Managing Quality 12 July 2001

Introduction What: quality in operations management Where: Quality affects all goods and services Why: Customers demand quality

What is Quality High quality products Low quality products What does quality mean to you?

American Society for Quality “The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs”

User-Based Definition “Quality lies in the eye of the beholder” Higher quality = better performance Higher quality = nicer features

Manufacturing-Based Definition Quality = conforming to standards “Making it right the first time”

Product-Based Definition Quality = a measurable variable

Our Definition Quality: The ability of a product or service to meet customer needs

Implications of Quality Company Reputation Product Liability Global Implications

National Quality Awards: US: Malcolm Baldridge National Quality Award Japan: Deming Prize Canada: National Quality Institute Canada Awards for Excellence

Canada Award Winners 2000 Aeronautical and Technical Services British Columbia Transplant Society Delta Hotels Honeywell Water Controls Business Unit

Quality and Strategy Differentiation Cost Leader Response

Quality and Profitability Improved QualityIncreased Profits Sales Gains Improved Response Higher Prices Improved Reputation Reduced Costs Increased Productivity Lower Rework, Scrap Lower Warranty Costs

Costs of Quality Prevention Costs Appraisal Costs Internal Failure External Costs

International Standards ISO 9000 Establish quality management procedures Documented processes Work Instructions Record Keeping Does NOT tell you how to make a product!

Total Quality Management TQM – Total Quality Management Quality emphasis throughout an organization From suppliers through to customers

W. Edwards Deming

Deming’s 14 Points Create consistency of purpose Lead to promote change Build quality into the product, stop depending on inspections to catch problems Build long-term relationships based on performance instead of awarding business on the basis of price Continuously improve product, quality and service Start training

Deming’s 14 Points Emphasize leadership Drive out fear Break down barriers between departments Stop haranguing workers Support, help and improve Remove barriers to pride in work Institute a vigorous program of education and self-improvement Put everybody in the company to work on transformation

TQM Concepts Continuous Improvement Employee Empowerment Benchmarking Just-In-Time Taguchi Knowledge of Tools

Continuous Improvement Plan Do Check Act

Continuous Improvement Kaizen Zero Defects Six Sigma

Employee Empowerment Involve employees in every step of production High involvement by those who understand the shortcomings of the system Quality circle

Benchmarking Pick a standard or target to work towards Compare your performance Best practices in the industry

Just-In-Time Produce or deliver goods just when they are needed Low inventory on hand Keeps evidence of errors fresh

Taguchi Concepts Quality robustness Quality Loss Function Target-oriented Quality

TQM Tools Check Sheet Scatter Diagram Cause and effect diagram (fishbone) Pareto Chart – Rule Flow Charts Histogram Statistical Process Control

Inspection Attribute Inspection Variable Inspection

Inspection At supplier’s plant Upon receipt of goods from supplier Before costly processes During production When production complete Before delivery At point of customer contact

Source Inspection Employees self-check their work Poka-yoke

Statistical Process Control Apply statistical techniques to ensure processes meet standards Natural variations Assignable variations Goal: signal when assignable causes of a variation are present

Statistics Mean Standard deviation Natural variation Assignable variation

Control Charts X Bar Chart R Chart

In Control vs Out Of Control In control and producing within control limits In control, but not producing within control limits Out of control

Central Limit Theorem Mean Standard Deviation 95.5% 99.73% Control Limits

Using Control Charts Mean changing – Range changing