Transcript The Scope and Language of Operations Management

Chapter 1
Introduction to
Quality
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Modern Importance of
Quality
“The first job we have is to turn out
quality merchandise that consumers will
buy and keep on buying. If we produce
it efficiently and economically, we will
earn a profit, in which you will share.”
- William Cooper Procter
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Key Idea
Building—and maintaining—quality into
an organization’s goods and services, and
more importantly, into the infrastructure
of the organization itself, is not an easy
task.
Quality Assurance
...is any action directed toward
providing customers with goods and
services of appropriate quality.
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History of Quality Assurance
(1 of 3)
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Skilled craftsmanship during Middle Ages
Industrial Revolution: rise of inspection
and separate quality departments
Early 20th Century: statistical methods at
Bell System
Quality control during World War II
Post-war Japan: evolution of quality
management
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History of Quality Assurance
(2 of 3)
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Quality awareness in U.S. manufacturing
industry during 1980s: from “Little Q” to
“Big Q” - Total Quality Management
Malcolm Baldrige National Quality Award
(1987)
Disappointments and criticism
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History of Quality Assurance
(3 of 3)
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Emergence of quality management in
service industries, government, health
care, and education
Evolution of Six Sigma
Current and future challenge: keep
progress in quality management alive
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Key Idea
While quality initiatives can lead to
business success, they cannot guarantee
it, and one must not infer that business
failures or stock price dives are the result
of poor quality.
Contemporary Influences on
Quality
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Partnering
Learning systems
Adaptability and speed of change
Environmental sustainability
Globalization
Knowledge focus
Customization and differentiation
Shifting demographics
Defining Quality
Perfection
Fast delivery
Providing a good, usable product
Eliminating waste
Consistency
Doing it right the first time
Delighting or pleasing customers
Total customer service and satisfaction
Compliance with policies and procedures
Formal Definitions of Quality
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Transcendent definition: excellence
Product-based definition: quantities of
product attributes
User-based definition: fitness for intended
use
Value-based definition: quality vs. price
Manufacturing-based definition:
conformance to specifications
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Quality Perspectives
transcendent &
product-based
user-based
needs
Marketing
Customer
products
and
services
value-based
Design
manufacturingbased
Manufacturing
Distribution
Information flow
Product flow
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Key Idea
Because individuals in different business
functions speak different “languages,”
the need for different views of what
constitutes quality at different points
inside and outside an organization is
necessary to create products of true
quality that will satisfy customers’ needs.
Customer-Driven Quality
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“Meeting or exceeding customer
expectations”
Customers can be...
– Consumers
– External customers
– Internal customers
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Total Quality
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People-focused management system
Focus on increasing customer satisfaction
and reducing costs
A systems approach that integrates
organizational functions and the entire
supply chain
Stresses learning and adaptation to
change
Based on the scientific method
Principles of Total Quality
Customer and stakeholder focus
 Participation and teamwork
 Process focus supported by continuous
improvement and learning
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…all supported by an integrated organizational
infrastructure, a set of management practices,
and a set of tools and techniques
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Customer and Stakeholder
Focus
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Customer is principal judge of quality
Organizations must first understand
customers’ needs and expectations in
order to meet and exceed them
Organizations must build relationships
with customers
Customers include employees and
society at large
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Key Idea
To meet or exceed customer expectations,
organizations must fully understand all
product and service attributes that
contribute to customer value and lead to
satisfaction and loyalty.
Participation and Teamwork
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Employees know their jobs best and
therefore, how to improve them
Management must develop the systems and
procedures that foster participation and
teamwork
Empowerment better serves customers, and
creates trust and motivation
Teamwork and partnerships must exist both
horizontally and vertically
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Key Idea
In any organization, the person who
best understands his or her job and
how to improve both the product and
the process is the one performing it.
Process Focus and Continuous
Improvement
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A process is a sequence of activities
that is intended to achieve some result
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Continuous Improvement
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Enhancing value through new products
and services
Reducing errors, defects, waste, and
costs
Increasing productivity and effectiveness
Improving responsiveness and cycle time
performance
Key Idea
Major improvements in response time may
require significant simplification of work
processes and often drive simultaneous
improvements in quality and productivity.
Deming’s View of a
Production System
Suppliers of
materials and
equipment
Design and
Redesign
Receipt and test
of materials
A
B
C
D
Production, assembly
inspection
Consumer
research
Consumers
Distribution
Tests of processes, machines, methods
INPUTS
PROCESSES
Feedback
OUTPUTS
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Learning
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The foundation for improvement …
Understanding why changes are successful
through feedback between practices and
results, which leads to new goals and
approaches
Learning cycle:
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Planning
Execution of plans
Assessment of progress
Revision of plans based on assessment findings
Infrastructure, Practices,
and Tools
Infrastructure
Leadership
Strategic
Planning
Practices
Tools
HRM
Performance
appraisal
Process
mgt.
Information and knowledge
management
Training
Trend chart
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TQ Infrastructure
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Customer relationship management
Leadership and strategic planning
Human resources management
Process management
Information and knowledge management
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Competitive Advantage
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Is driven by customer wants and needs
Makes significant contribution to business
success
Matches organization’s unique resources with
opportunities
Is durable and lasting
Provides basis for further improvement
Provides direction and motivation
Quality supports each of these characteristics
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Quality and Profitability
Improved quality
of design
Improved quality
of conformance
Higher perceived
value
Higher
prices
Increased market
share
Increased
revenues
Higher profitability
Lower
manufacturing and
service costs
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Key Idea
Considerable evidence exists that
quality initiatives positively impact
bottom-line results.
Quality and Business Results
Studies
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General Accounting Office study of Baldrige
Award applicants
Baldrige stock study (see www.baldrige.org)
Hendricks and Singhal study of quality
award winners
Performance results of Baldrige Award
winners
Key Idea
An organization that is committed to total
quality must apply it at three levels: the
organizational level, the process level, and
the performer/job level.
Three Levels of Quality
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Organizational level: meeting external
customer requirements
Process level: linking external and
internal customer requirements
Performer/job level: meeting internal
customer requirements
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Quality and Personal Values
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Personal initiative has a positive impact on
business success
Quality begins with personal attitudes
Quality-focused individuals often exceed
customer expectations
Attitudes can be changed through
awareness and effort (e.g., personal quality
checklists)
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Key Idea
In the daily attempt to bring about change in the
individual parts of the organizational universe,
managers, employees, professors, and students can
find that personal quality is the key to unlock the
door to a wider understanding of what the concept
really is all about. Unless quality is internalized at
the personal level, it will never become rooted in
the culture of an organization. Thus, quality must
begin at a personal level (and that means you!).