Topic 6 Quality Management PDF

TOPIC 6 QUALITY MANAGEMENT At the end of this SM you should…  Define the precepts of total quality management.  Determine how companies develop quality specifications and the factors that determine the cost of quality.  Know what Six-Sigma quality is about.  Know the Shi...

TOPIC 6 QUALITY MANAGEMENT At the end of this SM you should…  Define the precepts of total quality management.  Determine how companies develop quality specifications and the factors that determine the cost of quality.  Know what Six-Sigma quality is about.  Know the Shingo system.  Define quality certification.  Assess the role of benchmarking in the analysis of quality. Reading for preparing your study Chapter 9: Chase, R., Jacobs, F., Aquilano, N. (2009): Operations & Supply Management. 12th Edition, McGraw- Hill Irwin, New York. Total quality management (TQM) Definition of quality According to the Spanish Association for Standardization and Certification, quality can be defined as the set of characteristics of a product or service that enable this product or service to meet customers’ needs (including explicit or implicit needs). Following the leaders of the quality movement, quality can be defined as follows:  Conformance to requirements (Crosby).  A predictable degree of uniformity and reliability at low cost and intended to meet customers’ needs (Deming).  Fitness for use (meet customers’ needs) (Juran).  Total quality management (TQM)  Quality has acquired a strategic character for shaping companies’ competitiveness.  Indeed, quality management has become a key issue for policy-makers intended to enhance competitiveness in certain countries (e.g., Japan and USA).  Total Quality Management (TQM)  Total quality management (TQM) managing the entire organization so that it excels on all dimensions of products and services with the aim of meeting customers’ needs.  TQM adopts a vision in which the production of quality depends on everyone involved in the production process. Thus, TQM requires the involvement of stockholders related to the production and consumption of products and services.  Two fundamental operational goals: 1. Careful design of the product or service 2. Ensuring that the organization’s systems can consistently produce the design Quality specifications Quality specifications Quality specifications for a product or service depend critically on a range of strategic decisions:  Design quality: This element refers to the value of the product or service in the marketplace. This value depends on the attributes included in the product/service offered by the company.  Conformance quality: This aspect refers to the extent to which design specifications of a product or service are met. Dimensions of the design quality The dimensions of design quality refer to characteristics of products and services that relate to design issues. These dimensions are:  Performance.  Features.  Reliability/durability.  Serviceability  Aesthetic.  Perceived quality.  Examples of Quality Dimensions Dimension (Product) (Service) Automobile Auto Repair 1. Performance Everything works, fit & All work done, at agreed finish price Ride, handling, grade of Friendliness, courtesy, materials used Competency, quickness 2. Aesthetics Interior design, soft touch Clean work/waiting area 3. Special features Gauge/control placement Location, call when ready Cellular phone, CD Computer diagnostics player  Examples of Quality Dimensions (Cont’d) Dimension (Product) (Service) Automobile Auto Repair 5. Reliability Infrequency of breakdowns Work done correctly, ready when promised 6. Durability Useful life in miles, resistance Work holds up over to rust & corrosion time 7. Perceived Top-rated car Award-winning service quality department 8. Serviceability Handling of complaints and/or Handling of complaints requests for information Quality specifications and designing services for the customer  As discussed previously, we can draw on the “house of quality chart” to establish the links between design quality and conformance quality.  This approach places the attention on the customer's needs. The idea is to map customers’ needs into concrete specifications to be followed over the product/service development process. The objective is to ensure that resulting product/ service designs are aligned with the customer’s needs. Quality specifications by using the SERVQUAL model equipment, physical facilities, layoffs, appearance of personnel. Ability to deliver the promised service dependably and accurately. willingness to help customers and provide prompt services. knowledge and courtesy of employees and their abilities to inspire trust and confidence. Caries and individualized attention a company provides its customers Examples of quality specifications in the hospitality industry according to Instituto para la Calidad Turística Española ICTE: Normas UNE 182001 Source: Diapositivas Luís Vegas What is cost of quality? Cost of quality We can define the term cost of quality as follows:  It involves all the costs attributable to the production of quality that is not 100% perfect.  A less strict definition says that the cost of quality is the difference between what we can expect from excellent performance and the current costs that exist. Cost of quality (Contd.) Some estimations show that the costs of quality is 15% to 20% of each sales dollar. These costs correspond to things such as:  Reworking.  Scrapping.  Repeated services.  Inspections and tests.  Warranties. Cost of quality measurement There are at least three reasons that justify to measure the costs of quality: 1. Failures are caused. 2. Prevention is cheaper. 3. Performance of production system can be measured.  Costs of Quality (4 types) Appraisal costs – costs of the inspection and testing to ensure Prevention costs – sum of all that the product or process is the costs to prevent defects acceptable Quality Costs External failure costs – costs Internal failure costs – costs for defects that pass through the for defects incurred within the system (replacement, system (scrap, rework, repair). warranties, complaints, repairs…)  Cost of quality classification Appraisal Costs of costs conformance Internal failure Cost of Prevention costs costs quality Costs of non- conformance External failure costs  QUESTION Which of the following is not a dimension of design quality? A) Features B) Durability C) Serviceability D) Customization E) Perceived quality  QUESTION Which of the following is not a dimension of design quality? A) Features B) Durability C) Serviceability D) Customization E) Perceived quality QUESTION 2 Testing is an example of: A) Appraisal costs B) Prevention costs C) Internal failure costs D) External failure costs E) None of the above QUESTION 2 Testing is an example of: A) Appraisal costs B) Prevention costs C) Internal failure costs D) External failure costs E) None of the above QUESTION 3 An example of prevention quality cost is: A) Inspection B) Testing C) Training personnel D) Rework E) Warranty replacements QUESTION 3 An example of prevention quality cost is: A) Inspection B) Testing C) Training personnel D) Rework E) Warranty replacements What is Six-Sigma? Six-Sigma quality We can define Six Sigma as a philosophy along with a set of methods that seeks to eliminate defects in the production process of companies. The idea is to reduce variability along the production process that may be the cause of defects. The goal of Six-Sigma is to achieve a maximum of 3.4 defects per million of events (opportunities). In this context, a defect represents an event where the product or service does not meet the customer’s requirements. Six Sigma Methodology Developed by General Define, measure, Electric as a means of analyze, improve, and focusing effort on quality control (DMAIC) using a methodological approach Overall focus of the Seeks to reduce the methodology is to variation in the understand and achieve processes that leads to what the customer wants these defects Defects per million of opportunities (DPMO) We can measure the performance of a productive process by using the metric defect per million of opportunities (DPMO). To do so, we need three pieces of information:  Unit: The number of items produced or being served.  Defect: Any item or event failing in meeting customers’ requirements.  Opportunity: A chance for a defect to occur. Defects per million of opportunities (Contd.) In a sample of 1,200 menus served, the quality manager of the restaurant “A” identified that waiters made 105 mistakes when they took orders from customers. This means that 87,500 menus out of every 1,000,000 were served mistakenly. That is, 8.75% of the menus are wrongly served. Defects per million of opportunities (Contd.) Next, the equivalence between the number of defects, sigma levels and efficiency corresponding to a production process are defined:  1 sigma = 690,000 DPMO = 31% of efficiency.  2 sigma = 308,538 DPMO = 69% of efficiency.  3 sigma = 66,807 DPMO = 93,3% of efficiency.  4 sigma = 6,210 DPMO = 99,38% of efficiency.  5 sigma = 233 DPMO = 99,977% of efficiency.  6 sigma = 3.4 DPMO = 99,99966% of efficiency. Source: http://en.wikipedia.org/wiki/Six_Sigma Defects per million of opportunities (Contd.) Suppose that a company has estimated that the optimal time to serve a customer is 3 minutes. Less is perceived by the customer as insufficient and more is regarded as too much. If the service delivery process has a target of efficiency equal to 3 sigma, we have that 66,807 customers of out every million will served wrongly (in a time that is either less than 3 minutes or more than 3 minute). If the service delivery process has as a target 6 sigma, then for every million customers served, only 4 will not be served according to the optimal standard of 3 minutes. Elaborated from the information available at: http://en.wikipedia.org/wiki/Six_Sigma Six-Sigma methodology  In order to study the Six-sigma methodology, we will put the emphasis on the following steps, which in turn define a cycle:  Define.  Measure.  Analyze.  Improve.  Control.  The DMAIC cycle (acronyms of previous steps) is a version of the continuous improvement philosophy developed by Deming. The idea seeks improvements of machinery, equipment, labor utilization and production methods through applications of suggestions proposed by company’s teams. DMAIC cycle 1. Define (D) Customers’ needs 2. Measure (M) Processes and its performance 3. Analyze (A) Causes producing defects 4. Improve (I) Eliminate causes of failures 5. Control (C) Keep quality Six Sigma Training Belts Six Sigma in Hospitality  https://www.youtube.com/watch?v=Kz_7njsDU MQ  https://www.youtube.com/watch?v=DLfRqMCf _h4 What tools are used in the Six-Sigma methodology? Analytical tools for Six-Sigma Among the most popular, we find:  Flowcharts.  House of quality.  Pareto charts.  Cause-and-effect diagrams (fishbone diagrams).  Control charts.  Run charts. Tools: Flowcharts No, Inputs continue… received from Inspect Defects suppliers material for defects found? Yes These charts can be used to detect quality problems. Useful in the Return to Improve supplier for DMAIC method credit Tools: House of quality chart The house of quality allows identifying the customer’s requirements and implementing the specifications addressed to meet these requirements Useful for the Define stage of the DMAIC cycle Source: Chase et al., (2009) Tools: Pareto charts These charts help us to breakdown a problem into the contributions of its components. They are based on the empirical fact that a large percentage of problems is due to a small portion of causes. For instance, 80% of the reported complaints of customers are related to “late delivery”, which represents 20% of the causes listed. Helpful in the Measure stage of the DMAIC Source: Chase et al., cycle (2009) Tools: Cause-and-effects diagram (fishbone diagram) This diagram defines hypotheses Helpful in the Analysis that link potential causes of stage of the DMAIC cycle detected problems. Tools: Control charts These charts can be used to track ongoing production process quality and quality conformance to state standards of quality Useful for the Control stage of the DMAIC cycle Source: Chase et al., (2009) Tools: Run charts These charts can be used to identify Useful for the when equipment or processes are not Control stage of behaving according to specifications the DMAIC cycle 0.58 0.56 0.54 Units 0.52 0.50 0.48 0.46 0.44 1 2 3 4 5 6 7 8 9 10 11 12 Time (Hours) Source: Chase et al., (2009) VIDEO TQM (book)  https://www.youtube.com/watch?v=Im- Fnmev5Cc&index=3&list=PLXCtbsKwg_TX48 KH0N25v8OZ0gzYxf0vG What is the Shingo System? The Shingo system  Philosophy orientated to prevention: Methods of control quality do not avoid the defects. They provide probabilistic information that tells us when a defect can occur.  Avoidance of defects in the site where they occur: The idea is to design and implement controls that prevent defects.  Involvement of employees in control of quality: An important part of these controls require the involvements of the employees that are in contact with a company’s operations and processes. The Shingo system (Contd.)  Errors and defects: Defects arise because people make mistakes. The errors are inevitable, but defects can be prevented.  Fail-save design: The use of mechanisms to prevent defects such as poka-yokes gain in relevance.  The Shingo system (Contd.) The use of poka-yokes:  Prevent the worker’s mistakes turn into defects.  Provide the worker with immediate feedback on anomalies. The French fry scoop used by McDonald’ employees prevent variability when serving menus. The idea is that French fries will served consistently among different menus Standardization, certification and assessment  Models for quality certification and assessment There are two kinds of approaches to certify and assess quality: 1. Prescriptive models. 2. Non-prescriptive models. PRESCRIPTIVE MODELS These models are based on standards, which define how processes or procedures should be conducted to achieve a target of quality. Auditors certify whether or not a process conforms to a given standard. Among the best known, we have the following systems:  ISO9001: Quality Management Systems.  ISO14001: Environmental Management.  Sectorial standards: Spanish Tourism Quality “Q” mark.  ISO 9000 and ISO 14000 12-55  Series of standards agreed upon by the International Organization for Standardization (ISO)  Adopted in 1987  Used in more than 160 countries  A prerequisite for global competition?  ISO 9000 an international reference for quality; ISO 14000 primarily concerned with environmental management Spanish Tourism Quality Q mark Source: Luís Vegas’ slides  Spanish Tourism Quality Q mark (Contd.)  Rural Accommodations, UNE UNE 182001 183001  Water Sport Facilities, UNE  Spa Establishments, UNE 186001 188004  Campsites and Holiday Cities,  Night Leisure, UNE 188005 UNE 184001  Tourist Information Offices, UNE  Golf Courses, UNE 188001 187003  Convention Bureau, UNE 187005  Conference Centers, UNE 187004  Active Tourism Companies, UNE  Tourism Boards, UNE 187007 188003  Beaches, UNE 187001  Nature Reserves, UNE 187002  Restaurant Services, series of  Ski Resorts, UNE 188002 UNE 167000 standards  Time-Share Establishment, UNE  Tourism Intermediary Services, 185001 UNE 189001  Hotels and Tourist Apartments, Non-prescriptive models In this case, the models describe the desire outcomes associated with quality, but do not specify how those should be achieved. The way to generate desirable outcomes depends on the company decisions and strategies. Examples of this kind of models include:  EFQM model: European Foundation for Quality Management.  ServQual scale: The scale for measuring quality. Non-prescriptive models (Contd.)  EFQM: European foundation quality management (http://www.efqm.org/)  Based on self-evaluation.  European scope.  European Quality Award by the EFQM.  Similar awards:  Malcom Baldrige (USA).  Deming (Japan). Non-prescriptive models (Contd.) SERVQUAL: By using a 22-questions survey, this method analyzes the gap between customers’ expectation and experiences along the process of service delivery. To do so, the following elements are evaluated:  Tangible.  Reliability.  Responsiveness.  Assurance/Security.  Empathy. What is benchmarking? Benchmarking: looking external references to improve quality  The basic premise behind benchmarking is that to deliver quality, you need to compare your business against the best in class business and then make changes to your operation so that quality is enhanced.  Benchmarking is the process of determining who is the very best, who sets the standard, and what that standard is.  Next in Hospitality… a culture of care  https://www.youtube.com/watch?v=rlNdbqkglv g