BBA V - OM - Unit-2QUALITY MANAGEMENT

Course: BBA
Subject: Operation Management

Unit: 2
© Oxford University Press 2013. All rights reserved.

 Quality Management
 Modern Tools
– TQM
– Six Sigma
– DMAIC
– ISO series
– Statistical Quality Control
– Kanban
– Kaizen
– Lean Manufacturing
– JIT

Definitions
J. M. Juran defined quality as “fitness for purpose.”

Philip Crosby defined quality as “conformance to
specifications.”
A. V. Feigenbaum defines Total Quality Control (TQC)
as:
“Total quality control is an effective system for
integrating the quality-development, quality-
maintenance, and quality-improvement efforts of
the various groups in an organization so as to
enable marketing, engineering, production, and
service at the most economical levels which allow
for full customer satisfaction.”
Various Dimensions of Quality
Performance –
Safety – How much care
How well does the
the company has taken to
product perform
make the product safe for
with respect to its Features – What special
users before, during, or
intended use? For features does the product
after use? For example, a
examplegood have? For example, 1200 watt
TV having features to
picture and sound sound system, flat-picture tube,
protect eyes of viewers
effects of a TV. picture-in-picture feature, etc.
from harmful radiations.
in a TV.
Customer Service – How is the

behavior and treatment of the seller
Reliability – How much is the
with the customer before, during
probability of breakdowns, need
and after the sale of the product?
Various for adjustments, replacement of
E.g. the pleasant treatment given
Dimensions parts, etc. in the product? For
by the sales staff prompted a
of Quality example, a TV performing well
customer to buy another TV of the
every time it is switched on.
same brand from the same dealer.
Appearance – How Serviceability – How easily, cheaply,

pleasant is the outward and speedily can the product be
look, smell, taste, feel, or repaired and serviced? For example,
Durability – How long
sound of the product to the a company providing on-the-spot
can the product perform
customers? For example, a repairs of TV within one hour of
before needing any
super-thin flat TV (which customer complaint at nominal
repair or replacement of
can be hung on a wall like a charges.
parts? For example, a
picture)
TV gives best
performance for 10 years
without needing any
repair.

Costs of Quality
Cost of prevention of
defects – training &
performing Acceptance
Sampling of raw
materials, SQC, Six
Sigma and other
techniques
Cost of warranty Cost of detecting defects

claims – This in the final product-
Costs of Outgoing inspection of
includes the loss of Quality products before being
goodwill on part of
shipped to customers
customers
Cost of scrap and

rework of defective
products – this includes
the extra paper work,
delays, rescheduling
required etc.

Deming’s Contribution to Total Quality Management
• Consistency of purpose is a must for continual

improvement of the product.
• Continuous change and innovation is a must
for survival.
• Quality cannot be achieved only by inspection.
• Eliminate wastes in every functional area, not
only production.
• Attitude of supervisors and managers towards
workers should be that of a facilitator.
• Remove the barriers between departments
and individuals.
Deming’s Contribution to Total Quality Management
• Remove obstacles in the good workmanship of

hourly workers to instill a sense of pride in
them.
• Vigorous programmes of retraining and
education of employees are a must.
• Top management’s commitment for ever-
improving quality is a must.
• Numerical targets and work standards may
affect quality.
• Encourage workers to give quality
improvement ideas without fear.
• On-the-job© Oxford
training
University of
Press employees is a must
2013. All rights reserved.
Quality at Every Stage
Quality of inputs Quality of outputs
monitored monitored
(Acceptance (Acceptance
Sampling) Sampling)
Random disturbances
INPUTS Transformation OUTPUTS

process
Statistical Process
Control (SPC)
Feedback Mechanisms
Monitoring Quality Levels at Every Stage of the

Transformation Process

Statistical Quality Control
• During the transformation process of a batch,
samples of items are taken at regular intervals
and inspected for any variations from the
established standards. Any variations found
prompt the quality control (QC) manager to
find the cause. If a cause like mistake on the
part of a worker in processing the item,
improper adjustment of the machine, etc is
found, it is termed as an assignable cause.
• Whenever variations are due to assignable
causes, the process
© Oxford is said
University Press 2013. Allto
rightsbe out of control.
reserved.
Statistical Process Control
7.05 mm Upper Specification Limit

(USL)
M + 3.σM Upper Control Limit (UCL)
Targeted or Aimed-at Mean Central Line (CL)

M = 7.00 mm
M - 3.σM Lower Control Limit (LCL)
6.95 mm Lower Specification Limit (LSL)
Specification & Control Limits for the Diameter of a Pencil

Type I and Type II Errors
Search for Search for

assignable assignable
causes is causes is
done not done
Type I Correct
Process is in control error approach
Correct Type II
Process is out of control approach error
Type I & Type II errors

Six Sigma
• Motorola pioneered the six sigma program in
1987. it took five years to yield significant
results.
• Six Sigma at many organizations simply means
a measure of quality that strives for near
perfection. Six Sigma is a disciplined, data-
driven approach and methodology for
eliminating defects (driving toward six
standard deviations between the mean and
the nearest specification limit) in any process
from manufacturing to transactional and
Six Sigma
LSL USL
CL
Defective Defective
items items
Three Sigma
μ - 3.s μ μ + 3.s quality level
s’
Defective Defective
items items
Six Sigma
μ - 6.s’ μ μ + 6.s’ quality level

Steps in Implementing Six Sigma
DMAIC
• Step 1 – Define: Define the priorities of the customers with respect to
quality
• Step 2 – Measure : Measure the processes and the defects arising in the
product due to the process
• Step 3 – Analyze: Analyze the process to determine the most likely causes
of defects
• Step 4 – Improve : Improve the performance of the process and remove
the causes of the defects
• Step 5 – Control : Ensure that the improvements are maintained over
time.

Defects per million opportunities (DPMO)

Contrasting Six Sigma and TQM
Six Sigma TQM

• Executive ownership • Self-directed work
• Business strategy teams
execution system • Quality initiative
• Truly cross functional • Largely within a single
• Focused training with function
verifiable return on • No mass training in
investment statistics and quality
• Business results with return on
oriented investment
• All rights reserved.
© Oxford University Press 2013. Quality oriented
Acceptance Sampling
• One or more samples may be drawn out of the lot and
tested for quality.
• A decision may be made to accept or reject the lot or
consignment depending upon the number of defective
items found in the samples.
• This process of using sampling in incoming or outgoing
inspection is called acceptance sampling.
Quality Standards
Quality standards are of two types:
Generic standards These standards are set by national and international
quality certification bodies as a guidance, development, or evaluation of quality
system in an organization. ‘Generic’ means that the same standards can be applied to
any organization—large or small, producing any product or service, and in any sector
of activity—it could be a business enterprise, public administration department, or a
government department. E.g. ISO9001
• ISO 9001: This is the most comprehensive of the certificates for an organization
engaging in development / design, production, installation, and servicing
Two documents are provided by ISO as guidance to organizations for
understanding various aspects of a good quality system:
• ISO 9000: This document explains principal concepts and applications, guide to
selection and use.
• ISO 9004: This document explains principal concepts and applications, guide to
quality management, and quality system elements.

Quality Standards
Industry-related standards These standards are

set by purchasing bodies for a particular industry
as the basic requirements for purchasing
products/services. For example, defence,
aerospace, nuclear industries, etc. usually have a
set of guidelines for purchasing due to
overriding safety requirements. A new standard
came into existence in 1995–96 called COPC–
2000 for customer service providers such as
BPOs. The Capability maturity model (CMM) is
another standard that has been developed by
the Software Engineering Institute, Carnegie
Mellon University, USA
© Oxford University and
Press 2013. All rightsis applicable to
reserved.
ISO 14001

Just-In-Time (JIT)
Schonberger defines the JIT system as to :

”Produce and deliver finished goods just in time
to be sold, sub-assemblies just in time to be
assembled into finished goods, and purchased
materials just in time to be transformed into
fabricated parts”.
Monden defines JIT as ‘a production system to
produce the kind of units needed, at the time
needed and in the quantities needed.'
The Concept of JIT Manufacturing
• Revise factory layouts
• Reduce set-up times
• Implement a pull system of production
• Better coordination with suppliers

Kanban Visual System
Manufacturing Manufacturing Manufacturing
Cell 1 (MC 1) Cell 2 (MC 2) Cell 3 (MC 3)
Step 4 Step 4 Step 4
Step 3
Racks containing bins Racks containing bins Racks containing bins

of components of components of components
manufactured at MC 1 manufactured at MC 2 manufactured at MC 3
Store
Work-In-Process Inventory
Racks containing bins Racks containing bins Racks containing bins

of components required of components required of components required
at WS 1 at WS 2 at WS 3
Mizosomashi or
supply worker
Step 1 Step 1 Step 1
(Step 2)
Workstation 1 Workstation 2 Workstation 3

(WS 1) (WS 2) (WS 3)
Car 1 Car 2 Car 3
Conveyor
The Assembly Line

Use of Kanban across the Supply Chain

Benefits of JIT
Heightened
Reduced buffer
awareness of
stocks and/or
problems &
operators
causes
Fast feedback
on defects
Ideas for Ideas for improving Ideas for
cutting lot sizes JIT delivery controlling defects
Smoother
performance
output
Scrap/ rates
quality
Lot size JIT
control
reductions production
Less
material
waste
Less stock in Less indirect Fewer rework
the system cost hours
Less material, labor, and indirect inputs for the same or higher output = higher productivity
Less inventory in the system = faster market response, better forecasting, less administration

Demand Inventory Capacity Quality
Management Management Management Management
Product Business Resource

forecasting forecasting planning
and control
P
L
A Inventory status Master Capacity
Customer (end items) production planning
N order entry schedule
N
I
N Bill of
materials
G
Components Inventory status Materials Capacity

forecasting (components) requirement requirement
planning planning
Shop-floor control
Shop Capacity
Hybrid MRP- JIT
scheduling control
Production System
E
Kanban Group
X system technology
E
C TPM
U JIT distribution JIT production
T
I TPC
O
JIT deliveries
N
Purchase Vendor
order capacity
scheduling control
Purchasing

Introduction to
Lean Manufacturing
Lean Manufacturing Definition
Lean has been defined in many different ways.
“A systematic approach to identifying and

eliminating waste(non-value-added activities)
through continuous improvement by flowing
the product at the pull of the customer in
pursuit of perfection.”
Intro-To-Lean
History Timeline for Lean Manufacturing
Intro-To-Lean
Lean manufacturing is a
philosophy
In 1990 James Womack, Daniel T. Jones, and
Daniel Roos wrote a book called “The Machine That
Changed the World: The Story of Lean Production--
Toyota's Secret Weapon in the Global Car Wars That
Is Now Revolutionizing World Industry”
In this book, Womack introduced the Toyota

Production System to American.
What was new was a phrase–

"Lean Manufacturing."
Intro-To-Lean
Lean Overview
Intro-To-Lean
Lean Manufacturing Tools
 5S
 Value Stream Mapping
 Standardized Work
 Load Leveling
 Kaizen
 Kanban
 Visual Workplace
 Quick Changeover
 Andon
 Poka-yoke
 One-piece flow
 Cellular Manufacturing
Intro-To-Lean
Production Planning System (Push System)
Intro-To-Lean
Push or Pull?
A push system
Intro-To-Lean
Push or Pull?
A pull system
Intro-To-Lean
Kanban Operation
K a n ba n S tag e K a nban S tage
1 i
RM FG
S t a t io n S t a t io n S t a t io n S t a t io n S t a t io n
1 2 i i+ 1 N+1
W K (1 ) P K (1 ) W K (2 ) P K (2 ) W K (i) P K (i) W K (i+ 1 ) P K (i+ 1 ) W K (N ) P K (N )
K-1
K 5
i Kanban Stage 4 i +1
i
From stage i-1 To stage i+1
1 3
2
PK WK
Figure 3.3. A kanban stage formed by two adjacent stations.
Intro-To-Lean
Raw materials inventory
3
14
Semi-finished parts Semi-finished parts
7
11 Finished
goods
11 7
12
Station 3
RM
Station 1 11 RM 7 RM 3
Station 2
8 4
8
13 4
WK PK WK 9 PK WK 5 PK
7
11
2
10 6
13
Material
handler Order receiving
Intro-To-Lean
Current State Map of A Case Study Example
Intro-To-Lean
Which to Choose — MRP (ERP),
or Kanban?
Where MRP (ERP) works best:
 MRP is by its very nature a forward-looking

system.
 MRP can be very effective in an environment with
a great deal of variability.
 MRP is recognized an engine to drive an
integrated enterprise-wide information system.
Purchasing and logistics activities were similarly
being integrated with fundamental internal
materials management principles into an
enterprise-wide approach.
Intro-To-Lean
MRP or Lean Manufacturing?
Where MRP is not as effective.
 MRP is a predictive system. It does not reflect to
customer’s demand (easy to get overproduction).
A company takes MRP suggestions and acts on them without
too much review is very risky.
 MRP won’t fully support the cost-cutting.
 MRP needs lots of data for production management.
 MRP generates high overhead.
 MRP builds high work-in-process.
 MRP’s lead times are fixed.
 MRP creates potential quality hazard.
Intro-To-Lean
Which to Choose — MRP
(ERP), or Kanban?
Where Kanban works best.
Kanban is a very reactive system. Very little is planned ahead.
Instead, Kanban causes replacement of material used in a totally
reactive mode. Kanban works best in a highly stable and predictable
environment.
Where it is not as effective.

Kanban can quickly fail in a highly volatile environment
because of the reactive nature of the system. Volatility in
customer demand, processing problems, and extensive changes
in product designs make it very difficult for a Kanban system to
work effectively.
Intro-To-Lean
Which to Choose — MRP (ERP), or
Kanban?
Kanban and MRP Combination

The combination of these two systems is becoming quite common.
An MRP system is used for advanced planning, including long lead-time
purchased materials, adding resources, and implementing product
design changes. Once the MRP has the materials and resources “lined
up,” however, Kanban is used as an execution system, bringing with the
characteristics of rapid response to customer order and reduced
inventory levels throughout the process.
Hybrid Systems
Intro-To-Lean
The Objections to Lean
How should you deal with these objections to lean?
• “It is very hard to deal with raw material suppliers if
we fully depend on customer order.”
• “It takes too much discipline.”
• “It takes too long to implement.”
• “My process is too complex; I have to deal with too
many uncontrollable variables, like late supplier
shipments, sick people, etc.”
• “My process requires a large batch size.”
• “It doesn’t make sense in my industry.”
• “It’s unclear to me how lean will work with my MRP
system.”
Intro-To-Lean
Lean and Green
The environmental impacts due to
production and waste generation
have made its way into every day
society.
Consumers are becoming more
environmentally conscious.
With the Earth’s limited resources,
companies are more conscious of
their carbon footprint, and there has
been a movement to create more
environmentally friendly decisions.
Green engineering is the systems-level approach to product and

process design where environmental attributes are treated as
primary objectives or opportunities rather than simple constraints.
Intro-To-Lean
Lean Manufacturing is a link to green
engineering
Lean manufacturing is the business model and collection of tactical
methods that emphasize eliminating non-value- added activities
(waste) while delivering quality products at lowest cost with greater
efficiency. In conjunction, six goals of green engineering are:
1. Select low environmental impact materials.

2. Avoid toxic or hazardous materials.
3. Choose cleaner production processes.
4. Maximize energy and water efficiencies.
5. Design for waste minimization.
6. Design for recyclability and reuse of material.
Intro-To-Lean
Lean Manufacturing is a link to green
engineering
 Population grows
 Wastes increase
 Fossil fuels are diminishing and there is nothing replenishing
them. Consumers are becoming more aware of the environment
and prefer environmentally friendly companies.
Being lean and green is so important now to reduce the
consumption of natural resources and the CO2 concentration
in the Earth’s atmosphere.
The Jonly real difference between lean and green manufacturing is

that green actually designs the product or process with the
environment as a constraint while lean creates a process with the
view of the environment as a valuable resource and not a
constraint.
Intro-To-Lean
Key Steps in Transforming
a Company to the Lean Approach
1. Establish a steering team—conduct strategic planning session

2. Train the steering team and the model line team in the disciplines of
lean
3. Perform PQR (product-quantity-routing) analysis
4. Identify value streams—select a value stream
5. Calculate model line takt time
6. Value stream map the model line—assemble current state map
7. Balance the line—assign standard work
8. Establish standard WIP (inventory levels)
9. Test the system (virtual cell)—document results
10. Setup reduction event
Intro-To-Lean
Introductory Quotation
Waste (“muda” in Japanese) is

‘anything other than the minimum
amount of equipment, materials,
parts, space, and worker’s time,
which are absolutely essential to
add value to the product.’
— Shoichiro Toyoda
Founder, Toyota
© 1995 Corel Corp.

Pull (JIT) System
The production of items only as demanded for
use or to replace those taken for use.
Work WS 2 WS 3
Station 1
Material
Information (via Kanban/Card)
Kanban
• Japanese word for card
– Pronounced ‘kahn-bahn’ (not ‘can-ban’)
• Authorizes production from downstream
operations
– ‘Pulls’ material through plant
• May be a card, flag, verbal signal etc.
• Used often with fixed-size containers
– Add or remove containers to change production
rate
Triangular Kanban
Part # Part Description Location
Date Triggered Lot Size
Trigger (Reorder) Point
Tool #
Machine #

Kanban

Kaizen
• Change for better = continuous improvement
• Kaizen workshop or Kaizen event:
A group of Kaizen activity, commonly
lasting five days, in which a team identifies
and implements a significant improvement in
a process, e.g., creating a manufacturing cell.

5S: Workplace organization/Housekeeping
• 5s: Important part of Kaizen/Lean Manufacturing
• The S's stand for:
– Seiri - keep only what is absolutely necessary, get rid of things that
you don't need, i.e. simplify or sort.
– Seiton - create a location for everything, i.e. organize
or straighten.
– Seiso - clean everything and keep it clean, i.e. cleanliness or
sweep.
– Seiketsu - implement Seiri, Seiton and Seiso plant wide, i.e.
standardize.
– Shitsuke - assure that everyone continues to follow the rules of 5S,
i.e. stick to it or self discipline.
• 5S in the US: Sort, Straighten, Sweep, Standardize, Self Disciple
• 5S + 1S (Safety) = 6S (Hytrol, etc)

• 5S + 2S (Safety and Security) = 7 S (Agilent Technology that was part
of Hewlett Packard)

ISO 9000
ISO 9000
Who created the standards?
• International Organization for Standardization
- Geneva
• ISO tech committee - TC 176 started in 1979
• Standards created in 1987
– To eliminate country to country differences
– To eliminate terminology confusion
– To increase quality awareness
ISO 9000
How did ISO get started?
• 1906 - International Electro-technical Commission
• 1926 - International Federation of the National
Standardizing Associations (ISA)
• 1946 London - delegates from 25 countries decided to
create a new international organization "the object of
which would be to facilitate the international
coordination and unification of industrial standards
• 1947 - ISO began to officially function
• 1951 - The first ISO standard was published .
ISO 9000
ISO Organization
General
Assembly
Policy
Technical
Development Council
Management Board
Committees
Technical Advisory
Groups
Technical Committees
ISO 9000
What has ISO Accomplished?
• ISO film speed code
• Standard format for telephone and banking
cards
• ISO 9000 which provides a framework for
quality management and quality assurance
• ISO 14000 series provides a similar
framework for environmental management
• Internationally standardized freight containers
• Standardized paper sizes.
ISO 9000
Ten Steps to ISO Registration
10. Registration!
9. Final assessment by registrar
8. Take corrective actions
7. Pre-assessment by registrar
6. Submit quality manual for approval
5. Perform self-analysis audit
4. Select a third-party registrar and apply
3. Develop and implement the quality system
2. Select the appropriate standard
1. Set the registration objective

ISO 9000

BBA V - OM - Unit-2QUALITY MANAGEMENT

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

BBA V - OM - Unit-2QUALITY MANAGEMENT

Uploaded by

Copyright:

Available Formats

Course: BBA

Subject: Operation Management

© Oxford University Press 2013. All rights reserved.

© Oxford University Press 2013. All rights reserved.

J. M. Juran defined quality as “fitness for purpose.”

Customer Service – How is the

Appearance – How Serviceability – How easily, cheaply,

© Oxford University Press 2013. All rights reserved.

Cost of warranty Cost of detecting defects

Cost of scrap and

© Oxford University Press 2013. All rights reserved.

• Consistency of purpose is a must for continual

• Remove obstacles in the good workmanship of

INPUTS Transformation OUTPUTS

Monitoring Quality Levels at Every Stage of the

© Oxford University Press 2013. All rights reserved.

7.05 mm Upper Specification Limit

M + 3.σM Upper Control Limit (UCL)

Targeted or Aimed-at Mean Central Line (CL)

M - 3.σM Lower Control Limit (LCL)

6.95 mm Lower Specification Limit (LSL)

Specification & Control Limits for the Diameter of a Pencil

© Oxford University Press 2013. All rights reserved.

Search for Search for

Type I & Type II errors

© Oxford University Press 2013. All rights reserved.

© Oxford University Press 2013. All rights reserved.

© Oxford University Press 2013. All rights reserved.

© Oxford University Press 2013. All rights reserved.

Six Sigma TQM

© Oxford University Press 2013. All rights reserved.

Industry-related standards These standards are

© Oxford University Press 2013. All rights reserved.

Schonberger defines the JIT system as to :

• Revise factory layouts

• Reduce set-up times

• Implement a pull system of production

• Better coordination with suppliers

© Oxford University Press 2013. All rights reserved.

Step 4 Step 4 Step 4

Racks containing bins Racks containing bins Racks containing bins

Racks containing bins Racks containing bins Racks containing bins

Workstation 1 Workstation 2 Workstation 3

Car 1 Car 2 Car 3

The Assembly Line

© Oxford University Press 2013. All rights reserved.

© Oxford University Press 2013. All rights reserved.

© Oxford University Press 2013. All rights reserved.

Product Business Resource

Components Inventory status Materials Capacity

© Oxford University Press 2013. All rights reserved.

“A systematic approach to identifying and

In this book, Womack introduced the Toyota

What was new was a phrase–

W K (1 ) P K (1 ) W K (2 ) P K (2 ) W K (i) P K (i) W K (i+ 1 ) P K (i+ 1 ) W K (N ) P K (N )

Figure 3.3. A kanban stage formed by two adjacent stations.

 MRP is by its very nature a forward-looking

Where it is not as effective.

Kanban and MRP Combination

Green engineering is the systems-level approach to product and

1. Select low environmental impact materials.

The Jonly real difference between lean and green manufacturing is

1. Establish a steering team—conduct strategic planning session