© 1997 Prentice-Hall, Inc Principles of Operations Management Total Quality Management Chapter 3

© 1997 Prentice-Hall, Inc Learning Objectives n Define quality n State why quality is important n Explain total quality management (TQM) n Explain tools for total quality management n Describe inspection

© 1997 Prentice-Hall, Inc Definitions of Quality n ASQC: Product characteristics & features that affect customer satisfaction n User-Based: What consumer says it is n Mfg.-Based: Degree to which a product conforms to design specification n Product-Based: Level of measurable product characteristic

© 1997 Prentice-Hall, Inc Dimensions of Quality for Goods n Operation n Reliability & durability n Conformance n Serviceability n Appearance n Perceived quality Quality

© 1997 Prentice-Hall, Inc Importance of Quality n Company’s reputation n Product liability n International implications n Costs & market share

© 1997 Prentice-Hall, Inc International Quality Standards n Industrial Standard Z (Japan) l Specification for TQM n ISO 9000 series (Europe/EC) l Common quality standards for products sold in Europe (even if made in U.S.) n ISO series (Europe/EC) l Standards for recycling, labeling etc. n ASQC Q90 series; MILSTD (U.S.)

© 1997 Prentice-Hall, Inc Malcolm Baldrige National Quality Award n Established in 1988 by the U.S. gov’t n Designed to promote TQM practices n Some criteria l Senior executive leadership; strategic planning; mgt. of process quality l Quality results; customer satisfaction n Recent winners l Corning Inc.; GTE; AT&T; Eastman Chem.

© 1997 Prentice-Hall, Inc Traditional Quality Process (Mfg.) Quality is customer driven!

© 1997 Prentice-Hall, Inc Total Quality Management n Quality system involving entire organization from supplier to customer n Objective: Meet or exceed customer needs through company-wide continuous improvement n Early proponents l W. Edwards Deming l J. M. Juran l Philip B. Crosby

© 1997 Prentice-Hall, Inc Total Quality Management Principles n Continuous improvement n Employee empowerment n Benchmarking n Just-in-time (JIT) n Knowledge of TQM tools © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc Continuous Improvement n Represents continual improvement of process & customer satisfaction n Involves all operations & work units n Other names l Kaizen (Japanese) l Zero-defects l Six sigma © T/Maker Co.

© 1997 Prentice-Hall, Inc Employee Empowerment n Getting employees involved in product & process improvements l 85% of quality problems are due to process & material n Techniques l Talk to workers l Support workers l Let workers make decisions l Build teams & quality circles © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc Quality Circles n Group of 6-12 employees from same work area n Meet regularly to solve work-related problems l 4 hours/month n Facilitator trains & helps with meetings © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc BenchmarkingBenchmarking n Selecting best practices to use as a standard for performance n Steps l Determine what to benchmark l Form benchmarking team l Identify benchmarking partners l Collect benchmarking information l Take action to meet or exceed benchmark

© 1997 Prentice-Hall, Inc Benchmarking Thinking Challenge n Accounting n Data processing n Hotel front desk n Marketing What specific & measurable variables would you benchmark in these areas? AloneGroupClass

© 1997 Prentice-Hall, Inc Just-In-Time (JIT) n ‘Pull’ system of production/purchasing l Customer starts production with an order n Involves ‘vendor partnership programs’ to improve quality of purchased items n Reduces all inventory levels l Inventory hides process & material problems n Improves process & product quality

© 1997 Prentice-Hall, Inc n Quality function deployment (QFD) n Pareto charts n Process charts n Cause & effect diagrams n Statistical process control (SPC) TQM Tools

© 1997 Prentice-Hall, Inc Quality Function Deployment (QFD) n Product design process using cross-functional teams l Marketing, engineering, manufacturing n Translates customer preferences into specific product characteristics n Involves creating 4 tabular ‘Matrices’ or ‘Houses’ l Breakdown product design into increasing levels of detail

© 1997 Prentice-Hall, Inc Quality Function Deployment Sequence Product Char. Customer Req. Component Spec. Product Char. Production Process Component Spec. Quality Plan Production Process House of Quality 1 House of Quality 2 House of Quality 3 House of Quality 4

© 1997 Prentice-Hall, Inc House of Quality Example You’ve been assigned temporarily to a QFD team. The goal of the team is to develop a new camera design. Build a House of Quality. © T/Maker Co.

© 1997 Prentice-Hall, Inc House of Quality Example  High relationship  Medium relationship  Cust. Req. Cust. Importance Target Values

© 1997 Prentice-Hall, Inc Pareto Chart n Vertical bar chart showing relative importance of problems or defects l Makes identifying & solving them easier n Based on Pareto Principle l Most effects have relatively few causes l e.g., 80% of quality problems come from 20% of machines, materials, or operators s Focus on ‘vital few’ 20% causes s Called rule

© 1997 Prentice-Hall, Inc Pareto Chart Thinking Challenge You’re a quality analyst for Corning Glass. You’ve collected data on 100 rejected glasses: Nicks80 Cuts11 Scratches3 Porosity3 Misc.3 Prepare a Pareto Chart. AloneGroupClass

© 1997 Prentice-Hall, Inc Pareto Chart Solution Cause # of Defects NicksCutsScratchesMisc.Porosity

© 1997 Prentice-Hall, Inc Process Chart n Shows sequence of events in process n Depicts activity relationships n Has many uses l Identify data collection points l Find problem sources l Identify places for improvement l Identify where travel distances can be reduced

© 1997 Prentice-Hall, Inc Process Chart Example  = Operation;  = Transport;  = Inspect; D = Delay;  = Storage

© 1997 Prentice-Hall, Inc Cause & Effect Diagram n Used to find problem sources/solutions n Other names l Fish-bone diagram, Ishikawa diagram n Steps l Identify problem to correct l Draw main causes for problem as ‘bones’ l Ask ‘What could have caused problems in these areas?’ Repeat for each sub-area.

© 1997 Prentice-Hall, Inc Cause & Effect Diagram Example MethodManpower Material Machinery DrillDrill OverOver TimeTime SteelSteel WoodWood LatheLathe TiredTired Too many defects OldOld SlowSlow Problem Main Cause

© 1997 Prentice-Hall, Inc Statistical Process Control (SPC) n Uses statistics & control charts to tell when to adjust process n Developed by Shewhart in 1920’s n Involves l Creating standards (upper & lower limits) l Measuring sample output (e.g. mean wgt.) l Taking corrective action (if necessary) n Done while product is being produced

© 1997 Prentice-Hall, Inc Statistical Process Control Steps

© 1997 Prentice-Hall, Inc Control Chart Example UCL LCL

© 1997 Prentice-Hall, Inc Thinking Challenge: Compare & Contrast AloneGroupClass

© 1997 Prentice-Hall, Inc InspectionInspection n Involves examining items to see if an item is good or defective n Objective: Detect a defective product l Does not correct deficiencies in process or product n Issues l When to inspect l Where in process to inspect

© 1997 Prentice-Hall, Inc When & Where to Inspect in Mfg. n At supplier’s plant while producing n Upon receipt of goods from supplier n Before costly or irreversible processes n During production process n When production is complete n Before shipment © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc When & Where to Inspect in Services BankTeller stationSpeed, courtesy CheckingAccuracy StoreStockroomsStock rotation Display areasAttractiveness CountersCourtesy, knowledge BusinessWhereVariable

© 1997 Prentice-Hall, Inc TQM in Services n Service quality is more difficult to measure than for goods n Service quality perceptions depend on l Expectations vs. reality l Process & outcome n Types of service quality l Normal: Routine service delivery l Exceptional: How problems are handled

© 1997 Prentice-Hall, Inc Under- standing Tangibles Service Quality Attributes Reliability CommunicationCredibility Security Responsiveness Competence Courtesy Access © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc ConclusionConclusion n Defined quality n Stated why quality is important n Explained total quality management n Explained tools for total quality management (TQM) n Described inspection