Chapter 6: Managing Quality

Two Ways Quality Improves Profitability:

1. Sales Gains via - IFI TQM

a. Improved response
-Encompasses entire organization, from
b. Flexible pricing
supplier to customer.
c. Improved reputation
2. Reduced Cost via - LIL - Stresses a commitment by management to
a. Increase productivity have a continuing, companywide drive toward
b. Lower rework and Scrap costs excellence in all aspects of products and services
c. Lower warranty costs that are important to the customer

Quality Seven Concepts of TQM

-The totality of features and characteristics of a product 1) Continuous improvement
or service that bears on its ability to satisfy stated or - Represents continual improvement of all
implied needs. processes. Involves all operations and work
centers including suppliers and customers
Different Views
People, Equipment, Materials,
 User-based – better performance, more Procedures
features 2) Six Sigma
 Manufacturing-based- conformance to -Two meanings
standards, making it right the first time o Statistical definition of a process that is
 Product-based – specific and measurable 99.9997% capable, 3.4 defects per
attributes of the product. million opportunities (DPMO)
o A program designed to reduce A
program designed to reduce defects,
lower costs, and improve customer
satisfaction.

Takumi

- A Japanese character that symbolizes:

o a broader dimension than quality
o a deeper process than education
o more perfect method than persistence

Costs of Quality

 Prevention costs - reducing the potential for

defects
 Appraisal costs – evaluating products, parts,
and services
 Internal failure - producing defective parts or
service before delivery
 External costs - defects discovered after
delivery
 Chapter 6: Managing Quality

 Involves examining items to see if Involves

3. Employee empowerment examining items to see if an item is good or
defective
4. Benchmarking  Detect a defective product
o Does not correct deficiencies in process
Selecting best practices to use as a Standard for
or product
performance
o It is expensive
o Determine what to Form a benchmark team  Issues
o Take action to match or exceed the Identify o When to inspect
benchmarking partners o Where in process to inspect
o Collect and analyze benchmarking

5. Just-in-time (JIT) When and Where to Inspect

1. At the supplier’s plant while the supplier is producing

Relationship to quality:
2. At your facility upon receipt of goods from the
 JIT cuts the cost of quality JIT cuts the cost of
supplier
quality
3. Before costly or irreversible processes
 JIT improves quality
4. During the step-by-step production process
 Better quality means less inventory and better,
5. When production or service is complete
easier-to- employ JIT system
6. Before delivery to your customer
6. Taguchi concepts
7. At the point of customer contact
o Engineering and experimental
design methods to improve product Inspection
and process design.
 Identify key component and  Many problems Many problems
and process variables affecting  Worker fatigue Worker fatigue
product variation  Measurement error
 Process variability
o Taguchi Concepts  Cannot inspect quality into a product
 Robust design, empowered and sound
Quality robustness
processes employees, are better solutions
Quality loss function
Target-oriented quality
TQM In Services
-Service quality is more difficult to Service
7. Quality Robustness
quality is more difficult to measure than the
 Ability to produce products Ability to produce
quality of goods
products uniformly in adverse manufacturing
and environmental conditions
-Service quality perceptions depend on
o Remove the effects of adverse
o Intangible differences between
conditions
products
o Small variations in materials and
process do not destroy product quality.
o Intangible expectations customers have
of those products
Quality Loss Function
Service Quality
o  Shows that costs increase as the product
moves away from what the customer wants The Operations Manager must recognize:
o Costs include customer dissatisfaction, warranty
1. The tangible component of services is important
and service, internal scrap and repair, and costs
to society. 2. The service process is important
o Traditional conformance specifications are too
3. The service is judged against the customer’s
simplistic.
expectations

Inspection
 Chapter 6: Managing Quality

4. Exceptions will occur