1997 Prentice-Hall, Inc.

Principles of
Operations Management
Total Quality Management
Chapter 3

3-1

Learning Objectives
1997 Prentice-Hall, Inc.

Define quality

State why quality is important

Explain total quality management

(TQM)

Explain tools for total quality

management

Describe inspection
3-2

Definitions of Quality
1997 Prentice-Hall, Inc.

ASQC: Product characteristics &

features that affect customer satisfaction

User-Based: What consumer says it is

Mfg.-Based: Degree to which a product

conforms to design specification

Product-Based: Level of measurable

product characteristic
3-3

 1997 Prentice-Hall, Inc.

Dimensions of Quality
for Goods

Operation

Reliability & durability

Conformance

Serviceability

Appearance

Perceived quality
3-4

Quality

Importance of Quality
1997 Prentice-Hall, Inc.

Costs & market

share
Companys
reputation
Product
liability

Improved
Improved
Quality
Quality

International
implications
3-5

Market
MarketGains
Gains
Reputation
Reputation
Volume
Volume
Price
Price
Lower
LowerCosts
Costs
Productivity
Productivity
Rework/Scrap
Rework/Scrap
Warranty
Warranty

Increased
Increased
Profits
Profits

 1997 Prentice-Hall, Inc.

Industrial Standard Z8101-1981 (Japan)

Common quality standards for products

sold in Europe (even if made in U.S.)

ISO 14000 series (Europe/EC)

Specification for TQM

ISO 9000 series (Europe/EC)

International
Quality Standards

Standards for recycling, labeling etc.

ASQC Q90 series; MILSTD (U.S.)

3-6

 1997 Prentice-Hall, Inc.

Malcolm Baldrige
National Quality Award

Established in 1988 by the U.S. govt

Designed to promote TQM practices

Some criteria
Senior executive leadership; strategic
planning; mgt. of process quality
Quality results; customer satisfaction

Recent winners

Corning Inc.; GTE; AT&T; Eastman Chem.

3-7

 1997 Prentice-Hall, Inc.

Traditional
Quality Process (Mfg.)

Customer

Marketing

Engineering

Operations

Specifies
Need

Interprets
Need

Designs
Product

Produces
Product

Defines
Quality

Plans
Quality

Quality is customer driven!

3-8

Monitors
Quality

 1997 Prentice-Hall, Inc.

Total Quality
Management

Quality system involving entire

organization from supplier to customer

Objective: Meet or exceed customer needs

through company-wide continuous
improvement

Early proponents

W. Edwards Deming
J. M. Juran
Philip B. Crosby

3-9

 1997 Prentice-Hall, Inc.

Total Quality Management

Principles

Continuous improvement

Employee empowerment

Benchmarking

Just-in-time (JIT)

Knowledge of TQM tools

1995 Corel Corp.

3 - 10

Continuous Improvement
1997 Prentice-Hall, Inc.

Represents continual improvement of

process & customer satisfaction

Involves all operations

& work units

Other names

Kaizen (Japanese)
Zero-defects
Six sigma

3 - 11

1984-1994 T/Maker Co.

 1997 Prentice-Hall, Inc.

Getting employees involved in product

& process improvements

Employee
Empowerment

85% of quality problems are due to process

& material

Techniques

Talk to workers
Support workers
Let workers make decisions
Build teams & quality circles

3 - 12

1995 Corel Corp.

Quality Circles
1997 Prentice-Hall, Inc.

Group of 6-12 employees from same

work area

Meet regularly to solve work-related

problems
4 hours/month

Facilitator trains
& helps with
meetings
3 - 13

1995 Corel Corp.

Benchmarking
1997 Prentice-Hall, Inc.

Selecting best practices to use

as a standard for performance

Steps

Determine what to
benchmark
Form benchmarking team
Identify benchmarking partners
Collect benchmarking information
Take action to meet or exceed benchmark

3 - 14

 1997 Prentice-Hall, Inc.

Benchmarking
Thinking Challenge

What specific & measurable variables

would you benchmark in these areas?

Accounting

Hotel front desk

Data processing

Marketing

3 - 15

Alone

Group Class

Just-In-Time (JIT)
1997 Prentice-Hall, Inc.

Pull system of production/purchasing

Customer starts production with an order

Involves vendor partnership programs

to improve quality of purchased items

Reduces all inventory levels

Inventory hides process & material

problems

Improves process & product quality

3 - 16

TQM Tools
1997 Prentice-Hall, Inc.

Quality function deployment (QFD)

Pareto charts

Process charts

Cause & effect diagrams

Statistical process control (SPC)

3 - 17

 1997 Prentice-Hall, Inc.

Quality Function
Deployment (QFD)

Product design process using

cross-functional teams

Marketing, engineering, manufacturing

Translates customer preferences into

specific product characteristics

Involves creating 4 tabular Matrices or

Houses

Breakdown product design into increasing

levels of detail

3 - 18

 1997 Prentice-Hall, Inc.

Quality Function
Deployment Sequence

House of
Quality 1

Product
Char.

Customer
Req.

House of
Quality 3
Component
Spec.
3 - 19

House of
Quality 2

Component
Spec.

Product
Char.

Production
Process

House of
Quality 4
Production
Process

Quality
Plan

 1997 Prentice-Hall, Inc.

House of Quality
Example

Youve been assigned

temporarily to a QFD
team. The goal of the
team is to develop a
new camera design.
Build a House of
Quality.

1984-1994 T/Maker Co.

3 - 20

House of Quality
Example

1997 Prentice-Hall, Inc.

Cust.
Req.

Cust.
Importance

Target Values

3 - 21

High relationship Medium relationship

Pareto Chart
1997 Prentice-Hall, Inc.

Vertical bar chart showing relative

importance of problems or defects

Makes identifying & solving them easier

Based on Pareto Principle

Most effects have relatively few causes

e.g., 80% of quality problems come from 20%
of machines, materials, or operators
Focus on vital few 20% causes
Called 80-20 rule

3 - 22

 1997 Prentice-Hall, Inc.

Pareto Chart
Thinking Challenge

Youre a quality analyst for

Corning Glass. Youve
collected data on 100
rejected glasses:
Nicks
80
Cuts
11
Scratches
3
Porosity
3
Misc.
3
Prepare a Pareto Chart.
3 - 23

Alone

Group Class

Process Chart
1997 Prentice-Hall, Inc.

Shows sequence of events in process

Depicts activity relationships

Has many uses

Identify data collection points
Find problem sources
Identify places for improvement
Identify where travel distances can be
reduced

3 - 25

Process Chart Example

1997 Prentice-Hall, Inc.

SUBJECT: Request tool purchase

Dist (ft) Time (min) Symbol

Description

D Write order
On desk
75

D To buyer
D Examine
= Operation; = Transport; = Inspect;

3 - 26

D = Delay; = Storage

Cause & Effect Diagram

1997 Prentice-Hall, Inc.

Used to find problem sources/solutions

Other names

Fish-bone diagram, Ishikawa diagram

Steps
Identify problem to correct
Draw main causes for problem as bones
Ask What could have caused problems in
these areas? Repeat for each sub-area.

3 - 27

 1997 Prentice-Hall, Inc.

Statistical
Process Control (SPC)

Uses statistics & control charts to tell

when to adjust process

Developed by Shewhart in 1920s

Involves

Creating standards (upper & lower limits)

Measuring sample output (e.g. mean wgt.)
Taking corrective action (if necessary)

Done while product is being produced

3 - 29

 1997 Prentice-Hall, Inc.

Start

Statistical Process
Control Steps
Produce Good
Provide Service
Take Sample

No
Assign.
Causes?
Yes

3 - 30

Inspect Sample

Stop Process

Create
Control Chart

Find Out Why

Control Chart Example

1997 Prentice-Hall, Inc.

80
60
40
20
0

UCL

LCL
Time

3 - 31

 1997 Prentice-Hall, Inc.

Thinking Challenge:
Compare & Contrast
TQM Tools

Bases

3 - 32

Alone

Group Class

Inspection
1997 Prentice-Hall, Inc.

Involves examining items to see if an

item is good or defective

Objective: Detect a defective product

Does not correct deficiencies in process

or product

Issues
When to inspect
Where in process to inspect

3 - 33

 1997 Prentice-Hall, Inc.

When & Where

to Inspect in Mfg.

At suppliers plant while

producing

Upon receipt of goods

from supplier

Before costly or
irreversible processes

During production process

When production is complete

Before shipment
3 - 34

1995 Corel Corp.

 1997 Prentice-Hall, Inc.

When & Where

to Inspect in Services

Business

Where

Variable

Bank

Teller station
Checking

Store

Stockrooms
Stock rotation
Display areas Attractiveness
Counters
Courtesy,
knowledge

3 - 35

Speed, courtesy
Accuracy

TQM in Services
1997 Prentice-Hall, Inc.

Service quality is more difficult to

measure than for goods

Service quality perceptions depend on

Expectations vs. reality

Process & outcome

Types of service quality

Normal: Routine service delivery

Exceptional: How problems are handled

3 - 36

Service Quality
Attributes

1997 Prentice-Hall, Inc.

Reliability

Responsiveness

Tangibles

Competence

Understanding

Access

Security

Courtesy
1995 Corel Corp.

Credibility

3 - 37

Communication

Conclusion
1997 Prentice-Hall, Inc.

Defined quality

Stated why quality is important

Explained total quality management

Explained tools for total quality

management (TQM)

Described inspection
3 - 38