2. Operations Management Framework
Insert New Resource/Profit Model

3. 6
C H A P T E R
Quality
L E A R N I N G O B J E C T I V E S
State the contributions Shewhart, Deming, Juran, and Crosby made to
quality management.
Describe why customer loyalty is so important for profitability.
Explain the importance of internal and external customers and the
role each plays in TQM.
Describe the three principles of TQM.
Explain how the PDCA cycle is used to obtain continuous improvement.
Describe the seven steps of the quality improvement story.
Describe industry-focused and process-focused benchmarking.
Describe how Six Sigma is used to enhance quality.
Explain how certification programs can provide structure for quality
improvement.
State the criteria used for the Malcolm Baldrige National Quality Award.

4. Operations Management Framework
U N I T .
Operations Management Framework
Cost
Quality
Timeliness
Quality Tools
Quality – Conformance to customer specifications and expectations.
Quality is defined by the customer.
Quality has a key role in customer perception of value.

5. Service and Quality Dimensions Combined
Exhibit 6.3 Dimensions of Service and Product Quality Combined

6. Dimensions of Product Quality*
Performance
What are the desirable characteristics of the product?
Features
What additional characteristics of the product are possible?
Reliability
Is the product dependable? Does it accomplish what it promises?
Durability
How long with the product last?
*Source: Garvin, D.A. (1984) and Pisek, P.E. (1987)

7. Dimensions of Product Quality*
Serviceability
Can the product be easily and inexpensively repaired?
Aesthetics
Does the product satisfy subjective requirements?
Response
Is the interaction between the customer and the product provider pleasant and appropriate?
Reputation
What does information on past performance say about the company?
*Source: Garvin, D.A. (1984) and Pisek, P.E. (1987)

8. Dimensions of Service Quality
Reliability
Does the business keep its promises?
Responsiveness
Does it promptly respond to the needs of its customers?
Assurance
Can the employees generate customer trust and confidence?

9. Dimensions of Service Quality
Empathy
Are employees approachable and sensitive to individual customers?
Tangibles
Do the physical facilities, equipment, and written materials show care and attention?

10. A Brief History of Quality Management
Shewhart
Developed the use of statistical process control charts, which provide an opportunity to control the variability of processes
Deming
Stressed that significant quality improvement only comes from changing the organization, and that responsibility rests with upper management.

11. A Brief History of Quality Management
Insert exhibit 6.4 (Deming’s 14 pts)

12. A Brief History of Quality Management
Juran
Believed quality problems could be traced to ineffective management.
Created a framework for managing quality that consisted of three elements: quality planning, quality control, and quality improvement.
Crosby
Known for his influence on the education and attitudes of top management, not the development of techniques.
His quality philosophy is built around four “absolutes”.

13. A Brief History of Quality Management
Insert exhibit 6.5 (Crosby’s absolutes)

14. A Brief History of Quality Management
Insert exhibit 6.6 (Crosby’s 14 pts.)

15. Cost of Quality
All of the costs associated with maintaining the quality of goods and services.
Exhibit 6.7

16. Cost of Quality Prevention costs
Investing in advanced technology and processes to promote good engine design.
Rule of Thumb  For every $1 spent here, you save $10 below
Appraisal costs (inspection and testing)
Implementing worker self-inspection to capture and rework defective components on the assembly line
Internal failure costs
Sending the engine to rework in the factory after a defect is detected in the final product
External failure costs
Replacing the engine after it fails in the customers automobile

17. Total Quality Management
A culture of doing it right the first time.
Based on three principles:
Customer focus: The customer determines what quality is.
Continuous process improvement: Constantly trying to eliminate variability.
Total involvement: A commitment at all levels of the firm.

18. Total Quality Management
Insert exhibit 6.9 (Impact on profitability)

19. Total Quality Management
Insert exhibit 6.10 (supportive approaches)

20. Obtaining Continuous Improvement
Plan, Do, Check, Act (PDCA)
Plan: Identify the problem, understand it, and find its root cause.
Do: Take action to fix the problem.
Check: See if things have improved.
Act: Standardize the change throughout the business.

21. Six Sigma Quality
A philosophy and set of methods companies use to eliminate defects in their products and processes
Evolution of “Total Quality Management” movement
Adopted by General Electric, Motorola, etc., as a means of focusing effort on quality using a methodological approach
Overall focus of the methodology is to understand and achieve what the customer wants
Seeks to reduce variation in the processes that lead to product defects

22. Six Sigma Quality: DMAIC Cycle
Define, Measure, Analyze, Improve, and Control (DMAIC)
DMAIC consists of five steps….
1. Define (D)
Customers and their priorities
2. Measure (M)
Process and its performance
3. Analyze (A)
Causes of defects
4. Improve (I)
Remove causes of defects
5. Control (C)
Maintain quality

23. Six Sigma Hierarchy Executive Leader Champion Master Black Belt
Executive who sponsors the overall Six Sigma Initiative
Champion
Middle- or senior-level executive who sponsors a specific Six Sigma project, ensuring that resources are available and cross-functional issues are resolved
Master Black Belt
Highly experienced and successful Black Belt who has managed several projects and is an expert in Six Sigma methods/tools
Responsible for coaching/mentoring/ training Black Belts and for helping the Six Sigma leader and Champions keep the initiative on track

24. Six Sigma Hierarchy Black Belt Green Belt
Full-time professional who acts as a team leader on Six Sigma projects
Typically has four to five weeks of classroom training in methods, statistical tools, and (sometimes) team skills
Green Belt
Part-time professional who participates on a Black Belt project team or leads smaller projects
Typically has two weeks of classroom training in methods and basic statistical tools

25. Benchmarking
Industry-focused benchmarking is the identification of the best practices among competitors.
Process-focused benchmarking focuses on similar processes of other companies, even if they are not competitors.

26. Benchmarking

27. Quality Certification Programs
ISO 9000:
Quality management and quality assurance standards. Part 1: Guidelines for selection and use. Part 2: Generic guidelines for the application of ISO 9000, ISO 9002, and ISO Part 3: Guidelines for the application of ISO 9001 to the development, supply, and maintenance of software. Part 4: Guide to dependability program management.
ISO 9001:
Quality system-model for quality assurance in design, development, production, installation, and servicing
ISO 9002:
Quality system-model for quality assurance in production, installation, and servicing.
ISO 9003:
Quality system-model for quality assurance in final inspection and test.
ISO 9004:
Development of quality management systems.

28. Quality Awards
The Malcolm Baldrige National Quality Award, managed by the Department of Commerce, provides an excellent structure for developing a quality-driven organization.
Insert exhibit 6.20