1. Operations Management
Chapter 6 – Managing Quality
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e
© 2006 Prentice Hall, Inc.

2. Outline Global Company Profile: Arnold Palmer Hospital
Quality And Strategy
Defining Quality
Total Quality Management (TQM)
Tools of TQM
Inspection
TQM in Services

3. Managing Quality Provides a Competitive Advantage
Arnold Palmer Hospital
Deliver over 10,000 babies annually
Virtually every type of quality tool is employed
Continuous improvement
Employee empowerment
Benchmarking
Just-in-time
Quality tools

4. Quality and Strategy
Managing quality supports differentiation, low cost, and response strategies
Quality helps firms increase sales and reduce costs
Building a quality organization is a demanding task

5. Defining Quality
The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs
American Society for Quality

6. Different Views User-based – better performance, more features
Manufacturing-based – conformance to standards, making it right the first time
Product-based – specific and measurable attributes of the product

7. Key Dimensions of Quality
Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality
Value 7

8. Encompasses entire organization, from supplier to customer
TQM
Encompasses entire organization, from supplier to customer
Stresses a commitment by management to have a continuing, companywide drive toward excellence in all aspects of products and services that are important to the customer

9. Seven Concepts of TQM Continuous improvement Six Sigma
Employee empowerment
Benchmarking
Just-in-time (JIT)
Taguchi concepts
Knowledge of TQM tools

10. Continuous Improvement
Represents continual improvement of all processes
Involves all operations and work centers including suppliers and customers
People, Equipment, Materials, Procedures

11. Six Sigma
Originally developed by Motorola, Six Sigma refers to an extremely high measure of process capability
A Six Sigma capable process will return no more than 3.4 defects per million operations (DPMO)
Highly structured approach to process improvement

12. Six Sigma Define critical outputs and identify gaps for improvement
Measure the work and collect process data
Analyze the data
Improve the process
Control the new process to make sure new performance is maintained
DMAIC Approach

13. Employee Empowerment
Getting employees involved in product and process improvements
85% of quality problems are due to process and material
Techniques
Build communication networks that include employees
Develop open, supportive supervisors
Move responsibility to employees
Build a high-morale organization
Create formal team structures
One way of doing this is by using Quality Circles … see the book for more if you are interested.

14. Use internal benchmarking if you’re big enough
Selecting best practices to use as a standard for performance
Use internal benchmarking if you’re big enough
Determine what to benchmark
Form a benchmark team
Identify benchmarking partners
Collect and analyze benchmarking information
Take action to match or exceed the benchmark

15. Best Practices for Resolving Customer Complaints
Make it easy for clients to complain
Respond quickly to complaints
Resolve complaints on first contact
Use computers to manage complaints
Recruit the best for customer service jobs

16. Just-in-Time (JIT)
‘Pull’ system of production scheduling including supply management
Production only when signaled
Allows reduced inventory levels
Inventory costs money and hides process and material problems
Encourages improved process and product quality

17. Just-In-Time (JIT) Example
Scrap
Unreliable Vendors
Capacity Imbalances
Work in process inventory level (hides problems)

18. Just-In-Time (JIT) Example
Reducing inventory reveals problems so they can be solved
Unreliable Vendors
Capacity Imbalances
Scrap

19. Tools of TQM Tools for Generating Ideas Tools to Organize the Data
Check sheets
Scatter diagrams
Cause and effect diagrams
Tools to Organize the Data
Pareto charts
Flow charts
Tools for Identifying Problems
Histogram
Statistical process control chart

20. Seven Tools for TQM
(a) Check Sheet: An organized method of recording data / / / //
/ / /// /
// ///
// ////
/// // /
Hour
Defect A B C
Figure 6.5

21. Seven Tools for TQM
(b) Scatter Diagram: A graph of the value of one variable vs. another variable
Absenteeism
Productivity
Figure 6.5

22. Seven Tools for TQM
(c) Cause and Effect Diagram: A tool that identifies process elements (causes) that might effect an outcome
Cause
Materials
Methods
Manpower
Machinery
Effect
Also called a fishbone chart.
Figure 6.5

23. Seven Tools for TQM
(d) Pareto Charts: A graph to identify and plot problems or defects in descending order of frequency
Frequency
Percent
A B C D E
Figure 6.5

24. Seven Tools for TQM
(e) Flow Charts (Process Diagrams): A chart that describes the steps in a process
Figure 6.5

25. Seven Tools for TQM
(f) Histogram: A distribution showing the frequency of occurrence of a variable
Distribution
Repair time (minutes)
Frequency
Figure 6.5

26. Seven Tools for TQM
(g) Statistical Process Control Chart: A chart with time on the horizontal axis to plot values of a statistic
Upper control limit
Target value
Lower control limit
Time
Figure 6.5

27. Statistical Process Control (SPC)
Uses statistics and control charts to tell when to take corrective action
Drives process improvement
Four key steps
Measure the process
When a change is indicated, find the assignable cause
Eliminate or incorporate the cause
Restart the revised process

28. An SPC Chart Plots the percent of free throws missed
Upper control limit
Coach’s target value
Lower control limit
Game number
| | | | | | | | |
20%
10% 0%
Figure 6.7

29. 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

30. When and Where to Inspect
At the supplier’s plant while the supplier is producing
At your facility upon receipt of goods from the supplier
Before costly or irreversible processes
During the step-by-step production processes
When production or service is complete
Before delivery from your facility
At the point of customer contact

31. Service Industry Inspection
Organization
What is Inspected
Standard
Arnold Palmer Hospital
Billing
Pharmacy
Lab
Nurses
Admissions
Accurate, timely, and correct format
Prescription accuracy, inventory accuracy
Audit for lab-test accuracy
Charts immediately updated
Data entered correctly and completely
Table 6.4

32. TQM In Services
Service quality is more difficult to measure than the quality of goods
Service quality perceptions depend on
Intangible differences between products
Intangible expectations customers have of those products

33. Service Quality The Operations Manager must recognize:
The tangible component of services is important
The service process is important
The service is judged against the customer’s expectations
Exceptions will occur

34. Determinants of Service Quality
Reliability
Responsiveness
Competence
Access
Courtesy
Communication
Credibility
Security
Understanding/ knowing the customer
Tangibles