Managing Quality Jay Heizer, Barry Render, Chuck Munson. (2017) Session 5 - 6 © 2014 Pearson Education, Inc. Outline Quality And Strategy Defining Quality Why Quality is important? Seven tools of TQM 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 3 How Quality improves Profitability? 4 Ways Quality Improves Productivity Sales Gains Improved response Higher Prices Improved Quality Improved reputation Reduced Costs Increased productivity Lower rework and scrap costs Lower warranty costs Increased Profits Figure 6.1 5 How do you define Quality? 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 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 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 9 Malcom Baldrige National Quality Award Established in 1988 by the U.S. government Designed to promote TQM practices Recent winners The Bama Companies, Kenneth W. Monfort College of Business, Caterpillar Financial Services, Baptist Hospital, Clarke American Checks, Los Alamos National Bank 10 What are the costs of quality? 11 Costs of Quality Prevention costs - reducing the potential for defects Appraisal costs - evaluating products, parts, and services Internal failure - producing defective parts or service before delivery External costs - defects discovered after delivery 12 Costs of Quality Total Cost Total Cost External Failure Internal Failure Prevention Appraisal Quality Improvement 13 TQM (Total Quality Management) Refers to a quality emphasis that: Encompasses entire organization, from supplier to customer. And 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 14 Deming’s Fourteen Points (How he implemented TQM!?) 1. Create consistency of purpose 2. Lead to promote change 3. Build quality into the product; stop depending on inspection 4. Build long term relationships based on performance, not price 5. Continuously improve product, quality, and service 6. Start training 7. Emphasize leadership Table 6.1 15 Deming’s Fourteen Points 8. 9. 10. 11. 12. 13. Drive out fear Break down barriers between departments Stop haranguing workers Support, help, improve Remove barriers to pride in work Institute a vigorous program of education and selfimprovement 14. Put everybody in the company to work on the transformation Table 6.1 16 We develop those into Seven Concepts of TQM 1. 2. 3. 4. 5. 6. 7. Continuous improvement Six Sigma Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of TQM tools 17 1- Continuous Improvement Represents continual improvement of all processes Involves all operations and work centers including suppliers and customers People, Equipment, Materials, Procedures 18 Shewhart’s PDCA Model for Continuous Improvement 1.Plan 4. Act Identify the Implement improvement and make the plan a plan 3. Check Is the plan working? 2. Do Test the plan Figure 6.3 19 Seven Concepts of TQM 1. 2. 3. 4. 5. 6. 7. Continuous improvement Six Sigma Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of TQM tools 20 2-Six Sigma Originally developed by Motorola, Six Sigma refers to an extremely high measure of process capability A Six Sigma capable process will return no more than 3.4 defects per million operations (DPMO) Highly structured approach to process improvement 21 Six Sigma Improvement Model 1. Define critical outputs and identify gaps for improvement DMAIC Approach 2. Measure the work and collect process data 3. Analyze the data 4. Improve the process 5. Control the new process to make sure new performance is maintained 22 Seven Concepts of TQM 1. 2. 3. 4. 5. 6. 7. Continuous improvement Six Sigma Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of TQM tools 23 3- Employee Empowerment Getting employees involved in product and process improvements 85% of quality problems are due to process and material Techniques Build communication networks that include employees Develop open, supportive supervisors Move responsibility to employees Build a high-morale organization Create formal team structures 24 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 25 Seven Concepts of TQM 1. 2. 3. 4. 5. 6. 7. Continuous improvement Six Sigma Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of TQM tools 26 4-Benchmarking Selecting best practices to use as a standard for performance Determine what to benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking information Take action to match or exceed the benchmark 27 Best Practices for Resolving Customer Complaints Make it easy for clients to complain Respond quickly to complaints Resolve complaints on first contact Use computers to manage complaints Recruit the best for customer service jobs 28 Seven Concepts of TQM 1. 2. 3. 4. 5. 6. 7. Continuous improvement Six Sigma Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of TQM tools 29 What is a “Just In Time” system? And How is it related to Quality? 30 5-Just-in-Time (JIT): Relationship to quality: JIT systems are designed to produce or deliver goods as they are needed JIT cuts the cost of quality JIT improves quality Better quality means less inventory and better, easier-toemploy JIT system 31 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 32 Just-In-Time (JIT) Example Work in process inventory level (hides problems) Unreliable Vendors Scrap Capacity Imbalances 33 Just-In-Time (JIT) Example Reducing inventory reveals problems so they can be solved Unreliable Vendors Scrap Capacity Imbalances 34 Seven Concepts of TQM 1. 2. 3. 4. 5. 6. 7. Continuous improvement Six Sigma Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of TQM tools 35 Taguchi Concepts Most Quality problems are the result of poor product and process design. Experimental design methods to improve product and process design Identify key component and process variables affecting product variation 36 Seven Concepts of TQM 1. 2. 3. 4. 5. 6. 7. Continuous improvement Six Sigma Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of TQM tools 37 Tools of TQM • To empower employees and implement TQM as a continuing effort, everyone in the organization must be trained in the techniques of TQM. 38 Tools of TQM Tools for Generating Ideas Check sheets Scatter diagrams Cause and effect diagrams Tools to Organize the Data Pareto charts Flow charts Tools for Identifying Problems Histogram Statistical process control chart 39 Seven Tools for TQM (a) Check Sheet: An organized method of recording data Defect A 1 /// 2 / 3 Hour 4 5 / / B C // / / // / / 6 / 7 /// 8 / // // /// //// Figure 6.5 40 Tools of TQM Tools for Generating Ideas Check sheets Scatter diagrams Cause and effect diagrams Tools to Organize the Data Pareto charts Flow charts Tools for Identifying Problems Histogram Statistical process control chart 41 Seven Tools for TQM Productivity (b) Scatter Diagram: A graph of the value of one variable vs. another variable Absenteeism Figure 6.5 42 Tools of TQM Tools for Generating Ideas Check sheets Scatter diagrams Cause and effect diagrams Tools to Organize the Data Pareto charts Flow charts Tools for Identifying Problems Histogram Statistical process control chart 43 Seven Tools for 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 6.5 44 Broken luggage carousel Inadequate special meals on-board Mistagged bags Methods Poor check-in policies Overbooking policies Bumping policies Mechanical delay on plane Dissatisfied Airline Customer Understaffed crew Understaffed ticket counters Manpower Poorly trained attendants supply of magazines Machinery Deicing equipment not available Inadequate & blankets on-board Material Insufficient clean pillows Cause-and-Effect Diagrams Figure 6.6 45 Tools of TQM Tools for Generating Ideas Check sheets Scatter diagrams Cause and effect diagrams Tools to Organize the Data Pareto charts Flow charts Tools for Identifying Problems Histogram Statistical process control chart 46 Seven Tools for TQM Percent Frequency (d) Pareto Charts: A graph to identify and plot problems or defects in descending order of frequency A B C D E Figure 6.5 47 Pareto Charts Data for October Frequency (number) 60 – 54 – 72 50 – 40 – Number of occurrences 30 – 20 – 12 10 – 4 3 2 Minibar 4% Misc. 3% 0 – Room svc 72% Check-in Pool hours 16% 5% Cumulative percent – 100 – 93 – 88 70 – Causes and percent 48 Tools of TQM Tools for Generating Ideas Check sheets Scatter diagrams Cause and effect diagrams Tools to Organize the Data Pareto charts Flow charts Tools for Identifying Problems Histogram Statistical process control chart 49 Seven Tools for TQM (e) Flow Charts (Process Diagrams): A chart that describes the steps in a process Figure 6.5 50 Flow Charts Packing and shipping process Packing station Sealing Weighing Labeling Quick freeze storage (60 Mins) Storage (4 to 6 hrs) Shipping dock 51 Tools of TQM Tools for Generating Ideas Check sheets Scatter diagrams Cause and effect diagrams Tools to Organize the Data Pareto charts Flow charts Tools for Identifying Problems Histogram Statistical process control chart 52 Seven Tools for TQM (f) Histogram: A distribution showing the frequency of occurrence of a variable Frequency Distribution Repair time (minutes) Figure 6.5 53 Seven Tools for 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 6.5 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 55 An SPC Chart Plots the percent of free throws missed 20% Upper control limit 10% Coach’s target value 0% | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 Lower control limit Game number Figure 6.7 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 57 When and Where to Inspect? 58 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 the supplier 3. Before costly or irreversible processes 4. During the step-by-step production processes 5. When production or service is complete 6. Before delivery from your facility 7. At the point of customer contact 59 TQM In Services Service quality is more difficult to measure than the quality of goods Service quality perceptions depend on Intangible differences between products Intangible expectations customers have of those products 60 Determinants of Service Quality Reliability Credibility Responsiveness Security Competence Understanding/ knowing the customer Access Courtesy Communication Tangibles 61
