CHASE AQUILANO JACOBS Operations Management For Competitive Advantage Chapter 7 Quality Management ninth edition
Chapter 7Quality Management • Total Quality Management Defined • Malcolm Baldrige National Quality Award • Quality Specifications • Costs of Quality • Continuous Improvement • SPC Tools • Benchmarking • Fail-safing • ISO 9000
Total Quality Management (TQM)Defined • Total quality management is defined as managing the entire organization so that it excels on all dimensions of products and services that are important to the customer.
1999 Malcolm Baldrige National Quality Award • 1.0 Leadership (125 points) • 2.0 Strategic Planning (85 points) • 3.0 Customer and Market Focus (85 points) • 4.0 Information and Analysis (85 points) • 5.0 Human Resource Focus (85 Points) • 6.0 Process Management (85 points) • 7.0 Business Results (450 points)
Categories for the Baldrige Award • Manufacturing companies or subsidiaries that • produce and sell manufactured products or manufacturing processes or • produce agricultural, mining, or construction products. • Service companies or subsidiaries that sell service • Small businesses • Health care organizations • Educational institutions
Characteristics of a Baldrige Award Winner • The companies formulated a vision of what they thought quality was and how they would achieve it. • Senior management was actively involved. • Companies carefully planned and organized their quality effort to be sure it would be effectively initiated. • They vigorously controlled the overall process.
Quality Specifications • Design quality: Inherent value of the product in the marketplace • Dimensions include: Performance, Features, Reliability, Durability, Serviceability, Response, Aesthetics, and Reputation. • Conformance quality: Degree to which the product or service design specifications are met
Appraisal Costs Costs of Quality External Failure Costs Prevention Costs Internal FailureCosts Costs of Quality
Continuous Improvement (CI) • Management's view of performance standards of the organization • performance level of the firm as something to be "continuously challenged and incrementally upgraded." • The way management views the contribution and role of its workforce • believe employee involvement and team efforts are the key to improvement
1. Plan a change aimed at improvement. 4. Institutionalize the change or abandon or do it again. 4. Act 1. Plan 3. Check 2. Do 3. Study the results; did it work? 2. Execute the change. CI Methodology: PDCA Cycle (Deming Wheel)
Example: Process Flow Chart Material Received from Supplier No, Continue… Inspect Material for Defects Defects found? Yes Can be used to find quality problems. Return to Supplier for Credit
Example: Pareto Analysis Can be used to find when 80% of the problems may be attributed to 20% of the causes. 80% Frequency Design Assy. Instruct. Purch. Training Other
Example: Run Chart Can be used to identify when equipment or processes are not behaving according to specifications. 0.58 0.56 Diameter 0.54 0.52 0.5 0.48 0.46 0.44 1 2 3 4 5 6 7 8 9 10 11 12 Time (Hours)
Example: Histogram Can be used to identify the frequency of quality defect occurrence and display quality performance. Number of Lots 0 1 2 3 4 Defectsin lot Data Ranges
Example: Scatter Diagram Can be used to illustrate the relationships between quality behavior and training. 12 10 8 Defects 6 4 2 0 0 10 20 30 Hours of Training
Example: Checksheet Can be used to keep track of defects or used to make sure people collect data in a correct manner. Monday • Billing Errors • Wrong Account • Wrong Amount • A/R Errors • Wrong Account • Wrong Amount
Machine Man Effect Environment Method Material Example: Cause & Effect Diagram The results or effect. Possible causes: Can be used to systematically track backwards to find a possible cause of a quality problem (or effect).
UCL LCL Example: Control Charts Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality. 1020 1010 1000 990 980 970 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Benchmarking 1. Identify those processes needing improvement. 2. Identify a firm that is the world leader in performing the process. 3. Contact the managers of that company and make a personal visit to interview managers and workers. 4. Analyze data.
The Shingo System: Fail-Safe Design • Shingo’s argument: • SQC methods do not prevent defects • Defects arise when people make errors • Defects can be prevented by providing workers with feedback on errors • Poka-Yoke includes: • Checklists • Special tooling that prevents workers from making errors
ISO 9000 • Series of standards agreed upon by the International Organization for Standardization (ISO) • Adopted in 1987 • More than 100 countries • A prerequisite for global competition? • ISO 9000 directs you to "document what you do and then do as you documented."
Three Forms of ISO Certification First party: A firm audits itself against ISO 9000 standards. Second party: A customer audits its supplier. Third party: A "qualified" national or international standards or certifying agency serves as auditor.
ISO 9000 versus the Baldrige Award • Which should we pursue first? • What are the differences between the two? • Do you have to be ISO 9000 certified before going for the Baldrige Award?