OPSM 301 Operations Management Koç University OPSM 301 Operations Management Class 16: Quality Zeynep Aksin zaksin@ku.edu.tr

Process management overview Strategic positioning-establish product capabilities Determine appropriate process capabilities: time, quality, cost, flexibility Process design, appropriate selection of resources Process documentation: flowchart Analyze at macro level Where is the bottleneck? Is capacity enough? How is time performance? Where do quality problems occur? Analyze at micro level Scheduling: focus on the bottleneck Set-up times, lotsize Reduce variability

Framework for Process Flow Management Competitive? No Flow Chart Process Identify Bottlenecks Maximal Flow Rate Identify Critical Path Minimal Flow Time Demand Pattern Macro Average Performance Process Re-Design Micro Variability Demand & Supply Mgt Continuous Improvement mean variability Yes

What does the term quality mean? Quality Management What does the term quality mean? Product-based definition Manufacturing based definition User-based definition

Product-Based Definition According to this view, differences in quality reflect differences in the quantity of some ingredient or attribute possessed by a product (Example: Fine rugs have a large number of knots per square centimeter) This approach seems appropriate only if the attributes in question are considered preferable by virtually all buyers

Manufacturing-Based Definition This approach identifies quality as “conformance to requirements” This approach's primary focus is internal, however, the consumers’ interest in quality is implicitly recognized According to the manufacturing-based approach, improvements in quality lead to lower costs

User-Based Definition This approach starts from the opposite premise that quality “lies in the eyes of the beholder” The goods that best satisfy consumers' preferences are those that they regard as having the highest quality

Variability = Actual - Expected Customer Needs - Product Design Product Design - Process Capability Process Capability - Process Performance Process Performance - Product Performance Product Performance - Customer Perception

Ways in Which Quality Can Improve Profitability Sales Gains Improved response Higher prices Improved reputation Improved Quality Increased Profits Reduced Costs Increased productivity Lower rework and scrap costs Lower warranty costs

Quality Costs Cost of Control (Quality, Conformance) Prevention costs: reducing the potential for defects Appraisal costs: evaluating products Cost of Failure of Control (Unquality, non-conformance) Internal failure costs:of producing defective parts or service External failure costs: occur after delivery

Early Defect Detection Saves Stage: At Source Next Process End of Line Final Inspection End User Cost: Impact: • Little • Minor • Rework • Much rework • Warranty delay • Reschedule • Delivery delay • Complaints • Inspect more • Reputation • Market share Prevention Saves Even More!

Tradeoffs in Process Control Degree of Control Cost Cost of Control Cost of Non-Conformance

International Quality Standards ISO 9000 series Common quality standards for products sold in Europe (even if made in U.S.) 2000 update places greater emphasis on leadership and customer satisfaction ISO 14000 series Environmental management Auditing Performance evaluation Labeling Life cycle assessment

TQM: Continuous Process Improvement Measurement External and Internal Analysis Analyze Variation Control Adjust Process Improvement Reduce Variation Innovation Redesign Product/Process D A C P Improve Innovate D A C P Improve Control

Analytical Tools for Continuous Improvement Process Analysis Pareto Charts Histograms Scatter Diagrams Fish-Bone Charts Control Charts

Seven Tools for TQM

Check Sheet Type of Defect Number of Defective Flow Units Cost Response Time Customization Service Quality Garage Quality

Pareto Analysis The purpose of Pareto Analysis is to identify and highlight major symptoms of major quality problems It is based on the premise that usually a small number of faults cause the majority of malfunctions (to separate the vital few and trivial many)

Developing Pareto Analysis Define classification of defects to be monitored Define the period of time over which the assessment will be made Total the frequency of occurrence of each class of defects over the period Plot the histogram and cumulative distribution of the classes in descending order of the frequency occurrence Identify the classes that constitute the majority of defect occurrences

“80 percent of the problems are due to 20 percent of the causes” Pareto Analysis Frequency Percentage -100% -50% -0% A B C D E F Pareto Law (80/20 Rule): “80 percent of the problems are due to 20 percent of the causes”

Fish-Bone Diagram Also known as cause-and-effect diagram, or Ishikawa diagram Pareto analysis is used to identify key problems or symptoms, Fish-Bone diagram is used to sort causes of the problems Brain storming sessions of groups of workers needed It is a very valuable educational tool

Used to find problem sources/solutions Other names Steps Fish-Bone Diagram Used to find problem sources/solutions Other names Fish-bone diagram, Ishikawa diagram Steps Identify problem to correct Draw main causes for problem as ‘bones’ Ask ‘What could have caused problems in these areas?’ Repeat for each sub-area. This slide introduces the Cause and Effect Diagram. The next several slide show the development of a simple example. If time is available, it would be helpful to ask students to develop their own examples.

Cause-and-Effect Diagrams Material (ball) Method (shooting process) Size of ball Lopsidedness Grain/Feel (grip) Air pressure Follow-through Hand position Aiming point Bend knees Balance Missed free-throws Training Conditioning Motivation Concentration Consistency Manpower (shooter) Rim alignment Rim size Backboard stability Rim height Machine (hoop & backboard) Figure 6.7

Weight data for 20 days-Table 1 Time 1 2 3 4 5 6 7 8 9 10 9:00 81 82 80 74 75 83 86 88 11:00 73 87 79 84 13:00 85 76 91 89 15:00 90 78 77 17:00 Time 11 12 13 14 15 16 17 18 19 20 9:00 86 88 72 84 76 74 85 82 89 11:00 83 79 80 13:00 81 78 90 15:00 77 92 17:00 87

Histogram 2 4 6 8 1 7 9 Weight (kg) Frequency

Design for Processing Simplify Standardize Mistake-proof Fewer parts, steps Modular design Standardize Less variety Standard, proven parts, and procedures Mistake-proof Clear specs Ease of assembly, disassembly, servicing

The Shingo System: Fail-Safe Design Shingo’s argument: Defects arise when people make errors Defects can be prevented by providing employees with feedback on errors and putting controls in the process Poka-Yoke includes: Checklists Special tooling that prevents employees from making errors (Poka-Yoke: Japanese slang for “avoiding inadvertent errors” ) 21

Which dial turns on the burner? Stove A Stove B

Announcement Group Case Assignment 2 See Web page to download a copy Due in one week