1.1 Operations Systems Design Unit 11 Total Quality Management

1.2 What is Quality? The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs. Quality from Whose Perspective? Marketing: Better performance, nicer features, and other (costly) improvements. Production: Conforming to costs, standards and other specifications. Customer: Design, characteristics and price

1.3 Ways in Which Quality Can Improve Productivity

1.4 Total Quality Management AspectTraditionalTQM Overall missionMaximize return on investmentMeet or exceed customer satisfaction ObjectivesEmphasis on short termBalance of long and short terms Management Not always open; sometimes inconsistence objectives Open; encourages employee input; consistent objective Role of managerIssue orders; enforceCoach, remove barrier, build trust Customer requirements Not highest priority; may be unclear Highest priority; important to identify and understand ProblemsAssign blame; punishIdentify and resolve Problem solvingNot systematic; individualsSystematic; teams ImprovementErraticContinuous SuppliersAdversarialPartnership Jobs Narrow, specialized; much individual effort Broad, more general; much team effort FocusProduct orientedProcess oriented Comparison of the cultures of TQM and traditional organizations

1.5 So What is Total Quality Management? A holistic quality philosophy that help manage the entire organization so as to excel on all dimensions (from supplier, production to customer) of goods and services that are important to customers.

1.6 Principles of TQM 1. The customer defines quality, and customer satisfaction is the top priority. 2. Top management must provide the leadership for quality. 3. Quality is a strategic issue, and requires a strategic plan. 4. Quality is the responsibility of all employees at all levels of the organization. 5. All functions of the company must focus on continuous quality improvement to achieve strategic goals. 6. Quality problems are solved through cooperation among employees and management. 7. Problem solving and continuous quality improvement use statistical quality control methods. 8. Training and education of all employees are the basis for continuous quality improvement.

1.7 Costs of Quality External Failure Costs Appraisal Costs Prevention Costs Internal Failure Costs Costs of Quality Costs of Quality Assurance Costs of Nonconformance (70%-90% of total quality cost)

1.8 Cost of Quality : Basic Assumptions Failures are caused Prevention is cheaper Performance can be measured

1.9 Quality Cost Prevention Cost (QMS) Rework/Catch & Fix problem within the orgnisation Field Failures

1.10 Costs of Quality Internal failure cost: costs attributable to errors and defects in production at plant Appraisal cost: costs of evaluating, measuring, or inspecting for quality at the plant and in the field Prevention costs: costs of planning, designing, and equipping a quality control program External failure costs: costs attributable to the failure of products in the field

1.11 Improving Quality through TQM Purchasing Consideration Product and Service design Process Design Quality Function Deployment Benchmarking Data Analysis Tools

1.12 Improving Quality through TQM Purchasing Consideration  Quality of inputs can affect the quality of the firm’s work and purchased parts of poor quality.  The firm must emphasize not only the cost and speed of delivery to the supplier but also the quality of product.  Select the supplier that offer high quality product or service at a reasonable cost.  Allocate sufficient time for purchasing department to identify several low cost and qualified suppliers.

1.13 Improving Quality through TQM Product and Service design  Change in design specifications can increase defect rates.  Change invariably increase the risk of making mistakes so stable product and service design can help reduce internal quality problems.  Change is however required to remain competitive.  It is necessary to carefully test new design and redesign the product or service and process with a focus on market.

1.14 Improving Quality through TQM Product and Service design  Reliability Issue The reliability of each subsystem contributes to the quality of the total system; the reliability of the complete product equals the product of all the reliabilities of the subsystem R=R1+R2+…Rn R= reliability of the complete product R1= Reliability of the subsystem or components N= number of subsystem

1.15 Improving Quality through TQM Process Design  The design of the process used to produce a product or service greatly affects its quality.  Ensure proper process design to meet production requirement and process capabilities.

1.16 Improving Quality through TQM Quality Function Deployment  QFD is a means of translating customer requirements into the appropriate technical requirements for each stage of product or service development and production.

1.17 Improving Quality through TQM Quality Function Deployment  Approach to QFD QFD approach provides a way to set targets and their effects on product quality. a.Voice of customer (What do our customers need and wants? b. Competitive analysis (How well are we doing relative to competitors?

1.18 Improving Quality through TQM Quality Function Deployment  Approach to QFD c. Voice of engineers What technical measures related to our customer needs? d. Correlations e. Technical comparison f. Trade off

1.19 Improving Quality through TQM Benchmarking Benchmarking is a process of standardization of the product or service to some comparable means as industry standards, competitor product or even with own previous set standards or productivity measures. Benchmarking is usually set in following stages 1.Planning 2.Analysis 3.Integration 4.Action

1.20 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 –Statistical process control chart

1.21 Tools of TQM

1.22 Process Chart Shows sequence of events in process Depicts activity relationships Has many uses –Identify data collection points –Find problem sources –Identify places for improvement –Identify where travel distances can be reduced

1.23 Cause and Effect Diagram 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.

1.24 Fishbone Chart - Problems with Airline Customer Service

1.25 Statistical Process Control (SPC) Uses statistics & control charts to tell when to adjust process Developed by Shewhart in 1920’s Involves –Creating standards (upper & lower limits) –Measuring sample output (e.g. mean wgt.) –Taking corrective action (if necessary) Done while product is being produced

1.26 Statistical Process Control Steps Produce Good Provide Service Stop Process Yes No Assign. Causes? Take Sample Inspect Sample Find Out Why Create Control Chart Start

1.27 Process Control Chart

1.28 Patterns to Look for in Control Charts

1.29 Taguchi’s View of Variation Incremental Cost of Variability High Zero Lower Spec Target Spec Upper Spec Traditional View Incremental Cost of Variability High Zero Lower Spec Target Spec Upper Spec Taguchi’s View Traditional view is that quality within the LS and US is good and that the cost of quality outside this range is constant, where Taguchi views costs as increasing as variability increases, so seek to achieve zero defects and that will truly minimize quality costs.

1.30 Strategic Implications of TQM Mission, goals and objectives need to be refection of TQM Strategic plans and programs need to be operationalzed and informed to employees Strategic plans and programs that include quality should also contain a mechanism of feedback to adjust update, and make corrections.

1.31 Acceptance Sampling  It is a form of inspection of goods in order to determine what percentage of the total lots or batch of goods confirm to the required specification.  Purpose of Acceptance sampling is to decide if the lot satisfies pre-determined standards.  Lot that judged to satisfy standards are passed or accepted but those that do not meet the standards are rejected.

1.32 Acceptance Sampling Single sampling plan is defined by n and C, n= number of units on a sample C=the acceptance number i.e maximum number of allowable defectives in the sample n is selected from the total population

1.33 Acceptance Sampling) Disadvantages – Risks of accepting “bad” lots and rejecting “good” lots – Added planning and documentation – Sample provides less information than 100-percent inspection

1.34 Risk Acceptable Quality Level (AQL) – Max. acceptable percentage of defectives defined by producer The  (Producer’s risk) – The probability of rejecting a good lot Lot Tolerance Percent Defective (LTPD) – Percentage of defectives that defines consumer’s rejection point The  (Consumer’s risk) – The probability of accepting a bad lot

1.35 Acceptance Sampling Type I error The probability of rejecting high-quality lot is defined as  producer risk. A lot containing almost all good quality, containing less number of defective items is called Acceptance Quality level (AOL). In type I error, the acceptance quality lots are rejected, leading to loss to producers.

1.36 Acceptance Sampling Type II error A lots are defined as low quality if the percentage of defectives is greater than a specified limit, termed as LOT Tolerance Percent defective (LTPD). The probability of accepting such defective lot is type-II error or termed as consumer risk.

1.37 International Quality Standards (1) ISO (means equal or uniform in Greek) 9000 Series:  ISO 9000 sets out the mandate for establishing, documenting and maintaining an effective quality management system.  Its purpose is to demonstrate an organization's commitment to quality, their capability to satisfy customer requirements and ultimately to achieve total customer satisfaction through the prevention of error and continual improvement.  ISO 9000 directs to "document what you do and then do as you documented"  ISO 9000, it's principles and disciplines are accepted and recognized world wide as a sound basis for quality management systems.

1.38 ISO (means equal or uniform in Greek) 9000 Series:  Three forms of ISO certification: First party (the firm), Second party (customer or client), and Third party ( a qualified agency). International Quality Standards (2)

1.39 Series of standards agreed upon by the International Organization for Standardization (ISO) Adopted in 1987 More than 100 countries A prerequisite for global competition ISO 9000 directs you to "document what you do and then do as you documented" ISO 9000 Standardization

1.40 ISO 9000 Standardization Generic Benefits of ISO  It provides a framework for organizational effectiveness  Assures consistency in products and services delivered to customers  Improved productivity and quality  Increase customer satisfaction  Better management of core business processes  Increased awareness of quality among staff  Reduced costs of quality

1.41 ISO 9000 Standardization External Benefits of ISO Improved customer satisfaction Higher perceived quality by market place Quicker time to market new products Enhanced competitive edge Increased market share

1.42 Six Sigma Quality A philosophy and set of methods companies use to eliminate defects in their products and processes Seeks to reduce variation in the processes that lead to product defects The name, “six sigma” refers to the variation that exists within plus or minus three standard deviations of the process outputs Pg. 345 Chase

1.43 Six Sigma Quality (Continued) Six Sigma allows managers to readily describe process performance using a common metric: Defects Per Million Opportunities (DPMO)

1.44 Six Sigma Quality (Continued) Example of Defects Per Million Opportunities (DPMO) calculation. Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered. What is the DPMO in this situation? So, for every one million letters delivered this city’s postal managers can expect to have 1,000 letters incorrectly sent to the wrong address.

1.45 Six Sigma Methodology Detailed version of Deming PDCA (Plan,Do,Check,Act) cycle Act under Continuous Improvement (CI) (also known as Kaizen) performance level of the firm as something to be continuously challenged and incrementally upgraded believe employee involvement and team efforts are the key to improvement DMAIC: Define, Measure, Analyse, Improve, Control Developed by General Electric as a means of focusing effort on quality using a methodological approach Overall focus of the methodology is to understand and achieve what the customer wants “ Dumb Managers Always Ignore Customers”

1.46 PDCA Cycle 4.Act: Implement the plan 1.Plan: Identify the improvement and make a plan 3.Check: Is the plan working 2.Do: Test the plan

1.47 Six Sigma Quality: DMAIC Cycle Steps Define (D) Measure (M) Analyze (A) Improve (I) Control (C) Customer priorities, critical to quality characteristics Process and its performance Causes of defects Remove causes of defects Maintain quality

1.48 Analytical Tools for Six Sigma/ SPC (Statistical Process Control)Tools Flow chart (Already covered) Run Chart Pareto Analysis/ Charts Histogram Check sheet Cause & Effect Diagram/ Fishbone diagram Control Charts

1.49 End of Lecture