Operations Management Chapter 6 – Managing Quality Delivered by: Eng.Mosab I. Tabash PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-1 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Outline Global Company Profile: Motorola Defining Quality Implications of Quality Malcolm Baldrige National Quality Award Cost of Quality International Quality Standards Total Quality Management Continuous Improvement Employee Empowerment Benchmarking Just-in-Time (JIT) Taguchi Concepts Knowledge of TQM Tools PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-2 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Outline Tools of TQM Check sheets Scatter Diagrams Cause-and-Effect Diagram Pareto Charts Process Charts Histogram The Role of Inspection When and where to Inspect Source Inspection Service Industry Inspection Inspection of Attributes vs Variables TQM in Services PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-3 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Learning Objectives When you complete this chapter, you should be able to : Identify or Define: Quality Malcolm Baldrige National Quality Award Demings, Juran, and Crosby Taguchi Concepts PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-4 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Learning Objectives - continued When you complete this chapter, you should be able to : Explain: Why quality is important Total Quality Management (TQM) Pareto charts Process charts Quality robust products Inspection PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-5 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 To Make the Quality Focus Work Motorola: Aggressively began a worldwide education program to be sure that employees understood quality and statistical process control Established goals Established extensive employee participation and employee teams PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-6 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Ways in Which Quality Can Improve Productivity Sales Gains Improved response Higher Prices Improved reputation Improved Quality Reduced Costs Increased Profits Increased productivity Lower rework and scrap costs Lower warranty costs PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-7 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Flow of Activities Necessary to Achieve Total Quality Management Organizational Practices Quality Principles Employee Fulfillment Customer Satisfaction PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-8 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Organizational Practices Leadership Mission statement Effective operating procedure Staff support Training Yields: What is important and what is to be accomplished PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-9 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Quality Principles Customer focus Continuous improvement Employee empowerment Benchmarking Just-in-time Tools of TQM Yields: How to do what is important and to be accomplished PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-10 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Employment Fulfillment Empowerment Organizational commitment Yields: Employees’ attitudes that they can accomplish what is important and to be accomplished PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-11 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Customer Satisfaction Winning orders Repeat customers Yields: An effective organization with a competitive advantage PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-12 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Definitions of Quality ASC: Product characteristics & features that affect customer satisfaction User-Based: What consumer says it is Manufacturing-Based: Degree to which a product conforms to design specification Product-Based: Level of measurable product characteristic PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-13 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Importance of Quality Costs & market share Company’s reputation Product liability International implications PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) Market Gains Reputation Volume Price Improved Quality Increased Profits Lower Costs Productivity Rework/Scrap Warranty 6-14 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Malcom Baldrige National Quality Award Established in 1988 by the U.S. government Designed to promote TQM practices Some criteria Senior executive leadership; strategic planning; management. of process quality Quality results; customer satisfaction Recent winners Corning Inc.; GTE; AT&T; Eastman Chemical. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-15 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Costs of Quality Prevention costs - reducing the potential for defects Appraisal costs - evaluating products Internal failure - of producing defective parts or service External costs - occur after delivery PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-16 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 International Quality Standards Industrial Standard Z8101-1981 (Japan) Specification for TQM ISO 9000 series (Europe/EC) Common quality standards for products sold in Europe (even if made in U.S.) ISO 14000 series (Europe/EC) Standards for recycling, labeling etc. ASQC Q90 series; MILSTD (U.S.) PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-17 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Environmental Standard ISO 14000 Core Elements: Environmental management Auditing Performance evaluation Labeling Life-cycle assessment PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-18 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 TQM Encompasses entire organization, from supplier to customer Stresses a commitment by management to have a continuing company-wide drive toward excellence in all aspects of products and services that are important to the customer. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-19 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Achieving Total Quality Management Customer Satisfaction Effective Business Attitudes (e.g., Commitment) Employee Fulfillment How to Do Quality Principles What to Do Organizational Practices PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-20 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Concepts of TQM Continuous improvement Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of tools PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-21 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 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. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-22 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Shewhart’s PDCA Model 4.Act 1.Plan 3.Check 2.Do Implement Identify the improvement and the plan make a plan Is the plan working PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-23 Test the plan © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Employee Empowerment Getting employees involved in product & process improvements 85% of quality problems are due to process & material Techniques © 1995 Corel Corp. Support workers Let workers make decisions Build teams & quality circles PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-24 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Quality Circles Group of 6-12 employees from same work area Meet regularly to solve work-related problems 4 hours/month Facilitator trains & helps with meetings PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 1995 Corel Corp. 6-25 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 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 PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-26 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Just-in-Time (JIT) Relationship to quality: JIT cuts cost of quality JIT improves quality Better quality means less inventory and better, easier-to-employ JIT system PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-27 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Just-in-Time (JIT) ‘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 PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-28 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Taguchi Techniques Experimental design methods to improve product & process design Identify key component & process variables affecting product variation Taguchi Concepts Quality robustness Quality loss function Target specifications PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-29 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Quality Robustness Ability to produce products uniformly regardless of manufacturing conditions Put robustness in House of Quality matrices besides functionality © 1995 Corel Corp. © 1984-1994 T/Maker Co. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-30 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Quality Loss Function Shows social cost ($) of deviation from target value Assumptions Most measurable quality characteristics (e.g., length, weight) have a target value Deviations from target value are undesirable Equation: L = D2C L = Loss ($); D = Deviation; C = Cost PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-31 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Quality Loss Function Graph Loss = (Actual X - Target)2 • (Cost of Deviation) Loss LSL Greater deviation, more people are dissatisfied, higher cost Target Lower (upper) specification limit PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) USL X Measurement 6-32 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Target Specification Example A study found U.S. consumers preferred Sony TV’s made in Japan to those made in the U.S. Both factories used the same designs & specifications. The difference in quality goals made the difference in consumer preferences. Freq. LSL Japanese factory (Target-oriented) Target PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) USL 6-33 U.S. factory (ConformanceX oriented) © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Tools of TQM Tools for generating ideas Check sheet Scatter diagram Cause and effect diagram Tools to organize data Pareto charts Process charts (Flow diagrams) Tools for identifying problems Histograms Statistical process control chart PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-34 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 (a) Check Sheet: An organized method of recording data Defect A B C 1 /// // / PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 2 / / // 3 Hour 4 5 / / / 6-35 / 6 / 7 /// // // 8 / /// //// © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Productivity (b) Scatter Diagram: A graph of the value of one variable vs. another variable Absenteeism PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-36 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 c.Cause and Effect 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. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-37 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Cause and Effect Diagram Example Problem Too many defects PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-38 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Cause and Effect Diagram Example Method Manpower Main Cause Too many defects Material Machinery Main Cause PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-39 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Cause and Effect Diagram Example Method Manpower Drill Over Time Too many defects Wood Steel Material Lathe Machinery Sub-Cause PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-40 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Cause and Effect Diagram Example Method Manpower Tired Drill Over Time Slow Old Wood Steel Material PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) Too many defects Lathe Machinery 6-41 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Fishbone Chart - Problems with Airline Customer Service PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-42 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Process Chart 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 PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-43 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Process Chart Example SUBJECT: Request tool purchase Dist (ft) Time (min) Symbol Description D Write order w On desk D To buyer 75 D Examine = Operation; = Transport; = Inspect; D = Delay; = Storage PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-44 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Percent Frequency (d) Pareto Chart: A graph to identify and plot problems or defects in descending order of frequency A PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) B C D 6-45 E © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 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 PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-46 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Statistical Process Control Steps Start Produce Good Provide Service Take Sample No Assign. Causes? Yes Inspect Sample Stop Process Create Control Chart Find Out Why PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-47 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Process Control Chart Plot of Sample Data Over Time Sample Value 80 Sample Value UCL 60 40 Average 20 LCL 0 1 5 9 13 17 21 Time PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-48 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Patterns to Look for in Control Charts PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-49 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 (f) Histogram: A distribution showing the frequency of occurrences of a variable Frequency Distribution Repair time (minutes) PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-50 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 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 PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-51 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 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 process 5. When production or service is complete 6. Before delivery to your customer 7. At the point of customer contact PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-52 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Inspection Points in Services Organization Some Points of Inspection Bank Teller stations Issues to Consider Shortages, courtesy, speed, accuracy Loan accounts Collateral, proper credit checks, rates, terms of loans, default rates, loan rates Checking accounts Accuracy, speed of entry, rate of overdraws PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-53 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Inspection Points in Services Organization Some Points of Inspection Retail store Stockrooms Issues to Consider Clean, uncluttered, organized, level of stockouts, amply supply, rotation of goods Display areas Attractive, well-organized, stocked, visible goods, good lighting Sales counters Neat, courteous knowledgeable personnel; waiting time; accuracy in credit checking and sales entry PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-54 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Inspection Points in Services Organization Issues to Consider Some Points of Inspection Kitchen Clean, proper storage, unadulterated food, health regulations observed, wellorganized Cashier station Speed, accuracy, appearance Dining areas Clean, comfortable, regular monitoring by personnel, Restaurant PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-55 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Inspection Many problems Worker fatigue Measurement error Process variability Cannot inspect quality into a product Robust design, empowered employees, and sound processes are better solutions PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-56 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Attributes Versus Variables Attributes Items are either good or bad, acceptable or unacceptable Does not address degree of failure Variables Measures dimensions such as weight, speed, height, or strength Falls within an acceptable range PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-57 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 TQM In Services Service quality is more difficult to measure than for goods Service quality perceptions depend on Expectations versus reality Process and outcome Types of service quality Normal: Routine service delivery Exceptional: How problems are handled PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-58 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458 Service Quality The Operations Manager must recognize: 1. The tangible component of services is important 2. The service process is important 3. The service is judged against the customer’s expectations 4. Exceptions will occur PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) 6-59 © 2001 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458