1. OPSM 301 Operations Management
Koç University
OPSM 301 Operations Management
Class 16:
Quality
(All of Chapter 6 included)
Zeynep Aksin

2. Objectives Total Quality Management Defined
Quality Specifications and Costs
Six Sigma Quality and Tools
External Benchmarking
ISO 9000
Service Quality 2

3. Total Quality Management (TQM) Defined
Total quality management is defined as managing the entire organization so that it excels on all dimensions of products and services that are important to the customer 3

4. Quality Management
What does the term quality mean?
Product-based definition
User-based definition
Manufacturing based definition

5. Product-Based Definition
According to this view, differences in quality reflect differences in the quantity of some ingredient or attribute possessed by a product (Example: Fine rugs have a large number of knots per square centimeter)
This approach seems appropriate only if the attributes in question are considered preferable by virtually all buyers

6. Manufacturing-Based Definition
This approach identifies quality as “conformance to requirements”
This approach's primary focus is internal, however, the consumers’ interest in quality is implicitly recognized
According to the manufacturing-based approach, improvements in quality lead to lower costs

7. User-Based Definition
This approach starts from the opposite premise that quality “lies in the eyes of the beholder”
The goods that best satisfy consumers' preferences are those that they regard as having the highest quality

8. Shifting Definitions
The characteristics that connote quality must be first identified through market research
These characteristics must then be translated into identifiable product attributes
And finally, manufacturing process must be organized to ensure that products are made precisely to these specifications

9. Ways in Which Quality Can Improve Productivity
Sales Gains
Improved response
Higher Prices
Improved reputation
Improved Quality
Increased Profits
Reduced Costs
Increased productivity
Lower rework and scrap costs
Lower warranty costs

10. Quality Specifications
Quality: Inherent value of the product in the marketplace
Dimensions include: Performance, Features, Reliability, Conformance, Durability, Serviceability, Aesthetics, and Perceived Quality (Reputation) 7

11. Eight Dimensions of Quality
Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality

12. Performance
Performance refers to a product's primary operating characteristics (Acceleration of a car, brightness of a TV set)
Different brands can easily be ranked objectively on individual aspects of performance

13. Features
Features are the bells and whistles of products and services, they supplement their basic functioning (Push-button windows)
It is hard to draw the line separating primary performance characteristics from secondary features
Many customers may wish to customize or personalize their purchases, and availability of different features plays an important role in meeting these requirements

14. Reliability
Reliability reflects the probability of a product malfunctioning or failing within a specified time period (Mean time to first failure, mean time between failures)
These measures are most relevant to durable goods than to products and services that are consumed instantly
Reliability normally becomes more important to consumers as down time and maintenance become more expensive

15. Conformance
Conformance is the degree to which a product's design and operating characteristics meet established standards
These standards are normally expressed as a target or center, and deviance from the center is permitted within a specified range

16. Durability
Durability is a measure of product life and may be defined as the amount of use one gets from a product before it breaks down and replacement is preferable to continued repair

17. Serviceability, Aesthetics, and Perceived Quality
Serviceability is a measure of speed, courtesy, competence, and ease of repair
Aesthetics (how a product looks, feels, sounds, tastes or smells) is a very subjective quality dimension
Perceived quality is the set of inferences we make about quality rather than the reality of itself

18. Certain dimensions may be pushed to the forefront to gain market share
Quality Strategies
Certain dimensions may be pushed to the forefront to gain market share
Some of the dimensions are mutually reinforcing, some are not
The challenge is to compete on selected dimensions

19. Quality Costs Cost of Control (Quality, Conformance)
Prevention costs: reducing the potential for defects
Appraisal costs: evaluating products
Cost of Failure of Control (Unquality, non-conformance)
Internal failure costs:of producing defective parts or service
External failure costs: occur after delivery

20. Continuous Improvement
Represents continual improvement of process & customer satisfaction
Involves all operations & work units
Other names
Kaizen (Japanese)
Zero-defects
Six sigma
© T/Maker Co.

21. Six Sigma Quality
A philosophy and set of methods companies use to eliminate defects in their products and processes
Seeks to reduce variation in the processes that lead to product defects
The name “six sigma” refers to the variation that exists within plus or minus six standard deviations of the process outputs

22. Six Sigma Quality

23. Six Sigma Quality (Continued)
Six Sigma allows managers to readily describe process performance using a common metric: Defects Per Million Opportunities (DPMO)

24. Six Sigma Quality (Continued)
Example of Defects Per Million Opportunities (DPMO) calculation: Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered. What is the DPMO in this situation?
So, for every one million letters delivered this city’s postal managers can expect to have 1,000 letters incorrectly sent to the wrong address.
Cost of Quality: What might that DPMO mean in terms of over-time employment to correct the errors?

25. Six Sigma Quality: DMAIC Cycle
Define, Measure, Analyze, Improve, and Control (DMAIC)
Developed by General Electric as a means of focusing effort on quality using a methodological approach
Overall focus of the methodology is to understand and achieve what the customer wants
DMAIC consists of five steps….

26. Six Sigma Quality: DMAIC Cycle (Continued)
1. Define (D)
Customers and their priorities
2. Measure (M)
Process and its performance
3. Analyze (A)
Causes of defects
4. Improve (I)
Remove causes of defects
5. Control (C)
Maintain quality

27. The DMAIC Road Map (Ford)
DEFINE
Define — Select Critical To Satisfaction (CTS) characteristics and performance
MEASURE
Measure — Create/validate measurement systems
ANALYZE
Analyze — Identify sources of variation from performance objectives
MODIFY DESIGN?
Redesign — Revise current measurement systems if incorrect
REDESIGN
Improve — Discover process relationships and establish new procedures
IMPROVE
CONTROL
Control — Implement process controls

28. Analytical Tools for Six Sigma and Continuous Improvement
Process Analysis
Run Charts
Pareto Charts
Histograms
Scatter Diagrams
Fish-Bone Charts
Control Charts (not covered in this course)

29. Pareto Analysis
The purpose of Pareto Analysis is to identify and highlight major symptoms of major quality problems
It is based on the premise that usually a small number of faults cause the majority of malfunctions (to separate the vital few and trivial many)

30. Developing Pareto Analysis
Define classification of defects to be monitored
Define the period of time over which the assessment will be made
Total the frequency of occurrence of each class of defects over the period
Plot the histogram and cumulative distribution of the classes in descending order of the frequency occurrence
Identify the classes that constitute the majority of defect occurrences

31. “80 percent of the problems are due to 20 percent of the causes”
Pareto Analysis
Frequency
Percentage
-100%
-50%
-0%
A B C D E F
Pareto Law (80/20 Rule):
“80 percent of the problems are due to 20 percent of the causes”

32. Scatter Diagrams
A Scatter Diagram is used to interpret data by graphically displaying the relationship between two variables.

33. Fish-Bone Diagram
Also known as cause-and-effect diagram, or Ishikawa diagram
Pareto analysis is used to identify key problems or symptoms,
Fish-Bone diagram is used to sort causes of the problems
Brain storming sessions of groups of workers needed
It is a very valuable educational tool

34. Used to find problem sources/solutions Other names Steps
Fish-Bone Diagram
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.
This slide introduces the Cause and Effect Diagram. The next several slide show the development of a simple example.
If time is available, it would be helpful to ask students to develop their own examples.

35. Causes and Effect Diagram
Fishbone diagram - Ishikawa Chart
Machine
Man
Effect
Method
Material

36. Cause and Effect Diagram Example
Method
Manpower
Main Cause
Too many defects
Material
Machinery
Main Cause

37. Cause and Effect Diagram Example
Method
Manpower
Drill
Overtime
Too many defects
Wood
Steel
Lathe
Material
Machinery
Sub-Cause

38. Cause and Effect Diagram Example
Method
Manpower
Tired
Old
Slow
Drill
Overtime
Steel
Wood
Lathe
Too many defects
Material
Machinery

39. Example: why isn't the phone being answered on time?

40. Analytical Tools for Six Sigma and Continuous Improvement: Control Charts
Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality
970
980
990
1000
1010
1020 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
LCL
UCL

41. Statistical Process Control with Control Charts

42. Six Sigma Roles and Responsibilities
Executive leaders must champion the process of improvement
Corporation-wide training in Six Sigma concepts and tools
Setting stretch objectives for improvement
Continuous reinforcement and rewards

43. The Shingo System: Fail-Safe Design
Shingo’s argument:
Defects arise when people make errors
Defects can be prevented by providing employees with feedback on errors and putting controls in the process
Poka-Yoke includes:
Checklists
Special tooling that prevents employees from making errors
(Poka-Yoke: Japanese slang for “avoiding inadvertent errors” ) 21

44. Which dial turns on the burner?
Knowledge in the World:
Which dial turns on the burner?
Stove A
Stove B

45. 1. Identify those processes needing improvement
Benchmarking
1. Identify those processes needing improvement
2. Identify a firm that is the world leader in performing the process
3. Contact the managers of that company and make a personal visit to interview managers and workers
4. Analyze data 20

46. A prerequisite for global competition?
ISO 9000
Series of standards agreed upon by the International Organization for Standardization (ISO)
Adopted in 1987
Awarded in 152 countries
A prerequisite for global competition?
ISO 9000 directs you to "document what you do and then do as you documented" 24

47. Three Forms of ISO Certification
First party: A firm audits itself against ISO 9000 standards
Second party: A customer audits its supplier
3. Third party: A "qualified" national or international standards or certifying agency serves as auditor 27

48. ISO 9000 Standards: Application in Production Flow