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Operations ManagementQuality Part 1

source: (Heizer & Render 2008) and (Gardiner 2008)

Class 5

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Learning Objectives

1. Define quality2. Explain the relationship between quality and

strategy3. Explain TQM4. Explain Seven Concepts of TQM

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Defining QualityThe totality of features and The totality of features and

characteristics of a product or service characteristics of a product or service that bears on its ability to satisfy that bears on its ability to satisfy

stated or implied needsstated or implied needsAmerican Society for QualityAmerican Society for Quality

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Quality Definitions• Fitness for intended use:

– Fitness for purpose as defined by the customer• Customers Perception of Value

– Benefits from a product vs. what was given in exchange

• Compliance\Conformance– How well does the product meet the specification.

• User/Manufacturing/Product Based

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Can you inspect quality in to a product

Finished files are the result Finished files are the result

of years of scientific study of years of scientific study

combined with the experience combined with the experience

of years…..of years…..

How many F’s does the above passage contain?How many F’s does the above passage contain?

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Strategy• Managing quality supports Managing quality supports

differentiation, low cost, and response differentiation, low cost, and response strategiesstrategies

• Quality helps firms Quality helps firms increase salesincrease sales and and reduce costsreduce costs

• Building a quality organization is a Building a quality organization is a demanding taskdemanding task

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Improving Profitability

Improved Improved QualityQuality

Increased Increased ProfitsProfits

Increased productivity Lower rework and scrap costs Lower warranty costs

Reduced Costs via

Improved response Flexible pricing Improved reputation

Sales Gains via

Figure 6.1Figure 6.1

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Cost of Quality

• External costsExternal costs • Internal failureInternal failure• Prevention costs Prevention costs • Appraisal costs Appraisal costs

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Total Quality Management (TQM)Deming 1900-1993

Encompasses the 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

Right things are done right first time and every time

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Flow of ActivitiesOrganizational Practices

Leadership, Mission statement, Effective operating procedures, Staff support, TrainingYields: What is important and what is to be

accomplishedQuality Principles

Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQMYields: How to do what is important and to be

accomplishedEmployee Fulfillment

Empowerment, Organizational commitmentYields: Employee attitudes that can accomplish

what is importantCustomer SatisfactionWinning orders, Repeat customersYields: An effective organization with

a competitive advantage

Figure 6.2Figure 6.2

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Concepts of TQM

• Continuous improvement• Six Sigma• Employee empowerment• Benchmarking• Just-in-time (JIT)• Taguchi concepts• Knowledge of TQM tools (next week)

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Continuous Improvement

2. DoTest the

plan

3. CheckIs the plan working?

4. ActImplement

the plan

1.PlanIdentify the

improvement and make a plan

Figure 6.3Figure 6.3

Shewhart’sShewhart’s

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Six Sigma• Originally + or – 6 sigma. 4 ppm defect

rate• Focus on meeting customer requirements• Concentration on increased reliability

through process improvement• Provide extensive training, expert led• Create process improvement experts

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Six Sigma1. Define critical outputs

and identify gaps for improvement

2. Measure the work and collect process data

3. Analyze the data4. Improve the process5. Control the new process to

make sure new performance is maintained

DMAIC ApproachDMAIC Approach

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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

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Benchmarking

Selecting best practices to use as a Selecting best practices to use as a standard for performancestandard 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• ‘‘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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JIT

Reducing inventory revealsReducing inventory revealsproblems so they can be solvedproblems so they can be solved

ScrapUnreliable Vendors

Capacity Imbalances

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Taguchi Concepts• Taguchi ConceptsTaguchi Concepts

• Quality robustnessQuality robustness•Able to be produced uniformly in Able to be produced uniformly in adverse manufacturing conditions. adverse manufacturing conditions.

• Quality loss functionQuality loss function•Conformance orientated specifications Conformance orientated specifications are too simplisticare too simplistic

• TARGETTARGET

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Customer Complaints

• Make it easy for clients to complainMake it easy for clients to complain• Respond quickly to complaintsRespond quickly to complaints• Resolve complaints on first contactResolve complaints on first contact• Use computers to manage complaintsUse computers to manage complaints• Recruit the best for customer service Recruit the best for customer service

jobsjobs

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Deming’s 14 points1."Create constancy of purpose towards improvement".

2."Adopt the new philosophy".

3."Cease dependence on inspection".

4."Move towards a single supplier for any one item.“

5."Improve constantly and forever".

6."Institute training on the job".

7."Institute leadership".

8."Drive out fear".

9."Break down barriers between departments“.

10."Eliminate slogans".

11."Eliminate management by objectives".

12."Remove barriers to pride of workmanship".

13."Institute education and self-improvement". 

14."The transformation is everyone's job". 

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References• Heizer, J., & Render, B. (2008). Operations management (9th

ed.). Saddle River, New Jersey: Pearson Prentice Hall.

• Gardiner, D.,(2008). Operations Management for Business Excellence (2nd ed.). Rosedale, North Shore: Pearson Education New Zealand.