Transcript Document
Total Quality Management
Chapter 5
© 2005 Wiley
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Overview of Management 326
Operations and Operations Strategy
Designing an Operations System
Managing an Operations System
Done
We are here
Designing an Operations System
Done
Project
management:
A design
tool
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Product design
Process design
Quality system
Lean systems
• Quality management
• Statistical quality control
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Capacity planning
Facility location
Facility layout
Work design
We are here
Why Quality is Important
Increases value of products to customers
Reduces expensive mistakes
Increases profits Shareholder value
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Total Quality Management (TQM)
Customer-defined quality: Meeting quality
expectations as defined by the customer
Integrated organizational effort designed to improve
quality on all quality characteristics that are
important to customers (core product and anything
else that affects customers)
Requires a coordinated effort
All levels of the organization
All functions (departments) in the organization
Work with suppliers and listen to customers
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Quality Definitions
Fitness for use: product performs its intended function
Intended function depends on customer
requirements in the target market
Value: product is superior to others in the same price
range (getting more for your money)
Psychological (perceived quality): the quality that the
customer thinks he/she got
Conformance quality: product performs at targeted
levels, as defined in the product specification
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Manufacturing Quality vs. Service
Quality
Manufacturing quality focuses on
tangible product features
Conformance, performance, reliability, features
Service organizations produce intangible
products that must be experienced
Quality often defined by perceptional factors like
courtesy, friendliness, promptness, waiting time,
consistency
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Quality Measurement in Services
Qualitative measures are based on customer
perceptions
Customer satisfaction surveys
Teacher evaluations
Quantitative measures are based on
numerical data
Waiting time
Number of errors
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Cost of Quality – 4 Categories
Early detection/prevention is less costly
May be less by a factor of 10
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Quality–Cost Relationship
Cost of quality
Difference between price of
nonconformance and conformance
Cost of doing things wrong
Cost of doing things right
20 to 35% of revenues
3 to 4% of revenues
Profitability
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In the long run, quality is free
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Evolution of TQM – New Focus
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TQM Philosophy
Focus on Customer
Identify and meet customer needs
Stay tuned to changing needs, e.g. fashion styles
Continuous Improvement
Continuous learning and problem solving
Quality at the Source
Inspection vs. prevention & problem solving
Employee Empowerment
Empower all employees; serve external and
internal customers
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TQM Philosophy (continued)
Understanding Quality Tools
Team Approach
Teams formed around processes – 8 to 10 people
Meet regularly to analyze and solve problems
Benchmarking
Ongoing training on analysis, assessment, and correction, &
implementation tools
Studying practices at “best in class” companies
Managing Supplier Quality
Certify suppliers and eliminate receiving inspection
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Plan-Do-Study-Act (PDSA)
Plan
Do
Collect data and evaluate against objectives
Act
Implement the plan – trial basis
Study
Evaluate current process
Collect procedures, data, identify problems
Develop an improvement plan, performance objectives
Communicate the results from trial
If successful, implement new process
After Act phase, go back and Plan the next quality
project
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PDSA
(continued)
Cycle is repeated
After act phase, start planning and repeat process
See Figure 5-6, p. 148
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Seven Problem Solving Tools
Cause-and-Effect Diagrams
Flowcharts
Checksheet
Control Charts
Scatter Diagrams
Pareto Analysis
Histograms
Tools shown in Figure 5-7, p. 151
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Cause-and-Effect Diagrams
Used to identify the cause of a quality problem
Followup: Collect data to verify the cause and
develop a plan to eliminate the cause.
Flowchart
Used to document the detailed steps in a
process
Often the first step in Process Re-Engineering
Checksheet
Tool Used to Collect Data for Analysis
Control Chart
Set confidence intervals for the mean and range of a
process (usual behavior)
LCL = lower control limit, UCL = upper control limit
Is process in control (predictable)?
Does process have conformance quality?
Scatter Diagrams
A graph that shows how two variables are
related to one another
Data can be used in a regression analysis to
establish equation for the relationship
Pareto Analysis
Used to Prioritize Problems
Most important problems should be solved first
Prioritize by number of defects or $ cost of defects
Often called the 80-20 Rule: Most quality problems are the
result of only a few causes.
Example: 80% of the problems caused by 20% of causes
Histogram
A chart that shows the frequency distribution of
observed values of a variable like service time
at a bank drive-up window
Displays whether the distribution is symmetrical
(normal) or skewed
Quality in Product Design
Quality function deployment (QFD)
Used by product design teams
Used to translate customer preferences into specific
technical requirements
The technical requirements are used to develop the
product specification
Operations is responsible for making the product to
specifications
Products that meet specifications have conformance
quality
Objective is to satisfy customers
Principal tool is House of Quality (pages 154-156)
See Figure 5-9, p. 154, & 5-10, p. 156
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Quality Award and Certifications
Malcolm Baldrige National Quality Award
ISO 9000 Certification
ISO 14000 Certifications
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Baldrige Award
Competitive quality award presented by
U. S. government
5 award categories: Manufacturing, services,
small business, health care, education
All written applications are reviewed by
trained examiners
Site visits to leading candidates
Maximum of 2 awards per category
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Baldrige Award Criteria Framework
A Systems Perspective
Total =
1,000 pts
Leadership
(120 pts)
Organizational Profile
Strategic
Planning
(85 pts)
Human Resource
Development
& Mgmt. (85 pts)
Customer &
Market Focus
(85 pts)
Process
Mgmt. (85 pts)
Business
Results
(450 pts)
Measurement, analysis, & knowledge management (90 pts)
Baldrige Award - Business Results
Customer-focused results
Product and service performance
Financial and market results
Human resource results
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ISO 9000 Standards
International quality certification program
guided by the International Standards
Organization (ISO)
Any firm that passes an ISO standards audit will
be certified.
U. S. participates in the development of these
standards:
American National Standards Institute (ANSI)
American Society for Quality (ASQ)
Professional organizations
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ISO 9000
ISO 9000 standards audits must be
performed by a registrar, a firm that is
certified to do ISO 9000 audits
Some companies require their suppliers to be
certified
Be sure that your registrar is acceptable to your
customers
Firms must be re-certified periodically.
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ISO 14000
A certification program in environmental
management
Standard-setting and certification
procedures are similar to ISO 9000
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Why TQM Efforts Fail
Lack of top management support and commitment
Lack of a genuine quality culture
Continuous improvement
Teamwork
Training
Employee empowerment
Recognition and rewards (team or individual)
Under-reliance or over-reliance on statistical process control
(SPC)
SPC is an essential tool for identifying problems and
monitoring quality
It is important to solve the problems (PDSA, 7 quality tools)
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