Management of Quality

OPM 1202: Operations Management

S Maheswaran
Faculty of Management
11/11/2023
• "Quality is not an act, it is a habit."-- Aristotle
 Learning Outcomes
• After completing this lesson, you should be able to:
– Define term quality as it relates to service and as it
relates to product
– Discuss the philosophy of Quality Gurus
– Explain why quality is important and the
consequences of poor quality
– Describe the cost associated with quality
– Describe TQM and its main features
– Explain an overview of process improvement
– Describe and use various quality tools
 Defining Quality
• Quality is the ability of a product or service to
consistently meet or exceed customer
expectations
• The role of Japanese Manufacturers in quality
• What is the quality in the context of
– Banking
– Hospital
– Mobile Communication
– Car
 Defining Quality: Different Views
• The totality of features and characteristics of a
product or service that bears on its ability to
satisfy stated or implied needs (American
Society for Quality)
• Different Views
– User-based: better performance, more features
‘ fit for purpose’
– Manufacturing-based: conformance to standards,
making it right the first time
 Quality Assurance vs. Strategic Approach

• Quality Assurance
– Emphasis on finding and correcting defects
before reaching market
• Strategic Approach
– Proactive, focusing on preventing mistakes from
occurring
– Greater emphasis on customer satisfaction
 An Overview of Quality Management (QM)
• The purpose of quality management is to improve product
quality, defined as the ability to meet customer needs and
be free from deficiencies, like errors and rework (Juran
and Godfrey, 1998).
• Product quality is the result of manufacturing resources –
people, processes, materials, and equipment – oriented to
varying degrees for achieving customer satisfaction and
low deficiencies (Ahire and Dreyfus, 2000).
• Specific QM practices are designed to improve quality
through higher process control (e.g. SPC), better
documentation (e.g. ISO 9000),more cooperation and
involvement (e.g. TQM), and deeper improvement efforts
(e.g. six-sigma).
 Benefits of Good Quality
• Enhanced reputation for quality
• Ability to command premium prices
• Increased market share
• Greater customer loyalty
• Lower liability costs
• Fewer production or service problems
• Lower production costs
• Higher profits
 Key Contributors to Quality Management
Contributor Known for
Waltor
Shewhart Father of Statistical Quality Control
Deming 14 points; special & common causes of
variation

Juran Quality is fitness for use; quality trilogy

Feignbaum Quality is a total field

Crosby Quality is free; zero defects

Ishikawa Cause-and effect diagrams; quality

circles

Taguchi Taguchi loss function

Quality
 Dimensions of Product Quality
• Performance - main characteristics of the
product/service
• Aesthetics - appearance, feel, smell, taste
• Special Features - extra characteristics
• Conformance - how well product/service
conforms to customer’s expectations
• Reliability - consistency of performance
 Dimensions of Quality (Cont’d)

• Durability - useful life of the product/service

• Perceived Quality - indirect evaluation of
quality (e.g. reputation)
• Serviceability - service after sale
 Examples of Quality Dimensions

Dimension (Product) (Service)

Automobile Auto Repair
1. Performance Everything works, fit & All work done, at agreed
finish price
Ride, handling, grade of Friendliness, courtesy,
materials used Competency, quickness
2. Aesthetics Interior design, soft touch Clean work/waiting area

3. Special features Gauge/control placement Location, call when ready

Cellular phone, CD Computer diagnostics
player
 Examples of Quality Dimensions (Cont’d)

Dimension (Product) (Service)

Automobile Auto Repair
5. Reliability Infrequency of breakdowns Work done correctly,
ready when promised

6. Durability Useful life in miles, resistance Work holds up over

to rust & corrosion time

7. Perceived Top-rated car Award-winning service

quality department

8. Serviceability Handling of complaints and/or Handling of complaints

requests for information
 Service Quality
• Tangibles
• Convenience
• Reliability
• Responsiveness
• Time
• Assurance
• Courtesy
 Examples of Service Quality

Dimension Examples
1. Tangibles Were the facilities clean, personnel neat?

2. Convenience Was the service center conveniently located?

3. Reliability Was the problem fixed?

4. Responsiveness Were customer service personnel willing and able

to answer questions?
5. Time How long did the customer wait?

6. Assurance Did the customer service personnel seem

knowledgeable about the repair?
7. Courtesy Were customer service personnel and the
cashierfriendly and courteous?
 The Consequences of Poor Quality

• Loss of business
• Liability
• Productivity
• Costs
 Costs of Quality
(Failure cost, prevention cost and appraisal cost)
• Failure Costs - costs incurred by defective
parts/products or faulty services.
– Internal Failure Costs
• Costs incurred to fix problems that are detected
before the product/service is delivered to the
customer.
– External Failure Costs
• All costs incurred to fix problems that are detected
after the product/service is delivered to the customer.
 Costs of Quality (continued)

• Appraisal Costs
– Costs of activities designed to ensure quality or
uncover defects
• Prevention Costs
– All TQ training, TQ planning, customer
assessment, process control, and quality
improvement costs to prevent defects from
occurring
 Quality Certification
• ISO 9000
– Set of international standards on quality
management and quality assurance, critical to
international business
• ISO 14000
– A set of international standards for assessing a
company’s environmental performance
– Standards in three major areas
• Management systems
• Operations
• Environmental systems
 Total Quality Management
A philosophy that involves everyone in an
organization in a continual effort to improve
quality and achieve customer satisfaction.

T Q M
 The TQM Approach

1.Find out what the customer wants

2.Design a product or service that meets or
exceeds customer wants
3.Design processes that facilitates doing the
job right the first time
4.Keep track of results
5.Extend these concepts to suppliers
 Elements of TQM

• Continual improvement (Kaizen)

• Competitive benchmarking
• Employee empowerment
• Team approach
• Decisions based on facts
• Knowledge of tools
• Supplier quality
• Champion
• Quality at the source
• Suppliers
 Continuous Improvement

• Philosophy that seeks to make never-ending

improvements to the process of converting
inputs into outputs.
• Kaizen: Japanese
word for continuous
improvement.
 Quality at the Source

The philosophy of making each

worker responsible for the
quality of his or her work.
 Obstacles to Implementing TQM

• Lack of:
– Company-wide definition of quality
– Strategic plan for change
– Customer focus
– Real employee empowerment
– Strong strong motivation
– Time to devote to quality initiatives
– Leadership
 The PDSA Cycle

Plan

Act

Do

Study
 Process Improvement

• Process Improvement: A systematic

approach to improving a process
– Process mapping
– Analyze the process
– Redesign the process
The Process Improvement Cycle
Select a
process

Document

Study/document

Evaluate

Seek ways to
Implement the
Improve it
Improved process

Design an
Improved process
 Basic Quality Tools

• Flowcharts
• Check sheets
• Histograms
• Pareto Charts
• Scatter diagrams
• Control charts
• Cause-and-effect diagrams
• Run charts
 Flow Chart Example:
Self-Serve Gas Before Improvement

shut off walk to pay

Drive in check price self serve? to pump engine station
yes

no

turn on back pump walk to wait

check card transmit approved?
pump to car gas booth
yes
no
copy to
file return to car
employee check prepare sign
totals accuracy receipt copy on the road
charges copy to again
wallet
 Flow Chart Example:
Self-Serve Gas After Improvement

check shut off

self-serve? go to
Drive in price engine insert
yes pump
card
in pump
no

wait for store in system

approved? receipt

yes on the road

check wait pump gas
again
credit card no

copy to
wallet
 Check Sheet

Billing Errors Monday

Wrong Account

Wrong Amount

A/R Errors

Wrong Account

Wrong Amount
 Pareto Analysis

80%
80% ofof the
the
problems
problems
may
may be
be
attributed
attributed to
Number of defects
to
20%
20% ofof the
the
causes.
causes.

Off Smeared Missing Loose Other

center print label
Exam Score
Example

Homework Problems
 Control Chart

1020
UCL
1010
1000
990
980
LCL

970
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
 Tracking Improvements

UCL UCL
UCL

LCL
LCL
Additional improvements
LCL Process centered made to the process
Process not centered and stable
and not stable
 Cause-and-Effect Diagram

Methods Materials
Cause
Cause
Cause
Cause
Cause Cause
Environment Effect
Cause Cause

Cause Cause
Cause Cause

People Equipment
 Run Chart

0.58
0.56
Diameter

0.54
0.52
0.5
0.48
0.46
0.44
1 2 3 4 5 6 7 8 9 10 11 12
Time (Ho urs )
Time (Hours)
 Case Study for Discussion

• Quality Problems at the Tech Bookstores

(page 105, 106 & 107) From Bernard W.
Taylor III and Roberta S. Russell’ Book