Chapter 6 Quality Management

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 (ASQ) An operations managers objective is to build a total quality management system that identifies and satisfies customer needs.

Categories of Quality Definitions: 1. User based. Higher quality means better performance, nicer features, and other improvements. 2. Manufacturing based Quality means conforming to standards and making it right the first time. 3. Product based Quality is viewed as a precise and measureable variable, e.g., really good ice cream has high butter fat levels.

The characteristics that connote quality must first be identified through research ( a user-based approach to quality). These characteristics are then translated into specific product attributes (a product based approach to quality). Then, the manufacturing process is organized to ensure that products are made precisely to specifications (a manufacturing-based approach to quality).

Total Quality Management (TQM) A successful quality strategy begins with an organization culture that fosters quality, followed by an understanding of the principles of quality, and then engaging employees in the necessary activities to implement quality. When these things are done well, the organization typically satisfies its customers and obtains a competitive advantage.

Implications of Quality 1. Company reputation 2. Product liability 3. Global implications Malcolm Baldrige National Quality Award US Deming Prize -- Japan

Cost of Quality (COQ)

1. Prevention costs. Costs associated with reducing the potential for defective parts or services (e.g., training, quality improvement programs). 2. Appraisal costs. Costs related to evaluating products, processes, parts and services (e.g., testing, labs, inspectors). 3. Internal failure. Costs that result from production of defective parts or services before delivery to customers (e.g., rework, scrap, downtime). 4. External costs: Costs that occur after delivery of defective parts or services (e.g., rework, returned goods, liabilities, lost goodwill, costs to society).

International Quality Standards ISO 9000 A set of quality standards developed by the international organization for standardization.

ISO 14000 A series of environmental management standards established by the international organization for standardization (ISO). Core elements of ISO 14000: 1. Environmental management 2. Auditing 3. Performance evaluation 4. Labeling 5. Life cycle assessment

Advantages of the ISO 14000: Positive public image and reduced exposure to liability. Good systematic approach to pollution prevention through the minimization of ecological impact of products and activities. Compliance with regulatory requirement and opportunities for competitive advantage. Reduction in need for multiple audits.

Demings 14 points for implementing Quality Improvement:

1. Create consistency of purpose 2. Lead to promote change 3. Build quality into the product; stop depending on inspections to catch problems 4. Build long-term relationships based on performance instead of awarding business on the basis of price. 5. Continuously improve product, quality and service 6. Start training

Demings 14 points for implementing Quality Improvement:

7. Emphasize leadership 8. Drive out fear 9. Break down business between departments 10. Stop haranguing workers 11. Support, help and improve 12. Remove barriers to pride in work 13. Institute a vigorous program of education and self-improvement 14. Put everybody in the company to work on the transformation

Total Quality Management Management of an entire organization so that it excels in all aspects of products and services that are important to the customers. - quality emphasis that encompasses the entire organization, from suppliers to customers. -stresses 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.

7 concepts for an effective TQM program: 1. 2. 3. 4. 5. 6. 7. Continuous improvement Six sigma Employee empowerment Benchmarking Just-In-Time (JIT) Taguchi concepts Knowledge of TQM tools

1. Continuous Improvement TQM requires a never-ending process of continuous improvement that covers people, equipment, suppliers, materials, and procedures. The basis of the philosophy is that every aspect of an operation can be improved. The end good is perfection.

Plan-Do-Check-Act (PDCA) by Walter Showhart

PDCA A continuous improvement model of plan, do, check, act.

2. Six Sigma Popularized by Motorola, Honeywell and G.E.

In statistical sense, it describes a product, process or service with an extremely high capacity (99.9997% accuracy).
3.4 out of 1,000,000 (6) 2,700 out of 1,000,000 (3)

TQM definition of six sigma a program designed to reduce defects to help lower costs, save time, and improve customer satisfaction. Six sigma is a comprehensive system a strategy, a discipline and a set of tools for achieving and sustaining business success. It is a strategy because it focus on total customer satisfaction.

It is a discipline because it follows the formal Six Sigma Improvement Model known as DMAIC

1. 2. 3. 4. 5.

Define Measures Analyzes Improves Controls

7 set of tools of Six Sigma 1. 2. 3. 4. 5. 6. 7. Check Sheets Scatter Diagrams Cause-and-Effect Diagrams Pareto Charts Flowcharts Histograms Statistical Process Control

3. Employee Empowerment Enlarging employee jobs so that the added responsibility and authority is move to the lowest level possible in the organization. It involves employees in every step of the production process.

Techniques for building employee empowerment 1. Building communication networks that include employee 2. Developing open, supportive supervisors 3. Moving responsibility from both managers and staff to production employees 4. Building high-morale organization 5. Creating such formal organization structures as teams and quality circles

Quality Circle a group of employees meeting regularly with a facilitator to solve work-related problems in their work area. The members receive training in group planning, problem solving and statistical quality control. Generally meet once a week. Not rewarded financially, but received recognition. Facilitator, a specially trained member, helps train the members and keeps the meetings running smoothly. Teams with a quality focus have proven to be a costeffective way to increase productivity as well as quality.

4. Benchmarking Selecting a demonstrated standard of performance that represents the very best performance for a process or an activity. Develop a target at which to shoot and then to develop a standard or benchmark against which to compare your performance.

Steps for developing benchmarks 1. 2. 3. 4. Determine what to benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking information 5. Take action to match or exceed the benchmark Internal benchmarking

7 concepts for an effective TQM program: 1. 2. 3. 4. 5. 6. 7. Continuous improvement Six sigma Employee empowerment Benchmarking Just-In-Time (JIT) Taguchi concepts Knowledge of TQM tools

5. Just-In-Time (JIT) The philosophy behind just-in-time (JIT) is one of continuing improvement and enforced problem solving. JIT systems are designed to produce or deliver goods just as they are needed.

JIT is related to quality in three ways:

1. JIT cuts the cost of quality This occurs because scrap, rework, inventory investment and damage costs are directly related to inventory on hand. Because there is less inventory on hand with JIT, cost are lower. In addition, inventory hides bad quality, whereas JIT immediately exposes bad quality. 2. JIT improves quality As JIT shrinks lead time it keeps evidence of errors fresh and limits the number of potential sources of error. JIT creates an early warming system for quality problems, both within the firm and with vendors.

3. Better quality means less inventory and a better, easier-to-employ JIT system. Often the purpose of keeping inventory is to protect against poor production performance resulting from unreliable quality. If consistent quality exist, JIT allows firms to reduce all the costs associated with inventory.

6. Taguchi Concepts
Quality Robust. Products that are consistently built to meet customer needs in spite of adverse conditions in the production process.

Quality Loss Function (QLF) A mathematical function that identifies all costs connected with poor quality and shows how costs increases as product quality moves from what the customer wants

L = loss to society D2 = square of the distance from the target value C = cost of the deviation at the specification limit

Target-oriented quality. A philosophy of continuous improvement to bring a product exactly on target.

7. TQM Tools 1) 2) 3) 4) 5) 6) 7) Check Sheets Scatter Diagrams Cause-and-Effect Diagrams Pareto Charts Flow Charts Histograms Statistical Process Control (SPC)

Check Sheet A fact-finding tool for tallying the number of defects for a list of previously identified problem causes.

Scatter Diagram A graph showing the relationship between two variables in a process; identifies a pattern that may cause a quality problem.

Cause-and-Effect Diagram (Ishikawa diagram or Fish-bone Chart) A graph of causes of a quality problem dic=vided into categories.

Pareto Chart A diagram for tallying the percentage of defects resulting from different causes to identify major quality problems.

Flow Chart A diagram of the steps in a process; helps focus on where in a process a quality problem might exist.

Histogram A diagram showing the frequency of data related to a quality problem.

Statistical Process Control (SPC) A chart with statistical upper and lower limits; if process stays between these limits over time it is in control and a problem does not exist.

The role of inspection Inspection can involve measurement, tasting, touching, weighing or testing of product. Its goal is to detect a bad process immediately. Inspection does not correct deficiencies in the system or defects in the products; nor does it change a product or increase its value. Inspection only finds deficiencies and defects. Moreover, inspections are expensive and do not add value to the product.

Two critical points of inspection

1. When to inspect 2. Where to inspect Inspections can take place at: 1. At your suppliers plant while the supplier is producing. 2. At you facility upon receipt of goods from your supplier. 3. Before costly or irreversible processes. 4. During step-by-step production process. 5. When production or service is complete. 6. Before delivery to your customer 7. At the point of customer contact.

Source Inspection Controlling or monitoring at the point of production or purchase at the source. The best inspection can be thought of as no inspection at all; this inspection is always done at the source it is just doing the job properly with the operator ensuring that it is so. The idea is that each supplier, process, employee treats the next step in the process as the customer, ensuring the perfect product to the next customer.

Poke-yoke. Literally translated foolproof. It has come to mean a device or technique that ensures the production of a good unit every time. Example: Diesel gas pump nozzle will not fit into unleaded gas tank. MacDonalds French fry scoop. The packaged surgical coverings that contain exactly the items needed for a medical procedure. Checklists.

Service Industry Inspection

Determinants of Service Quality

TQM in Services Major aspects of service quality 1. The tangible component of many services is important. How well the service is designed and produced does make a difference. This might be how accurate, clean and complete your checkout bill at the hotel is, how the food at Taco Bell, or how well your car runs after you pick it up at the shop.

2. The process 9 out of 10 determinants of service quality are related to service process. 3. Customers expectations are the standard against which the service is judged.
4. The manager must expect exceptions e.g., computer crash

Reference: Operations Management by Jay Heizer and Barry Render, 10th edition, 2011
Operations Management by Russell and Taylor