1. Operations Management Managing Quality Chapter 6
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

2. Ways Quality Can Improve Profitability
Sales Gains
Improved response
Higher Prices
Improved reputation
Improved Quality
Increased Profits
Reduced Costs
Increased productivity
Lower rework / scrap costs
Lower warranty costs
This slide not only looks at the impact of quality on productivity - it also enables you to begin a discussion as to the meaning of quality (or perhaps the differing meanings among different people). To many people, the notion of “high quality” carries with it the assumption of “high price.” This slide provides an initial point to challenge that assumption.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

3. Flow of Activities Necessary to Achieve Total Quality Management
Organizational Practices
Quality Principles
Employee Fulfillment
This slide simply introduces the four activities. Subsequent slides expand on each.
Customer Satisfaction
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

4. TQM – Organizational Practices
Leadership
Mission statement
Effective operating procedure
Staff support
Training
What is important and what is to be accomplished
Organizational Practices
Quality Principles
Employee Fulfillment
Customer Satisfaction
One might begin discussion of this slide by introducing the difference between “leadership” and “management.”
The point should also be made, again, about the need for involvement and commitment throughout the organization.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

5. TQM – Quality Principles
Customer focus
Continuous improvement
Employee empowerment
Benchmarking
Just-in-time
Tools of TQM
How to do what is important and to be accomplished
Organizational Practices
Quality Principles
Employee Fulfillment
Customer Satisfaction
Some students may find the notion of “continuous improvement” (Why can’t we do it right the first time?) and “employee empowerment” (Doesn’t this reduce or abrogate the role of the manager?) the most difficult to accept. If you have not done so already, this might be a good time to discuss each in some depth.
The following slide may be used in a discussion of empowerment.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

6. TQM – Employee Fulfillment
Empowerment
Organizational commitment
Employees’ attitudes that they can accomplish what is important and to be accomplished
Organizational Practices
Quality Principles
Employee Fulfillment
Customer Satisfaction
This slide can be used to form the basis for a discussion of empowerment.
If you wish to discuss empowerment - begin by asking students to define the term. You may find students are already comfortable with the term, in which case the discussion can be rather short; or, you may find they have unrealistic expectations (or desires?) - in which case you may wish to pursue the discussion at greater length. It may be helpful to ask students to identify the benefits and pitfalls to both management and worker. (For example, empowerment requires workers to assume greater responsibility.)
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

7. TQM – Customer Satisfaction
Winning orders
Repeat customers
An effective organization with a competitive advantage
Organizational Practices
Quality Principles
Employee Fulfillment
Customer Satisfaction
The main point that one might make with this slide is that the customer is, ultimately, the most important person in your business.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

8. Definitions of Quality
ASQ: The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs
User-Based: What consumer says it is
Product-Based: Level of measurable product characteristic
Manufacturing-Based: Degree to which a product conforms to design specification
CATAGORIES
Once you have introduced these definitions of quality, ask students to provide example of products that use them.
CONFORMANCE IS THE JOB OF OPERATIONS
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9. Dimensions of Quality for Goods
Operation
Reliability & durability
Serviceability
Appearance
Perceived quality
Conformance
It may be most helpful to provide, or ask you students to provide, examples of products for which the notion of quality is based upon one or more of the dimensions listed.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

10. Service Quality Attributes
Tangibles
Reliability
Communication
Credibility
Security
Responsiveness
Competence
Courtesy
Access
© 1995 Corel Corp.
Under- standing
Although the text considers service quality at the end of the chapter, you may wish, at this point, to contrast the notion of quality for goods with that for services. If not, skip this slide - it is repeated at the point at which the issues are raised in the text.
How do we build quality into our service offerings?
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

11. Costs of Quality Prevention costs Appraisal costs
Internal failure costs
External failure costs
Costs of poor quality are huge but the amounts are not known with precision. In most companies, the accounting system provides only a minority of the information needed to quantify this cost of poor quality
Juran on “Quality by Design” The Free Press (1992)
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

12. Prevention Costs
Costs associated with preventing defects before they happen
Redesigning the process to remove causes of defects
Redesigning the product or service
Training employees in continuous improvement
Working with suppliers to improve quality
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13. Appraisal Costs Costs to assess / appraise quality
Test / inspection to identify quality problems
Used to screen out defective product … this is NOT best practice
As preventive measures improve quality, appraisal costs decrease
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14. Internal Failure Costs
Costs resulting from defects discovered during production of the product or service
Yield / scrap
Rework / correcting mistakes (note may also affect delivery)
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15. External Failure Costs
Costs resulting from defects discovered after delivery of the product or service to the customer
Warranty service expense
Customer returns
Dissatisfied customers / repeat business
Poor publicity
Lawsuits
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16. Cost of Detecting Defects
Process Final testing Customer
Where defect is detected
Cost of detection and correction
Prevention, not inspection or correction
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17. Traditional Quality Process (Manufacturing)
Customer
Marketing
Engineering
Operations
Specifies
Interprets
Designs
Produces
Need
Need
Product
Product
Defines
Plans
Students might be asked what problems they would foresee in implementing this process.
Quality
Quality
Quality is customer driven!
Monitors
Quality
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18. TQM Encompasses entire organization, from supplier to customer
Stresses a commitment by management to have a continuing, company-wide, drive toward excellence in all aspects of products and services that are important to the customer.
A point to be made here is that TQM is not a program but a philosophy.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

19. Concepts of TQM Continuous improvement Employee empowerment
Benchmarking
Just-in-time (JIT)
Taguchi concepts
Knowledge of TQM tools
This slide simply introduces concepts of TQM. These concepts are expanded upon in subsequent slides.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

20. Continuous Improvement
TQM CONCEPTS
Continuous Improvement
Continual improvement of people, equipment, suppliers, materials, process & customer satisfaction
Based on philosophy that every aspect of an operation can be improved
Involves all operations and work units
Other names
Kaizen
Zero-defects
Six sigma
Plan Do
Check
Act
Students may have a number of questions with respect to the notion of continuous improvement.
- Why do we need continuous improvement? Why can’t we do it right the first time?
- Doesn’t implementation of continuous improvement introduce a certain instability?
- Are we never “done”?
- Etc.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

21. TQM CONCEPTS
Employee Empowerment
Involving employees in product & process improvement
85% of quality problems are due to processes & materials
The people most closely associated with an operation are in the best position to identify the changes that should be made
Techniques
Support workers
Let workers make decisions
Build teams & quality circles
Training
If you have not done so already, you might at this point discuss:
- why employee empowerment works
- the role of information technology in enabling employee empowerment
- the role of information technology in making employee empowerment a requirement
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

22. TQM CONCEPTS
Benchmarking
Selecting best practices in products, services, processes, or costs to use as a standard for performance
Determine what to benchmark
Form a benchmark team
Identify benchmarking partners
Collect and analyze benchmarking information
Take action to match or exceed the benchmark
Ask student to identify firms which they believe could serve as benchmarks. If students are unable to identify any firms - ask them to identify a college or university whose registration system or housing selection system could serve as a benchmark. Most students have enough knowledge of, or friends at,other colleges and universities so as to be able to respond to this question.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

23. Best Practices Example – Resolving Customer Complaints
TQM CONCEPTS
Best Practices Example – Resolving Customer Complaints
Make it easy for clients to complain
Respond quickly to complaints
Resolve complaints on the first contact
Use computers to manage complaints
Recruit the best for customer service jobs
One might ask students “Given that these suggestions seem to make intuitive sense, why would a company not wish to implement them?”
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

24. Just-in-Time (JIT) Relationship to quality:
TQM CONCEPTS
Just-in-Time (JIT)
Relationship to quality:
JIT cuts the cost of quality
JIT improves quality
Better quality means less inventory and better, easier-to- employ JIT system
JIT
QUALITY
This slide introduces a discussion about JIT.
Subsequent slides elaborate.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

25. TQM CONCEPTS
Taguchi Concepts
Experimental design methods to improve product and process design
Quality Robustness – Ability to produce products uniformly regardless of manufacturing conditions – Removing the effects is often cheaper than removing the causes
Quality loss function
Target specifications
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

26. Taguchi Concepts
TQM CONCEPTS
Experimental design methods to improve product and process design
Quality Robustness
Quality loss function – Identifies all costs (loss to society) connected with poor quality – Costs increase as the product moves away from the target
Target specifications
Low Loss
High Loss
Quality Loss Function
Unacceptable
Poor
Fair
Good
Best
Upper
Lower
Target
Specification
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

27. Taguchi Concepts
TQM CONCEPTS
Experimental design methods to improve product and process design
Quality Robustness
Quality loss function
Target-oriented quality – Philosophy of continuous improvement to bring the product exactly on target – Traditional conformance oriented specs produce more units farther from the target (greater loss)
Quality Loss Function (a)
Target-oriented quality yields more product in the “best” category and brings products toward the target level
High loss
Unacceptable
Poor
Fair
Low loss
Good
Best
Conformance-oriented quality keeps product within three standard deviations
Frequency
Lower
Target
Upper
Distribution of specs for product produced (b)
Specification
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28. Seven Tools of TQM TQM CONCEPTS
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

29. Process Chart Shows sequence of events in process
TQM CONCEPTS
Process Chart
Shows sequence of events in process
Depicts activity relationships
Has many uses
Identify data collection points
Find problem sources
Identify areas for improvement
Identify where travel distances can be reduced
This slide can be used to introduce Process Charts.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

30. Process Chart example TQM CONCEPTS
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31. Cause and Effect Diagram
TQM CONCEPTS
Cause and Effect Diagram
Main Cause
Main Cause
Specific cause
Specific cause
Effect (problem)
Specific cause
Specific cause
Specific cause
Main Cause
Main Cause
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32. Cause and Effect Diagram Example
TQM CONCEPTS
Cause and Effect Diagram Example
Method
Manpower
Drilling too slow
Overtime/ fatigue
Too many defects
Wood
Steel
Lathe not calibrated
Material
Machinery
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33. © 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J. 07458

34. Inspection Examining items to see if they are good or defective
TQM CONCEPTS
Inspection
Examining items to see if they are good or defective
Does not correct deficiencies in process or product
Does not add value to the product / service
Why inspect – to ensure that we are producing at the expected quality level
Issues
When to inspect
Where in process to inspect
This slide introduces the concept of inspection.
At this point, one should probably stress the role of inspection in the overall quality control process. Some students seem to have the notion that inspection is quality control.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

35. When and Where to Inspect
TQM CONCEPTS
When and Where to Inspect
At the supplier’s plant while the supplier is producing
At your facility upon receipt of goods from the supplier
Before costly or irreversible processes
During the step-by-step production process
When production or service is complete
Before delivery from your facility
At the point of customer contact
This slide can be used to frame a discussion about when to inspect. If your students have documented an actual production process from a local business, one of these documented processes can serve as an example.
The best inspection can be thought of as no inspection at all: Source inspection – controlling or monitoring at the point of production or purchase
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

36. SPC (Control Charting)
TQM CONCEPTS
100% Inspection vs. SPC
Ship
Process
Rework
Scrap
100% Inspection
Process
Ship
Sample
Feedback
SPC (Control Charting)
Normal variance or cause for concern ?
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

37. TQM In Services
It is more difficult to measure quality for services than for goods
Intangible differences between products (services)
Intangible expectations of customers
Tangibles
Reliability
Communication
Credibility
Security
Responsiveness
Competence
Courtesy
Access
© 1995 Corel Corp.
Under- standing
At this point, you might consider going back to the slides illustrating the differences between goods and services. Those slides are provided next. If you do not wish to use them, simply skip to the final slide in the sequence.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

38. Operations Role in Service Quality
The tangible component of many services is important
Operations can design processes (service products) that have quality attributes
Customers’ perceptions are the quality standard – Operations can influence both the quality of the service and the expectation
Preparation for exceptions – contingency plans for sub-optimal operating conditions
At this point, you might consider going back to the slides illustrating the differences between goods and services. Those slides are provided next. If you do not wish to use them, simply skip to the final slide in the sequence.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J

39. Summary
TQM is a supply chain-wide philosophy to continuously improve processes to make products that will satisfy our customers.
TQM and Just-in-Time support each other
In the process of getting better, most companies also reduce costs and lead time through elimination of waste.
So TQM is a way to get faster, better and cheaper simultaneously.
At this point, you might consider going back to the slides illustrating the differences between goods and services. Those slides are provided next. If you do not wish to use them, simply skip to the final slide in the sequence.
© 2004 by Prentice Hall, Inc. , Upper Saddle River, N.J