Week 2

BUSN 6110 Summer 2011

Quality Quality ManagementManagement

Quality is a measure of goodness that is inherent to a product or service.

Bottom line: perspective has to be from theCustomer – fitness for use

““The degree of excellence of a thing” The degree of excellence of a thing” (Webster’s Dictionary)(Webster’s Dictionary)

““The totality of features and The totality of features and characteristics that satisfy needs” (ASQ)characteristics that satisfy needs” (ASQ)

Fitness for useFitness for use Quality of designQuality of design

What Is Quality?

Quality

• Quality Management – not owned by any functional area – cross functional

• Measure of goodness that is inherent to a product or service

FedEx and Quality• Digitally Assisted Dispatch System – communicate

with 30K couriers • 1-10-100 rule

1 – if caught and fixed as soon as it occurs, it costs a certain amount of time and money to fix

10 – if caught later in different department or location = as much as 10X cost 100 – if mistake is caught by the customer = as much as 100X to fix

Product Quality Dimensions

• Product Based – found in the product attributes

• User Based – if customer satisfied• Manufacturing Based – conform to specs• Value Based – perceived as providing good

value for the price

Dimensions of Quality (Garvin)

1.1. Performance Performance Basic operating characteristicsBasic operating characteristics

2.2. Features Features ““Extra” items added to basic featuresExtra” items added to basic features

3.3. Reliability Reliability Probability product will operate over timeProbability product will operate over time

Dimensions of Quality (Garvin)

4.4. Conformance Conformance Meeting pre-established standardsMeeting pre-established standards

5.5. Durability Durability Life span before replacement Life span before replacement

6.6. Serviceability Serviceability Ease of getting repairs, speed & competence of repairsEase of getting repairs, speed & competence of repairs

Dimensions of Quality (Garvin)

7.7. AestheticsAesthetics Look, feel, sound, smell or tasteLook, feel, sound, smell or taste

8.8. SafetySafety Freedom from injury or harmFreedom from injury or harm

9.9. Other perceptionsOther perceptions Subjective perceptions based on brand name, advertising, etcSubjective perceptions based on brand name, advertising, etc

1.1. Time & Timeliness Time & Timeliness Customer waiting time, completed on timeCustomer waiting time, completed on time

2.2. Completeness Completeness Customer gets all they asked forCustomer gets all they asked for

3.3. CourtesyCourtesy Treatment by employeesTreatment by employees

Service Quality

4.4. ConsistencyConsistency Same level of service for all customers Same level of service for all customers

5.5. Accessibility & Convenience Accessibility & Convenience Ease of obtaining serviceEase of obtaining service

6.6. AccuracyAccuracy Performed right every timePerformed right every time

7.7. ResponsivenessResponsiveness Reactions to unusual situationsReactions to unusual situations

Service Quality

Quality of Conformance

Ensuring product or service produced Ensuring product or service produced according to designaccording to design

Depends onDepends on Design of production processDesign of production process Performance of machineryPerformance of machinery MaterialsMaterials TrainingTraining

Quality Philosophers

Walter Shewhart – Statistical Process ControlWalter Shewhart – Statistical Process Control W. Edwards DemingW. Edwards Deming Joseph Juran – strategic and planning basedJoseph Juran – strategic and planning based Armand Fiegenbaum – total quality control “entire business must be involved in Armand Fiegenbaum – total quality control “entire business must be involved in

quality improvement”quality improvement”

Deming’s 14 Points

1.1. Create constancy of purposeCreate constancy of purpose2.2. Adopt philosophy of preventionAdopt philosophy of prevention3.3. Cease mass inspectionCease mass inspection4.4. Select a few suppliers based on qualitySelect a few suppliers based on quality5.5. Constantly improve system and Constantly improve system and

workersworkers6.6. Institute worker trainingInstitute worker training

Deming’s 14 Points

7.7. Instill leadership among supervisorsInstill leadership among supervisors8.8. Eliminate fear among employeesEliminate fear among employees9.9. Eliminate barriers between Eliminate barriers between

departmentsdepartments10.10. Eliminate slogansEliminate slogans11.11. Remove numerical quotasRemove numerical quotas

Deming’s 14 Points

12.12. Enhance worker prideEnhance worker pride13.13. Institute vigorous training and Institute vigorous training and

education programseducation programs14.14. Develop a commitment from top Develop a commitment from top

management to implement these 13 management to implement these 13 pointspoints

The Deming Wheel(or PDCA Cycle)

1. PlanIdentify the problem and develop the plan for improvement.

2. DoImplement the plan on a test basis.

3. Study/CheckAssess the plan; is it working?

4. ActInstitutionalize improvement; continue the cycle.

Also known as the Shewart CycleAlso known as the Shewart Cycle

Six Sigma

• Quality management program that measures and improves the operational performance of a company by identifying and correcting defects in the company’s processes and products

Six SigmaStarted By Motorola

• Define• Measure• Analyze• Improve • Control

Made Famous by Made Famous by General ElectricGeneral Electric40% of GE executives’40% of GE executives’bonuses tied to 6 sigmabonuses tied to 6 sigmaimplementation implementation

Malcolm Baldrige National Quality Award

• Category 3 – determine requirements, expectations, preferences of customers and markets

• Category 4 – what is important to the customer and the company; how does company improve

Total Quality Management

1.1. Customer defined qualityCustomer defined quality2.2. Top management leadershipTop management leadership3.3. Quality as a strategic issueQuality as a strategic issue4.4. All employees responsible for qualityAll employees responsible for quality5.5. Continuous improvementContinuous improvement6.6. Shared problem solvingShared problem solving7.7. Statistical quality controlStatistical quality control8.8. Training & education for all employeesTraining & education for all employees

Strategic Implications of TQM

Quality is key to effective strategyQuality is key to effective strategy Clear strategic goal, vision, missionClear strategic goal, vision, mission High quality goalsHigh quality goals Operational plans & policiesOperational plans & policies Feedback mechanismFeedback mechanism Strong leadershipStrong leadership

TQM in Service Companies

Inputs similar to manufacturingInputs similar to manufacturing Processes & outputs are differentProcesses & outputs are different Services tend to be labor intensiveServices tend to be labor intensive Quality measurement is harderQuality measurement is harder Timeliness is important measureTimeliness is important measure TQM principles apply to servicesTQM principles apply to services

Cost of QualityCost of achieving good qualityCost of achieving good quality

PreventionPrevention Planning, Product design, Process, Training, InformationPlanning, Product design, Process, Training, Information

AppraisalAppraisal Inspection and testing, Inspection and testing,

Test equipment, Test equipment, OperatorOperator

Cost of QualityCost of poor qualityCost of poor quality

Internal failure costsInternal failure costs Scrap, Rework, Process failure, Process downtime, Price-Scrap, Rework, Process failure, Process downtime, Price-

downgradingdowngrading

External failure costsExternal failure costs Customer complaints, Customer complaints,

Product return, Product return, Warranty, Product Warranty, Product liability, Lost salesliability, Lost sales

Employees and Quality Improvement

Employee involvementEmployee involvement Quality circlesQuality circles Process improvement teamsProcess improvement teams Employee suggestionsEmployee suggestions

Cause-and-Effect Diagram

QualityProblemQuality

Problem

Out of adjustmentOut of adjustment

Tooling problemsTooling problems

Old / wornOld / worn

MachinesMachinesFaultyFaulty testing equipmenttesting equipment

Incorrect specificationsIncorrect specifications

Improper methodsImproper methods

MeasurementMeasurement

Poor supervisionPoor supervision

Lack of concentrationLack of concentration

Inadequate trainingInadequate training

HumanHuman

DeficienciesDeficienciesin product designin product design

Ineffective qualityIneffective qualitymanagementmanagement

Poor process designPoor process design

ProcessProcess

InaccurateInaccuratetemperature temperature controlcontrol

Dust and DirtDust and Dirt

EnvironmentEnvironment

Defective from vendorDefective from vendor

Not to specificationsNot to specifications

Material-Material-handling problemshandling problems

MaterialsMaterials

Also known as Ishikawa Diagram or Fish BoneAlso known as Ishikawa Diagram or Fish Bone

Hot House Quality

Lots of Hoopla and no follow through

ISO 9000:2000

• Customer focus• Leadership• Involvement of the people• Process approach• Systems approach to management• Continual process improvement – GAO• Factual approach to decision making• Mutually beneficial supplier relationships

Implications Of ISO 9000 Truly international in scopeTruly international in scope Certification required by many foreign firmsCertification required by many foreign firms U.S. firms export more than U.S. firms export more than

$150 billion annually to Europe$150 billion annually to Europe Adopted by U.S. Navy, Adopted by U.S. Navy,

DuPont, 3M, AT&T, and othersDuPont, 3M, AT&T, and others

ISO Accreditation

European registrationEuropean registration

3rd party registrar assesses quality program3rd party registrar assesses quality program European Conformity (CE) mark authorizedEuropean Conformity (CE) mark authorized

United States 3rd party registrarsUnited States 3rd party registrars

American National Standards Institute (ANSI)American National Standards Institute (ANSI) American Society for Quality (ASQ)American Society for Quality (ASQ) Registrar Accreditation Board (RAB)Registrar Accreditation Board (RAB)

Product Development

Chapter 6

IntroductionIntroduction

1. Analyze market to assess need2. Design product3. Design process for making product4. Develop plan to market product5. Develop plan for full-scale production6. Analyze financial feasibility

Product Development is a process which generates concepts, designs, and plans to create services and goods to meet customer needs.

Increasing Importance of

Product Development Increasing Importance of

Product Development 1. Customers demand greater product variety.

2. Customers are causing shorter product life cycles.

3. Improving technology is causing new products to be introduced

4. The impact of increasing product variety and shortening product life cycles is having a multiplicative effect on the need for product development.

5. Today, in order to be competitive, the firm may have to produce many different products with a life cycle of only five years or less. End of Life issues

Product Design

Specifies materialsDetermines dimensions &

tolerancesDefines appearanceSets performance standards

Service DesignSpecifies what the customer is to

experience Physical items Sensual benefits Psychological benefits

An Effective Design Process

Matches product/service characteristics with customer needs

Meets customer requirements in simplest, most cost-effective manner

Reduces time to market - haste vs. speed to market

Minimizes revisions - quality designed into the product

Stages in the Design Process Idea Generation — Product Concept - can you

create your own market? What role does the voice of the customer play in idea generation?

Feasibility Study — Performance Specifications Preliminary Design — Prototype - testing and

redesign Final Design — Final Design Specifications Process Planning — Manufacturing

Specifications - make to order/stock – assembly line?

Idea Generation

Suppliers, distributors, salespersons Trade journals and other published material Warranty claims, customer complaints,

failures Customer surveys, focus groups, interviews Field testing, trial users Research and development

More Idea Generators Perceptual Maps

Visual comparison of customer perceptions

BenchmarkingComparing product/service

against best-in-class Reverse engineering

Dismantling competitor’s product to improve your own product

Perceptual Map of Breakfast Cereals

HIGH HIGH NUTRITIONNUTRITION

LOW LOW NUTRITIONNUTRITION

GOOD GOOD TASTETASTE

BAD BAD TASTETASTE

© Russell and Taylor, Prentice Hall, 2004

Perceptual Map of Breakfast Cereals

HIGH HIGH NUTRITIONNUTRITION

LOW LOW NUTRITIONNUTRITION

GOOD GOOD TASTETASTE

Cocoa PuffsCocoa Puffs

BAD BAD TASTETASTE

Rice Rice KrispiesKrispies

WheatiesWheaties

CheeriosCheerios

Shredded Shredded WheatWheat

© Russell and Taylor, Prentice Hall, 2004

Perceptual Map of Breakfast Cereals

HIGH HIGH NUTRITIONNUTRITION

LOW LOW NUTRITIONNUTRITION

GOOD GOOD TASTETASTE

Cocoa PuffsCocoa Puffs

BAD BAD TASTETASTE

Rice Rice KrispiesKrispies

WheatiesWheaties

CheeriosCheerios

Shredded Shredded WheatWheat

How do I get here?

Feasibility Study

Market Analysis - Market Segmentation

Economic Analysis Technical / Strategic Analysis Performance Specifications Risk Analysis

Economic Analysis

• Can we produce it at a volume to make a profit?

• If not, why produce?• How many do we have to make to break

even?

Break Even AnalysisTotal Costs = Total Revenues

(Volume x Price) = (Fixed Costs + Variable Costs)

Profit = (Total Revenue – Total Costs)

Fixed Costs

Sales Price – Variable CostsB/E Point =

Example

Fixed Costs = $2000

Variable Costs = $5/item

Sales Price = $10/item

Fixed Costs ($2000)

Sales Price ($10) – Variable Costs ($5)

B/E PT =

B/E point = ($2000/$5) 400 items

Risk Analysis

1. Identify the Hazards2.Assess hazards to determine risks.3.Develop controls and make risk decisions.4.Implement controls.5.Supervise and evaluate.

Preliminary Design

Create form & functional designBuild prototypeTest prototypeRevise prototypeRetest

How will it look?

Functional Design(How the Product Performs)

Reliability Probability product performs intended

function for specified length of time

Maintainability Ease and/or cost or maintaining/repairing

product

System Availability

System Availability, SA = MTBFMTBFMTBF + MTTRMTBF + MTTR

PROVIDERPROVIDER MTBF (HR)MTBF (HR) MTTR (HR)MTTR (HR)

AA 6060 4.04.0BB 3636 2.02.0CC 2424 1.01.0

System AvailabilityPROVIDER MTBF (HR) MTTR (HR)

A 60 4.0B 36 2.0C 24 1.0

SASAAA = 60 / (60 + 4) = .9375 or 93.75% = 60 / (60 + 4) = .9375 or 93.75%

SASABB = 36 / (36 + 2) = .9473 or 94.73% = 36 / (36 + 2) = .9473 or 94.73%

SASACC = 24 / (24 + 1) = .96 or 96% = 24 / (24 + 1) = .96 or 96%

Production Design

Part of the preliminary design phase

Simplification Standardization Modularity

Final Design & Process Plans

Produce detailed drawings & specificationsCreate workable instructions for

manufactureSelect tooling & equipmentPrepare job descriptionsDetermine operation & assembly orderProgram automated machines

Improving the Design Process Design teams Concurrent design Design for manufacture & assembly Design to prevent failures and ensure value Design for environment Measure design quality Utilize quality function deployment Design for robustness Engage in collaborative design

Design Teams

Marketing, manufacturing, engineeringSuppliers, dealers, customersLawyers, accountants, insurance

companies

Preferred solution = cross functional teams

Concurrent Design

Improves quality of early design decisionsDecentralized - suppliers complete

detailed design Incorporates production processScheduling and management can be

complex as tasks are done in parallel include the customer in the process!!

Design for Manufacture and Assembly

Design a product for easy& economical production

Incorporate production design early in the design phase

Improves quality and reduces costs Shortens time to design and manufacturealso known as Design for Six Sigma

Design for Six Sigma• Define – the goals of the design activity• Measure – customer input to determine what is

critical to quality from the customers’ perspective – what are customer delighters? What aspects are critical to quality?

• Analyze – innovative concepts for products and services to create value for the customer

• Design – new processes, products, and services to deliver customer value

• Verify – new systems perform as expected

DFM Guidelines

1. Minimize the number of parts, tools, fasteners, and assemblies

2. Use standard parts and repeatable processes

3. Modular design4. Design for ease of assembly, minimal

handling5. Allow for efficient testing and parts

replacement

Design for Assembly (DFA)Procedure for reducing number of partsEvaluate methods for assemblyDetermine assembly sequence

Design Review

Failure Mode and Effects Analysis (FMEA)A systematic approach for analyzing causes

& effects of failuresPrioritizes failuresAttempts to eliminate causes

Value Analysis (Value Engineering)

Ratio of value / cost Assessment of value :

1. Can we do without it?2. Does it do more than is required?3. Does it cost more than it is worth?4. Can something else do a better job5. Can it be made by less costly method, tools,

material?6. Can it be made cheaper, better or faster by

someone else? Should we contract it out?

Is there value added?

Design for EnvironmentDesign from recycled materialUse materials which can be recycledDesign for ease of repairMinimize packagingMinimize material & energy

used during manufacture, consumption & disposal

green laws in Europe -

Design for Robustness

Product can fail due to poor design quality Products subjected to many conditions Robust design studies

Controllable factors - under designer’s control

Uncontrollable factors - from user or environment

Designs products for consistent performance

A Well-Designed Service System is

Consistent with firm’s strategic focusCustomer friendlyEasy to sustainEffectively linked between front & back

officeCost effectiveVisible to customer

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CHAPTER 8 CHAPTER 8

Process Selection affects the outcome – in production or sports:

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What is Process Selection?

• Series of decisions that includes technical/engineering issues and volume/scale issues

• Technical/engineering: basic methods that produce a good or service

• Scale: how many or how much to produce; how many to serve at a time

• Trade off analysis between capacity and costs

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Why process selection is critical

• Dell – from make/assemble to order in Texas to make/assemble to stock off shore

• Does this work?• Break even analysis may depend on process

costs• Which process gives the lowest costs –

assumption?

The Point of IndifferenceComparing Two Processes

• What is it? • Who cares? • How do you calculate it?

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Comparing Two Processes

• Process A• Fixed = $2000• Variable = $5/item

• Process B• Fixed = $11000• Variable = $2/item

FixedA + (VarA)x = FixedB + (VarB)x

2000 + 5x = 11,000 + 2x

3x = 9000

X = 3000

So what?

Comparing the Processes

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Trade off analysis

• Customer demanded quantity drives the trade off analysis and decision process

• Example:→ retail stocks at Christmas 2008 and 2009 season - goal save money by stocking less→ At what point do you lose sales due to lower stockage levels?

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Process Design/Selection/Capacity

• Have to be simultaneous operations – some texts suggest sequential steps

• Decision process has to be customer based → what should it be? → how many should be produced/how many

are we capable of producing? → how should it be produced?

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Process Strategy - Defines

• Capital intensity• Process flexibility• Vertical integration• Customer involvement

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Goal of Process Design

• Reduce lead time for product to the customer• Is it best to be the first to market and establish

the market?• Or, be the follower and let someone else do

the R&D/design/risk?

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Problems with Managing Large, Unfocused Operations

Problems with Managing Large, Unfocused Operations

• Growing facilities add more levels of management and make coordination and control difficult.

• New products are added to the facility as customers demand greater product variety.

• Hidden overhead costs increase as managers add staff to deal with increased complexity.

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Process Planning

Make-or-buy decisions Process selection Specific equipment selection Process plans Process analysis

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Make-or-Buy Decisions

1. Cost2. Capacity3. Quality4. Speed5. Reliability6. Expertise

What about

Proprietary Information?

Barrier to Make-or-Buy?

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Rationale for Off Shore to Low Country Source

94.00%

37.00%

27.00%23.00% 22.00% 21.00% 20.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

$ Savings procuredgoods

Penetration to newmarket

inventory redux inc customer service access newtechnology

reduced cycle time log cost reductions

Source: Aberdeen Research, “Low-Cost Country Sourcing Success Strategies: Maximizing and Sustaining the Next Big Supply Savings Opportunity,” Jun 2005

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Process Plans Blueprints Bill of material Flat or multiple layers -

part or assembly Assembly chart /

product structure diagram Operations process chart - list of

operations involved in assembly Routing sheet - sequence of events

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Process Analysis

The systematic examination of all aspects The systematic examination of all aspects of a process to improve its operationof a process to improve its operation FasterFaster More efficientMore efficient Less costlyLess costly More responsiveMore responsive

Basic toolsBasic tools Process flowchartProcess flowchart Process diagramsProcess diagrams Process mapsProcess maps

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Operations Process Chart

Part name Crevice Tool

Part No. 52074

Usage Hand-Vac

Assembly No. 520

Oper. No. Description Dept. Machine/Tools Time

10 Pour in plastic bits 041 Injection molding 2 min

20 Insert mold 041 #076 2 min

30 Check settings 041 113, 67, 650 20 min& start machine

40 Collect parts & lay flat 051 Plastics finishing 10 min

50 Remove & clean mold 042 Parts washer 15 min

60 Break off rough edges 051 Plastics finishing 10 min

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Process Analysis – What processes feed other processes?

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Process Flowchart

Ste

p

Op

erat

ion

Tra

nsp

ort

Insp

ect

Del

ay

Sto

rag

e

Dis

tan

ce(f

eet)

Tim

e(m

in)Description

ofprocess

1

2

3

4

5

6

7

8

9

10

11

Unload apples from truck

Move to inspection station

Weigh, inspect, sort

Move to storage

Wait until needed

Move to peeler

Apples peeled and cored

Soak in water until needed

Place in conveyor

Move to mixing area

Weigh, inspect, sort

TotalPage 1 0f 3 480

30

5

20

15

360

30

20

190 ft

20 ft

20 ft

50 ft

100 ft

Date: 9-30-02Analyst: TLR

Location: Graves MountainProcess: Apple Sauce

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Principles for Redesigning Processes

• Walk the Process!• Remove waste, simplify, consolidate• Link processes to create value• Let the swiftest and most capable

execute• Capture information digitally, data mine,

and use information to improve operations

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Principles for Redesigning Processes

• Provide visibility through information about process status

• Fit the process with sensors and feedback loops

• Add analytic capabilities• Connect, collect and create knowledge

around the process• Personalize the process

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Techniques for Generating Innovative Ideas

Vary entry point to a problem Draw analogies Change your perspective Use attribute brainstorming

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RFID

• Active Tags• Always on • Battery powered• Can be read from up to

300 ft• US Army • Savi Tags

• Passive Tags• Small• Must be activated• May be turned off• England• California• Rolex

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93

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Robotics Programmable manipulators Follow specified path Better than humans with respect to

Hostile environments Long hoursConsistency

Adoption has been slowed by ineffective integration and adaptation of systems

Welding at Harley Davidson Plant

Questions?