1 MBA 8452 Systems and Operations Management MBA 8452 Systems and Operations Management Quality Management

2 Quality Management Statistical Process Control Inventory Control Just in Time Introduction to Operations Management/ Operations Strategy Project Management Planning for Production Process Analysis and Design Process Control and Improvement Waiting Line Analysis Services Manufacturing Process Analysis Job Design Aggregate Planning Capacity Management Supply Chain Management Layout/ Assembly Line Balancing Scheduling

3 Objective: Quality Management Be able to Define TQM Two Types of Quality What is meant by Customer Driven Definition of Quality? Explain the Quality Awards/Certifications Be able to describe the Quality Awards and Certifications Apply the Quality Problem Solving Tools Be able to identify and use the problem solving tools for quality management

4 What Is Quality? A degree or level of excellence (Oxford American Dictionary) The totality of features and characteristics that satisfies given needs (ANSI and ASQC “official” definition) Fitness for use (Joseph Jurn’s definition)

5 What Is Quality? Design & Conformance Quality Quality of Design the degree to which quality characteristics are purposely designed into the product or service Quality of Conformance the degree to which the product or service design specifications are met

6 What Is Quality? Dimensions of Product Quality Performance (basic operating characteristics) Features (extra items added) Reliability (likelihood that product will perform normally over time) Conformance (meeting pre-specified standards) Durability (useful life span) Serviceability (ease of repair) Aesthetics (sensory characteristics) Perception (perceived quality)

7 What Is Quality? Dimensions of Service Quality Time & Timeliness (waiting time, on time service) Completeness (customer gets all they asked for) Courtesy (treatment by employees) Consistency (same level of service for all) Accessibility (ease of obtaining service) Accuracy (performed right every time) Responsiveness (reactions to unusual situations)

8 Cost of Quality Cost of achieving good quality Prevention (quality planning and training, identify and removing poor quality source) Appraisal (inspection, testing) Cost of poor quality Internal failure costs (scrap, rework, repair) External failure costs (returned products, warranty charges, complaints, liability)

9 Total Quality Management (TQM) Management of the entire organization so that it excels on all dimensions of products and services that are important to the customer

10 Total Quality Management Elements 1. Customer-driven quality 2. Top management leadership 3. Quality as a strategic issue 4. All employees responsible for quality 5. Continuous improvement (CI) 6. Shared problem solving 7. Statistical quality control (SQC) 8. Training & education for all employees

11 Total Quality Management Deming’s 14 Points 1.Create a constancy of purpose toward improvement of product and service with a plan to be competitive, stay in business, and provide jobs. 2.Adopt the new philosophy of preventing poor-quality products instead of acceptable levels of poor quality. 3.Cease dependence on mass inspection to achieve quality, instead using statistical evidence that quality is being built into the product. 4.Select a few suppliers or vendors based on quality commitment rather than competitive prices. 5.Constantly improve the system of production and service, thus increasing productivity and reducing costs. 6.Institute modern methods of training, including statistical techniques and thinking. 7.Instill leadership among supervisors to help workers perform better.

12 Total Quality Management Deming’s 14 Points 8.Driving out fear from the workforce by encouraging employee involvement so that everyone may work effectively for the company. 9.Break down barriers between departments, and promote teamwork. 10.Eliminate slogans and numerical targets that urge workers to achieve higher performance levels without first showing them how to do it. 11.Eliminate numerical quotas that employees attempt to meet at any cost without regard for quality. 12.Promote worker pride by improving supervision and the production process so that workers can perform to their capabilities. 13.Institute vigorous education and training programs in methods of quality improvement throughout the organization, from top management down, so that continuous improvement can occur. 14.Develop a commitment from top management to implement the previous thirteen points.

13 Continuous Improvement: P-D-C-A Cycle (Deming Wheel) Identify problem and develop plan for improvement Implement plan on test basis Assess the plan: Is the plan working? Institutionalize improvement Do Check Act Plan

14 Continuous Improvement: Benchmarking Process of measuring and improving a firm’s performance by learning from the best practices identify processes needing improvement identify the best practices or leaders contact, visit, and study the benchmark organization analyze data take action

15 Continuous Improvement: Seven Quality Control Tools 1. Pareto analysis 2. Process flowcharts 3. Check sheets 4. Histograms 5. Scatter diagrams 6. Control charts 7. Cause & effect diagrams

16 Percent from each cause Causes of poor quality Machine calibrations Defective parts Wrong dimensions Poor Design Operator errors Defective materials Surface abrasions (64) (13) (10) (6) (3) (2) 80% of the problems can often be attributed to 20% of the causes. Pareto Analysis

17 Process Flowcharts Identify the potential fail points

18 Check Sheet COMPONENTS REPLACED BY LAB TIME PERIOD: 2/5/01 - 2/9/01 REPAIR TECHNICIAN: Bob Smith TV SET MODEL 1013 Integrated Circuits |||| Capacitors |||| |||| |||| |||| |||| || Resistors || Transformers |||| Commands CRT |

19 Histogram Number of defects Frequency

20 Scatter Diagram Hours of Training Number of Defects

21 Control Chart Sample number Number of defects

22 Cause & Effect Diagram (Fishbone Diagram) Quality Problem MachinesMeasurementHuman ProcessEnvironmentMaterials Faulty testing equipment Incorrect specifications Improper methods Poor supervision Lack of concentration Inadequate training Out of adjustment Tooling problems Old / worn Defective from vendor Not to specifications Material- handling problems Deficiencies in product design Ineffective quality management Poor process design Inaccurate temperature control Dust and Dirt

23 Quality Awards The Malcolm Baldrige National Quality Award (USA, since 1987) The Deming Prize (Japan, since 1951)

24 Malcolm Baldrige Quality Award: Criteria (2000) 1.0 Leadership (125 points) 2.0 Strategic Planning (85 points) 3.0 Customer and Market Focus (85 points) 4.0 Information and Analysis (85 points) 5.0 Human Resource Focus (85 Points) 6.0 Process Management (85 points) 7.0 Business Results (450 points)

25 Categories for the Baldrige Award Manufacturing companies or subsidiaries Service companies or subsidiaries Small businesses (less than 500 employees) Health care organizations Educational institutions

26 ISO 9000 A set of international quality standards and guidelines agreed upon by the International Organization for Standardization (ISO) Adopted in 1987 Recognized by more than 100 countries ISO 9000 Certification for competitive advantage

27 ISO 9000 Series 9001 Model for Quality Assurance in Design, Production, Installation, and Servicing Model for Quality Assurance in Production and Installation 9003 Model for Quality Assurance in Final Inspection Test

28 ISO 9000 Series Application Areas Design/ Development Production Installation Servicing Procurement ISO9003 ISO9001 ISO9002

29 ISO 9000 Certification required by many foreign firms enhance global competitiveness three Forms of Certification First party: firm audits itself Second party: customer audits supplier Third party: audited by "qualified" agencies (ANSI, ASQC, RAB)