Quality: Management of Quality Pertemuan 11 Mata kuliah: J Manajemen Operasional Tahun: 2010

Learning Objectives Define the term quality. Explain why quality is important and the consequences of poor quality. Identify the determinants of quality. Describe the costs associated with quality. Describe the quality awards. Discuss the philosophies of quality gurus. Describe TQM. Give an overview of process improvement. Describe and use various quality tools.

Quality Management What does the term quality mean? Quality is the ability of a product or service to consistently meet or exceed customer expectations.

Definitions of Quality ASC: Product characteristics & features that affect customer satisfaction User-Based: What consumer says it is Manufacturing-Based: Degree to which a product conforms to design specification Product-Based: Level of measurable product characteristic

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

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

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

Examples of Quality Dimensions

Service Quality Convenience Reliability Responsiveness Time Assurance Courtesy Tangibles

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

Challenges with Service Quality Customer expectations often change Different customers have different expectations Each customer contact is a “moment of truth” Customer participation can affect perception of quality Fail-safing must be designed into the system

Determinants of Quality Service Ease of use Conforms to design Design

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

The Consequences of Poor Quality Loss of business Liability Productivity Costs

Top management Design Procurement Production/operations Quality assurance Packaging and shipping Marketing and sales Customer service Responsibility for 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.

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

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.

Quality Awards Baldrige Award Deming Prize

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)

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

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

ISO 9000 Standards Requirements System requirements Management Resource Realization Remedial

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

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

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

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

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

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

Shewhart’s PDCA Model 4.Act 1.Plan 3.Check 2.Do Identify the improvement and make a plan Test the plan Is the plan working Implement the plan

Employee Empowerment  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 © 1995 Corel Corp.

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

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

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

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

Ability to produce products uniformly regardless of manufacturing conditions Put robustness in House of Quality matrices besides functionality © T/Maker Co. © 1995 Corel Corp. Quality Robustness

Shows social cost ($) of deviation from target value Assumptions –Most measurable quality characteristics (e.g., length, weight) have a target value –Deviations from target value are undesirable Equation: L = D 2 C –L = Loss ($); D = Deviation; C = Cost Quality Loss Function

A study found U.S. consumers preferred Sony TV’s made in Japan to those made in the U.S. Both factories used the same designs & specifications. The difference in quality goals made the difference in consumer preferences. Japanese factory (Target-oriented) U.S. factory (Conformance- oriented) Target Specification Example

Seven Tools for TQM

Tools of TQM Tools for generating ideas –Check sheet –Scatter diagram –Cause and effect diagram Tools to organize data –Pareto charts –Process charts (Flow diagrams) Tools for identifying problems –Histograms –Control chart

Check Sheet Billing Errors Wrong Account Wrong Amount A/R Errors Wrong Account Wrong Amount Monday

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

Too many defects Problem Cause and Effect Diagram Example

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

MethodManpower Material Machinery DrillDrill OvertimeOvertime SteelSteel WoodWood LatheLathe Too many defects Sub-Cause Cause and Effect Diagram Example

MethodManpower Material MachineryDrillDrillOvertimeOvertime SteelSteel WoodWood LatheLathe Too many defects TiredTiredOldOld SlowSlow Cause and Effect Diagram Example

Control Chart UCL LCL

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 Six sigma: A business process for improving quality, reducing costs, and increasing customer satisfaction.

Six Sigma Programs Six Sigma programs –Improve quality –Save time –Cut costs Employed in –Design –Production –Service –Inventory management –Delivery

Six Sigma Management Providing strong leadership Defining performance metrics Selecting projects likely to succeed Selecting and training appropriate people

Six Sigma Technical Improving process performance Reducing variation Utilizing statistical models Designing a structured improvement strategy

Six Sigma Team Top management Program champions Master “black belts” “Black belts” “Green belts”

Six Sigma Process Define Measure Analyze Improve Control DMAIC

The End