Operations Management CHASE For Competitive Advantage AQUILANO ninth

Operations Management CHASE For Competitive Advantage AQUILANO ninth edition JACOBS 1 Operations Management For Competitive Advantage Chapter 7 Quality Management CHASE AQUILANO JACOBS ninth edition ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 2 ninth edition Chapter 7 Quality Management · · · · · Total Quality Management Defined Malcolm Baldrige National Quality Award Quality Specifications Costs of Quality Continuous Improvement SPC Tools Benchmarking Fail-safing ISO 9000 CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 3 ninth edition 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. CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 4 ninth edition 1999 Malcolm Baldrige National Quality Award · 1. 0 Leadership (125 points) · 2. 0 Strategic Planning (85 points) · 3. 0 Customer and Market Focus (85 points) · 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) CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 5 ninth edition Categories for the Baldrige Award · Manufacturing companies or subsidiaries that – – · · 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 CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 6 ninth edition Characteristics of a Baldrige Award Winner · The companies formulated a vision of what they thought quality was and how they would achieve it. · Senior management was actively involved. · Companies carefully planned and organized their quality effort to be sure it would be effectively initiated. · They vigorously controlled the overall process. CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 7 ninth edition 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 CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 8 ninth edition Costs of Quality Appraisal Costs of Quality External Failure Costs Prevention Costs Internal Failure Costs CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 9 ninth edition Continuous Improvement (CI) · Management's view of performance standards of the organization – · 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 CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 10 ninth edition 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? CHASE 2. Execute the change. AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 11 ninth edition Example: Process Flow Chart Material Received from Supplier No, Continue… Inspect Material for Defects found? Yes Can be used to find quality problems. CHASE Return to Supplier for Credit AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 12 ninth edition Example: Pareto Analysis 80% Frequency Can be used to find when 80% of the problems may be attributed to 20% of the causes. Design CHASE Assy. Instruct. AQUILANO JACOBS Purch. Training Other ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 13 ninth edition 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 1 2 3 4 CHASE 5 6 7 8 Time (Hours) AQUILANO JACOBS 9 10 11 12 ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 14 ninth edition Number of Lots Example: Histogram Can be used to identify the frequency of quality defect occurrence and display quality performance. 0 1 2 3 Data Ranges CHASE AQUILANO JACOBS 4 Defects in lot ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 15 ninth edition Defects Example: Scatter Diagram Can be used to illustrate the relationships between quality behavior and training. 12 10 8 6 4 2 0 0 10 20 30 Hours of Training CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 16 ninth edition Example: Checksheet Monday Billing Errors Can be used to keep track of defects or used to make sure people collect data in a correct manner. Wrong Account Wrong Amount A/R Errors Wrong Account Wrong Amount CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 17 ninth edition 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). CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 18 ninth edition 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 0 1 2 3 4 5 CHASE 6 7 8 AQUILANO 9 10 11 12 13 14 15 JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 19 ninth edition 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. CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 20 ninth edition The Shingo System: Fail-Safe Design · Shingo’s argument: – – – · 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 CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 21 ninth edition ISO 9000 · Series of standards agreed upon by the International Organization for Standardization (ISO) · Adopted in 1987 · More than 100 countries · A prerequisite for global competition? · ISO 9000 directs you to "document what you do and then do as you documented. " CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 22 ninth edition Three Forms of ISO Certification First party: A firm audits itself against ISO 9000 standards. Second party: A customer audits supplier. Third party: A "qualified" national or international standards or certifying agency serves as auditor. CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001

Operations Management For Competitive Advantage 23 ninth edition ISO 9000 versus the Baldrige Award · Which should we pursue first? · What are the differences between the two? · Do you have to be ISO 9000 certified before going for the Baldrige Award? CHASE AQUILANO JACOBS ©The Mc. Graw-Hill Companies, Inc. , 2001