9-1Management of Quality William J. Stevenson Operations Management 8 th edition

9-2Management of Quality CHAPTER 9 Management of Quality McGraw-Hill/Irwin Operations Management, Eighth Edition, by William J. Stevenson Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.

9-3Management of 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.

9-4Management of Quality Evolution of Quality Management  Statistical process control charts  Tables for acceptance sampling  1940’s - Statistical sampling techniques  1950’s - Quality assurance/TQC  1960’s - Zero defects  1970’s - Quality assurance in services

9-5Management of Quality Quality Assurance vs. Strategic Approach  Quality Assurance  Emphasis on finding and correcting defects before reaching market  Strategic Approach  Proactive, focusing on preventing mistakes from occurring  Greater emphasis on customer satisfaction

9-6Management of Quality The Quality Gurus  Walter Shewhart  “Father of statistical quality control”  W. Edwards Deming  Joseph M. Juran  Armand Feignbaum  Philip B. Crosby  Kaoru Ishikawa  Genichi Taguchi

9-7Management of Quality Quality Leaders

9-8Management of Quality W. Edwards Deming  Most famous quality figure  14 Points  7 Deadly Diseases  Responsible for Japanese quality turnaround  Continual improvement  Focus on variation In God we trust, all others bring data.

9-9Management of Quality W. Edwards Deming’s 14 Points for Management 1. Create constancy of purpose 2. Adopt a new philosophy 3. Cease dependence on mass inspection 4. End awarding business on the basis of price 5. Constantly improve the system 6. Institute training on the job 7. Improve leadership 8. Drive out fear. 9. Break down barriers 10. Eliminate slogans 11. Eliminate work standards 12. Remove barriers to pride 13. Institute education & self improvement 14. Put everybody back to work

9-10Management of Quality W. Edwards Deming’s Seven Deadly Diseases 1. Lack of constancy of purpose 2. Emphasis on short-term profits 3. Evaluation of performance, merit ratings, or annual reviews of performance 4. Mobility of management 5. Running a company on the visible numbers alone 6. Excessive medical costs 7. Excessive warranty costs

9-11Management of Quality Joseph M. Juran  Responsible for Japanese quality turnaround  Quality Control Handbook  Managerial Breakthrough  Quality Trilogy – planning, control, improvement  Focus on variation  Pareto analysis

9-12Management of Quality Joseph M. Juran’s Prescriptions Quality Planning 1. Establish quality goals 2. Identify the customers 3. Determine customer needs 4. Develop product features to respond to customer needs 5. Develop process features 6. Establish process controls

9-13Management of Quality Joseph M. Juran’s Prescriptions Quality Control 1. Evaluate actual quality performance 2. Compare actual performance to quality goals 3. Act on the difference

9-14Management of Quality Joseph M. Juran’s Prescriptions Quality Improvement 1. Establish infrastructure needed to secure annual quality improvement 2. Identify the specific needs for improvement 3. Establish project team with clear responsibility for success

9-15Management of Quality Walter M. Shewhart  Inventor of Statistical Process Control  Inventor of PDCA concept  Operational definitions  Mentor to WED & JMJ  Founding member of ASQC  Focus on variation

9-16Management of Quality Philip Crosby 1. Quality = conformance to requirements 2. No quality problems 3. Always cheaper to do it right the 1 st time 4. Cost of poor quality is only performance measurement 5. Zero defects is only performance standard

9-17Management of Quality Philip Crosby’s 14-Point Q Improvement Program 1. Management commitment 2. Q Improvement Teams 3. Q Measurements 4. Cost of Q Evaluation 5. Q Awareness 6. Corrective Action 7. 0-Defect Committees 8. Supervisor Training 9. Zero-defects Day 10. Goal Setting 11. Error Cause Removal 12. Recognition 13. Quality Councils 14. Do It Over Again

9-18Management of Quality Armand Feigenbaum 1. Total Quality Control 2. Quality leadership 3. Quality technology 4. Organizational commitment

9-19Management of Quality Kaoru Ishikawa 1. Cause-and-effect diagrams 2. Quality circles 3. 7 Basic Quality Tools

9-20Management of Quality Ishikawa’s 11 Points 1. Q begins & ends with education 2. 1 st step in Q is to know the requirements of customer. 3. Ideal state of QC is when inspection not needed. 4. Remove root causes not symptoms. 5. QC is responsibility of all workers. 6. Do not confuse means w/ objectives. 7. Put Q 1 st and set sights on long term objectives. 8. Marketing is entrance & exit of Q.

9-21Management of Quality Ishikawa’s 11 Points 9. Top management must not show anger when facts are presented to subordinates % of problems in a company can be solved by the 7 tools of QC. 11. Data without dispersion info are false data.

9-22Management of Quality Mikel Harry 1. Six Sigma Quality 2. Defined toolbox 3. Human issues – commitment and training 4. Quality measurement – DPMO – Cost of Q 5. Structures – DMAIC, DMADV 6. Critical to Quality

9-23Management of Quality Key Contributors to Quality Management Table 9.2

9-24Management of 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  Reliability - consistency of performance

9-25Management of Quality Dimensions of Quality (Cont’d)  Durability - useful life of the product/service  Perceived Quality - indirect evaluation of quality (e.g. reputation)  Serviceability - service after sale

9-26Management of Quality Examples of Quality Dimensions

9-27Management of Quality Examples of Quality Dimensions (Cont’d)

9-28Management of Quality Service Quality  Tangibles  Convenience  Reliability  Responsiveness  Time  Assurance  Courtesy

9-29Management of Quality Examples of Service Quality DimensionExamples 1. TangiblesWere the facilities clean, personnel neat? 2. ConvenienceWas the service center conveniently located? 3. ReliabilityWas the problem fixed? 4. ResponsivenessWere customer service personnel willing and able to answer questions? 5. TimeHow long did the customer wait? 6. AssuranceDid the customer service personnel seem knowledgeable about the repair? 7. CourtesyWere customer service personnel and the cashierfriendly and courteous? Table 9.4

9-30Management of Quality Determinants of Quality Service Ease of use Conforms to design Design

9-31Management of Quality Determinants of Quality (cont’d)  Quality of design  Intension of designers to include or exclude features in a product or service  Quality of conformance  The degree to which goods or services conform to the intent of the designers

9-32Management of Quality The Consequences of Poor Quality  Loss of business  Liability  Productivity  Costs

9-33Management of Quality  Top management  Design  Procurement  Production/operations  Quality assurance  Packaging and shipping  Marketing and sales  Customer service Responsibility for Quality

9-34Management of Quality Costs of Quality  Failure Costs - costs incurred by defective parts/products or faulty services.  Internal Failure Costs  Costs incurred to fix problems that are detected before the product/service is delivered to the customer.  External Failure Costs  All costs incurred to fix problems that are detected after the product/service is delivered to the customer.

9-35Management of Quality Costs of Quality (continued)  Appraisal Costs  Costs of activities designed to ensure quality or uncover defects  Prevention Costs  All TQ training, TQ planning, customer assessment, process control, and quality improvement costs to prevent defects from occurring

9-36Management of Quality Cost of Poor Quality Lost Opportunity Downtime Rework Inspection Overtime Rejects Lost sales Late delivery Long cycle times Expediting costs Inaccurate Reports (less obvious) Lost Customer Loyalty Redundant Operations Cost of Capital Excessive Planning 5-8% of Sales 15-22% of Sales

9-37Management of Quality  Substandard work  Defective products  Substandard service  Poor designs  Shoddy workmanship  Substandard parts and materials Ethics and Quality Having knowledge of this and failing to correct and report it in a timely manner is unethical.

9-38Management of Quality Quality Awards Baldrige Award Deming Prize

9-39Management of Quality Malcolm Baldrige National Quality Award  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)

9-40Management of Quality Benefits of Baldrige Competition  Financial success  Winners share their knowledge  The process motivates employees  The process provides a well-designed quality system  The process requires obtaining data  The process provides feedback

9-41Management of Quality European Quality Award  Prizes intended to identify role models  Leadership  Customer focus  Corporate social responsibility  People development and involvement  Results orientation

9-42Management of Quality The Deming Prize  Honoring W. Edwards Deming  Japan’s highly coveted award  Main focus on statistical quality control

9-43Management of Quality Quality Certification  ISO 9000  Set of international standards on quality management and quality assurance, critical to international business  ISO  A set of international standards for assessing a company’s environmental performance

9-44Management of Quality ISO 9000 Standards Requirements  System requirements  Management  Resource  Realization  Remedial

9-45Management of Quality ISO 9000 Quality Management Principles  A systems approach to management  Continual improvement  Factual approach to decision making  Mutually beneficial supplier relationships  Customer focus  Leadership  People involvement  Process approach

9-46Management of 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

9-47Management of Quality  Management systems  Systems development and integration of environmental responsibilities into business planning  Operations  Consumption of natural resources and energy  Environmental systems  Measuring, assessing and managing emissions, effluents, and other waste ISO 14000

9-48Management of Quality Total Quality Management A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction. TQM

9-49Management of Quality 1. Find out what the customer wants 2. Design a product or service that meets or exceeds customer wants 3. Design processes that facilitates doing the job right the first time 4. Keep track of results 5. Extend these concepts to suppliers The TQM Approach

9-50Management of Quality Elements of TQM  Continual improvement  Competitive benchmarking  Employee empowerment  Team approach  Decisions based on facts  Knowledge of tools  Supplier quality  Champion  Quality at the source  Suppliers

9-51Management of 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.

9-52Management of Quality Quality at the Source The philosophy of making each worker responsible for the quality of his or her work.

9-53Management of Quality Six Sigma  Statistically  Having no more than 3.4 defects per million  Conceptually  Program designed to reduce defects  Requires the use of certain tools and techniques

9-54Management of Quality Six Sigma Programs  Six Sigma programs  Improve quality  Save time  Cut costs  Employed in  Design  Production  Service  Inventory management  Delivery

9-55Management of Quality Six Sigma Management  Providing strong leadership  Defining performance merits  Selecting projects likely to succeed  Selecting and training appropriate people

9-56Management of Quality Six Sigma Technical  Improving process performance  Reducing variation  Utilizing statistical models  Designing a structured improvement strategy

9-57Management of Quality Six Sigma Team  Top management  Program champions  Master “black belts”  “Black belts”  “Green belts”

9-58Management of Quality Six Sigma Process  Define  Measure  Analyze  Improve  Control DMAIC

9-59Management of Quality  Lack of:  Company-wide definition of quality  Strategic plan for change  Customer focus  Real employee empowerment  Strong strong motivation  Time to devote to quality initiatives  Leadership Obstacles to Implementing TQM

9-60Management of Quality  Poor inter-organizational communication  View of quality as a “quick fix”  Emphasis on short-term financial results  Internal political and “turf” wars Obstacles to Implementing TQM

9-61Management of Quality Criticisms of TQM  Blind pursuit of TQM programs  Programs may not be linked to strategies  Quality-related decisions may not be tied to market performance  Failure to carefully plan a program

9-62Management of Quality Basic Steps in Problem Solving 1. Define the problem and establish an improvement goal 2. Collect data 3. Analyze the problem 4. Generate potential solutions 5. Choose a solution 6. Implement the solution 7. Monitor the solution to see if it accomplishes the goal

9-63Management of Quality The PDSA Cycle Plan Do Study Act

9-64Management of Quality  Process Improvement: A systematic approach to improving a process  Process mapping  Analyze the process  Redesign the process Process Improvement

9-65Management of 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

9-66Management of 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

9-67Management of Quality Basic Quality Tools  Flowcharts  Check sheets  Histograms  Pareto Charts  Scatter diagrams  Control charts  Cause-and-effect diagrams  Run charts

9-68Management of Quality Check Sheet Billing Errors Wrong Account Wrong Amount A/R Errors Wrong Account Wrong Amount Monday

9-69Management of Quality Pareto Analysis 80% of the problems may be attributed to 20% of the causes. 80% of the problems may be attributed to 20% of the causes. Smeared print Number of defects Off center Missing label Loose Other

9-70Management of Quality Control Chart UCL LCL Figure 9.11

9-71Management of Quality Cause-and-Effect Diagram Figure 9.12 Effect MaterialsMethods EquipmentPeople Environment Cause

9-72Management of Quality Run Chart Time (Hours) Diameter

9-73Management of Quality Tracking Improvements UCL LCL UCL Process not centered and not stable Process centered and stable Additional improvements made to the process Figure 9-17

9-74Management of Quality Methods for Generating Ideas  Brainstorming  Quality circles  Interviewing  Benchmarking  5W2H

9-75Management of Quality  Team approach  List reduction  Balance sheet  Paired comparisons Quality Circles

9-76Management of Quality  Identify a critical process that needs improving  Identify an organization that excels in this process  Contact that organization  Analyze the data  Improve the critical process Benchmarking Process

9-77Management of Quality Quality/Safety STA09 Pixux systems

9-78Management of Quality Service, Personnel SDHM5 Training, guestware support