Operations

Management
Chapter 6 –
Managing Quality
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e

© 2006
© 2006 Prentice
Prentice Hall, Inc. Hall, Inc. 6–1
 Ways Quality Improves
Productivity
Sales Gains
 Improved response
 Higher Prices
 Improved reputation
Improved Increased
Quality Profits
Reduced Costs
 Increased productivity
 Lower rework and scrap costs
 Lower warranty costs
Figure 6.1

© 2006 Prentice Hall, Inc. 6–2

 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

© 2006 Prentice Hall, Inc. 6–3

 Malcom Baldrige National
Quality Award
 Established in 1988 by the U.S.
government
 Designed to promote TQM practices
 http://www.quality.nist.gov/

© 2006 Prentice Hall, Inc. 6–4

 International Quality
Standards
 To do business globally, being listed on an
ISO directory is crucial
 ISO 9000
 Organizations must go through a 9 to 18
month process involving documenting
procedures, on-site assessment, and
ongoing product/service audits
 ISO 14000 series
 An environmental management standard
which focuses on pollution prevention
and ecological impact
© 2006 Prentice Hall, Inc. 6–5
 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

© 2006 Prentice Hall, Inc. 6–6

 Seven Concepts of TQM
 Continuous improvement
 Six Sigma
 Employee empowerment
 Benchmarking
 Just-in-time (JIT)
 Taguchi concepts
 Knowledge of TQM tools
© 2006 Prentice Hall, Inc. 6–7
 Continuous Improvement

 Represents continual
improvement of all processes
 Involves all operations and work
centers including suppliers and
customers
People, Equipment, Materials,
Procedures

© 2006 Prentice Hall, Inc. 6–8

 Six Sigma
 Originally developed by Motorola,
Six Sigma refers to an extremely
high measure of process capability
 A Six Sigma capable process will
return no more than 3.4 defects per
million operations (DPMO)
 Highly structured approach to
process improvement

© 2006 Prentice Hall, Inc. 6–9

 Six Sigma Implementation
 Emphasize DPMO as a standard metric
 Provide extensive training
 Focus on corporate sponsor support
(Champions)
 Create qualified process improvement
experts (Black Belts, Green Belts, etc.)
 Set stretch objectives

This cannot be accomplished without a major

commitment from top level management

© 2006 Prentice Hall, Inc. 6 – 10

 Employee Empowerment
 Getting employees involved in product
and process improvements
 85% of quality problems are due to process
and material
 Techniques
 Build communication networks that include
employees
 Develop open, supportive supervisors
 Move responsibility to employees
 Build a high-morale organization
 Create formal team structures
© 2006 Prentice Hall, Inc. 6 – 11
 Quality Circles
 Group of employees who meet
regularly to solve problems
 Trained in planning, problem
solving, and statistical methods
 Often led by a facilitator
 Very effective when done
properly

© 2006 Prentice Hall, Inc. 6 – 12

 Benchmarking
Selecting best practices to use as a
standard for performance
 Determine what to
benchmark
 Form a benchmark team
 Identify benchmarking partners
 Collect and analyze benchmarking
information
 Take action to match or exceed the
benchmark
© 2006 Prentice Hall, Inc. 6 – 13
 Best Practices for Resolving
Customer Complaints
 Make it easy for clients to complain
 Respond quickly to complaints
 Resolve complaints on first contact
 Use computers to manage
complaints
 Recruit the best for customer
service jobs
© 2006 Prentice Hall, Inc. 6 – 14
 Just-in-Time (JIT)

 ‘Pull’ system of production scheduling

including supply management
 Production only when signaled
 Allows reduced inventory levels
 Inventory costs money and hides process
and material problems
 Encourages improved process and
product quality

© 2006 Prentice Hall, Inc. 6 – 15

 Taguchi Concepts

 Experimental design methods to

improve product and process design
 Uses Robust Design method
 Plan for the worst conditions and
design quality around the worst
conditions
 Example: Grocery Stores and coming
Hurricane (design store to handle the
traffic associated with this worst
condition)
© 2006 Prentice Hall, Inc. 6 – 16
 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
© 2006 Prentice Hall, Inc. 6 – 17
 Seven Tools for TQM
(a) Check Sheet: An organized method of
recording data

Hour
Defect 1 2 3 4 5 6 7 8
A /// / / / / /// /
B // / / / // ///
C / // // ////

Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 18

 Seven Tools for TQM
(b) Scatter Diagram: A graph of the value
of one variable vs. another variable
Productivity

Absenteeism

Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 19

 Seven Tools for TQM
(c) Cause and Effect Diagram: A tool that
identifies process elements (causes) that
might effect an outcome

Cause
Materials Methods
Effect

Manpower Machinery
Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 20

 Cause-and-Effect Diagrams

clean pillows
Machinery

Insufficient

& blankets
Material

not available
on-board

equipment
Deicing
Inadequate
Mechanical delay
supply of
magazines on plane
Inadequate special Broken luggage
meals on-board carousel
Dissatisfied
Airline
Overbooking policies Understaffed Customer
crew
Bumping policies Understaffed

Poorly trained
Poor check-in

ticket counters

attendants
policies
Mistagged
bags

Methods Manpower
Figure 6.6

© 2006 Prentice Hall, Inc. 6 – 21

 Seven Tools for TQM
(d) Pareto Charts: A graph to identify and plot
problems or defects in descending order of
frequency
Frequency

Percent
A B C D E
Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 22

 Pareto Charts
Data for October
– 100
70 – – 93
– 88
60 –
54
Frequency (number)

Cumulative percent
– 72
50 –
40 –
Number of
30 –
occurrences
20 –
12
10 –
4 3 2
0 –
Room svc Check-in Pool hours Minibar Misc.
72% 16% 5% 4% 3%
Causes and percent

© 2006 Prentice Hall, Inc. 6 – 23

 Seven Tools for TQM
(e) Flow Charts (Process Diagrams): A chart
that describes the steps in a process

Figure 6.5

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 Flow Charts
Packing and shipping process

Sealing Quick freeze

Packing Storage Shipping
Weighing storage
station (4 to 6 hrs) dock
Labeling (60 Mins)

© 2006 Prentice Hall, Inc. 6 – 25

 Seven Tools for TQM
(f) Histogram: A distribution showing the
frequency of occurrence of a variable
Distribution
Frequency

Repair time (minutes)

Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 26

 Seven Tools for TQM
(g) Statistical Process Control Chart: A chart with
time on the horizontal axis to plot values of a
statistic

Upper control limit

Target value

Lower control limit

Time
Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 27

 Statistical Process Control
(SPC)
 Uses statistics and control charts
to tell when to take corrective
action
 Drives process improvement

© 2006 Prentice Hall, Inc. 6 – 28

 Inspection
 Involves examining items to see if
an item is good or defective
 Detect a defective product
 Does not correct deficiencies in
process or product
 It is expensive
 Issues
 When to inspect
 Where in process to inspect
© 2006 Prentice Hall, Inc. 6 – 29
 Service Industry Inspection
What is
Organization Standard
Inspected
Jones Law Office Receptionist Is phone answered by the
performance second ring
Billing Accurate, timely, and
correct format
Attorney Promptness in returning
calls

Table 6.4

© 2006 Prentice Hall, Inc. 6 – 30

 TQM In Services
 Service quality is more difficult to
measure than the quality of goods
 Service quality perceptions depend
on
 Intangible differences between
products
 Intangible expectations customers
have of those products

© 2006 Prentice Hall, Inc. 6 – 31

 Service
Specs
at UPS

© 2006 Prentice Hall, Inc. 6 – 32

 Determinants of Service
Quality
 Reliability  Credibility
 Responsiveness  Security
 Competence  Understanding/
 Access knowing the
customer
 Courtesy
 Tangibles
 Communication

© 2006 Prentice Hall, Inc. 6 – 33