PRODUCTION AND OPERATIONS MANAGEMENT Ch 4 Managing Quality

PRODUCTION AND OPERATIONS MANAGEMENT Ch. 4: Managing Quality POM - J. Galván 1

Learning Objectives n Definition of quality in a productive environment POM - J. Galván 2

Ways in Which Quality Can Improve Productivity Market Gains Improved response • Economies of Scale • Improved reputation • Improved Quality Reduced Costs Increased Profits Increased productivity Lower rework and scrap costs • Lower warranty costs • • POM - J. Galván 3

Flow of Activities Necessary to Achieve Total Quality Management Organizational Practices Quality Principles Employee Fulfillment Customer Satisfaction POM - J. Galván 4

Organizational Practices Leadership n Mission statement n Effective operating procedure n Staff support n Training Yields: What is important and what is to be accomplished n POM - J. Galván 5

Quality Principles Customer focus n Continuous improvement n Employee empowerment n Benchmarking n Just-in-time n Tools of TQM Yields: How to do what is important and to be accomplished n POM - J. Galván 6

Employment Fulfillment Empowerment n Organizational commitment Yields: Employees attitudes that can accomplish what is important and to be accomplished n POM - J. Galván 7

Customer Satisfaction Meeting customer needs n Repeat customers Yields: An effective organization with a competitive advantage n POM - J. Galván 8

Definitions of Quality n ASQC: Product characteristics & features that affect customer satisfaction n User-Based: What consumer says it is n Manufacturing-Based: Degree to which a product conforms to design specification n Product-Based: Level of measurable product characteristic POM - J. Galván 9

Dimensions of Quality for Goods ¨ ¨ ¨ Operation Reliability & durability Conformance Serviceability Appearance Perceived quality POM - J. Galván Quality 10

Three Reasons Quality is Important Company reputation n Product liability n Global implications n POM - J. Galván 11

PROBLEM n n How can a company assure the manufacturing of quality products? Implementing the organization and the procedures that will guarantee that products are well done • What kind of organization? • What type of procedures and practices? n ANSWER: Implement quality management standards POM - J. Galván 12

How do quality management standards work n UNDERLYING PRINCIPLE: • If things are done well once the system is OK • If things are always done the same way they are well done • Thus if the procedures are defined and documented, the final outcome will always be the same POM - J. Galván 13

International Quality Standards n n Industrial Standard Z 8101 -1981 (Japan) • Specification for TQM ISO 9000 series (Europe/EC) • Common quality standards for products sold in Europe (even if made in U. S. ) ISO 14000 series (Europe/EC) • Standards for recycling, labeling etc. ASQC Q 90 series; MILSTD (U. S. ) POM - J. Galván 14

ISO 9000 n Series of standards agreed upon by the International Organization for Standardization (ISO) n Adopted in 1987 n More than 100 countries n A prerequisite for global competition? n ISO 9000 directs you to "document what you do and then do as you documented. " POM - J. Galván 15

CERTIFICATION n n n Who decides that a company applies quality management standards? Someone that examines the company and CERTIFIES that it follows the correct organizational and procedural rules established in the standard Who is able to certify? POM - J. Galván 16

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. POM - J. Galván 17

ISO 9001: 2000 Quality Management System Comprises the following processes: 1. The Quality Management System process itself and contributory processes for 2. Resource Management 3. Regulatory Research 4. Market Research 5. Product Design 6. Purchasing 7. Production 8. Service Provision 9. Product Protection 10. Customer Needs Assessment 11. Customer Communications 12. Internal Communications 13. Document Control 14. Record Keeping 15. Planning 16. Training 17. Internal Audit 18. Management Review 19. Monitoring and Measuring 20. Nonconformance Management 21. Continual Improvement POM - J. Galván 18

Traditional Quality Process (Manufacturing) Customer Marketing Engineering Operations Specifies Need Interprets Need Designs Product Produces Product Defines Quality Plans Quality is customer driven! Monitors Quality POM - J. Galván 19

TQM Encompasses entire organization, from supplier to customer n Stresses a commitment by management to have a continuing company-wide drive toward excellence in all aspects of products and services that are important to the customer. n POM - J. Galván 20

Achieving Total Quality Management Customer Satisfaction Effective Business Attitudes (e. g. , Commitment) Employee Fulfillment How to Do Quality Principles What to Do Organizational Practices POM - J. Galván 21

Concepts of TQM Continuous improvement n Employee empowerment n Benchmarking n Just-in-time (JIT) n Knowledge of tools n POM - J. Galván 22

Continuous Improvement ¨ Represents continual improvement of process & customer satisfaction ¨ Involves all operations & work units ¨ Other names Kaizen (Japanese) ¨ Zero-defects ¨ Six sigma ¨ © 1984 -1994 T/Maker Co. POM - J. Galván 23

Employee Empowerment ¨ Getting employees involved in product & process improvements ¨ 85% of quality problems are due to process & material ¨ Techniques © 1995 Corel Corp. Support workers ¨ Let workers make decisions ¨ Build teams & quality circles ¨ POM - J. Galván 24

Benchmarking Selecting best practices to use as a standard for performance n n n Determine what to benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking information Take action to match or exceed the benchmark POM - J. Galván 25

Resolving Customer Complaints Make it easy for clients to complain n Respond quickly to complaints n Resolve complaints on the first contact n Use computers to manage complaints n Recruit the best for customer service jobs n POM - J. Galván 26

Just-in-Time (JIT) Relationship to quality: • JIT cuts cost of quality • JIT improves quality • Better quality means less inventory and better, easier-to-employ JIT system POM - J. Galván 27

Just-in-Time (JIT) n n ‘Pull’ system of production/purchasing • Customer starts production with an order Involves ‘vendor partnership programs’ to improve quality of purchased items Reduces all inventory levels • Inventory hides process & material problems Improves process & product quality POM - J. Galván 28

Just-In-Time (JIT) Example Work in process inventory level (hides problems) Unreliable Vendors Scrap POM - J. Galván Capacity Imbalances 29

Just-In-Time (JIT) Example Reducing inventory reveals problems so they can be solved. Unreliable Vendors Scrap POM - J. Galván Capacity Imbalances 30

Quality Specifications n Design quality: Inherent value of the product in the marketplace • Dimensions include: n n Performance, n Features, n Reliability, n Durability, n Serviceability, n Response, n Aesthetics, and n Reputation. Conformance quality: Degree to which the product or service design specifications are met POM - J. Galván 31

Costs of Quality Appraisal Costs External Failure Costs of Quality Prevention Costs Internal Failure Costs POM - J. Galván 32

Continuous Improvement (CI) n n 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 POM - J. Galván 33

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? POM - J. Galván 2. Execute the change. 34

Example: Process Flow Chart Material Received from Supplier No, Continue… Inspect Material for Defects found? Yes Can be used to find quality problems. Return to Supplier for Credit POM - J. Galván 35

Example: Pareto Analysis 80% Frequency Can be used to find when 80% of the problems may be attributed to 20% of the causes. Design Assy. Instruct. POM - J. Galván Purch. Training Other 36

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 5 6 7 8 Time (Hours) POM - J. Galván 9 10 11 12 37

Number of Lots Example: Histogram Can be used to identify the frequency of quality defect occurrence and display quality performance. 0 1 2 Data Ranges POM - J. Galván 3 4 Defects in lot 38

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 POM - J. Galván 39

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 POM - J. Galván 40

Example: Cause & Effect Diagram Possible causes: Machine Man The results or effect. Effect Environment Method Material Can be used to systematically track backwards to find a possible cause of a quality problem (or effect). POM - J. Galván 41

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 6 7 8 POM - J. Galván 9 10 11 12 13 14 15 42

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. POM - J. Galván 43

The Shingo System: Fail-Safe Design n Shingo’s argument: • • • n 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 POM - J. Galván 44

Statistical Process Control Steps Start Produce Good Provide Service Take Sample No Assign. Causes? Yes Inspect Sample Stop Process Create Control Chart Find Out Why POM - J. Galván 45

Control Chart Example UCL LCL POM - J. Galván 46

Inspection Involves examining items to see if an item is good or defective n Detect a defective product n • Does not correct deficiencies in process or product n Issues • When to inspect • Where in process to inspect POM - J. Galván 47

When and Where to Inspect n n n n At the supplier’s plant while the supplier is producing At your plant upon receipt of goods from the supplier Before costly or irreversible processes During the step-by-step production processes When production is complete Before shipment from your plant At the point of customer contact POM - J. Galván 48

When and Where to Inspect in Services Business Where Variable Bank Teller station Speed, courtesy Checking Accuracy Store Stockrooms Display areas Counters POM - J. Galván Stock rotation Attractiveness Courtesy, knowledge 49

TQM In Services Service quality is more difficult to measure than for goods n Service quality perceptions depend on n • Expectations vs. reality • Process & outcome n Types of service quality • Normal: Routine service delivery • Exceptional: How problems are handled POM - J. Galván 50

Service Quality Attributes Reliability Responsiveness Tangibles Competence Understanding Access Security Courtesy © 1995 Corel Corp. Credibility Communication POM - J. Galván 51