fitness for use, customer satisfaction, and zero defects are goals rather than definitions.
• Most organizations view quality more as a process than a product. To be more specific, it is a continuously improving process where lessons learned are used to enhance future products and services in order to
Retain existing customers
Win back lost customers
Win new customers
8
Definition of Quality
9
• Therefore, companies are developing quality improvement processes.
• Figure 20–1 shows the five quality principles that support Kodak’s quality policy.
• Figure 20–2 shows a more detailed quality improvement process.
• These two figures seem to illustrate that organizations are placing more emphasis on the quality process than on the quality product and, therefore, are actively pursuing quality improvements through a continuous cycle.
2. Definition of Quality
10
• Figure 20–1 shows the five quality principles that support Kodak’s quality policy.
Definition of Quality
11
• Figure 20–2 shows a more detailed quality improvement process.
Quality up
Profits up
Processing time down
Inventory down
Capital costs down
Complaint and warranty costs
down
Rework and scrap costs
down
Inspection and test costs
down
Productivity up
Image up
Scale economies up
Price competition
down
Sales volume up
Revenue up
High quality puts costs down and revenue up
Operation costs down
Service costs down
12
Customers’ expectations
for the product or
service
Customers’ perceptions
of the product or
service
Gap
Expectations > perceptions
Expectations = perceptions
Expectations < perceptions
Perceived quality is governed by the gap between customers’ expectations and their perceptions of the product or service
Gap
Perceived quality is poor Perceived quality is good
Perceived quality is acceptable
Customers’ expectations
for the product or
service
Customers’ perceptions
of the product or
service
Customers’ expectations
for the product or
service
Customers’ perceptions
of the product or
service
13
The operation’s domain
Management’s concept of the
product or service
The customer’s
domain
PreviousExperience
Word of mouth communications
Image of product or service
Customers’ own specification of
quality
Organization’s specification of
quality
The actual product or serviceGap 1
Gap 2Gap 3
Gap 4
A ‘Gap’ model of Quality
Customers’ expectations concerning a
product or service
Customers’ perceptions
concerning the product or service
Is there
a Gap ?
14
The perception – expectation gap
GapAction required to ensure high perceived quality
Main organizational responsibility
Gap 3 OperationsEnsure actual product or service conforms to internally specified quality level
Gap 4 MarketingEnsure that promises made to customers concerning the product or service can really be delivered
Gap 1Ensure consistency between internal quality specification and the expectations of customers
Marketing, operations, product/service development
Gap 2 Ensure internal specification meets its intended concept of design
Marketing, operations, product/service development
15
Quality characteristics of goods and services
Functionality – how well the product or service does the job for which it was intended.
Appearance – aesthetic appeal, look, feel, sound and smell of the product or service.
Reliability – consistency of product or services performance over time.
Durability – the total useful life of the product or service.
Recovery – the ease with which problems with the product or service can be rectified or resolved.
Contact – the nature of the person-to-person contacts that take place.
16
Attribute and variable measures of quality
Attributes Variables
Defective or not defective?Measured on a
continuous scale
Light bulb works or does not work?
Light emission of bulb
Number of defects in a turbine blade . Length of blade
17
Variablesthings you can measure
Attributesthings you can assess
accept/reject
Qualityfitness for purpose
Reliabilityability to continue
working at acceptedquality level
Quality
Quality of Designdegree to which
design achieves purpose
Quality of Conformancefaithfulness with which the
operation agrees with design
Aspects of quality
18
What does Total Quality Management include?
Total Quality Management
• Includes all parts of the organization
• Includes all staff of the organization
• Includes consideration of all costs
• Includes every opportunity to get things right
• Includes all the systems that affect quality
• And it never stops!
19
Total quality management can be viewed as a natural extension of earlier approaches to quality management
• Quality is strategic• Teamwork• Staff empowerment• Involves customers and suppliers
• Quality systems• Quality costing• Problem solving• Quality planning
• Statistics• Process analysis• Quality standards
• Error detection
• Rectification
Prevents ‘out of specification’ products and services reaching market
Solves the root cause of quality
problems
Broadens the organizational
responsibility for quality
Makes quality central and strategic in the
organization
Inspection Quality control
Quality assurance
Total Quality Management
20
External supplier
External customer
The internal customer–supplier concept involvesunderstanding the relationship between processes
Process 1
Process 3
Process 2
Process 4
Process 5
Process 6
The traditional cost of quality model
Cost of errors = costs of prevention and appraisal
Total cost of quality Cost of quality provision = costs of internal and external
failure
Co
sts
‘Optimum’ amount of quality effort
Amount of quality effort
22
Co
sts
Amount of quality effort
Total cost of qualityCost of errors = costs of
prevention and appraisalCost of quality provision =
costs of internal and external failure
‘Optimum’ amount of quality effort
The traditional cost of quality model with adjustmentsto reflect TQM criticisms
23
The cost of rectifying errors becomes increasingly expensive the longer the errors remain uncorrected in the development and launch process
Co
st t
o r
ecti
fy e
rro
r
Stage in the development and launch process
Pilot production
Market usePrototypeDesignConcept
1000
100
101
10, 000
24
Time
Co
sts
of
qu
alit
y
Appraisal
Internal failure
Appraisal
Prevention
Total cost of quality
Increasing the effort spent on preventing errors occurring in the first place brings a more than equivalent reduction in other cost categories
25
Effe
ctiv
enes
s o
f th
e T
QM
init
iati
veThe pattern of some TQM programmes which run out of
enthusiasm
Introduction
Learning and understanding
Growth
Increasing enthusiasm
Levelling off
Starting to hit the more difficult
problems
Disillusionment
Waning enthusiasm
Repackaging
Attempts to revitalize the programme
26
Cost of Quality
• To verify that a product or service meets the customer’s requirements requires the measurement of the costs of quality.
• For simplicity’s sake, the costs can be classified as “the cost of conformance” and “the cost of non-conformance.”
• Conformance costs include items such as training, indoctrination, verification, validation, testing, maintenance, calibration, and audits.
• Nonconforming costs include items such as scrap, rework, warranty repairs, product recalls, and complaint handling.
27
Cost of Quality
• Trying to save a few project dollars by reducing conformance costs could prove disastrous.
• For example, an American company won a contract as a supplier of Japanese parts.
• The initial contract called for the delivery of 10,000 parts. During inspection and testing at the customer’s (i.e., Japanese) facility, two rejects were discovered.
• The Japanese returned all 10,000 components to the American supplier stating that this batch was not acceptable.
• In this example, the nonconformance cost could easily be an order of magnitude greater than the conformance cost. The moral is clear: Build it right the first time.
28
Cost of Quality• Another common method to classify costs includes the following:
• Prevention costs are the up-front costs oriented toward the satisfaction of customer’s requirements with the first and all succeeding units of product produced without defects. Included in this are typically such costs as design review, training, quality planning, surveys of vendors, suppliers, and subcontractors, process studies, and related preventive activities.
• Appraisal costs are costs associated with evaluation of product or process to ascertain how well all of the requirements of the customer have been met. Included in this are typically such costs as inspection of product, lab test, vendor control, in-process testing, and internal–external design reviews.
• (refer to Table 20.6)
29
Cost of Quality• Internal failure costs are those costs associated with the failure of the
processes to make products acceptable to the customer, before leaving the control of the organization.
• Included in this area are scrap, rework, repair, downtime, defect evaluation, evaluation of scrap, and corrective actions for these internal failures.
• External failure costs are those costs associated with the determination by the customer that his requirements have not been satisfied. Included are customer returns and allowances, evaluation of customer complaints, inspection at the customer, and customer visits to resolve quality complaints and necessary corrective action.
• Figure 20–6 shows the expected results of the total quality management system on quality costs. Prevention costs are expected to actually rise as more time is spent in prevention activities throughout the organisation.
30
Cost of Quality
31FIGURE 20–6. Total quality cost.