PowerPoint Presentation To Accompany Heizer, Render .

Managing Quality6PowerPoint presentation to accompanyHeizer, Render, MunsonOperations Management, Twelfth EditionPrinciples of Operations Management, Tenth EditionPowerPoint slides by Jeff HeylCopyright 2017 Pearson Education, Inc.6-1

Quality and Strategy Managing quality supportsdifferentiation, low cost, andresponse strategies Quality helps firms increase salesand reduce costs Building a quality organization is ademanding taskCopyright 2017 Pearson Education, Inc.6-2

Two Ways QualityImproves ProfitabilityFigure 6.1Sales Gains via Improved response Flexible pricing Improved reputationImprovedQualityReduced Costs viaIncreasedProfits Increased productivity Lower rework and scrap costs Lower warranty costsCopyright 2017 Pearson Education, Inc.6-3

The Flow of ActivitiesOrganizational PracticesLeadership, Mission statement, Effective operatingprocedures, Staff support, TrainingYields: What is important and what is to beaccomplishedQuality PrinciplesCustomer focus, Continuous improvement, Benchmarking,Just-in-time, Tools of TQMYields: How to do what is important and to beaccomplishedEmployee FulfillmentEmpowerment, Organizational commitmentYields: Employee attitudes that can accomplishwhat is importantFigure 6.2Copyright 2017 Pearson Education, Inc.Customer SatisfactionWinning orders, Repeat customersYields: An effective organization witha competitive advantage6-4

Defining QualityAn operations manager’s objectiveis to build a total qualitymanagement system that identifiesand satisfies customer needsCopyright 2017 Pearson Education, Inc.6-5

Defining QualityThe totality of features andcharacteristics of a product or servicethat bears on its ability to satisfy statedor implied needsAmerican Society for QualityCopyright 2017 Pearson Education, Inc.6-6

Different Views User based: better performance,more featuresManufacturing based: conformanceto standards, making it right the firsttimeProduct based: specific andmeasurable attributes of the productCopyright 2017 Pearson Education, Inc.6-7

Implications of Quality1. Company reputation Perception of new products Employment practices Supplier relations2. Product liability Reduce risk3. Global implications Improved ability to competeCopyright 2017 Pearson Education, Inc.6-8

Malcolm Baldrige NationalQuality Award Established in 1988 by the U.S.government Designed to promote TQM practices Recent winners includeMidwayUSA, Charter School of San Diego, MidAmerica Transplant Services, Hill Country Memorial,PricewaterhouseCoopers Public Sector Practice,Elevations Credit Union, Lockheed Martin Missilesand Fire Control, MESA Products Inc.Copyright 2017 Pearson Education, Inc.6-9

Baldrige CriteriaApplicants are evaluated on:CATEGORIESPOINTSLeadership120Strategic Planning85Customer Focus85Measurement, Analysis, and KnowledgeManagement90Workforce Focus85Operations Focus85Results450Copyright 2017 Pearson Education, Inc.6 - 10

ISO 9000 International QualityStandards International recognition Encourages quality managementprocedures, detailed documentation, workinstructions, and recordkeeping 2015 revision gives greater emphasis torisk-based thinking Over one million certifications in 206countries Critical for global businessCopyright 2017 Pearson Education, Inc.6 - 11

ISO 9000 International QualityStandards Management principles1)2)3)4)5)6)7)8)Top management leadershipCustomer satisfactionContinual improvementInvolvement of peopleProcess analysisUse of data-driven decision makingA systems approach to managementMutually beneficial supplier relationshipsCopyright 2017 Pearson Education, Inc.6 - 12

Costs of Quality Prevention costs - reducing thepotential for defects Appraisal costs - evaluating products,parts, and services Internal failure costs - producingdefective parts or service beforedelivery External failure costs - defectsdiscovered after deliveryCopyright 2017 Pearson Education, Inc.6 - 13

Costs of QualityTotalCostTotal CostExternal FailureInternal FailurePreventionAppraisalQuality ImprovementCopyright 2017 Pearson Education, Inc.6 - 14

TakumiA Japanese characterthat symbolizes abroader dimension thanquality, a deeper processthan education, and amore perfect methodthan persistenceCopyright 2017 Pearson Education, Inc.6 - 15

Leaders in QualityTABLE 6.1Leaders in the Field of Quality ManagementLEADERPHILOSOPHY/CONTRIBUTIONW. Edwards DemingDeming insisted management accept responsibility for buildinggood systems. The employee cannot produce products that onaverage exceed the quality of what the process is capable ofproducing. His 14 points for implementing quality improvementare presented in this chapter.Joseph M. JuranA pioneer in teaching the Japanese how to improve quality,Juran believed strongly in top-management commitment,support, and involvement in the quality effort. He was also abeliever in teams that continually seek to raise quality standards.Juran varies from Deming somewhat in focusing on thecustomer and defining quality as fitness for use, not necessarilythe written specifications.Copyright 2017 Pearson Education, Inc.6 - 16

Leaders in QualityTABLE 6.1Leaders in the Field of Quality ManagementLEADERPHILOSOPHY/CONTRIBUTIONArmand FeigenbaumHis 1961 book Total Quality Control laid out 40 steps to qualityimprovement processes. He viewed quality not as a set of toolsbut as a total field that integrated the processes of a company.His work in how people learn from each other’s successes led tothe field of cross-functional teamwork.Philip B. CrosbyQuality Is Free was Crosby’s attention-getting book published in1979. Crosby believed that in the traditional trade-off betweenthe cost of improving quality and the cost of poor quality, the costof poor quality is understated. The cost of poor quality shouldinclude all of the things that are involved in not doing the job rightthe first time. Crosby coined the term zero defects and stated,“There is absolutely no reason for having errors or defects in anyproduct or service.”Copyright 2017 Pearson Education, Inc.6 - 17

Ethics and QualityManagement Operations managers must deliverhealthy, safe, quality products andservices Poor quality risks injuries, lawsuits,recalls, and regulation Ethical conduct must dictate responseto problems All stakeholders must be consideredCopyright 2017 Pearson Education, Inc.6 - 18

Total Quality Management Encompasses entire organization fromsupplier to customerStresses a commitment bymanagement to have a continuingcompanywide drive toward excellencein all aspects of products and servicesthat are important to the customerCopyright 2017 Pearson Education, Inc.6 - 19

Deming's Fourteen PointsTABLE 6.2Deming's 14 Points for Implementing Quality Improvement1. Create consistency of purpose2. Lead to promote change3. Build quality into the product; stop depending on inspections to catchproblems4. Build long-term relationships based on performance instead ofawarding business on price5. Continuously improve product, quality, and service6. Start training7. Emphasize leadershipCopyright 2017 Pearson Education, Inc.6 - 20

Deming's Fourteen PointsTABLE 6.2Deming's 14 Points for Implementing Quality Improvement8. Drive out fear9. Break down barriers between departments10. Stop haranguing workers11. Support, help, and improve12. Remove barriers to pride in work13. Institute a vigorous program of education and self-improvement14. Put everyone in the company to work on the transformationCopyright 2017 Pearson Education, Inc.6 - 21

Seven Concepts of TQM1)2)3)4)5)6)7)Continuous improvementSix SigmaEmployee empowermentBenchmarkingJust-in-time (JIT)Taguchi conceptsKnowledge of TQM toolsCopyright 2017 Pearson Education, Inc.6 - 22

Continuous Improvement Never-ending process of continuousimprovement Covers people, equipment, suppliers,materials, procedures Every operation can be improvedCopyright 2017 Pearson Education, Inc.6 - 23

Shewhart's PDCA ModelFigure 6.34. ActImplementthe plan,document3. CheckIs the planworking?Copyright 2017 Pearson Education, Inc.1. PlanIdentify thepattern andmake a plan2. DoTest theplan6 - 24

Continuous Improvement Kaizen describes the ongoing processof unending improvement TQM and zero defects also used todescribe continuous improvementCopyright 2017 Pearson Education, Inc.6 - 25

Six Sigma Two meanings Statistical definition of a process that is99.9997% capable, 3.4 defects permillion opportunities (DPMO) A program designed to reduce defects,lower costs, save time, and improvecustomer satisfactionA comprehensive system for achievingand sustaining business successCopyright 2017 Pearson Education, Inc.6 - 26

Six Sigma Lower limitsTwo meaningsUpper limits2,700 defects/millionStatistical definition of a process that is99.9997% capable, 3.4 defects per3.4 defects/millionmillion opportunities (DPMO) A program designed to reduce defects,lower costs, save time, and improvecustomer satisfaction Mean 3 A comprehensive systemfor achieving and sustaining business 6successFigure 6.4Copyright 2017 Pearson Education, Inc.6 - 27

Six Sigma ProgramOriginally developed by Motorola,adopted and enhanced by Honeywelland GE Highly structured approach to processimprovement A strategy A discipline – DMAIC A set of 7 toolsCopyright 2017 Pearson Education, Inc.6 6 - 28

Six Sigma1. Defines the project’s purpose, scope, and outputs,then identifies the required process informationkeeping in mind the customer’s definition of quality2. Measures the process and collects data3. Analyzes the data ensuringrepeatability and reproducibilityDMAIC Approach4. Improves by modifying orredesigning existingprocesses and procedures5. Controls the new processto make sure performancelevels are maintainedCopyright 2017 Pearson Education, Inc.6 - 29

Implementing Six Sigma Emphasize defects per million opportunitiesas a standard metric Provide extensive training Focus on top management leadership(Champion) Create qualified process improvementexperts (Black Belts, Green Belts, etc.) Set stretch objectivesCopyright 2017 Pearson Education, Inc.6 - 30

Implementing Six Sigma Emphasize defects per million opportunitiesas a standard metric Provide extensive training Focus on top management leadership(Champion) Create qualified process improvementexperts (Black Belts, Green Belts, etc.)This cannot be accomplished without aSet stretchobjectivesmajorcommitment from top levelmanagement Copyright 2017 Pearson Education, Inc.6 - 31

Employee Empowerment Getting employees involved in product andprocess improvements 85% of quality problems are dueto materials and processTechniques1) Build communication networksthat include employees2) Develop open, supportive supervisors3) Move responsibility to employees4) Build a high-morale organization5) Create formal team structuresCopyright 2017 Pearson Education, Inc.6 - 32

Quality Circles Group of employees who meetregularly to solve problems Trained in planning, problemsolving, and statistical methods Often led by a facilitator Very effective when done properlyCopyright 2017 Pearson Education, Inc.6 - 33

BenchmarkingSelecting best practices to use as astandard for performance1. Determine what to benchmark2. Form a benchmark team3. Identify benchmarking partners4. Collect and analyze benchmarkinginformation5. Take action to match or exceed thebenchmarkCopyright 2017 Pearson Education, Inc.6 - 34

Best Practices for ResolvingCustomer ComplaintsTable 6.3BEST PRACTICEJUSTIFICATIONMake it easy for clients to complainIt is free market researchRespond quickly to complaintsIt adds customers and loyaltyResolve complaints on first contactIt reduces costUse computers to manage complaintsDiscover trends, share them, and alignyour servicesRecruit the best for customer servicejobsIt should be part of formal training andcareer advancementCopyright 2017 Pearson Education, Inc.6 - 35

Internal Benchmarking When the organization is large enough Data more accessible Can and should be established in avariety of areasCopyright 2017 Pearson Education, Inc.6 - 36