© 1997 Prentice-Hall, Inc.
Principles of
Operations Management
Total Quality Management
Chapter 3
3-1
Learning Objectives
© 1997 Prentice-Hall, Inc.

Define quality

State why quality is important

Explain total quality management (TQM)

Explain tools for total quality
management

Describe inspection
3-2
Definitions of Quality
© 1997 Prentice-Hall, Inc.

ASQC: Product characteristics &
features that affect customer
satisfaction

User-Based: What consumer says it is

Mfg.-Based: Degree to which a product
conforms to design specification

Product-Based: Level of measurable
product characteristic
3-3
© 1997 Prentice-Hall, Inc.
Dimensions of Quality for
Goods

Operation

Reliability & durability

Conformance

Serviceability

Appearance

Perceived quality
3-4
Quality
Importance of Quality
© 1997 Prentice-Hall, Inc.




Costs & market
share
Company’s
reputation
Product
liability
Improved
Improved
Quality
Quality
International
implications
3-5
Market
Market Gains
Gains
Reputation
Reputation
Volume
Volume
Price
Price
Increased
Increased
Profits
Profits
Lower
Lower Costs
Costs
Productivity
Productivity
Rework/Scrap
Rework/Scrap
Warranty
Warranty
© 1997 Prentice-Hall, Inc.

Industrial Standard Z8101-1981 (Japan)


Common quality standards for products
sold in Europe (even if made in U.S.)
ISO 14000 series (Europe/EC)


Specification for TQM
ISO 9000 series (Europe/EC)


International
Quality Standards
Standards for recycling, labeling etc.
ASQC Q90 series; MILSTD (U.S.)
3-6
© 1997 Prentice-Hall, Inc.
Malcolm Baldrige National
Quality Award

Established in 1988 by the U.S. gov’t

Designed to promote TQM practices

Some criteria



Senior executive leadership; strategic
planning; mgt. of process quality
Quality results; customer satisfaction
Recent winners

Corning Inc.; GTE; AT&T; Eastman Chem.
3-7
© 1997 Prentice-Hall, Inc.
Traditional
Quality Process (Mfg.)
Customer
Marketing
Engineering
Operations
Specifies
Need
Interprets
Need
Designs
Product
Produces
Product
Defines
Quality
Plans
Quality
Quality is customer driven!
3-8
Monitors
Quality
Total Quality Management
© 1997 Prentice-Hall, Inc.

Quality system involving entire
organization from supplier to customer

Objective: Meet or exceed customer
needs through company-wide
continuous improvement

Early proponents



W. Edwards Deming
J. M. Juran
Philip B. Crosby
3-9
© 1997 Prentice-Hall, Inc.
Total Quality Management
Principles

Continuous improvement

Employee empowerment

Benchmarking

Just-in-time (JIT)

Knowledge of TQM tools
© 1995 Corel Corp.
3 - 10
Continuous Improvement
© 1997 Prentice-Hall, Inc.

Represents continual improvement
of process & customer satisfaction

Involves all operations
& work units

Other names



Kaizen (Japanese)
Zero-defects
Six sigma
3 - 11
© 1984-1994 T/Maker Co.
Employee Empowerment
© 1997 Prentice-Hall, Inc.

Getting employees involved in
product & process improvements

85% of quality problems are due to
process & material
© 1995 Corel Corp.

Techniques




Talk to workers
Support workers
Let workers make decisions
Build teams & quality circles
3 - 12
Quality Circles
© 1997 Prentice-Hall, Inc.

Group of 6-12 employees from same
work area

Meet regularly to solve work-related
problems
 4 hours/month

Facilitator trains
& helps with
meetings
3 - 13
© 1995 Corel Corp.
Benchmarking
© 1997 Prentice-Hall, Inc.

Selecting best practices to use
as a standard for performance

Steps





Determine what to
benchmark
Form benchmarking team
Identify benchmarking partners
Collect benchmarking information
Take action to meet or exceed benchmark
3 - 14
© 1997 Prentice-Hall, Inc.
Benchmarking
Thinking Challenge
What specific & measurable variables
would you benchmark in these areas?

Accounting

Hotel front desk

Data processing

Marketing
3 - 15
Alone
Group Class
Just-In-Time (JIT)
© 1997 Prentice-Hall, Inc.

‘Pull’ system of production/purchasing

Customer starts production with an order

Involves ‘vendor partnership programs’
to improve quality of purchased items

Reduces all inventory levels


Inventory hides process & material
problems
Improves process & product quality
3 - 16
TQM Tools
© 1997 Prentice-Hall, Inc.

Quality function deployment (QFD)

Pareto charts

Process charts

Cause & effect diagrams

Statistical process control (SPC)
3 - 17
© 1997 Prentice-Hall, Inc.

Quality Function
Deployment (QFD)
Product design process using
cross-functional teams

Marketing, engineering, manufacturing

Translates customer preferences into
specific product characteristics

Involves creating 4 tabular ‘Matrices’
or ‘Houses’

Breakdown product design into
increasing levels of detail
3 - 18
© 1997 Prentice-Hall, Inc.
House of
Quality 1
Quality Function
Deployment Sequence
Product
Char.
Customer
Req.
House of
Quality 3
Component
Spec.
3 - 19
House of
Quality 2
Component
Spec.
Product
Char.
Production
Process
House of
Quality 4
Production
Process
Quality
Plan
House of Quality Example
© 1997 Prentice-Hall, Inc.
You’ve been assigned
temporarily to a QFD
team. The goal of the
team is to develop a
new camera design.
Build a House of
Quality.
© 1984-1994 T/Maker Co.
3 - 20
House of Quality Example
© 1997 Prentice-Hall, Inc.
Cust.
Req.
Cust.
Importance
Target Values
 High relationship Medium relationship

3 - 21
Pareto Chart
© 1997 Prentice-Hall, Inc.

Vertical bar chart showing relative
importance of problems or defects


Makes identifying & solving them easier
Based on Pareto Principle


Most effects have relatively few causes
e.g., 80% of quality problems come from
20% of machines, materials, or operators
 Focus on ‘vital few’ 20% causes
 Called 80-20 rule
3 - 22
© 1997 Prentice-Hall, Inc.
Pareto Chart
Thinking Challenge
You’re a quality analyst
for Corning Glass.
You’ve collected data on
100 rejected glasses:
Nicks
80
Cuts
11
Scratches
3
Porosity
3
Misc.
3
Prepare a Pareto Chart.
3 - 23
Alone
Group Class
Process Chart
© 1997 Prentice-Hall, Inc.

Shows sequence of events in process

Depicts activity relationships

Has many uses




Identify data collection points
Find problem sources
Identify places for improvement
Identify where travel distances can be
reduced
3 - 25
Process Chart Example
© 1997 Prentice-Hall, Inc.
SUBJECT: Request tool purchase
Dist (ft) Time (min) Symbol
Description
D Write order
 On desk
D To buyer
75
D Examine
 = Operation;  = Transport;  = Inspect;
D = Delay;  = Storage
3 - 26
Cause & Effect Diagram
© 1997 Prentice-Hall, Inc.

Used to find problem sources/solutions

Other names


Fish-bone diagram, Ishikawa diagram
Steps



Identify problem to correct
Draw main causes for problem as ‘bones’
Ask ‘What could have caused problems in
these areas?’ Repeat for each sub-area.
3 - 27
© 1997 Prentice-Hall, Inc.
Statistical
Process Control (SPC)

Uses statistics & control charts to tell
when to adjust process

Developed by Shewhart in 1920’s

Involves




Creating standards (upper & lower limits)
Measuring sample output (e.g. mean wgt.)
Taking corrective action (if necessary)
Done while product is being produced
3 - 29
© 1997 Prentice-Hall, Inc.
Statistical Process Control
Steps
Start
Produce Good
Provide Service
Take Sample
No
Assign.
Causes?
Yes
Inspect Sample
Create
Control Chart
3 - 30
Stop Process
Find Out Why
Control Chart Example
© 1997 Prentice-Hall, Inc.
UCL
3 - 31
11
Time
9
7
5
LCL
3
1
80
60
40
20
0
X
© 1997 Prentice-Hall, Inc.
Thinking Challenge:
Compare & Contrast
TQM Tools
Bases
3 - 32
Alone
Group Class
Inspection
© 1997 Prentice-Hall, Inc.

Involves examining items to see if an
item is good or defective

Objective: Detect a defective product


Does not correct deficiencies in
process or product
Issues


When to inspect
Where in process to inspect
3 - 33
© 1997 Prentice-Hall, Inc.
When & Where
to Inspect in Mfg.

At supplier’s plant while
producing

Upon receipt of goods
from supplier

Before costly or
irreversible processes

During production process

When production is complete

Before shipment
3 - 34
© 1995 Corel Corp.
© 1997 Prentice-Hall, Inc.
Business
When & Where
to Inspect in Services
Where
Variable
Bank
Teller station
Checking
Store
Stockrooms
Stock rotation
Display areas Attractiveness
Counters
Courtesy,
knowledge
3 - 35
Speed, courtesy
Accuracy
TQM in Services
© 1997 Prentice-Hall, Inc.

Service quality is more difficult to
measure than for goods

Service quality perceptions depend on



Expectations vs. reality
Process & outcome
Types of service quality


Normal: Routine service delivery
Exceptional: How problems are handled
3 - 36
Service Quality Attributes
© 1997 Prentice-Hall, Inc.
Reliability
Responsiveness
Tangibles
Competence
Understanding
Access
Security
Courtesy
© 1995 Corel Corp.
Credibility
3 - 37
Communication
Conclusion
© 1997 Prentice-Hall, Inc.

Defined quality

Stated why quality is important

Explained total quality management

Explained tools for total quality
management (TQM)

Described inspection
3 - 38