Managing Quality

© 2014
© 2014
Pearson
Pearson
Education,
Education,
Inc.Inc. 6-1
 Defining Quality

 Conformance to Specifications
 Adherence to stated specifications
 Fitness for Use
 The totality of features and characteristics
of a product or service that bears on its
ability to satisfy stated or implied needs
 Value to Customer
 Ratio of benefits to costs

© 2014 Pearson Education, Inc. 6-2

 Two Ways Quality
Improves Profitability
Figure 6.1

Sales Gains via

• Improved response
• Improved reputation
• Premium can be charged

Improved Increased
Quality Profits
Reduced Costs via
• Increased productivity
• Lower rework and scrap costs
• Lower warranty costs

© 2014 Pearson Education, Inc. 6-3

 ISO 9000 International Quality
Standards
► International recognition
► Encourages quality management
procedures, detailed documentation, work
instructions, and recordkeeping
► Critical for global business

© 2014 Pearson Education, Inc. 6-4

 Costs of Quality
► Prevention costs - reducing the
potential for defects
► Appraisal costs - evaluating products,
parts, and services
► Internal failure costs - producing
defective parts or service discovered
before delivery
► External failure costs - defects
discovered after delivery
© 2014 Pearson Education, Inc. 6-5
 Costs of Quality

Total Total Cost

Cost
External Failure

Internal Failure

Quality Improvement

© 2014 Pearson Education, Inc. 6-6

 Leaders in Quality
TABLE 6.1 Leaders in the Field of Quality Management
LEADER PHILOSOPHY/CONTRIBUTION
W. Edwards Deming Deming insisted management accept responsibility for
building good systems. The employee cannot produce
products that on average exceed the quality of what the process
is capable of producing. His 14 points for implementing quality
improvement are presented in this chapter.
Joseph M. Juran A pioneer in teaching the Japanese how to improve quality,
Juran believed strongly in top-management commitment,
support, and involvement in the quality effort. Juran’s Trilogy
consisted of: Quality Planning, Quality Control, Quality
Improvement.

© 2014 Pearson Education, Inc. 6-7

 Leaders in Quality
TABLE 6.1 Leaders in the Field of Quality Management
LEADER PHILOSOPHY/CONTRIBUTION
Taguchi Put forward the Taguchi Loss Function according to which
losses increased exponentially as the deviation from the target
specification increased.
Philip B. Crosby He propounded the concept of: Do it Right the First Time:
Quality Is Free was Crosby’s attention-getting book published in
1979. The cost of poor quality should include all of the things that
are involved in not doing the job right the first time. Crosby
coined the term zero defects

William Shewhart Known as the Father of Statistical Quality Control

© 2014 Pearson Education, Inc. 6-8

 Taguchi Loss Function

© 2014 Pearson Education, Inc. 6-9

 Quality Assurance Vs Quality
Control
▶ Quality assurance
▶ Part of quality management focused on providing
confidence that quality requirements will be
fulfilled.
▶ Quality Control
▶ Part of quality management focused on
fulfilling quality requirements.

© 2014 Pearson Education, Inc. 6 - 10

 Total Quality Management
► 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

© 2014 Pearson Education, Inc. 6 - 11

 Deming’s Fourteen Points
TABLE 6.2 Deming’s 14 Points for Implementing Quality Improvement
1. Create consistency of purpose
2. Lead to promote change
3. Build quality into the product; stop depending on inspections to catch
problems
4. Build long-term relationships based on performance instead of
awarding business on price
5. Continuously improve product, quality, and service
6. Start training
7. Emphasize leadership

© 2014 Pearson Education, Inc. 6 - 12

 Deming’s Fourteen Points

TABLE 6.2 Deming’s 14 Points for Implementing Quality Improvement

8. Drive out fear
9. Break down barriers between departments
10. Stop haranguing workers
11. Support, help, and improve
12. Remove barriers to pride in work
13. Institute a vigorous program of education and self-improvement
14. Put everyone in the company to work on the transformation

© 2014 Pearson Education, Inc. 6 - 13

 Pillars of TQM
▶ Customer Satisfaction
▶ Continuous Improvement
▶ Employee Involvement

© 2014 Pearson Education, Inc. 6 - 14

 Customer Satisfaction
▶ Customer satisfaction can be achieved
through the following.
▶ Conforming to specifications
▶ Making the product/service fit for use
▶ Providing value to the customer

© 2014 Pearson Education, Inc. 6 - 15

 Employee Involvement
► Getting employees involved in product and
process improvements
► 85% of quality problems are due
to process and material
► Techniques
1) Build communication networks
that include employees
2) Develop open, supportive supervisors
3) Move responsibility to employees
(empowerment)
4) Build a high-morale organization
5) Create formal team structures
© 2014 Pearson Education, Inc. 6 - 16
 Quality Circles
► Group of employees who meet
regularly to solve problems
► Trained in planning, problem
solving, and statistical methods
► Often led by a facilitator

© 2014 Pearson Education, Inc. 6 - 17

 Continuous Improvement
► Never-ending process of continual
improvement (Kaizen)
► Covers people, equipment, materials,
procedures
► Every operation can be improved
► Benchmarking can be done

© 2014 Pearson Education, Inc. 6 - 18

 Benchmarking
Selecting best practices to use as a
standard for performance
1. Determine what to benchmark
2. Form a benchmark team
3. Identify benchmarking organization
4. Collect and analyze benchmarking
information
5. Take action to match or exceed the
benchmark

© 2014 Pearson Education, Inc. 6 - 19

 Six Sigma
► Two meanings
► Statistical definition: A process that is
99.9997% capable, 3.4 defects per
million opportunities (DPMO)
► A program designed to reduce defects,
lower costs, save time, and improve
customer satisfaction
► A comprehensive system for achieving
and sustaining business success

© 2014 Pearson Education, Inc. 6 - 20

 Six Sigma
► Two meanings
Lower limits Upper limits
2,700 defects/million
► Statistical definition of a process that is
3.499.9997%
defects/million capable, 3.4 defects per
million opportunities (DPMO)
► A program designed to reduce defects,
lower costs, save time, and improve
customer satisfaction Mean
► A comprehensive system±3for achieving
and sustaining business ±6success

Figure 6.4

© 2014 Pearson Education, Inc. 6 - 21

 Six Sigma Program
► Originally developed by Motorola,
adopted and enhanced by Honeywell
and GE
► Highly structured approach to process

improvement

6
© 2014 Pearson Education, Inc. 6 - 22
 Six Sigma
1. Defines the project’s purpose, scope, and outputs,
identifies the required process information keeping
in mind the customer’s definition of quality
2. Measures the process and collects data
3. Analyzes the data, determine gaps in performance,
find root causes.
4. Improves by modifying or DMAIC Approach
redesigning existing
processes and procedures
5. Controls the new process
to make sure performance
levels are maintained

© 2014 Pearson Education, Inc. 6 - 23

 Seven Tools of TQM
(a) Check Sheet: An organized
method of recording data

Hour

Defect 1 2 3 4 5 6 7 8

A /// / / / / /// /
B // / / / // ///
C / // // ////

Figure 6.6

© 2014 Pearson Education, Inc. 6 - 24

 Seven Tools of TQM
(b) Scatter Diagram: A graph of the
value of one variable vs. another
variable
Productivity

Absenteeism
Figure 6.6

© 2014 Pearson Education, Inc. 6 - 25

 Seven Tools of TQM
(c) Cause-and-Effect Diagram: A tool
that identifies process elements
(causes) that might effect an outcome
Cause
Materials Methods
Effect

Manpower Machinery
Figure 6.6

© 2014 Pearson Education, Inc. 6 - 26

 Seven Tools of TQM
(d) Pareto Chart: A graph to identify and
plot problems or defects in descending
order of frequency
Frequency

Percent
A B C D E
Figure 6.6

© 2014 Pearson Education, Inc. 6 - 27

 Seven Tools of TQM
(e) Flowchart (Process Diagram): A chart
that describes the steps in a process

Figure 6.6

© 2014 Pearson Education, Inc. 6 - 28

 Seven Tools of TQM
(f) Histogram: A distribution showing the
frequency of occurrences of a variable
Distribution
Frequency

Repair time (minutes) Figure 6.6

© 2014 Pearson Education, Inc. 6 - 29

 Seven Tools of TQM
(g) Statistical Process Control Chart: A chart
with time on the horizontal axis to plot
values of a statistic

Upper control limit

Target value

Lower control limit

Time
Figure 6.6

© 2014 Pearson Education, Inc. 6 - 30

 Cause-and-Effect Diagrams
Material Method
(ball) (shooting process)
Grain/Feel Aiming point
(grip)
Size of ball
Air pressure Bend knees
Hand position
Balance
Lopsidedness
Follow-through
Missed
Training
free-throws
Rim size

Conditioning Motivation Rim height

Consistency Rim alignment Backboard

stability
Concentration

Machine
Manpower (hoop &
(shooter) Figure 6.7
backboard)

© 2014 Pearson Education, Inc. 6 - 31

 Pareto Charts
Data for October
– 100
70 – – 93
– 88
60 – 54
Frequency (number)

Cumulative percent
– 72
50 –
40 –
Number of
30 – occurrences
20 –
12
10 –
4 3 2
0 –
Room service Check-in Pool hours Minibar Misc.
72% 16% 5% 4% 3%
Causes and percent of the total

© 2014 Pearson Education, Inc. 6 - 32

 Flow Charts
MRI Flowchart
1. Physician schedules MRI 7. If unsatisfactory, repeat
2. Patient taken to MRI 8. Patient taken back to room
3. Patient signs in 9. MRI read by radiologist
4. Patient is prepped 10. MRI report transferred to
5. Technician carries out MRI physician
6. Technician inspects film 11. Patient and physician
discuss

8
80%
1 2 3 4 5 6 7 11
9 10
20%

© 2014 Pearson Education, Inc. 6 - 33

 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 by taking periodic
samples
► Plot the quality parameters on a graph
► When a change is indicated, find the
assignable cause, if any
► Eliminate or incorporate the cause
© 2014 Pearson Education, Inc. 6 - 34
►
 Control Charts
Figure 6.8

Plot the percent of free throws missed

Upper control limit

40%

Coach’s target value

20%

| | | | | | | | | Lower control limit

0% 1 2 3 4 5 6 7 8 9

Game number

© 2014 Pearson Education, Inc. 6 - 35

 Process Capability
▶ Tolerances or specifications
▶ Range of acceptable values established by
engineering design or customer requirements

▶ Process variability
▶ Natural variability in a process

▶ Process capability
▶ Process variability relative to specification

© 2014 Pearson Education, Inc. 10-36 6 - 36

 Process Capability
Figure 10.15
Lower Upper
Specification Specification

A. Process variability
matches specifications
Lower Upper
Specification Specification

B. Process variability
Lower Upper
well within specifications Specification Specification

C. Process variability
exceeds specifications
© 2014 Pearson Education, Inc. 10-37 6 - 37
 Process Capability Ratio
If the process is centered use Cp
specification width
Process capability ratio, Cp =
process width

Cp = Upper specification – lower specification

6
If the process is not centered use Cpk
 X  LTL UTL - X 
C pk = min  or 

 3  3 
© 2014 Pearson Education, Inc. 10-38 6 - 38
 Chance and Assignable
Causes of Quality Variation
▶ A process that is operating with only chance
causes of variation present is said to be in
statistical control.
▶ A process that is operating in the presence of
assignable causes is said to be out of control.
▶ The eventual goal of SPC is reduction or
elimination of variability in the process by
identification of assignable causes.

© 2014 Pearson Education, Inc. 6 - 39

 TQM In Services
► Service quality is more difficult to
measure than the quality of goods
► Service quality perceptions depend on
1) Intangible differences between
products
2) Intangible expectations customers
have of those products

© 2014 Pearson Education, Inc. 6 - 40

 Service Quality
The Operations Manager must
recognize:
► The tangible component of services
is important
► The service process is important
► The service is judged against the
customer’s expectations
► Exceptions will occur

© 2014 Pearson Education, Inc. 6 - 41

 SERVQUAL MODEL
▶ Tangibility
▶ The appearance of physical facilities, equipment, personnel and
communication materials
▶ Reliability
▶ The ability to perform the promised service dependably and
accurately
▶ Responsiveness
▶ The willingness to help customers and to provide prompt service
▶ Assurance
▶ The knowledge and courtesy of employees and their ability to
convey trust and confidence
▶ Empathy
▶ The provision of caring, individualized attention to customer
© 2014 Pearson Education, Inc. 6 - 42