Managing Quality


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  • Other methods such as qualitative and associative forecasting are also relevant.
  • Managing Quality

    1. 1. Managing Quality Outlines <ul><li>Why Study Quality? </li></ul><ul><li>Defining Quality </li></ul><ul><li>Quality in Product and Service </li></ul><ul><li>International Quality Standards: ISO 9000 </li></ul><ul><li>Total Quality Management (TQM): Principles and Elements </li></ul><ul><li>Cost of Quality </li></ul><ul><li>Implementing TQM and Continuous Quality Improvement : Procedure, Problems and Tools </li></ul>
    2. 2. Why Study Quality? <ul><li>Customers &quot;buy&quot; quality with higher price and loyalty </li></ul><ul><li>Total quality leads to substantial cost reduction in rework, repair, scrap, warranty costs, etc. </li></ul><ul><li>Total quality &quot;pays&quot; with the higher productivity, profits and market share </li></ul><ul><li>Quality is built-in into all products and services </li></ul><ul><li>Quality is everybody’s responsibility including design, operations, marketing, purchasing, etc. </li></ul><ul><li>Quality improvement requires effective tools and good training </li></ul>
    3. 3. Defining Quality <ul><li>The American National Standards Institute (ANSI) and the American Society for Quality (ASQ) definition: </li></ul><ul><li>Quality is the totality of features and characteristics of a product or service that bears on its ability to satisfy given needs. </li></ul><ul><li>Purchaser-based definitions (user-based): </li></ul><ul><ul><li>Quality of the product delivered </li></ul></ul><ul><ul><li>Quality of supplier’s service and capability during the transactions </li></ul></ul>
    4. 4. Purchasing Qualified Tires for UPS Delivery Vehicles <ul><li>What are UPS’s needs for tires </li></ul><ul><li>What are UPS’s quality/value concerns of the tires delivered </li></ul><ul><li>What are UPS’s concerns of the supplier’s performance during the product/service delivery and transaction </li></ul><ul><li>What’s UPS’s “best buy”? </li></ul>
    5. 5. Dimensions of Product Quality <ul><li>Performance </li></ul><ul><li>Product's primary operating characteristics </li></ul><ul><li>Features </li></ul><ul><li>&quot;Bells and whistles&quot; of a product </li></ul><ul><li>Reliability </li></ul><ul><li>Probability of a product's surviving over a specified period of time </li></ul><ul><li>Conformance </li></ul><ul><li>Degree to which physical and performance characteristics of a product match pre-established standards </li></ul>
    6. 6. Dimensions of Product Quality <ul><li>Durability </li></ul><ul><li>Amount of use one gets from a product before it physically deteriorates or until replacement is preferable </li></ul><ul><li>Aesthetics </li></ul><ul><li>How a product looks, feels, sounds, tastes, or smells </li></ul><ul><li>Perceived quality (reputations) </li></ul><ul><li>Subjective assessment resulting from image, advertising, or brand names </li></ul>
    7. 7. Dimensions of Service Quality <ul><li>Competence, Access and Communication </li></ul><ul><li>Possession of the skills and knowledge required to perform the transactions; ease of contact; educating and informing buyers </li></ul><ul><li>Serviceability and responsiveness </li></ul><ul><li>Speed and willingness of providing service/repairing </li></ul><ul><li>Security </li></ul><ul><li>Freedom from danger, risk, or doubt </li></ul><ul><li>Commitment </li></ul><ul><li>Making an effort to meet the customer's needs </li></ul>
    8. 8. Importance of Quality <ul><li>Identify cost saving & value creation </li></ul><ul><li>Profits including company’s reputation or lower product liability </li></ul><ul><li>International implications </li></ul>Increased Profits Lower Costs Productivity Rework/Scrap Warranty Market Gains Reputation Volume Price Improved Quality
    9. 9. Description by Specification <ul><li>Establish clear standards for measuring </li></ul><ul><li>Serve as instructions of handling </li></ul><ul><li>Advantages and limits of using specs </li></ul><ul><li>Three types of specs </li></ul><ul><ul><li>Physical or Chemical Characteristics </li></ul></ul><ul><ul><li>Defining functions or performance in both products and delivery process </li></ul></ul><ul><ul><li>Description by engineering drawing </li></ul></ul>
    10. 10. Alternatives to Specification <ul><li>Description by sample </li></ul><ul><li>Use market grade </li></ul><ul><ul><li>Common for commodities such as agriculture or raw materials </li></ul></ul><ul><li>Use standard specification </li></ul><ul><ul><li>For example RS232 interface, IEEE1394 standard </li></ul></ul>
    11. 11. ISO 9000 Quality Standards <ul><li>Formed by International Organization for Standardization (ISO) in Geneva, Switzerland </li></ul><ul><li>U.S. counterpart: American National Standards Institute (ANSI) </li></ul><ul><li>Internal benefits </li></ul><ul><ul><li>Better documentation </li></ul></ul><ul><ul><li>Greater quality awareness by employee </li></ul></ul><ul><li>External benefits </li></ul><ul><ul><li>Higher perceived quality </li></ul></ul><ul><ul><li>Reduced customer quality audits </li></ul></ul>
    12. 12. How to Manage Quality? <ul><li>From OM’s perspective </li></ul><ul><li>Manufacturing-based definitions </li></ul><ul><ul><li>Conforming to standards </li></ul></ul><ul><ul><li>Make it right the first time </li></ul></ul><ul><li>Product-based definitions </li></ul><ul><ul><li>Quality of design/redesign </li></ul></ul><ul><ul><li>Quality are precise and measurable variables (specific product attributes) </li></ul></ul>
    13. 13. Total Quality Management (TQM) Principles <ul><li>Customer focus </li></ul><ul><li>Continuous improvement </li></ul><ul><li>Benchmarking </li></ul><ul><li>Consistency in the goal </li></ul><ul><li>Suppliers are partners in TQM process </li></ul><ul><li>Use statistical tools of TQM </li></ul><ul><li>Yields: How to do what is important and to be accomplished </li></ul>
    14. 14. To Make the Quality Focus Work <ul><li>Motorola: </li></ul><ul><ul><li>Aggressively began a worldwide education program to be sure that employees understood quality and statistical process control </li></ul></ul><ul><ul><li>Established goals </li></ul></ul><ul><ul><li>Established extensive employee participation and employee teams </li></ul></ul>
    15. 15. Flow of Activities Necessary to Achieve Total Quality Management <ul><li>Organizational Practices </li></ul><ul><li>Quality Principles </li></ul><ul><li>Employee Fulfillment </li></ul><ul><li>Customer Satisfaction </li></ul>
    16. 16. Organizational Practices <ul><li>Leadership </li></ul><ul><li>Mission statement </li></ul><ul><li>Effective operating procedure </li></ul><ul><li>Staff support </li></ul><ul><li>Training </li></ul><ul><li>Yields: What is important and what is to be accomplished </li></ul>
    17. 17. Benchmarking the quality of Potential Suppliers <ul><li>Selecting best practices to use as a standard for performance </li></ul><ul><li>Determine what to benchmark </li></ul><ul><li>Form a benchmark team </li></ul><ul><li>Identify benchmarking partners </li></ul><ul><li>Collect and analyze benchmarking information </li></ul><ul><li>Take action to match or exceed the benchmark </li></ul>
    18. 18. Employee and Supplier Fulfillment <ul><li>Incentive sharing and empowerment </li></ul><ul><li>Mutual commitments between Motorola and shipping agents </li></ul><ul><li>Empowerment </li></ul><ul><li>Organizational commitment </li></ul><ul><li>Yields: Suppliers’ attitudes that they are willing to accomplish what is important for buyers </li></ul>
    19. 19. Quality Circle and Six-Sigma Team <ul><li>Group of 6-12 employees from same work area </li></ul><ul><li>Meet regularly to solve work-related problems </li></ul><ul><ul><li>4 hours/month </li></ul></ul><ul><li>Six-Sigma team: Internal consulting group of outstanding employees from different work areas </li></ul><ul><li>Meet regularly to solve quality-related problems </li></ul><ul><li>Facilitates, trains, and helps with quality circle </li></ul><ul><li>meetings </li></ul>© 1995 Corel Corp.
    20. 20. The Baldrige National Quality Award and Deming Prize <ul><li>Malcolm Baldrige Award is to recognize US organizations’ quality achievement on diffusion of Total Quality Management (TQM) practices </li></ul><ul><li>Deming Prize granted by Japanese Empire annually to Japanese companies </li></ul><ul><ul><li>Since 1950’s, Deming’s quality crusade in Japan changed the world’s concepts of quality management </li></ul></ul>
    21. 21. Deming’s Points for Implementing Quality Improvement <ul><li>Create consistent and continuous improvement on product and service quality </li></ul><ul><li>Build quality into the product; stop depending on inspections to catch problems </li></ul><ul><li>Build long-term relationships in supplier based on performance instead of price </li></ul><ul><li>Emphasize top manager’s responsibility </li></ul>
    22. 22. Deming’s Points for Implementing Quality Improvement <ul><li>Break down barrier between departments </li></ul><ul><li>Support, help, and improve </li></ul><ul><li>Remove barriers of pride in work </li></ul><ul><li>Institute a vigorous program of education and self-improvement </li></ul><ul><li>Put everybody in the company to work on the transformation </li></ul>
    23. 23. Shewhart’s PDCA Model 4.Act 1.Plan 3.Check 2.Do Identify the improvement and make a plan Test the plan Is the plan working Implement the plan
    24. 24. Exam Information <ul><li>A sample quiz will be discussed </li></ul><ul><li>Midterm exam will cover Chapter 1, 2, 4, 5, 6 </li></ul>
    25. 25. Cost of Quality <ul><li>INTERNAL FAILURE COSTS </li></ul><ul><li>Incurred directly--prior to shipment or service--as a result of defective output: </li></ul><ul><ul><li>scrap </li></ul></ul><ul><ul><li>rework </li></ul></ul><ul><ul><li>repair </li></ul></ul><ul><ul><li>salvage </li></ul></ul><ul><ul><li>downtime </li></ul></ul><ul><ul><li>disposition </li></ul></ul>
    26. 26. Cost of Quality <ul><li>EXTERNAL FAILURE COSTS </li></ul><ul><li>Incurred to the provider when defects are discovered after shipment to customers: </li></ul><ul><ul><li>warranty expenses </li></ul></ul><ul><ul><li>returned materials </li></ul></ul><ul><ul><li>complaint processing </li></ul></ul><ul><ul><li>liability settlements </li></ul></ul><ul><ul><li>legal fees </li></ul></ul>
    27. 27. Cost of Quality <ul><li>PREVENTION COSTS </li></ul><ul><li>Incurred in an effort to improve quality system and avoid nonconformance in products and services: </li></ul><ul><ul><li>process analysis and process control </li></ul></ul><ul><ul><li>quality planning </li></ul></ul><ul><ul><li>quality training </li></ul></ul><ul><ul><li>system development and management </li></ul></ul><ul><ul><li>reporting </li></ul></ul>
    28. 28. Cost of Quality <ul><li>APPRAISAL COSTS </li></ul><ul><li>Incurred for determining the degree of quality: </li></ul><ul><ul><li>inspection and testing </li></ul></ul><ul><ul><li>materials and tools </li></ul></ul><ul><ul><li>maintenance of test equipment </li></ul></ul><ul><ul><li>field testing </li></ul></ul>
    29. 29. Traditional View of Quality-Cost Trade offs Low correction cost High detection cost High prevention cost High correction cost Low detection cost Low prevention cost Optimum Quality % of defects Cost
    30. 30. Taguchi Techniques and Quality Loss Function <ul><li>Experimental design methods </li></ul><ul><ul><li>Identify key component & process variables affecting product variation </li></ul></ul><ul><ul><li>improve product & process design </li></ul></ul><ul><li>Taguchi Concepts </li></ul><ul><ul><li>Quality robustness </li></ul></ul><ul><ul><li>Quality loss function </li></ul></ul><ul><ul><li>Target-oriented quality </li></ul></ul>
    31. 31. Target-Oriented Quality <ul><ul><li>A study found U.S. consumers preferred Sony TV’s made in Japan to those made in the U.S. Both factories used the same designs & specifications. The difference in quality goals made the difference in consumer preferences. </li></ul></ul>Japanese factory (Target-oriented) U.S. factory (Conformance-oriented)
    32. 32. Quality Loss Function; Distribution of Products Produced Low loss High loss Frequency Lower Target Upper Specification Loss (to producing organization, customer, and society) Quality Loss Function (a) Unacceptable Poor Fair Good Best Target-oriented quality yields more product in the “best” category Target-oriented quality brings products toward the target value Conformance-oriented quality keeps product within three standard deviations Distribution of specifications for product produced (b)
    33. 33. Quality Loss Function Graph <ul><ul><li>Loss = (Actual X - Target) 2 • (Cost of Deviation) </li></ul></ul>Lower (upper) specification limit Measurement Greater deviation, more people are dissatisfied, higher cost
    34. 34. <ul><li>The specifications for the diameter of a gear are 25.00 ± 0.25 mm . </li></ul><ul><li>However, even within the specifications, there is still loss due to quality deviation. </li></ul><ul><li>Need to identify the loss function </li></ul>Quality Loss Function Example © 1984-1994 T/Maker Co.
    35. 35. <ul><li>Setup equation based on Taguchi’s assumptions </li></ul><ul><li>L = D 2 C = (X - Target) 2 C </li></ul><ul><ul><li>L = Loss ($); D = Deviation; C = Cost </li></ul></ul><ul><li>Design experiments to find out key coefficients </li></ul><ul><li>4.00 = (25.25 - 25.00) 2 C </li></ul><ul><ul><li>Item scrapped if greater than 25.25 (USL = 25.00 + 0.25) with a cost of $4.00 </li></ul></ul><ul><li>C = 4.00 / (25.25 - 25.00) 2 = 64 </li></ul><ul><li>L = D 2 • 64 = (X - 25.00) 2 64 </li></ul><ul><li>Enter various X values to obtain L & plot </li></ul>Quality Loss Function Solution
    36. 36. <ul><li>Ability to produce products uniformly regardless of manufacturing conditions </li></ul><ul><li>Different conditions may lead to different yield or process time. But the quality of finished parts will be consistent. </li></ul>Quality Robustness © 1984-1994 T/Maker Co. © 1995 Corel Corp .
    37. 37. Assignment and Case Discussion for Managing Quality <ul><li>Assignment 3: LuckWay Supermarket </li></ul><ul><li>Christy Allen, the manager of the LuckWay supermarket, was very concerned with the large number of complaints from customers, particularly on Sundays, so over the last eight weeks she obtained Sunday's complaint records from the store's service desk… </li></ul>
    38. 38. Tools of TQM and Continuous Improvement <ul><li>Flow charts or process diagrams </li></ul><ul><li>Check sheet </li></ul><ul><li>Pareto charts </li></ul><ul><li>Cause and effect diagram </li></ul><ul><li>(Scatter diagram) </li></ul><ul><li>(Histograms) </li></ul><ul><li>Statistical process control charts </li></ul>
    39. 39. <ul><li>Shows sequence of events in process </li></ul><ul><li>Depicts activity relationships </li></ul><ul><li>Has many uses </li></ul><ul><ul><li>Identify data collection points </li></ul></ul><ul><ul><li>Find problem sources </li></ul></ul><ul><ul><li>Identify places for improvement </li></ul></ul><ul><ul><li>Identify where travel distances can be reduced </li></ul></ul>Flow Chart (Process Diagram)
    40. 40. Flow Charts (Chicken Processing Plant) Packing station Weighting & labeling Quick freeze (60 min) Storage (4 to 6 hrs) Shipping dock
    41. 41. Check Sheets <ul><li>Check sheet is designed for recording data </li></ul><ul><li>Help identify patterns or facts during the recording period and lead to subsequent analysis </li></ul><ul><li>For example, recording customer complains or inspection results as time goes by </li></ul>
    42. 42. Check Sheet Types of Error ------------------------------------------------------------------- Month Broken Wrong Mixed Contamination package label items --------------------------------------------------------------------------------------------- Jan 7 5 3 0 Feb 5 7 4 0 Mar 9 3 2 0 Apr 4 5 3 3 May 5 7 2 7 Jun 2 5 4 6 ---------------------------------------------------------------------------------------------- Total Percentage
    43. 43. Pareto Charts <ul><li>Organize errors, problems, or defects </li></ul><ul><li>Help focus on problem-solving efforts </li></ul><ul><li>Based on the work of Vilfredo Pareto, a 19-century economist </li></ul><ul><li>80% of a firm’s problem are a result of only 20% of the causes. </li></ul>
    44. 44. Pareto Analysis of Production Process (Total Defects = 44)
    45. 45. <ul><li>Used to find problem sources/solutions </li></ul><ul><li>Other names </li></ul><ul><ul><li>Fish-bone diagram, Ishikawa diagram </li></ul></ul><ul><li>Steps </li></ul><ul><ul><li>Identify problem to correct </li></ul></ul><ul><ul><li>Draw main causes for problem as ‘bones’ </li></ul></ul><ul><ul><li>Ask ‘What could have caused problems in these areas?’ Repeat for each sub-area. </li></ul></ul>Cause and Effect Diagram
    46. 46. Cause and Effect Diagram Example Too many defects Problem
    47. 47. Cause and Effect Diagram Example Method Manpower Material Machinery Too many defects Main Cause Main Cause
    48. 48. Cause and Effect Diagram Example Method Manpower Material Machinery Drill Over Time Steel Wood Lathe Too many defects Sub-Cause
    49. 49. Cause and Effect Diagram Example Method Manpower Material Machinery Drill Over Time Steel Wood Lathe Too many defects Tired Old Slow
    50. 50. <ul><li>Uses statistics & control charts to tell when to adjust process </li></ul><ul><li>Developed by Shewhart in 1920’s </li></ul><ul><li>Involves </li></ul><ul><ul><li>Creating standards (upper & lower limits) </li></ul></ul><ul><ul><li>Measuring sample output (e.g. mean wgt.) </li></ul></ul><ul><ul><li>Taking corrective action (if necessary) </li></ul></ul><ul><li>Done while product is being produced </li></ul>Statistical Process Control (SPC)
    51. 51. Process Control Chart
    52. 52. Patterns to Look for in Control Charts
    53. 53. <ul><li>Involves examining items to see if an item is good or defective </li></ul><ul><li>Detect a defective product </li></ul><ul><ul><li>Does not correct deficiencies in process or product </li></ul></ul><ul><li>Issues </li></ul><ul><ul><li>When to inspect </li></ul></ul><ul><ul><li>Where in process to inspect </li></ul></ul><ul><li>Use TQM tools to help analyze, organize, and interoperate result from inspection </li></ul>Inspection
    54. 54. When and Where to Inspect (Aided by Flow Chart) <ul><li>Before costly or irreversible processes </li></ul><ul><ul><li>At the supplier’s plant while the supplier is producing </li></ul></ul><ul><ul><li>At your facility upon receipt of goods from the supplier </li></ul></ul><ul><ul><li>Before delivery from your facility </li></ul></ul><ul><li>During the step-by-step production processes </li></ul><ul><li>When production or service is complete </li></ul><ul><ul><li>Conducting survey or interview </li></ul></ul>
    55. 55. Routine Inspection vs. Probing Inspection <ul><li>Probing inspection is to identify the source of emerging quality problem </li></ul><ul><li>Routine inspection is for tracking and monitoring those existing quality issues </li></ul><ul><li>Flow chart or process diagram is useful for designing and studying both types of inspection </li></ul>
    56. 56. Inspection Points in Services Bank Teller stations Loan accounts Checking accounts Shortages, courtesy, speed, accuracy Collateral, proper credit checks, rates, terms of loans, default rates, loan rates Accuracy, speed of entry, rate of overdraws Organization Some Points of Inspection Issues to Consider
    57. 57. Inspection Points in Services Retail store Stockrooms Display areas Sales counters Clean, uncluttered, organized, level of stockouts, amply supply, rotation of goods Attractive, well-organized, stocked, visible goods, good lighting Neat, courteous knowledgeable personnel; waiting time; accuracy in credit checking and sales entry Organization Some Points of Inspection Issues to Consider
    58. 58. Inspection Points in Services Restaurant Kitchen Cashier station Dining areas Clean, proper storage, unadulterated food, health regulations observed, well-organized Speed, accuracy, appearance Clean, comfortable, regular monitoring by personnel, Organization Some Points of Inspection Issues to Consider
    59. 59. Luckway Supermarket <ul><li>Only use open-ended comments but include timeline </li></ul><ul><li>Analyze the issues with insightful flow chart </li></ul><ul><li>Requirements </li></ul><ul><ul><li>Check sheet </li></ul></ul><ul><ul><li>Pareto chart </li></ul></ul><ul><ul><li>Control chart (record the frequency without consider UCL and LCL) </li></ul></ul><ul><ul><li>Cause-and-effect diagram </li></ul></ul><ul><li>Make recommendation (for example, tie to TQM principles) </li></ul>
    60. 60. Southwestern University (B) <ul><li>Why we need quantitative tools for managing quality? </li></ul><ul><li>How to identify quality problems </li></ul><ul><ul><li>Collect data </li></ul></ul><ul><ul><li>Organize data </li></ul></ul><ul><ul><li>Interoperate data </li></ul></ul><ul><li>Plan for improving quality </li></ul><ul><ul><li>Benchmarking </li></ul></ul><ul><ul><li>Empowerment </li></ul></ul><ul><ul><li>Continuous improvement </li></ul></ul>
    61. 61. Southwestern University (B) <ul><li>Two types of data in this case </li></ul><ul><ul><li>Survey data </li></ul></ul><ul><ul><li>Open-ended comments </li></ul></ul><ul><li>Start from considering the tools of TQM </li></ul><ul><ul><li>Flow chart </li></ul></ul><ul><ul><li>Pareto chart </li></ul></ul><ul><ul><li>Cause and effect diagram </li></ul></ul>
    62. 62. Survey Data vs. Open-Ended Comments <ul><li>All types of data collection is costly </li></ul><ul><li>When should we use survey? </li></ul><ul><li>When should open-ended comments be elicited? </li></ul><ul><li>How to encode open-ended comments? </li></ul><ul><li>Advantages of using data from comments? </li></ul><ul><li>How to design questions in survey? </li></ul><ul><li>Advantages of using survey data </li></ul>
    63. 63. Analyze Survey Data
    64. 64. Ranking     Speed of Service 1.96 Poor   Seating 2.14     Printed Program 2.34     Concession Prices 2.36     Traffic 2.41     Season Ticket Plans 2.78     Entertainment 3.23     Parking 3.28     Ticket Pricing 3.36     Items in Weighted Descending Order     Food Selection 3.44 Good
    65. 65. Issues for Analyzing Open-Ended Comments <ul><li>A direct way to find out customer’s biggest concerns about quality </li></ul><ul><li>Data would be abstract and subjective </li></ul><ul><li>Difficult to encode </li></ul><ul><li>Difficult to rank and interoperate </li></ul><ul><li>May miss some secondary issues </li></ul><ul><li>Good for pilot study on quality </li></ul>
    66. 66. Categorize Open-Ended Comments
    67. 67. Ranking (ABC Analysis)     Speed of Service 1.96 Poor   Seating 2.14     Printed Program 2.34     Concession Prices 2.36     Traffic 2.41     Season Ticket Plans 2.78     Entertainment 3.23     Parking 3.28     Ticket Pricing 3.36     Items in Descending Order     Food Selection 3.44 Good
    68. 68. Pareto Chart 100% 70% 40% 10%
    69. 69. Cause and Effect Diagram Internal Facility Manpower External Facility Food Stands Too many complains Main Cause Main Cause
    70. 70. Other Concerns about Data Collection <ul><li>Time horizon </li></ul><ul><li>Demography </li></ul><ul><li>Sample size </li></ul><ul><li>Sampling techniques </li></ul><ul><li>Question design </li></ul><ul><ul><li>Set hypothesis </li></ul></ul><ul><ul><li>Identify factors </li></ul></ul><ul><li>Data analysis </li></ul><ul><ul><li>Statistic methods </li></ul></ul><ul><ul><li>Models for testing hypothesis </li></ul></ul>