2 The operation supplies… Capacity planning and controlOperations strategyDesignImprovementQuality managementPlanning and controlThe operation supplies…the consistent delivery of products and services at specification or aboveThe market requires… consistent quality of products and services
3 Key operations questions In Chapter 17 – Quality planning and control – Slack et al. identify the following key questions:What is quality and why is it so important?How can quality problems be diagnosed?What steps lead towards conformance to specification?What is Total Quality Management (TQM)?
4 High quality puts costs down and revenue up Quality upImage upProcessing time downService costs downInspection and test costs downRework and scrap costs downInventory downComplaint and warranty costs downCapital costs downPrice competition downSales volume upProductivity upRevenue upScale economies upOperation costs downThe net effect of all these consequences is that revenues increase and costs reduce. In other words, the overall effect of raising quality levels is to increase profitability.Profits up
5 Perceived quality is governed by the gap between customers’ expectations and their perceptions of the product or serviceCustomers’ expectations for the product or serviceCustomers’ perceptions of the product or serviceGapCustomers’ expectations for the product or serviceCustomers’ perceptions of the product or serviceCustomers’ expectations for the product or serviceCustomers’ perceptions of the product or serviceGapExpectations > perceptionsExpectations = perceptionsExpectations < perceptionsSo the continuum between quality being perceived as poor through to it being perceived as good is primarily a function of the nature and extent of any gaps between customers’ expectations and their perceptions. The implication of this is that in order to manage customers’ perceived quality levels, both their expectations and their perceptions must be managed.Perceived quality is poorPerceived quality is goodPerceived quality is acceptable
6 A ‘Gap’ model of Quality The customer’s domainPreviousExperienceWord of mouth communicationsImage of product or serviceGap 4Customers’ expectations concerning a product or serviceCustomers’ perceptions concerning the product or serviceGap ?Customers’ own specification of qualityThe actual product or serviceGap 1The operation’s domainFinally, the organization may be influencing the customers’ image of the product or service, for example through its advertising or other promotional activity, in such a way as to conflict with its actual reality. This is called gap 4.Organization’s specification of qualityGap 3Management’s concept of the product or serviceGap 2
7 The perception – expectation gap Action required to ensure highperceived qualityMain organizationalresponsibilityGap 1Ensure consistency between internal quality specification and the expectations of customersMarketing, operations, product/service developmentGap 2Ensure internal specification meets its intended concept of designMarketing, operations, product/service developmentGap 3OperationsEnsure actual product or service conforms to internally specified quality levelGap 4MarketingEnsure that promises made to customers concerning the product or service can really be delivered
8 Quality characteristics of goods and services Functionality – how well the product or service does the job for which it was intended.Appearance – aesthetic appeal, look, feel, sound and smell of the product or service.Reliability – consistency of product or services performance over time.Durability – the total useful life of the product or service.Recovery – the ease with which problems with the product or service can be rectified or resolved.Contact – the nature of the person-to-person contacts that take place.
9 Attribute and variable measures of quality AttributesVariablesDefective or not defective?Measured on a continuous scaleLight bulb works or does not work?Light emission of bulbNumber of defects in a turbine blade.Length of blade
10 Aspects of quality Quality Quality Reliability fitness for purpose ability to continueworking at acceptedquality levelQuality of Designdegree to whichdesign achieves purposeQuality of Conformancefaithfulness with which theoperation agrees with designVariablesthings you can measureAttributesthings you can assessaccept/reject
11 Total Quality Management What does Total Quality Management include?Includes all parts of the organizationIncludes all staff of the organizationIncludes consideration of all costsIncludes every opportunity to get things rightIncludes all the systems that affect qualityAnd it never stops!
12 Total quality management can be viewed as a natural extension of earlier approaches to quality managementQuality is strategicTeamworkStaff empowermentInvolves customers and suppliersPrevents ‘out of specification’ products and services reaching marketSolves the root cause of quality problemsBroadens the organizational responsibility for qualityMakes quality central and strategic in the organizationQuality systemsQuality costingProblem solvingQuality planningStatisticsProcess analysisQuality standardsError detectionRectificationInspectionQuality controlQuality assuranceTotal Quality Management
13 The internal customer–supplier concept involves understanding the relationship between processes External supplierExternal customerProcess 1Process 3Process 2Process 4Process 5Process 6Between each process, the requirements of the ‘customer’ process must be understood and met by the 'supplier’ process
14 The traditional cost of quality model Total cost of qualityCost of errors = costs of prevention and appraisalCostsCost of quality provision = costs of internal and external failure‘Optimum’ amount of quality effortAmount of quality effort
15 The traditional cost of quality model with adjustments to reflect TQM criticisms Cost of errors = costs of prevention and appraisalTotal cost of qualityCosts‘Optimum’ amount of quality effortCost of quality provision = costs of internal and external failureAmount of quality effort
16 EFQM ‘Business excellence’ model LeadershipPeoplePartnerships and resourcesProcessesKey performance resultsPolicy and strategyCustomer resultsPeople resultsSociety results
17 The quality gurus Quality is free – the optimum is zero defects Philip CrosbyQuality is free – the optimum is zero defectsW. Edwards DemingDeming’s 14 pointsHow to use statisticsArmand FeigenbaumTotal quality controlKaoru IshikawaQuality circles and cause and effect diagramsJoseph JuranQuality as fitness for use, rather than conformance to specificationGenichi TaguchiLoss functionMinimize variation
18 Stage in the development and launch process The cost of rectifying errors becomes increasingly expensive the longer the errors remain uncorrected in the development and launch process100010010110, 000Cost to rectify errorStage in the development and launch processPilot productionMarket usePrototypeDesignConcept
19 Total cost of quality Appraisal Internal failure Costs of quality Increasing the effort spent on preventing errors occurring in the first place brings a more than equivalent reduction in other cost categoriesTimeCosts of qualityTotal cost of qualityAppraisalInternal failureAppraisalPrevention
20 The pattern of some TQM programmes which run out of enthusiasm Effectiveness of the TQM initiativeIntroductionLearning and understandingGrowthIncreasing enthusiasmLevelling offStarting to hit the more difficult problemsDisillusionmentWaning enthusiasmRepackagingAttempts to revitalize the programme
21 Some measure of operations performance Process control chartingSome aspect of the performance of a process is often measured over time.Question‘Why do we do this?’TimeSome measure of operations performance
22 Some measure of operations performance Process control charting (Continued)Trend can indicate whether performance is getting better or worseQuestion‘But why is variation important?’TimeSome measure of operations performance‘And how do we know if the variation in process performance is ‘‘Natural’’ in terms of being a result of random causes, or is indicative of some ‘‘Assignable’’ causes in the process?’
23 Some measure of operations performance Process control charting (Continued)The last point plotted on this chart seems to be unusually low.How do we know if this is just random variation or the result of some change in the process which we should investigate?Some kind of ‘Guide lines’ or ‘Control limits’ would be useful.TimeSome measure of operations performance
24 Process control charting (Continued) Sampling over a period of time…0.82.23.6After the second sample0.82.23.6After the first sample0.82.23.6Fitting a normal distribution to the histogram of sampled call times0.82.23.6By the end of the day0.82.23.6By the end of the second day
25 Process control charting The chances of measurement points deviating from the average is predictable in a normal distributionProcess control charting–3 standarddeviations+3 standard99.7% of points–2 standarddeviations+2 standard95.4% of points–1 standarddeviation+1 standardA standardS = sigmaFrequency68% of pointsElapsed time of call (seconds)
26 Some measure of operations performance Process control chartingIf we understand the normal distribution which describes random variation when the process is operating normally, then, we can use the distribution to draw the control limits.In this case, the final point is very likely to be caused by an ‘assignable’ cause, i.e. the process is likely to be out of control.TimeSome measure of operations performance
27 X X X Process variability A P A P A P A P Off target ACCURACY : P Scatter PRECISION : PXA PA P
28 Low process variation allows changes in process performance to be readily detected TIMEProcess distribution AProcess distribution BABProcess distribution BBProcess distribution AATIME
29 Alternating and erratic behaviour – Investigate. In addition to points falling outside the control limits other unlikely sequences of points should be investigatedAlternating and erratic behaviour – Investigate.UCLC/LLCL
30 Suspiciously average behaviour – Investigate. In addition to points falling outside the control limits other unlikely sequences of points should be investigated (Continued)UCLC/LLCLSuspiciously average behaviour – Investigate.
31 Two points near control limit – Investigate. In addition to points falling outside the control limits other unlikely sequences of points should be investigated (Continued)UCLC/LLCLTwo points near control limit – Investigate.
32 Five points one side of centre line – Investigate. In addition to points falling outside the control limits other unlikely sequences of points should be investigated (Continued)UCLC/LLCLFive points one side of centre line – Investigate.
33 Apparent trend in one direction – Investigate. In addition to points falling outside the control limits other unlikely sequences of points should be investigated (Continued)UCLC/LLCLApparent trend in one direction – Investigate.
34 Sudden change in level – Investigate. In addition to points falling outside the control limits other unlikely sequences of points should be investigated (Continued)UCLC/LLCLSudden change in level – Investigate.
35 Process variation and its effect on process Defects per Million Opportunities (DPMO) LSLUSLLSLUSLLSLUSLLSLUSL3 sigma process variation= 66,800 Defects per million opportunities4 sigma process variation= 6200 Defects per million opportunities5 sigma process variation= 230 Defects per million opportunities6 sigma process variation= 3.4 Defects per million opportunities
36 Ideal and real operating characteristics In this ideal operating characteristic, the probability of accepting the batch if it contains more than 0.04% defective items is zero, and the probability of accepting the batch if it contains less than 0.04% items defective is 1.Producer’s risk (0.05)1.00.90.80.7In this real operating characteristic (where n = 250 and c = 1), both type 1 and type 2 errors will occur.0.6Probability of accepting the batch0.50.4Type 1 errorType 2 error0.30.20.1AQLLTPDConsumer’s risk (1.0)0.010.020.030.040.050.060.070.08Percentage actual defective in the batch