PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e
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© 2006 Prentice Hall, Inc.
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
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Service Quality
• For services, the assessment of quality is made during the service delivery process.
• Customer satisfaction can be measured as the difference between the customer’s service expectation and the service actually received.
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Gaps in Service Quality
• Measuring the gap between expected service and perceived service is a routine customer feedback process practiced by many companies
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Service Recovery
• Letters of apology
• Replacement Product/Complimentary service
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Malcom Baldrige National
Quality Award
 Established in 1988 by the U.S. government
 Designed to promote TQM practices
 http://www.quality.nist.gov/
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International Quality
Standards
 To do business globally, being listed on an
ISO directory is crucial
 ISO 9000
 Organizations must go through a 9 to 18 month process involving documenting procedures, on-site assessment, and ongoing product/service audits
 ISO 14000 series
 An environmental management standard which focuses on pollution prevention and ecological impact
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TQM
Encompasses entire organization, from supplier to customer
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
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© 2006 Prentice Hall, Inc.
Seven Concepts of TQM
 Continuous improvement
 Six Sigma
 Employee empowerment
 Benchmarking
 Just-in-time (JIT)
 Taguchi concepts
 Knowledge of TQM tools
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Continuous Improvement
 Represents continual improvement of all processes
 Involves all operations and work centers including suppliers and customers
 People, Equipment, Materials,
Procedures
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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
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Six Sigma Implementation

Emphasize DPMO as a standard metric

Provide extensive training

Focus on corporate sponsor support
(Champions)

Create qualified process improvement experts (Black Belts, Green Belts, etc.)

Set stretch objectives
This cannot be accomplished without a major commitment from top level management
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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
© 2006 Prentice Hall, Inc.
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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
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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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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
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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
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Taguchi Concepts
 Experimental design methods to improve product and process design
 Uses Robust Design method
 Plan for the worst conditions and design quality around the worst conditions
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 Example: Grocery Stores and coming
Hurricane (design store to handle the traffic associated with this worst condition)
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Tools of TQM
 Tools for Generating Ideas
 Check sheets
 Scatter diagrams
 Cause and effect diagrams
 Tools to Organize the Data
 Pareto charts
 Flow charts
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 Tools for Identifying Problems
 Histogram
 Statistical process control chart
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Seven Tools for TQM
(a) Check Sheet: An organized method of recording data
Hour
Defect 1 2 3 4 5 6 7 8
A
B
C
///
//
/
/
/
//
/ /
/ / / ///
//
/
///
// ////
Figure 6.5
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Seven Tools for TQM
(b) Scatter Diagram: A graph of the value of one variable vs. another variable
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Absenteeism
Figure 6.5
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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
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Cause-and-Effect Diagrams
Material
Inadequate supply of magazines
Inadequate special meals on-board
Overbooking policies
Bumping policies
Machinery
Mechanical delay on plane
Broken luggage carousel
Understaffed crew
Understaffed ticket counters
Dissatisfied
Airline
Customer
Manpower Methods
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Figure 6.6
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Seven Tools for TQM
(d) Pareto Charts: A graph to identify and plot problems or defects in descending order of frequency
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A B C D E
Figure 6.5
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Pareto Charts
Data for October
70 –
60
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50 –
40
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30 –
20
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10 –
0
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54
12
4
Number of occurrences
3
Room svc Check-in Pool hours Minibar
72% 16% 5% 4%
Causes and percent
2
Misc.
3%
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Seven Tools for TQM
(e) Flow Charts (Process Diagrams): A chart that describes the steps in a process
Figure 6.5
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Flow Charts
Packing and shipping process
Packing station
Sealing
Weighing
Labeling
Quick freeze storage
(60 Mins)
Storage
(4 to 6 hrs)
Shipping dock
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Seven Tools for TQM
(f) Histogram: A distribution showing the frequency of occurrence of a variable
Distribution
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Repair time (minutes)
Figure 6.5
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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
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Statistical Process Control
(SPC)
 Uses statistics and control charts to tell when to take corrective action
 Drives process improvement
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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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Service Industry Inspection
Organization
What is
Inspected
Jones Law Office Receptionist performance
Billing
Attorney
Standard
Is phone answered by the second ring
Accurate, timely, and correct format
Promptness in returning calls
Table 6.4
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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
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Service
Specs at UPS
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Determinants of Service
Quality
 Reliability
 Responsiveness
 Competence
 Access
 Courtesy
 Communication
 Credibility
 Security
 Understanding/ knowing the customer
 Tangibles
© 2006 Prentice Hall, Inc.
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