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Operations Management. Chapter 6 – Managing Quality. PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e . © 2006 Prentice Hall, Inc. Sales Gains. Improved response Higher Prices Improved reputation. Improved Quality.

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Operations Management

Chapter 6 – Managing Quality

PowerPoint presentation to accompany


Principles of Operations Management, 6e

Operations Management, 8e

© 2006 Prentice Hall, Inc.

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Sales Gains

  • Improved response

  • Higher Prices

  • Improved reputation

Improved Quality

Increased Profits

Reduced Costs

  • Increased productivity

  • Lower rework and scrap costs

  • Lower warranty costs

Ways Quality Improves Productivity

Figure 6.1

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Defining Quality

The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs

American Society for Quality

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Malcom Baldrige National Quality Award

  • Established in 1988 by the U.S. government

  • Designed to promote TQM practices

  • http://www.quality.nist.gov/

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International Quality Standards

  • To do business globally, being listed on an ISO directory is crucial

  • ISO 9000

    • Organizations must go through a 9 to 18 month process involving documenting procedures, on-site assessment, and ongoing product/service audits

  • ISO 14000 series

    • An environmental management standard which focuses on pollution prevention and ecological impact

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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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Seven Concepts of TQM

  • Continuous improvement

  • Six Sigma

  • Employee empowerment

  • Benchmarking

  • Just-in-time (JIT)

  • Taguchi concepts

  • Knowledge of TQM tools

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Continuous Improvement

  • Represents continual improvement of all processes

  • Involves all operations and work centers including suppliers and customers

    • People, Equipment, Materials, Procedures

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Six Sigma

  • Originally developed by Motorola, Six Sigma refers to an extremely high measure of process capability

  • A Six Sigma capable process will return no more than 3.4 defects per million operations (DPMO)

  • Highly structured approach to process improvement

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Six Sigma Implementation

  • Emphasize DPMO 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 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 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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Selecting best practices to use as a standard for performance

Use internal benchmarking if you’re big enough

  • Determine what to benchmark

  • Form a benchmark team

  • Identify benchmarking partners

  • Collect and analyze benchmarking information

  • Take action to match or exceed the benchmark

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Best Practices for Resolving Customer Complaints

  • Make it easy for clients to complain

  • Respond quickly to complaints

  • Resolve complaints on first contact

  • Use computers to manage complaints

  • Recruit the best for customer service jobs

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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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Taguchi Concepts

  • Experimental design methods to improve product and process design

  • Uses Robust Design method

    • Plan for the worst conditions and design quality around the worst conditions

    • Example: Grocery Stores and coming Hurricane (design store to handle the traffic associated with this worst condition)

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Tools of TQM

  • Tools for Generating Ideas

    • Check sheets

    • Scatter diagrams

    • Cause and effect diagrams

  • Tools to Organize the Data

    • Pareto charts

    • Flow charts

  • Tools for Identifying Problems

    • Histogram

    • Statistical process control chart

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Seven Tools for TQM

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



/ / /// /

// ///

// ////





Defect 1 2 3 4 5 6 7 8








Figure 6.5

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Seven Tools for TQM

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

Figure 6.5

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Seven Tools for TQM

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

Figure 6.5

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Insufficient clean pillows

& blankets on-board

Deicing equipment not available


supply of magazines

Mechanical delay on plane

Broken luggage carousel

Inadequate special meals on-board

Dissatisfied Airline Customer

Understaffed crew

Overbooking policies

Understaffed ticket counters

Bumping policies

Poor check-in policies

Poorly trained attendants

Mistagged bags



Cause-and-Effect Diagrams

Figure 6.6

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Seven Tools for TQM

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

Figure 6.5

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Data for October

70 –

60 –

50 –

40 –

30 –

20 –

10 –

0 –

– 100

– 93

– 88

– 72


Frequency (number)

Number of occurrences

Cumulative percent





Room svc Check-in Pool hours Minibar Misc.

72% 16% 5% 4% 3%

Causes and percent

Pareto Charts

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Seven Tools for TQM

(e) Flow Charts (Process Diagrams): A chart that describes the steps in a process

Figure 6.5

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Sealing Weighing Labeling

Quick freeze storage

(60 Mins)

Packing station


(4 to 6 hrs)

Shipping dock

Flow Charts

Packing and shipping process

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Repair time (minutes)

Seven Tools for TQM

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

Figure 6.5

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Upper control limit

Target value

Lower control limit


Seven Tools for TQM

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

Figure 6.5

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Statistical Process Control (SPC)

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

  • Drives process improvement

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  • 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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TQM 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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Determinants of Service Quality

  • Reliability

  • Responsiveness

  • Competence

  • Access

  • Courtesy

  • Communication

  • Credibility

  • Security

  • Understanding/ knowing the customer

  • Tangibles