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Operation Management - OPM 530

Operation Management - OPM 530

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  • This slide not only looks at the impact of quality on productivity - it also enables you to begin a discussion as to the meaning of quality (or perhaps the differing meanings among different people). To many people, the notion of “high quality” carries with it the assumption of “high price.” This slide provides an initial point to challenge that assumption.
  • This slide simply introduces the four activities. Subsequent slides expand on each.
  • One might begin discussion of this slide by introducing the difference between “leadership” and “management.” The point should also be made, again, about the need for involvement and commitment throughout the organization.
  • Some students may find the notion of “continuous improvement” (Why can’t we do it right the first time?) and “employee empowerment” (Doesn’t this reduce or abrogate the role of the manager?) the most difficult to accept. If you have not done so already, this might be a good time to discuss each in some depth. The following slide may be used in a discussion of empowerment.
  • This slide can be used to form the basis for a discussion of empowerment. If you wish to discuss empowerment - begin by asking students to define the term. You may find students are already comfortable with the term, in which case the discussion can be rather short; or, you may find they have unrealistic expectations (or desires?) - in which case you may wish to pursue the discussion at greater length. It may be helpful to ask students to identify the benefits and pitfalls to both management and worker. (For example, empowerment requires workers to assume greater responsibility.)
  • The main point that one might make with this slide is that the customer is, ultimately, the most important person in your business.
  • Once you have introduced these definitions of quality, ask students to provide example of products that use them.
  • 7
  • Although the text considers service quality at the end of the chapter, you may wish, at this point, to contrast the notion of quality for goods with that for services. If not, skip this slide - it is repeated at the point at which the issues are raised in the text.
  • This slide simply illustrates the relationships between quality and other elements of the firm.
  • Students might be asked what problems they would foresee in implementing this process.
  • A point to be made here is that TQM is not a program but a philosophy.
  • Again, a point to be made here is the universality required to achieve TQM.
  • One point to make here is that this list represents a recent expression of Demings 14 points - the list is still evolving. Students may notice that many of these fourteen points seem to be simply common sense. If they raise this issue - ask them to consider jobs they have held. Were these points emphasized or implemented by their employers? If not, why not? This part of the discussion can be used to raise again the issue that proper approaches to quality are not “programs,” with limited involvement and finite duration, but rather philosophies which must become ingrained throughout the organization.
  • At this point, you might consider going back to the slides illustrating the differences between goods and services. Those slides are provided next. If you do not wish to use them, simply skip to the final slide in the sequence.
  • This slide is a repeat of the earlier one on Service Quality Attributes as that topic appears at this point in the text.

C12 quality C12 quality Presentation Transcript

  • OPM 533 12- Operations Management Managing Quality Chapter 12
  • Ways in Which Quality Can Improve Productivity
    • Sales Gains
      • Improved response
      • Higher Prices
      • Improved reputation
    OPM 533 12-
    • Reduced Costs
      • Increased productivity
      • Lower rework and scrap costs
      • Lower warranty costs
    Increased Profits Improved Quality
  • Flow of Activities Necessary to Achieve Total Quality Management
    • Organizational Practices
    OPM 533 12-
    • Quality Principles
    • Employee Fulfillment
    • Customer Satisfaction
  • 1. Organizational Practices
    • Leadership
    • Mission statement
    • Effective operating procedure
    • Staff support
    • Training
    • Yields: What is important and what is to be accomplished
    OPM 533 12-
  • 2. Quality Principles
    • Customer focus
    • Continuous improvement
    • Employee empowerment
    • Benchmarking
    • Just-in-time
    • Tools of TQM
    • Yields: How to do what is important and to be accomplished
    OPM 533 12-
  • 3. Employment Fulfillment
    • Empowerment
    • Organizational commitment
    • Yields: Employees’ attitudes that they can accomplish what is important and to be accomplished
    OPM 533 12-
  • 4. Customer Satisfaction
    • Winning orders
    • Repeat customers
    • Yields: An effective organization with a competitive advantage
    OPM 533 12-
  • Definitions of Quality
    • ASQ : Product characteristics & features that affect customer satisfaction
    • User-Based : What consumer says it is
    • Manufacturing-Based : Degree to which a product conforms to design specification
    • Product-Based : Level of measurable product characteristic
    OPM 533 12-
  • Implications of Quality
    • Company reputation
      • Perception of new products
      • Employment practices
      • Supplier relations
    • Product liability
      • Reduce risk
    • Global implications
      • Improved ability to compete
  • Key Dimensions of Quality
    • Performance
    • Features
    • Reliability
    • Conformance
    • Durability
    • Serviceability
    • Aesthetics
    • Perceived quality
    • Value
  • Service Quality Attributes OPM 533 12- Under- standing Tangibles Reliability Communication Credibility Security Responsiveness Competence Courtesy Access © 1995 Corel Corp.
  • Importance of Quality OPM 533 12-
    • Costs & market share
    • Company’s reputation
    • Product liability
    • International implications
    Increased Profits Lower Costs Productivity Rework/Scrap Warranty Market Gains Reputation Volume Price Improved Quality
  • Quality Cost
    • 4 types of quality costs
    • Prevention cost
    • Appraisal cost
    • Internal failure cost
    • External failure costs
    • 1 & 2 – cost to maintain or control quality.
    • 3 & 4 – cost resulting from failure to control quality.
  • Prevention cost
    • Cost associated with preventing defects before they happen.
    • Costs of trying to prevent poor quality products from reaching the consumer.
    • Eg.process design, product design, employee training and vendor program.
  • Appraisal costs
    • Cost incurred in assessing or auditing the level of quality. These are the costs of measuring, testing and analyzing materials, parts, product and the production process to ensure that the product quality specifications are being conformed to.
    • Example cost of inspection and testing, test equipment or devices.
  • Internal failure costs
    • Cost incurred for correcting or reworking on products or services due to defects incurred during the production process.
    • It pertains to defects found before the product left the factory.
    • Example: Rework costs, process failure costs, process downtown costs and price downgrading costs.
  • External failure costs
    • External failure costs are costs incurred after the customer has received a poor-quality product.
    • Example: customer complaint costs, product returns costs, warranty claim costs, loss of market share and lawsuit arising from injury or property damages from use of the product or service.
  • Traditional Quality Process (Manufacturing) OPM 533 12- Specifies Need Customer Interprets Need Marketing Designs Product Defines Quality Engineering Produces Product Plans Quality Monitors Quality Operations Quality is customer driven!
  • TQM
    • Encompasses entire organization, from supplier to customer
    • Stresses a commitment by management to have a continuing, company-wide, drive toward excellence in all aspects of products and services that are important to the customer.
    OPM 533 12-
  • Achieving Total Quality Management OPM 533 12- Organizational Practices Quality Principles Employee Fulfillment Attitudes (e.g., Commitment) How to Do What to Do Effective Business Customer Satisfaction
  • Deming’s Fourteen Points
    • Create consistency of purpose
    • Lead to promote change
    • Build quality into the products
    • Build long term relationships
    • Continuously improve product, quality, and service
    • Start training
    • Emphasize leadership
    OPM 533 12-
  • Deming’s Points - continued
    • 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
    OPM 533 12-
  • Seven Concepts of TQM
    • Continuous improvement
    • Six Sigma
    • Employee empowerment
    • Benchmarking
    • Just-in-time (JIT)
    • Taguchi concepts
    • Knowledge of TQM tools
  • Continuous Improvement
    • Represents continual improvement of all processes
    • Involves all operations and work centers including suppliers and customers
      • People, Equipment, Materials, Procedures
  • Shewhart’s PDCA Model Figure 6.3 2. Do Test the plan 3. Check Is the plan working? 4. Act Implement the plan
    • Plan
    • Identify the improvement and make a plan
  • 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
  • Six Sigma DMAIC Approach
    • Define critical outputs and identify gaps for improvement
    • Measure the work and collect process data
    • Analyze the data
    • Improve the process
    • Control the new process to make sure new performance is maintained
  • 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
  • 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
  • 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
  • Benchmarking Use internal benchmarking if you’re big enough Selecting best practices to use as a standard for performance
    • Determine what to benchmark
    • Form a benchmark team
    • Identify benchmarking partners
    • Collect and analyze benchmarking information
    • Take action to match or exceed the benchmark
  • 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
  • Just-in-Time (JIT)
    • Relationship to quality:
    • JIT cuts the cost of quality
    • JIT improves quality
    • Better quality means less inventory and better, easier-to-employ JIT system
  • 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
  • Taguchi Concepts
    • Experimental design methods to improve product and process design
      • Identify key component and process variables affecting product variation
    • Taguchi Concepts
      • Quality robustness
      • Quality loss function
      • Target-oriented quality
  • Quality Robustness
    • Ability to produce products uniformly in adverse manufacturing and environmental conditions
      • Remove the effects of adverse conditions
      • Small variations in materials and process do not destroy product quality
  • Quality Loss Function
    • Shows that costs increase as the product moves away from what the customer wants
    • Costs include customer dissatisfaction, warranty and service, internal scrap and repair, and costs to society
    • Traditional conformance specifications are too simplistic
  • Quality Loss Function Figure 6.4 Unacceptable Poor Good Best High loss Loss (to producing organization, customer, and society) Low loss Frequency Lower Target Upper Specification Target-oriented quality yields more product in the “best” category Target-oriented quality brings product toward the target value Conformance-oriented quality keeps products within 3 standard deviations L = D 2 C where L = loss to society D = distance from target value C = cost of deviation
  • 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
  • Seven Tools for TQM / / / / /// / // /// // //// /// // / Hour Defect 1 2 3 4 5 6 7 8 A B C / / // / (a) Check Sheet: An organized method of recording data Figure 6.5
  • Seven Tools for TQM (b) Scatter Diagram: A graph of the value of one variable vs. another variable Figure 6.5 Absenteeism Productivity
  • Seven Tools for TQM (c) Cause and Effect Diagram: A tool that identifies process elements (causes) that might effect an outcome Figure 6.5 Cause Materials Methods Manpower Machinery Effect
  • Seven Tools for TQM (d) Pareto Charts: A graph to identify and plot problems or defects in descending order of frequency Figure 6.5 Frequency Percent A B C D E
  • Seven Tools for TQM (e) Flow Charts (Process Diagrams): A chart that describes the steps in a process Figure 6.5
  • Seven Tools for TQM (f) Histogram: A distribution showing the frequency of occurrence of a variable Figure 6.5 Distribution Repair time (minutes) Frequency
  • 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 Upper control limit Target value Lower control limit Time
  • Cause-and-Effect Diagrams Figure 6.6 Material Machinery Methods Manpower Inadequate supply of magazines Inadequate special meals on-board Insufficient clean pillows & blankets on-board Broken luggage carousel Mechanical delay on plane Deicing equipment not available Overbooking policies Bumping policies Mistagged bags Poor check-in policies Understaffed ticket counters Understaffed crew Poorly trained attendants Dissatisfied Airline Customer
  • Pareto Charts Number of occurrences Room svc Check-in Pool hours Minibar Misc. 72% 16% 5% 4% 3% 12 4 3 2 54 – 100 – 93 – 88 – 72 70 – 60 – 50 – 40 – 30 – 20 – 10 – 0 – Frequency (number) Causes and percent Cumulative percent Data for October
  • Flow Charts Packing and shipping process Shipping dock Storage (4 to 6 hrs) Quick freeze storage (60 Mins) Sealing Weighing Labeling Packing station
  • Statistical Process Control (SPC)
    • Uses statistics and control charts to tell when to take corrective action
    • Drives process improvement
    • Four key steps
      • Measure the process
      • When a change is indicated, find the assignable cause
      • Eliminate or incorporate the cause
      • Restart the revised process
  • An SPC Chart Figure 6.7 Upper control limit Coach’s target value Lower control limit Game number | | | | | | | | | 1 2 3 4 5 6 7 8 9 20% 10% 0% Plots the percent of free throws missed
  • Inspection
    • 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
  • Purpose of Inspection
    • To maintain certain standards in producing products
    • To meet customer specifications
    • To find defective products which can be reworked or correct before the process is completed.
    • To find problems in the production process that can be corrected before defects can occur.
    • To provide information concerning the effectiveness of individual workers and particular department
    • Some industries use inspection to grade products
  • Types of Inspection
    • 100 % inspection
    • Inspect each unit that is we received or produced.
    • When 100% inspection is used?
    • Cost of inspection is cheaper than defective cost
    • Probability of quality variation is high
    • Risks of unacceptable quality are high
    • Low volume of output
    • Testing are not destructive
  • Sampling Inspection
      • Sampling inspection involve the use of statistical sampling to check the quality of a batch of products or to check whether a process is working properly.
      • Sampling inspection involves inspection of only a few products, which represent a sample of the total number of products produced.
      • When sampling inspection is used?
      • Mechanical production is used rather than manual production.
      • The cost of inspection is high.
      • High volume of output
      • Sensitive items which is easy destroy
      • When destructive testing is involved
      • Not critical product
  • When and Where to Inspect
    • At the supplier’s plant while the supplier is producing
    • At your facility upon receipt of goods from the supplier
    • Before costly or irreversible processes
    • During the step-by-step production processes
    • When production or service is complete
    • Before delivery from your facility
    • At the point of customer contact
  • Inspection
    • Many problems
      • Worker fatigue
      • Measurement error
      • Process variability
    • Cannot inspect quality into a product
    • Robust design, empowered employees, and sound processes are better solutions
  • Source Inspection
    • Also known as source control
    • The next step in the process is your customer
    • Ensure perfect product to your customer
    Poka-yoke is the concept of foolproof devices or techniques designed to pass only acceptable product
    • Service quality is more difficult to measure than for goods
    • Service quality perceptions depend on
      • Expectations versus reality
      • Process and outcome
    • Types of service quality
      • Normal: Routine service delivery
      • Exceptional: How problems are handled
    TQM In Services OPM 533 12-
  • Service Quality Attributes OPM 533 12- Under- standing Tangibles Reliability Communication Credibility Security Responsiveness Competence Courtesy Access © 1995 Corel Corp.
  • Determinants of Service Quality
    • Reliability – consistency and dependability
    • Responsiveness – willingness/readiness of employees to provide service; timeliness
    • Competence – possession of skills and knowledge required to perform service
    • Access – approachability and ease of contact
    • Courtesy – politeness, respect, consideration, friendliness of contact personnel
    OPM 533 12-
  • Determinants of Service Quality
    • Communication – keeping customers informed in languages they understand
    • Credibility – trustworthiness, believability, honesty
    • Security – freedom from danger, risk or doubt
    • Understanding/knowing the customer – making the effort to understands the customer’s needs
    • Tangibles – the physical evidence of the service
    OPM 533 12-