Koç University
OPSM 301 Operations Management
Class 16:
Quality
(All of Chapter 6 included)
Zeynep Aksin
zaksin@ku.edu.tr
Objectives
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Total Quality Management Defined
Quality Specifications and Costs
Six Sigma Quality and Tools
External Benchmarking
ISO 9000
Service Quality
Total Quality Management (TQM)
Defined
 Total quality management is defined as
managing the entire organization so that it
excels on all dimensions of products and
services that are important to the customer
Quality Management
 What does the term quality mean?
– Product-based definition
– User-based definition
– Manufacturing based definition
Product-Based Definition
 According to this view, differences in
quality reflect differences in the quantity of
some ingredient or attribute possessed by
a product (Example: Fine rugs have a
large number of knots per square
centimeter)
 This approach seems appropriate only if
the attributes in question are considered
preferable by virtually all buyers
Manufacturing-Based Definition
 This approach identifies quality as
“conformance to requirements”
 This approach's primary focus is internal,
however, the consumers’ interest in quality
is implicitly recognized
 According to the manufacturing-based
approach, improvements in quality lead to
lower costs
User-Based Definition
 This approach starts from the opposite
premise that quality “lies in the eyes of the
beholder”
 The goods that best satisfy consumers'
preferences are those that they regard as
having the highest quality
Shifting Definitions
 The characteristics that connote quality must be
first identified through market research
 These characteristics must then be translated
into identifiable product attributes
 And finally, manufacturing process must be
organized to ensure that products are made
precisely to these specifications
Ways in Which Quality Can Improve
Productivity
Sales Gains
Improved
Quality
– Improved response
– Higher Prices
– Improved reputation
Reduced Costs
– Increased productivity
– Lower rework and scrap
costs
– Lower warranty costs
Increased
Profits
Quality Specifications
 Quality: Inherent value of the product in the
marketplace
– Dimensions include: Performance, Features,
Reliability, Conformance, Durability, Serviceability,
Aesthetics, and Perceived Quality (Reputation)
Eight Dimensions of Quality
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Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality
Performance
 Performance refers to a product's primary
operating characteristics (Acceleration of a
car, brightness of a TV set)
 Different brands can easily be ranked
objectively on individual aspects of
performance
Features
 Features are the bells and whistles of products
and services, they supplement their basic
functioning (Push-button windows)
 It is hard to draw the line separating primary
performance characteristics from secondary
features
 Many customers may wish to customize or
personalize their purchases, and availability of
different features plays an important role in
meeting these requirements
Reliability
 Reliability reflects the probability of a
product malfunctioning or failing within a
specified time period (Mean time to first
failure, mean time between failures)
 These measures are most relevant to
durable goods than to products and
services that are consumed instantly
 Reliability normally becomes more
important to consumers as down time and
maintenance become more expensive
Conformance
 Conformance is the degree to which a
product's design and operating
characteristics meet established standards
 These standards are normally expressed
as a target or center, and deviance from
the center is permitted within a specified
range
Durability
 Durability is a measure of product life and
may be defined as the amount of use one
gets from a product before it breaks down
and replacement is preferable to continued
repair
Serviceability, Aesthetics, and Perceived
Quality
 Serviceability is a measure of speed,
courtesy, competence, and ease of repair
 Aesthetics (how a product looks, feels,
sounds, tastes or smells) is a very
subjective quality dimension
 Perceived quality is the set of inferences
we make about quality rather than the
reality of itself
Quality Strategies
 Certain dimensions may be pushed to
the forefront to gain market share
 Some of the dimensions are mutually
reinforcing, some are not
 The challenge is to compete on
selected dimensions
Quality Costs
 Cost of Control (Quality, Conformance)
– Prevention costs: reducing the potential for
defects
– Appraisal costs: evaluating products
 Cost of Failure of Control (Unquality, nonconformance)
– Internal failure costs:of producing defective
parts or service
– External failure costs: occur after delivery
Continuous Improvement
 Represents continual improvement of
process & customer satisfaction
 Involves all operations
& work units
 Other names
– Kaizen (Japanese)
– Zero-defects
– Six sigma
© 1984-1994 T/Maker Co.
Six Sigma Quality
 A philosophy and set of methods companies use
to eliminate defects in their products and
processes
 Seeks to reduce variation in the processes that
lead to product defects
 The name “six sigma” refers to the variation that
exists within plus or minus six standard
deviations of the process outputs
 6
Six Sigma Quality
Six Sigma Quality (Continued)
 Six Sigma allows managers to readily describe
process performance using a common metric:
Defects Per Million Opportunities (DPMO)
DPMO 
Numberof defects
 Numberof 
 opportunit
ies  x No.of units
 for error per 
 unit



x 1,000,000
Six Sigma Quality (Continued)
Example of Defects Per Million Opportunities
(DPMO) calculation: Suppose we observe
200 letters delivered incorrectly to the
wrong addresses in a small city during a
single day when a total of 200,000 letters
were delivered. What is the DPMO in this
situation?
DPMO 
200
So, for every one million
letters delivered this
city’s postal managers
can expect to have
1,000 letters
incorrectly sent to the
wrong address.
x 1,000,000 1, 000
 1  x 200,000
Cost of Quality: What might that DPMO mean in terms of over-time
employment to correct the errors?
Six Sigma Quality: DMAIC Cycle
 Define, Measure, Analyze, Improve, and
Control (DMAIC)
 Developed by General Electric as a means
of focusing effort on quality using a
methodological approach
 Overall focus of the methodology is to
understand and achieve what the customer
wants
 DMAIC consists of five steps….
Six Sigma Quality: DMAIC Cycle (Continued)
1. Define (D)
Customers and their priorities
2. Measure (M)
Process and its performance
3. Analyze (A)
Causes of defects
4. Improve (I)
Remove causes of defects
5. Control (C)
Maintain quality
The DMAIC Road Map (Ford)
DEFINE
Define — Select Critical To Satisfaction
(CTS) characteristics and performance
MEASURE
Measure — Create/validate
measurement systems
ANALYZE
Analyze — Identify sources of variation
from performance objectives
MODIFY
DESIGN?
REDESIGN
Redesign — Revise
current measurement
systems if incorrect
IMPROVE
Improve — Discover process
relationships and establish new
procedures
CONTROL
Control — Implement process
controls
Analytical Tools for Six Sigma and
Continuous Improvement
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Process Analysis
Run Charts
Pareto Charts
Histograms
Scatter Diagrams
Fish-Bone Charts
Control Charts (not covered in this course)
Pareto Analysis
 The purpose of Pareto Analysis is to
identify and highlight major symptoms of
major quality problems
 It is based on the premise that usually a
small number of faults cause the majority
of malfunctions (to separate the vital few
and trivial many)
Developing Pareto Analysis
 Define classification of defects to be monitored
 Define the period of time over which the
assessment will be made
 Total the frequency of occurrence of each class
of defects over the period
 Plot the histogram and cumulative distribution of
the classes in descending order of the frequency
occurrence
 Identify the classes that constitute the majority of
defect occurrences
Pareto Analysis
Percentage
-100%
Frequency
-50%
A
B
C
D
E
F
-0%
Pareto Law (80/20 Rule):
“80 percent of the problems are due to 20 percent of the causes”
Scatter Diagrams
A Scatter Diagram is used to interpret data by graphically
displaying the relationship between two variables.
Fish-Bone Diagram
 Also known as cause-and-effect diagram,
or Ishikawa diagram
 Pareto analysis is used to identify key
problems or symptoms,
 Fish-Bone diagram is used to sort causes
of the problems
 Brain storming sessions of groups of
workers needed
 It is a very valuable educational tool
Fish-Bone Diagram
 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.
Causes and Effect Diagram
Fishbone diagram - Ishikawa Chart
Machine
Man
Effect
Method
Material
Cause and Effect Diagram Example
Method
Manpower
Main Cause
Too many
defects
Material
Machinery
Main Cause
Cause and Effect Diagram Example
Method
Drill
Manpower
Overtime
Too many
defects
Wood
Steel
Material
Lathe
Machinery
Sub-Cause
Cause and Effect Diagram Example
Method
Drill
Slow
Manpower
Tired
Overtime
Old
Wood
Steel
Material
Lathe
Machinery
Too many
defects
Example: why isn't the phone being answered on
time?
Analytical Tools for Six Sigma and Continuous Improvement: Control
Charts
Can be used to monitor ongoing production process
quality and quality conformance to stated standards of
quality
1020
UCL
1010
1000
990
LCL
980
970
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15
UCL
Statistical
Process
Control
LCL
UCL
with
Control Charts
LCL
UCL
LCL
Six Sigma Roles and Responsibilities
1. Executive leaders must champion the
process of improvement
2. Corporation-wide training in Six Sigma
concepts and tools
3. Setting stretch objectives for improvement
4. Continuous reinforcement and rewards
The Shingo System: Fail-Safe Design
 Shingo’s argument:
–
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Defects arise when people make errors
Defects can be prevented by providing employees
with feedback on errors and putting controls in the
process
 Poka-Yoke includes:
– Checklists
– Special tooling that prevents employees from making
errors
– (Poka-Yoke: Japanese slang for “avoiding inadvertent
errors” )
Knowledge in the World:
Which dial turns on the burner?
Stove A
Stove B
Benchmarking
1. Identify those processes needing
improvement
2. Identify a firm that is the world leader in
performing the process
3. Contact the managers of that company
and make a personal visit to interview
managers and workers
4. Analyze data
ISO 9000
 Series of standards agreed upon by the
International Organization for
Standardization (ISO)
 Adopted in 1987
 Awarded in 152 countries
 A prerequisite for global competition?
 ISO 9000 directs you to "document what you
do and then do as you documented"
Three Forms of ISO Certification
1. First party: A firm audits itself against
ISO 9000 standards
2. Second party: A customer audits its
supplier
3. Third party: A "qualified" national or
international standards or certifying
agency serves as auditor
ISO 9000 Standards: Application in Production
Flow