9-1Management of Quality William J. Stevenson Operations Management 8 th edition

9-2Management of Quality CHAPTER 9 Management of Quality McGraw-Hill/Irwin Operations Management, Eighth Edition, by William J. Stevenson Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.

9-3Management of Quality Quality Management  This chapter is devoted to quality management.  It presents:  a definition of quality,  discusses the importance of quality and the determinations of quality,  highlights the views of leading experts on modern quality management, and  describes the total quality management approach.  A later chapter is devoted to quality control procedures and quality improvement.

9-4Management of Quality Quality Management  What does the term quality mean?  Quality is the ability of a product or service to consistently meet or exceed customer expectations.

9-5Management of Quality Quality Assurance vs. Strategic Approach  Quality Assurance  Emphasis on finding and correcting defects before reaching market  Strategic Approach  Proactive, focusing on preventing mistakes from occurring  Greater emphasis on customer satisfaction

9-6Management of Quality Dimensions of Quality  Performance - main characteristics of the product/service  Aesthetics - appearance, feel, smell, taste  Special Features - extra characteristics  Conformance - how well product/service conforms to customer’s expectations  Reliability - consistency of performance  Durability - useful life of the product/service  Perceived Quality - indirect evaluation of quality (e.g. reputation)  Serviceability - service after sale

9-7Management of Quality Service Quality  Tangibles  Convenience  Reliability  Responsiveness  Time  Assurance  Courtesy

9-8Management of Quality Examples of Service Quality DimensionExamples 1. TangiblesWere the facilities clean, personnel neat? 2. ConvenienceWas the service center conveniently located? 3. ReliabilityWas the problem fixed? 4. ResponsivenessWere customer service personnel willing and able to answer questions? 5. TimeHow long did the customer wait? 6. AssuranceDid the customer service personnel seem knowledgeable about the repair? 7. CourtesyWere customer service personnel and the cashierfriendly and respectful? Table 9.4

9-9Management of Quality Determinants of Quality Service Ease of use Conforms to design Design

9-10Management of Quality Determinants of Quality (cont’d)  Quality of design  Intension of designers to include or exclude features in a product or service  Quality of conformance  The degree to which goods or services conform to the intent of the designers  Ease of Use  Service

9-11Management of Quality The Consequences of Poor Quality  Loss of business  Liability  Productivity  Costs

9-12Management of Quality  Top management  Design  Procurement  Production/operations  Quality assurance  Packaging and shipping  Marketing and sales (identify customer needs and complaints)  Customer service Responsibility for Quality

9-13Management of Quality Costs of Quality  Failure Costs - costs incurred by defective parts/products or faulty services.  Internal Failure Costs  Costs incurred to fix problems that are detected before the product/service is delivered to the customer.  External Failure Costs  All costs incurred to fix problems that are detected after the product/service is delivered to the customer.  Appraisal Costs  Costs of activities designed to ensure quality or uncover defects  Prevention Costs  All TQ training, TQ planning, customer assessment, process control, and quality improvement costs to prevent defects from occurring

9-14Management of Quality  Substandard work  Defective products  Substandard service  Poor designs  Shoddy workmanship  Substandard parts and materials Ethics and Quality Having knowledge of this and failing to correct and report it in a timely manner is unethical.

9-15Management of Quality Malcolm Baldrige National Quality Award Annual award given by the US government to recognize achievements of US companies  1.0 Leadership (125 points)  2.0 Strategic Planning (85 points)  3.0 Customer and Market Focus (85 points)  4.0 Information and Analysis (85 points)  5.0 Human Resource Focus (85 points)  6.0 Process Management (85 points)  7.0 Business Results (450 points)

9-16Management of Quality European Quality Award  Prizes intended to identify role models  Leadership  Customer focus  Corporate social responsibility  People development and involvement  Results orientation The Deming Prize  Honoring W. Edwards Deming  Japan’s highly desirable award

9-17Management of Quality Quality Certification  ISO 9000  Set of international standards on quality management and quality assurance, critical to international business  ISO  A set of international standards for assessing a company’s environmental performance

9-18Management of Quality 1. Find out what the customer wants 2. Design a product or service that meets or exceeds customer wants 3. Design processes that facilitates doing the job right the first time 4. Keep track of results 5. Extend these concepts to suppliers The TQM Approach

9-19Management of Quality Quality at the Source The philosophy of making each worker responsible for the quality of his or her work.

9-20Management of Quality  Lack of:  Company-wide definition of quality  Strategic plan for change  Customer focus  Real employee empowerment  Strong motivation  Time to devote to quality initiatives  Leadership  Poor inter-organizational communication  View of quality as a “quick fix”  Emphasis on short-term financial results  Internal political and “turf” wars Obstacles to Implementing TQM

9-21Management of Quality The PDSA Cycle Plan Do Study Act

9-22Management of Quality Basic Quality Tools  Plan  Establish objectives and draft your plans (analyze your organization’s current systems, establish overall objectives, set interim targets for review and develop plans to achieve them).  Do  Implement your plans  Check  Measure and monitor your actual results against your planned objectives  Act  Correct and improve your plans to meet and exceed your planned results

9-23Management of Quality Basic Quality Tools  Flowcharts  Check sheets  Histograms  Pareto Charts  Scatter diagrams  Control charts  Cause-and-effect diagrams  Run charts

9-24Management of Quality Flow Charts A flow chart is a visual representative of a process. As a problem solving tool, a flow chart can help investigators in identifying possible points in a process where problems occur

9-25Management of Quality Check Sheets A tool for organizing and collecting data; a tally of problems or other events by category DefectDay 1Day 2Day 3Day 4 AIIIIIIII BIII III CIIIIIIIIIII

9-26Management of Quality Pareto Analysis 80% of the problems may be attributed to 20% of the causes. 80% of the problems may be attributed to 20% of the causes. Smeared print Number of defects Off center Missing label Loose Other

9-27Management of Quality Histogram A chart that shows an empirical frequency distribution Smeared print Number of defects Off center Missing label LooseOther

9-28Management of Quality Control Chart UCL LCL Figure 9.11 A statistical chart of time-ordered values of a sample statistic (e.g., sample mean)

9-29Management of Quality Cause-and-Effect Diagram Figure 9.12 Effect MaterialsMethods EquipmentPeople Environment Cause A chart that shows an empirical frequency distribution

9-30Management of Quality Run Chart Time (Hours) Diameter This is used to track values of a variable over time.

9-31Management of Quality  Identify a critical process that needs improving  Identify an organization that excels in this process  Contact that organization  Analyze the data  Improve the critical process Benchmarking Process

9-32Management of Quality Basic Tools Basic Tools Flowcharts Check sheets Histograms Pareto Charts Control charts Cause-and-effect diagrams Run charts