9-1 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Chapters 9 Management of Quality

9-2 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Quality Management What does the term quality mean? Quality is the ability of a product or service to consistently meet or exceed customer expectations.

9-3 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Dimensions of Quality Performance - main characteristics of the product/service Aesthetics - appearance, feel, smell, taste Special features - extra characteristics Conformance - how well product/service conforms to customer’s expectations Safety - Risk of injury Reliability - consistency of performance

9-4 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Dimensions of Quality (Cont’d) Durability - useful life of the product/service Perceived Quality - indirect evaluation of quality (e.g. reputation) Service after sale - handling of customer complaints or checking on customer satisfaction

9-5 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Examples of Quality Dimensions Table 9-1

9-6 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Examples of Quality Dimensions (Cont’d) Table 9-1

9-7 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality TOTAL QUALITY INTERFACES QUALITY QUALITY OF PERFORMANCE QUALITY OF DESIGN QUALITY OF CONFORMANCE CONSUMER NEEDS/REQUIREMENTS WORK PROCESS/SYSTEM

9-8 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality The Costs of Poor Quality  Prevention Costs  Appraisal Costs  Internal Failure Costs  External Failure Costs

9-9 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Costs of quality assurance Prevention Costs QC administration and systems planning Quality training Quality planning (QC engineering work) Incoming, in- process, final inspection Special processes planning Quality data analysis Procurement planning Vendor surveys Reliability studies Quality measurement and control equipment Qualification of material Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

9-10 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Costs of quality assurance Appraisal Costs Testing Inspection Quality audits Incoming test and inspection and laboratory acceptance Checking labor Laboratory or other measurement service Setup for test and inspection Test and inspection material Outside endorsement Maintenance and calibration Product engineering review and shipping release Field testing Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

9-11 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Costs of quality assurance Internal Failure Costs Scrap, at full shop cost Rework, at full shop cost Scrap and rework, fault of vendor Material procurement Factory contact engineering QC investigations (of failures) Material review activity Repair and troubleshooting Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

9-12 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Costs of quality assurance External Failure Costs Complaints and loss of customer goodwill Warranty costs Field maintenance and product service Returned material processing and repair Replacement inventories Strained distributor relations Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

9-13 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Costs of Detecting Defects Cost of detection and correction Process Final testing Customer Where defect is detected Figure 6.3

9-14 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Percentage Cost Distribution by Category: Watches External failure 52% Internal failure 29% Appraisal 16% Prevention 3% Fourth-Quarter Indexes

9-15 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Hidden costs of poor Quality

9-16 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Total Quality Management A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.

9-17 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Find out what the customer wants Design a product or service that meets or exceeds customer wants Design processes that facilitates doing the job right the first time Keep track of results Extend these concepts to suppliers The TQM Approach

9-18 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality TQM Wheel Figure 6.1

9-19 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Elements of TQM Continual improvement Competitive benchmarking Employee empowerment Team approach Decisions based on facts Knowledge of tools Supplier quality Champion

9-20 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Continuous Improvement Philosophy that seeks to make never-ending improvements to the process of converting inputs into outputs. Kaizen: Japanese word for continuous improvement.

9-21 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Benchmarking Benchmarking is the process of measuring an organization’s performance against that best in the same or another industry. Types of benchmarking –Internal –Competitive –Functional

9-22 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Six Sigma Management Providing strong leadership Defining performance metris Selecting projects likely to succeed Selecting and training appropriate people

9-23 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Six Sigma Technical Improving process performance Reducing variation Utilizing statistical models Designing a structured improvement strategy

9-24 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Six Sigma Team Top management Program champions Master “black belts” “Black belts” “Green belts”

9-25 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Six Sigma Process Define Measure Analyze Improve Control DMAIC

9-26 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Basic Steps in Problem Solving Define the problem and establish an improvement goal Collect data Analyze the problem Generate potential solutions Choose a solution Implement the solution Monitor the solution to see if it accomplishes the goal

9-27 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality A (Act) P (Plan) (Check) C (Do) D Quality Never-ending improvement Continuous Improvement The Deming (PDCA) Cycle

9-28 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Process Improvement : A systematic approach to improving a process

9-29 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality The Process Improvement Cycle Implement the Improved process Select a process Study/document Seek ways to Improve it Design an Improved process Evaluate Document

9-30 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Process Improvement and Tools Process improvement - a systematic approach to improving a process –Process mapping –Analyze the process –Redesign the process Tools –There are a number of tools that can be used for problem solving and process improvement –Tools aid in data collection and interpretation, and provide the basis for decision making

9-31 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Basic Quality Tools Flowcharts Check sheets Histograms Pareto Charts Scatter diagrams Control charts Cause-and-effect diagrams Run charts

9-32 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Pareto Charts Figure 4.10

9-33 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Checker Board Airlines Passenger processing at gate Late cabin cleaners Unavailable cockpit crew Late cabin crew Personnel Aircraft late to gate Mechanical failures Equipment Procedures Waiting for late passengers Weight/balance sheet late Poor announcement of departures Delayed check-in procedure Delayed flight departures Materials Late food service Late fuel Late baggage to aircraft Contractor not provided updated schedule updated schedule Figure 4.11 Weather Air traffic delays Other Source: Adapted from D. Daryl Wyckoff, “New Tools for Achieving Service Quality.” The Cornell Hotel and Restaurant Administration Quarterly, November 1984, pg. 89. © 1984 Cornell H.R.A. Quarterly. Used by permission. All rights reserved.

9-34 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Quality Awards Baldrige Award Deming Prize

9-35 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Malcolm Baldrige National Quality Award 1.0 Leadership 2.0 Strategic Planning 3.0 Customer and Market Focus 4.0 Information and Analysis 5.0 Human Resource Development and Management 6.0 Process Management 7.0 Business Results Table 9-7

9-36 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality The Deming Prize Honoring W. Edwards Deming Japan’s highly coveted award Main focus on statistical quality control

9-37 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality Quality Certification ISO 9000 Set of international standards on quality management and Quality assurance, critical to international Business ISO 9000 series standards, briefly, require firms to document their quality-control systems at every step (incoming raw materials, product design, in- process monitoring and so forth) so that they’ll be able to identify those areas that are causing quality problems and correct them.

9-38 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality The ISO 9000 Series Standards ISO 9000 requires companies to document everything they do that affects the quality of goods and services. –Hierarchical approach to documentation of the Quality Management System

9-39 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Quality ISO A set of international standards for assessing a company’s environmental performance Standards in three major areas –Management systems –Operations –Environmental systems ISO 14000