OPERATIONS MANAGEMENT Goods, Services and Value Chains MOHD FARHAN ISMAIL TEEBAN THATCHANAMURTHI ADAMU ABDULLAHI IDRISU ROSHASMAWI BIN ABDUL WAHAB MOHAMAD RIFQI BIN MOHD RAZALI Quality Management CHAPTER 15

Quality management refers to systematic policies, methods, and procedures used to ensure that goods and services are produced with appropriate levels of quality to meet the needs of customers. Organizations today integrate quality principles into their management systems, using tools such as Total Quality Management (TQM), Six Sigma, and Lean Operating Systems. QUALITY MANAGEMENT

TQM 6 SIXMA LEAN

Understanding Quality Quality can be a confusing concept, partly because people view quality in relation to differing criteria based on their individual roles in the value chain such as:  perfection,  doing it right the first time, and/or  consistency. Fitness for use is the ability of a good or service to meet customer needs.

Six Sigma Six Sigma is a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and results in a clear financial return for the organization. Used by companies including Motorola, Allied Signal, Texas Instruments, and General Electric.

Six Sigma (cont..) Defects are any mistakes or errors that are passed on to the customer (many people also use the tern nonconformance). Defects per Unit (DPU)=Number of Defects Discovered Number of Units Processed

Six Sigma The Six Sigma concept characterizes quality performance by defects per million opportunities (dpmo), computed as DPMU  1,000,000/opportunities for error, (or, as is often used in services, errors per million opportunities – epmo).

DEFINEMEASUREANALYSEIMPROVECONTROLDMAIC

Six Sigma’s DMAIC Process Define: identify customer and priorities, identify and define a suitable project, identify CTQs (critical to quality characteristics). Measure: determine how to measure the process, identify key internal processes that influence CTQs. Analyze: determine likely causes of defects and understand why defects are generated by identifying key variables that cause process variation.

Six Sigma’s DMAIC Process Improve: identify means to remove defects, confirm key variables, modify the process to stay within acceptable range. Control: determine how to maintain improvements, put tools in place to ensure that key variables remain within acceptance ranges under the modified process.

The “Seven QC Tools” 1. FLOWCHARTS 2. RUN CHARTS & CONTROL CHARTS 3. CHECKSHEETS 4. HISTOGRAMS 5. PARETO ANALYSIS 6. CAUSE-AND-EFFECT DIAGRAMS 7. SCATTER DIAGRAMS

Chapter 15 Seven Tools of Quality Management 1.Flowcharts: process mapping to identify the sequence of activities or flow of materials/information in a process. 2.Run Charts and Control Charts: line graph with data plotted over time; control charts include control limits. 3.Checksheets: simple tools for data collection, ensure completeness. 4.Histograms: graphically represents frequency of values within a specified group. 5.Pareto Analysis: separates vital few from the trivial many causes; provides direction for selecting project improvement. 6.Cause-and-Effect Diagrams: represents chain of relationships; often called a fishbone diagram. 7.Scatter Diagrams: graphical component of regression analysis.

Exhibit 15.8 Use of Pareto Diagrams for Progressive Analysis Source: Small Business Guidebook to Quality Management, Office of the Secretary of Defense, Quality Management Office, Washington, DC (1988).

Exhibit 15.9 Cause-and-Effect (Fishbone) Diagram for Hospital Emergency Admission

Exhibit Application of the Seven QC Tools in Six Sigma