Presentation on theme: "Beni Asllani University of Tennessee at Chattanooga"— Presentation transcript:
1 Beni Asllani University of Tennessee at Chattanooga Chapter 2Quality ManagementOperations Management - 6th EditionRoberta Russell & Bernard W. Taylor, IIIBeni Asllani University of Tennessee at ChattanoogaCopyright 2009 John Wiley & Sons, Inc.
2 Lecture Outline What Is Quality? Evolution of Quality Management Quality ToolsTQM and QMSFocus of Quality Management—CustomersRole of Employees in Quality ImprovementQuality in Service CompaniesSix SigmaCost of QualityEffect of Quality Management on ProductivityQuality AwardsISO 9000Copyright 2009 John Wiley & Sons, Inc.
3 Relevant WEB SitesClick HereCopyright 2009 John Wiley & Sons, Inc.
4 What Is Quality? Oxford American Dictionary a degree or level of excellenceAmerican Society for Qualitytotality of features and characteristics that satisfy needs without deficienciesConsumer’s and producer’s perspectiveCopyright 2009 John Wiley & Sons, Inc.
5 What Is Quality: Customer’s Perspective Fitness for usehow well product or service does what it is supposed toQuality of designdesigning quality characteristics into a product or serviceA Mercedes and a Ford are equally “fit for use,” but with different design dimensions.Copyright 2009 John Wiley & Sons, Inc.
6 Producer’s Perspective Consumer’s Perspective The Meaning of QualityFitness forConsumer UseProducer’s PerspectiveConsumer’s PerspectiveQuality of ConformanceConformance to specificationsCostQuality of DesignQuality characteristicsPriceMarketingProductionThe Meaning of QualityFigure 14.1Copyright 2009 John Wiley & Sons, Inc.
7 Dimensions of Quality: Manufactured Products Performancebasic operating characteristics of a product; how well a car handles or its gas mileageFeatures“extra” items added to basic features, such as a stereo CD or a leather interior in a carReliabilityprobability that a product will operate properly within an expected time frame; that is, a TV will work without repair for about seven yearsCopyright 2009 John Wiley & Sons, Inc.
8 Dimensions of Quality: Manufactured Products (cont.) Conformancedegree to which a product meets pre–established standardsDurabilityhow long product lasts before replacement; with care, L.L.Bean boots may last a lifetimeServiceabilityease of getting repairs, speed of repairs, courtesy and competence of repair personCopyright 2009 John Wiley & Sons, Inc.
9 Dimensions of Quality: Manufactured Products (cont.) Aestheticshow a product looks, feels, sounds, smells, or tastesSafetyassurance that customer will not suffer injury or harm from a product; an especially important consideration for automobilesPerceptionssubjective perceptions based on brand name, advertising, and likeCopyright 2009 John Wiley & Sons, Inc.
10 Dimensions of Quality: Services Time and timelinesshow long must a customer wait for service, and is it completed on time?is an overnight package delivered overnight?Completeness:is everything customer asked for provided?is a mail order from a catalogue company complete when delivered?Copyright 2009 John Wiley & Sons, Inc.
11 Dimensions of Quality: Service (cont.) Courtesy:how are customers treated by employees?are catalogue phone operators nice and are their voices pleasant?Consistencyis same level of service provided to each customer each time?is your newspaper delivered on time every morning?Copyright 2009 John Wiley & Sons, Inc.
12 Dimensions of Quality: Service (cont.) Accessibility and conveniencehow easy is it to obtain service?does service representative answer you calls quickly?Accuracyis service performed right every time?is your bank or credit card statement correct every month?Responsivenesshow well does company react to unusual situations?how well is a telephone operator able to respond to a customer’s questions?Copyright 2009 John Wiley & Sons, Inc.
13 What Is Quality: Producer’s Perspective Quality of conformancemaking sure product or service is produced according to designif new tires do not conform to specifications, they wobbleif a hotel room is not clean when a guest checks in, hotel is not functioning according to specifications of its designCopyright 2009 John Wiley & Sons, Inc.
14 Meaning of QualityCopyright 2009 John Wiley & Sons, Inc.
15 What Is Quality: A Final Perspective Customer’s and producer’s perspectives depend on each otherProducer’s perspective:production process and COSTCustomer’s perspective:fitness for use and PRICECustomer’s view must dominateCopyright 2009 John Wiley & Sons, Inc.
16 Evolution of Quality Management: Quality Gurus Walter ShewartIn 1920s, developed control chartsIntroduced term “quality assurance”W. Edwards DemingDeveloped courses during World War II to teach statistical quality-control techniques to engineers and executives of companies that were military suppliersAfter war, began teaching statistical quality control to Japanese companiesJoseph M. JuranFollowed Deming to Japan in 1954Focused on strategic quality planningQuality improvement achieved by focusing on projects to solve problems and securing breakthrough solutionsCopyright 2009 John Wiley & Sons, Inc.
17 Evolution of Quality Management: Quality Gurus (cont.) Armand V. FeigenbaumIn 1951, introduced concepts of total quality control and continuous quality improvementPhilip CrosbyIn 1979, emphasized that costs of poor quality far outweigh cost of preventing poor qualityIn 1984, defined absolutes of quality management—conformance to requirements, prevention, and “zero defects”Kaoru IshikawaPromoted use of quality circlesDeveloped “fishbone” diagramEmphasized importance of internal customerCopyright 2009 John Wiley & Sons, Inc.
18 Deming’s 14 Points Create constancy of purpose Adopt philosophy of preventionCease mass inspectionSelect a few suppliers based on qualityConstantly improve system and workersCopyright 2009 John Wiley & Sons, Inc.
19 Deming’s 14 Points (cont.) Institute worker trainingInstill leadership among supervisorsEliminate fear among employeesEliminate barriers between departmentsEliminate slogansCopyright 2009 John Wiley & Sons, Inc.
20 Deming’s 14 Points (cont.) Remove numerical quotasEnhance worker prideInstitute vigorous training and education programsDevelop a commitment from top management to implement above 13 pointsCopyright 2009 John Wiley & Sons, Inc.
21 Deming Wheel: PDCA Cycle Copyright 2009 John Wiley & Sons, Inc.
22 Quality Tools Process Flow Chart Cause-and-Effect Diagram Check Sheet Pareto AnalysisHistogramScatter DiagramStatistical ProcessControl ChartCopyright 2009 John Wiley & Sons, Inc.
23 Flow ChartCopyright 2009 John Wiley & Sons, Inc.
24 Cause-and-Effect Diagram Cause-and-effect diagram (“fishbone” diagram)chart showing different categories of problem causesCopyright 2009 John Wiley & Sons, Inc.
25 Cause-and-Effect Matrix grid used to prioritize causes of quality problemsCopyright 2009 John Wiley & Sons, Inc.
26 Check Sheets and Histograms Copyright 2009 John Wiley & Sons, Inc.
27 Pareto Analysis Pareto analysis most quality problems result from a few causesCopyright 2009 John Wiley & Sons, Inc.
28 Pareto ChartCopyright 2009 John Wiley & Sons, Inc.
29 Scatter DiagramCopyright 2009 John Wiley & Sons, Inc.
30 Control ChartCopyright 2009 John Wiley & Sons, Inc.
31 TQM and QMS Total Quality Management (TQM) customer-oriented, leadership, strategic planning, employee responsibility, continuous improvement, cooperation, statistical methods, and training and educationQuality Management System (QMS)system to achieve customer satisfaction that complements other company systemsCopyright 2009 John Wiley & Sons, Inc.
32 Focus of Quality Management— Customers TQM and QMSsserve to achieve customer satisfactionPartneringa relationship between a company and its supplier based on mutual quality standardsMeasuring customer satisfactionimportant component of any QMScustomer surveys, telephone interviewsCopyright 2009 John Wiley & Sons, Inc.
33 Role of Employees in Quality Improvement Participative problem solvingemployees involved in quality-managementevery employee has undergone extensive training to provide quality service to Disney’s guestsKaizeninvolves everyone in process of continuous improvementCopyright 2009 John Wiley & Sons, Inc.
34 Quality Circles and QITs PresentationImplementationMonitoringSolutionProblem resultsProblem AnalysisCause and effectData collection and analysisProblem IdentificationList alternativesConsensusBrainstormingTrainingGroup processesData collectionProblem analysisOrganization8-10 membersSame areaSupervisor/moderatorQuality circlegroup of workers and supervisors from same area who address quality problemsProcess/Quality improvement teams (QITs)focus attention on business processes rather than separate company functionsCopyright 2009 John Wiley & Sons, Inc.
35 Quality in ServicesService defects are not always easy to measure because service output is not usually a tangible itemServices tend to be labor intensiveServices and manufacturing companies have similar inputs but different processes and outputsCopyright 2009 John Wiley & Sons, Inc.
36 Quality Attributes in Services Principles of TQM apply equally well to services and manufacturingTimelinesshow quickly a service is provided?Benchmark“best” level of quality achievement in one company that other companies seek to achieve“quickest, friendliest, most accurate service available.”Copyright 2009 John Wiley & Sons, Inc.
37 Six SigmaA process for developing and delivering virtually perfect products and servicesMeasure of how much a process deviates from perfection3.4 defects per million opportunitiesSix Sigma Processfour basic steps of Six Sigma—align, mobilize, accelerate, and governChampionan executive responsible for project successCopyright 2009 John Wiley & Sons, Inc.
38 Six Sigma: Breakthrough Strategy—DMAIC DEFINEMEASUREANALYZEIMPROVECONTROL3.4 DPMO67,000 DPMOcost = 25% of salesCopyright 2009 John Wiley & Sons, Inc.
39 Six Sigma: Black Belts and Green Belts project leaderMaster Black Belta teacher and mentor for Black BeltsGreen Beltsproject team membersCopyright 2009 John Wiley & Sons, Inc.
40 Six Sigma Design for Six Sigma (DFSS) Profitability a systematic approach to designing products and processes that will achieve Six SigmaProfitabilitytypical criterion for selection Six Sigma projectone of the factors distinguishing Six Sigma from TQM“Quality is not only free, it is anhonest-to-everything profit maker.”Copyright 2009 John Wiley & Sons, Inc.
41 Cost of Quality Cost of Achieving Good Quality Cost of Poor Quality Prevention costscosts incurred during product designAppraisal costscosts of measuring, testing, and analyzingCost of Poor QualityInternal failure costsinclude scrap, rework, process failure, downtime, and price reductionsExternal failure costsinclude complaints, returns, warranty claims, liability, and lost salesCopyright 2009 John Wiley & Sons, Inc.
42 Prevention Costs Quality planning costs Product-design costs costs of developing and implementing quality management programProduct-design costscosts of designing products with quality characteristicsProcess costscosts expended to make sure productive process conforms to quality specificationsTraining costscosts of developing and putting on quality training programs for employees and managementInformation costscosts of acquiring and maintaining data related to quality, and development and analysis of reports on quality performanceCopyright 2009 John Wiley & Sons, Inc.
43 Appraisal Costs Inspection and testing Test equipment costs costs of testing and inspecting materials, parts, and product at various stages and at end of processTest equipment costscosts of maintaining equipment used in testing quality characteristics of productsOperator costscosts of time spent by operators to gather data for testing product quality, to make equipment adjustments to maintain quality, and to stop work to assess qualityCopyright 2009 John Wiley & Sons, Inc.
44 Internal Failure Costs Scrap costscosts of poor-quality products that must be discarded, including labor, material, and indirect costsRework costscosts of fixing defective products to conform to quality specificationsProcess failure costscosts of determining why production process is producing poor-quality productsProcess downtime costscosts of shutting down productive process to fix problemPrice-downgrading costscosts of discounting poor-quality products—that is, selling products as “seconds”Copyright 2009 John Wiley & Sons, Inc.
45 External Failure Costs Customer complaint costscosts of investigating and satisfactorily responding to a customer complaint resulting from a poor-quality productProduct return costscosts of handling and replacing poor-quality products returned by customerWarranty claims costscosts of complying with product warrantiesProduct liability costslitigation costs resulting from product liability and customer injuryLost sales costscosts incurred because customers are dissatisfied with poor-quality products and do not make additional purchasesCopyright 2009 John Wiley & Sons, Inc.
46 Measuring and Reporting Quality Costs Index numbersratios that measure quality costs against a base valuelabor indexratio of quality cost to labor hourscost indexratio of quality cost to manufacturing costsales indexratio of quality cost to salesproduction indexratio of quality cost to units of final productCopyright 2009 John Wiley & Sons, Inc.
47 Quality–Cost Relationship Cost of qualitydifference between price of nonconformance and conformancecost of doing things wrong20 to 35% of revenuescost of doing things right3 to 4% of revenuesCopyright 2009 John Wiley & Sons, Inc.
48 Effect of Quality Management on Productivity ratio of output to inputQuality impact on productivityfewer defects increase output, and quality improvement reduces inputsYielda measure of productivityYield=(total input)(% good units) + (total input)(1-%good units)(% reworked)orY=(I)(%G)+(I)(1-%G)(%R)Copyright 2009 John Wiley & Sons, Inc.
49 Computing Product Cost per Unit where:Kd = direct manufacturing cost per unitI = inputKr = rework cost per unitR = reworked unitsY = yieldCopyright 2009 John Wiley & Sons, Inc.
50 Computing Product Yield for Multistage Processes Y = (I)(%g1)(%g2) … (%gn)where:I = input of items to the production process that will result in finished productsgi = good-quality, work-in-process products at stage iCopyright 2009 John Wiley & Sons, Inc.
51 Quality–Productivity Ratio QPRproductivity index that includes productivity and quality costsQPR =(good-quality units)(input) (processing cost) + (reworked units) (rework cost)(100)Copyright 2009 John Wiley & Sons, Inc.
52 Malcolm Baldrige Award Created in 1987 to stimulate growth of quality management in United StatesCategoriesLeadershipInformation and analysisStrategic planningHuman resource focusProcess managementBusiness resultsCustomer and market focusCopyright 2009 John Wiley & Sons, Inc.
53 Other Awards for Quality National individual awardsArmand V. Feigenbaum MedalDeming MedalE. Jack Lancaster MedalEdwards MedalShewart MedalIshikawa MedalInternational awardsEuropean Quality AwardCanadian Quality AwardAustralian Business Excellence AwardDeming Prize from JapanCopyright 2009 John Wiley & Sons, Inc.
54 ISO 9000A set of procedures and policies for international quality certification of suppliersStandardsISO 9000:2000Quality Management Systems—Fundamentals and Vocabularydefines fundamental terms and definitions used in ISO 9000 familyISO 9001:2000Quality Management Systems—Requirementsstandard to assess ability to achieve customer satisfactionISO 9004:2000Quality Management Systems—Guidelines for Performance Improvementsguidance to a company for continual improvement of its quality-management systemCopyright 2009 John Wiley & Sons, Inc.
55 ISO 9000 Certification, Implications, and Registrars ISO 9001:2000—only standard that carries third-party certificationMany overseas companies will not do business with a supplier unless it has ISO 9000 certificationISO 9000 accreditationISO registrarsCopyright 2009 John Wiley & Sons, Inc.
56 Copyright 2009 John Wiley & Sons, Inc. All rights reserved Copyright 2009 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein.Copyright 2009 John Wiley & Sons, Inc.