Chapter 07 Process Improvement Check Do Act Plan Quality level Time McGraw-Hill/Irwin Service Management: Operations, Strategy, and Information Technology, 6e Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Learning Objectives Use quality tools for process analysis and problem solving. Describe and contrast corporate quality improvement programs. Lead a team in a process improvement initiative. Conduct a data envelopment analysis (DEA). 7-2

Quality and Productivity Improvement Process Foundations of Continuous Improvement - Customer Satisfaction - Management by Facts - Respect for People Plan-Do-Check-Act (PDCA) Cycle 7-3

Quality Tools for Analysis and Problem Solving Check Sheet Run Chart Histogram Pareto Chart Flowchart Cause-and-Effect Diagram Scatter Diagram Control Chart Benchmarking 7-4

Check Sheet of Problems Month Lost Departure Mechanical Overbooked Other Luggage Delay January 1 2 3 3 1 February 3 3 0 1 0 March 2 5 3 2 3 April 5 4 4 0 2 May 4 7 2 3 0 June 3 8 1 1 1 July 6 6 3 0 2 August 7 9 0 3 0 September 4 7 3 0 2 October 3 11 2 3 0 November 2 10 1 0 0 December 4 12 2 0 1 Total 44 84 24 16 12 7-5

Run Chart of Departure Delays 7-6

Histogram of Lost Luggage 7-7

Pareto Chart of Problems 7-8

Cause-and-Effect Chart for Flight Departure Delay (Fishbone Chart) Equipment Personnel Gate agents cannot process passengers quickly enough Too few agents Aircraft late to gate Agents undertrained Late arrival Agents undermotivated Gate occupied Agents arrive at gate late Other Mechanical failures Late cabin cleaners Late pushback tug Weather Late or unavailable cabin crews Air traffic Late or unavailable cockpit crews Delayed Flight Departure Poor announcement of departures Weight and balance sheet late Delayed checkin procedure Late baggage to aircraft Confused seat selection Late fuel Passengers bypass checkin counter Late food service Checking oversize baggage Issuance of boarding pass Acceptance of late passengers Cutoff too close to departure time Desire to protect late passengers Material Desire to help company’s income Poor gate locations Procedure 7-9

Pareto Analysis of Flight Departure Delay Causes Percentage of Incidents Cumulative Percentage Late passengers 53.3 Waiting for pushback 15.0 68.3 Waiting for fuel 11.3 79.6 Late weight and balance sheet 8.7 88.3 7-10

Flowchart at Departure Gate 7-11

Scatter Diagram of Departure Delay vs Late Passengers 7-12

Control Chart of Departure Delays expected Lower Control Limit 1998 1999 7-13

Quality Improvement Programs Personnel Programs for Quality Assurance Deming’s 14 Point Program Baldrige National Quality Award ISO 9000 Six-Sigma 7-14

Six Sigma DMAIC Process Steps Definition Define Define project objectives, internal and external customers Measure Measure current level of performance Analyze Determine causes of current problems Improve Identify how the process can be improved to eliminate the problems Control Develop mechanisms for controlling the improved process 7-15

Topics for Discussion Discuss why Deming’s 14-point program was rejected by U.S. firms but embraced by the Japanese following World War II. Explain how the application of the DPCA cycle can support a competitive strategy of low cost leadership. What are the limitations of “benchmarking”? Articulate a process in which DEA can be used to improve the performance of an elementary school district. 7-16

Interactive Exercise Perform a walk-through audit of the class experience by recording responses on a five point Likert scale using a show of hands without the professor present. Average the student responses for each statement and use a graph to compare the results with the professor’s own assessment. 7-17

Mega Bytes Restaurant How is the Seven-Step Method (SSM) different from Deming’s PDCA cycle? Prepare a cause-and-effect or fishbone diagram for a problem such as “Why customers have long waits for coffee.” Use Figure 7.7 as a guide. How would you resolve the difficulties that study teams have experienced when applying the SSM? 7-18

The Seven-Step Method (SSM) Step 1: Define the project Step 2: Study the current situation Step 3: Analyze the potential causes Step 4: Implement a solution Step 5: Check the results Step 6: Standardize the improvement Step 7: Establish future plans 7-19