Managing Quality

10
PowerPoint presentation to accompany
Heizer and Render
Operations Management, Eleventh Edition
Principles of Operations Management, Ninth Edition

PowerPoint slides by Jeff Heyl

© 2014
© 2014
Pearson
Pearson
Education,
Education,
Inc.Inc. 6-1
 Quality and Strategy

► Managing quality supports

differentiation, low cost, and
response strategies
► Quality helps firms increase sales
and reduce costs
► Building a quality organization is a
demanding task

© 2014 Pearson Education, Inc. 6-2

 Two Ways Quality
Improves Profitability
Figure 6.1

Sales Gains via

• Improved response
• Flexible pricing
• Improved reputation

Improved Increased
Quality Profits
Reduced Costs via
• Increased productivity
• Lower rework and scrap costs
• Lower warranty costs

© 2014 Pearson Education, Inc. 6-3

 The Flow of Activities
Organizational Practices
Leadership, Mission statement, Effective operating
procedures, Staff support, Training
Yields: What is important and what is to be
accomplished
Quality Principles
Customer focus, Continuous improvement, Benchmarking,
Just-in-time, Tools of TQM
Yields: How to do what is important and to be
accomplished
Employee Fulfillment
Empowerment, Organizational commitment
Yields: Employee attitudes that can accomplish
what is important
Customer Satisfaction
Winning orders, Repeat customers
Figure 6.2 Yields: An effective organization with
a competitive advantage
© 2014 Pearson Education, Inc. 6-4
 Defining Quality

An operations manager’s objective

is to build a total quality
management system that identifies
and satisfies customer needs

© 2014 Pearson Education, Inc. 6-5

 Different Views
► User-based: better performance,
more features
► Manufacturing-based: conformance
to standards, making it right the first
time
► Product-based: specific and
measurable attributes of the product

© 2014 Pearson Education, Inc. 6-6

 Implications of Quality
1. Company reputation
► Perception of new products
► Employment practices
► Supplier relations
2. Product liability
► Reduce risk
3. Global implications
► Improved ability to compete
© 2014 Pearson Education, Inc. 6-7
 ISO 9000 International Quality
Standards
► International recognition
► Encourages quality management
procedures, detailed documentation, work
instructions, and recordkeeping
► 2009 revision emphasized sustained
success
► Over one million certifications in 178
countries
► Critical for global business
© 2014 Pearson Education, Inc. 6-8
 ISO 9000 International Quality
Standards
► Management principles
► Top management leadership
► Customer satisfaction
► Continual improvement
► Involvement of people
► Process analysis
► Use of data-driven decision making
► A systems approach to management
► Mutually beneficial supplier relationships

© 2014 Pearson Education, Inc. 6-9

 Costs of Quality
► Prevention costs - reducing the
potential for defects
► Appraisal costs - evaluating products,
parts, and services
► Internal failure costs - producing
defective parts or service before
delivery
► External failure costs - defects
discovered after delivery
© 2014 Pearson Education, Inc. 6 - 10
 Costs of Quality

Total Total Cost

Cost
External Failure

Internal Failure

Prevention

Appraisal
Quality Improvement

© 2014 Pearson Education, Inc. 6 - 11

 Ethics and Quality
Management
► Operations managers must deliver
healthy, safe, quality products and
services
► Poor quality risks injuries, lawsuits,
recalls, and regulation
► Ethical conduct must dictate response
to problems
► All stakeholders much be considered

© 2014 Pearson Education, Inc. 6 - 12

 Total Quality Management
► Encompasses entire organization from
supplier to customer
► 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

© 2014 Pearson Education, Inc. 6 - 13

 Deming’s Fourteen Points

TABLE 6.2 Deming’s 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 price
5. Continuously improve product, quality, and service
6. Start training
7. Emphasize leadership

© 2014 Pearson Education, Inc. 6 - 14

 Deming’s Fourteen Points

TABLE 6.2 Deming’s 14 Points for Implementing Quality Improvement

8. Drive out fear
9. Break down barriers 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 everyone in the company to work on the transformation

© 2014 Pearson Education, Inc. 6 - 15

 Seven Concepts of TQM
1. Continuous improvement
2. Six Sigma
3. Employee empowerment
4. Benchmarking
5. Just-in-time (JIT)
6. Taguchi concepts
7. Knowledge of TQM tools

© 2014 Pearson Education, Inc. 6 - 16

 Continuous Improvement

► Never-ending process of continual

improvement
► Covers people, equipment, materials,
procedures
► Every operation can be improved

© 2014 Pearson Education, Inc. 6 - 17

 Shewhart’s PDCA Model
Figure 6.3

4. Act 1. Plan
Implement Identify the
the plan, pattern and
document make a plan

3. Check 2. Do
Is the plan Test the
working? plan

© 2014 Pearson Education, Inc. 6 - 18

 Continuous Improvement

► Kaizen describes the ongoing process

of unending improvement
► TQM and zero defects also used to
describe continuous improvement

© 2014 Pearson Education, Inc. 6 - 19

 Six Sigma
► Two meanings
► Statistical definition of a process that is
99.9997% capable, 3.4 defects per
million opportunities (DPMO)
► A program designed to reduce defects,
lower costs, save time, and improve
customer satisfaction
► A comprehensive system for achieving
and sustaining business success

© 2014 Pearson Education, Inc. 6 - 20

 Six Sigma Program
► Originally developed by Motorola,
adopted and enhanced by Honeywell
and GE
► Highly structured approach to process
improvement
► A strategy
►

►
A discipline – DMAIC
A set of 7 tools 6
© 2014 Pearson Education, Inc. 6 - 21
 Six Sigma
1. Defines the project’s purpose, scope, and outputs,
identifies the required process information keeping
in mind the customer’s definition of quality
2. Measures the process and collects data
3. Analyzes the data ensuring
repeatability and reproducibility DMAIC Approach
4. Improves by modifying or
redesigning existing
processes and procedures
5. Controls the new process
to make sure performance
levels are maintained

© 2014 Pearson Education, Inc. 6 - 22

 Implementing Six Sigma
► Emphasize defects per million opportunities
as a standard metric
► Provide extensive training
► Focus on corporate sponsor support
(Champions)
► Create qualified process improvement
experts (Black Belts, Green Belts, etc.)
► This cannot
Set stretch be accomplished without a
objectives
major commitment from top level
management

© 2014 Pearson Education, Inc. 6 - 23

 Employee Empowerment
► Getting employees involved in product and
process improvements
► 85% of quality problems are due
to process and material
► Techniques
1) Build communication networks
that include employees
2) Develop open, supportive supervisors
3) Move responsibility to employees
4) Build a high-morale organization
5) Create formal team structures
© 2014 Pearson Education, Inc. 6 - 24
 Quality Circles
► Group of employees who meet
regularly to solve problems
► Trained in planning, problem
solving, and statistical methods
► Often led by a facilitator
► Very effective when done properly

© 2014 Pearson Education, Inc. 6 - 25

 Benchmarking
Selecting best practices to use as a
standard for performance
1. Determine what to benchmark
2. Form a benchmark team
3. Identify benchmarking partners
4. Collect and analyze benchmarking
information
5. Take action to match or exceed the
benchmark

© 2014 Pearson Education, Inc. 6 - 26

 Best Practices for Resolving
Customer Complaints
Table 6.3
BEST PRACTICE JUSTIFICATION
Make it easy for clients to complain It is free market research
Respond quickly to complaints It adds customers and loyalty
Resolve complaints on first contact It reduces cost
Use computers to manage complaints Discover trends, share them, and align
your services
Recruit the best for customer service It should be part of formal training and
jobs career advancement

© 2014 Pearson Education, Inc. 6 - 27

 Internal Benchmarking
▶ When the organization is large enough
▶ Data more accessible
▶ Can and should be established in a
variety of areas

© 2014 Pearson Education, Inc. 6 - 28

 Just-in-Time (JIT)
Relationship to quality:

► JIT cuts the cost of quality

► JIT improves quality
► Better quality means less
inventory and better, easier-to-
employ JIT system

© 2014 Pearson Education, Inc. 6 - 29

 Taguchi Concepts
► Engineering and experimental design
methods to improve product and
process design
► Identify key component and process
variables affecting product variation
► Taguchi Concepts
► Quality robustness
► Quality loss function
► Target-oriented quality

© 2014 Pearson Education, Inc. 6 - 30

 TQM Tools
► Tools for Generating Ideas
► Check Sheet
► Scatter Diagram
► Cause-and-Effect Diagram
► Tools to Organize the Data
► Pareto Chart
► Flowchart (Process Diagram)

© 2014 Pearson Education, Inc. 6 - 31

 TQM Tools
► Tools for Identifying Problems
► Histogram
► Statistical Process Control Chart

© 2014 Pearson Education, Inc. 6 - 32

 Statistical Process Control
(SPC)
► Uses statistics and control charts to tell
when to take corrective action
► Drives process improvement
► Four key steps
► Measure the process
► When a change is indicated, find the
assignable cause
► Eliminate or incorporate the cause
► Restart the revised process
© 2014 Pearson Education, Inc. 6 - 33
 When and Where to Inspect
1. At the supplier’s plant while the supplier is
producing
2. At your facility upon receipt of goods from your
supplier
3. Before costly or irreversible processes
4. During the 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

© 2014 Pearson Education, Inc. 6 - 34

 Inspection
► Many problems
► Worker fatigue
► Measurement error
► Process variability
► Cannot inspect quality into a product
► Robust design, empowered
employees, and sound processes
are better solutions

© 2014 Pearson Education, Inc. 6 - 35

 TQM In Services
► Service quality is more difficult to
measure than the quality of goods
► Service quality perceptions depend on
1) Intangible differences between
products
2) Intangible expectations customers
have of those products

© 2014 Pearson Education, Inc. 6 - 36

 Service Quality
The Operations Manager must
recognize:
► The tangible component of services
is important
► The service process is important
► The service is judged against the
customer’s expectations
► Exceptions will occur

© 2014 Pearson Education, Inc. 6 - 37

 Determinants of Service
Quality
Table 6.5
Reliability involves consistency of performance and dependability
Responsiveness concerns the willingness or readiness of employees to provide service
Competence means possession of the required skills and knowledge to perform the
service
Access involves approachability and ease of contact
Courtesy involves politeness, respect, consideration, and friendliness
Communication means keeping customers informed and listening to them
Credibility involves trustworthiness, believability, and honesty
Security is the freedom from danger, risk, or doubt
Understanding/knowing the customer involves making the effort to understand the
customer’s needs
Tangibles include the physical evidence of the service

© 2014 Pearson Education, Inc. 6 - 38