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6Quality Management and International Standards

PowerPoint presentation to accompany PowerPoint presentation to accompany

Heizer, Render, and Al-Zu’biHeizer, Render, and Al-Zu’bi

Operations Management, Arab World EditionOperations Management, Arab World Edition

Original PowerPoint slides by Jeff Heyl

Adapted by Zu’bi Al-Zu’bi

dr.Zouby

Please replace the photo of the potatoe sack to that of Petra-Jordant "the same one used at the begining of chapter 6"

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OutlineOutline

•Company Profile: New Mowasat Hospital

•Quality and Strategy

•Defining Quality

- Implications of Quality

- Cost of Quality (COQ)

- Ethics and Quality Management

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Outline – ContinuedOutline – Continued

•International Quality Standards

- ISO 9000

- ISO14000

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•Total Quality Management - Continuous Improvement - Six Sigma - Employee Empowerment - Benchmarking - Just-in-Time (JIT) - Taguchi Concepts - Knowledge of TQM Tools

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Outline – ContinuedOutline – Continued• Tools of TQM

- Check Sheets

- Scatter Diagrams

- Cause-and-Effect Diagrams

- Pareto Charts

- Flowcharts

- Histograms

- Statistical Process Control (SPC)

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• The Role of Inspection

- When and Where to Inspect

- Source Inspection

- Service Industry Inspection

- Inspection of Attributes versus Variables

- TQM in Services

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Learning ObjectivesLearning ObjectivesWhen you complete this chapter you should be able to:When you complete this chapter you should be able to:

1. Define quality and TQM2. Describe the ISO international

quality standards3. Explain Six Sigma4. Explain how benchmarking is

used 5. Explain quality robust products

and Taguchi concepts6. Use the seven tools of TQM

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Managing Quality Provides a Competitive Managing Quality Provides a Competitive AdvantageAdvantage

New Mowasat Hospital Virtually every type of quality tool is

employed Continuous improvement Employee empowerment Benchmarking Just-in-time Quality tools

dr.Zouby

Please insert a photo of the New Mowasat Hospital in the background

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Quality and StrategyQuality and Strategy

An operations manager’s objective An operations manager’s objective is to build a total quality is to build a total quality

management system that identifies management system that identifies and satisfies customer needsand satisfies customer needs

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Quality and StrategyQuality and Strategy

Managing quality supports differentiation, low cost, and response strategies

Quality helps firms increase sales and reduce costs

Building a quality organization is a demanding task

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Two Ways Quality Two Ways Quality Improves ProfitabilityImproves Profitability

Improved Quality

Increased Profits

Increased productivity Lower rework and scrap costs Lower warranty costs

Reduced Costs via

Improved response Flexible pricing Improved reputation

Sales Gains via

Figure 6.1

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The Flow of ActivitiesThe Flow of Activities

Organizational PracticesLeadership, Mission statement, Effective operating procedures, Staff support, TrainingYields: What is important and what is to be

accomplishedQuality Principles

Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQMYields: How to do what is important and to be

accomplishedEmployee Fulfillment

Empowerment, Organizational commitmentYields: Employee attitudes that can accomplish

what is importantCustomer SatisfactionWinning orders, Repeat customersYields: An effective organization with

a competitive advantage

Figure 6.2

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Defining QualityDefining Quality

The ability of a product or serviceto meet customer wants and needs

Render, Heizer, and Al-Zu’bi (2013)

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Different ViewsDifferent Views

User-basedUser-based: better performance, more features

Manufacturing-basedManufacturing-based: conformance to standards, making it right the first time

Product-basedProduct-based: specific and measurable attributes of the product

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Implications of QualityImplications of Quality

1. Company reputation Perception of new products Employment practices Supplier relations

2. Product liability Reduce risk

3. Global implications Improved ability to compete

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Key Dimensions of QualityKey Dimensions of Quality

Performance

Features

Reliability

Conformance

Durability

Serviceability

Aesthetics

Perceived quality

Value

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Costs of QualityCosts of Quality

Prevention costsPrevention costs - reducing the potential for defects

Appraisal costsAppraisal costs - evaluating products, parts, and services

Internal failureInternal failure - producing defective parts or service before delivery

External costsExternal costs - defects discovered after delivery

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External Failure

Internal Failure

Prevention

Costs of QualityCosts of Quality

Appraisal

Total Cost

Quality Improvement

Total Cost

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Leaders in QualityLeaders in Quality

Table 6.1

Leader Philosophy/ContributionW. Edwards Deming 14 Points for

ManagementJoseph M. Juran Top management

commitment, fitness for use

Armand Feigenbaum Total Quality ControlPhilip B. Crosby Quality is Free, zero

defects

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Ethics and Quality ManagementEthics and Quality Management

Operations managers must deliver healthy, safe, quality products and services

Poor quality risks injuries, lawsuits, recalls, and regulation

Organizations are judged by how they respond to problems

All stakeholders much be considered

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International Quality StandardsInternational Quality Standards

ISO 9000 series (Europe/EC) Common quality standards for products

sold in Europe (even if made in U.S.) 2008 update places greater emphasis on

leadership and customer requirements and satisfaction

ISO 14000 series (Europe/EC)

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ISO 14000ISO 14000Environmental StandardEnvironmental Standard

Core Elements:

Environmental management Auditing Performance evaluation Labeling Life cycle assessment

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ISO 14000ISO 14000Environmental StandardEnvironmental Standard

Advantages:

Positive public image and reduced exposure to liability

Systematic approach to pollution prevention

Compliance with regulatory requirements and opportunities for competitive advantage

Reduction in multiple audits

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TQMTQM

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

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Deming’s Fourteen PointsDeming’s Fourteen Points

Table 6.2

1. Create consistency of purpose 2. Lead to promote change3. Build quality into the product; stop

depending on inspections4. Build long-term relationships based

on performance instead of awarding business on price

5. Continuously improve product, quality, and service

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Table 6.2

6. Start training7. Emphasize leadership8. Drive out fear9. Break down barriers between

departments10. Stop haranguing workers11. Support, help, and improve

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Table 6.2

12. Remove barriers to pride in work13. Institute education and self-

improvement14. Put everyone to work on the

transformation

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Seven Concepts of TQMSeven Concepts of TQM

1. Continuous improvement2. Six Sigma3. Employee empowerment4. Benchmarking5. Just-in-time (JIT)6. Taguchi concepts7. Knowledge of TQM tools

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Continuous ImprovementContinuous Improvement

Represents continual improvement of all processes

Involves all operations and work centers including suppliers and customersPeople, Equipment, Materials,

Procedures

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4. ActImplement

the plan document

2. DoTest the

plan

3. CheckIs the plan working?

1.PlanIdentify the pattern and make a plan

Shewhart’s PDCA ModelShewhart’s PDCA Model

Figure 6.3

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Six SigmaSix Sigma

Two meanings Statistical definition of a process that

is 99.9997% capable, 3.4 defects per million opportunities (DPMO)

A program designed to reduce defects, lower costs, and improve customer satisfaction

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Two meaningsTwo meanings Statistical definition of a process that Statistical definition of a process that

is 99.9997% capable, 3.4 defects per is 99.9997% capable, 3.4 defects per million opportunities (DPMO)million opportunities (DPMO)

A program designed to reduce A program designed to reduce defects, lower costs, and improve defects, lower costs, and improve customer satisfactioncustomer satisfaction

Six SigmaSix Sigma

Mean

Lower limits Upper limits

3.4 defects/million

±6

2,700 defects/million

±3

Figure 6.4

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Six Sigma ProgramSix Sigma Program

Originally developed by Motorola, adopted and enhanced by Honeywell and GE

Highly structured approach to process improvement A strategy A discipline - DMAIC 6

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Six SigmaSix Sigma

1. Define critical outputs and identify gaps for improvement

2. Measure the work and collect process data

3. Analyze the data4. Improve the process5. Control the new process to

make sure new performance is maintained

DMAIC Approach

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Six Sigma ImplementationSix Sigma Implementation

Emphasize defects per million opportunities 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

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Employee EmpowermentEmployee 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

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Quality CirclesQuality 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

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Use internal

benchmarking

if you’re big

enough

BenchmarkingBenchmarking

Selecting best practices to use as a standard for performance

1. Determine what to benchmark

2. Form a benchmark team3. Identify benchmarking partners4. Collect and analyze benchmarking

information5. Take action to match or exceed the

benchmark

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Best Practices for Resolving Customer Best Practices for Resolving Customer ComplaintsComplaints

Best Practice JustificationMake it easy for clients to complain

It is free market research

Respond quickly to complaints

It adds customers and loyalty

Resolve complaints on first contact

It reduces cost

Use computers to manage complaints

Discover trends, share them, and align your services

Recruit the best for customer service jobs

It should be part of formal training and career advancement

Table 6.3

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Just-in-Time (JIT)Just-in-Time (JIT)

Relationship to quality:

JIT cuts the cost of quality JIT improves quality Better quality means less

inventory and better, easier-to-employ JIT system

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Just-in-Time (JIT)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

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Just-In-Time (JIT) ExampleJust-In-Time (JIT) Example

ScrapUnreliable Vendors

Capacity Imbalances

Work in process inventory level

(hides problems)

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Just-In-Time (JIT) ExampleJust-In-Time (JIT) Example

Reducing inventory revealsproblems so they can be solved

ScrapUnreliable Vendors

Capacity Imbalances

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Taguchi ConceptsTaguchi Concepts

Engineering and experimental design methods to improve product and process design Identify key component and process

variables affecting product variation Taguchi Concepts

Quality robustness Quality loss function Target-oriented quality

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Quality RobustnessQuality Robustness

Ability to produce products uniformly in adverse manufacturing and environmental conditions Remove the effects of adverse

conditions Small variations in materials and

process do not destroy product quality

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Quality Loss FunctionQuality Loss Function

Shows that costs increase as the product moves away from what the customer wants

Costs include customer dissatisfaction, warranty and service, internal scrap and repair, and costs to society

Traditional conformance specifications are too simplistic

Target-oriented quality

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Unacceptable

Poor

GoodBest

Fair

Quality Loss FunctionQuality Loss Function

High loss

Loss (to producing organization, customer, and society)

Low loss

Frequency

Lower Target UpperSpecification

Target-oriented quality yields more product in the “best” category

Target-oriented quality brings product toward the target valueConformance-oriented quality keeps products within 3 standard deviations

Figure 6.5

L = D2Cwhere

L = loss to societyD = distance from target valueC = cost of deviation

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Tools of TQMTools of TQM

Tools for Generating Ideas Check sheets Scatter diagrams Cause-and-effect diagrams

Tools to Organize the Data Pareto charts Flowcharts

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Tools of TQMTools of TQM

Tools for Identifying Problems Histogram Statistical process control

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//

/ / /// /// ///// ////

//////

HourDefect 1 2 3 4 5 6 7 8

ABC

////

/

Seven Tools of TQMSeven Tools of TQM

(a) Check Sheet: An organized method of recording data

Figure 6.6

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(b) Scatter Diagram: A graph of the value of one variable vs. another variable

Absenteeism

Prod

uctiv

ity

Figure 6.6

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(c) Cause-and-Effect Diagram: A tool that identifies process elements (causes) that might effect an outcome

Figure 6.6

CauseMaterials Methods

Manpower Machinery

Effect

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(d) Pareto Chart: A graph to identify and plot problems or defects in descending order of frequency

Figure 6.6

Freq

uenc

y

Perc

ent

A B C D E

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(e) Flowchart (Process Diagram): A chart that describes the steps in a process

Figure 6.6

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(f) Histogram: A distribution showing the frequency of occurrences of a variable

Figure 6.6

Distribution

Repair time (minutes)

Freq

uenc

y

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

Figure 6.6

Upper control limit

Target value

Lower control limit

Time

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Cause-and-Effect DiagramsCause-and-Effect Diagrams

Material(ball)

Method(shooting process)

Machine(hoop &

backboard)Manpower(shooter)

Missed free-throws

Figure 6.7

Rim alignment

Rim size

Backboard stability

Rim height

Follow-through

Hand position

Aiming point

Bend knees

Balance

Size of ball

Lopsidedness

Grain/Feel (grip)

Air pressure

Training

Conditioning Motivation

Concentration

Consistency

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Pareto ChartsPareto Charts

Number of occurrences

Room svc Check-in Pool hours Restaurant Misc.72% 16% 5% 4% 3%

124 3 2

54

– 100– 93– 88

– 72

70 –

60 –

50 –

40 –

30 –

20 –

10 –

0 –

Freq

uenc

y (n

umbe

r)

Causes and percent of the total

Cum

ulat

ive

perc

ent

Data for October

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Flow ChartsFlow Charts

MRI Flowchart1. Physician schedules MRI2. Patient taken to MRI3. Patient signs in4. Patient is prepped5. Technician carries out MRI6. Technician inspects film

7. If unsatisfactory, repeat8. Patient taken back to room9. MRI read by radiologist10. MRI report transferred to

physician11. Patient and physician discuss

11

1020%

9

880%

1 2 3 4 5 6 7

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Statistical Process ControlStatistical Process Control

Uses statistics and control charts to tell when to take corrective action

Drives process improvement Four key steps

Measure the process When a change is indicated, find the

assignable cause Eliminate or incorporate the cause Restart the revised process

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An SPC ChartAn SPC Chart

Upper control limit

Coach’s target value

Lower control limit

Game number

| | | | | | | | |1 2 3 4 5 6 7 8 9

20%

10%

0%

Plots the percent of free throws missed

Figure 6.8

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InspectionInspection

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

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When and Where to InspectWhen and Where to Inspect

1. At the supplier’s plant while the supplier is producing

2. At your facility upon receipt of goods from the supplier

3. Before costly or irreversible processes4. During the step-by-step production

process5. When production or service is complete6. Before delivery to your customer7. At the point of customer contact

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InspectionInspection

Many problems Worker fatigue Measurement error Process variability

Cannot inspect quality into a product

Robust design, empowered employees, and sound processes are better solutions

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Source InspectionSource Inspection

Also known as source control The next step in the process is

your customer Ensure perfect product

to your customer

Poka-yoke is the concept of foolproof devices or techniques designed to pass only

acceptable product

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Service Industry InspectionService Industry Inspection

Organization What is Inspected Standard

Zu’bi Law Firm Receptionist performance

Billing

Attorney

Is phone answered by the second ring

Accurate, timely, and correct format

Promptness in returning calls

Table 6.4

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Manama Hotel Reception deskDoorman

Room

Minibar

Use customer’s name

Greet guest in less than 30 secondsAll lights working, spotless bathroomRestocked and charges accurately posted to bill

Table 6.4

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New Mowasat Hospital

Billing

Pharmacy

LabNurses

Admissions

Accurate, timely, and correct formatPrescription accuracy, inventory accuracyAudit for lab-test accuracyCharts immediately updatedData entered correctly and completely

Table 6.4

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Zooka Restaurant

Busboy

Busboy

Waiter

Serves water and bread within 1 minuteClears all entrée items and crumbs prior to dessertKnows and suggest specials, desserts

Table 6.4

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Great Stores Display areas

Stockrooms

Salesclerks

Attractive, well-organized, stocked, good lightingRotation of goods, organized, cleanNeat, courteous, very knowledgeable

Table 6.4

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Attributes Versus VariablesAttributes Versus Variables Attributes

Items are either good or bad, acceptable or unacceptable

Does not address degree of failure

Variables

Measures dimensions such as weight, speed, height, or strength

Falls within an acceptable range

Use different statistical techniques

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TQM in ServicesTQM 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

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Service QualityService Quality

The Operations Manager must recognize:

1. The tangible component of services is important

2. The service process is important3. The service is judged against the

customer’s expectations4. Exceptions will occur

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ServiceServiceSpecificationsSpecificationsat UPSat UPS

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Determinants of Service QualityDeterminants of Service Quality

Reliability Consistency of performance and dependabilityResponsiveness Willingness or readiness of employeesCompetence Required skills and knowledgeAccess Approachability and ease of contactCourtesy Politeness, respect, consideration, friendlinessCommunication Keeping customers informedCredibility Trustworthiness, believability, honestySecurity Freedom from danger, risk, or doubtUnderstanding/ knowing the customer Understand the customer’s needs

Tangibles Physical evidence of the service

Table 6.5

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Service Recovery StrategyService Recovery Strategy

Managers should have a plan for when services fail

Marriott’s LEARN routine

Listen

Empathize

Apologize

React

Notify

Business

Heizer omawe ch06