1. 10/16/2010
Managing Quality Outline
6 Global Company Profile: Arnold
Palmer Hospital
Quality and Strategy
PowerPoint presentation to accompany
Defining Quality
gQ y
Heizer and Render
Operations Management, 10e
Implications of Quality
Principles of Operations Management, 8e
Malcolm Baldrige National Quality
PowerPoint slides by Jeff Heyl Award
Cost of Quality (COQ)
Ethics and Quality Management
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Outline – Continued Outline – Continued
International Quality Standards Total Quality Management
ISO 9000 Continuous Improvement
ISO14000 Six Sigma
Employee Empowerment
Benchmarking
Just-in-Time (JIT)
Taguchi Concepts
Knowledge of TQM Tools
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Outline – Continued Outline – Continued
Tools of TQM The Role of Inspection
Check Sheets When and Where to Inspect
Scatter Diagrams p
Source Inspection
Cause-and-Effect Diagrams Service Industry Inspection
Pareto Charts Inspection of Attributes versus
Flowcharts Variables
Histograms TQM in Services
Statistical Process Control (SPC)
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2. 10/16/2010
Learning Objectives Managing Quality Provides a
When you complete this chapter you Competitive Advantage
should be able to:
Arnold Palmer Hospital
1. Define quality and TQM
2. Describe the ISO international Deliver over 16,000 babies annually
quality standards Virtually every type of quality tool is
3. Explain Six Sigma employed
4. Explain how benchmarking is used Continuous improvement
Employee empowerment
5. Explain quality robust products and
Taguchi concepts Benchmarking
Just-in-time
6. Use the seven tools of TQM
Quality tools
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Quality and Strategy Quality and Strategy
An operations manager’s objective Managing quality supports
is to build a total quality differentiation, low cost, and
management system that identifies
g y response strategies
and satisfies customer needs Quality helps firms increase
sales and reduce costs
Building a quality organization is
a demanding task
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Two Ways Quality The Flow of Activities
Improves Profitability Organizational Practices
Leadership, Mission statement, Effective operating
Sales Gains via procedures, Staff support, Training
Yields: What is important and what is to be
Improved response accomplished
Quality Principles
Flexible pricing Customer focus, Continuous improvement, Benchmarking,
Just-in-time,
Just in time Tools of TQM
Improved reputation Yields: How to do what is important and to be
Improved Increased accomplished
Quality Profits Employee Fulfillment
Reduced Costs via
Empowerment, Organizational commitment
Increased productivity Yields: Employee attitudes that can accomplish
what is important
Lower rework and scrap costs Customer Satisfaction
Winning orders, Repeat customers
Lower warranty costs Yields: An effective organization with
Figure 6.2 a competitive advantage
Figure 6.1
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3. 10/16/2010
Defining Quality Different Views
User-based
User-based: better performance,
more features
The totality of features and
characteristics of a product or Manufacturing-based
Manufacturing-based:
service that bears on its ability to conformance t standards,
f to t d d
satisfy stated or implied needs making it right the first time
Product-based
Product-based: specific and
American Society for Quality
measurable attributes of the
product
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Implications of Quality Key Dimensions of Quality
1. Company reputation
Perception of new products Performance Durability
Employment practices Features Serviceability
Supplier relations
Reliability Aesthetics
2. Product liability
Conformance Perceived quality
Reduce risk
Value
3. Global implications
Improved ability to compete
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Malcolm Baldrige National Baldrige Criteria
Quality Award
Applicants are evaluated on:
Established in 1988 by the U.S. Categories Points
government
Leadership 120
Designed to promote TQM practices Strategic Planning 85
Recent winners include Customer & Market Focus 85
Honeywell Federal, Midway USA, Measurement, Analysis, and
AtlantiCare, Heartland Health, Cargill Knowledge Management 90
Corn Milling, PRO-TEC Coating Co., Workforce Focus 85
City of Coral Springs, Premier Inc.,
Process Management 85
Sunny Fresh Foods, Park Place
Lexus, Richland College Results 450
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4. 10/16/2010
Takumi Costs of Quality
A Japanese character Prevention costs - reducing the
that symbolizes a potential for defects
broader dimension Appraisal costs - evaluating
than quality, a deeper products, parts, and services
process than
Internal failure - producing defective
education, and a more
parts or service before delivery
perfect method than
persistence External costs - defects discovered
after delivery
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Costs of Quality Leaders in Quality
Leader Philosophy/Contribution
Total Total Cost W. Edwards Deming 14 Points for
Cost Management
External Failure
Joseph M. Juran
p Top management
p g
commitment, fitness for
Internal Failure use
Armand Feigenbaum Total Quality Control
Prevention
Philip B. Crosby Quality is Free, zero
Appraisal defects
Quality Improvement
Table 6.1
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Ethics and Quality International Quality
Management Standards
Operations managers must deliver
healthy, safe, quality products and ISO 9000 series (Europe/EC)
services Common quality standards for products
sold in Europe (even if made in U.S.)
US)
Poor quality risks injuries, lawsuits,
recalls, and regulation 2008 update places greater emphasis on
leadership and customer requirements
Organizations are judged by how and satisfaction
they respond to problems ISO 14000 series (Europe/EC)
All stakeholders much be
considered
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5. 10/16/2010
ISO 14000 ISO 14000
Environmental Standard Environmental Standard
Core Elements: Advantages:
Positive public image and reduced
Environmental management
g exposure to liability
p y
Auditing Systematic approach to pollution
Performance evaluation prevention
Labeling Compliance with regulatory
requirements and opportunities for
Life cycle assessment competitive advantage
Reduction in multiple audits
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TQM Deming’s Fourteen Points
1. Create consistency of purpose
Encompasses entire organization, 2. Lead to promote change
from supplier to customer
3. Build quality into the product; stop
Stresses a commitment by y depe d g o
depending on inspections
spect o s
management to have a continuing, 4. Build long-term relationships based on
companywide drive toward performance instead of awarding
excellence in all aspects of products business on price
and services that are important to the 5. Continuously improve product, quality,
customer and service
Table 6.2
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Deming’s Fourteen Points Deming’s Fourteen Points
6. Start training 12. Remove barriers to pride in work
7. Emphasize leadership 13. Institute education and self-
8. Drive out fear improvement
9. Break d
9 B k down b i
barriers between
b t 14. Put everyone to work on the
departments transformation
10. Stop haranguing workers
11. Support, help, and improve
Table 6.2 Table 6.2
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6. 10/16/2010
Seven Concepts of TQM Continuous Improvement
1. Continuous improvement
2. Six Sigma Represents continual
improvement of all processes
3. Employee empowerment
4. Benchmarking Involves all operations and work
centers including suppliers and
5. Just-in-time (JIT)
customers
6. Taguchi concepts
People, Equipment, Materials,
7. Knowledge of TQM tools Procedures
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Shewhart’s PDCA Model Six Sigma
4. Act 1.Plan
Two meanings
Implement Identify the Statistical definition of a process that
the plan pattern and is 99.9997% capable, 3.4 defects per
document make a plan
million opportunities (DPMO)
A program designed to reduce
3. Check 2. Do defects, lower costs, and improve
Is the plan Test the customer satisfaction
working? plan
Figure 6.3
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Six Sigma Six Sigma Program
Lower limits Upper limits
Two meanings Originally developed by Motorola,
2,700 defects/million
adopted and enhanced by
Statistical definition of a process that Honeywell and GE
3.4 defects/million
is 99.9997% capable, 3.4 defects per
million opportunities (DPMO) Highly structured approach to
A program designed to reduce process improvement
defects, lower costs, Mean improve
and A strategy
customer satisfaction
Figure 6.4
±3σ
±6σ
A discipline - DMAIC
6σ
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7. 10/16/2010
Six Sigma Six Sigma Implementation
1. Define critical outputs Emphasize defects per million
and identify gaps for opportunities as a standard metric
improvement DMAIC Approach
Provide extensive training
2. Measure the work and
collect process data Focus on corporate sponsor support
(Champions)
3. Analyze the data
Create qualified process improvement
4. Improve the process experts (Black Belts, Green Belts, etc.)
5. Control the new process to Set stretch objectives
make sure new performance This cannot be accomplished without a major
is maintained commitment from top level management
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Employee Empowerment Quality Circles
Getting employees involved in product
and process improvements Group of employees who meet
85% of quality problems are due regularly to solve problems
to process and material
Trained in planning, problem
Techniques solving, and statistical methods
l i d t ti ti l th d
Build communication networks
that include employees Often led by a facilitator
Develop open, supportive supervisors Very effective when done
Move responsibility to employees properly
Build a high-morale organization
Create formal team structures
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Benchmarking Best Practices for Resolving
Selecting best practices to use as a Customer Complaints
standard for performance
Best Practice Justification
1. Determine what to Make it easy for clients It is free market research
benchmark to complain
Respond quickly to It adds customers and loyalty
2. Form a benchmark team complaints
Resolve complaints on It reduces cost
3. Identify benchmarking partners first contact
4. Collect and analyze benchmarking Use computers to Discover trends, share them, and align
manage complaints your services
information
Recruit the best for It should be part of formal training and
5. Take action to match or exceed the customer service jobs career advancement
benchmark Table 6.3
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8. 10/16/2010
Just-in-
Just-in-Time (JIT) Just-in-
Just-in-Time (JIT)
Relationship to quality: ‘Pull’ system of production scheduling
including supply management
JIT cuts the cost of quality Production only when signaled
JIT i
improves quality
lit Allows reduced inventory levels
Better quality means less Inventory costs money and hides process
inventory and better, easier-to- and material problems
employ JIT system Encourages improved process and
product quality
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Just-In-
Just-In-Time (JIT) Example Just-In-
Just-In-Time (JIT) Example
Reducing inventory reveals
problems so they can be solved
Work in process
inventory level
(hides problems)
Unreliable Capacity Unreliable Capacity
Vendors Scrap Vendors Scrap
Imbalances Imbalances
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Taguchi Concepts Quality Robustness
Engineering and experimental
design methods to improve product Ability to produce products
and process design uniformly in adverse manufacturing
Identify key component and process and environmental conditions
variables affecting product variation
i bl ff ti d t i ti Remove the effects of adverse
Taguchi Concepts conditions
Quality robustness Small variations in materials and
process do not destroy product
Quality loss function quality
Target-oriented quality
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9. 10/16/2010
Quality Loss Function Quality Loss Function
Shows that costs increase as the High loss L = D2C
Unacceptable where
product moves away from what Loss (to
producing Poor
L = loss to society
D = distance from
the customer wants organization,
customer, Fair target value
and society) Good C = cost of deviation
Costs include customer Low loss
Best
Target-oriented quality
T t i t d lit
dissatisfaction, warranty yields more product in
the “best” category
and service, internal Target-oriented quality
scrap and repair, and costs to Frequency
brings product toward
the target value
society Conformance-oriented
quality keeps products
within 3 standard
Traditional conformance deviations
Lower Target Upper
specifications are too simplistic Specification Figure 6.5
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Tools of TQM Tools of TQM
Tools for Generating Ideas Tools for Identifying Problems
Check sheets Histogram
Scatter diagrams Statistical process control chart
Cause-and-effect diagrams
Tools to Organize the Data
Pareto charts
Flowcharts
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Seven Tools of TQM Seven Tools of TQM
(a) Check Sheet: An organized method of (b) Scatter Diagram: A graph of the value
recording data of one variable vs. another variable
Hour
Defect
D f t 1 2 3 4 5 6 7 8
Productivity
A /// / / / / /// /
B // / / / // ///
C / // // ////
Absenteeism
Figure 6.6 Figure 6.6
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10. 10/16/2010
Seven Tools of TQM Seven Tools of TQM
(c) Cause-and-Effect Diagram: A tool that (d) Pareto Chart: A graph to identify and plot
identifies process elements (causes) that problems or defects in descending order of
might effect an outcome frequency
Cause
Materials Methods
Frequency
Effect
Percent
Manpower Machinery A B C D E
Figure 6.6 Figure 6.6
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Seven Tools of TQM Seven Tools of TQM
(e) Flowchart (Process Diagram): A chart that (f) Histogram: A distribution showing the
describes the steps in a process frequency of occurrences of a variable
Distribution
Frequency
Repair time (minutes)
Figure 6.6 Figure 6.6
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Seven Tools of TQM Cause-and-
Cause-and-Effect Diagrams
(g) Statistical Process Control Chart: A chart with Material Method
(ball) (shooting process)
time on the horizontal axis to plot values of a Grain/Feel Aiming point
statistic (grip)
Size of ball
Air pressure Bend knees
Hand position
Balance
Lopsidedness
L id d
Follow-through
Upper control limit Missed
Training
free-throws
Rim size
Target value
Conditioning Motivation Rim height
Lower control limit Backboard
Consistency Rim alignment
stability
Concentration
Time Machine
Manpower
(hoop & Figure 6.7
Figure 6.6 (shooter)
backboard)
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11. 10/16/2010
Pareto Charts Flow Charts
Data for October
– 100
MRI Flowchart
70 – – 93
– 88 1. Physician schedules MRI 7. If unsatisfactory, repeat
60 – 2. Patient taken to MRI 8. Patient taken back to room
54
Frequency (number)
rcent
– 72 3. Patient signs in 9. MRI read by radiologist
50 –
4. Patient is prepped
p pp 10. MRI report transferred to
p
Cumulative per
40 – 5. Technician carries out MRI physician
Number of 6. Technician inspects film 11. Patient and physician discuss
30 –
occurrences
20 –
12
10 – 8
4 3 2 80%
0 – 1 2 3 4 5 6 7 11
Room svc Check-in Pool hours Minibar Misc. 9 10
72% 16% 5% 4% 3%
20%
Causes and percent of the total
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Statistical Process Control An SPC Chart
(SPC)
Plots the percent of free throws missed
Uses statistics and control charts to
tell when to take corrective action 20% Upper control limit
Drives process improvement
p p
Four key steps 10% Coach’s target value
Measure the process
When a change is indicated, find the 0% | | | | | | | | |
Lower control limit
assignable cause 1 2 3 4 5 6 7 8 9
Eliminate or incorporate the cause Game number
Restart the revised process Figure 6.8
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Inspection When and Where to Inspect
Involves examining items to see if 1. At the supplier’s plant while the supplier is
an item is good or defective producing
2. At your facility upon receipt of goods from
Detect a defective product the supplier
Does not correct deficiencies in 3. Before costly or irreversible processes
process or product
4. During the step-by-step production
It is expensive process
Issues 5. When production or service is complete
When to inspect 6. Before delivery to your customer
Where in process to inspect 7. At the point of customer contact
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12. 10/16/2010
Inspection Source Inspection
Many problems
Worker fatigue Also known as source control
Measurement error The next step in the process is
Process variability your customer
Cannot inspect quality into a Ensure perfect product
product to your customer
Robust design, empowered
Poka-yoke is the concept of foolproof devices
employees, and sound processes or techniques designed to pass only
are better solutions acceptable product
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Service Industry Inspection Service Industry Inspection
What is What is
Organization Standard Organization Standard
Inspected Inspected
Jones Law Office Receptionist Is phone answered by the Hard Rock Hotel Reception Use customer’s name
performance second ring desk
Billing
Billi Accurate, timely, and
A i l d Doorman
D Greet guest in less than 30
G i l h
correct format seconds
Attorney Promptness in returning Room All lights working, spotless
calls bathroom
Minibar Restocked and charges
accurately posted to bill
Table 6.4 Table 6.4
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Service Industry Inspection Service Industry Inspection
What is What is
Organization Standard Organization Standard
Inspected Inspected
Arnold Palmer Billing Accurate, timely, and Olive Garden Busboy Serves water and bread
Hospital correct format Restaurant within 1 minute
Pharmacy
Ph Prescription accuracy,
P i i Busboy
B b Clears all entrée items and
Cl ll é i d
inventory accuracy crumbs prior to dessert
Lab Audit for lab-test accuracy Waiter Knows and suggest
Nurses Charts immediately specials, desserts
updated
Admissions Data entered correctly and
completely
Table 6.4 Table 6.4
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13. 10/16/2010
Service Industry Inspection Attributes Versus Variables
Attributes
What is
Organization Standard Items are either good or bad,
Inspected
Nordstrom Display areas Attractive, well-organized,
acceptable or unacceptable
Department stocked, good lighting Does not address degree of failure
Store Stockrooms
S k Rotation of goods,
R i f d
organized, clean Variables
Salesclerks Neat, courteous, very Measures dimensions such as weight,
knowledgeable speed, height, or strength
Falls within an acceptable range
Use different statistical techniques
Table 6.4
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TQM In Services Service Quality
Service quality is more difficult to The Operations Manager must
measure than the quality of goods recognize:
Service quality perceptions depend 1. The tangible component of
on services is important
Intangible differences between 2. The service process is important
products 3. The service is judged against the
Intangible expectations customers customer’s expectations
have of those products 4. Exceptions will occur
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Service
Determinants of Service
Specifications Quality
at UPS Reliability Consistency of performance and dependability
Responsiveness Willingness or readiness of employees
Competence Required skills and knowledge
Access Approachability and ease of contact
Courtesy Politeness, respect, consideration, friendliness
Communication Keeping customers informed
Credibility Trustworthiness, believability, honesty
Security Freedom from danger, risk, or doubt
Understanding/
Understand the customer’s needs
knowing the customer
Tangibles Physical evidence of the service
Table 6.5
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14. 10/16/2010
Service Recovery Strategy
Managers should have a plan for
when services fail
Marriott’s LEARN routine
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