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Operations Management. Chapter 6 – Managing Quality. PowerPoint presentation to accompany Heizer/Render Operations Management, 8e . © 2006 Prentice Hall, Inc. Outline. Quality And Strategy Defining Quality Evolution of Quality Management International Quality Standards TQM Concepts

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Operations Management

Chapter 6 – Managing Quality

PowerPoint presentation to accompany


Operations Management, 8e

© 2006 Prentice Hall, Inc.

  • Quality And Strategy
  • Defining Quality
  • Evolution of Quality Management
  • International Quality Standards
  • TQM Concepts
  • TQM Tools
  • Quality: Prevention vs. Detection
managing quality provides a competitive advantage
Managing Quality Provides a Competitive Advantage

Arnold Palmer Hospital

  • Deliver over 10,000 babies annually
  • Virtually every type of quality tool is employed
    • Continuous improvement
    • Employee empowerment
    • Benchmarking
    • Just-in-time
    • Quality tools
activity quality dimensions
Activity:Quality Dimensions


  • Which events would you list as evidence of low quality performance in retailing?
  • Poor quality happens when?
how quality failure happens
How Quality Failure Happens!

Events Happening in Service/Production Firm

  • Wrong things are done
  • Right things are not done
  • Right things are done poorly
  • Right things are done late
  • Right things are done well and in timely manner



costs of quality

Total Cost

Total Cost

External Failure

Internal Failure



Quality Improvement

Costs of Quality
impact of quality failures
Impact of Quality Failures
  • Internal Failure Costs
    • Warranty costs
    • Repair costs
    • Labor costs
    • Equipment downtime costs
  • External failure Costs
    • Liability costs
    • Loss of lives
    • Harm to health
    • Harm to environment
    • Customer defections
how quality performance happens
How Quality Performance Happens

Preventive Quality Approach

Appraisal Quality Approach

  • Process improvement
  • Quality program
  • Quality training
  • Process improvement
  • Statistical process control
  • Quality audit
  • -Work
  • inspection
  • Product rework
  • Product testing
  • Quality tools
  • Material inspection
  • -Right things done late
  • Right things done
  • Right things not done
  • Right things done poorly
  • Wrong things
  • done

-Right behaviorsand practicesleading to right things being doneand in timely manner, all the time

how quality practices affect organizational performance

Quality Principles

Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQM

Yields: How well a firm will perform what is important and things to be accomplished (standards of execution)

Employee Fulfilment

Empowerment, Organizational commitment

Yields: Employee attitudes that can accomplish what is important (motivation, participation)

Customer Satisfaction

Winning orders, Repeat customers

Yields: An effective organization with a competitive advantage (results, retention, satisfaction, growth)

How Quality Practices Affect Organizational Performance

Organizational Practices

Leadership, Mission statement, Effective operating procedures, Staff support, Training

Yields: What is important (priorities, resources) and what is to be accomplished (objectives, purposes)

Figure 6.2

activity quality dimensions1
Activity:Quality Dimensions

Department of Motor Vehicles (DMV)

  • What do you think would be the important thing to an employee of the DMV when reviewing supporting documentation of an applicant?
  • What do you think would be the important thing to an applicant for a license with regard to documents that s/he brings to support her/his application?
  • What do you think would be the important expectation of the police department with regard to the DMV issued licenses?
different views
Different Views
  • User-based – better performance, more features
  • Manufacturing-based – conformance to standards, making it right the first time
  • Product-based – specific and measurable attributes of the product
defining quality
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

quality programs by experts
Quality Programs by Experts

W. Edwards Deming 14 Points for Management

Joseph M. Juran Top management commitment, fitness for use

Armand Feigenbaum Total Quality Control

Philip B. Crosby Quality is Free

quality models by national agencies
Quality Models by National Agencies
  • Malcom Baldrige National Quality Award was established in 1988 by the U.S. government
    • Designed to promote TQM practices in Manufacturing, government, non-profit and services sectors
  • Japan Quality Award
quality models by international agencies
Quality Models by International Agencies
  • Industrial Standard Z8101-1981 (Japan)
    • Specification for TQM
  • ISO 9000 series (Europe/EC)
    • Common quality standards for products sold in Europe (even if made in U.S.)
    • 2000 update places greater emphasis on leadership and customer satisfaction
  • ISO 14000 series (Europe/EC)
quality models by industrial sector agents
Quality Models by Industrial Sector Agents
  • Capability Maturity Model Integration for improving quality of the Software development industry
  • Quality model for the automotive industry
  • Company-driven quality initiatives, e.g. Six sigma quality
ethics and quality management
Ethics 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

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

key quality principles 1
Key Quality Principles (1)
  • Customer orientation
    • Everything seen from the view of customer
  • Results orientation
    • Measure, track and define results objectively
  • Process orientation
    • View changes from a process point of view
  • Employee orientation
    • creativity, improvement come from employees. Empower, equip and train them
key quality principles 2
Key Quality Principles (2)
  • Measurement orientation
    • Define measures, collect data and analyze data about performance using TQM tools
  • Continuous improvement orientation
    • Focus on improving continuously not in haphazard or impulsive manner
  • Prevention orientation
    • Prevention of errors is cheaper and more effective than detecting and removing them
  • Variation Elimination orientation
    • Focus on recognizing and eliminating the root causes of variations in your systems.
tools of tqm
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
cause and effect diagrams



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

pareto charts

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
impact of poor process quality on output
Impact of Poor Process Quality on Output

Activity 60 mins60 mins 60 mins





MaximumBatch sizes100 units100 units100 units

Errors afteractivity 10 units(10%)10 units(10%)10 units(10%)

How may defective parts will whole process yield?

impact of quality appraisal on output
Impact of Quality Appraisal on Output

Activity 60 mins 10 mins 60 mins 10 mins 60 mins 10 mins





MaximumBatch sizes100 units100 units100 units

Errors afteractivity 2 units(2%) 2 units(2%)2 units(2%)

How may defective parts will whole process yield?

impact of quality prevention on output
Impact of Quality Prevention on Output

Activity 66 mins66 mins 66 mins





MaximumBatch sizes100 units100 units100 units

Errors afteractivity 1 units(1%)1 units(1%)1 units(1%)

How may defective parts will whole process yield?

ways quality by prevention improves productivity

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 by Prevention Improves Productivity

Figure 6.1