1. OM&PM/Class 7b1 1Operations Strategy 2Process Analysis 3Lean Operations 4Supply Chain Management 5Capacity Management in Service 6Quality Management –Class 7b: Quality & the Voice of the Customer »The Goal: summary »What is Quality? »Hank Kolb »Voice of the Customer 7Business Process Reengineering Operations Management & Performance Modeling

2. OM&PM/Class 7b2 Levers for Reducing Flow Time  “is to decrease the work content of (only ?) critical activities”,  and/or move it to non critical activities.  Reduce waiting time: –reduce variability »arrivals & service requests »synchronize flows within the process –increase safety capacity »lower utilization »Pooling –Match resource availability with flows in and out of process

3. OM&PM/Class 7b3 E.g.: Analysis of Service Systems  Divide day into blocks based on arrival rates  For each block evaluate performance measures given current staffing  Quantify financial impact of each action –Workforce training: reduces mean and variability of service time –Work flexibility from workforce: pools available capacity –Time flexibility from workforce: better synchronization –Retain experienced employees: increased safety capacity –Additional workforce: Increases safety capacity –Improved Scheduling: better synchronization –Incentives to affect arrival patterns: better synchronization –Decrease product variety: reduces variability of service time –Increase maximum queue capacity –Consignment program, fax, e-mail etc. S D

4. OM&PM/Class 7b4 Framework for Process Flow Management Competitive? No Flow Chart Process Identify Bottlenecks Maximal Flow Rate Identify Critical Path Minimal Flow Time Demand Pattern Macro Average Performance Process Re-Design Competitive? No Micro Variability Performance Demand & Supply Mgt Continuous Improvement mean variability Yes

5. OM&PM/Class 7b5 Dimensions of Quality  Performance  Features  Reliability  Conformance  Durability  Serviceability  Aesthetics  Perceived Quality

6. OM&PM/Class 7b6 Elements of TQM  Management by fact  Cross-functional (process) approach  Culture and leadership –Customer focus –Employee focus –High performance focus »Continuous improvement »Benchmarking  External alliances - the value chain Source: Eitan Zemel

7. OM&PM/Class 7b7  1 Leadership 110  2 Strategic Planning 80 –Strategy Development Process  3 Customer and Market Focus 80  4 Information and Analysis 80  5 Human Resource Development and Management 100  6 Process Management 100 –Product and Service Processes –Support Processes –Supplier and Partnering Processes  7 Business Results 450 u TOTAL POINTS 1000 Malcolm Baldrige National Quality Award

8. OM&PM/Class 7b8 Malcolm Baldridge Award Winners  Ames Rubber Corporation (1993)  Armstrong World Industries Building Products Operations (1995)  AT&T Consumer Communications Services (1994)  AT&T Network Systems Group (1992)  AT&T Universal Card Services (1992)  Cadillac Motor Car Company (1990)  Corning Telecommunications Products Division (1995)  Eastman Chemical Company (1993)  Federal Express Corporation (1990)  Globe Metallurgical Inc. (1988)  Granite Rock Company (1992)  GTE Directories Corporation (1994)  IBM Rochester (1990)  Marlow Industries (1991)  Milliken & Company (1989)  Motorola Inc. (1988)  The Ritz-Carlton Hotel Company (1992)  Solectron Corporation (1991)  Texas Instruments Incorporated - Defense Systems & Electronics Group (1992)  Wainwright Industries, Inc. (1994)  Wallace Co., Inc. (1990)  Westinghouse Electric Corporation - Commerical Nuclear Fuel Division (1988)  Xerox Corporation - Business Products & Systems (1989)  Zytec Corporation (1991) Last Updated: November 8, 1996

9. OM&PM/Class 7b9 ISO 9000  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: “document what you do and then do as you documented.” Source: Adapted from Chase & Aquilano Design Procurement Production Final test Installation Servicing ISO 9003 ISO 9002 ISO 9001

10. OM&PM/Class 7b10 Costs of Quality  Cost of Conformance –Cost of Appraisal –Cost of Prevention  Cost of Non-Conformance –Cost of Internal Failure –Cost of External Failure 100:1 10:1 1:1 Product Design Process Design Production Improve Product Quality Lever Benefits of Building Q in Early Low Visibility Reward High Visibility Reward Time

11. OM&PM/Class 7b11 Components of Quality  Voice of the customer –Customer Needs –Quality of Design  Voice of the process –Quality of Conformance –Process Capability  Process Control and Improvement

12. OM&PM/Class 7b12 Voice of the Customer: Linking Customer Needs to Business Processes Business ProcessCustomer Need Internal Metric Overall Quality Product (30%) Sales (30%) Installation (10%) Repair (15%) Billing (15%) Reliability (40 %) % Repair Call Easy to Use (20%) % Calls for Help Features/Functions (40%) Function Performance Test Knowledge (30%) Supervisor Observations Response (25%) % Proposals Mad on Time Follow-Up (10%) % Follow-Up Made Delivery Interval (30%) Average Order Interval Does Not Break (25%) % Repair Reports Installed When Promised % Installed on Due Date No Repeat Trouble (30%) % Repeat Reports Fixed Fast (25%) Average Speed of Repair Kept Informed (10%) % Customers Informed Accuracy, No Surprise (45%) % Billing Inquiries Response on First Call (35%) % Respolved First Call Easy to Understand (10%) % Billing Inquiries Source: Kordupleski et al., CMR ‘93.

13. OM&PM/Class 7b13 Voice of the Customer: Quality Function Deployment  What do customers want?  Are all preferences equally important?  Will delivering perceived needs deliver a competitive advantage?  How can we change the product?  How do engineering characteristics influence customer perceived quality?  How does one engineering attribute affect another?  What are the appropriate targets for the engineering characteristics?

14. House of Quality Source: Hauser and Clausing 1988

15. OM&PM/Class 7b15 Linked Houses From Customer To Manufacturing Engineering Characteristics Parts Characteristics Key Process Characteristics Production Characteristics House of Quality Parts Deployment Process Planning Production Planning IIIIIIIV Engineering Characteristics Parts Characteristics Key Process Characteristics Customer Attributes

16. OM&PM/Class 7b16 Benefits of QFD Startup and Preproduction costs at Toyota Auto Body Japanese automaker with QFD made fewer changes than US company without QFD time 20 - 24 months 90% of total Japanese changes complete Job # 1 Japan US Design Changes 14 - 17 months 1 - 3 months 1 - 3 months Before QFD After QFD (39% of preQFD costs) t Job # 1 Source: Hauser and Clausing 1988

17. OM&PM/Class 7b17 More New Product Development Tools  Value analysis / Value engineering  Design for manufacturability  Robust design

18. OM&PM/Class 7b18 Value Analysis/Value Engineering  Achieve equivalent or better performance at a lower cost while maintaining all functional requirements defined by the customer –Does the item have any design features that are not necessary? –Can two or more parts be combined into one? –How can we cut down the weight? –Are there nonstandard parts that can be eliminated?

19. OM&PM/Class 7b19 Robust Quality: Taguchi’s View of Cost of Variability Traditional ViewTaguchi’s View Non-conformance to design cost $$$ 0 Lower Tolerance Design Spec Upper Tolerance Actual value Lower Tolerance Design Spec Upper Tolerance

20. OM&PM/Class 7b20 Class 7b: Key Learning Objectives  Elements of TQM / Baldridge / ISO 9000  Costs of Quality  Components of Quality  Voice of the Customer –Linking business processes to customer needs –Product Design Methodologies: »Convert customer needs to product and process specifications: QFD »Value Engineering