___________________________________ MGS4700 Operations Management
___________________________________ Quality Management
___________________________________ ___________________________________ Lecture 2
___________________________________ ___________________________________ ___________________________________ ___________________________________ ¾
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Lecture Outline
___________________________________ Meaning of Quality
Total Quality Management and QMS
Quality Improvement and Role of Employees
Role of Employees in Quality Improvement
Six Sigma
Quality in Services
Cost of Quality
Quality Management and Productivity
Quality Awards
ISO 9000
___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ 2
___________________________________ What Is Quality?
___________________________________ ___________________________________ Š A degree or level of excellence
(Oxford American Dictionary)
___________________________________ Š The totality of features and characteristics
that satisfies given needs
___________________________________ (ASQ definition)
ƒ Consumer’s and Producer’s Perspective
___________________________________ ___________________________________ 3
___________________________________ Meaning of Quality:
___________________________________ Consumer’s Perspective
___________________________________ Š Fitness for use
„
how well product or
service does what it is
supposed to
___________________________________ Š Quality of design
___________________________________ Degree of quality
characteristics designed
into a product/service
” A Mercedes and a Ford are
equally “fit for use,” but with
different design dimensions
„
___________________________________ ___________________________________ 4
___________________________________ Dimensions of Quality:
Manufactured Products
___________________________________ ___________________________________ Š Performance (basic operating characteristics)
Š Features (extra items added)
Š Reliability (likelihood that product will perform
normally over time)
Š Conformance (meeting pre-specified standards)
Š Durability (useful life span)
Š Serviceability (ease of repair)
Š Aesthetics (sensory characteristics)
Š Safety (free from injury or harm)
Š Perception (perceived quality)
5
___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ Dimensions of Quality:
Service
___________________________________ ___________________________________ Š
Š
Š
Š
Š
Time & Timeliness (waiting time, on time service)
Completeness (customer gets all they asked for)
Courtesy (treatment by employees)
Consistency (same level of service for all)
Accessibility & Convenience (ease of obtaining
service)
Š Accuracy (performed right every time)
Š Responsiveness (reactions to unusual situations)
6
___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ Meaning of Quality:
___________________________________ Producer’s Perspective
___________________________________ ƒ Quality of Conformance
ƒ Making sure a product or service is
produced according to design
___________________________________ ƒ if new tires do not conform to specifications, they
wobble
ƒ if a hotel room is not clean when a guest checks
in, the hotel is not functioning according to
specifications of its design
___________________________________ ___________________________________ ___________________________________ 7
___________________________________ Meaning of Quality:
A Final Perspective
___________________________________ Meaning of Quality
Producer’s Perspective
Quality of Conformance
Production
• Conformance to
specifications
• Cost
___________________________________ Consumer’s Perspective
___________________________________ Quality of Design
___________________________________ • Quality characteristics
• Price
Marketing
Fitness for
Consumer Use
___________________________________ ___________________________________ 8
___________________________________ Total Quality Management
(TQM)
___________________________________ ___________________________________ Š Management of the entire organization
___________________________________ so that it excels on all dimensions of
___________________________________ products and services that are important
___________________________________ to the customer
___________________________________ 9
___________________________________ Total Quality Management
___________________________________ Principles
___________________________________ 1. Customer-driven quality
2. Top management leadership
___________________________________ 3. Quality as a strategic issue
4. All employees responsible for quality
___________________________________ 5. Continuous improvement (CI)
6. Shared problem solving
___________________________________ 7. Statistical quality control (SQC)
___________________________________ 8. Training & education for all employees
10
___________________________________ Total Quality Management
___________________________________ Quality Gurus
___________________________________ Š Walter Shewhart
„
„
In 1920s, developed control charts
Known as the father of statistical quality control
___________________________________ Š W. Edwards Deming
ƒ After war, taught Japanese the statistical quality
control techniques
ƒ Advocated continuous improvement via PDCA
ƒ Proposed famous 14 points for TQM
___________________________________ ___________________________________ Š Joseph M. Juran
„
„
„
Followed Deming to Japan in 1954
Focused on strategic quality planning
Published “Juran’s Quality Handbook”
___________________________________ 11
___________________________________ Total Quality Management
___________________________________ Quality Gurus (cont.)
___________________________________ Š Armand V. Feigenbaum
ƒ Published “Quality Control” and introduced concepts of
total quality control and continuous quality improvement
___________________________________ Š Philip Crosby
ƒ Published “Quality Is Free” and emphasized that costs
of poor quality far outweigh the cost of prevention
ƒ Emphasized conformance to requirements, prevention,
and “zero defects”
___________________________________ ___________________________________ Š Kaoru Ishikawa
ƒ Promoted use of quality circles
ƒ Developed “fishbone” diagram
ƒ Emphasized importance of internal customer
___________________________________ 12
___________________________________ Total Quality Management
___________________________________ Deming Wheel: PDCA Cycle
___________________________________ 4. Act
1. Plan
Institutionalize
improvement;
continue cycle.
Identify
problem and
develop a plan
for
improvement.
3. Study/Check
2. Do
Assess plan; is it
working?
Implement plan
on a test basis.
___________________________________ ___________________________________ ___________________________________ ___________________________________ 13
___________________________________ Total Quality Management
___________________________________ Deming’s 14 Points
1.
2.
3.
4.
5.
6.
7.
___________________________________ Create constancy of purpose
Adopt philosophy of prevention
Cease mass inspection
Select a few suppliers based on quality
Constantly improve system and workers
Institute worker training
Instill leadership among supervisors
___________________________________ ___________________________________ ___________________________________ ___________________________________ 14
___________________________________ Total Quality Management
___________________________________ Deming’s 14 Points (cont.)
8. Eliminate fear among employees
9. Eliminate barriers between departments
10. Eliminate slogans
11. Remove numerical quotas
12. Enhance worker pride
13. Institute vigorous training and education
programs
14. Develop a commitment from top management to
implement above 13 points
15
___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ Quality Improvement and
Role of Employees
___________________________________ ___________________________________ Š Participative problem
solving
„
___________________________________ every employee has
undergone extensive
training to provide
quality service to
Disney’s guests
___________________________________ ___________________________________ Š Kaizen
„
involves everyone in
process of continuous
improvement
___________________________________ 16
___________________________________ Quality Circles
___________________________________ Organization
8-10 members
Same area
Supervisor/moderator
ŠQuality circle
„
A group of
workers and
supervisors from
same area who
address quality
problems
___________________________________ Training
Presentation
Implementation
Monitoring
Group processes
Data collection
Problem analysis
Solution
Problem
Identification
___________________________________ ___________________________________ Problem results
Problem
Analysis
List alternatives
Consensus
Brainstorming
___________________________________ Cause and effect
Data collection
and analysis
___________________________________ 17
___________________________________ TQM in Services
___________________________________ ___________________________________ Š Principles of TQM apply equally well to
services and manufacturing
Š Services and manufacturing companies have
similar inputs but different processes and
outputs
Š Services tend to be labor intensive
Š Service defects are not always easy to
measure because service output is not usually
a tangible item
18
___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ Six Sigma
___________________________________ ___________________________________ Š A process for developing
and delivering near perfect
products and services
Š Measure of how much a
process deviates from
perfection
Š Six-Sigma = 3.4 defects
per million opportunities
(DPMO)
___________________________________ ___________________________________ ___________________________________ ___________________________________ 19
___________________________________ Six Sigma Methodology—
___________________________________ DMAIC
DEFINE
MEASURE
ANALYZE
IMPROVE
CONTROL
___________________________________ ___________________________________ ___________________________________ 3.4 DPMO
___________________________________ 67,000 DPMO
cost = 25% of
sales
___________________________________ Copyright 2009 John
Wiley & Sons,
2-20
Inc.
___________________________________ People Involved in Six-Sigma Projects
___________________________________ Black Belts and Green Belts
___________________________________ Š Champion
„
an executive responsible for project
success
___________________________________ Š Black Belt
„
project leader
___________________________________ Š Master Black Belt
„
a teacher and mentor for Black
Belts
___________________________________ Š Green Belts
„
___________________________________ project team members
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___________________________________ Cost of Quality
___________________________________ ___________________________________ Š Cost of achieving good quality
„
„
Prevention (quality planning and training,
identify and removing poor quality source)
Appraisal (inspection, testing)
___________________________________ ___________________________________ Š Cost of poor quality
„
„
Internal failure costs (scrap, rework, repair)
External failure costs (returned products,
warranty charges, complaints, liability)
___________________________________ ___________________________________ 22
___________________________________ Quality–Cost Relationship
___________________________________ ___________________________________ Š Quality is Free
„
Cost of doing things wrong (20 to 35% of revenues)
Cost of doing things right (3 to 4% of revenues)
„
Profitability
„
z
___________________________________ In the long run, quality is free
Š In general, when the cost of achieving good quality
increases, the cost of poor quality declines.
___________________________________ Š Increased prevention costs lead to decreased failure costs.
___________________________________ Š Improved quality leads to increased sales and market
share.
___________________________________ Š Higher quality products can command higher prices.
23
___________________________________ Quality Impact on
Productivity
___________________________________ ___________________________________ Š Fewer defects increase output and
quality improvement reduces inputs
Š Yield: a measure of productivity
___________________________________ ___________________________________ Yield=(total input)(% good units)
+ (total input)(1-%good units)(% reworked)
___________________________________ Y=(I)(%G)+(I)(1-%G)(%R)
___________________________________ 24
___________________________________ Yield Illustration
___________________________________ ___________________________________ %G
I
Yield (Y)
Production
Process
%R
(I)(1-%G)
___________________________________ (I)(%G)
Rework
Process
___________________________________ +
(I)(1-%G)(%R)
___________________________________ ___________________________________ 25
___________________________________ Product Yield
___________________________________ Example
___________________________________ The Colonial House Furniture Company manufactures twodrawer oak file cabinets that are sold unassembled through
catalogs. The company initiates production of 150 cabinet
packages each week. The percentage of good-quality
cabinets average 83 percent per week, and the percentage
of poor-quality cabinets that can be reworked is 60%.
___________________________________ ___________________________________ a. Determine the weekly product yield of file cabinets.
b. If the company desires a product yield of 145 units
per week, what increase in the percentage of goodquality products must result?
___________________________________ ___________________________________ 26
___________________________________ Product Yield
___________________________________ Example
___________________________________ a. Yield = (total input) (% good units) +
(total input)(1 - % good units)(% reworked)
= 150 x 83% + 150 x (1 – 83%) x 60%
= 139.8 file cabinets
___________________________________ ___________________________________ b. Yield = (total input) (% good units) +
(total input)(1 - % good units)(% reworked)
145 = 150 x G + 150 x (1 – G) x 60%
Thus, G = 91.67%
___________________________________ ___________________________________ 27
___________________________________ Product Cost Per Unit
___________________________________ ___________________________________ Product Cost
=
(Kd )(I) +(Kr )(R)
Y
___________________________________ where:
Kd = direct manufacturing cost per unit
I = input
Kr = rework cost per unit
R = reworked units
Y = yield
___________________________________ ___________________________________ ___________________________________ 28
___________________________________ Example of Product Cost
___________________________________ ___________________________________ In the last example, if the direct manufacturing cost for
cabinets is $27 and the rework cost is $8, compute the
manufacturing cost per good product.
___________________________________ (direct manufacturing cost per unit)(input)
+ (rework cost per unit)(reworked units)
___________________________________ Product cost =
yield
___________________________________ 27 x 150 + 8 x 15
=
= $29.8
___________________________________ 139.8
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___________________________________ Product Yield and Product Cost
___________________________________ In-Class Exercise
___________________________________ A manufacturing company has a weekly production
plan of 1700 units. The average percentage of
good-quality products is 85%. Of the poor-quality
products, 75% can be reworked and sold as goodquality products.
a. Determine the weekly product yield.
b. If the direct manufacturing cost for the products
is $30 and the rework cost is $10, compute the
manufacturing cost per-good product.
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___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ Computing Product
Yield for Multistage Processes
___________________________________ ___________________________________ Y = (I)(%g1)(%g2) … (%gn)
___________________________________ where:
I = input of items to the production process that will
result in finished products
gi = good-quality, work-in-process products at stage i
___________________________________ ___________________________________ I
1
2
…
n
Y
___________________________________ 31
___________________________________ Example of the Yield for a
Process
___________________________________ ___________________________________ The colonial House Furniture Company manufactures
four-drawer oak filing cabinets in six stages. In the first
stage, the boards forming the walls of the cabinet are
cut; in the second stage the front drawer panels are
wood-worked; in the third stage the boards are sanded
and finished; in the fourth stage the boards are cleaned,
stained, and painted with a clear finish; in the fifth stage
the hardware for pulls, runners, and fittings is installed;
and in the final stage the cabinets are assembled.
Inspection occurs at each stage of the process, and the
average percentages of good-quality units are given in
the following table.
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___________________________________ ___________________________________ ___________________________________ ___________________________________ ___________________________________ Example of Process Yield
Stage
Average Percentage
Good Quality
1
2
87%
91%
3
4
94%
93%
5
93%
6
96%
___________________________________ ___________________________________ ___________________________________ ___________________________________ The cabinets are produced in weekly production runs with a
product input for 300 units. Determine the weekly product
yield of good-quality cabinets.
___________________________________ Y = (I) (%g1)(%g2)...(%gn)
=300 x 87% x 91% x 94% x 93% x 93% x 96%
= 185 cabinets
___________________________________ ___________________________________ Quality–Productivity Ratio
___________________________________ ___________________________________ QPR
„
productivity index that includes productivity and
quality costs
___________________________________ ___________________________________ (good quality units)
QPR =
(input) (processing cost) + (defective units) (reworked cost)
___________________________________ ___________________________________ 34
___________________________________ Example of the Quality-Productivity Ratio
___________________________________ The total processing cost for producing the X-Pacer
running shoe is $18. The Omega Shoe Company
starts production of 650 pairs of the shoes weekly,
and the average weekly yield is 90%, with 10%
defective shoes. One quarter of the defective shoes
can be reworked at a cost of $3.75. Compute the
quality productivity ratio.
QPR =
=
Good-quality units
(input)(processing cost) +
(defective units)(rework cost)
650x 90% + 650x10%/4
650 x 18 + 650x10%/4 x3.75
___________________________________ ___________________________________ ___________________________________ (100)
___________________________________ (100) = 5.11
___________________________________ ___________________________________ ___________________________________ Quality Tools
___________________________________ 1. Pareto analysis
2. Process flowcharts
3. Check sheets
4. Histograms
5. Scatter diagrams
6. Control charts
7. Cause & effect diagrams
___________________________________ ___________________________________ ___________________________________ ___________________________________ 36
___________________________________ Seven Quality Control Tools:
___________________________________ 1.Pareto Analysis
CAUSE
NUMBER OF
DEFECTS
Poor design
Wrong part dimensions
Defective parts
Incorrect machine calibration
Operator errors
Defective material
Surface abrasions
Percent from each cause
___________________________________ %
80
16
12
7
4
3
3
64
13
10
6
3
2
2
125
100 %
7 (64)
0
60
___________________________________ 50
40
___________________________________ 30
20
(13)
10
(10)
(6)
___________________________________ (3) (2) (2)
0
___________________________________ Causes of poor quality
37
___________________________________ Seven Quality Control Tools:
___________________________________ 2.Flow Chart
___________________________________ Start/
Finish
Operation
Operation
Decision
Operation
___________________________________ Operation
Operation
Decision
Start/
Finish
___________________________________ ___________________________________ ___________________________________ 38
___________________________________ Seven Quality Control Tools:
___________________________________ 3.Check Sheet
___________________________________ COMPONENTS REPLACED BY LAB
TIME PERIOD: 22 Feb to 27 Feb 2005
REPAIR TECHNICIAN: Bob
___________________________________ TV SET MODEL 1013
Integrated Circuits
Capacitors
Resistors
Transformers
Commands
CRT
___________________________________ ||||
|||| |||| |||| |||| |||| ||
||
||||
___________________________________ |
___________________________________ 39
___________________________________ Seven Quality Control Tools:
___________________________________ 4.Histogram
___________________________________ 20
___________________________________ 15
___________________________________ 10
___________________________________ 5
0
1 2
___________________________________ 6 13 10 16 19 17 12 16 2017 13 5 6 2 1
40
___________________________________ Seven Quality Control Tools:
___________________________________ 5.Scatter Diagram
___________________________________ Y
___________________________________ ___________________________________ ___________________________________ ___________________________________ X
41
___________________________________ Seven Quality Control Tools:
___________________________________ 6.Control Chart
___________________________________ Number of defects
24
UCL = 23.35
21
___________________________________ c = 12.67
18
15
___________________________________ 12
9
___________________________________ 6
LCL = 1.99
3
2
4
6
8
10
12
Sample number
14
___________________________________ 16
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___________________________________ Seven Quality Control Tools:
___________________________________ 7.Cause-and-Effect Diagram
Measurement
Human
Faulty
testing equipment
Old / worn
Inadequate training
___________________________________ Quality
Problem
Defective from vendor
Not to specifications
Dust and Dirt
___________________________________ Tooling problems
Lack of concentration
Improper methods
Inaccurate
temperature
control
Out of adjustment
Poor supervision
Incorrect specifications
___________________________________ Machines
Materialhandling problems
Environment
Poor process design
___________________________________ Ineffective quality
management
Deficiencies
in product design
Materials
___________________________________ Process
43
___________________________________ Quality Awards
___________________________________ ___________________________________ Š The Malcolm Baldrige National
Quality Award (USA, since 1987)
„
___________________________________ www.quality.nist.gov
___________________________________ Š The Deming Prize (Japan, since
1951)
„
___________________________________ www.deming.org
___________________________________ 44
___________________________________ ISO 9000
___________________________________ ___________________________________ Š A set of procedures and policies for
international quality certification of
suppliers
Š Standards
„
„
„
___________________________________ ISO 9000:2000
ISO 9001:2000
ISO 9004:2000
___________________________________ Š Implications
„
„
„
Requirement for overseas business
ISO 9000 accreditation
A total commitment to quality is
required throughout an organization
___________________________________ ___________________________________ 45