product design
DESCRIPTION
TRANSCRIPT
© 2008 Prentice Hall, Inc. 5 – 1
Operations ManagementOperations ManagementChapter 5 – Chapter 5 – Design of Goods Design of Goods and Servicesand Services
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
© 2008 Prentice Hall, Inc. 5 – 2
Learning ObjectivesLearning Objectives
1.1. Define product life cycleDefine product life cycle
2.2. Describe a product development systemDescribe a product development system
3.3. Describe how time-based competition is Describe how time-based competition is implementedimplemented
4. 4. Describe how products and services are Describe how products and services are defineddefined
5. Prepare the documents needed for 5. Prepare the documents needed for productionproduction
When you complete this chapter you should When you complete this chapter you should be able to :be able to :
© 2008 Prentice Hall, Inc. 5 – 3
The good or service the The good or service the organization provides societyorganization provides society
Top organizations typically focus on Top organizations typically focus on core productscore products
Customers buy satisfaction, not just Customers buy satisfaction, not just a physical good or particular servicea physical good or particular service
Fundamental to an organization's Fundamental to an organization's strategy with implications strategy with implications throughout the operations functionthroughout the operations function
Product DecisionProduct Decision
© 2008 Prentice Hall, Inc. 5 – 4
Product Strategy OptionsProduct Strategy Options
DifferentiationDifferentiation Shouldice HospitalShouldice Hospital
Low costLow cost Taco BellTaco Bell
Rapid responseRapid response ToyotaToyota
© 2008 Prentice Hall, Inc. 5 – 5
Product Life CyclesProduct Life Cycles
May be any length from a few May be any length from a few hours to decadeshours to decades
The operations function must The operations function must be able to introduce new be able to introduce new products successfullyproducts successfully
© 2008 Prentice Hall, Inc. 5 – 6
Product Life CyclesProduct Life Cycles
Negative cash flow
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
Sal
es,
cost
, an
d c
ash
flo
wS
ales
, co
st,
and
cas
h f
low Cost of development and productionCost of development and production
Cash Cash flowflow
Net revenue (profit)Net revenue (profit)
Sales revenueSales revenue
LossLoss
Figure 5.1Figure 5.1
© 2008 Prentice Hall, Inc. 5 – 7
Product Life CycleProduct Life Cycle
IntroductionIntroduction
Fine tuning may warrant Fine tuning may warrant unusual expenses forunusual expenses for ResearchResearch
Product developmentProduct development
Process modification and Process modification and enhancementenhancement
Supplier developmentSupplier development
© 2008 Prentice Hall, Inc. 5 – 8
Product Life CycleProduct Life Cycle
GrowthGrowth
Product design begins to Product design begins to stabilizestabilize
Effective forecasting of Effective forecasting of capacity becomes necessarycapacity becomes necessary
Adding or enhancing capacity Adding or enhancing capacity may be necessarymay be necessary
© 2008 Prentice Hall, Inc. 5 – 9
Product Life CycleProduct Life Cycle
MaturityMaturity
Competitors now establishedCompetitors now established
High volume, innovative High volume, innovative production may be neededproduction may be needed
Improved cost control, Improved cost control, reduction in options, paring reduction in options, paring down of product linedown of product line
© 2008 Prentice Hall, Inc. 5 – 10
Product Life CycleProduct Life Cycle
DeclineDecline
Unless product makes a Unless product makes a special contribution to the special contribution to the organization, must plan to organization, must plan to terminate offeringterminate offering
© 2008 Prentice Hall, Inc. 5 – 11
Product-by-Value AnalysisProduct-by-Value Analysis
Lists products in descending Lists products in descending order of their individual dollar order of their individual dollar contribution to the firmcontribution to the firm
Lists the total annual dollar Lists the total annual dollar contribution of the productcontribution of the product
Helps management evaluate Helps management evaluate alternative strategiesalternative strategies
© 2008 Prentice Hall, Inc. 5 – 12
Product-by-Value AnalysisProduct-by-Value Analysis
Individual Contribution ($)
Total Annual Contribution ($)
Love Seat $102 $36,720
Arm Chair $87 $51,765
Foot Stool $12 $6,240
Recliner $136 $51,000
Sam’s Furniture FactorySam’s Furniture Factory
© 2008 Prentice Hall, Inc. 5 – 13
New Product OpportunitiesNew Product Opportunities
1.1. Understanding the Understanding the customercustomer
2.2. Economic changeEconomic change
3.3. Sociological and Sociological and demographic changedemographic change
4.4. Technological changeTechnological change
5.5. Political/legal changePolitical/legal change
6.6. Market practice, professional Market practice, professional standards, suppliers, distributorsstandards, suppliers, distributors
Brainstorming
is a useful tool
© 2008 Prentice Hall, Inc. 5 – 14
Importance of New ProductsImportance of New Products
Industry Industry leaderleader
Top Top thirdthird
Middle Middle thirdthird
Bottom Bottom thirdthird
Figure 5.2Figure 5.2
Percentage of Sales from New ProductsPercentage of Sales from New Products50%
40%
30%
20%
10%
Position of Firm in Its IndustryPosition of Firm in Its Industry
© 2008 Prentice Hall, Inc. 5 – 15
Organizing for Product Organizing for Product DevelopmentDevelopment
Historically – distinct departmentsHistorically – distinct departments Duties and responsibilities are definedDuties and responsibilities are defined
Difficult to foster forward thinkingDifficult to foster forward thinking
A ChampionA Champion Product manager drives the product Product manager drives the product
through the product development through the product development system and related organizations system and related organizations
© 2008 Prentice Hall, Inc. 5 – 16
Organizing for Product Organizing for Product DevelopmentDevelopment
Team approachTeam approach Cross functional – representatives Cross functional – representatives
from all disciplines or functionsfrom all disciplines or functions
Product development teams, design Product development teams, design for manufacturability teams, value for manufacturability teams, value engineering teamsengineering teams
Japanese “whole organization” Japanese “whole organization” approachapproach No organizational divisionsNo organizational divisions
© 2008 Prentice Hall, Inc. 5 – 17
Manufacturability andManufacturability and Value Engineering Value Engineering
Benefits:Benefits:
1.1. Reduced complexity of productsReduced complexity of products
2.2. Additional standardization of productsAdditional standardization of products
3.3. Improved functional aspects of productImproved functional aspects of product
4.4. Improved job design and job safetyImproved job design and job safety
5.5. Improved maintainability (serviceability) Improved maintainability (serviceability) of the productof the product
6.6. Robust designRobust design
© 2008 Prentice Hall, Inc. 5 – 18
Cost Reduction of a Bracket Cost Reduction of a Bracket via Value Engineeringvia Value Engineering
Figure 5.5Figure 5.5
© 2008 Prentice Hall, Inc. 5 – 19
Issues for Product Issues for Product DevelopmentDevelopment
Robust designRobust design
Modular designModular design
Computer-aided design (CAD)Computer-aided design (CAD)
Computer-aided manufacturing (CAM)Computer-aided manufacturing (CAM)
Virtual reality technologyVirtual reality technology
Value analysisValue analysis
Environmentally friendly designEnvironmentally friendly design
© 2008 Prentice Hall, Inc. 5 – 20
Robust DesignRobust Design
Product is designed so that small Product is designed so that small variations in production or variations in production or assembly do not adversely affect assembly do not adversely affect the productthe product
Typically results in lower cost and Typically results in lower cost and higher qualityhigher quality
© 2008 Prentice Hall, Inc. 5 – 21
Modular DesignModular Design
Products designed in easily Products designed in easily segmented componentssegmented components
Adds flexibility to both production Adds flexibility to both production and marketingand marketing
Improved ability to satisfy customer Improved ability to satisfy customer requirementsrequirements
© 2008 Prentice Hall, Inc. 5 – 22
Using computers to Using computers to design products and design products and prepare engineering prepare engineering documentationdocumentation
Shorter development Shorter development cycles, improved cycles, improved accuracy, lower costaccuracy, lower cost
Information and Information and designs can be designs can be deployed worldwidedeployed worldwide
Computer Aided Design Computer Aided Design (CAD)(CAD)
© 2008 Prentice Hall, Inc. 5 – 23
Computer-Aided Computer-Aided Manufacturing (CAM)Manufacturing (CAM)
Utilizing specialized computers Utilizing specialized computers and program to control and program to control manufacturing equipmentmanufacturing equipment
Often driven by the CAD system Often driven by the CAD system (CAD/CAM)(CAD/CAM)
© 2008 Prentice Hall, Inc. 5 – 24
1.1. Product qualityProduct quality
2.2. Shorter design timeShorter design time
3.3. Production cost reductionsProduction cost reductions
4.4. Database availabilityDatabase availability
5.5. New range of capabilitiesNew range of capabilities
Benefits of CAD/CAMBenefits of CAD/CAM
© 2008 Prentice Hall, Inc. 5 – 25
Virtual Reality TechnologyVirtual Reality Technology
Computer technology used to Computer technology used to develop an interactive, 3-D model of develop an interactive, 3-D model of a product from the basic CAD dataa product from the basic CAD data
Allows people to ‘see’ the finished Allows people to ‘see’ the finished design before a physical model is design before a physical model is builtbuilt
Very effective in large-scale designs Very effective in large-scale designs such as plant layoutsuch as plant layout
© 2008 Prentice Hall, Inc. 5 – 26
Value AnalysisValue Analysis
Focuses on design improvement Focuses on design improvement during productionduring production
Seeks improvements leading either Seeks improvements leading either to a better product or a product to a better product or a product which can be produced more which can be produced more economicallyeconomically
© 2008 Prentice Hall, Inc. 5 – 27
Legal and Industry Legal and Industry StandardsStandards
For Design …For Design …
Federal Drug AdministrationFederal Drug Administration
Consumer Products Safety CommissionConsumer Products Safety Commission
National Highway Safety AdministrationNational Highway Safety Administration
Children’s Product Safety ActChildren’s Product Safety Act
© 2008 Prentice Hall, Inc. 5 – 28
Legal and Industry Legal and Industry StandardsStandards
For Manufacture/Assembly …For Manufacture/Assembly …
Occupational Safety and Health Occupational Safety and Health AdministrationAdministration
Environmental Protection AgencyEnvironmental Protection Agency
Professional ergonomic standardsProfessional ergonomic standards
State and local laws dealing with State and local laws dealing with employment standards, discrimination, etc.employment standards, discrimination, etc.
© 2008 Prentice Hall, Inc. 5 – 29
Legal and Industry Legal and Industry StandardsStandards
For Disassembly/Disposal …For Disassembly/Disposal …
Vehicle Recycling PartnershipVehicle Recycling Partnership
Increasingly rigid laws worldwideIncreasingly rigid laws worldwide
© 2008 Prentice Hall, Inc. 5 – 30
Acquiring TechnologyAcquiring Technology
By Purchasing a FirmBy Purchasing a Firm Speeds developmentSpeeds development
Issues concern the fit between the acquired Issues concern the fit between the acquired organization and product and the hostorganization and product and the host
Through Joint VenturesThrough Joint Ventures Both organizations learnBoth organizations learn
Risks are sharedRisks are shared
Through AlliancesThrough Alliances Cooperative agreements between Cooperative agreements between
independent organizationsindependent organizations
© 2008 Prentice Hall, Inc. 5 – 31
Defining The ProductDefining The Product
First definition is in terms of First definition is in terms of functionsfunctions
Rigorous specifications are Rigorous specifications are developed during the design phasedeveloped during the design phase
Manufactured products will have an Manufactured products will have an engineering drawingengineering drawing
Bill of material (BOM) lists the Bill of material (BOM) lists the components of a productcomponents of a product
© 2008 Prentice Hall, Inc. 5 – 32
Engineering drawingEngineering drawing
Shows dimensions, tolerances, and Shows dimensions, tolerances, and materialsmaterials
Shows codes for Group TechnologyShows codes for Group Technology
Bill of Material Bill of Material
Lists components, quantities and Lists components, quantities and where usedwhere used
Shows product structureShows product structure
Product DocumentsProduct Documents
© 2008 Prentice Hall, Inc. 5 – 33
Monterey Jack CheeseMonterey Jack Cheese
(a) (a) U.S. grade AAU.S. grade AA. Monterey cheese shall conform to the . Monterey cheese shall conform to the following requirements:following requirements:
(1) (1) FlavorFlavor. Is fine and highly pleasing, free from undesirable . Is fine and highly pleasing, free from undesirable flavors and odors. May possess a very slight acid or feed flavors and odors. May possess a very slight acid or feed flavor.flavor.
(2) (2) Body and textureBody and texture. A plug drawn from the cheese shall be . A plug drawn from the cheese shall be reasonably firm. It shall have numerous small mechanical reasonably firm. It shall have numerous small mechanical openings evenly distributed throughout the plug. It shall not openings evenly distributed throughout the plug. It shall not possess sweet holes, yeast holes, or other gas holes.possess sweet holes, yeast holes, or other gas holes.
(3) (3) ColorColor. Shall have a natural, uniform, bright and attractive . Shall have a natural, uniform, bright and attractive appearance.appearance.
(4) (4) Finish and appearance - bandaged and paraffin-dippedFinish and appearance - bandaged and paraffin-dipped. . The rind shall be sound, firm, and smooth providing a good The rind shall be sound, firm, and smooth providing a good protection to the cheese.protection to the cheese.
Code of Federal Regulation, Parts 53 to 109, General Service Administration
© 2008 Prentice Hall, Inc. 5 – 34
Bills of MaterialBills of Material
Hard Rock Hard Rock Cafe’s Hickory Cafe’s Hickory BBQ Bacon BBQ Bacon CheeseburgerCheeseburger
DESCRIPTIONDESCRIPTION QTYQTY
BunBun 11Hamburger pattyHamburger patty 8 oz.8 oz.Cheddar cheeseCheddar cheese 2 slices2 slicesBaconBacon 2 strips2 stripsBBQ onionsBBQ onions 1/2 cup1/2 cupHickory BBQ sauceHickory BBQ sauce 1 oz.1 oz.Burger setBurger set LettuceLettuce 1 leaf1 leaf TomatoTomato 1 slice1 slice Red onionRed onion 4 rings4 rings PicklePickle 1 slice1 sliceFrench friesFrench fries 5 oz.5 oz.Seasoned saltSeasoned salt 1 tsp.1 tsp.11-inch plate11-inch plate 11HRC flagHRC flag 11
Figure 5.9 (b)Figure 5.9 (b)
© 2008 Prentice Hall, Inc. 5 – 35
Parts grouped into families with Parts grouped into families with similar characteristicssimilar characteristics
Coding system describes Coding system describes processing and physical processing and physical characteristicscharacteristics
Part families can be produced Part families can be produced in dedicated manufacturing cellsin dedicated manufacturing cells
Group TechnologyGroup Technology
© 2008 Prentice Hall, Inc. 5 – 36
1.1. Improved designImproved design
2.2. Reduced raw material and purchasesReduced raw material and purchases
3.3. Simplified production planning and Simplified production planning and controlcontrol
4.4. Improved layout, routing, and Improved layout, routing, and machine loadingmachine loading
5.5. Reduced tooling setup time, work-in-Reduced tooling setup time, work-in-process, and production timeprocess, and production time
Group Technology BenefitsGroup Technology Benefits
© 2008 Prentice Hall, Inc. 5 – 37
Documents for ProductionDocuments for Production
Assembly drawingAssembly drawing
Assembly chartAssembly chart
Route sheetRoute sheet
Work orderWork order
Engineering change notices (ECNs)Engineering change notices (ECNs)
© 2008 Prentice Hall, Inc. 5 – 38
Assembly DrawingAssembly Drawing
Shows exploded Shows exploded view of productview of product
Details relative Details relative locations to locations to show how to show how to assemble the assemble the productproduct
Figure 5.11 (a)Figure 5.11 (a)
© 2008 Prentice Hall, Inc. 5 – 39
Assembly ChartAssembly Chart
1
2
3
4
5
6
7
8
9
10
11
R 209 AngleR 209 Angle
R 207 AngleR 207 Angle
Bolts w/nuts (2)Bolts w/nuts (2)
R 209 AngleR 209 Angle
R 207 AngleR 207 Angle
Bolt w/nutBolt w/nut
R 404 RollerR 404 Roller
Lock washerLock washer
Part number tagPart number tag
Box w/packing materialBox w/packing material
Bolts w/nuts (2)Bolts w/nuts (2)
SA1
SA2
A1
A2
A3
A4
A5
LeftLeftbracketbracket
assemblyassembly
RightRightbracketbracket
assemblyassembly
Poka-yoke Poka-yoke inspectioninspection
Figure 5.11 (b)Figure 5.11 (b)
Identifies the point Identifies the point of production of production where components where components flow into flow into subassemblies and subassemblies and ultimately into the ultimately into the final productfinal product
© 2008 Prentice Hall, Inc. 5 – 40
Route SheetRoute Sheet
Lists the operations and times required Lists the operations and times required to produce a componentto produce a component
Setup OperationProcess Machine Operations Time Time/Unit
1 Auto Insert 2 Insert Component 1.5 .4 Set 562 Manual Insert Component .5 2.3
Insert 1 Set 12C3 Wave Solder Solder all 1.5 4.1
components to board
4 Test 4 Circuit integrity .25 .5test 4GY
© 2008 Prentice Hall, Inc. 5 – 41
Work OrderWork Order
Instructions to produce a given quantity Instructions to produce a given quantity of a particular item, usually to a scheduleof a particular item, usually to a schedule
Work Order
Item Quantity Start Date Due Date
Production DeliveryDept Location
157C 125 5/2/08 5/4/08
F32 Dept K11
© 2008 Prentice Hall, Inc. 5 – 42
Engineering Change Notice Engineering Change Notice (ECN)(ECN)
A correction or modification to a A correction or modification to a product’s definition or product’s definition or documentationdocumentation Engineering drawingsEngineering drawings
Bill of materialBill of material
Quite common with long product life cycles, long manufacturing lead times, or
rapidly changing technologies
© 2008 Prentice Hall, Inc. 5 – 43
Service DesignService Design
Service typically includes direct Service typically includes direct interaction with the customerinteraction with the customer Increased opportunity for customizationIncreased opportunity for customization
Reduced productivityReduced productivity
Cost and quality are still determined at Cost and quality are still determined at the design stagethe design stage Delay customizationDelay customization
ModularizationModularization
Reduce customer interaction, often Reduce customer interaction, often through automationthrough automation
© 2008 Prentice Hall, Inc. 5 – 44
Moments of TruthMoments of Truth
Concept created by Jan Carlzon of Concept created by Jan Carlzon of Scandinavian AirwaysScandinavian Airways
Critical moments between the Critical moments between the customer and the organization that customer and the organization that determine customer satisfactiondetermine customer satisfaction
There may be many of these momentsThere may be many of these moments
These are opportunities to gain or These are opportunities to gain or lose businesslose business
© 2008 Prentice Hall, Inc. 5 – 45
Transition to ProductionTransition to Production
Know when to move to productionKnow when to move to production Product development can be viewed as Product development can be viewed as
evolutionary and never completeevolutionary and never complete
Product must move from design to Product must move from design to production in a timely mannerproduction in a timely manner
Most products have a trial production Most products have a trial production period to insure producibilityperiod to insure producibility Develop tooling, quality control, trainingDevelop tooling, quality control, training
Ensures successful productionEnsures successful production
© 2008 Prentice Hall, Inc. 5 – 46
Transition to ProductionTransition to Production
Responsibility must also transition as the Responsibility must also transition as the product moves through its life cycleproduct moves through its life cycle Line management takes over from designLine management takes over from design
Three common approaches to managing Three common approaches to managing transitiontransition Project managersProject managers
Product development teamsProduct development teams
Integrate product development and Integrate product development and manufacturing organizationsmanufacturing organizations
© 2008 Prentice Hall, Inc. 5 – 47
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
© 2008 Prentice Hall, Inc. 5 – 48
Learning ObjectivesLearning Objectives
When you complete this chapter you When you complete this chapter you should be able to:should be able to:
Define quality and TQMDefine quality and TQM
Explain Six SigmaExplain Six Sigma
Explain how benchmarking is used Explain how benchmarking is used
Explain quality robust products and Explain quality robust products and Taguchi conceptsTaguchi concepts
© 2008 Prentice Hall, Inc. 5 – 49
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
© 2008 Prentice Hall, Inc. 5 – 50
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
© 2008 Prentice Hall, Inc. 5 – 51
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
© 2008 Prentice Hall, Inc. 5 – 52
Key Dimensions of QualityKey Dimensions of QualityKey Dimensions of QualityKey Dimensions of Quality
PerformancePerformance
FeaturesFeatures
ReliabilityReliability
ConformanceConformance
DurabilityDurability
ServiceabilityServiceability
AestheticsAesthetics
Perceived qualityPerceived quality
ValueValue
© 2008 Prentice Hall, Inc. 5 – 53
TakumiTakumi
A Japanese character A Japanese character that symbolizes a that symbolizes a broader dimension broader dimension than quality, a deeper than quality, a deeper process than process than education, and a more education, and a more perfect method than perfect method than persistencepersistence
© 2008 Prentice Hall, Inc. 5 – 54
Costs of QualityCosts of Quality
Prevention costs - reducing the Prevention costs - reducing the potential for defectspotential for defects
Appraisal costs - evaluating Appraisal costs - evaluating products, parts, and servicesproducts, parts, and services
Internal failure - producing defective Internal failure - producing defective parts or service before deliveryparts or service before delivery
External costs - defects discovered External costs - defects discovered after deliveryafter delivery
© 2008 Prentice Hall, Inc. 5 – 55
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
© 2008 Prentice Hall, Inc. 5 – 56
Seven Concepts of TQMSeven Concepts of TQM
Continuous improvementContinuous improvement
Six SigmaSix Sigma
Employee empowermentEmployee empowerment
BenchmarkingBenchmarking
Just-in-time (JIT)Just-in-time (JIT)
Taguchi conceptsTaguchi concepts
Knowledge of TQM toolsKnowledge of TQM tools
© 2008 Prentice Hall, Inc. 5 – 57
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
© 2008 Prentice Hall, Inc. 5 – 58
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
© 2008 Prentice Hall, Inc. 5 – 59
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
© 2008 Prentice Hall, Inc. 5 – 60
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
© 2008 Prentice Hall, Inc. 5 – 61
Use internal
benchmarking
if you’re big
enough
BenchmarkingBenchmarking
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
© 2008 Prentice Hall, Inc. 5 – 62
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
© 2008 Prentice Hall, Inc. 5 – 63
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
© 2008 Prentice Hall, Inc. 5 – 64
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
© 2008 Prentice Hall, Inc. 5 – 65
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
© 2008 Prentice Hall, Inc. 5 – 66
Quality Loss FunctionQuality Loss Function Shows that costs increase as the Shows that costs increase as the
product moves away from what product moves away from what the customer wantsthe customer wants
Costs include customer Costs include customer dissatisfaction, warranty dissatisfaction, warranty and service, internal and service, internal scrap and repair, and costs to scrap and repair, and costs to societysociety
Traditional conformance Traditional conformance specifications are too simplisticspecifications are too simplistic
Target-Target-
oriented oriented
qualityquality
© 2008 Prentice Hall, Inc. 5 – 67
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
© 2008 Prentice Hall, Inc. 5 – 68
When and Where to InspectWhen and Where to Inspect
1.1. At the supplier’s plant while the supplier is At the supplier’s plant while the supplier is producingproducing
2.2. At your facility upon receipt of goods from At your facility upon receipt of goods from the supplierthe supplier
3.3. Before costly or irreversible processesBefore costly or irreversible processes
4.4. During the step-by-step production During the step-by-step production processprocess
5.5. When production or service is completeWhen production or service is complete
6.6. Before delivery to your customerBefore delivery to your customer
7.7. At the point of customer contactAt the point of customer contact
© 2008 Prentice Hall, Inc. 5 – 69
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
© 2008 Prentice Hall, Inc. 5 – 70
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
© 2008 Prentice Hall, Inc. 5 – 71
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
© 2008 Prentice Hall, Inc. 5 – 72
ServiceServiceSpecificationsSpecifications
at UPSat UPS
© 2008 Prentice Hall, Inc. 5 – 73
Determinants of Service Determinants of Service QualityQuality
ReliabilityReliability
ResponsivenessResponsiveness
CompetenceCompetence
AccessAccess
CourtesyCourtesy
CommunicationCommunication
CredibilityCredibility
SecuritySecurity
Understanding/ Understanding/ knowing the knowing the customercustomer
TangiblesTangibles
© 2008 Prentice Hall, Inc. 5 – 74
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