Operation management 4th reil sanders wiley chapter 5

© Wiley 2010 4Order Qualifiers… By 1986 the Japanese auto industry lead over Ford had shrunk from 100% to about 20%, as Ford made quality "Job One." But since that impressive initial spu

Chapter 5 - Total Quality

M E Henrie - UAA

© Wiley 2010 2

Defining Quality

 Definition of quality is dependent

on the people defining it

 There is a lack of a single, universal definition of quality

 5 common definitions include

 Conformance to specifications

 Fitness for use

 Value for price paid

 Support services

 Psychological criteria

Order Qualifiers…

Delivering Two Kinds of Quality by Keith McFarland, Business Week, Feb

15, 2006

As I write this, the petroleum executive sitting next to me on

the plane has carefully unpacked his Bose QuietComfort 2

headphones and iPod nano, which has me thinking about the

meaning of quality The Japanese actually have two words for

quality and an understanding of each is necessary to

compete today

More than 20 years after the quality craze kicked off in the

U.S (primarily because America was getting its clock cleaned

by the Japanese), quality remains an elusive target for many

American companies Not that we haven't made progress In

1980 the average car produced by Ford (F) had twice as many

© Wiley 2010 4

Order Qualifiers…

By 1986 the Japanese auto industry lead over Ford had shrunk from 100% to about 20%, as Ford made quality "Job One." But since that impressive initial spurt of progress, many U.S

companies have struggled to keep up on quality, even as the

Japanese began building more of their products in the U.S with American workers

INNOVATION CURVE The truth is, the Japanese have an unfair advantage Japanese culture intrinsically values quality and

appreciates the small details In fact, the Japanese expression

for quality is atarimae hinshitsu, which can be roughly

translated as "taken-for-granted quality."

What do the Japanese take for granted when it comes to

quality? They take for granted that things should work as they are supposed to, and they even see an elegance to things

working properly whether it's cars, subway schedules,

traditional flower arranging, or the famous tea ceremony

Order Qualifiers…

Japanese manufacturers were so obsessed with

taken-for-granted quality that they created a constant stream of

innovations that built on renowned quality-management

consultant Ed Deming's original concepts: lean

manufacturing, just-in-time industry, and design for quality In today's competitive markets, manufacturers need to be very

far along this quality innovation curve or moving along it

very quickly If they are not, you can take for granted that

they will go out of business

This is true even for small, entrepreneurial companies The

ability to create products and services that work is no longer

a source of long-term competitive advantage It has become

just the price of admission to most markets If the stuff your

© Wiley 2010 6

…and Order Winners!

MODERN MARVELS That brings us to the second of the two

Japanese expressions for quality: miryoku teki hinshitsu, which

means "bewitching" or "enchanting quality." This kind of quality

appeals not to customer expectations and reliability (that things

should do what they're supposed to), but rather to a person's

aesthetic sense of beauty and elegance.

That's what I think Apple Computer (AAPL) got right with the iPod

and its many offspring The nano belonging to the man sitting next

to me is a marvel, not just of miniaturization, but of rounded edges

in a world of sharp corners.

And as I put on my own Bose headphones, I realize how much I

appreciate being able to retreat to my Zen space amid the rumble of the aircraft engines, rattling serving carts, and chattering cabin

mates If these products didn't work properly when you turned them

on, nobody would buy them They would lack atarimae hinshitsu But with the hungry competitors in most markets today, taken-for-

granted quality by itself may not get the job done.

http://www.businessweek.com/smallbiz/content/feb2006/sb20060214_876719.htm?

chan=search

Defining Quality – 5 Ways

 Conformance to specifications

 Does product/service meet targets and tolerances defined by designers?

 Fitness for use

 Evaluates performance for intended use

 Value for price paid

 Evaluation of usefulness vs price paid

© Wiley 2010 8

TQM is a Philosophy for

Business

Philosophy is the discipline concerned

with questions of how one should live

( ethics ); what sorts of things exist and

what are their essential natures

( metaphysics ); what counts as genuine

knowledge ( epistemology ); and what are

the correct principles of reasoning ( logic )

The word is of Greek origin: φιλοσοφία

( philosophía ), meaning love of wisdom

http://en.wikipedia.org/wiki/Philosophy

Quality Gurus

© Wiley 2010 10

Deming’s 14 Points

 Create constancy of purpose toward

improvement of product and service, with the aim to become competitive and to stay in

business, and to provide jobs

 Adopt the new philosophy We are in a new

economic age Western management must

awaken to the challenge, must learn their

responsibilities, and take on leadership for

change

 Cease dependence on inspection to achieve quality Eliminate the need for inspection on a mass basis by building quality into the

product in the first place

Deming’s 14 Points

 End the practice of awarding business on the basis of price tag Instead, minimize total cost Move toward a single supplier for any one

item, on a long-term relationship of loyalty and trust Improve constantly and forever the

system of production and service, to improve quality and productivity, and thus constantly decrease costs

 Institute training on the job

 Institute leadership (see Point 12 and Ch 8) The aim of supervision should be to help

people and machines and gadgets to do a

better job Supervision of management is in

need of overhaul, as well as supervision of

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Deming’s 14 Points

 Drive out fear, so that everyone may work effectively for the company.

 Break down barriers between

departments People in research,

design, sales, and production must work as a team, to foresee problems

of production and in use that may

be encountered with the product or service

Deming’s 14 Points

 Eliminate slogans, exhortations, and

targets for the work force asking for zero defects and new levels of productivity

Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong

to the system and thus lie beyond the

power of the work force.

 Eliminate work standards (quotas) on the factory

floor Substitute leadership

 Eliminate management by objective Eliminate

management by numbers, numerical goals

Substitute leadership

Deming’s 14 Points

 Institute a vigorous program of education and

self-improvement

 Put everybody in the company to work to

accomplish the transformation The

transformation is everybody's job

 From

http://www.deming.org/theman/teachings02.html

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Evolution of TQM – New

Focus

 Quality failure costs

 Internal failure costs

© Wiley 2010 18

Cost of Quality – 4

Categories

 Early detection/prevention is less costly

 May be less by a factor of 10

TQM Methodology

 TQM Focuses on identifying quality problem root causes

 Encompasses the entire organization

 Involves the technical as well as people

 Relies on seven basic concepts of

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 Focus on Customer

 Identify and meet customer needs

 Stay tuned to changing needs, e.g fashion styles

 Continuous Improvement

 Continuous learning and problem solving, e.g Kaizen, 6 sigma, benchmarking

and correction, & implementation tools

 Studying practices at “best in class”

companies

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Ways of Improving Quality

 Plan-Do-Study-Act Cycle (PDSA)

 Also called the Deming Wheel after originator

 Circular, never ending problem solving process

 Seven Tools of Quality Control

 Tools typically taught to problem solving teams

 Quality Function Deployment

 Used to translate customer preferences to

design

PDSA Details

 Plan

 Evaluate current process

 Collect procedures, data, identify problems

 Develop an improvement plan, performance objectives

Seven Tools of Quality

© Wiley 2010 26

Cause-and-Effect

Diagrams

 Called Fishbone Diagram

 Focused on solving identified quality problem

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Checklist

 Simple data check-off sheet designed to

identify type of quality problems at each

work station; per shift, per machine, per

operator

Control Charts

Control – Chapter 6

to show when process is in or out of

control

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Scatter Diagrams

 A graph that shows how two variables

are related to one another

 Data can be used in a regression analysis

to establish equation for the relationship

Pareto Analysis

 Technique that displays the degree of importance for

each element

 Named after the 19 th century Italian economist

 Often called the 80-20 Rule

 Principle is that quality problems are the result of only a few problems e.g 80% of the problems caused by 20% of causes

© Wiley 2010 32

Histograms

 A chart that shows the frequency distribution

of observed values of a variable like service time

at a bank drive-up window

 Displays whether the distribution is

symmetrical (normal) or skewed

Product Design - Quality

Function Deployment

customer expectations

specifications into technical requirements

is Quality Function Deployment (QFD)

QFD - House of Quality

 Adding trade-offs, targets & developing product specifications

Trade-offs

© Wiley 2010 36

Reliability – critical to

quality

 Reliability is the probability that the product,

service or part will function as expected

 No product is 100% certain to function properly

 Reliability is a probability function dependent on sub-parts or components

Reliability – critical to

quality

 Simple Serial Reliability of a system is the

product of component reliabilities

R S = (R 1 ) (R 2 ) (R 3 ) (R n )

R S = reliability of the product or system

R 1 = reliability of the components

© Wiley 2010 40

Process Management

 Quality products come from quality sources

 Quality must be built into the process

 Quality at the source is belief that it is better to uncover source of quality problems and correct it

 TQM extends to quality of product from

company’s suppliers

Managing Supplier Quality

 TQM efforts must extend to a firm’s suppliers

 Suppliers should meet pre-specified quality

criteria, such as certification

 Inspection of incoming material is a waste of time and effort

 Firm may have in-plant representative at supplier

ISO Standards

 ISO 9000 Standards:

 Certification developed by International

Organization for Standardization

 Set of internationally recognized quality

standards

 Companies are periodically audited & certified

 ISO 9000:2000 QMS – Fundamentals and

Standards

 ISO 9001:2000 QMS – Requirements

 ISO 9004:2000 QMS - Guidelines for Performance

 More than 40,000 companies have been certified

 ISO 14000:

© Wiley 2010 44

Manufacturing Quality vs Service Quality

 Manufacturing quality focuses on tangible

product features

 Conformance, performance, reliability,

features

 Service organizations produce intangible

products that must be experienced

 Quality often defined by perceptional factors like courtesy, friendliness, promptness,

waiting time, consistency

Why TQM Efforts Fail

 Lack of a genuine quality culture

 Lack of top management support and

commitment

 Over- and under-reliance on SPC methods

© Wiley 2010 46

MBNQA- What Is It?

 Award named after the former

Secretary of Commerce – Reagan

 Past winners; Motorola Corp., Xerox,

FedEx, 3M, IBM, Ritz-Carlton

The Deming Prize

and Engineers since 1951

worked to improve Japanese quality after WWII

 Florida P & L was first US company winner

© Wiley 2010 48

Many Viewpoints!

Why Six Sigma Is on the Downslope by Tom Davenport, Harvard

Business Online January 10, 2008

I was never a big fan of Six Sigma As approaches to business

process improvement and management go, it always had some

glaring shortcomings First, there was all the statistical

mumbo-jumbo it implied—but seldom delivered on in most companies'

implementations Second, it didn't incorporate information

technology—arguably the most powerful force available for

improving (or screwing up) processes—in any way Third, it was

overly elitist Instead of relying on Six Sigma expert "black belts" do

the process analysis and design, every employee should be a

process improver, as I argued last week Fourth, it really only

enabled incremental improvement, not radical breakthroughs Fifth

and last, it wasn't a good fit for innovation-oriented work Even Jack

Welch now admits that it shouldn't be used everywhere in a

company, but I might argue that it should only be used in product

manufacturing, where the idea of reducing defects to one in six

standard deviations really makes sense

Many Viewpoints!

So what's the best alternative to Six Sigma for process

improvement? Well, there really is no one alternative that's

best for all processes and circumstances Companies really

need a combination of tools and approaches The best

companies in process management already have such a

combination You hear about Lean Six Sigma, which is a

combination of some of the lean approaches found in the

Toyota Production System and Six Sigma, but actually the mix should be even broader Johnson & Johnson, for example, in

its "Process Excellence" program, also adds a component

involving breakthrough change Even Motorola, where Six

Sigma was born, also incorporates a method for creating

© Wiley 2010 50

TQM Within OM

 TQM is broad sweeping organizational change

 TQM impacts

 Marketing – providing key inputs of customer information

 Finance – evaluating and monitoring financial impact

 Accounting – provides exact costing

 Engineering – translate customer requirements into

specific engineering terms

 Purchasing – acquiring materials to support product

development

 Human Resources – hire employees with skills necessary

 Information systems – increased need for accessible

information

Chapter 5 Highlights

quality as it focus is on serving customers, identifying the causes of quality problems, and building quality into the production

process

appraisal, internal and external costs

Walter A Shewhart, W Edwards Demings,

Joseph M Juran, Armand V Feigenbaum,

© Wiley 2010 52

Chapter 5 Highlights -

Continued

create TQM philosophy; customer focus, continuous improvement, employee

empowerment, use of quality tools,

product design, process management, and managing supplier quality

needs into specific engineering

requirements

product will functions as expected

companies to recognize excellence in

quality management

The End

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