Operations Management Managing Quality Chapter 6 PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Outline Tools of TQM The Role of Inspection Check sheets Scatter Diagrams Cause-and-Effect Diagram Pareto Charts Process Charts Histogram The Role of Inspection When and where to Inspect Source Inspection PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Service Industry Inspection Inspection of Attributes vs Variables TQM in Services Process Charts Histogram The Role of Inspection Total Quality Management in Services Knowledge of TQM Tools PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Learning Objectives When you complete this chapter, you should be able to : Identify or Define: Quality Malcolm Baldrige National Quality Award Demings, Juran, and Crosby Taguchi Concepts PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Learning Objectives - continued When you complete this chapter, you should be able to : Explain: Why quality is important Total Quality Management (TQM) Pareto charts Process charts Quality robust products Inspection PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

To Make the Quality Focus Work Motorola: Aggressively began a worldwide education program to be sure that employees understood quality and statistical process control Established goals Established extensive employee participation and employee teams One of the most useful points to made from this slide is that the Motorola example illustrates that quality must be a concern of the enterprise - not an individual or department. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Ways in Which Quality Can Improve Productivity Sales Gains Improved response Higher Prices Improved reputation Improved Quality Increased Profits Reduced Costs Increased productivity Lower rework and scrap costs Lower warranty costs This slide looks at the impact of quality on productivity - it also enables you to begin a discussion as to the meaning of quality (or perhaps the differing meanings among different people). To many people, the notion of “high quality” carries with it the assumption of “high price.” This slide provides an initial point to challenge that assumption. On Quiz: An improvement in quality will decease production costs. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Flow of Activities Necessary to Achieve Total Quality Management Organizational Practices Quality Principles Employee Fulfillment This slide simply introduces the four activities. Subsequent slides expand on each. Customer Satisfaction PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Organizational Practices Leadership Mission statement Effective operating procedure Staff support Training Yields: What is important and what is to be accomplished Read Slide…………………. Point out the difference between “leadership” and “management.”………….a leader will rally the employees to share the same vision and mutually work together to achieve the same goals. To manage is to ensure that all the resources are working towards the same goal. The point should also be made, again, about the need for involvement and commitment throughout the organization. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Quality Principles Customer focus Continuous improvement Employee empowerment Benchmarking Just-in-time Tools of TQM Yields: How to do what is important and to be accomplished Read Slide……………………… Discuss the importance of employee involvement. All of the above principles can be esier achieved when there is a high level of employee involvement. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Employment Fulfillment Empowerment Organizational commitment Yields: Employees’ attitudes that they can accomplish what is important and to be accomplished This slide can be used to form the basis for a discussion of empowerment. Read Slide……………………… Discuss empowerment - begin by asking students to define the term. It may be helpful to ask students to identify the benefits and pitfalls to both management and worker. (For example, empowerment requires workers to assume greater responsibility.) PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Customer Satisfaction Winning orders Repeat customers Yields: An effective organization with a competitive advantage The main point that one might make with this slide is that the customer is, ultimately, the most important person in your business. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Definitions of Quality ASC: Product characteristics & features that affect customer satisfaction User-Based: What consumer says it is Manufacturing-Based: Degree to which a product conforms to design specification Product-Based: Level of measurable product characteristic Once you have introduced these definitions of quality, ask students to provide example of products that use them. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Dimensions of Quality for Goods Operation Reliability & durability Conformance Serviceability Appearance Perceived quality Quality It may be most helpful to provide, or ask you students to provide, examples of products for which the notion of quality is based upon one or more of the dimensions listed. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Importance of Quality Costs & market share Company’s reputation Product liability International implications Market Gains Reputation Volume Price Improved Quality Increased Profits This slide simply illustrates the relationships between quality and other elements of the firm. Lower Costs Productivity Rework/Scrap Warranty PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Malcom Baldrige National Quality Award Established in 1988 by the U.S. government Designed to promote TQM practices Some criteria Senior executive leadership; strategic planning; management. of process quality Quality results; customer satisfaction Recent winners Corning Inc.; GTE; AT&T; Eastman Chemical. You might make the point that companies actually do consider this a prestigious award. For further information, visit the web site: http://www.quality.nist.gov PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Baldrige Award Criteria Framework   PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Costs of Quality Prevention costs - reducing the potential for defects Appraisal costs - evaluating products Internal failure - of producing defective parts or service External costs - occur after delivery On quiz………prevention costs. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

EC Environmental Standard ISO 14000 Core Elements: Environmental management Auditing Performance evaluation Labeling Life-cycle assessment PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

International Quality Standards Industrial Standard Z8101-1981 (Japan) Specification for TQM ISO 9000 series (Europe/EC) Common quality standards for products sold in Europe (even if made in U.S.) ISO 14000 series (Europe/EC) Standards for recycling, labeling etc. ASQC Q90 series; MILSTD (U.S.) One of the most important points to be made from this slide is that quality standards are now international. Students might be asked to explain the benefits of international as opposed to national standards. They might also be asked to consider the limitations we would face if there were no such standards. The problems to be encountered in developing international standards also make for good discussion. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Traditional Quality Process (Manufacturing) Customer Marketing Engineering Operations Specifies Interprets Designs Produces Need Need Product Product What problems they would foresee in implementing this process? Defines Plans Quality Quality Quality is customer driven! Monitors Quality PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Encompasses entire organization, from supplier to customer TQM Encompasses entire organization, from supplier to customer Stresses a commitment by management to have a continuing company-wide drive toward excellence in all aspects of products and services that are important to the customer. A point to be made here is that TQM is not a program but a philosophy. All functions within an organization must be involved in quality or TQM Includes manufacturing, logistics, maintenance, accounting, and all levels of employees. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Achieving Total Quality Management Customer Satisfaction Effective Business Attitudes (e.g., Commitment) Employee Fulfillment How to Do Quality Principles Again, a point to be made here is the universality required to achieve TQM. What to Do Organizational Practices PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Deming’s Fourteen Points Create consistency of purpose Lead to promote change Build quality into the products Build long term relationships Continuously improve product, quality, and service Start training Emphasize leadership One point to make here is that this list represents a recent expression of Demings 14 points - the list is still evolving. You notice that many of these fourteen points seem to be simply common sense. Consider jobs you have held. Were these points emphasized or implemented by their employers? If not, why not? Proper approaches to quality are not “programs,” with limited involvement and finite duration, but rather philosophies which must become ingrained throughout the organization. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Deming’s Points - continued Drive out fear Break down barriers between departments Stop haranguing workers Support, help, improve Remove barriers to pride in work Institute a vigorous program of education and self-improvement Put everybody in the company to work on the transformation PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Concepts of TQM Continuous improvement Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of tools This slide simply introduces concepts of TQM. Explain later PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Continuous Improvement Represents continual improvement of process & customer satisfaction Involves all operations & work units Other names Kaizen (Japanese) Zero-defects Six sigma With respect to the notion of continuous improvement. - Why do we need continuous improvement? Why can’t we do it right the first time? - Doesn’t implementation of continuous improvement introduce a certain instability? - Are we never “done”? - Etc. On Quiz: Kaizen is similar to TQM in that both focus on continuous improvement. © 1984-1994 T/Maker Co. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Shewhart’s PDCA Model 4.Act 1.Plan 3.Check 2.Do Implement the plan Identify the improvement and make a plan 3.Check 2.Do Is the plan working Test the plan PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Employee Empowerment Getting employees involved in product & process improvements 85% of quality problems are due to process & material Techniques Support workers Let workers make decisions Build teams & quality circles © 1995 Corel Corp. At this point discuss: - why employee empowerment works - the role of information technology in enabling employee empowerment - the role of information technology in making employee empowerment a requirement PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Benchmarking Selecting best practices to use as a standard for performance Determine what to benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking information Take action to match or exceed the benchmark Ask student to identify firms which they believe could serve as benchmarks. If students are unable to identify any firms - ask them to identify a college or university whose registration system or housing selection system could serve as a benchmark. Most students have enough knowledge of, or friends at,other colleges and universities so as to be able to respond to this question. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Just-in-Time (JIT) Relationship to quality: JIT cuts cost of quality JIT improves quality Better quality means less inventory and better, easier-to-employ JIT system This slide introduces a discussion about JIT. Subsequent slides elaborate. On Quiz: Waste reduction is central to the Just-In-Time philosophy. Waste of inventory or excessive inventory works against the J.I.T. concept and contributes to quality problems. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Just-in-Time (JIT) ‘Pull’ system of production/purchasing Customer starts production with an order Involves ‘vendor partnership programs’ to improve quality of purchased items Reduces all inventory levels Inventory hides process & material problems Improves process & product quality This might be a good time to differentiate between “push”and “pull” systems. Do Beer example Subsequent slides elaborate on the role of JIT and inventory levels in hiding problems. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Just-In-Time (JIT) Example Scrap Work in process inventory level (hides problems) Unreliable Vendors Capacity Imbalances Remember this slide! PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Just-In-Time (JIT) Example Scrap Reducing inventory reveals problems so they can be solved. Unreliable Vendors Capacity Imbalances Note that reducing inventory enables problems to be seen - it does not necessarily fix them. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Tools for TQM Quality Function Deployment Quality loss function House of Quality Quality loss function Pareto charts Process charts Cause-and-effect diagrams Statistical process control Poke-Yoke, (error proofing) This slide is to simply introduce the tools of TQM. Q. F. D. We discussed this one last week. It determines what will satisfy the customer, and translates those customer desires into the target design. Quality Loss Function is a mathematical function that identifies all costs connected with poor quality and shows how these costs increase as product moves from what the customer wants. Pareto’s rule states that 80% of a firm’s problems are a result of 20% of the causes. It’s a graphical method of identifying the few critical items as opposed to many less important ones. As Spock would say on Star Trek, “sacrifice the trivial many to save the vital few, it’s logical. Be careful to watch the wording on the quiz on this ones. Fish-Bone, or Cause & Effect, Ishikawa chart is used to identify the location where quality problems are. It helps identify the source of a problem. Poke-Yoke is a Japanese term for error proofing. It usually means a device or technique that ensures a good unit every time. Such devices should lead to fewer inspection points. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Cause and Effect Diagram Example Too many defects Problem PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Cause and Effect Diagram Example Method Manpower Main Cause Too many defects Material Machinery Main Cause PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Cause and Effect Diagram Example Method Manpower Drill Over Time Too many defects Wood Steel Lathe Material Machinery Sub-Cause PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Cause and Effect Diagram Example Method Manpower Tired Old Slow Drill Over Time Steel Wood Lathe Too many defects Material Machinery PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

Fishbone Chart - Problems with Airline Customer Service This slide illustrates a Cause and Effect Chart for a practical problem. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458