Process Performance and Quality

1. Process Performance and Quality

2. Verizon Wireless Verizon wireless serves approximately 87 million customers. It holds manufactures of cell phones very high standards. Phones undergo a tear-down analysis as well as tests for temperature extremes, vibration and stress, 98 test personnel drive specially equipped $300,000 vans more than 1 million miles a year to measure network performance on new phone models. They make more than 3 million voice calls and 16 million data tests annually. Phones are electronically tested over a range of sounds and phonetics.

3. Dimensions of Quality Quality is a term used by customers to describe their general satisfaction with a service or product. It has a number of dimensions: 1) Fitness for use: Does it meet your needs? 2) Reliability: Does it hold up well over time? 3) Conformance to standards/specifications 4) Serviceability: Is it easily serviced? 5) Appearance: Are you satisfied with how it looks? 6) Perceived value: Was it a good deal for the price? 7) Support: Is support satisfactory & conveniently available?

4. Quality from different views From the Production Manager’s viewpoint: The degree to which a product meets specifications From the consumer’s (user’s) viewpoint: Fitness for the use you need Value for the money Quality is different things to different people. People’s perceptions change over time. Firms cannot rely on one definition of quality.

5. Consumer’s Changing view of automobile quality 1960’s: Powerful and big 1970’s: Fuel economy 1980’s: Design and performance 1990’s: Safety 2000’s: Fuel Economy 2010’s: ? ? ?

6. Quality’s Impact on the firm Quality affects a firm’s costs. Providing higher quality costs the firm more. Quality affects a firm’s reputation. Good and consistent quality is needed. Quality affects product liability. Lawsuits can destroy a company. Quality affects market success. Providing what the customer wants

7. BOTTOM LINE Consumers define quality in various ways. Some want value, some reliability, some low price Consumer’s views of what is important change over time. Preferences and needs change. EG: Fashion Firms must determine what the consumer wants and expects in terms of quality, and then strive to meet those expectations.

8. Prevention Costs are associated with preventing defects before they happen. Prevention must start before production begins Vendor selection and relations must be addressed. Employee training & attitudes about quality Prevention costs go up in order to increase quality. Quality Control Costs

9. Appraisal Costs are incurred when the firm assesses the performance level of its processes. These occur during the production process Inspection costs to detect unacceptable quality Trouble shooting of problems Appraisal costs go down as quality goes up. Quality Control Costs

10. Internal Failure Costs result from defects that are discovered during during the inspection process. rework costs (reworking a defective item) scrap costs (wasted materials and time) higher work-in-process inventory due to reworks longer production times due to rework and scrap Quality Control Costs

11. External Failure Costs costs arisewhen a defect is discovered after the customer receives the service or product. Product returns Warranty repairs Reputation & loss of repeat sales Law suits & product recalls Quality Control Costs

12. Total Quality Costs

13. INSPECTIONS The traditional approach to Quality Control in this country has focused on Inspection PURPOSE OF INSPECTION To detect unacceptable quality levels ISSUES IN INSPECTION When / Where / How much to inspect Typically, inspection costs increase as quality increases, but decrease once consistent high quality is achieved.

14. Inspection Points At Supplier’s plant during production Inspect goods when received from suppliers Early in the production process, prior to costly or irreversible processes During the step-by-step production process When the product is complete Before shipment to customers

16. ANSWER Any of these can be viable if followed up correctly. NONE of these approaches are Total Quality Management approaches. In successful, quality-oriented (TQM) companies, quality is the concern of all employees. Ideally, management should instill an awareness of quality in all employees and motivate them to improve the quality of their work. All employees act as inspectors.

17. Total Quality Management Total quality management (TQM) is a philosophy that stresses three principles for achieving high levels of process performance and quality: Customer satisfaction Employee involvement with quality Continuous improvement in quality performance

18. TQM Wheel

19. Japanese Approach(Thanks to Edward Deming in the 1960’s)

20. A Culture of Quality Workers and managers need to be quality conscious. Departmental barriers need to be bridged. Managers from different departments need to work together. The idea that a “Quality Control” department is responsible for quality needs to be eliminated. Quality needs to be customer driven, and include both INTERNAL and EXTERNAL customers.

21. Broadening the Scope of Quality concerns Employee empowerment is an approach to teamwork that gives responsibility for decision making to the employee actually doing the job. Quality circles are small groups of employees within a functional area who regularly meet to identify, analyze, and solve quality problems. Special-purpose teams: Teams that address a particular issue of concern to management. Self-managed teams: Small groups of employees who work together to produce a major portion, or sometimes all, of a service or product.

22. Broadening the Scope of Quality concerns On-The-Job-Training: Focuses on work skills, attitudes and issues of quality. Establishing a culture of quality as well as work skills. Monetary Incentives and Awards: Additional pay or bonuses for quality improvement (lower defect rates) Quality Assurance Groups: Cross-functional groups involved with quality monitoring and feedback.

23. Designing for High Quality Careful product design for reliability Purchasing must focus on the quality of the materials and parts as well as their cost. Product Designers, Process Designers and Purchasing must work together. Product designers tend to be customer oriented. Purchasing managers tend to be cost oriented. Process designers tend to be efficiency oriented. You can design the best quality product, but it can still be poorly made. Top Management Support and Emphasis on Quality is essential.

24. William Edwards Deming (1900 – 1993) An American statistician, best known for his work in Japan where, from 1950 onward, he taught top management how to improve design (and thus service), product quality, testing and sales through various methods, including the application of statistical methods. Deming made a significant contribution to Japan's later reputation for innovative, high-quality products and its economic power. He is regarded as having had more impact upon Japanese manufacturing and business than any other individual not of Japanese heritage. Despite being considered something of a hero in Japan, he was only just beginning to win widespread recognition in the U.S. at the time of his death.

25. Malcolm Baldrige National Quality Award A prestigious national award each year to the top QUALITY companies. Awards may be given in each of these categories Large manufacturers Large service companies Small businesses Education Health Care

28. The Bama Companies Tulsa, Okla. (Manufacturing) Texas Nameplate Co. Dallas, TX (Small Business) Kenneth W. Monfort College of Business, Greeley, CO (Education) Robert Wood Johnson University Hospital, Hamilton, NJ, (Health Care).

29. 2007 winners were… PRO-TEC Coating Co., Leipsic, Ohio (small business) Mercy Health System, Janesville, Wisc. (health care) Sharp HealthCare, San Diego, Calif. (health care) City of Coral Springs, Coral Springs, Fla. (nonprofit) U.S. Army Armament Research, Development and Engineering Center(ARDEC), Picatinny Arsenal, N.J. (nonprofit)

30. 2009 winners were… Honeywell Federal Manufacturing & Technologies Kansas City, Mo. (manufacturing) MidwayUSA Columbia, Mo. (small business) AtlantiCare, Egg Harbor Township, N.J. (health care) Heartland Health St. Joseph, Mo. (health care) VA Cooperative Studies Program Clinical Research Pharmacy Coordinating Center, Albuquerque, N.M. (nonprofit)

31. 2011 winners were… Concordia Publishing House, St. Louis, Mo. (nonprofit) Henry Ford Health System, Detroit, Mich. (health care) Schneck Medical Center, Seymour, Ind. (health care) Southcentral Foundation, Anchorage, Alaska (health care) The 2011 Baldrige Award recipients were selected from a field of 69 applicants.

32. ISO 9000 Began as a set of voluntary standards for companies doing business in the European Community. Has been adopted by many US companies Very expensive and time consuming Does not assure quality products or services It only says that companies have followed rigorous process standards for a quality process.

33. ISO 14000 Environmental Management System Sets standards that insures environmental responsibility Responsible use of raw materials Proper disposal of waste Safe process emissions Long-term environmental impact

34. Six Sigma A five-step process developed by Motorola in the early 1980’s Define - Measure - Analyze - Improve - Control (For existing processes) Define, Measure, Analyze, Design, Verify (For new processes) A more disciplined and formal approach to achieving a quality process. Customer oriented and customer focused. Not a certification like ISO 9000, but rather a process to apply. Relies heavily on statistical analyses and measures

35. Six Sigma Education Green Belt: An employee who achieved the first level of training in a Six Sigma program and spends part of his or her time teaching and helping teams with their projects. Black Belt: An employee who reached the highest level of training in a Six Sigma program and spends all of his or her time teaching and leading teams involved in Six Sigma projects. Master Black Belt: Full-time teachers and mentors to several black belts.