Operations
Management
Chapter 6 –
Managing Quality
Delivered by:
Eng.Mosab I. Tabash
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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
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Outline
 Tools of TQM





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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
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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

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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

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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

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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


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Flow of Activities Necessary to
Achieve Total Quality Management
Organizational Practices
Quality Principles
Employee Fulfillment
Customer Satisfaction
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Organizational Practices
Leadership
Mission statement
Effective operating procedure
Staff support
Training
Yields: What is important and what is to be
accomplished
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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
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Employment Fulfillment
Empowerment
Organizational commitment
Yields: Employees’ attitudes that they can
accomplish what is important and to be
accomplished
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Customer Satisfaction
Winning orders
Repeat customers
Yields: An effective organization with a
competitive advantage
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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
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Importance of Quality
 Costs & market
share
 Company’s
reputation
 Product
liability
 International
implications
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Market Gains
Reputation
Volume
Price
Improved
Quality
Increased
Profits
Lower Costs
Productivity
Rework/Scrap
Warranty
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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.
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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
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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.)
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Environmental Standard
ISO 14000
Core Elements:
Environmental management
 Auditing
 Performance evaluation
 Labeling
 Life-cycle assessment

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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.
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Achieving
Total Quality Management
Customer
Satisfaction
Effective
Business
Attitudes
(e.g., Commitment)
Employee
Fulfillment
How to Do
Quality
Principles
What to Do
Organizational
Practices
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Concepts of TQM
Continuous improvement
Employee empowerment
Benchmarking
Just-in-time (JIT)
Taguchi concepts
Knowledge of tools
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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.
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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
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Test the plan
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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
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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
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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
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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

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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
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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
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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.
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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
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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
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USL
X
Measurement
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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
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USL
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U.S. factory
(ConformanceX oriented)
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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

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(a) Check Sheet: An organized method
of recording data
Defect
A
B
C
1
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//
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/
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4
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/
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7
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Productivity
(b) Scatter Diagram: A graph of the value of one
variable vs. another variable
Absenteeism
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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.

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Cause and Effect Diagram
Example
Problem
Too many
defects
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Cause and Effect Diagram
Example
Method
Manpower
Main Cause
Too many
defects
Material
Machinery
Main Cause
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Cause and Effect Diagram
Example
Method
Manpower
Drill
Over
Time
Too many
defects
Wood
Steel
Material
Lathe
Machinery
Sub-Cause
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Cause and Effect Diagram
Example
Method
Manpower
Tired
Drill
Over
Time
Slow
Old
Wood
Steel
Material
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Too many
defects
Lathe
Machinery
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Fishbone Chart - Problems with
Airline Customer Service
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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

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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
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Percent
Frequency
(d) Pareto Chart: A graph to identify and plot
problems or defects in descending order of
frequency
A
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C
D
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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
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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
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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
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Patterns to Look for in
Control Charts
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(f) Histogram: A distribution showing the
frequency of occurrences of a variable
Frequency
Distribution
Repair time (minutes)
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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
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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
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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
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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
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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
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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
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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
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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

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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
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