1. POM - J. Galván 1 PRODUCTION AND OPERATIONS MANAGEMENT Ch. 4: Managing Quality

2. POM - J. Galván 2 Learning Objectives Definition of quality in a productive environment Definition of quality in a productive environment

3. POM - J. Galván 3 Ways in Which Quality Can Improve Productivity Market Gains Improved response Improved response Economies of Scale Economies of Scale Improved reputation Improved reputation Reduced Costs Increased productivity Increased productivity Lower rework and scrap costs Lower rework and scrap costs Lower warranty costs Lower warranty costs Increased Profits Improved Quality

4. POM - J. Galván 4 Flow of Activities Necessary to Achieve Total Quality Management Organizational Practices Organizational PracticesOrganizational PracticesOrganizational Practices Quality Principles Quality PrinciplesQuality PrinciplesQuality Principles Employee Fulfillment Employee FulfillmentEmployee FulfillmentEmployee Fulfillment Customer Satisfaction Customer SatisfactionCustomer SatisfactionCustomer Satisfaction

5. POM - J. Galván 5 Organizational Practices Leadership Leadership Mission statement Mission statement Effective operating procedure Effective operating procedure Staff support Staff support Training Training Yields: What is important and what is to be accomplished

6. POM - J. Galván 6 Quality Principles Customer focus Customer focus Continuous improvement Continuous improvement Employee empowerment Employee empowerment Benchmarking Benchmarking Just-in-time Just-in-time Tools of TQM Tools of TQM Yields: How to do what is important and to be accomplished

7. POM - J. Galván 7 Employment Fulfillment Empowerment Empowerment Organizational commitment Organizational commitment Yields: Employees attitudes that can accomplish what is important and to be accomplished

8. POM - J. Galván 8 Customer Satisfaction Meeting customer needs Meeting customer needs Repeat customers Repeat customers Yields: An effective organization with a competitive advantage

9. POM - J. Galván 9 Definitions of Quality ASQC: Product characteristics & features that affect customer satisfaction ASQC: Product characteristics & features that affect customer satisfaction User-Based: What consumer says it is User-Based: What consumer says it is Manufacturing-Based: Degree to which a product conforms to design specification Manufacturing-Based: Degree to which a product conforms to design specification Product-Based: Level of measurable product characteristic Product-Based: Level of measurable product characteristic

10. POM - J. Galván 10 ¨Operation ¨Reliability & durability ¨Conformance ¨Serviceability ¨Appearance ¨Perceived quality Quality Dimensions of Quality for Goods

11. POM - J. Galván 11 Three Reasons Quality is Important Company reputation Company reputation Product liability Product liability Global implications Global implications

12. POM - J. Galván 12 PROBLEM How can a company assure the manufacturing of quality products? How can a company assure the manufacturing of quality products? Implementing the organization and the procedures that will guarantee that products are well done Implementing the organization and the procedures that will guarantee that products are well done What kind of organization?What kind of organization? What type of procedures and practices?What type of procedures and practices? ANSWER: Implement quality management standards ANSWER: Implement quality management standards

13. POM - J. Galván 13 How do quality management standards work UNDERLYING PRINCIPLE: UNDERLYING PRINCIPLE: If things are done well once the system is OKIf things are done well once the system is OK If things are always done the same way they are well doneIf things are always done the same way they are well done Thus if the procedures are defined and documented, the final outcome will always be the sameThus if the procedures are defined and documented, the final outcome will always be the same

14. POM - J. Galván 14 International Quality Standards Industrial Standard Z8101-1981 (Japan) Industrial Standard Z8101-1981 (Japan) Specification for TQM Specification for TQM ISO 9000 series (Europe/EC) ISO 9000 series (Europe/EC) Common quality standards for products sold in Europe (even if made in U.S.) Common quality standards for products sold in Europe (even if made in U.S.) ISO 14000 series (Europe/EC) ISO 14000 series (Europe/EC) Standards for recycling, labeling etc. Standards for recycling, labeling etc. ASQC Q90 series; MILSTD (U.S.) ASQC Q90 series; MILSTD (U.S.)

15. POM - J. Galván 15 ISO 9000 Series of standards agreed upon by the International Organization for Standardization (ISO) Series of standards agreed upon by the International Organization for Standardization (ISO) Adopted in 1987 Adopted in 1987 More than 100 countries More than 100 countries A prerequisite for global competition? A prerequisite for global competition? ISO 9000 directs you to "document what you do and then do as you documented." ISO 9000 directs you to "document what you do and then do as you documented."

16. POM - J. Galván 16 CERTIFICATION Who decides that a company applies quality management standards? Who decides that a company applies quality management standards? Someone that examines the company and CERTIFIES that it follows the correct organizational and procedural rules established in the standard Someone that examines the company and CERTIFIES that it follows the correct organizational and procedural rules established in the standard Who is able to certify? Who is able to certify?

17. POM - J. Galván 17 Three Forms of ISO Certification First party: A firm audits itself against ISO 9000 standards. Second party: A customer audits its supplier. Third party: A "qualified" national or international standards or certifying agency serves as auditor.

18. POM - J. Galván 18 ISO 9001:2000 Quality Management System Comprises the following processes: 1. The Quality Management System process itself and contributory processes for 1. The Quality Management System process itself and contributory processes for 2. Resource Management 2. Resource Management 3. Regulatory Research 3. Regulatory Research 4. Market Research 4. Market Research 5. Product Design 5. Product Design 6. Purchasing 6. Purchasing 7. Production 7. Production 8. Service Provision 8. Service Provision 9. Product Protection 9. Product Protection 10. Customer Needs Assessment 10. Customer Needs Assessment 11. Customer Communications 11. Customer Communications 12. Internal Communications 12. Internal Communications 13. Document Control 13. Document Control 14. Record Keeping 14. Record Keeping 15. Planning 15. Planning 16. Training 16. Training 17. Internal Audit 17. Internal Audit 18. Management Review 18. Management Review 19. Monitoring and Measuring 19. Monitoring and Measuring 20. Nonconformance Management 20. Nonconformance Management 21. Continual Improvement 21. Continual Improvement

19. POM - J. Galván 19 Traditional Quality Process (Manufacturing) Specifies Need Customer Interprets Need Marketing Designs Product Defines Quality Engineering Produces Product Plans Quality Monitors Quality Operations Quality is customer driven!

20. POM - J. Galván 20 TQM Encompasses entire organization, from supplier to customer 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. 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.

21. POM - J. Galván 21 Organizational Practices Quality Principles Employee Fulfillment Attitudes (e.g., Commitment) How to Do What to Do Effective Business Customer Satisfaction Achieving Total Quality Management

22. POM - J. Galván 22 Concepts of TQM Continuous improvement Continuous improvement Employee empowerment Employee empowerment Benchmarking Benchmarking Just-in-time (JIT) Just-in-time (JIT) Knowledge of tools Knowledge of tools

23. POM - J. Galván 23 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.

24. POM - J. Galván 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. POM - J. Galván 25 Benchmarking Selecting best practices to use as a standard for performance Determine what to benchmark Determine what to benchmark Form a benchmark team Form a benchmark team Identify benchmarking partners Identify benchmarking partners Collect and analyze benchmarking information Collect and analyze benchmarking information Take action to match or exceed the benchmark Take action to match or exceed the benchmark

26. POM - J. Galván 26 Resolving Customer Complaints Make it easy for clients to complain Make it easy for clients to complain Respond quickly to complaints Respond quickly to complaints Resolve complaints on the first contact Resolve complaints on the first contact Use computers to manage complaints Use computers to manage complaints Recruit the best for customer service jobs Recruit the best for customer service jobs

27. POM - J. Galván 27 Just-in-Time (JIT) Relationship to quality: JIT cuts cost of quality JIT cuts cost of quality JIT improves quality JIT improves quality Better quality means less inventory and better, easier-to-employ JIT system Better quality means less inventory and better, easier-to-employ JIT system

28. POM - J. Galván 28 Just-in-Time (JIT) ‘Pull’ system of production/purchasing ‘Pull’ system of production/purchasing Customer starts production with an order Customer starts production with an order Involves ‘vendor partnership programs’ to improve quality of purchased items Involves ‘vendor partnership programs’ to improve quality of purchased items Reduces all inventory levels Reduces all inventory levels Inventory hides process & material problems Inventory hides process & material problems Improves process & product quality Improves process & product quality

29. POM - J. Galván 29 Just-In-Time (JIT) Example Scrap Work in process inventory level (hides problems) Unreliable Vendors Capacity Imbalances

30. POM - J. Galván 30 Just-In-Time (JIT) Example Scrap Reducing inventory reveals problems so they can be solved. Unreliable Vendors Capacity Imbalances

31. POM - J. Galván 31 Quality Specifications Design quality: Inherent value of the product in the marketplace Design quality: Inherent value of the product in the marketplace Dimensions include:Dimensions include: Performance, Performance, Features, Features, Reliability, Reliability, Durability, Durability, Serviceability, Serviceability, Response, Response, Aesthetics, and Aesthetics, and Reputation. Reputation. Conformance quality: Degree to which the product or service design specifications are met Conformance quality: Degree to which the product or service design specifications are met

32. POM - J. Galván 32 Costs of Quality External Failure Costs Appraisal Costs Prevention Costs Internal Failure Costs Costs of Quality

33. POM - J. Galván 33 Continuous Improvement (CI) Management's view of performance standards of the organization Management's view of performance standards of the organization performance level of the firm as something to be "continuously challenged and incrementally upgraded." performance level of the firm as something to be "continuously challenged and incrementally upgraded." The way management views the contribution and role of its workforce The way management views the contribution and role of its workforce believe employee involvement and team efforts are the key to improvement believe employee involvement and team efforts are the key to improvement

34. POM - J. Galván 34 CI Methodology: PDCA Cycle (Deming Wheel) 1. Plan a change aimed at improvement. 1. Plan 2. Execute the change. 2. Do 3. Study the results; did it work? 3. Check 4. Institutionalize the change or abandon or do it again. 4. Act

35. POM - J. Galván 35 Example: Process Flow Chart No, Continue… Material Received from Supplier Inspect Material for Defects Defects found? Return to Supplier for Credit Yes Can be used to find quality problems.

36. POM - J. Galván 36 Example: Pareto Analysis Can be used to find when 80% of the problems may be attributed to 20% of the causes. Can be used to find when 80% of the problems may be attributed to 20% of the causes. Assy. Instruct. Frequency DesignPurch. Training Other 80%

37. POM - J. Galván 37 Example: Run Chart 0.44 0.46 0.48 0.5 0.52 0.54 0.56 0.58 123456789101112 Time (Hours) Diameter Can be used to identify when equipment or processes are not behaving according to specifications.

38. POM - J. Galván 38 Example: Histogram Number of Lots Data Ranges Defects in lot 01234 Can be used to identify the frequency of quality defect occurrence and display quality performance.

39. POM - J. Galván 39 Example: Scatter Diagram 0 2 4 6 8 10 12 0102030 Hours of Training Defects Can be used to illustrate the relationships between quality behavior and training.

40. POM - J. Galván 40 Example: Checksheet Billing Errors Wrong Account Wrong Amount A/R Errors Wrong Account Wrong Amount Monday Can be used to keep track of defects or used to make sure people collect data in a correct manner.

41. POM - J. Galván 41 Example: Cause & Effect Diagram Effect ManMachine MaterialMethod Environment Possible causes: The results or effect. Can be used to systematically track backwards to find a possible cause of a quality problem (or effect).

42. POM - J. Galván 42 Example: Control Charts 970 980 990 1000 1010 1020 0123456789101112131415 LCL UCL Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality.

43. POM - J. Galván 43 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.

44. POM - J. Galván 44 The Shingo System: Fail-Safe Design Shingo’s argument: Shingo’s argument: SQC methods do not prevent defects SQC methods do not prevent defects Defects arise when people make errors Defects arise when people make errors Defects can be prevented by providing workers with feedback on errors Defects can be prevented by providing workers with feedback on errors Poka-Yoke includes: Poka-Yoke includes: ChecklistsChecklists Special tooling that prevents workers from making errorsSpecial tooling that prevents workers from making errors

45. POM - J. Galván 45 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

46. POM - J. Galván 46 UCL LCL Control Chart Example

47. POM - J. Galván 47 Involves examining items to see if an item is good or defective Involves examining items to see if an item is good or defective Detect a defective product Detect a defective product Does not correct deficiencies in process or product Does not correct deficiencies in process or product Issues Issues When to inspect When to inspect Where in process to inspect Where in process to inspect Inspection

48. POM - J. Galván 48 When and Where to Inspect At the supplier’s plant while the supplier is producing At the supplier’s plant while the supplier is producing At your plant upon receipt of goods from the supplier At your plant upon receipt of goods from the supplier Before costly or irreversible processes Before costly or irreversible processes During the step-by-step production processes During the step-by-step production processes When production is complete When production is complete Before shipment from your plant Before shipment from your plant At the point of customer contact At the point of customer contact

49. POM - J. Galván 49 BankTeller stationSpeed,courtesy CheckingAccuracy StoreStockroomsStock rotation Display areasAttractiveness CountersCourtesy, knowledge BusinessWhereVariable When and Where to Inspect in Services

50. POM - J. Galván 50 Service quality is more difficult to measure than for goods Service quality is more difficult to measure than for goods Service quality perceptions depend on Service quality perceptions depend on Expectations vs. reality Expectations vs. reality Process & outcome Process & outcome Types of service quality Types of service quality Normal: Routine service delivery Normal: Routine service delivery Exceptional: How problems are handled Exceptional: How problems are handled TQM In Services

51. POM - J. Galván 51 Under- standing Tangibles Reliability CommunicationCredibility Security Responsiveness Competence Courtesy Access © 1995 Corel Corp. Service Quality Attributes