1. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-1 Operations Management Chapter 6 – Managing Quality Delivered by: Eng.Mosab I. Tabash Eng.Mosab I. Tabash

2. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-2 Outline  Global Company Profile: Motorola  Defining Quality  Implications of Quality  Malcolm Baldrige National Quality Award  Cost of Quality  International Quality Standards  Total Quality Management  Continuous Improvement  Employee Empowerment  Benchmarking  Just-in-Time (JIT)  Taguchi Concepts  Knowledge of TQM Tools

3. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-3 Outline  Tools of TQM  Check sheets  Scatter Diagrams  Cause-and-Effect Diagram  Pareto Charts  Process Charts  Histogram  The Role of Inspection  When and where to Inspect  Source Inspection  Service Industry Inspection  Inspection of Attributes vs Variables  TQM in Services  Process Charts  Histogram  The Role of Inspection  Total Quality Management in Services  Knowledge of TQM Tools

4. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-4 Learning Objectives When you complete this chapter, you should be able to :  Identify or Define :  Quality  Malcolm Baldrige National Quality Award  Demings, Juran, and Crosby  Taguchi Concepts

5. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-5 Learning Objectives - continued When you complete this chapter, you should be able to :  Explain :  Why quality is important  Total Quality Management (TQM)  Pareto charts  Process charts  Quality robust products  Inspection

6. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-6 To Make the Quality Focus Work Motorola:  Aggressively began a worldwide education program to be sure that employees understood quality and statistical process control  Established goals  Established extensive employee participation and employee teams

7. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-7 Ways in Which Quality Can Improve Productivity Sales Gains  Improved response  Higher Prices  Improved reputation Reduced Costs  Increased productivity  Lower rework and scrap costs  Lower warranty costs Increased Profits Improved Quality

8. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-8 Flow of Activities Necessary to Achieve Total Quality Management  Organizational Practices  Quality Principles  Employee Fulfillment  Customer Satisfaction

9. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-9 Organizational Practices  Leadership  Mission statement  Effective operating procedure  Staff support  Training Yields: What is important and what is to be accomplished

10. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-10 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

11. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-11 Employment Fulfillment  Empowerment  Organizational commitment Yields: Employees’ attitudes that they can accomplish what is important and to be accomplished

12. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-12 Customer Satisfaction  Winning orders  Repeat customers Yields: An effective organization with a competitive advantage

13. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-13 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

14. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-14 Importance of Quality  Costs & market share  Company’s reputation  Product liability  International implications Increased Profits Lower Costs Productivity Rework/Scrap Warranty Market Gains Reputation Volume Price Improved Quality

15. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-15  Established in 1988 by the U.S. government  Designed to promote TQM practices  Some criteria  Senior executive leadership; strategic planning; management. of process quality  Quality results; customer satisfaction  Recent winners  Corning Inc.; GTE; AT&T; Eastman Chemical. Malcom Baldrige National Quality Award

16. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-16 Costs of Quality  Prevention costs - reducing the potential for defects  Appraisal costs - evaluating products  Internal failure - of producing defective parts or service  External costs - occur after delivery

17. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-17 International Quality Standards  Industrial Standard Z8101-1981 (Japan)  Specification for TQM  ISO 9000 series (Europe/EC)  Common quality standards for products sold in Europe (even if made in U.S.)  ISO 14000 series (Europe/EC)  Standards for recycling, labeling etc.  ASQC Q90 series; MILSTD (U.S.)

18. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-18 Environmental Standard ISO 14000  Core Elements:  Environmental management  Auditing  Performance evaluation  Labeling  Life-cycle assessment

19. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-19 TQM Encompasses entire organization, from supplier to customer Stresses a commitment by management to have a continuing company-wide drive toward excellence in all aspects of products and services that are important to the customer.

20. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-20 Organizational Practices Quality Principles Employee Fulfillment Attitudes (e.g., Commitment) How to Do What to Do Effective Business Customer Satisfaction Achieving Total Quality Management

21. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-21 Concepts of TQM  Continuous improvement  Employee empowerment  Benchmarking  Just-in-time (JIT)  Taguchi concepts  Knowledge of tools

22. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-22 Continuous Improvement  Represents continual improvement of process & customer satisfaction  Involves all operations & work units  Other names  Kaizen (Japanese)  Zero-defects  Six sigma © 1984-1994 T/Maker Co.

23. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-23 Shewhart’s PDCA Model 4.Act1.Plan 3.Check 2.Do Identify the improvement and make a plan Test the planIs the plan working Implement the plan

24. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-24 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.

25. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-25 Quality Circles  Group of 6-12 employees from same work area  Meet regularly to solve work-related problems  4 hours/month  Facilitator trains & helps with meetings © 1995 Corel Corp.

26. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-26 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

27. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-27 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

28. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-28 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

29. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-29 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

30. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-30  Ability to produce products uniformly regardless of manufacturing conditions  Put robustness in House of Quality matrices besides functionality © 1984-1994 T/Maker Co. © 1995 Corel Corp. Quality Robustness

31. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-31  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

32. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-32 Loss = (Actual X - Target) 2 (Cost of Deviation) Lower (upper) specification limit Measurement Greater deviation, more people are dissatisfied, higher cost Quality Loss Function Graph

33. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-33 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

34. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-34 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

35. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-35 ( a)Check Sheet: An organized method of recording data //// ////// ///// ////// /// // / Hour Defect12345678 A B C / // /

36. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-36 (b)Scatter Diagram: A graph of the value of one variable vs. another variable Absenteeism Productivity

37. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-37  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. c.Cause and Effect Diagram

38. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-38 Too many defects Problem Cause and Effect Diagram Example

39. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-39 MethodManpower Material Machinery Too many defects Main Cause Cause and Effect Diagram Example

40. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-40 MethodManpower Material Machinery DrillDrill OverOver TimeTime SteelSteel WoodWood LatheLathe Too many defects Sub-Cause Cause and Effect Diagram Example

41. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-41 MethodManpower Material MachineryDrillDrillOverOver TimeTime SteelSteel WoodWood LatheLathe Too many defects TiredTiredOldOld SlowSlow Cause and Effect Diagram Example

42. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-42 Fishbone Chart - Problems with Airline Customer Service

43. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-43  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 Process Chart

44. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-44 Process Chart Example

45. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-45 (d)Pareto Chart: A graph to identify and plot problems or defects in descending order of frequency Frequency Percent ABCDEABCDEABCDEABCDE

46. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-46  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 Statistical Process Control (SPC)

47. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-47 Produce Good Provide Service Stop Process Yes No Assign. Causes? Take Sample Inspect Sample Find Out Why Create Control Chart Start Statistical Process Control Steps

48. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-48 Process Control Chart

49. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-49 Patterns to Look for in Control Charts

50. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-50 (f)Histogram: A distribution showing the frequency of occurrences of a variable Distribution Repair time (minutes) Frequency

51. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-51 Inspection  Involves examining items to see if an item is good or defective  Detect a defective product  Does not correct deficiencies in process or product  It is expensive  Issues  When to inspect  Where in process to inspect

52. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-52 When and Where to Inspect 1.At the supplier’s plant while the supplier is producing 2.At your facility upon receipt of goods from the supplier 3.Before costly or irreversible processes 4.During the step-by-step production process 5.When production or service is complete 6.Before delivery to your customer 7.At the point of customer contact

53. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-53 Inspection Points in Services Bank Teller stations Loan accounts Checking accounts Shortages, courtesy, speed, accuracy Collateral, proper credit checks, rates, terms of loans, default rates, loan rates Accuracy, speed of entry, rate of overdraws Organization Some Points of Inspection Issues to Consider

54. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-54 Inspection Points in Services Retail store Stockrooms Display areas Sales counters Clean, uncluttered, organized, level of stockouts, amply supply, rotation of goods Attractive, well-organized, stocked, visible goods, good lighting Neat, courteous knowledgeable personnel; waiting time; accuracy in credit checking and sales entry Organization Some Points of Inspection Issues to Consider

55. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-55 Inspection Points in Services Restaurant Kitchen Cashier station Dining areas Clean, proper storage, unadulterated food, health regulations observed, well- organized Speed, accuracy, appearance Clean, comfortable, regular monitoring by personnel, Organization Some Points of Inspection Issues to Consider

56. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-56 Inspection  Many problems  Worker fatigue  Measurement error  Process variability  Cannot inspect quality into a product  Robust design, empowered employees, and sound processes are better solutions

57. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-57 Attributes Versus Variables  Attributes  Items are either good or bad, acceptable or unacceptable  Does not address degree of failure  Variables  Measures dimensions such as weight, speed, height, or strength  Falls within an acceptable range

58. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-58  Service quality is more difficult to measure than for goods  Service quality perceptions depend on  Expectations versus reality  Process and outcome  Types of service quality  Normal: Routine service delivery  Exceptional: How problems are handled TQM In Services

59. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-59 Service Quality The Operations Manager must recognize: 1.The tangible component of services is important 2.The service process is important 3.The service is judged against the customer’s expectations 4.Exceptions will occur