Mgt 340 Ch 6 - Quality.ppt

Managing Quality 6 PowerPoint presentation to accompany Heizer and Render Operations Management, Eleventh Edition Principles of Operations Management, Ninth Edition PowerPoint slides by Jeff Heyl © 2014 © 2014 Pearson...

Managing Quality 6 PowerPoint presentation to accompany Heizer and Render Operations Management, Eleventh Edition Principles of Operations Management, Ninth Edition PowerPoint slides by Jeff Heyl © 2014 © 2014 Pearson Pearson Education, Education, Inc.Inc. 6-1  Learning Objectives When you complete this chapter you should be able to: 1. Define quality and TQM 2. Describe the ISO international quality standards 3. Explain what Six Sigma is 4. Explain how benchmarking is used in TQM 5. Explain quality robust products and Taguchi concepts 6. Use the seven tools of TQM © 2014 Pearson Education, Inc. 6-2  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 © 2014 Pearson Education, Inc. 6-3  Two Ways Quality Improves Profitability Figure 6.1 Sales Gains via Improved response Flexible pricing Improved reputation Improved Increased Quality Profits Reduced Costs via Increased productivity Lower rework and scrap costs Lower warranty costs © 2014 Pearson Education, Inc. 6-4  The Flow of Activities Organizational Practices Leadership, Mission statement, Effective operating procedures, Staff support, Training Yields: What is important and what is to be accomplished Quality Principles Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQM Yields: How to do what is important and to be accomplished Employee Fulfillment Empowerment, Organizational commitment Yields: Employee attitudes that can accomplish what is important Customer Satisfaction Winning orders, Repeat customers Figure 6.2 Yields: An effective organization with a competitive © 2014 Pearson Education, Inc. 6-5 advantage  Defining Quality An operations manager’s objective is to build a total quality management system that identifies and satisfies customer needs © 2014 Pearson Education, Inc. 6-6  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 © 2014 Pearson Education, Inc. 6-7  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 © 2014 Pearson Education, Inc. 6-8  Implications of Quality 1. Company reputation ► Perception of new products ► Employment practices ► Supplier relations 2. Product liability ► Reduce risk 3. Global implications ► Improved ability to compete © 2014 Pearson Education, Inc. 6-9  Malcolm Baldrige National Quality Award ► Established in 1988 by the U.S. government ► Designed to promote TQM practices ► Recent winners include Lockheed Martin Missiles and Fire Control, MESA Products Inc., North Mississippi Health Services, City of Irving, Concordia Publishing House, Henry Ford Health System, MEDRAD, Nestlé Purina PetCare Co., Montgomery County Public Schools © 2014 Pearson Education, Inc. 6 - 10  Baldrige Criteria Applicants are evaluated on: CATEGORIES POINTS Leadership 120 Strategic Planning 85 Customer Focus 85 Measurement, Analysis, and 90 Knowledge Management Workforce Focus 85 Operations Focus 85 Results 450 © 2014 Pearson Education, Inc. 6 - 11  ISO 9000 International Quality Standards ► International recognition ► Encourages quality management procedures, detailed documentation, work instructions, and recordkeeping ► 2009 revision emphasized sustained success ► Over one million certifications in 178 countries ► Critical for global business © 2014 Pearson Education, Inc. 6 - 12  ISO 9000 International Quality Standards ► Management principles ► Top management leadership ► Customer satisfaction ► Continual improvement ► Involvement of people ► Process analysis ► Use of data-driven decision making ► A systems approach to management ► Mutually beneficial supplier relationships © 2014 Pearson Education, Inc. 6 - 13  Costs of Quality ► Prevention costs - reducing the potential for defects ► Appraisal costs - evaluating products, parts, and services ► Internal failure costs - producing defective parts or service before delivery ► External failure costs - defects discovered after delivery © 2014 Pearson Education, Inc. 6 - 14  Costs of Quality Total Total Cost Cost External Failure Internal Failure Quality Improvement © 2014 Pearson Education, Inc. 6 - 15  Takumi A Japanese character that symbolizes a broader dimension than quality, a deeper process than education, and a more perfect method than persistence © 2014 Pearson Education, Inc. 6 - 16  Leaders in Quality TABLE 6.1 Leaders in the Field of Quality Management LEADER PHILOSOPHY/CONTRIBUTION W. Edwards Deming Deming insisted management accept responsibility for building good systems. The employee cannot produce products that on average exceed the quality of what the process is capable of producing. His 14 points for implementing quality improvement are presented in this chapter. Joseph M. Juran A pioneer in teaching the Japanese how to improve quality, Juran believed strongly in top-management commitment, support, and involvement in the quality effort. He was also a believer in teams that continually seek to raise quality standards. Juran varies from Deming somewhat in focusing on the customer and defining quality as fitness for use, not necessarily the written specifications. © 2014 Pearson Education, Inc. 6 - 17  Leaders in Quality TABLE 6.1 Leaders in the Field of Quality Management LEADER PHILOSOPHY/CONTRIBUTION Amarnd Feigenbaum His 1961 book Total Quality Control laid out 40 steps to quality improvement processes. He viewed quality not as a set of tools but as a total field that integrated the processes of a company. His work in how people learn from each other’s successes led to the field of cross-functional teamwork. Philip B. Crosby Quality Is Free was Crosby’s attention-getting book published in 1979. Crosby believed that in the traditional trade-off between the cost of improving quality and the cost of poor quality, the cost of poor quality is understated. The cost of poor quality should include all of the things that are involved in not doing the job right the first time. Crosby coined the term zero defects and stated, “There is absolutely no reason for having errors or defects in any product or service.” © 2014 Pearson Education, Inc. 6 - 18  Ethics and Quality Management ► Operations managers must deliver healthy, safe, quality products and services ► Poor quality risks injuries, lawsuits, recalls, and regulation ► Ethical conduct must dictate response to problems ► All stakeholders much be considered © 2014 Pearson Education, Inc. 6 - 19  Total Quality Management ► 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 © 2014 Pearson Education, Inc. 6 - 20  Deming’s Fourteen Points TABLE 6.2 Deming’s 14 Points for Implementing Quality Improvement 1. Create consistency of purpose 2. Lead to promote change 3. Build quality into the product; stop depending on inspections to catch problems 4. Build long-term relationships based on performance instead of awarding business on price 5. Continuously improve product, quality, and service 6. Start training 7. Emphasize leadership © 2014 Pearson Education, Inc. 6 - 21  Deming’s Fourteen Points TABLE 6.2 Deming’s 14 Points for Implementing Quality Improvement 8. Drive out fear 9. Break down barriers between departments 10. Stop haranguing workers 11. Support, help, and improve 12. Remove barriers to pride in work 13. Institute a vigorous program of education and self-improvement 14. Put everyone in the company to work on the transformation © 2014 Pearson Education, Inc. 6 - 22  Seven Concepts of TQM 1. Continuous improvement 2. Six Sigma 3. Employee empowerment 4. Benchmarking 5. Just-in-time (JIT) 6. Taguchi concepts 7. Knowledge of TQM tools © 2014 Pearson Education, Inc. 6 - 23  Continuous Improvement ► Never-ending process of continual improvement ► Covers people, equipment, materials, procedures ► Every operation can be improved © 2014 Pearson Education, Inc. 6 - 24  Shewhart’s PDCA Model Figure 6.3 4. Act 1. Plan Implement Identify the the plan, pattern and document make a plan 3. Check 2. Do Is the plan Test the working? plan © 2014 Pearson Education, Inc. 6 - 25  Continuous Improvement ► Kaizen describes the ongoing process of unending improvement ► TQM and zero defects also used to describe continuous improvement © 2014 Pearson Education, Inc. 6 - 26  Six Sigma ► Two meanings Lower limits Upper limits 2,700 defects/million ► Statistical definition of a process that is 3.499.9997% defects/million capable, 3.4 defects per million opportunities (DPMO) ► A program designed to reduce defects, lower costs, save time, and improve customer satisfaction Mean ► A comprehensive system±3for achieving and sustaining business ±6 success  Figure 6.4 © 2014 Pearson Education, Inc. 6 - 27  Six Sigma ► Two meanings ► Statistical definition of a process that is 99.9997% capable, 3.4 defects per million opportunities (DPMO) ► A program designed to reduce defects, lower costs, save time, and improve customer satisfaction ► A comprehensive system for achieving and sustaining business success © 2014 Pearson Education, Inc. 6 - 28  Six Sigma Program ► Originally developed by Motorola, adopted and enhanced by Honeywell and GE ► Highly structured approach to process improvement 6 ► A strategy ► A discipline – DMAIC ► A set of 7 tools © 2014 Pearson Education, Inc. 6 - 29  Six Sigma 1. Defines the project’s purpose, scope, and outputs, identifies the required process information keeping in mind the customer’s definition of quality 2. Measures the process and collects data 3. Analyzes the data ensuring repeatability and reproducibility DMAIC Approach 4. Improves by modifying or redesigning existing processes and procedures 5. Controls the new process to make sure performance levels are maintained © 2014 Pearson Education, Inc. 6 - 30  Implementing Six Sigma ► Emphasize defects per million opportunities as a standard metric ► Provide extensive training ► Focus on corporate sponsor support (Champions) ► Create qualified process improvement experts (Black Belts, Green Belts, etc.) ► This cannot Set stretch be accomplished without a objectives major commitment from top level management © 2014 Pearson Education, Inc. 6 - 31  Employee Empowerment ► Getting employees involved in product and process improvements ► 85% of quality problems are due to process and material ► Techniques 1) Build communication networks that include employees 2) Develop open, supportive supervisors 3) Move responsibility to employees 4) Build a high-morale organization 5) Create formal team structures © 2014 Pearson Education, Inc. 6 - 32  Quality Circles ► Group of employees who meet regularly to solve problems ► Trained in planning, problem solving, and statistical methods ► Often led by a facilitator ► Very effective when done properly © 2014 Pearson Education, Inc. 6 - 33  Benchmarking Selecting best practices to use as a standard for performance 1. Determine what to benchmark 2. Form a benchmark team 3. Identify benchmarking partners 4. Collect and analyze benchmarking information 5. Take action to match or exceed the benchmark © 2014 Pearson Education, Inc. 6 - 34  Best Practices for Resolving Customer Complaints Table 6.3 BEST PRACTICE JUSTIFICATION Make it easy for clients to complain It is free market research Respond quickly to complaints It adds customers and loyalty Resolve complaints on first contact It reduces cost Use computers to manage complaints Discover trends, share them, and align your services Recruit the best for customer service It should be part of formal training and jobs career advancement © 2014 Pearson Education, Inc. 6 - 35  Internal Benchmarking ▶ When the organization is large enough ▶ Data more accessible ▶ Can and should be established in a variety of areas © 2014 Pearson Education, Inc. 6 - 36  Just-in-Time (JIT) Relationship to quality: ► JIT cuts the cost of quality ► JIT improves quality ► Better quality means less inventory and better, easier-to- employ JIT system © 2014 Pearson Education, Inc. 6 - 37  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 © 2014 Pearson Education, Inc. 6 - 38  Taguchi Concepts ► Engineering and experimental design methods to improve product and process design ► Identify key component and process variables affecting product variation ► Taguchi Concepts ► Quality robustness ► Quality loss function ► Target-oriented quality © 2014 Pearson Education, Inc. 6 - 39  Quality Robustness ► Ability to produce products uniformly in adverse manufacturing and environmental conditions ► Remove the effects of adverse conditions ► Small variations in materials and process do not destroy product quality © 2014 Pearson Education, Inc. 6 - 40  Quality Loss Function ► Shows that costs increase as the product moves away from what the customer wants Target- ► Costs include customer or ien t ed dissatisfaction, warranty quality and service, internal scrap and repair, and costs to society ► Traditional conformance specifications are too simplistic © 2014 Pearson Education, Inc. 6 - 41  Quality Loss Function High loss L = D2C Unacceptable where Loss (to L = loss to society producing Poor organization, D2 = square of customer, Fair the distance from and society) target value Good C = cost of Best Low loss deviation Target-oriented quality yields more product in the “best” category Target-oriented quality brings product toward Frequency the target value Conformance-oriented quality keeps products within 3 standard deviations Lower Target Upper Specification Figure 6.5 © 2014 Pearson Education, Inc. 6 - 42  TQM Tools ► Tools for Generating Ideas ► Check Sheet ► Scatter Diagram ► Cause-and-Effect Diagram ► Tools to Organize the Data ► Pareto Chart ► Flowchart (Process Diagram) © 2014 Pearson Education, Inc. 6 - 43  TQM Tools ► Tools for Identifying Problems ► Histogram ► Statistical Process Control Chart © 2014 Pearson Education, Inc. 6 - 44  Seven Tools of TQM (a) Check Sheet: An organized method of recording data Hour Defect 1 2 3 4 5 6 7 8 A /// / / / / /// / B // / / / // /// C / // // //// Figure 6.6 © 2014 Pearson Education, Inc. 6 - 45  Seven Tools of TQM (b) Scatter Diagram: A graph of the value of one variable vs. another variable Productivity Absenteeism Figure 6.6 © 2014 Pearson Education, Inc. 6 - 46  Seven Tools of TQM (c) Cause-and-Effect Diagram: A tool that identifies process elements (causes) that might effect an outcome Cause Materials Methods Effect Manpower Machinery Figure 6.6 © 2014 Pearson Education, Inc. 6 - 47  Seven Tools of TQM (d) Pareto Chart: A graph to identify and plot problems or defects in descending order of frequency Frequency Percent A B C D E Figure 6.6 © 2014 Pearson Education, Inc. 6 - 48  Seven Tools of TQM (e) Flowchart (Process Diagram): A chart that describes the steps in a process Figure 6.6 © 2014 Pearson Education, Inc. 6 - 49  Seven Tools of TQM (f) Histogram: A distribution showing the frequency of occurrences of a variable Distribution Frequency Repair time (minutes) Figure 6.6 © 2014 Pearson Education, Inc. 6 - 50  Seven Tools of 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 6.6 © 2014 Pearson Education, Inc. 6 - 51  Cause-and-Effect Diagrams Material Method (ball) (shooting process) Grain/Feel Aiming point (grip) Size of ball Air pressure Bend knees Hand position Balance Lopsidedness Follow-through Missed Training free-throws Rim size Conditioning Motivation Rim height Consistency Rim alignment Backboard stability Concentration Machine Manpower (hoop & (shooter) Figure 6.7 backboard) © 2014 Pearson Education, Inc. 6 - 52  Pareto Charts Data for October – 100 70 – – 93 – 88 60 – 54 Frequency (number) Cumulative percent – 72 50 – 40 – Number of 30 – occurrences 20 – 12 10 – 4 3 2 0 – Room svc Check-in Pool hours Minibar Misc. 72% 16% 5% 4% 3% Causes and percent of the total © 2014 Pearson Education, Inc. 6 - 53  Flow Charts MRI Flowchart 1. Physician schedules MRI 7. If unsatisfactory, repeat 2. Patient taken to MRI 8. Patient taken back to room 3. Patient signs in 9. MRI read by radiologist 4. Patient is prepped 10. MRI report transferred to 5. Technician carries out MRI physician 6. Technician inspects film 11. Patient and physician discuss 8 80% 1 2 3 4 5 6 7 11 9 10 20% © 2014 Pearson Education, Inc. 6 - 54  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 © 2014 Pearson Education, Inc. 6 - 55  Control Charts Figure 6.8 Plot the percent of free throws missed Upper control limit 40% Coach’s target value 20% | | | | | | | | | Lower control limit 0% 1 2 3 4 5 6 7 8 9 Game number © 2014 Pearson Education, Inc. 6 - 56  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 © 2014 Pearson Education, Inc. 6 - 57  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 your 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 © 2014 Pearson Education, Inc. 6 - 58  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 © 2014 Pearson Education, Inc. 6 - 59  Source Inspection ► Also known as source control ► The next step in the process is your customer ► Ensure perfect product to your customer © 2014 Pearson Education, Inc. 6 - 60  Source Inspection ► Poka-yoke is the concept of foolproof devices or techniques designed to pass only acceptable product ► Checklists ensure consistency and completeness © 2014 Pearson Education, Inc. 6 - 61  Service Industry Inspection TABLE 6.4 Examples of Inspection in Services ORGANIZATION WHAT IS INSPECTED STANDARD Jones Law Office Receptionist performance Phone answered by the second ring Billing Accurate, timely, and correct format Attorney Promptness in returning calls Hard Rock Hotel Reception desk Use customer’s name Doorman Greet guest in less than 30 seconds Room All lights working, spotless bathroom Minibar Restocked and charges accurately posted to bill © 2014 Pearson Education, Inc. 6 - 62  Service Industry Inspection TABLE 6.4 Examples of Inspection in Services ORGANIZATION WHAT IS INSPECTED STANDARD Arnold Palmer Hospital Billing Accurate, timely, and correct format Pharmacy Prescription accuracy, inventory accuracy Lab Audit for lab-test accuracy Nurses Charts immediately updated Data entered correctly and Admissions completely Olive Garden Busboy Serves water and bread within Restaurant 1 minute Busboy Clears all entrée items and crumbs prior to dessert Waiter Knows and suggest specials, desserts © 2014 Pearson Education, Inc. 6 - 63  Service Industry Inspection TABLE 6.4 Examples of Inspection in Services ORGANIZATION WHAT IS INSPECTED STANDARD Nordstrom Department Display areas Attractive, well-organized, Store stocked, good lighting Stockrooms Rotation of goods, organized, clean Salesclerks Neat, courteous, very knowledgeable © 2014 Pearson Education, Inc. 6 - 64  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 ► Use different statistical techniques © 2014 Pearson Education, Inc. 6 - 65  TQM In Services ► Service quality is more difficult to measure than the quality of goods ► Service quality perceptions depend on 1) Intangible differences between products 2) Intangible expectations customers have of those products © 2014 Pearson Education, Inc. 6 - 66  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 © 2014 Pearson Education, Inc. 6 - 67  Service Specifications © 2014 Pearson Education, Inc. 6 - 68  Determinants of Service Quality Table 6.5 Reliability involves consistency of performance and dependability Responsiveness concerns the willingness or readiness of employees to provide service Competence means possession of the required skills and knowledge to perform the service Access involves approachability and ease of contact Courtesy involves politeness, respect, consideration, and friendliness Communication means keeping customers informed and listening to them Credibility involves trustworthiness, believability, and honesty Security is the freedom from danger, risk, or doubt Understanding/knowing the customer involves making the effort to understand the customer’s needs Tangibles include the physical evidence of the service © 2014 Pearson Education, Inc. 6 - 69  Service Recovery Strategy ► Managers should have a plan for when services fail ► Marriott’s LEARN routine ► Listen ► Empathize ► Apologize ► React ► Notify © 2014 Pearson Education, Inc. 6 - 70