1. Week 2
BUSN 6110
Summer 2011

2. Quality Management Quality is a measure of goodness that is
inherent to a product or service.
Bottom line: perspective has to be from the
Customer – fitness for use

3. What Is Quality?
“The degree of excellence of a thing” (Webster’s Dictionary)
“The totality of features and characteristics that satisfy needs” (ASQ)
Fitness for use
Quality of design

4. Quality
Quality Management – not owned by any functional area – cross functional
Measure of goodness that is inherent to a product or service

5. FedEx and Quality
Digitally Assisted Dispatch System – communicate with 30K couriers
rule  1 – if caught and fixed as soon as it occurs, it costs a certain amount of time and money to fix  10 – if caught later in different department or location = as much as 10X cost  100 – if mistake is caught by the customer = as much as 100X to fix

6. Product Quality Dimensions
Product Based – found in the product attributes
User Based – if customer satisfied
Manufacturing Based – conform to specs
Value Based – perceived as providing good value for the price

7. Dimensions of Quality (Garvin)
Performance
Basic operating characteristics
Features
“Extra” items added to basic features
Reliability
Probability product will operate over time

8. Dimensions of Quality (Garvin)
Conformance
Meeting pre-established standards
Durability
Life span before replacement
Serviceability
Ease of getting repairs, speed & competence of repairs

9. Dimensions of Quality (Garvin)
Aesthetics
Look, feel, sound, smell or taste
Safety
Freedom from injury or harm
Other perceptions
Subjective perceptions based on brand name, advertising, etc

10. Service Quality Time & Timeliness Completeness Courtesy
Customer waiting time, completed on time
Completeness
Customer gets all they asked for
Courtesy
Treatment by employees

11. Service Quality Consistency Accessibility & Convenience Accuracy
Same level of service for all customers
Accessibility & Convenience
Ease of obtaining service
Accuracy
Performed right every time
Responsiveness
Reactions to unusual situations

12. Quality of Conformance
Ensuring product or service produced according to design
Depends on
Design of production process
Performance of machinery
Materials
Training

13. Quality Philosophers Walter Shewhart – Statistical Process Control
W. Edwards Deming
Joseph Juran – strategic and planning based
Armand Fiegenbaum – total quality control “entire business must be involved in quality improvement”

14. Deming’s 14 Points Create constancy of purpose
Adopt philosophy of prevention
Cease mass inspection
Select a few suppliers based on quality
Constantly improve system and workers
Institute worker training

15. Deming’s 14 Points Instill leadership among supervisors
Eliminate fear among employees
Eliminate barriers between departments
Eliminate slogans
Remove numerical quotas

16. Deming’s 14 Points Enhance worker pride
Institute vigorous training and education programs
Develop a commitment from top management to implement these 13 points

17. The Deming Wheel (or PDCA Cycle)
1. Plan
Identify the problem and develop the plan for improvement.
2. Do
Implement the plan on a test basis.
3. Study/Check
Assess the plan; is it working?
4. Act
Institutionalize improvement; continue the cycle.
Also known as the Shewart Cycle

18. Six Sigma
Quality management program that measures and improves the operational performance of a company by identifying and correcting defects in the company’s processes and products

19. Six Sigma Started By Motorola
Define
Measure
Analyze
Improve
Control
Made Famous by
General Electric
40% of GE executives’
bonuses tied to 6 sigma
implementation

20. Malcolm Baldrige National Quality Award
Category 3 – determine requirements, expectations, preferences of customers and markets
Category 4 – what is important to the customer and the company; how does company improve

21. Total Quality Management
Customer defined quality
Top management leadership
Quality as a strategic issue
All employees responsible for quality
Continuous improvement
Shared problem solving
Statistical quality control
Training & education for all employees

22. Strategic Implications of TQM
Quality is key to effective strategy
Clear strategic goal, vision, mission
High quality goals
Operational plans & policies
Feedback mechanism
Strong leadership

23. TQM in Service Companies
Inputs similar to manufacturing
Processes & outputs are different
Services tend to be labor intensive
Quality measurement is harder
Timeliness is important measure
TQM principles apply to services

24. Cost of Quality Cost of achieving good quality Prevention Appraisal
Planning, Product design, Process, Training, Information
Appraisal
Inspection and testing, Test equipment, Operator
Cost of achieving good quality
Prevention
quality planning, product design
process, training
information
Appraisal
inspection & testing
test equipment
operator
Cost of poor quality
Internal failure costs
scrap, rework
process failure & downtime
downgrading products
External failure costs
customer complaints
returns, warranty
product liability, lost sales 18

25. Cost of Quality Cost of poor quality Internal failure costs
Scrap, Rework, Process failure, Process downtime, Price-downgrading
External failure costs
Customer complaints, Product return, Warranty, Product liability, Lost sales
Cost of achieving good quality
Prevention
quality planning, product design
process, training
information
Appraisal
inspection & testing
test equipment
operator
Cost of poor quality
Internal failure costs
scrap, rework
process failure & downtime
downgrading products
External failure costs
customer complaints
returns, warranty
product liability, lost sales 18

26. Employees and Quality Improvement
Employee involvement
Quality circles
Process improvement teams
Employee suggestions

27. Cause-and-Effect Diagram
Quality
Problem
Out of adjustment
Tooling problems
Old / worn
Machines
Faulty
testing equipment
Incorrect specifications
Improper methods
Measurement
Poor supervision
Lack of concentration
Inadequate training
Human
Deficiencies
in product design
Ineffective quality
management
Poor process design
Process
Inaccurate
temperature
control
Dust and Dirt
Environment
Defective from vendor
Not to specifications
Material-
handling problems
Materials
Also known as Ishikawa Diagram or Fish Bone

28. Lots of Hoopla and no follow through
Hot House Quality
Lots of Hoopla and no follow through

29. ISO 9000:2000 Customer focus Leadership Involvement of the people
Process approach
Systems approach to management
Continual process improvement – GAO
Factual approach to decision making
Mutually beneficial supplier relationships

30. Implications Of ISO 9000 Truly international in scope
Certification required by many foreign firms
U.S. firms export more than $150 billion annually to Europe
Adopted by U.S. Navy, DuPont, 3M, AT&T, and others

31. ISO Accreditation 3rd party registrar assesses quality program
European registration
3rd party registrar assesses quality program
European Conformity (CE) mark authorized
United States 3rd party registrars
American National Standards Institute (ANSI)
American Society for Quality (ASQ)
Registrar Accreditation Board (RAB)

32. Product Development
Chapter 6

33. Introduction
Product Development is a process which generates concepts, designs, and plans to create services and goods to meet customer needs.
1. Analyze market to assess need
2. Design product
3. Design process for making product
4. Develop plan to market product
5. Develop plan for full-scale production
6. Analyze financial feasibility

34. Increasing Importance of Product Development
Customers demand greater product variety.
Customers are causing shorter product life cycles.
Improving technology is causing new products to be introduced
The impact of increasing product variety and shortening product life cycles is having a multiplicative effect on the need for product development.
Today, in order to be competitive, the firm may have to produce many different products with a life cycle of only five years or less. End of Life issues

35. Product Design Specifies materials Determines dimensions & tolerances
Defines appearance
Sets performance standards

36. Service Design Specifies what the customer is to experience
Physical items
Sensual benefits
Psychological benefits

37. An Effective Design Process
Matches product/service characteristics with customer needs
Meets customer requirements in simplest, most cost-effective manner
Reduces time to market - haste vs. speed to market
Minimizes revisions - quality designed into the product

38. Stages in the Design Process
Idea Generation — Product Concept - can you create your own market? What role does the voice of the customer play in idea generation?
Feasibility Study — Performance Specifications
Preliminary Design — Prototype - testing and redesign
Final Design — Final Design Specifications
Process Planning — Manufacturing Specifications - make to order/stock – assembly line?

39. Idea Generation Suppliers, distributors, salespersons
Trade journals and other published material
Warranty claims, customer complaints, failures
Customer surveys, focus groups, interviews
Field testing, trial users
Research and development

40. More Idea Generators Perceptual Maps
Visual comparison of customer perceptions
Benchmarking
Comparing product/service against best-in-class
Reverse engineering
Dismantling competitor’s product to improve your own product

41. Perceptual Map of Breakfast Cereals
HIGH NUTRITION
LOW NUTRITION
GOOD TASTE
BAD TASTE

42. Perceptual Map of Breakfast Cereals
HIGH NUTRITION
LOW NUTRITION
GOOD TASTE
Cocoa Puffs
BAD TASTE
Rice
Krispies
Wheaties
Cheerios
Shredded
Wheat
© Russell and Taylor, Prentice Hall, 2004

43. Perceptual Map of Breakfast Cereals
HIGH NUTRITION
LOW NUTRITION
GOOD TASTE
Cocoa Puffs
BAD TASTE
Rice
Krispies
Wheaties
Cheerios
Shredded
Wheat
How do I get here?
© Russell and Taylor, Prentice Hall, 2004

44. Feasibility Study Market Analysis - Market Segmentation
Economic Analysis
Technical / Strategic Analysis
Performance Specifications
Risk Analysis

45. Economic Analysis Can we produce it at a volume to make a profit?
If not, why produce?
How many do we have to make to break even?

46. Sales Price – Variable Costs
Break Even Analysis
Total Costs = Total Revenues
(Volume x Price) =
(Fixed Costs + Variable Costs)
Profit = (Total Revenue –
Total Costs)
Fixed Costs
Sales Price – Variable Costs
B/E Point =

47. Sales Price ($10) – Variable Costs ($5)
Example
Fixed Costs = $2000
Variable Costs = $5/item
Sales Price = $10/item
Fixed Costs ($2000)
Sales Price ($10) – Variable Costs ($5)
B/E PT =
B/E point = ($2000/$5) 400 items

48. Risk Analysis 1. Identify the Hazards
2. Assess hazards to determine risks.
3. Develop controls and make risk decisions.
4. Implement controls.
5. Supervise and evaluate.

50. Preliminary Design Create form & functional design Build prototype
How will it look?
Create form & functional design
Build prototype
Test prototype
Revise prototype
Retest

51. Functional Design (How the Product Performs)
Reliability
Probability product performs intended function for specified length of time
Maintainability
Ease and/or cost or maintaining/repairing product

52. System Availability PROVIDER MTBF (HR) MTTR (HR) A 60 4.0 B 36 2.0
System Availability, SA =
MTBF
MTBF + MTTR
PROVIDER MTBF (HR) MTTR (HR) A B C
At first glance it would appear that the items from Provider A has the longest mean time
between failures. This is why the Systems Availability computation is necessary.

53. System Availability PROVIDER MTBF (HR) MTTR (HR) A 60 4.0 B 36 2.0C
Although Provider A’s products have the longest mean time between failure, look at the
Mean Time To Repair – when calculating the System Availability, the products from
Provider C provides the best System Availability.
SAA = 60 / (60 + 4) = or 93.75%
SAB = 36 / (36 + 2) = or 94.73%
SAC = 24 / (24 + 1) = .96 or 96%

54. Production Design Part of the preliminary design phase Simplification
Standardization
Modularity

55. Final Design & Process Plans
Produce detailed drawings & specifications
Create workable instructions for manufacture
Select tooling & equipment
Prepare job descriptions
Determine operation & assembly order
Program automated machines

56. Improving the Design Process
Design teams
Concurrent design
Design for manufacture & assembly
Design to prevent failures and ensure value
Design for environment
Measure design quality
Utilize quality function deployment
Design for robustness
Engage in collaborative design

57. Preferred solution = cross functional teams
Design Teams
Preferred solution = cross functional teams
Marketing, manufacturing, engineering
Suppliers, dealers, customers
Lawyers, accountants, insurance companies

58. Concurrent Design Improves quality of early design decisions
Decentralized - suppliers complete detailed design
Incorporates production process
Scheduling and management can be complex as tasks are done in parallel
include the customer in the process!!

59. Design for Manufacture and Assembly
Design a product for easy & economical production
Incorporate production design early in the design phase
Improves quality and reduces costs
Shortens time to design and manufacture
also known as Design for Six Sigma

60. Design for Six Sigma Define – the goals of the design activity
Measure – customer input to determine what is critical to quality from the customers’ perspective – what are customer delighters? What aspects are critical to quality?
Analyze – innovative concepts for products and services to create value for the customer
Design – new processes, products, and services to deliver customer value
Verify – new systems perform as expected

61. DFM Guidelines
Minimize the number of parts, tools, fasteners, and assemblies
Use standard parts and repeatable processes
Modular design
Design for ease of assembly, minimal handling
Allow for efficient testing and parts replacement

62. Design for Assembly (DFA)
Procedure for reducing number of parts
Evaluate methods for assembly
Determine assembly sequence

63. Design Review Failure Mode and Effects Analysis (FMEA)
A systematic approach for analyzing causes & effects of failures
Prioritizes failures
Attempts to eliminate causes

64. Value Analysis (Value Engineering)
Is there value added?
Ratio of value / cost
Assessment of value :
1. Can we do without it?
2. Does it do more than is required?
3. Does it cost more than it is worth?
4. Can something else do a better job
5. Can it be made by less costly method, tools, material?
6. Can it be made cheaper, better or faster by someone else? Should we contract it out?

65. Design for Environment
Design from recycled material
Use materials which can be recycled
Design for ease of repair
Minimize packaging
Minimize material & energy used during manufacture, consumption & disposal
green laws in Europe -

67. Design for Robustness Product can fail due to poor design quality
Products subjected to many conditions
Robust design studies
Controllable factors - under designer’s control
Uncontrollable factors - from user or environment
Designs products for consistent performance

68. A Well-Designed Service System is
Consistent with firm’s strategic focus
Customer friendly
Easy to sustain
Effectively linked between front & back office
Cost effective
Visible to customer

69. CHAPTER 8
Process Selection affects the outcome – in production or sports:

70. What is Process Selection?
Series of decisions that includes technical/engineering issues and volume/scale issues
Technical/engineering: basic methods that produce a good or service
Scale: how many or how much to produce; how many to serve at a time
Trade off analysis between capacity and costs

71. Why process selection is critical
Dell – from make/assemble to order in Texas to make/assemble to stock off shore
Does this work?
Break even analysis may depend on process costs
Which process gives the lowest costs – assumption?

72. The Point of Indifference Comparing Two Processes
What is it?
Who cares?
How do you calculate it?

73. Comparing Two Processes
Process A
Fixed = $2000
Variable = $5/item
Process B
Fixed = $11000
Variable = $2/item

74. Comparing the Processes
FixedA + (VarA)x = FixedB + (VarB)x
x = 11, x
3x = 9000
X = 3000
So what?

75. Trade off analysis
Customer demanded quantity drives the trade off analysis and decision process
Example:
→ retail stocks at Christmas 2008 and 2009 season - goal save money by stocking less
→ At what point do you lose sales due to lower stockage levels?

76. Process Design/Selection/Capacity
Have to be simultaneous operations – some texts suggest sequential steps
Decision process has to be customer based
→ what should it be?
→ how many should be produced/how many are we capable of producing?
→ how should it be produced?

77. Process Strategy - Defines
Capital intensity
Process flexibility
Vertical integration
Customer involvement

78. Goal of Process Design Reduce lead time for product to the customer
Is it best to be the first to market and establish the market?
Or, be the follower and let someone else do the R&D/design/risk?

79. Problems with Managing Large, Unfocused Operations
Growing facilities add more levels of management and make coordination and control difficult.
New products are added to the facility as customers demand greater product variety.
Hidden overhead costs increase as managers add staff to deal with increased complexity.

80. Process Planning Make-or-buy decisions Process selection
Specific equipment selection
Process plans
Process analysis

81. Make-or-Buy Decisions
1. Cost
2. Capacity
3. Quality
4. Speed
5. Reliability
6. Expertise
What about
Proprietary Information?
Barrier to Make-or-Buy?

82. Source: Aberdeen Research,
“Low-Cost Country Sourcing Success Strategies: Maximizing and
Sustaining the Next Big Supply Savings Opportunity,” Jun 2005

83. Process Plans Blueprints
Bill of material Flat or multiple layers - part or assembly
Assembly chart / product structure diagram
Operations process chart - list of operations involved in assembly
Routing sheet - sequence of events

84. Process Analysis
The systematic examination of all aspects of a process to improve its operation
Faster
More efficient
Less costly
More responsive
Basic tools
Process flowchart
Process diagrams
Process maps

85. Operations Process Chart
Part name Crevice Tool
Part No
Usage Hand-Vac
Assembly No. 520
Oper. No. Description Dept. Machine/Tools Time
10 Pour in plastic bits 041 Injection molding 2 min
20 Insert mold 041 #076 2 min
30 Check settings , 67, min & start machine
40 Collect parts & lay flat 051 Plastics finishing 10 min
50 Remove & clean mold 042 Parts washer 15 min
60 Break off rough edges 051 Plastics finishing 10 min

86. Process Analysis – What processes feed other processes?

87. Process Flowchart Operation Transport Inspect Step Delay Storage
Distance
(feet)
Time
(min)
Description of
process 1 2 3 4 5 6 7 8 9 10 11
Unload apples from truck
Move to inspection station
Weigh, inspect, sort
Move to storage
Wait until needed
Move to peeler
Apples peeled and cored
Soak in water until needed
Place in conveyor
Move to mixing area
Total
Page 1 0f 3
480 30 20 15
360
190 ft
20 ft
50 ft
100 ft
Date:
Analyst: TLR
Location: Graves Mountain
Process: Apple Sauce

88. Principles for Redesigning Processes
Walk the Process!
Remove waste, simplify, consolidate
Link processes to create value
Let the swiftest and most capable execute
Capture information digitally, data mine, and use information to improve operations

89. Principles for Redesigning Processes
Provide visibility through information about process status
Fit the process with sensors and feedback loops
Add analytic capabilities
Connect, collect and create knowledge around the process
Personalize the process

90. Techniques for Generating Innovative Ideas
Vary entry point to a problem
Draw analogies
Change your perspective
Use attribute brainstorming

91. RFID Active Tags Always on Battery powered
Can be read from up to 300 ft
US Army
Savi Tags
Passive Tags
Small
Must be activated
May be turned off
England
California
Rolex

94. Robotics Questions? Programmable manipulators Follow specified path
Better than humans with respect to
Hostile environments
Long hours
Consistency
Adoption has been slowed by ineffective integration and adaptation of systems
Welding at Harley Davidson Plant
Questions?