Operations Management

1. Operations Management Chapter 6 – Managing Quality PowerPoint presentation to accompany Heizer/Render Operations Management, 8e © 2006 Prentice Hall, Inc.

2. Outline • Quality And Strategy • Defining Quality • Evolution of Quality Management • International Quality Standards • TQM Concepts • TQM Tools • Quality: Prevention vs. Detection

3. Managing Quality Provides a Competitive Advantage Arnold Palmer Hospital • Deliver over 10,000 babies annually • Virtually every type of quality tool is employed • Continuous improvement • Employee empowerment • Benchmarking • Just-in-time • Quality tools

4. Activity:Quality Dimensions Retailing • Which events would you list as evidence of low quality performance in retailing? • Poor quality happens when?

5. How Quality Failure Happens! Events Happening in Service/Production Firm • Wrong things are done • Right things are not done • Right things are done poorly • Right things are done late • Right things are done well and in timely manner Input Output

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

7. Impact of Quality Failures • Internal Failure Costs • Warranty costs • Repair costs • Labor costs • Equipment downtime costs • External failure Costs • Liability costs • Loss of lives • Harm to health • Harm to environment • Customer defections

8. How Quality Performance Happens Preventive Quality Approach Appraisal Quality Approach • Process improvement • Quality program • Quality training • Process improvement • Statistical process control • Quality audit • -Work • inspection • Product rework • Product testing • Quality tools • Material inspection • -Right things done late • Right things done • Right things not done • Right things done poorly • Wrong things • done -Right behaviorsand practicesleading to right things being doneand in timely manner, all the time

9. Quality Principles Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQM Yields: How well a firm will perform what is important and things to be accomplished (standards of execution) Employee Fulfilment Empowerment, Organizational commitment Yields: Employee attitudes that can accomplish what is important (motivation, participation) Customer Satisfaction Winning orders, Repeat customers Yields: An effective organization with a competitive advantage (results, retention, satisfaction, growth) How Quality Practices Affect Organizational Performance Organizational Practices Leadership, Mission statement, Effective operating procedures, Staff support, Training Yields: What is important (priorities, resources) and what is to be accomplished (objectives, purposes) Figure 6.2

10. Activity:Quality Dimensions Department of Motor Vehicles (DMV) • What do you think would be the important thing to an employee of the DMV when reviewing supporting documentation of an applicant? • What do you think would be the important thing to an applicant for a license with regard to documents that s/he brings to support her/his application? • What do you think would be the important expectation of the police department with regard to the DMV issued licenses?

11. 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

12. 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

13. Quality Programs by Experts W. Edwards Deming 14 Points for Management Joseph M. Juran Top management commitment, fitness for use Armand Feigenbaum Total Quality Control Philip B. Crosby Quality is Free

14. Quality Models by National Agencies • Malcom Baldrige National Quality Award was established in 1988 by the U.S. government • Designed to promote TQM practices in Manufacturing, government, non-profit and services sectors • Japan Quality Award

15. Quality Models by International Agencies • Industrial Standard Z8101-1981 (Japan) • Specification for TQM • ISO 9000 series (Europe/EC) • Common quality standards for products sold in Europe (even if made in U.S.) • 2000 update places greater emphasis on leadership and customer satisfaction • ISO 14000 series (Europe/EC)

16. Quality Models by Industrial Sector Agents • Capability Maturity Model Integration for improving quality of the Software development industry • Quality model for the automotive industry • Company-driven quality initiatives, e.g. Six sigma quality

17. Ethics and Quality Management • Operations managers must deliver healthy, safe, quality products and services • Poor quality risks injuries, lawsuits, recalls, and regulation • Organizations are judged by how they respond to problems

18. TQM 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

19. Key Quality Principles (1) • Customer orientation • Everything seen from the view of customer • Results orientation • Measure, track and define results objectively • Process orientation • View changes from a process point of view • Employee orientation • creativity, improvement come from employees. Empower, equip and train them

20. Key Quality Principles (2) • Measurement orientation • Define measures, collect data and analyze data about performance using TQM tools • Continuous improvement orientation • Focus on improving continuously not in haphazard or impulsive manner • Prevention orientation • Prevention of errors is cheaper and more effective than detecting and removing them • Variation Elimination orientation • Focus on recognizing and eliminating the root causes of variations in your systems.

21. Tools of TQM • Tools for Generating Ideas • Check sheets • Scatter diagrams • Cause and effect diagrams • Tools to Organize the Data • Pareto charts • Flow charts • Tools for Identifying Problems • Histogram • Statistical process control chart

22. Machinery Material Insufficient clean pillows & blankets on-board Deicing equipment not available Inadequate supply of magazines Mechanical delay on plane Broken luggage carousel Inadequate special meals on-board Dissatisfied Airline Customer Understaffed crew Overbooking policies Understaffed ticket counters Bumping policies Poor check-in policies Poorly trained attendants Mistagged bags Manpower Methods Cause-and-Effect Diagrams Figure 6.6

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

24. Impact of Poor Process Quality on Output Activity 60 mins60 mins 60 mins times 1 3 2 MaximumBatch sizes100 units100 units100 units Errors afteractivity 10 units(10%)10 units(10%)10 units(10%) How may defective parts will whole process yield?

25. Impact of Quality Appraisal on Output Activity 60 mins 10 mins 60 mins 10 mins 60 mins 10 mins times 1 3 2 MaximumBatch sizes100 units100 units100 units Errors afteractivity 2 units(2%) 2 units(2%)2 units(2%) How may defective parts will whole process yield?

26. Impact of Quality Prevention on Output Activity 66 mins66 mins 66 mins times 1 3 2 MaximumBatch sizes100 units100 units100 units Errors afteractivity 1 units(1%)1 units(1%)1 units(1%) How may defective parts will whole process yield?

27. Sales Gains • Improved response • Higher Prices • Improved reputation Improved Quality Increased Profits Reduced Costs • Increased productivity • Lower rework and scrap costs • Lower warranty costs Ways Quality by Prevention Improves Productivity Figure 6.1