1. 6 Managing Quality PowerPoint presentation to accompany
Heizer and Render
Operations Management, Eleventh Edition
Principles of Operations Management, Ninth Edition
PowerPoint slides by Jeff Heyl
© 2014 Pearson Education, Inc.

2. Outline Global Company Profile: Arnold Palmer Hospital
Quality and Strategy
Defining Quality
Total Quality Management
Tools of TQM
The Role of Inspection
TQM in Services

3. Learning Objectives
When you complete this chapter you should be able to:
Define quality and TQM
Describe the ISO international quality standards
Explain what Six Sigma is
Explain how benchmarking is used in TQM
Explain quality robust products and Taguchi concepts
Use the seven tools of TQM

4. Managing Quality Provides a Competitive Advantage
Arnold Palmer Hospital
Deliver over 12,000 babies annually
Virtually every type of quality tool is employed
Continuous improvement
Employee empowerment
Benchmarking
Just-in-time
Quality tools
© 2014 Pearson Education, Inc.

5. Quality and Strategy
Managing quality supports differentiation, low cost, and response strategies
Quality helps firms increase sales and reduce costs
Building a quality organization is a demanding task

6. Two Ways Quality Improves Profitability
Figure 6.1
Improved response
Flexible pricing
Improved reputation
Sales Gains via
Improved Quality
Increased Profits
Increased productivity
Lower rework and scrap costs
Lower warranty costs
Reduced Costs via

7. The Flow of Activities Organizational Practices
Leadership, Mission statement, Effective operating procedures, Staff support, Training
Yields: What is important and what is to be accomplished
Quality Principles
Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQM
Yields: How to do what is important and to be accomplished
Employee Fulfillment
Empowerment, Organizational commitment
Yields: Employee attitudes that can accomplish what is important
Customer Satisfaction
Winning orders, Repeat customers
Yields: An effective organization with a competitive advantage
Figure 6.2

8. Defining Quality
An operations manager’s objective is to build a total quality management system that identifies and satisfies customer needs

9. Defining Quality
The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs
American Society for Quality

10. Different Views User-based: better performance, more features
Manufacturing-based: conformance to standards, making it right the first time
Product-based: specific and measurable attributes of the product

11. Implications of Quality
Company reputation
Perception of new products
Employment practices
Supplier relations
Product liability
Reduce risk
Global implications
Improved ability to compete

12. ISO 9000 International Quality Standards
International recognition
Encourages quality management procedures, detailed documentation, work instructions, and recordkeeping
2009 revision emphasized sustained success
Over one million certifications in 178 countries
Critical for global business

13. ISO 9000 International Quality Standards
Management principles
Top management leadership
Customer satisfaction
Continual improvement
Involvement of people
Process analysis
Use of data-driven decision making
A systems approach to management
Mutually beneficial supplier relationships

14. Costs of Quality Prevention costs - reducing the potential for defects
Appraisal costs - evaluating products, parts, and services
Internal failure costs - producing defective parts or service before delivery
External failure costs - defects discovered after delivery

15. Costs of Quality External Failure Internal Failure Prevention
Total Cost
Quality Improvement
Total Cost
External Failure
Internal Failure
Prevention
Appraisal

16. Takumi
A Japanese character that symbolizes a broader dimension than quality, a deeper process than education, and a more perfect method than persistence

17. Leaders in Quality TABLE 6.1
Leaders in the Field of Quality Management
LEADER
PHILOSOPHY/CONTRIBUTION
W. Edwards Deming
Deming insisted management accept responsibility for building good systems. The employee cannot produce products that on average exceed the quality of what the process is capable of producing. His 14 points for implementing quality improvement are presented in this chapter.
Joseph M. Juran
A pioneer in teaching the Japanese how to improve quality, Juran believed strongly in top-management commitment, support, and involvement in the quality effort. He was also a believer in teams that continually seek to raise quality standards. Juran varies from Deming somewhat in focusing on the customer and defining quality as fitness for use, not necessarily the written specifications.

18. Leaders in Quality TABLE 6.1
Leaders in the Field of Quality Management
LEADER
PHILOSOPHY/CONTRIBUTION
Amarnd Feigenbaum
His 1961 book Total Quality Control laid out 40 steps to quality improvement processes. He viewed quality not as a set of tools but as a total field that integrated the processes of a company. His work in how people learn from each other’s successes led to the field of cross-functional teamwork.
Philip B. Crosby
Quality Is Free was Crosby’s attention-getting book published in Crosby believed that in the traditional trade-off between the cost of improving quality and the cost of poor quality, the cost of poor quality is understated. The cost of poor quality should include all of the things that are involved in not doing the job right the first time. Crosby coined the term zero defects and stated, “There is absolutely no reason for having errors or defects in any product or service.”

19. Total Quality Management
Encompasses entire organization from supplier to customer
Stresses a commitment by management to have a continuing companywide drive toward excellence in all aspects of products and services that are important to the customer

20. Deming’s Fourteen Points
TABLE 6.2
Deming’s 14 Points for Implementing Quality Improvement
1. Create consistency of purpose
2. Lead to promote change
3. Build quality into the product; stop depending on inspections to catch problems
4. Build long-term relationships based on performance instead of awarding business on price
5. Continuously improve product, quality, and service
6. Start training
7. Emphasize leadership

21. Deming’s Fourteen Points
TABLE 6.2
Deming’s 14 Points for Implementing Quality Improvement
8. Drive out fear
9. Break down barriers between departments
10. Stop haranguing workers
11. Support, help, and improve
12. Remove barriers to pride in work
13. Institute a vigorous program of education and self-improvement
14. Put everyone in the company to work on the transformation

22. Historical Evolution of TQM
History of TQM : Naval Air System command used the term for the first time to refer Japanese system of quality improvement.
However, its root can be traced back to early 1920s- during these days statistical theories were applied to improve quality of products.
This concept was later improved by American quality Gurus like Deming, Juran, Feigenbaum.
And later scope of TQM widened from mere product to all issues within the organization ( process, service and many more dimensions. )

23. Phases of Evolution of TQM
Inspection Phase
Quality Control and statistical theory
Quality in Japan
Total Quality
Total quality management
Quality awards and excellence models
Business excellence
Business Performance Improvement Resource (BPIR

24. 1. Inspection
Inspection involves measuring, examining, and testing products, process and services against specified requirements to determine conformity.
During the early years of manufacturing, inspection was used to decide whether a worker’s job or a product met the requirements; therefore, acceptable.
It was not done in a systematic way, but worked well when the volume of production was reasonably low. However, as organisations became larger, the need for more effective operations became apparent.
In 1911, Frederick W. Taylor helped to satisfy this need. He published ‘The Principles of Scientific Management’ which provided a framework for the effective use of people in industrial organisations.

25. Inspection Contd.
One of Taylor’s concepts was clearly defined tasks performed under standard conditions.
Inspection was one of these tasks and was intended to;
Ensure that no faulty product left the factory or workshop;
focuses on the product and the detection of problems in the product;
Involves testing every item to ensure that it complies with product specifications;
Is carried out at the end of the production process; and relies on specially trained inspectors.
This movement led to the emergence of a separate inspection department. An important new idea that emerged from this new department was defect prevention, which led to quality control.
Inspection still has an important role in modern quality practices. However, it is no longer seen as the answer to all quality problems. Rather, it is one tool within a wider array. 

26. 2. Quality control and statistical theory
Quality Control was introduced to detect and fix problems along the production line to prevent the production of faulty products. Statistical theory played an important role in this area.
In the 1920s, Dr W. Shewhart developed the application of statistical methods to the management of quality.
He made the first modern control chart and demonstrated that variation in the production process leads to variation in product. Therefore, eliminating variation in the process leads to a good standard of end products.

27. Quality control and statistical theory contd.
Statistical Quality Control:
focuses on product and the detection and control of quality problems;
involves testing samples and statistically infers compliance of all products;
is carried out at stages through the production process; and
relies on trained production personnel and quality control professionals.
Shewart’s work was later developed by Deming, Dodge and Roming.  
However, manufacturing companies did not fully utilise these techniques until the late 1940s.

28. Shewhart’s PDCA Model 4. Act Implement the plan, document Plan
Identify the pattern and make a plan
3. Check
Is the plan working?
2. Do
Test the plan

29. 3. Quality in Japan
In the 1940s, Japanese products were perceived as cheep, shoddy imitations. Japanese industrial leaders recognised this problem and aimed to produce innovative high quality products.
They invited a few quality gurus, such as Deming, Juran, and Feigenbaum to learn how to achieve this aim.
Deming suggested that they can achieve their goal in five years; not many Japanese believed him.
However, they followed his suggestions. Maybe the Japanese thought it was rude to say that they did not believe Deming. Or maybe they thought it would be embarrassing if they could not follow his suggestions. Whatever reason it was, they took Deming’s and other gurus’ advice and never looked back.

30. In the 1950s, quality control and management developed quickly and became a main theme of Japanese management. The idea of quality did not stop at the management level.
Quality circles started in the early 60s. A quality circle is a volunteer group of workers who meet and discuss issues to improve any aspects of workplace, and make presentations to management with their ideas.
A by-product of quality circles was employee motivation . Workers felt that they were involved and heard.
Another by-product was the idea of improving not only quality of the products, but also every aspect of organisational issues. This probably was the start of the idea, total quality.

31. 4. Total Quality
The term ‘total quality’ was used for the first time in a paper by Feigenbaum at the first international conference on quality control in Tokyo in The term referred to wider issues within an organisation.
Ishikawa also discussed ‘total quality control’ in Japan, which is different from the western idea of total quality.
According to his explanation, it means ‘company-wide quality control’ that involves all employees, from top management to the workers, in quality control.

32. 5. TQM
In the 1980s to the 1990s, a new phase of quality control and management began. This became known as Total Quality Management (TQM).
Having observed Japan’s success of employing quality issues, western companies started to introduce their own quality initiatives.
TQM, developed as a catchall phrase for the broad spectrum of quality-focused strategies, programmes and techniques during this period, became the centre of focus for the western quality movement.
A typical definition of TQM includes phrases such as: customer focus, the involvement of all employees, continuous improvement and the integration of quality management into the total organisation.

33. In 1988 a major step forward in quality management was made with the development of the Malcolm Baldrige Award in the United States.
The model, on which the award was based, represented the first clearly defined and internationally recognised TQM model. 
It was developed by the United States government to encourage companies to adopt the model and improve their competitiveness.  
In response to this, a similar model was developed by the European Foundation of Quality Management in This EFQM Excellence Model is the framework for the European Quality Award.

34. 6. Business Excellence
TQM models are often called Business Excellence Models. Also, TQM itself is now often called Business Excellence. This is to distinguish the “new TQM” from the past work on TQM.
As mentioned earlier, there was confusion as to what TQM was in the 80s and early 90s.
This was because any business improvement programme was becoming called TQM. Therefore, the name TQM became tarnished.
Business Excellence is really the same as TQM, but with a more clearly defined approach

35. 7. BPIR
Increasing number of organisations, large or small, have become involved in TQM/Business Excellence in the new millennium.
The Centre for Organisational Excellence Research (COER), recognised the need for resources devoted to this area and launched the BPIR.com in April 2002.
Which stands for : Business Performance Improvement Resource

36. Philosophies of TQM Customer Driven Quality Leadership
Continuous Improvement
Employee’s participation
Quick Response
Quality Design
Management by fact
Work partnership with suppliers
Performance measure
Benchmarking

37. Principles of TQM Producing quality work (the first time)
Focusing on the customer
Strategic approach to improvement – guided by vision, mission- i.e. long term
Improving continuously
Employee involvement
Encouraging mutual respect and teamwork
Top management support
Early detection of defects

38. Cost of quality control
Appraisal cost
Prevention cost
Internal failure cost
External failure cost

39. 1. Appraisal cost
Appraisal costs are associated with measuring and monitoring activities related to quality. These costs are associated with the suppliers’ and customers’ evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications. They could include:
Cost of preparation of reporst and audits.
Cost of maintenance and collaboration of test instrumentation and facilities
Cost of administrative machinery and organization for inspections, testing and appraisal.
Product review cost
Cost of inward, in process and final inspection
Process control cost
Quality engineering cost
Cost of destructive test losses, if any (prolonged test until the product fails – such as heat resistance, upto 100 degree Celsius)
Field evaluation cost.

40. 2. Prevention cost
The cost incurred to ensure there is no quality deviation – i.e. defective production prevention. The cost includes;
Cost for acquiring the data related to quality and analyzing the data – it involves cost
Cost of pilot production and scientific product development
Cost of designing the quality map- what ? How ? When? Who etc.
Cost of quality planning and organization
Product review cost
Cost of process control and design of process control system
Research and testing costs for quality assurance and quality enhancement
Cost of training for quality
Trouble shooting and failure analysis
Cost of adjustment, repairs and replacement on process machinery
Administrative cost.

41. Failure cost
These costs are associated with the manufacturing and usage of products, which fail on quality requirements. Types of failure cost;
Internal failure cost : cost related to defective products or services before they are delivered to the customers. E.g. rework cost, problem solving cost, material and product losses, scraps and downtime.
External failure cost : costs related to delivering substandard products / services to the customers. E.g. returned goods, warranty cost, reworking cost, loss of goodwill, liability claims and penalties. Etc.

42. Quality control –defined
According to Bethel, Atwater and Stackman, “Quality control refers to the systematic control of those variables encountered in a manufacturing process which affect the excellence of the end product. such variables result from the application of
Men
Machine
Material and
Manufacturing condition ”
Quality control may be defined as that industrial management technique of group of techniques by means of which products of uniformly acceptable quality are manufactured. Alfred and Betty

43. Quality control process
1. Establish quality standard
2. Measurement of quality (actual )
3. Analysis of quality deviation
4. Corrective action

44. Factors for controlling quality
1. Quality of material
2. Quality of manpower
3. Quality of machine
4. Quality of management

45. Objectives of quality control
Defining and establishing quality standard from customer viewpoint.
Detecting flaws (faults) or variations in raw materials (inputs) and process for smooth production.
Evaluate the method and process of production and suggest for further improvement
To find out the degree of quality deviation in the product
To identify the causes for quality deviation
To take measures for improving the quality.

46. Advantages of quality control
Uniform quality and reliability of products – increase sales turnover thereby
Reduced variability resulting in higher quality and reduced production bottlenecks
Reduce the cost as a result of defective
Increased quality consciousness among employees
Higher operating efficiency
Reduced inspection cost
Minimum scrap
Better customer satisfaction – goodwill

47. Responsibilities for quality
Top management : support from top management.
Design : quality map – what , how, who, where, how etc.
Procurement of quality inputs
Production / operation : process
Quality assurance : analyze quality problems and offer suggestion to improve quality problems.
Packaging and shipping : using the materials strong enough to preserve, protect the products.
Marketing and sales : accurate determination of customer needs.
Customer service

48. JIT Brainchild of Henry Ford – but he did not develop it fully.
American manufacturing concerns did not use it therefore it was considered as a “Dead concept” upto 1960s.
Later during 1970s, the concept was given a complete shape / final touch by Taii-Chi Ohno – a former shop manager, V. P of Toyota Motors. Then the concept was developed for eliminating 7 deadly wastes.
Later, German manufacturing firms used it with slight modification of the concept.

49. 7 Deadly wastes
Defects – work performed incorrectly that must ultimately be accurate in order to create value
Work In Process – build-ups of queues and transactions which have not been completed to the customer’s specifications. Partially completed work consumes resources, but the customer is not willing to pay for it
Overproduction – doing activities earlier than necessary. Typically leads to accumulated work in process
Waiting – people and transactions idled due to work imbalances, defects or other root causes
Motion – unnecessary human movement required to complete a transaction or customer request
Transportation – movement, either physically or electronically, of a customer transaction which consumes resources and costs, but is not required to satisfy the customer
Overprocessing – excess activity or steps that do not add value to the service or product for the end customer

50. What is JIT Holding too much of inventory requires cost.
Producing large quantity requires cost – storage, safety.
Availing inventory at the right quantity, time.
It is a manufacturing system that responds to the market promptly at minimum cost.
JIT is a philosophy than a technique
Procure when required
Produce when required – pull production

51. Features of JIT A management philosophy
Pull method of material flow – procure when required, produce when demanded
Small lot sizes
Uniform work stations
Standardized components and work methods
Close supplier ties
Automated production
Preventive maintenance
Zero inventories
Less lead time – time between order and delivery.

52. How JIT works Employees’ participation Kanban system of production
Developing Kaizan system : continuous improvement.
Good processies bring good results
Take action to contain and correct root causes of problems
Work as a team
Kaizen is everybody’s business
Flexible manufacturing system
TQM
Business process re-engineering
Focus on the factory network
Qyality at source (supply side management)

53. What JIT does Attacks waste Exposes bottlenecks and problems
Reduction in the size of inventory
Process time, space requirement and set up time are reduced
Eliminates waste by prohibiting overproduction
Responds market need promptly
Productivity
Goodwill and profit

54. Six Sigma
Developed by Bill Smith – a senior engineer at Motorola – 1986 a means to eliminate the defects.
Actual meaning of six sigma is less 3.4 defective items per 1 million units/ opportunities.

55. Six Sigma
Two meanings
Statistical definition of a process that is % capable, 3.4 defects per million opportunities (DPMO)
A program designed to reduce defects, lower costs, save time, and improve customer satisfaction
A comprehensive system for achieving and sustaining business success

56. Six Sigma Program
Originally developed by Motorola, adopted and enhanced by Honeywell and GE
Highly structured approach to process improvement
A strategy
A discipline – DMAIC
A set of 7 tools 6

57. Six Sigma
Defines the project’s purpose, scope, and outputs, identifies the required process information keeping in mind the customer’s definition of quality
Measures the process and collects data
Analyzes the data ensuring repeatability and reproducibility
Improves by modifying or redesigning existing processes and procedures
Controls the new process to make sure performance levels are maintained
DMAIC Approach

58. Implementing Six Sigma
Emphasize defects per million opportunities as a standard metric
Provide extensive training
Focus on corporate sponsor support (Champions)
Create qualified process improvement experts (Black Belts, Green Belts, etc.)
Set stretch objectives

59. Components of six sigma
Define
Measure
Analyze
Improve
Control

60. TQM Tools Tools for Generating Ideas Tools to Organize the Data
Check Sheet
Scatter Diagram
Cause-and-Effect Diagram
Tools to Organize the Data
Pareto Chart
Flowchart (Process Diagram)

61. TQM Tools Tools for Identifying Problems Histogram
Statistical Process Control Chart

62. Seven Tools of TQM
(a) Check Sheet: An organized method of recording data
Hour
Defect A B C / / / /
Figure 6.6

63. Seven Tools of TQM
(b) Scatter Diagram: A graph of the value of one variable vs. another variable
Absenteeism
Productivity
Figure 6.6

64. Seven Tools of TQM
(c) Cause-and-Effect Diagram: A tool that identifies process elements (causes) that might effect an outcome
Cause
Materials
Methods
Manpower
Machinery
Effect
Figure 6.6

65. Seven Tools of TQM
(d) Pareto Chart: A graph to identify and plot problems or defects in descending order of frequency
Frequency
Percent
A B C D E
Figure 6.6

66. Seven Tools of TQM
(e) Flowchart (Process Diagram): A chart that describes the steps in a process
Figure 6.6

67. Seven Tools of TQM
(f) Histogram: A distribution showing the frequency of occurrences of a variable
Distribution
Repair time (minutes)
Frequency
Figure 6.6

68. Seven Tools of TQM
(g) Statistical Process Control Chart: A chart with time on the horizontal axis to plot values of a statistic
Upper control limit
Target value
Lower control limit
Time
Figure 6.6

69. 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

70. Pareto Charts Data for October 54 12 4 3 2 70 – 60 – 50 – 40 – 30 –
70 –
60 –
50 –
40 –
30 –
20 –
10 –
0 –
Frequency (number)
Causes and percent of the total
Cumulative percent
Data for October
– 100
– 93
– 88
– 72
Room svc Check-in Pool hours Minibar Misc.
72% 16% 5% 4% 3% 12 4 3 2 54
Number of occurrences

71. Flow Charts MRI Flowchart Physician schedules MRI
Patient taken to MRI
Patient signs in
Patient is prepped
Technician carries out MRI
Technician inspects film
If unsatisfactory, repeat
Patient taken back to room
MRI read by radiologist
MRI report transferred to physician
Patient and physician discuss 9 8
80% 11 10 1 2 3 4 5 6 7
20%

72. Control Charts Plot the percent of free throws missed
Figure 6.8
Plot the percent of free throws missed
Upper control limit
Coach’s target value
Lower control limit
Game number
| | | | | | | | |
40%
20% 0%

73. Inspection
Involves examining items to see if an item is good or defective
Detect a defective product
Does not correct deficiencies in process or product
It is expensive
Issues
When to inspect
Where in process to inspect

74. When and Where to Inspect
At the supplier’s plant while the supplier is producing
At your facility upon receipt of goods from your supplier
Before costly or irreversible processes
During the step-by-step production process
When production or service is complete
Before delivery to your customer
At the point of customer contact

75. Inspection Many problems Cannot inspect quality into a product
Worker fatigue
Measurement error
Process variability
Cannot inspect quality into a product
Robust design, empowered employees, and sound processes are better solutions

76. Dimensions of Service Quality

77. Service Recovery Strategy
Managers should have a plan for when services fail
Marriott’s LEARN routine
Listen
Empathize
Apologize
React
Notify