1 Management of Quality Operations Management Session 4

2 Objectives By the end of this session, student will be able to: –Assess the importance of quality –Understand the history and the development of quality management –Understand the various definitions of quality –Understand how quality promotes strategic objectives –Understand the principles of TQM –Be able to implement TQM –Understand need to promote continuous improvement

3 Topics History of quality management Zero defects/TQM/Six Sigma JIT House of Quality Taguchi – robustness Taguchi – fish-bone diagram Quality in service industries

4 Ways in Which Quality Can Improve Productivity Market Gains –Improved response –Economies of Scale –Improved reputation Reduced Costs –Increased productivity –Lower rework and scrap costs –Lower warranty costs Increased Profits Improved Quality

5 Traditional Quality Process (Manufacturing) Specifies Need Customer Interprets Need Marketing Designs Product Defines Quality Engineering Produces Product Monitors Quality Operations Who should define quality?

6 The Quality Gurus W Edwards Deming (1950s) – workers must know what quality work is and be given the means to achieve it – use of statistical techniques Joseph Juran (1960s – 1970s) – ‘cost of quality’. Quality = ‘fitness for purpose’. As defects decrease cost increases so zero defects is impossible Philip B Crosby (1980s) – Quality = ‘conformance to requirements’. As quality improves, costs fall. So, “Quality is free!” Kaoru Ishikawa (1960s) - Company wide quality. Quality circles.

7 Deming’s Fourteen Points 1.Create consistency of purpose 2.Lead to promote change 3.Build quality into the products 4.Build long term relationships 5.Continuously improve product, quality, and service 6.Start training 7.Emphasize leadership

8 Deming’s Points – cont. 8.Drive out fear 9.Break down barriers between departments 10.Stop haranguing workers 11.Support, help, improve 12.Remove barriers to pride in work 13.Institute a vigorous program of education and self-improvement 14.Put everybody to work on the transformation

9 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.

10 Flow of Activities Necessary to Achieve TQM Organizational Practices Quality Principles Employee Fulfillment Customer Satisfaction

11 Organizational Practices Leadership Mission statement Effective operating procedure Staff support Training Yields: What is important and what is to be accomplished

12 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

13 Organizational Practices Quality Principles Employee Fulfillment Attitudes (e.g., Commitment) How to Do What to Do Effective Business Customer Satisfaction Achieving Total Quality Management

14 Concepts of TQM Continuous improvement Employee empowerment Benchmarking Just-in-time (JIT) Knowledge of tools

15 Continuous Improvement Represents continual improvement of process & customer satisfaction Involves all operations & work units Other names –Kaizen (Japanese) –Zero-defects –Six Sigma

16 Employee Empowerment © 1995 Corel Corp. 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

17 Group of 6-12 employees from same work area Meet regularly to solve work-related problems –4 hours/month Facilitator trains & helps with meetings Quality Circles

18 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

19 Six Sigma Pioneered by Bill Smith at Motorola in 1986 Aims to reduce defect levels below 3.4 Defects Per (one) Million Opportunities (DPMO) DMAIC - used to improve an existing business process DMADV - used to create new product designs or process designs for more predictable, mature and defect free performance

20 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

21 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

22 Just-In-Time (JIT) Example Scrap Work in process inventory level (hides problems) Unreliable Vendors Capacity Imbalances

23 Just-In-Time (JIT) Example Scrap Reducing inventory reveals problems so they can be solved. Unreliable Vendors Capacity Imbalances

24 Quality Function Deployment (QFD) Determines what will satisfy the customer Translates customer preferences into specific product characteristics Product design process using cross-functional teams eg. marketing/engineering/manufacturing

25 House of Quality House of Quality is a QFD technique Involves creating 4 tabular ‘Matrices’ or ‘Houses’- breaks down product design into increasing levels of detail

26 To Build House of Quality Identify customer wants Identify how the good/service will satisfy customer wants. Relate the customer’s wants to the product’s hows. Identify relationships between the firm’s hows. Develop importance ratings Evaluate competing products

27 House of Quality Sequence Design Characteristics Quality Plan Production Process Specific Components Design Characteristics Specific Components Production Process Customer Requirements House 2 House 1 House 3 House 4

28 Taguchi Techniques Experimental design methods to improve product & process design –Identify key component & process variables affecting product variation Taguchi Concepts –Quality robustness –Quality loss function –Target specifications

29 Ability to produce products uniformly regardless of manufacturing conditions Robustness is more a function of design than control of manufacture Put robustness in House of Quality matrices besides functionality Quality losses result mainly from product failure after sale © T/Maker Co. © 1995 Corel Corp. Quality Robustness

30 Fish-Bone Diagram A tool of TQM

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

32 Too many defects Problem Cause and Effect Diagram Example

33 MethodManpower Material Machinery Too many defects Main Cause Cause and Effect Diagram Example

34 MethodManpower Material Machinery Drill Over Time Steel Wood Lathe Too many defects Sub-Cause Cause and Effect Diagram Example

35 Method Manpower Material Machinery Drill Over Time Steel Wood Lathe Too many defects Tired Old Slow Cause and Effect Diagram Example

36 Service quality perceptions depend on comparison of expectations with reality Perception of service quality derived from process as well as outcome Types of service quality –Normal: Routine service delivery –Exceptional: How problems are handled TQM In Services

37 Determinants of Service Quality Reliability Responsiveness Competence Access Courtesy Communication Credibility Security Understanding/ knowing the customer Tangibles