© 2006 prentice hall, inc.6 – 1 operations management chapter 6 – managing quality © 2006...

© 2006 Prentice Hall, Inc. 6 – 1

Operations ManagementOperations ManagementChapter 6 – Managing QualityChapter 6 – Managing Quality

© 2006 Prentice Hall, Inc.

PowerPoint presentation to accompanyPowerPoint presentation to accompany Heizer/Render Heizer/Render Operations Management, 8e Operations Management, 8e


OutlineOutline

History of QualityHistory of Quality

Quality and StrategyQuality and Strategy

Defining QualityDefining Quality

Evolution of Quality Management Evolution of Quality Management

International Quality StandardsInternational Quality Standards

TQM ConceptsTQM Concepts

TQM ToolsTQM Tools

Quality: Prevention vs. DetectionQuality: Prevention vs. Detection


Our Faith in Quality of SystemsOur Faith in Quality of Systems

Have you ever checked a bridge on a Have you ever checked a bridge on a highway before you drove over it with highway before you drove over it with your car?your car?

Have you ever checked the validity of Have you ever checked the validity of the claims on the bottle of your pills?the claims on the bottle of your pills?

Have you ever asked a pilot for her Have you ever asked a pilot for her license before your flight?license before your flight?

Have you ever asked you doctor for Have you ever asked you doctor for his certificate in medicine? his certificate in medicine?

Why should you consider the ideas?Why should you consider the ideas?


Quality Failures ExamplesQuality Failures Examples The big dig panel fell on a car and The big dig panel fell on a car and

killed a lady (product defect)killed a lady (product defect)

A trained doctor who turned into A trained doctor who turned into cosmetic surgeon without a license or cosmetic surgeon without a license or training in area (fake service)training in area (fake service)

Hospital operates patient on wrong leg Hospital operates patient on wrong leg (service error)(service error)

Hospital gives patient wrong pills Hospital gives patient wrong pills (service error)(service error)


Quality Failures ExamplesQuality Failures Examples A person without training practicing A person without training practicing

natural healing or alternate medicine natural healing or alternate medicine (fake service)(fake service)

Arsenic in bottled water (product Arsenic in bottled water (product defect)defect)

Fake drugs on the market (fake Fake drugs on the market (fake product)product)


Quality Failures: 20Quality Failures: 20thth Century Century

US Food and Drug Administration US Food and Drug Administration

http://www.fda.gov/opacom/7alerts.html

UK Medicines and Healthcare products Regulatory UK Medicines and Healthcare products Regulatory Agency (MHRA)Agency (MHRA)

Fake drugs Fake drugs video clipvideo clip http://news.bbc.co.uk/1/hi/health/4725881.stm#


Institutional Practices for Quality Institutional Practices for Quality Assurance: History 13Assurance: History 13thth – 19 – 19thth Century Century

From the end of the 13th century to the early 19th From the end of the 13th century to the early 19th century, craftsmen across medieval Europe were century, craftsmen across medieval Europe were organized into unions called guilds, who developed organized into unions called guilds, who developed strict rules for product and service quality. strict rules for product and service quality.

Inspection committees enforced the rules by Inspection committees enforced the rules by marking flawless goods with a special mark or marking flawless goods with a special mark or symbol.symbol.

Craftsmen themselves often placed a second mark Craftsmen themselves often placed a second mark on the goods they produced. At first this mark was on the goods they produced. At first this mark was used to track the origin of faulty items. used to track the origin of faulty items.

But over time the mark came to represent a But over time the mark came to represent a craftsman’s good reputation. Inspection marks and craftsman’s good reputation. Inspection marks and master-craftsmen marks served as proof of quality master-craftsmen marks served as proof of quality for customers throughout medieval Europe. for customers throughout medieval Europe.


Weaknesses of Medieval Quality Weaknesses of Medieval Quality Assurance PracticesAssurance Practices

Products got more diverse Products got more diverse

Products got more complex and knowledge Products got more complex and knowledge intensiveintensive

Ways of defining quality by the guilds were diverseWays of defining quality by the guilds were diverse

It relied on manual inspection of goods by outside It relied on manual inspection of goods by outside guildsguilds

It slowed down the delivery of goodsIt slowed down the delivery of goods

Mass production era produced more units per day Mass production era produced more units per day than could be manually inspected (staffing, cost than could be manually inspected (staffing, cost and time issues)and time issues)

A New Approach was needed !!!A New Approach was needed !!!


Statistical-Approaches for Quality : 20Statistical-Approaches for Quality : 20thth CenturyCentury

During the World War II (from 1941), US military During the World War II (from 1941), US military products were inspected on delivery to ensure products were inspected on delivery to ensure conformance to requirements. The U.S. armed conformance to requirements. The U.S. armed forces inspected virtually every unit produced to forces inspected virtually every unit produced to ensure that it was safe for operation. This practice ensure that it was safe for operation. This practice required huge inspection forces and caused required huge inspection forces and caused problems in recruiting competent inspection problems in recruiting competent inspection personnel.personnel.

To ease the problems without compromising To ease the problems without compromising product safety, the armed forces began to use product safety, the armed forces began to use sampling inspection to replace unit-by-unit sampling inspection to replace unit-by-unit inspection. Industry consultants, particularly from inspection. Industry consultants, particularly from Bell Laboratories, helped develop sampling tables Bell Laboratories, helped develop sampling tables and published them in a military standard, known and published them in a military standard, known as Mil-Std-105. Later became known as statistical as Mil-Std-105. Later became known as statistical control charts. control charts.


Statistical-Approaches for Quality : Statistical-Approaches for Quality : After World War IIAfter World War II

After the World War II, Japanese manufacturers After the World War II, Japanese manufacturers converted plants from producing military to converted plants from producing military to producing civilian goods for trade. Initially, producing civilian goods for trade. Initially, Japanese goods were shoddy and could not be sold Japanese goods were shoddy and could not be sold as exports in international markets. Japanese firms as exports in international markets. Japanese firms asked American statisticians for help.asked American statisticians for help.

W. Edwards Deming, was frustrated with American , was frustrated with American managers for their termination of the use of quality managers for their termination of the use of quality control methods after the war. He introduced his 14-control methods after the war. He introduced his 14-points approach, of focusing on the System and not points approach, of focusing on the System and not on inspection to improve quality, in Japan plants.on inspection to improve quality, in Japan plants.

Joseph M. Juran, trained Japanese managers about , trained Japanese managers about role of top managers, customers defining quality, role of top managers, customers defining quality, involvement of everyone and continuous involvement of everyone and continuous improvement. improvement.


America Gets the Message of America Gets the Message of Statistical-Approaches for Quality :Statistical-Approaches for Quality :

In the 1970s, price advantages and quality In the 1970s, price advantages and quality competitiveness of Japanese continued to rise. A competitiveness of Japanese continued to rise. A 1980 NBC-TV News special report examined the 1980 NBC-TV News special report examined the question of quality, “If Japan Can… Why Can’t We?” question of quality, “If Japan Can… Why Can’t We?” . It captured the attention from national legislators, . It captured the attention from national legislators, administrators and the media. administrators and the media.

Congress passed a law intended to increase Congress passed a law intended to increase competitiveness through quality improvement and it competitiveness through quality improvement and it introduced a national quality award called Malcolm introduced a national quality award called Malcolm Baldrige National Quality Award. Baldrige National Quality Award. http://www.quality.nist.gov/

U.S. firms began to listen and focus on quality in U.S. firms began to listen and focus on quality in their strategies and in projects and in the training of their strategies and in projects and in the training of staff. The U.S. response, emphasized not only staff. The U.S. response, emphasized not only statistics but also a holistic set of principles that statistics but also a holistic set of principles that became known as Total Quality Management (TQM). became known as Total Quality Management (TQM).


Quality Programs by ExpertsQuality Programs by Experts

W. Edwards DemingW. Edwards Deming 14 Points for 14 Points for ManagementManagement

Joseph M. JuranJoseph M. Juran Top management Top management commitment, commitment, fitness for usefitness for use

Armand FeigenbaumArmand Feigenbaum Total Quality Total Quality ControlControl

Philip B. CrosbyPhilip B. Crosby Quality is FreeQuality is Free


Quality Models by National Quality Models by National AgenciesAgencies

Malcom Baldrige National Quality Malcom Baldrige National Quality AwardAward was established in 1988 by was established in 1988 by the U.S. governmentthe U.S. government

Designed to promote TQM practices in Manufacturing, Designed to promote TQM practices in Manufacturing, government, non-profit and services sectorsgovernment, non-profit and services sectors

Japan Quality AwardJapan Quality Award


Quality Models by International Quality Models by International AgenciesAgencies

Industrial Standard Z8101-1981 (Japan)Industrial Standard Z8101-1981 (Japan) Specification for TQMSpecification for TQM

ISO 9000 series (Europe/EC)ISO 9000 series (Europe/EC) Common quality standards for products Common quality standards for products

sold in Europe (even if made in U.S.)sold in Europe (even if made in U.S.)

2000 update places greater emphasis on 2000 update places greater emphasis on leadership and customer satisfactionleadership and customer satisfaction

ISO 14000 series (Europe/EC)ISO 14000 series (Europe/EC)


Quality Models by Industrial Quality Models by Industrial Sector AgentsSector Agents

Capability Maturity Model Integration Capability Maturity Model Integration for improving quality of the Software for improving quality of the Software development industrydevelopment industry

Quality model for the automotive Quality model for the automotive industryindustry

Company-driven quality initiatives, Company-driven quality initiatives, e.g. Six sigma qualitye.g. Six sigma quality


Managing Quality Provides a Managing Quality Provides a Competitive AdvantageCompetitive Advantage

Arnold Palmer HospitalArnold Palmer Hospital

Deliver over 10,000 babies annuallyDeliver over 10,000 babies annually

Virtually every type of quality tool is Virtually every type of quality tool is employedemployed Continuous improvementContinuous improvement

Employee empowermentEmployee empowerment

BenchmarkingBenchmarking

Just-in-timeJust-in-time

Quality toolsQuality tools


Services: Quality DimensionsServices: Quality Dimensions

Service densityService density

Service inputsService inputs


Activity:Quality DimensionsActivity:Quality Dimensions

RetailingRetailing Which events would you list as Which events would you list as

evidence of low quality performance in evidence of low quality performance in retailing?retailing?

Poor quality happens when?Poor quality happens when?


How Quality Failure Happens!How Quality Failure Happens!

InputInputOutput Output SYSTEM

GoodGoodqualityquality

PoorPoorqualityquality


How Quality Failure Happens!How Quality Failure Happens!

InputInput Output Output

Wrong things are done

Right things are not done

Right things are done poorly

Right things are done late

Right things are done well and in timely manner

Events Happening in Service/Production Firm


External Failure

Internal Failure

Prevention

Costs of QualityCosts of Quality

Appraisal

Total Cost

Quality Improvement

Total CostTotal Cost


Costs of Quality- ExampleCosts of Quality- Example

Example: Comparing firms with Example: Comparing firms with Cost of quality approachCost of quality approach


Impact of Quality FailuresImpact of Quality Failures

1.1. Internal Failure CostsInternal Failure Costs Warranty costsWarranty costs

Repair costsRepair costs

Labor costsLabor costs

Equipment downtime costsEquipment downtime costs

2.2. External failure CostsExternal failure Costs Liability costsLiability costs Loss of livesLoss of lives Harm to healthHarm to health Harm to environmentHarm to environment Customer defectionsCustomer defections


How Quality Performance HappensHow Quality Performance Happens

Preventive Preventive Quality ApproachQuality Approach

-Process improvementProcess improvement-Quality programQuality program-Quality trainingQuality training-Process improvementProcess improvement-Statistical processStatistical process control control-Quality auditQuality audit

-Right things -Right things done late done late-Right things doneRight things done-Right things notRight things not done done- Right things doneRight things done poorly poorly-Wrong thingsWrong things donedone

-Right behaviors-Right behaviorsand practicesand practicesleading to right leading to right things being donethings being doneand in timely and in timely manner, all the timemanner, all the time

-Work-Work inspectioninspection-Product Product rework rework-ProductProduct testing testing- Quality toolsQuality tools-Material Material inspection inspection

Appraisal Appraisal Quality ApproachQuality Approach


How Quality Practices Affect How Quality Practices Affect Organizational PerformanceOrganizational Performance

Organizational PracticesLeadership, Mission statement, Effective operating procedures, Staff support, TrainingYields: What is important (priorities, resources) and what is to be accomplished (objectives, purposes)

Quality PrinciplesCustomer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQMYields: How well a firm will perform what is important and things to be accomplished (standards of execution)

Employee FulfilmentEmpowerment, Organizational commitmentYields: Employee attitudes that can accomplish what is important (motivation, participation)

Customer SatisfactionWinning orders, Repeat customersYields: An effective organization with a competitive advantage (results, retention, satisfaction, growth)

Figure 6.2Figure 6.2


Activity:Quality DimensionsActivity:Quality Dimensions

Department of Motor Vehicles (DMV)Department of Motor Vehicles (DMV) What do you think would be the important thing to an What do you think would be the important thing to an

employee of the DMV when reviewing supporting employee of the DMV when reviewing supporting documentation of an applicant?documentation of an applicant?

What do you think would be the important thing to an What do you think would be the important thing to an applicant for a license with regard to documents that applicant for a license with regard to documents that s/he brings to support her/his application?s/he brings to support her/his application?

What do you think would be the important expectation What do you think would be the important expectation of the police department with regard to the DMV of the police department with regard to the DMV issued licenses? issued licenses?


Different ViewsDifferent Views

User-based – better performance, User-based – better performance, more featuresmore features

Manufacturing-based – Manufacturing-based – conformance to standards, conformance to standards, making it right the first timemaking it right the first time

Product-based – specific and Product-based – specific and measurable attributes of the measurable attributes of the product product


Defining QualityDefining Quality

The totality of features and The totality of features and characteristics of a product or characteristics of a product or

service that bears on its ability to service that bears on its ability to satisfy stated or implied needssatisfy stated or implied needs

American Society for QualityAmerican Society for Quality


Ethics and Quality Ethics and Quality ManagementManagement

Operations managers must Operations managers must deliver healthy, safe, quality deliver healthy, safe, quality products and servicesproducts and services

Poor quality risks injuries, Poor quality risks injuries, lawsuits, recalls, and regulationlawsuits, recalls, and regulation

Organizations are judged by Organizations are judged by how they respond to problemshow they respond to problems


TQMTQM

Encompasses entire organization, Encompasses entire organization, from supplier to customerfrom supplier to customer

Stresses a commitment by Stresses a commitment by management to have a continuing, management to have a continuing,

companywide drive toward companywide drive toward excellence in all aspects of products excellence in all aspects of products and services that are important to the and services that are important to the

customercustomer


Key Quality Principles (1)Key Quality Principles (1)

Customer orientationCustomer orientation Everything seen from the view of customerEverything seen from the view of customer

Results orientationResults orientation Measure, track and define results objectivelyMeasure, track and define results objectively

Process orientationProcess orientation View changes from a process point of viewView changes from a process point of view

Employee orientationEmployee orientation creativity, improvement come from creativity, improvement come from

employees. Empower, equip and train thememployees. Empower, equip and train them


Key Quality Principles (2)Key Quality Principles (2) Measurement orientationMeasurement orientation

Define measures, collect data and analyze Define measures, collect data and analyze data about performance using TQM toolsdata about performance using TQM tools

Continuous improvement orientationContinuous improvement orientation Focus on improving continuously not in Focus on improving continuously not in

haphazard or impulsive mannerhaphazard or impulsive manner

Prevention orientationPrevention orientation Prevention of errors is cheaper and more Prevention of errors is cheaper and more

effective than detecting and removing themeffective than detecting and removing them

Variation Elimination orientationVariation Elimination orientation Focus on recognizing and eliminating the Focus on recognizing and eliminating the

root causes of variations in your systems.root causes of variations in your systems.


Tools of TQMTools of TQM Tools for Generating IdeasTools for Generating Ideas

Check sheetsCheck sheetsScatter diagramsScatter diagramsCause and effect diagramsCause and effect diagrams

Tools to Organize the DataTools to Organize the DataPareto chartsPareto chartsFlow chartsFlow charts

Tools for Identifying ProblemsTools for Identifying ProblemsHistogramHistogramStatistical process control chartStatistical process control chart


Cause-and-Effect DiagramsCause-and-Effect Diagrams

MaterialMaterial MachineryMachinery

MethodsMethods ManpowerManpower

InadequateInadequate

supply of supply of magazinesmagazines

Inadequate special Inadequate special

meals on-boardmeals on-board

Insu

ffic

ien

t In

suff

icie

nt

clea

n p

illo

ws

clea

n p

illo

ws

& b

lan

kets

&

bla

nke

ts

on

-bo

ard

on

-bo

ardBroken luggage Broken luggage

carouselcarousel

Mechanical delay Mechanical delay

on planeon plane

Dei

cin

g

Dei

cin

g

equ

ipm

ent

equ

ipm

ent

no

t av

aila

ble

no

t av

aila

ble

Overbooking policiesOverbooking policies

Bumping policiesBumping policies

Mis

tag

ged

M

ista

gg

ed

bag

sb

ags

Po

or

chec

k-in

P

oo

r ch

eck-

in

po

lici

es

po

lici

es

Understaffed Understaffed

ticket countersticket counters

Understaffed Understaffed

crewcrew

Po

orl

y tr

ain

ed

Po

orl

y tr

ain

ed

atte

nd

ants

atte

nd

ants

Dissatisfied Dissatisfied Airline Airline CustomerCustomer



Pareto ChartsPareto Charts

Number of Number of occurrencesoccurrences

Room svcRoom svc Check-inCheck-in Pool hoursPool hours MinibarMinibar Misc.Misc.72%72% 16%16% 5%5% 4%4% 3%3%

1212

44 33 22

5454

– 100100– 9393– 8888

– 7272

70 70 –

60 60 –

50 50 –

40 40 –

30 30 –

20 20 –

10 10 –

0 0 –

Fre

qu

ency

(n

um

ber

)F

req

uen

cy (

nu

mb

er)

Causes and percentCauses and percent

Cu

mu

lati

ve p

erce

nt

Cu

mu

lati

ve p

erce

nt

Data for OctoberData for October


Impact of Poor Process Quality on OutputImpact of Poor Process Quality on Output

11 22 33

MaximumMaximumBatch sizesBatch sizes 100 units100 units 100 units100 units 100 units100 units

Activity Activity 60 mins60 mins 60 mins60 mins 60 mins 60 minstimestimes

Errors afterErrors afteractivity activity 10 units10 units (10%)(10%) 10 units10 units (10%)(10%) 10 units10 units (10%)(10%)

How may defective parts will whole process yield?How may defective parts will whole process yield?


Impact of Quality Appraisal on OutputImpact of Quality Appraisal on Output

11 22 33


Activity 60 mins 10 mins 60 mins 10 mins 60 mins 10 mins Activity 60 mins 10 mins 60 mins 10 mins 60 mins 10 mins

timestimes

Errors afterErrors afteractivity activity 2 units2 units (2%)(2%) 2 2 units units (2%)(2%) 2 units2 units (2%)(2%)



Impact of Quality Prevention on OutputImpact of Quality Prevention on Output

11 22 33


Activity Activity 66 mins66 mins 66 mins66 mins 66 mins 66 minstimestimes

Errors afterErrors afteractivity activity 1 units1 units (1%)(1%) 1 units1 units (1%)(1%) 1 units1 units (1%)(1%)



Ways Quality by Prevention Ways Quality by Prevention Improves ProductivityImproves Productivity

Improved Improved QualityQuality

Increased Increased ProfitsProfits

Increased productivity

Lower rework and scrap costs

Lower warranty costs

Reduced Costs

Improved response

Higher Prices

Improved reputation

Sales Gains


© 2006 prentice hall, inc.6 – 1 operations management chapter 6 – managing quality © 2006...

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