Transcript Production and Operations Management: Manufacturing and

Operations Management
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For Competitive Advantage
AQUILANO
ninth edition
JACOBS
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Operations Management
For Competitive Advantage
Chapter 7
Quality Management
CHASE
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ninth edition
©The McGraw-Hill Companies, Inc., 2001
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ninth edition
Chapter 7
Quality Management
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Total Quality Management Defined
Malcolm Baldrige National Quality Award
Quality Specifications
Costs of Quality
Continuous Improvement
SPC Tools
Benchmarking
Fail-safing
ISO 9000
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Total Quality Management (TQM)
Defined

Total quality management is defined as
managing the entire organization so that it
excels on all dimensions of products and
services that are important to the customer.
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1999 Malcolm Baldrige National
Quality Award

1.0 Leadership (125 points)

2.0 Strategic Planning (85 points)
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3.0 Customer and Market Focus (85
points)
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4.0 Information and Analysis (85 points)

5.0 Human Resource Focus (85 Points)

6.0 Process Management (85 points)

7.0 Business Results (450 points)
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Categories for the Baldrige Award
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Manufacturing companies or subsidiaries that
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produce and sell manufactured products or
manufacturing processes or
produce agricultural, mining, or construction products.
Service companies or subsidiaries that sell service
Small businesses
Health care organizations
Educational institutions
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Characteristics of a Baldrige Award
Winner

The companies formulated a vision of what they
thought quality was and how they would
achieve it.
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Senior management was actively involved.
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Companies carefully planned and organized
their quality effort to be sure it would be
effectively initiated.

They vigorously controlled the overall process.
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Quality Specifications

Design quality: Inherent value of the
product in the marketplace
– Dimensions include: Performance, Features,
Reliability, Durability, Serviceability, Response,
Aesthetics, and Reputation.

Conformance quality: Degree to which the
product or service design specifications are
met
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Costs of Quality
Appraisal Costs
Costs of
Quality
External Failure
Costs
Prevention Costs
Internal Failure
Costs
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Continuous Improvement (CI)

Management's view of performance
standards of the organization
–
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performance level of the firm as something to be
"continuously challenged and incrementally
upgraded."
The way management views the contribution
and role of its workforce
–
believe employee involvement and team efforts
are the key to improvement
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CI Methodology: PDCA Cycle (Deming
Wheel)
1. Plan a change
aimed at
improvement.
4. Institutionalize
the change or
abandon or
do it again.
4. Act
1. Plan
3. Check
2. Do
3. Study the results;
did it work?
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2. Execute the
change.
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Example: Process Flow Chart
Material
Received
from
Supplier
No,
Continue…
Inspect
Material for
Defects
Defects
found?
Yes
Can be used to find
quality problems.
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Return to
Supplier for
Credit
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Example: Pareto Analysis
80%
Frequency
Can be used
to find when
80% of the
problems may
be attributed
to 20% of the
causes.
Design
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Diameter
Example: Run Chart
Can be used to identify
when equipment or
processes are not behaving
according to specifications.
0.58
0.56
0.54
0.52
0.5
0.48
0.46
0.44
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Time (Hours)
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Number of Lots
Example: Histogram
Can be used to identify the frequency of quality
defect occurrence and display quality performance.
0
1
3
2
Data Ranges
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Defects
in lot
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Defects
Example: Scatter Diagram
Can be used to illustrate the
relationships between quality
behavior and training.
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10
8
6
4
2
0
0
10
20
30
Hours of Training
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Example: Checksheet
Monday
Can be used to keep track of
defects or used to make sure
people collect data in a correct
manner.
Billing Errors
Wrong Account
Wrong Amount
A/R Errors
Wrong Account
Wrong Amount
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Example: Cause & Effect Diagram
The results
or effect.
Possible causes:
Machine
Man
Effect
Environment
Method
Material
Can be used to systematically track backwards to find
a possible cause of a quality problem (or effect).
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Example: Control Charts
Can be used to monitor ongoing production process quality
and quality conformance to stated standards of quality.
1020
UCL
1010
1000
990
LCL
980
970
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Benchmarking
1. Identify those processes needing
improvement.
2. Identify a firm that is the world leader in
performing the process.
3. Contact the managers of that company and
make a personal visit to interview managers
and workers.
4. Analyze data.
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The Shingo System: Fail-Safe Design

Shingo’s argument:
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SQC methods do not prevent defects
Defects arise when people make errors
Defects can be prevented by providing workers
with feedback on errors
Poka-Yoke includes:
– Checklists
– Special tooling that prevents workers from
making errors
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ISO 9000

Series of standards agreed upon by the
International Organization for
Standardization (ISO)
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Adopted in 1987
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More than 100 countries
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A prerequisite for global competition?

ISO 9000 directs you to "document what you
do and then do as you documented."
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Three Forms of ISO Certification
First party: A firm audits itself against ISO
9000 standards.
Second party: A customer audits its supplier.
Third party: A "qualified" national or
international standards or certifying agency
serves as auditor.
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ISO 9000 versus the Baldrige Award

Which should we pursue first?
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What are the differences between the two?

Do you have to be ISO 9000 certified before
going for the Baldrige Award?
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