Teaching PowerPoint Slides - Chapter 13

CHAPTER
QUALITY MANAGEMENT
13
LEARNING OUTCOMES
At the end of this chapter, you should be able to:

Define quality management
Discuss quality gurus
Explain quality in terms of standards and awards, as
well as strategy
Explain the importance of quality and the objectives
of managing quality
Operations Management All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2016 13– 3
LEARNING OUTCOMES (cont.)
 Measure the performance of goods and

services
 Describe the quality control activity
 Discuss Total Quality Management
 Apply the statistical quality control tools

OVERVIEW OF
QUALITY MANAGEMENT
 In general, quality can be defined as the ability of a

product or service to meet the customers’ needs.
 The American Society for Quality has defined quality as,
‘The totality of features and characteristics of a product
or service that bears on its ability to satisfy stated or
implied needs’.

OVERVIEW OF
QUALITY MANAGEMENT (cont.)
Quality can be defined based on the categories as follows:

Product based
 Quality is measured based on the characteristics or
attributes of products.
User experience
 This refers to the extent to which goods or services
give satisfaction to users.
Production Based
 Quality is determined by how closely products meet
the desired specifications and standards.

GURUS OF QUALITY
 W. Edwards Deming
 He is popular for developing the statistical quality
control system.
 He believes that quality should be built into
products at all levels to achieve excellent quality.
 Deming chain reactiona situation whereby
when quality improves, costs will decrease and
productivity will increase.
 He is also known for developing the 14 principles
for achieving quality.
GURUS OF QUALITY (cont.)
The 14 principles are:

1.Create consistency of purpose
2.Lead to promote change
3.Build quality into the products; stop depending on inspections
4.Build long-term relationships based on performance, instead
of awarding businesses based on price
5.Improve products, quality and services continuously
6.Start on-the-job training
7.Emphasize leadership
8.Eliminate fear

9. Break down barriers between departments

10. Eliminate slogans, exhortations and targets for the
workers
11. Abolish numerical quota for production; concentrate on
quality and not quantity
12. Remove barriers to pride in work or workmanship
13. Implement education and self-improvement
14. Put everyone to work on achieving the transformation

 Joseph M.Juran
 He defines quality as fitness for use in the field and in
terms of design, conformance, availability and safety.
 His concept focuses on the customers’ view of quality.
 He introduced three basic processes for managing and
improving quality:
1. Planning
2. Control
3. Improvement

 Philips B. Crosby
 The definition of quality is ‘conformity to requirements’.
 The system that enables the achievement of quality is
prevention.
 The standard for quality performance is zero-error or
zero defects.
 The measures of quality are determined by the degree
of conformity.

 Quality improvement: ‘Crosby’s Fourteen Points’

1. Management commitment.
2. Quality improvement team
3. Measurement
4. Cost of quality (COQ)
5. Awareness of quality
6. Actions recovery
7. Planning to zero defects
8. Guidance for staff

9. Zero-Defects Day
10. Determination of the target
11. Removing the causes of errors
12. Prize
13. Quality councils
14. Implementation on a continuous basis

 Kaoru Ishikawa
 The first person to launch a quality circle (QC).
 They concur that the management plays the role of
providing support, leadership and a model to the staff.
 He agrees that quality improvements will reduce costs.
 He is the first expert to focus on internal and external
customers.

QUALITY STANDARDS
AND AWARDS
ISO 9000 International Quality Standards
ISO 9000 focuses on enhancing quality through eight quality
management principles, namely:
1. Leadership
2. Customers’ satisfaction
3. Continuous improvement
4. People involvement
5. Data-driven decision making
6. Process analysis
7. A system approach to management
8. Mutually beneficial relationship with suppliers

QUALITY STANDARDS
AND AWARDS (cont.)
The standards in the ISO 9000 family series include:

QUALITY STANDARDS
AND AWARDS (cont.)
Malcolm Baldrige National Quality Award
Recognizes companies that demonstrate quality and
excellence in performance
Baldrige Criteria for Performance Excellence:
1. Leadership
2. Strategic planning
3. Customer and market focus
4. Measurement, analysis and knowledge management
5. Human resource focus
6. Process management
7. Business or organizational performance results

QUALITY AND STRATEGY
 Quality management helps companies to develop their

competitive strategy.
 Quality can be considered a competitive weapon for
companies.
 High-quality products and services can generate higher
profits.
 Poor quality products reduces the ability of a company
to compete in the market.

QUALITY AND STRATEGY
(cont.)

IMPORTANCE OF QUALITY
1. Quality products and services will portray good image of a

company.
2. Quality is a competitive advantage that can be used by
companies to compete in the market.
3. Quality products and services will increase sales.
4. Customers often value the price they are paying for the
quality of the products or services they received.
5. Producing good quality products can avoid legal actions
from customers.
6. High quality products will increase the reputation of the
company.

OBJECTIVES OF
QUALITY MANAGEMENT
1. Ensure that companies produce goods and services that

meet standards or specifications
2. Reduce the production costs
3. Ensure that products and services are always well-
received by users
4. Protect companies from lawsuits caused by producing
goods that are harmful to the customers
5. Provide assurance to the management and users that the
products produced have been designed, manufactured
and marketed in compliance with the required standards
6. Achieve zero defects by producing high-quality products

QUALITY DIMENSIONS FOR
GOODS AND SERVICES
Eight dimensions of quality:

1.Performance
2.Reliability
3.Durability
4.Esthetic characteristics
5.Safety
6.Customer service
7.Features
8.Serviceability

QUALITY DIMENSIONS FOR
GOODS AND SERVICES (cont.)
Ten determinants of service quality:
1.Reliability
2.Responsiveness
3.Competence
4.Access
5.Courtesy
6.Communication
7.Credibility
8.Security
9.Understanding the customer
10.Tangibles

STAGES IN
QUALITY CONTROL
The quality control process can be divided into three

stages:
1.Product or Process Design Stage
2.Manufacturing Stage
 Inspection of raw materials received
 Inspection during the production process
 Inspection of the finished goods
3.After-sales Stage

INSPECTIONS
Six objectives of conducting inspections are:

1.To maintain certain standards in producing products
2.To ensure that the products made meet standards and
specifications
3.To detect defective products earlier
4.To detect potential problems in the production process,
before the problems occur
5.To gather information about the efficiency and
effectiveness of the operations system
6.To grade products

INSPECTIONS (cont.)
When and Where to Inspect

1.At the suppliers’ plant when the materials or components
are being produced
2.Upon receiving the raw materials from suppliers
3.Before costly and irreversible processes
4.At each stage of the production process
5.When the production process has been completed
6.Before delivering the completed products to customers
7.At the point of customer contact

INSPECTIONS (cont.)
Types of Inspections
1.100% inspections
• Inspection of all products manufactured or received
2.Sampling inspections
• An inspection method that uses statistical sampling to
make inferences about the quality of a batch of
product or to conclude whether a process has worked
well

INSPECTIONS (cont.)
Source Inspections
Defined as controlling quality done at the point of production
or purchase
Assisted by control devices or techniques such as poka-
yoke and checklists
Poka-yokea fool-proof device that ensures the production
of decent products every time
Poka-yokea concept of quality management developed to
avoid errors caused by negligence
A checklist as a type of poka-yoke helps the user to
maintain consistency and thoroughness in completing work.

INSPECTIONS (cont.)
Attributes and Variables Inspections

Attribute inspections classify a product as a good or bad
thing, as all right or not all right.
Variable inspections rate products based on some
measurable characteristics.

COST OF QUALITY
1. Prevention costsThe costs associated with preventing

or reducing potential defects, before they occur.
2. Appraisal costsThe costs of evaluating the quality
level of products, processes, parts and services.
3. Internal failure costsThe costs resulting from
producing defective products, before these products are
delivered to customers.
4. External failure costsThe costs incurred after poor
quality products have been delivered to customers.

TOTAL QUALITY MANAGEMENT
 Refers to the emphasis on quality that encompasses the

entire organization, from the suppliers to customers
 Seven concepts in TQM:
2. Six Sigma
3. Employee empowerment
4. Benchmarking
5. Just-in-time
6. Taguchi concepts
7. Knowledge of TQM tools

(cont.)
• TQM is a never-ending process of continuous improvement.
• PDCA (plan, do, check, act) is one model of continuous
improvement.
2. Six Sigma
• It is a measure of quality that strives for near perfection.
• It is a programme to save time, improve quality and reduce costs.
• It can also be defined as a programme designed to reduce defects in
helping to lower costs, save time and improve customers’
satisfaction.
• Two Six Sigma sub-methodologies—DMAIC (define, measure,
analyze, improve, control) and DMADV (define, measure, analyze,
design, verify).

(cont.)
3. Employee empowerment
• Getting the employees involved in product and
process improvements
• Move some of the responsibilities for decisions to the
employee who actually performs the job
• Quality circlea small group of supervisors and
employees, who meet to identify, analyze and solve
production and quality problems

(cont.)
4. Benchmarking
• A continuous and systematic approach that
measures a company’s products, services and
processes against that of the industry leaders
• The company will select the best practices and use
them as a target or the standards for performance
measurement.

(cont.)
• Five steps for developing benchmarking are:
1. Determining what to benchmark
2. Forming a benchmark team
3. Identifying benchmarking partners
4. Collecting and analyzing benchmarking
information
5. Taking action to match or exceed the benchmark
• Three types of benchmarking:
1. Competitive benchmarking
2. Functional benchmarking
3. Internal benchmarking

(cont.)
5. Just-in-time (JIT)
• An inventory strategy that companies employ to increase
efficiency and decrease waste by receiving or producing
goods only when they are needed
• JIT improves quality because all materials or finished
products are fresh at the time of receipt or delivery.
6. Taguchi concepts
• 80% of defective goods are caused by poor product design
• Taguchi loss functionwhen the conformance value
moves away from the target, loss increases as a quadratic
function.

(cont.)
7. Knowledge of TQM tools

 Tools for generating ideas
 Check sheets
 Scatter diagrams
 Cause-and-effect diagrams
 Tools to organize data
 Pareto charts
 Flow charts
 Tools for identifying problems
 Histograms
 Control charts

1
5
3
3
2
- TOTAL QUALITY MANAGEMENT
3
8 (cont.)

1
5
3
3
2
3
9 (cont.)

1
5
3
3
2
4
0 (cont.)

1
5
3
3
2
4
1 (cont.)

1
5
3
3
2
4
2 (cont.)

1
5
3
3
2
4
3 (cont.)

STATISTICAL QUALITY
CONTROL
 The use of statistical techniques to control quality

 Two categories of statistical quality control procedures
that can be used to control quality:
1. Acceptance sampling
2. Statistical process control

STATISTICAL QUALITY
CONTROL (cont.)
 Acceptance sampling
• Evaluation of purchased or manufactured products that
have been completed
• Samples will be taken and evaluated
• Types of sampling errors
1. Type 1 Errors—Producer risks
2. Type 2 Errors—Consumer risks
• Two possible ways to reduce sampling errors:
1. The selection of samples should be done randomly
2. Increase the number of samples

STATISTICAL QUALITY
CONTROL (cont.)
Statistical Process Control (SPC)
The quality of products is monitored during the production
process.
The purpose of SPC is to determine whether the production
process is under control or not and to detect the processes
that are ‘out of control’.
Samples are monitored using process control charts.
Variable samplingclassifies a product as either accepted
or not accepted, based on some measurable characteristics
Attribute samplingapplies to sample units that have no
specific measurement

STATISTICAL QUALITY
CONTROL (cont.)
Control Chart
A graphical tool that makes conclusions about the status of
process control, based on the results of the sampling used
The charts will tell operations manager whether the outputs
produced meet the quality standards or not
If the outputs do not meet quality standards, the matter
should be investigated and corrective actions should be
taken.
If the quality of the products exceeds expectations, the
operations manager should also investigate the factors that
contribute to the achievement, so that the quality can be
maintained.

STATISTICAL QUALITY
CONTROL (cont.)
Chance Cause and Assign Cause

Chance causes are the usual, historical, quantifiable
variation in a system.
Four characteristics of chance cause variation:
1. This phenomenon often occurs in the system.
2. Variations can be expected on the basis of probability.
3. Variations are not the same, but they are within a
historical experience base.
4. Variations are less important in individual values.

STATISTICAL QUALITY
CONTROL (cont.)
 Assign causes are the unusual, not previously observed and
non-quantifiable variation.
 Five characteristics of assign cause variation:
1. This phenomenon is new, unanticipated, emergent or
previously neglected in the system.
2. Variations are inherently unpredictable, even
probabilistically.
3. Variations are outside the historical experience base.
4. There is evidence of some inherent change in the system
or in our knowledge of it.
5. Special-cause variations always arrive as a surprise.

STATISTICAL QUALITY
CONTROL (cont.)
The three steps to construct the p-chart:

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)

STATISTICAL QUALITY
CONTROL (cont.)
Conclusion:
Reject the samples of
worker number 13,
because they fall
outside the control limit.
The samples also need
to be investigated to
find out the causes of
poor performance. The
other samples are
accepted.


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CHAPTER

At the end of this chapter, you should be able to:

Operations Management All Rights Reserved

 Measure the performance of goods and

Operations Management All Rights Reserved

 In general, quality can be defined as the ability of a

Operations Management All Rights Reserved

Quality can be defined based on the categories as follows:

Operations Management All Rights Reserved

The 14 principles are:

Operations Management All Rights Reserved

9. Break down barriers between departments

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

 Quality improvement: ‘Crosby’s Fourteen Points’

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

The standards in the ISO 9000 family series include:

Operations Management All Rights Reserved

Operations Management All Rights Reserved

 Quality management helps companies to develop their

Operations Management All Rights Reserved

Operations Management All Rights Reserved

1. Quality products and services will portray good image of a

Operations Management All Rights Reserved

1. Ensure that companies produce goods and services that

Operations Management All Rights Reserved

Eight dimensions of quality:

Operations Management All Rights Reserved

Operations Management All Rights Reserved

The quality control process can be divided into three

Operations Management All Rights Reserved

Six objectives of conducting inspections are:

Operations Management All Rights Reserved

When and Where to Inspect

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Attributes and Variables Inspections

Operations Management All Rights Reserved

1. Prevention costsThe costs associated with preventing

Operations Management All Rights Reserved

 Refers to the emphasis on quality that encompasses the

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

7. Knowledge of TQM tools

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

Operations Management All Rights Reserved

 The use of statistical techniques to control quality

Operations Management All Rights Reserved

Operations Management All Rights Reserved