Operations Management Framework Insert New Resource/Profit Model

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.

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.

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

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)

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)

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?

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?

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.

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

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”.

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

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

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

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

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.

Total Quality Management Insert exhibit 6.9 (Impact on profitability)

Total Quality Management Insert exhibit 6.10 (supportive approaches)

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.

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

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

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

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

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.

Benchmarking

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 9003. 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.

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