Operations Management

1. Operations Management Chapter 6 – Managing Quality PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 7e Operations Management, 9e Extensive chages have been made to this slide set by Ömer Yağız.

2. Outline • Global Company Profile: Arnold Palmer Hospital • Quality and Strategy • Defining Quality • Implications of Quality • Malcolm Baldrige National Quality Award • Cost of Quality (COQ) • Ethics and Quality Management

3. Outline – Continued • International Quality Standards • ISO 9000 • ISO14000

4. Outline – Continued • Total Quality Management • Continuous Improvement • Six Sigma • Employee Empowerment • Benchmarking • Just-in-Time (JIT) • Taguchi Concepts • Knowledge of TQM Tools

5. Outline – Continued • Tools of TQM • Check Sheets • Scatter Diagrams • Cause-and-Effect Diagrams • Pareto Charts • Flowcharts • Histograms • Statistical Process Control (SPC)

6. Outline – Continued • The Role of Inspection • When and Where to Inspect • Source Inspection • Service Industry Inspection • Inspection of Attributes versus Variables • TQM in Services

7. Learning Objectives When you complete this chapter you should be able to: • Define quality and TQM • Describe the ISO international quality standards • Explain Six Sigma • Explain how benchmarking is used • Explain quality robust products and Taguchi concepts • Use the seven tools of TQM

8. Managing Quality Provides a Competitive Advantage Arnold Palmer Hospital • Deliver over 13,000 babies annually • Virtually every type of quality tool is employed • Continuous improvement • Employee empowerment • Benchmarking • Just-in-time • Quality tools

9. To Make the Quality Focus Work Motorola: • Aggressively began a worldwide education program to be sure that employees understood quality and statistical process control • Established goals • “stretch goal” - a goal which is very ambitious • Established extensive employee participation and employee teams • originator of the “six-sigma” approach to quality • winner of the Baldrige national quality award

10. What is a stretch goal ? A stretch goal is an ambitious goal. Sometimes it is called a “breakthrough objective.” Stretch goals force an organization to think radically different to encourage major improvements, as well as incremental ones. Stretch goals can be set for all areas of the company, including manufacturing, sales, accounting, product design, etc.

11. MOTOROLA Co. --A famous illustration of stretch goal “Six Sigma Quality” concept of Motorola: Motorola set the following stretch goal in 1987. “Improve product and services quality ten times by 1989, and at least one hundred fold by 1991. Achieve six sigma capability by 1992. With a deep sense of urgency, spread dedication to quality to every facet of the corporation, and achieve a culture of continuous improvement to assure total customer satisfaction. There is only one ultimate goal: zero defects--in everything we do.”

12. MOTOROLA Co. --A famous illustration of stretch goal Concept of six-sigma quality: Shrinking process variation (as indicated by 6 sigma) to half of the design tolerance so that only 3.4 parts out of 1 million are defective. At Motorola, six sigma became part of the common language of all employees. To them it meant “near perfection”, even if some did not understand the statistical details.

13. Quality and Strategy • Managing quality supports differentiation, low cost, and response strategies • Quality helps firms increase sales and reduce costs • Building a quality organization is a demanding task

14. Sales Gains via • Improved response • Flexible pricing • Improved reputation Improved Quality Increased Profits Reduced Costs via • Increased productivity • Lower rework (düzeltme) and scrap (hurda) costs • Lower warranty costs Two Ways Quality Improves Profitability Figure 6.1

15. Quality Principles Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQM Yields: How to do what is important and to be accomplished Employee Fulfillment Empowerment, Organizational commitment Yields: Employee attitudes that can accomplish what is important Customer Satisfaction Winning orders, Repeat customers Yields: An effective organization with a competitive advantage The Flow of Activities to achieve TQM Organizational Practices Leadership, Mission statement, Effective operating procedures, Staff support, Training Yields: What is important and what is to be accomplished Figure 6.2

16. Defining Quality The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs ASQ - American Society for Quality

17. Other Definitions of Quality • QUALITY MEANS “FITNESS FOR USE”. • QUALITY IS MEETING OR EXCEEDING CUSTOMER EXPECTATIONS. • QUALITY IS INVERSELY PROPORTIONAL TO VARIABILITY. – What does this mean?

18. Different Views of Quality • Depending on who/where you are.. • User-based – better performance, more features • “fitness for intended use,” or how well the product/service performs its intended function

19. Different Views of Quality • Manufacturing-based – conformance to standards, making it right the first time • quality is “conformance to specifications”. Specifications are targets and tolerances determined by designers of products and services. This is a key definition of quality for the technical aspects of quality planning and control.

20. Different Views of Quality • Product-based – specific and measurable attributes of the product • quality is a function of a specific, measurable variable and differences in the quality reflect differences in quantity of some product attribute ( number of knots on carpets, number of cylinders in an auto engine, percentage of silk in a shirt or blouse).

21. Implications of Quality • Company reputation • Perception of new products • Employment practices • Supplier relations • Product liability • Reduce risk of faulty products or services • Global implications • Improved ability to compete

22. Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived quality Value Key Dimensions of Quality for goods

23. Key Dimensions of Quality for goods • Performance: A product’s primary operating characteristics. Will the product do the intended job? (Car example -- acceleration, braking distance, steering, maneuverability.) Performans, birincil (temel) işlevler

24. Key Dimensions of Quality for goods • Features: Characteristics of secondary importance for the functioning of a product. In other words, “the bells and whistles” of a product. ( Power steering, antilock brakes, tape/CD deck, A/C, reclining seats.) İkincil özellikler

25. Key Dimensions of Quality for goods • Reliability: probability of a product’s surviving over a specified period of time under stated conditions of use. Consistency of performance over time. How often does the product fail? (Ability to start on cold days, frequency of failure of various components). Güvenilirlik

26. Key Dimensions of Quality for goods • Conformance: Degree to which physical and performance characteristics of a product match preestablished standards. Is the product made exactly as the designer intended? (fit and finish, aerodynamic properties-drag coefficient, freedom from noise, fuel consumption.) Uygunluk (spesifikasyonlara)

27. Key Dimensions of Quality for goods • Durability: Amount of use one gets from a product before it physically deteriorates or until replacement is preferable. How long does the product last ? (Corrosion resistance, wear of seat cover material, wiper blades motor, AC compressor, etc.) Dayanıklılık

28. Key Dimensions of Quality for goods • Serviceability: The speed, courtesy, and competence of maintenance and repair. How easy is it to service and repair the product? (Access to spare parts, the number of kilometers between major maintenance service, ease and expense of service.) Bakım / onarım kolaylığı

29. Key Dimensions of Quality for goods • Aesthetics: How a product looks, feels, sounds, tastes, or smells. What does the product look like? (Color, instrument panel design, placement of controls, and “feel of the road”.) Estetik özellikler

30. Key Dimensions of Quality for goods • Perceived Quality: Subjective assessment of quality resulting from image, advertising, or brand names. What is the reputation of the company or its product? (Brand image of car, repair history reported by trade magazines or friends.) Tüketici tarafından algılanan kalite

31. Reliability Responsiveness Tangibles Competence Access Security Courtesy © 1995 Corel Corp. Credibility Communication Service Quality Attributes Under-standing

32. Malcom Baldrige National Quality Award • Established in 1988 by the U.S. government • Designed to promote TQM practices • Recent winners • Premier Inc., MESA Products, Sunny Fresh Foods, Park Place Lexus, North Mississippi Medical Center, The Bama Companies, Richland College, Texas Nameplate Company, Inc. Click

33. Categories Points Leadership 120 Strategic Planning 85 Customer & Market Focus 85 Measurement, Analysis, and Knowledge Management 90 Workforce Focus 85 Process Management 85 Results 450 Baldrige Criteria Applicants are evaluated on:

34. Baldrige Excellence Model

35. Other well-known awards • European Foundation for Quality Management (EFQM) (established in 1988 by the European Commission) • Deming Prize (established in 1951 in honor of Deming, the quality guru who helped Japan establish its famous quality system)

36. Other well-known awards • KALDER Quality Award (established in 1991 by Turkish Quality Association – Kalite Derneği • Has been very successful in Turkey’s bid for quality excellence

37. EFQM Quality Model

38. Takumi A Japanese character that symbolizes a broader dimension than quality, a deeper process than education, and a more perfect method than persistence

39. Costs of Quality • Prevention costs - reducing the potential for defects (training, quality improvement programs) • Appraisal costs - evaluating products, parts, and services (testing, labs, inspectors) • Internal failure - producing defective parts or service before delivery (scrap, rework, downtime of machinery) • External costs - defects discovered after delivery to customer (returned product, liabilities, loss of goodwill, warranty repair, costs to society)

40. Total Cost Total Cost External Failure Internal Failure Prevention Appraisal Quality Improvement Costs of Quality

41. Leaders in Quality 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, zero defects

42. History of Development of TQM PLEASE REFER TO SLIDE SET TITLED HISTORY OF DEVELOPMENT OF TQM

43. 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 • All stakeholders much be considered

44. International Quality Standards • 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)

45. ISO 14000Environmental Standard Core Elements: • Environmental management • Auditing • Performance evaluation • Labeling • Life cycle assessment

46. TQM 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

47. Deming’s Fourteen Points • Create consistency of purpose • Lead to promote change • Build quality into the product; stop depending on inspection • Build long-term relationships based on performance, not price • Continuously improve product, quality, and service • Start training • Emphasize leadership Table 6.1

48. Deming’s Fourteen Points • Drive out fear • Break down barriers between departments • Stop haranguing workers • Support, help, improve • Remove barriers to pride in work • Institute a vigorous program of education and self-improvement • Put everybody in the company to work on the transformation Table 6.1

49. Seven Concepts of TQM • Continuous improvement • Six Sigma • Employee empowerment • Benchmarking • Just-in-time (JIT) • Taguchi concepts • Knowledge of TQM tools

50. Continuous Improvement • Represents continual improvement of all processes • Involves all operations and work centers including suppliers and customers • People, Equipment, Materials, Procedures