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Operations Management MBA105Operations Management MBA105

Chapter 9/11Chapter 9/11

Williams J. Srevenson 7th Edition

Introduction to Quality Introduction to Quality Total Quality Management Total Quality Management

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Learning ObjectivesLearning Objectives

Define quality. Importance of quality. Determinants of quality. Costs & quality. Quality awards. quality gurus TQM Quality tools

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Quality ManagementQuality Management

What does the term quality mean?

Quality is the ability of a product or service to consistently meet or exceed customer expectations.

degree of excellence of a thing.

Totality of features and characteristics that satisfy needs

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Quality Quality

Cost and Productivity Vs. Quality

USA Organizations Focus in Cost and productivity (2nd war – mid 1980s)

WHY AMERICAN ORGANIZATIONS BEHAVIOR CHANGE TWARD QUALITY??

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Evolution of Quality ManagementEvolution of Quality Management

Fredrick Taylor (Scientific Management) 1924 - Statistical process control charts 1930 - Tables for acceptance sampling 1940’s - Statistical sampling techniques 1950’s - Quality assurance/TQC (DEMING)

1960’s - Zero defects 1970’s - Quality assurance in services

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Quality Assurance vs. Strategic Quality Assurance vs. Strategic ApproachApproach

Quality Assurance Emphasis on finding and correcting defects

before reaching market

Strategic Approach Proactive, focusing on preventing mistakes

from occurring Greater emphasis on customer satisfaction

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Dimension of Quality Dimension of Quality

Which type of fuel you prefer to your car MOMTAZ or GAID

Which Car you prefer CAMRY OR LUMINA FULL OPTIONS OR NORMAL OPTION

Did you prefer health centre or private clinic

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Dimensions of QualityDimensions of Quality

Performance basic operating characteristics of a product; how

well a car is handled.

Features “extra” items added to basic features, such as a

stereo CD or a leather interior in a car

Reliability probability that a product will operate properly

within an expected time frame; that is, a TV will work without repair for about seven years

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Dimensions of Quality (Cont’d)Dimensions of Quality (Cont’d)

Conformance degree to which a product meets pre–

established standards Durability

how long product lasts before replacement Serviceability

ease of getting repairs, speed of repairs, courtesy and competence of repair person

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Dimensions of Quality (Cont’d)Dimensions of Quality (Cont’d)

Aesthetics how a product looks, feels, sounds, smells, or

tastes

Safety assurance that customer will not suffer injury or

harm from a product; an especially important consideration for automobiles

Perceptions subjective perceptions based on brand name,

advertising, and the like

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Examples of Quality DimensionsExamples of Quality DimensionsDimension

1. Performance 2. Aesthetics 3. Special features

(Product) Automobile

Everything works, fit & finish Ride, handling, grade of materials used Interior design, soft touch Gauge/control placement Cellular phone, CD player

(Service) Auto Repair

All work done, at agreed priceFriendliness, courtesy, Competency, quickness Clean work/waiting area Location, call when ready Computer diagnostics

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Examples of Quality Dimensions Examples of Quality Dimensions (Cont’d)(Cont’d)

Dimension

5. Reliability 6. Durability 7. Perceived quality 8. Serviceability

(Product) Automobile

Infrequency of breakdowns Useful life in miles, resistance to rust & corrosion Top-rated car Handling of complaints and/or requests for information

(Service) Auto Repair

Work done correctly, ready when promised Work holds up over time Award-winning service department Handling of complaints

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Dimensions of Quality: ServiceDimensions of Quality: Service

Time and Timeliness How long must a customer wait for service, and

is it completed on time? Is an overnight package delivered overnight?

Completeness: Is everything customer asked for provided? Is a mail order from a catalogue company

complete when delivered?

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Dimensions of Quality: ServiceDimensions of Quality: Service

Courtesy: How are customers treated by employees? Are catalogue phone operators nice and are their

voices pleasant?

Consistency Is the same level of service provided to each

customer each time? Is your newspaper delivered on time every

morning?

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Dimensions of Quality: ServiceDimensions of Quality: Service

Accessibility and convenience How easy is it to obtain service? Does a service representative answer you calls

quickly?

Accuracy Is the service performed right every time? Is your bank or credit card statement correct

every month?

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Dimensions of Quality: ServiceDimensions of Quality: Service

Responsiveness How well does the company react to unusual

situations? How well is a telephone operator able to respond

to a customer’s questions?

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Challenges with Service QualityChallenges with Service Quality

Customer expectations often change Different customers have different

expectations Each customer contact is a “moment of truth” Customer participation can affect perception

of quality Fail-staffing must be designed into the

system

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Quality GurusQuality Gurus

Walter Shewart In 1920s, developed control charts Introduced the term “quality assurance”

W. Edwards Deming Developed courses during World War II to teach

statistical quality-control techniques to engineers and executives of companies that were military suppliers

After the war, began teaching statistical quality control to Japanese companies

Joseph M. Juran Followed Deming to Japan in 1954 Focused on strategic quality planning

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Quality Gurus (cont.)Quality Gurus (cont.)

Armand V. Feigenbaum In 1951, introduced concepts of total quality control and

continuous quality improvement Philip Crosby

In 1979, emphasized that costs of poor quality far outweigh the cost of preventing poor quality

In 1984, defined absolutes of quality management—conformance to requirements, prevention, and “zero defects”

Kaoru Ishikawa Promoted use of quality circles Developed “fishbone” diagram Emphasized importance of internal customer

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Deming’s 14 PointsDeming’s 14 Points

1.1. Create constancy of purposeCreate constancy of purpose2.2. Adopt philosophy of preventionAdopt philosophy of prevention3.3. Cease mass inspectionCease mass inspection4.4. Select a few suppliers based on qualitySelect a few suppliers based on quality5.5. Constantly improve system and workersConstantly improve system and workers6. Institute worker training7. Instill leadership among supervisors8. Eliminate fear among employees9. Eliminate barriers between departments10. Eliminate slogans11. Remove numerical quotas12. Enhance worker pride13. Institute vigorous training and education programs14. Develop a commitment from top management to implement

above 13 points

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Determinants of Quality (cont’d)Determinants of Quality (cont’d)

Quality of design Intension of designers to include or exclude

features in a product or service: Different car models with different features

size Appearance Roominess Fuel economy Comfort Material used

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Determinants of Quality (cont’d)Determinants of Quality (cont’d)

Quality of Conformance Making sure a product or service is produced

according to design: if new tires do not conform to specifications, they

wobble if a hotel room is not clean when a guest checks in,

the hotel is not functioning according to specifications of its design

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Determinants of Quality (cont’d)Determinants of Quality (cont’d)

Ease of Use Instruction manuals Guide the customer for proper used good labeling

Service after Delivery

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The Consequences of Poor QualityThe Consequences of Poor Quality

Loss of business Liability Productivity Costs

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Benefits of Good Quality Benefits of Good Quality

Organizations will benefit in different way:

Enhance reputation Increase market share Greater customer loyalty Lower liability Cost Fewer complains Lower production cost Higher profits

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Top management Design Procurement Production/operations Quality assurance Packaging and shipping Marketing and sales Customer service

Responsibility for QualityResponsibility for Quality

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Costs of QualityCosts of Quality

Failure Costs - costs incurred by defective parts/products or faulty services.

Internal Failure Costs Costs incurred to fix problems that are

detected during the production. Defective materials

Incorrect machine setting

Faulty equipment

Carelessness

Wrong procedure

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Costs of QualityCosts of Quality

External Failure Costs

All costs incurred to fix problems that are detected after the product/service is delivered to the customer.

Warranty work

Handling of complains

Replacement

Liability

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Costs of Quality (continued)Costs of Quality (continued)

Appraisal Costs Costs of activities designed to ensure

quality or uncover defects Cost of inspector Testing Test equipment Labs Field testing

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Costs of Quality (continued)Costs of Quality (continued)

Prevention Costs Cost of preventing defects form occurring

Planning and adminstration Working with vendors Training Quality control procedures

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Total Quality ManagementTotal Quality Management

A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.

Continuous Improvement Involvement of Everyone Customer Satisfaction

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Elements of TQMElements of TQM

1. Continual improvement (never ending)

2. Competitive benchmarking 3. Employee empowerment 4. Team approach5. Decisions based on facts6. Knowledge of tools7. Supplier quality8. Champion 9. Quality at the source10.Suppliers

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Continuous ImprovementContinuous Improvement

Philosophy that seeks to make never-ending improvements to the process of converting inputs into outputs.

Kaizen: Japanese word for continuous improvement.

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Quality at the SourceQuality at the Source

The philosophy of making each worker responsible for

the quality of his or her work.

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Process Improvement and ToolsProcess Improvement and Tools Process improvement - a systematic approach to improving a

process Process mapping Analyze the process Redesign the process

Tools There are a number of tools that can be used for problem solving and

process improvement Tools aid in data collection and interpretation, and provide the basis for

decision making

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Basic Quality ToolsBasic Quality Tools

Flowcharts Check sheets Histograms Pareto Charts Scatter diagrams Control charts Cause-and-effect diagrams Run charts

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Quality ToolsQuality Tools

Flow Chart :displays the steps in a process showing order and relationships helps in understanding of that process and identifies potential weaknesses i.e. poor performance

Cause and EffectAlso know as fishbone or Ishikawa

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Quality ToolsQuality Tools

Poke-Yokeseeking to avoid inadvertent errors

Failure Mode Effect Analysis(FMEA)Quantifies the possibilities offailure, the effect of failure andweighs up the likelihood

Quality Circlesfeedback groups that voice problemsand suggest solutions

Tally or Check sheetRecords frequency

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Quality ToolsQuality Tools

Histogramdisplaying variation in a processtrying to explain the cause of itNote: Box Whisker Plots would be auseful addition to this

Pareto Charta form of bar-chart which displaysthe relative importance of problemsor conditions by ordering frequencyand showing the cumulative effect

Scatter Graph looks for relationships between factors and displays their strength

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Quality ToolsQuality Tools

Clustering Reduces complexity or size of data set by grouping ideas under headingsUseful for qualitative data from questionnaires

Filtering ideas Reduces ideas by asking questions e.g. Is the idea feasible? Affordable? Is it within our control? Would it improve the situation?

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Flow ChartFlow Chart

Operation DecisionStart/ Finish

Start/ Finish

Operation

OperationOperation

Operation

Decision

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Check SheetCheck Sheet

COMPONENTS REPLACED BY LABTIME PERIOD: 22 Feb to 27 Feb 2002REPAIR TECHNICIAN: Bob

TV SET MODEL 1013

Integrated Circuits ||||Capacitors |||| |||| |||| |||| |||| ||Resistors ||Transformers ||||CommandsCRT |

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HistogramHistogram

0

5

10

15

20

1 2 6 13 10 16 19 17 12 16 2017 13 5 6 2 1

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Pareto AnalysisPareto Analysis

NUMBER OFNUMBER OFCAUSECAUSE DEFECTSDEFECTS PERCENTAGEPERCENTAGE

Poor designPoor design 8080 6464 %%Wrong part dimensionsWrong part dimensions 1616 1313Defective partsDefective parts 1212 1010Incorrect machine calibrationIncorrect machine calibration 77 66Operator errorsOperator errors 44 33Defective materialDefective material 33 22Surface abrasionsSurface abrasions 33 22

125125 100100 %%

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Causes of poor qualityCauses of poor quality

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2020

3030

4040

5050

6060

7070(64)(64)

(13)(13)(10)(10)

(6)(6)(3)(3) (2)(2) (2)(2)

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Scatter DiagramScatter Diagram

YY

XX

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Control ChartControl Chart

970

980

990

1000

1010

1020

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

UCL

LCL

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Cause-and-Effect DiagramCause-and-Effect DiagramFigure 9.12

QualityProblemQuality

Problem

Out of adjustmentOut of adjustment

Tooling problemsTooling problems

Old / wornOld / worn

MachinesMachines

FaultyFaulty testing equipmenttesting equipment

Incorrect specificationsIncorrect specifications

Improper methodsImproper methods

MeasurementMeasurement

Poor supervisionPoor supervision

Lack of concentrationLack of concentration

Inadequate trainingInadequate training

HumanHuman

DeficienciesDeficienciesin product designin product design

Ineffective qualityIneffective qualitymanagementmanagement

Poor process designPoor process design

ProcessProcess

InaccurateInaccuratetemperature temperature controlcontrol

Dust and DirtDust and Dirt

EnvironmentEnvironment

Defective from vendorDefective from vendor

Not to specificationsNot to specifications

Material-Material-handling problemshandling problems

MaterialsMaterials

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Run ChartRun Chart

Time (Hours )

0.440.460.480.5

0.520.540.560.58

1 2 3 4 5 6 7 8 9 10 11 12

Time (Hours)

Dia

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er

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Tracking ImprovementsTracking Improvements

UCL

LCL

LCLLCL

UCLUCL

Process not centeredand not stable

Process centeredand stable

Additional improvementsmade to the process

Figure 9-18

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Methods for Generating IdeasMethods for Generating Ideas

Brainstorming

Quality circles

Interviewing

Benchmarking

5W2H

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Team approach List reduction Balance sheet Paired comparisons

Quality Circles Quality Circles

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Identify a critical process that needs improving

Identify an organization that excels in this process

Contact that organization Analyze the data Improve the critical process

Benchmarking ProcessBenchmarking Process