1. © 1997 Prentice-Hall, Inc. 3 - 1 Principles of Operations Management Total Quality Management Chapter 3

2. © 1997 Prentice-Hall, Inc. 3 - 2 Learning Objectives n Define quality n State why quality is important n Explain total quality management (TQM) n Explain tools for total quality management n Describe inspection

3. © 1997 Prentice-Hall, Inc. 3 - 3 Definitions of Quality n ASQC: Product characteristics & features that affect customer satisfaction n User-Based: What consumer says it is n Mfg.-Based: Degree to which a product conforms to design specification n Product-Based: Level of measurable product characteristic

4. © 1997 Prentice-Hall, Inc. 3 - 4 Dimensions of Quality for Goods n Operation n Reliability & durability n Conformance n Serviceability n Appearance n Perceived quality Quality

5. © 1997 Prentice-Hall, Inc. 3 - 5 Importance of Quality n Company’s reputation n Product liability n International implications n Costs & market share

6. © 1997 Prentice-Hall, Inc. 3 - 6 International Quality Standards n Industrial Standard Z8101-1981 (Japan) l Specification for TQM n ISO 9000 series (Europe/EC) l Common quality standards for products sold in Europe (even if made in U.S.) n ISO 14000 series (Europe/EC) l Standards for recycling, labeling etc. n ASQC Q90 series; MILSTD (U.S.)

7. © 1997 Prentice-Hall, Inc. 3 - 7 Malcolm Baldrige National Quality Award n Established in 1988 by the U.S. gov’t n Designed to promote TQM practices n Some criteria l Senior executive leadership; strategic planning; mgt. of process quality l Quality results; customer satisfaction n Recent winners l Corning Inc.; GTE; AT&T; Eastman Chem.

8. © 1997 Prentice-Hall, Inc. 3 - 8 Traditional Quality Process (Mfg.) Quality is customer driven!

9. © 1997 Prentice-Hall, Inc. 3 - 9 Total Quality Management n Quality system involving entire organization from supplier to customer n Objective: Meet or exceed customer needs through company-wide continuous improvement n Early proponents l W. Edwards Deming l J. M. Juran l Philip B. Crosby

10. © 1997 Prentice-Hall, Inc. 3 - 10 Total Quality Management Principles n Continuous improvement n Employee empowerment n Benchmarking n Just-in-time (JIT) n Knowledge of TQM tools © 1995 Corel Corp.

11. © 1997 Prentice-Hall, Inc. 3 - 11 Continuous Improvement n Represents continual improvement of process & customer satisfaction n Involves all operations & work units n Other names l Kaizen (Japanese) l Zero-defects l Six sigma © 1984-1994 T/Maker Co.

12. © 1997 Prentice-Hall, Inc. 3 - 12 Employee Empowerment n Getting employees involved in product & process improvements l 85% of quality problems are due to process & material n Techniques l Talk to workers l Support workers l Let workers make decisions l Build teams & quality circles © 1995 Corel Corp.

13. © 1997 Prentice-Hall, Inc. 3 - 13 Quality Circles n Group of 6-12 employees from same work area n Meet regularly to solve work-related problems l 4 hours/month n Facilitator trains & helps with meetings © 1995 Corel Corp.

14. © 1997 Prentice-Hall, Inc. 3 - 14 BenchmarkingBenchmarking n Selecting best practices to use as a standard for performance n Steps l Determine what to benchmark l Form benchmarking team l Identify benchmarking partners l Collect benchmarking information l Take action to meet or exceed benchmark

15. © 1997 Prentice-Hall, Inc. 3 - 15 Benchmarking Thinking Challenge n Accounting n Data processing n Hotel front desk n Marketing What specific & measurable variables would you benchmark in these areas? AloneGroupClass

16. © 1997 Prentice-Hall, Inc. 3 - 16 Just-In-Time (JIT) n ‘Pull’ system of production/purchasing l Customer starts production with an order n Involves ‘vendor partnership programs’ to improve quality of purchased items n Reduces all inventory levels l Inventory hides process & material problems n Improves process & product quality

17. © 1997 Prentice-Hall, Inc. 3 - 17 n Quality function deployment (QFD) n Pareto charts n Process charts n Cause & effect diagrams n Statistical process control (SPC) TQM Tools

18. © 1997 Prentice-Hall, Inc. 3 - 18 Quality Function Deployment (QFD) n Product design process using cross-functional teams l Marketing, engineering, manufacturing n Translates customer preferences into specific product characteristics n Involves creating 4 tabular ‘Matrices’ or ‘Houses’ l Breakdown product design into increasing levels of detail

19. © 1997 Prentice-Hall, Inc. 3 - 19 Quality Function Deployment Sequence Product Char. Customer Req. Component Spec. Product Char. Production Process Component Spec. Quality Plan Production Process House of Quality 1 House of Quality 2 House of Quality 3 House of Quality 4

20. © 1997 Prentice-Hall, Inc. 3 - 20 House of Quality Example You’ve been assigned temporarily to a QFD team. The goal of the team is to develop a new camera design. Build a House of Quality. © 1984-1994 T/Maker Co.

21. © 1997 Prentice-Hall, Inc. 3 - 21 House of Quality Example  High relationship  Medium relationship  Cust. Req. Cust. Importance Target Values

22. © 1997 Prentice-Hall, Inc. 3 - 22 Pareto Chart n Vertical bar chart showing relative importance of problems or defects l Makes identifying & solving them easier n Based on Pareto Principle l Most effects have relatively few causes l e.g., 80% of quality problems come from 20% of machines, materials, or operators s Focus on ‘vital few’ 20% causes s Called 80-20 rule

23. © 1997 Prentice-Hall, Inc. 3 - 23 Pareto Chart Thinking Challenge You’re a quality analyst for Corning Glass. You’ve collected data on 100 rejected glasses: Nicks80 Cuts11 Scratches3 Porosity3 Misc.3 Prepare a Pareto Chart. AloneGroupClass

24. © 1997 Prentice-Hall, Inc. 3 - 24 Pareto Chart Solution Cause # of Defects 0 20 40 60 80 100 NicksCutsScratchesMisc.Porosity

25. © 1997 Prentice-Hall, Inc. 3 - 25 Process Chart n Shows sequence of events in process n Depicts activity relationships n Has many uses l Identify data collection points l Find problem sources l Identify places for improvement l Identify where travel distances can be reduced

26. © 1997 Prentice-Hall, Inc. 3 - 26 Process Chart Example  = Operation;  = Transport;  = Inspect; D = Delay;  = Storage

27. © 1997 Prentice-Hall, Inc. 3 - 27 Cause & Effect Diagram n Used to find problem sources/solutions n Other names l Fish-bone diagram, Ishikawa diagram n Steps l Identify problem to correct l Draw main causes for problem as ‘bones’ l Ask ‘What could have caused problems in these areas?’ Repeat for each sub-area.

28. © 1997 Prentice-Hall, Inc. 3 - 28 Cause & Effect Diagram Example MethodManpower Material Machinery DrillDrill OverOver TimeTime SteelSteel WoodWood LatheLathe TiredTired Too many defects OldOld SlowSlow Problem Main Cause

29. © 1997 Prentice-Hall, Inc. 3 - 29 Statistical Process Control (SPC) n Uses statistics & control charts to tell when to adjust process n Developed by Shewhart in 1920’s n Involves l Creating standards (upper & lower limits) l Measuring sample output (e.g. mean wgt.) l Taking corrective action (if necessary) n Done while product is being produced

30. © 1997 Prentice-Hall, Inc. 3 - 30 Statistical Process Control Steps

31. © 1997 Prentice-Hall, Inc. 3 - 31 Control Chart Example UCL LCL

32. © 1997 Prentice-Hall, Inc. 3 - 32 Thinking Challenge: Compare & Contrast AloneGroupClass

33. © 1997 Prentice-Hall, Inc. 3 - 33 InspectionInspection n Involves examining items to see if an item is good or defective n Objective: Detect a defective product l Does not correct deficiencies in process or product n Issues l When to inspect l Where in process to inspect

34. © 1997 Prentice-Hall, Inc. 3 - 34 When & Where to Inspect in Mfg. n At supplier’s plant while producing n Upon receipt of goods from supplier n Before costly or irreversible processes n During production process n When production is complete n Before shipment © 1995 Corel Corp.

35. © 1997 Prentice-Hall, Inc. 3 - 35 When & Where to Inspect in Services BankTeller stationSpeed, courtesy CheckingAccuracy StoreStockroomsStock rotation Display areasAttractiveness CountersCourtesy, knowledge BusinessWhereVariable

36. © 1997 Prentice-Hall, Inc. 3 - 36 TQM in Services n Service quality is more difficult to measure than for goods n Service quality perceptions depend on l Expectations vs. reality l Process & outcome n Types of service quality l Normal: Routine service delivery l Exceptional: How problems are handled

37. © 1997 Prentice-Hall, Inc. 3 - 37 Under- standing Tangibles Service Quality Attributes Reliability CommunicationCredibility Security Responsiveness Competence Courtesy Access © 1995 Corel Corp.

38. © 1997 Prentice-Hall, Inc. 3 - 38 ConclusionConclusion n Defined quality n Stated why quality is important n Explained total quality management n Explained tools for total quality management (TQM) n Described inspection