Operations Management

© 2008 Prentice Hall, Inc. 6 – 1

Operations ManagementOperations ManagementLecture 5 – Lecture 5 – Managing QualityManaging Quality

PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer/Render Heizer/Render Principles of Operations Management, 7ePrinciples of Operations Management, 7eOperations Management, 9e Operations Management, 9e


RecapRecap Defining QualityDefining Quality

What is QualityWhat is Quality

Basic Quality functionBasic Quality function

Quality Assessment Criteria Quality Assessment Criteria

Principle dimensions of qualityPrinciple dimensions of quality

Quality and StrategyQuality and Strategy

Implications of QualityImplications of Quality


Recap…Recap…

Cost of QualityCost of Quality

Leaders in QualityLeaders in Quality

Ethics and Quality ManagementEthics and Quality Management

International Quality StandardsInternational Quality Standards ISO 9000ISO 9000

ISO14000ISO14000


Outline – ContinuedOutline – Continued

TQM & Deming 14 pointsTQM & Deming 14 points

Total Quality ManagementTotal Quality Management Continuous ImprovementContinuous Improvement

Six SigmaSix Sigma

Employee EmpowermentEmployee Empowerment

BenchmarkingBenchmarking

Just-in-Time (JIT)Just-in-Time (JIT)

Taguchi ConceptsTaguchi Concepts

Knowledge of TQM ToolsKnowledge of TQM Tools


Outline – ContinuedOutline – Continued

Tools of TQMTools of TQM Check SheetsCheck Sheets

Scatter Diagrams Scatter Diagrams

Cause-and-Effect DiagramsCause-and-Effect Diagrams

Pareto ChartsPareto Charts

FlowchartsFlowcharts

HistogramsHistograms

Statistical Process Control (SPC)Statistical Process Control (SPC)


Learning ObjectivesLearning Objectives

When you complete this chapter you When you complete this chapter you should be able to:should be able to:

Understanding TQM concepts and Understanding TQM concepts and approachesapproaches

Explain Six SigmaExplain Six Sigma

Explain how benchmarking is used Explain how benchmarking is used

Explain quality robust products and Explain quality robust products and Taguchi conceptsTaguchi concepts

Use the seven tools of TQMUse the seven tools of TQM


TQMTQM

Encompasses entire organization, Encompasses entire organization, from supplier to customerfrom supplier to customer

Stresses a commitment by Stresses a commitment by management to have a continuing, management to have a continuing,

companywide drive toward companywide drive toward excellence in all aspects of products excellence in all aspects of products

and services that are important to and services that are important to the customerthe customer


Deming’s Fourteen PointsDeming’s Fourteen Points

1.1. Create consistency of purposeCreate consistency of purpose

2.2. Lead to promote changeLead to promote change

3.3. Build quality into the product; stop Build quality into the product; stop depending on inspectiondepending on inspection

4.4. Build long-term relationships based on Build long-term relationships based on performance, not priceperformance, not price

5.5. Continuously improve product, quality, Continuously improve product, quality, and serviceand service

6.6. Start trainingStart training

7.7. Emphasize leadershipEmphasize leadership


Deming’s Fourteen PointsDeming’s Fourteen Points

8.8. Drive out fearDrive out fear

9.9. Break down barriers between Break down barriers between departmentsdepartments

10.10. Stop haranguing workersStop haranguing workers

11.11. Support, help, improveSupport, help, improve

12.12. Remove barriers to pride in workRemove barriers to pride in work

13.13. Institute a vigorous program of Institute a vigorous program of education and self-improvementeducation and self-improvement

14.14. Put everybody in the company to work Put everybody in the company to work on the transformationon the transformation

Table 6.1Table 6.1


Seven Concepts of TQMSeven Concepts of TQM

Continuous improvementContinuous improvement

Six SigmaSix Sigma

Employee empowermentEmployee empowerment


Just-in-time (JIT)Just-in-time (JIT)

Taguchi conceptsTaguchi concepts

Knowledge of TQM toolsKnowledge of TQM tools


Continuous ImprovementContinuous Improvement

Represents continual Represents continual improvement of all processes improvement of all processes

Involves all operations and work Involves all operations and work centers including suppliers and centers including suppliers and customerscustomersPeople, Equipment, Materials, People, Equipment, Materials,

ProceduresProcedures


2. DoTest the

plan

3. CheckIs the plan working?

4. ActImplement

the plan

1.PlanIdentify the

improvement and make

a plan

Shewhart’s PDCA ModelShewhart’s PDCA Model

Continuous Continuous ImprovementImprovement

KaizenKaizen

Zero Zero DefectsDefects


Six SigmaSix Sigma

Two meaningsTwo meanings Statistical definition of a process that Statistical definition of a process that

is 99.9997% capable, 3.4 defects per is 99.9997% capable, 3.4 defects per million opportunities (DPMO)million opportunities (DPMO)

A program designed to reduce A program designed to reduce defects, lower costs, and improve defects, lower costs, and improve customer satisfactioncustomer satisfaction

66


Six SigmaSix Sigma

Mean

Lower limits Upper limits

3.4 defects/million

±6

2,700 defects/million

±3


Six Sigma ProgramSix Sigma Program

Originally developed by Motorola, Originally developed by Motorola, adopted and enhanced by adopted and enhanced by Honeywell and GEHoneywell and GE

Highly structured approach to Highly structured approach to process improvementprocess improvement A strategyA strategy

A discipline - DMAICA discipline - DMAIC 66


Six SigmaSix Sigma

1.1. Define critical outputs Define critical outputs and identify gaps for and identify gaps for improvementimprovement

2.2. Measure the work and Measure the work and collect process datacollect process data

3.3. Analyze the dataAnalyze the data

4.4. Improve the processImprove the process

5.5. Control the new process to Control the new process to make sure new performance make sure new performance is maintainedis maintained

DMAIC ApproachDMAIC Approach


Six Sigma ImplementationSix Sigma Implementation

Emphasize defects per million Emphasize defects per million opportunities as a standard metricopportunities as a standard metric

Provide extensive trainingProvide extensive training Create qualified process improvement Create qualified process improvement

experts (Black Belts, Green Belts, etc.)experts (Black Belts, Green Belts, etc.) Set stretch objectivesSet stretch objectives

This cannot be accomplished without a major commitment from top level management


Employee EmpowermentEmployee Empowerment

Getting employees involved in product Getting employees involved in product and process improvementsand process improvements 85% of quality problems are due 85% of quality problems are due

to process and materialto process and material TechniquesTechniques

Build communication networks Build communication networks that include employeesthat include employees

Develop open, supportive supervisorsDevelop open, supportive supervisors Move responsibility to employeesMove responsibility to employees Build a high-morale organizationBuild a high-morale organization Create formal team structuresCreate formal team structures


Quality CirclesQuality Circles

Group of employees who meet Group of employees who meet regularly to solve problemsregularly to solve problems

Trained in planning, problem Trained in planning, problem solving, and statistical methodssolving, and statistical methods

Often led by a facilitatorOften led by a facilitator

Very effective when done Very effective when done properlyproperly


Use internal

benchmarking

if you’re big

enough


Selecting best practices to use as a Selecting best practices to use as a standard for performancestandard for performance

Determine what to Determine what to benchmarkbenchmark

Form a benchmark teamForm a benchmark team Identify benchmarking partnersIdentify benchmarking partners Collect and analyze benchmarking Collect and analyze benchmarking

informationinformation Take action to match or exceed the Take action to match or exceed the

benchmarkbenchmark


Best Practices for Resolving Best Practices for Resolving Customer ComplaintsCustomer Complaints

Make it easy for clients to complainMake it easy for clients to complain

Respond quickly to complaintsRespond quickly to complaints

Resolve complaints on first contactResolve complaints on first contact

Use computers to manage Use computers to manage complaintscomplaints

Recruit the best for customer Recruit the best for customer service jobsservice jobs



Relationship to quality:Relationship to quality:

JIT cuts the cost of qualityJIT cuts the cost of quality

JIT improves qualityJIT improves quality

Better quality means less Better quality means less inventory and better, easier-to-inventory and better, easier-to-employ JIT systememploy JIT system



‘‘Pull’ system of production scheduling Pull’ system of production scheduling including supply managementincluding supply management Production only when signaledProduction only when signaled

Allows reduced inventory levelsAllows reduced inventory levels Inventory costs money and hides process Inventory costs money and hides process

and material problemsand material problems

Encourages improved process and Encourages improved process and product qualityproduct quality


Taguchi ConceptsTaguchi Concepts

Engineering and experimental Engineering and experimental design methods to improve product design methods to improve product and process designand process design Identify key component and process Identify key component and process

variables affecting product variationvariables affecting product variation

Taguchi ConceptsTaguchi Concepts Quality robustnessQuality robustness

Quality loss functionQuality loss function

Target-oriented qualityTarget-oriented quality


Quality RobustnessQuality Robustness

Ability to produce products Ability to produce products uniformly in adverse manufacturing uniformly in adverse manufacturing and environmental conditionsand environmental conditions Remove the effects of adverse Remove the effects of adverse

conditionsconditions

Small variations in materials and Small variations in materials and process do not destroy product process do not destroy product qualityquality


Quality Loss FunctionQuality Loss Function Shows that costs increase as the Shows that costs increase as the

product moves away from what product moves away from what the customer wantsthe customer wants

Costs include customer Costs include customer dissatisfaction, warranty dissatisfaction, warranty and service, internal and service, internal scrap and repair, and costs to scrap and repair, and costs to societysociety

Traditional conformance Traditional conformance specifications are too simplisticspecifications are too simplistic

Target-Target-

oriented oriented

qualityquality


Unacceptable

Poor

GoodBest

Fair

Quality Loss FunctionQuality Loss FunctionHigh lossHigh loss

Loss (to Loss (to producing producing organization, organization, customer, customer, and society)and society)

Low lossLow loss

FrequencyFrequency

LowerLower TargetTarget UpperUpper

SpecificationSpecification

Target-oriented quality Target-oriented quality yields more product in yields more product in the “best” categorythe “best” category

Target-oriented quality Target-oriented quality brings product toward brings product toward the target valuethe target value

Conformance-oriented Conformance-oriented quality keeps products quality keeps products within 3 standard within 3 standard deviationsdeviations

L = DL = D22CCwherewhere

L =L = loss to loss to societysocietyD =D = distance from distance from target valuetarget valueC =C = cost of cost of deviationdeviation


Tools of TQMTools of TQM Tools for Generating IdeasTools for Generating Ideas

Check sheetsCheck sheetsScatter diagramsScatter diagramsCause-and-effect diagramsCause-and-effect diagrams

Tools to Organize the DataTools to Organize the DataPareto chartsPareto chartsFlowchartsFlowcharts

Tools for Identifying ProblemsTools for Identifying ProblemsHistogramHistogramStatistical process control chartStatistical process control chart


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Hour

Defect 1 2 3 4 5 6 7 8

A

B

C

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Seven Tools of TQMSeven Tools of TQM

(a)(a) Check Sheet: An organized method of Check Sheet: An organized method of recording datarecording data



(b)(b) Scatter Diagram: A graph of the value Scatter Diagram: A graph of the value of one variable vs. another variableof one variable vs. another variable

AbsenteeismAbsenteeism

Pro

du

cti

vit

yP

rod

uc

tiv

ity



(c)(c) Cause-and-Effect Diagram: A tool that Cause-and-Effect Diagram: A tool that identifies process elements (causes) that identifies process elements (causes) that might effect an outcomemight effect an outcome

CauseCause

MaterialsMaterials MethodsMethods

ManpowerManpower MachineryMachinery

EffectEffect


Seven Tools of TQMSeven Tools of TQM(d)(d) Pareto Chart: A graph to identify and plot Pareto Chart: A graph to identify and plot

problems or defects in descending order of problems or defects in descending order of frequencyfrequency

Fre

qu

en

cyF

req

ue

ncy

Pe

rce

nt

Pe

rce

nt

AA BB CC DD EE

80 % of the 80 % of the firm’s problems firm’s problems are a result of are a result of only 20% of the only 20% of the causescauses



(e)(e) Flowchart (Process Diagram): A chart that Flowchart (Process Diagram): A chart that describes the steps in a processdescribes the steps in a process



(f)(f) Histogram: A distribution showing the Histogram: A distribution showing the frequency of occurrences of a variablefrequency of occurrences of a variable

DistributionDistribution

Repair time (minutes)Repair time (minutes)

Fre

qu

en

cyF

req

ue

ncy



(g)(g) Statistical Process Control Chart: A chart with Statistical Process Control Chart: A chart with time on the horizontal axis to plot values of a time on the horizontal axis to plot values of a statisticstatistic

Upper control limitUpper control limit

Target valueTarget value

Lower control limitLower control limit

TimeTime


Forthcoming lecture- Managing Quality (Quality Tools implications and problem solving)

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Operations Management