Operations Management - bms.lkbms.lk/download/HND/semester 4/OM/week 4/Session 4 - Quality...Total...

Session 4 – Managing Quality

2/9/2018

Operations Management

The challenge for business today is to satisfytheir customers through the exceptionalquality performance of their processes.

Opening remarks …….

The challenge for business today is to satisfytheir customers through the exceptionalquality performance of their processes.

Session 4 – Leaning outcome

• Understand the importance of managing quality in an organisation.

• Define the (4) four major costs of quality.

• Explain the basic principles of Total Quality Management (TQM)

and Six Sigma.

• Understand the seven (7) Quality Management assessment Tools.

• Describe how to construct process control charts.

The totality of features and characteristics of aproduct or service that bears on its ability tosatisfy stated or implied needs

American Society for Quality

Defining Quality

The totality of features and characteristics of aproduct or service that bears on its ability tosatisfy stated or implied needs.

User-based – better performance, more features

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

Product-based – specific and measurable attributes ofthe product

Quality - Different Views

User-based

Manufacturing-based

Product-based

What is “Quality”?(An experts’ views)

There are different definitions:

• Quality is defined from the customer‘s point of view asanything that enhances their satisfaction - Dr. EdwardDeming

• Fitness for use - those product features which meet theneeds of customers and thereby provide productsatisfaction. Freedom from deficiencies - Dr. JosephJuran

6

The Quality Gaps

Perceived quality is governed by the magnitude and direction of the gapbetween customers’ expectations and their perceptions of the product or service

7

Quality Management (QM)to

Total Quality Management (TQM)

From traditional quality inspection approach to TQM

9

TQM WheelTotal QualityManagement (TQM) asa philosophy stresses(3) three principles

The simple objectiveof TQM is “Do theright things, right thefirst time, everytime.”

The simple objectiveof TQM is “Do theright things, right thefirst time, everytime.”

The continual process improvementdrives an organization to be bothanalytical and creative in finding waysto become more competitive and moreeffective at meeting stakeholderexpectations.

Continual Improvement - KAIZAN)

The three important Principles in TQM

( P - D - C - A Cycle)

The continual process improvementdrives an organization to be bothanalytical and creative in finding waysto become more competitive and moreeffective at meeting stakeholderexpectations.

The three important Principles in TQM - Cont…

All employees participate in working toward common goals. High-performance work systems integrate continuous improvement effortswith normal business operations. Self-managed work teams are oneform of empowerment.

Total Employee Involvement

The customer ultimately determines the level of quality. No matter whatan organization does to foster quality. The customer determines whetherthe efforts were worthwhile.

Customer Satisfaction (Customer focus)

Prevention costs - reducing the potential for defects Appraisal costs - evaluating products, parts, and services Internal failure costs - producing defective parts or service

before delivery External costs - defects discovered after delivery

TQM Reduces 4 types of Cost of Quality

Prevention costs - reducing the potential for defects Appraisal costs - evaluating products, parts, and services Internal failure costs - producing defective parts or service

before delivery External costs - defects discovered after delivery

External Failure

Internal Failure

Prevention

TotalCost

Quality Improvement

Total Cost

TQM Reduces 4 types of Cost of Quality

Appraisal

How quality Mgt. reduces cost and increase revenue?

15

Why Total Quality Management (TQM) is Important?

This style of management can lead to:1. Increase company reputation.2. Decreased costs related to corrective or preventative maintenance.3. Maintaining good supplier relationships. (SCM)4. Reduces business risks.5. Better overall performance.6. Increasing the number of happy and loyal customers.7. Improve the competitiveness.

Total Quality Management (TQM) is an approach that organizations use toimprove their internal processes and increase customer satisfaction.

Eight Quality Management Principles by Deming

1. Customer Focus (Internal or External)• understand Customer NEEDs.• meet Customer REQUIREMENT• exceed Customer EXPECTATIONs

2. Leadership for quality improvement (Top Mgt. Commitment)

3. Involvement of People

Eight Quality Management Principles by Deming

4. Process Approach- Doing the things right - Efficiency- Doing the right things – Effectiveness

5. System Approach to Management

6. Continuous Improvement (Kaizen)

7. Factual approach to decision making (Use of statistical data)

8. Mutually Beneficial Supplier Relationship

SIX SIGMA

Six Sigma - Approach

• A comprehensive and flexible management system for achieving,sustaining and maximizing business success by minimizing defects andvariability in process.

• The system is influenced by, other management improvement strategieslike; Total Quality Management and Zero Defects.

• Six Sigma seeks to improve business processes by removing the causes oferrors that lead to defects in a product or service.

• It accomplishes this by setting up a management system thatsystematically identifies errors and provides methods for eliminating them.

Major Aspects of Six Sigma

Statistical definition of a process that is 99.9997%capable, 3.4 defects for every one million opportunities(DPMO)A management system designed to improve efficiencies in

a business structure, reduce defects, lower costs, andimprove customer satisfaction

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Six Sigma as a Mathematical viewThis mathematical view emphasized that a process requiredcorrection after it had deviated three sigma from the mean.

Mean

Lower limits Upper limits

3.4 defects/million

±6

2,700 defects/million

±3

Different management tools used within Six Sigma

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• 5W & 1H –Why, What, When, Where, Who & How ? This methoduses to ask questions to get to the root cause of a problem.

• CTQ tree - The Critical to Quality Tree diagram breaks down thecomponents of a process that produces the features needed in yourproduct and service if you wish to have satisfied customers.(to getVOC)

• Root Cause Analysis –Much like 5W & 1H, this is a process bywhich a business attempts to identify the root cause of a defect andthen correct it, rather than simply correcting the surface “symptom” ofthe problem.

Critical to Quality (CTQ) Tree – A model

The need : "Must be accessible on a smartphone."

Example : launching a new website

The quality driver : "Must display properly onsmartphone web browsers."

Use of CTQ to Identify the critical needs of yourcustomers (Get the customer voice)

The measurable requirement: "display as requiredon the five most popular smartphone webbrowsers.“ (This is CTQ for customer - VOC)

Methodologies of Six SigmaThere are two major methodologies used within Six Sigma:

This method is used for improvingexisting business processes.

DMAIC

• Define the problem and the project goals• Measure in detail the various aspects of

the current process• Analyze data to, among other things, find

the root defects in a process• Improve the process• Control how the process is done in the

future.

This method is used to createnew processes and new products

or services.

DMADV

• Define the project goals• Measure critical components of the process

and the product capabilities• Analyze the data and develop various

designs for the process, eventually pickingthe best one

• Design and test details of the process• Verify the design by running simulations

and a pilot program.

Seven (7) Quality Management Assessment Tools

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Tools for Generating IdeasCheck sheetsScatter diagramsCause-and-effect diagrams

Tools to Organize the DataPareto chartsFlowcharts

Tools for Identifying ProblemsCause-and-effect diagramsHistogramStatistical process control chart

Quality Management Assessment Tools

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//

/ / /// /// ///// ////

//////

HourDefect 1 2 3 4 5 6 7 8

ABC

////

/

(1) Check Sheet: An organized method ofrecording data


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(2) Scatter Diagram: A graph of the valueof one variable vs. another variable

Absenteeism

Prod

uctiv

ity


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(3) Cause-and-Effect Diagram: A tool thatidentifies process elements (causes) thatmight effect an outcome

CauseMaterials Methods

Manpower Machinery

Effect


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Cause and Effect Diagram Example

Method Manpower

Material Machinery

Too manydefects

Too manydefects

Main Cause

Main Cause

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Method Manpower

Material Machinery

DrillDrillOverOver

SteelSteel

WoodWood

LatheLathe

Too manydefects

Too manydefects

Sub-Cause


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Method Manpower

Material Machinery

DrillDrillOverOverTimeTime

SteelSteel

WoodWood

LatheLathe

Too manydefects

Too manydefects

TiredTired

OldOld

SlowSlow


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(4) Pareto Chart: A graph to identify and plotproblems or defects in descending order offrequency

Freq

uenc

y

Perc

ent

A B C D E


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Number ofoccurrences

Room ser. Check-in Pool hours Minibar Misc.72% 16% 5% 4% 3%

124 3 2

54

– 100– 93– 88

– 72

70 –

60 –

50 –

40 –

30 –

20 –

10 –

0 –

Freq

uenc

y (n

umbe

r)

Causes and percent of the total

Cum

ulat

ive

perc

ent

Data for October


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(5) Flowchart (Process Diagram): A chart thatdescribes the steps in a process


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MRI Flowchart1. Physician schedules MRI2. Patient taken to MRI3. Patient signs in4. Patient is prepped5. Technician carries out MRI6. Technician inspects film

7. If unsatisfactory, repeat8. Patient taken back to room9. MRI read by radiologist10. MRI report transferred to

physician11. Patient and physician discuss

11

10

20%

9

880%

1 2 3 4 5 6 7


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(6) Histogram: A distribution showing thefrequency of occurrences of a variable

Distribution

Repair time (minutes)

Freq

uenc

y


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(7) Statistical Process Control Chart: A chart withtime on the horizontal axis to plot values of astatistic

Upper control limit

Target value

Lower control limit

Time


Session 4 – Summary

• Understand the importance of managing quality in an organisation.

• Define the (4) four major costs of quality.

• Explain the basic principles of Total Quality Management (TQM)

and Six Sigma.

• Understand the seven (7) Quality Management assessment Tools

• Describe how to construct process control charts

Additional slide - & types of wastes in process

Waste (MUDA) Identification and waste elimination

7 types of wastes

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