1. Operations Management
CHASE AQUILANO JACOBS
Operations Management
For Competitive Advantage
Chapter 7
Quality Management
ninth edition

3. Chapter 7 Quality Management
Total Quality Management Defined
Malcolm Baldrige National Quality Award
Quality Specifications
Costs of Quality
Continuous Improvement
SPC Tools
Benchmarking
Fail-safing
ISO 9000 2

4. Total Quality Management (TQM) Defined
Total quality management is defined as managing the entire organization so that it excels on all dimensions of products and services that are important to the customer. 3

6. 1999 Malcolm Baldrige National Quality Award
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) 4

7. Categories for the Baldrige Award
Manufacturing companies or subsidiaries that
produce and sell manufactured products or manufacturing processes or
produce agricultural, mining, or construction products.
Service companies or subsidiaries that sell service
Small businesses
Health care organizations
Educational institutions 5

8. Characteristics of a Baldrige Award Winner
The companies formulated a vision of what they thought quality was and how they would achieve it.
Senior management was actively involved.
Companies carefully planned and organized their quality effort to be sure it would be effectively initiated.
They vigorously controlled the overall process. 6

9. Quality Specifications
Design quality: Inherent value of the product in the marketplace
Dimensions include: Performance, Features, Reliability, Durability, Serviceability, Response, Aesthetics, and Reputation.
Conformance quality: Degree to which the product or service design specifications are met 7

10. Internal Failure Costs
Costs of Quality
External Failure
Costs
Appraisal Costs
Prevention Costs
Internal Failure Costs
Costs of
Quality

11. What Tools Are Used in Designing Research?

12. Continuous Improvement (CI)
Management's view of performance standards of the organization
performance level of the firm as something to be "continuously challenged and incrementally upgraded."
The way management views the contribution and role of its workforce
believe employee involvement and team efforts are the key to improvement 10

13. CI Methodology: PDCA Cycle (Deming Wheel)
1. Plan a change aimed at improvement.
1. Plan
4. Institutionalize the change or abandon or do it again.
4. Act
3. Study the results; did it work?
3. Check
2. Execute the change.
2. Do 19

14. Example: Process Flow Chart
Material Received from Supplier
No, Continue…
Inspect Material for Defects
Defects found?
Yes
Can be used to find quality problems.
Return to Supplier for Credit 4

15. Example: Pareto Analysis
Can be used to find when 80% of the problems may be attributed to 20% of the
causes.
80%
Frequency
Design
Assy.
Instruct.
Purch.
Training
Other 12

16. Example: Run Chart Diameter Time (Hours) 0.58 0.56 0.54 0.52 0.5 0.48
Can be used to identify when equipment or processes are not behaving according to specifications.
0.58
Diameter
0.56
0.54
0.52
0.5
0.48
0.46
0.44 1 2 3 4 5 6 7 8 9 10 11 12
Time (Hours) 13

17. Example: Histogram Number of Lots Data Ranges 1 2 3 4 Defects in lot
Can be used to identify the frequency of quality defect occurrence and display quality performance.
Number of Lots 1 2 3 4
Defects in lot
Data Ranges 14

18. Example: Scatter Diagram
Can be used to illustrate the relationships between quality behavior and training. 12 10 8
Defects 6 4 2 10 20 30
Hours of Training 15

20. Example: Checksheet Monday
Can be used to keep track of defects or used to make sure people collect data in a correct manner.
Monday
Billing Errors
Wrong Account
Wrong Amount
A/R Errors 16

21. Example: Cause & Effect Diagram
The results or effect.
Possible causes:
Man
Machine
Material
Method
Environment
Effect
Can be used to systematically track backwards to find a possible cause of a quality problem (or effect). 17

22. Example: Control Charts
Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality.
1020
UCL
1010
1000
990
LCL
980
970 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 18

23. Benchmarking
1. Identify those processes needing improvement. 2. Identify a firm that is the world leader in performing the process. 3. Contact the managers of that company and make a personal visit to interview managers and workers. 4. Analyze data. 20

24. The Shingo System: Fail-Safe Design
Shingo’s argument:
SQC methods do not prevent defects
Defects arise when people make errors
Defects can be prevented by providing workers with feedback on errors
Poka-Yoke includes:
Checklists
Special tooling that prevents workers from making errors 21

26. ISO 9000
Series of standards agreed upon by the International Organization for Standardization (ISO)
Adopted in 1987
More than 100 countries
A prerequisite for global competition?
ISO 9000 directs you to "document what you do and then do as you documented." 24

28. Three Forms of ISO Certification
First party: A firm audits itself against ISO 9000 standards. Second party: A customer audits its supplier. Third party: A "qualified" national or international standards or certifying agency serves as auditor. 27

29. ISO 9000 versus the Baldrige Award
Which should we pursue first?
What are the differences between the two?
Do you have to be ISO 9000 certified before going for the Baldrige Award? 28