Quality Management

Lesson 7

QUALITY MANAGEMENT

Management issues
Difficult to define quality
Different perspectives
customer, manufacturer
Design, conformance, specifications, fitness to use etc

Still important
identify dimensions of quality important to customers
Quality and costs related
Bad quality or poor service
dissatisfied customers, returns, loss of goodwill
Good quality or service
Customer loyalty, increased profits

Global market

Highly competitive
Not sufficient to satisfy customer
excite, delight etc the customer
Hence provision of high quality goods and or services mandatory for
long-term success.

High quality puts costs down and revenue up

Quality up

Rework and
scrap costs
down

Image up

Service costs
down

Inspection and
test costs down

Sales volume
up
Price
competition
down

Processing time
down

Inventory down

Complaint and
warranty costs down

Scale economies
up

Productivity up

Operation costs
down

Revenue up

Profits up

Capital costs
down

QUALITY MANAGEMENT

Quality is relative, meaning different things

to different people
Operating
systems
Quality of
Conformance
To design
Stage I

Product or
service
Quality of
design
Stage II

Note:
All quality aspects important
Failure in any one can create quality problems

Customer
needs
Quality of
conformance

Stage III

The various definitions of quality

The transcendent approach views quality as synonymous with innate
excellence.
The manufacturing-based approach assumes quality is all about making
or providing error-free products or services.
The user-based approach assumes quality is all about providing products
or services that are fit for their purpose.
The product-based approach views quality as a precise and measurable
set of characteristics.

The value-based approach defines quality in terms of value.

Perceived quality is governed by the gap between customers

expectations and their perceptions of the product or service

Customers
expectations
for the
product or
service

Gap

Gap
Customers
perceptions
of the
product or
service

Expectations >
perceptions

Perceived quality is poor

Customers
expectations
for the
product or
service

Customers
perceptions
of the
product or
service

Expectations =
perceptions

Perceived quality is
acceptable

Customers
expectations
for the
product or
service

Customers
perceptions
of the
product or
service

Expectations <
perceptions

Perceived quality is
good

A gap model of quality

Previous
experience

Word-of-mouth
communications

The customers
domain

Customers
expectations
concerning a
product or service

Image of product
or service

Gap ?

Gap 4

Customers own
specification of
quality
Gap 1
Managements
concept of the
product or service

Gap 2

Customers
perceptions
concerning the
product or service

The actual product or

service

Organizations
specification of
quality
Gap 3
The operations domain

The perceptionexpectation gap

Action required to ensure high
perceived quality

Main organizational
responsibility

Gap 1

Ensure consistency between

internal quality specification and
the expectations of customers

Marketing, operations,
product/service
development

Gap 2

Ensure internal specification meets its

intended concept of design

Marketing, operations,
product/service
development

Gap 3

Ensure actual product or service

conforms to internally specified quality
level

Operations

Gap 4

Ensure that promises made to customers

concerning the product or service can
really be delivered

Marketing

Quality

Quality
fitness for purpose

Quality of design
degree to which
design achieves purpose

Reliability
ability to continue
working at accepted
quality level

Quality of conformance
faithfulness with which the
operation agrees with design

Variables
things you can measure

Attributes
things you can assess and
accept or reject

Attribute and variable measures of quality

Attributes

Variables

Defective or not defective?

Measured on a continuous
scale

Light bulb works or does not

work

Diameter of bulb

Number of defects in a turbine

blade

Length of bar

Quality Dimensions

Goods

Performance

Measure of operating
characteristic

Features

Options offered with the product

Reliability

Chance that product will not fail

Durability

Expected operational life

Conformance

Design specifications

Serviceability

Speed, competence, courtesy of

repair

Aesthetics

Identify niche, as this is subjective

Perceived quality

Reputation of manaufacturer

Services

Reliability

Ability to perform

Tangibles

dependably
accurately

Appearance of facilities,
equipment, personnel

Responsiveness

Ability to help and attend to

customers
prompt service

Assurance

Knowledge, courtesy of
employees
Ability to convey trust and
confidence

Empathy

Caring,
individualised attention
accesibility

NOTE: major difference due to presence of customer in service systems

Leaders in Quality
W. Edwards Deming

14 Points for
Management

Joseph M. Juran

Top management
commitment,
fitness for use

Armand Feigenbaum

Total Quality
Control

Philip B. Crosby

Quality is Free,
zero defects

Notions on Quality: Gurus Compared

Crosby

Deming

Juran

Definition of Quality

Conformance to specifications

A predictable degree of
uniformity and
dependability at low cost
and suited to market

Fitness for use

Degree of senior
management
responsibility

Responsible for quality

Responsible for 85% of

quality problems

Less than 20% of quality

problems are due to
workers

Performance standard
or motivation

Zero defects

Quality has many scales;

use statistics to measure
performance in all areas;
critical of zero defects

Avoid campaigns to do
perfect work

General approach

Prevention, not inspection

Reduce variability by
continuous improvement;
cease mass inspection

General mgt approach to

quality, especially human
elements

structure

14 steps to quality
improvements

14 points for management

10 steps to quality
improvement

Statistical process
control, SPC

Rejects statistically acceptable

levels of quality

Statistical methods of
quality control must be
used

Recommends SPC, but

warns that it can lead to
tool driven approach

Other Quality Issues

Technical quality
Relates to the core element of the commodity or service
Cannot be readily assessed by customer
Customers may use some other measure, (closely related to
aesthetics)

Functional quality
Relates to customers perceptions of how the service was delivered
Can be assessed by customers
More important to customers

Expectations
Set of these developed by customer using a variety of input
Previous experiences
Information (reputation, gossip, research)

Perceptions
Experience of service
Good or bad

Satisfaction
Does service meet or exceed expectations
Performance usually clouded by customers perceptions of quality
Satisfaction = (perception of performance) (Expectation)

Cost of Quality
Cost of prevention
Incurred when attempting to prevent production of
defective goods and services
Includes
Investment in machinery, technology, training
Admin of quality program. Statistical analysis, vendor
certification

Cost of detection or Appraisal

Evaluation of product quality
Includes
Inspection, tests, maintenance, destruction of defectives

Cost of Quality
Cost of failure
Internal failure costs
Due to defects produced within the system
Include
Costs attributed to defects found before despatch to
customers
Eg: scrap, rework, repair, retesting, downtime, disposition
of defectives

External failure costs

Due to defects detected by the customer
Include
Returns, warranty charges, legal expenses, customer
dissatisfaction, loss of revenue, concessions to customers

TOTAL QUALITY MANAGEMENT

Organizational practice
Leadership, mission statement,
effective operating procedure, staff support, training
Yield: what is important, what is to be accomplished?

Quality principles
Customer focus, continuous improvement
Benchmarking, JIT, tools for TQM
Yield: How to do and accomplish what is important

Employee fulfillment
Empowerment, organizational commitment
Yield: attitudes that can accomplish what is important

Customer satisfaction
Winning orders, repeat business
Yield: competitive advantage

Source: Heizer & Render

TOTAL QUALITY MANAGEMENT

Continuous improvement
Quest for zero defects (perfection)
Improve people, equipment, suppliers, materials, procedures etc

Six sigma
Strategy
Focus on customer satisfaction

Discipline
Six sigma improvement model (DMAIC)
Define, Measure, Analyse, Improve, control

Employee empowerment
Benchmarking
JIT
Taguchi concepts
Robustness - remove effect instead of cause of adverse conditions
loss function identify all costs connected with poor quality

TQM TOOLS

Check sheets
Tools for generating ideas
Scatter diagram
Cause and effect (fish bone) diagram
Pareto charts
Tools for organizing data
Flow diagram
Histogram
Tools for identifying problems
Control charts

Six Sigma
Two meanings
Lower limits

Upper limits

2,700 defects/million
Statistical
definition of a process that is
99.9997% capable, 3.4 defects per
3.4 defects/million
million opportunities (DPMO)

A program designed to reduce defects,

lower costs, and improve customer
satisfaction
Mean
3
6
Figure 6.4

Cause-and-Effect Diagrams
Method
(shooting process)

Material
(ball)
Grain/Feel
(grip)

Aiming point

Size of ball

Bend knees

Air pressure

Hand position
Lopsidedness

Follow-through

Training
Conditioning
Consistency

Balance

Missed
free-throws

Rim size
Motivation

Rim alignment

Rim height
Backboard
stability

Concentration

Manpower
(shooter)

Machine
(hoop &
backboard)

Figure 6.7

Pareto Charts
Data for October

Frequency (number)

60

54

72

50

40
Number of
occurrences

30

20

12

10

Pool hours
5%

Minibar
4%

Misc.
3%

0
Room svc
72%

Check-in
16%

Causes and percent of the total

Cumulative percent

100
93
88

70

Flow Charts
MRI Flowchart
1.
2.
3.
4.
5.
6.

Physician schedules MRI

Patient taken to MRI
Patient signs in
Patient is prepped
Technician carries out MRI
Technician inspects film

7.
8.
9.
10.

If unsatisfactory, repeat
Patient taken back to room
MRI read by radiologist
MRI report transferred to
physician
11. Patient and physician discuss

8
1

80%

11
9

20%

10

Seven Tools of TQM

Histogram: A distribution showing the frequency of occurrences
of a variable

Distribution
Frequency

(f)

Repair time (minutes)

Figure 6.6

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

Demings model on improving quality

Improve
quality
Traditional view

Increase
Appraisal
costs
Results:

Demings view

Increase
Process
quality

Quality goes up

Quality goes up

costs go up

costs go down

The plandocheckact (or Deming) improvement cycle,

and the definemeasureanalyzeimprovecontrol
(or DMAIC) six sigma improvement cycle
Define
Plan

Do
Control

Act

Check

Improve

Measure

Analyze

The DMAIC
cycle

Define identify the

problem, define
requirements and set
the goal

Control establish
performance
standards and deal
with any problems

Measure gather
data, refine problem
and measure inputs
and outputs

Analyze develop
Improve develop
improvement ideas, problem hypotheses,
identify root causes
test, establish
and validate
solution, and
hypotheses
measure results

Ethics and Quality Management

Operations managers must deliver
healthy, safe, quality products and
services
Poor quality risks injuries, lawsuits,
recalls, and regulation
Organizations are judged by how they
respond to problems

All stakeholders much be considered

International Quality Standards

ISO 9000 series (Europe/EC)
Common quality standards for products sold in Europe
(even if made in U.S.)
2000 update places greater emphasis on leadership and
customer satisfaction

ISO 14000 series (Europe/EC)

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

When a change is indicated, find the assignable cause

Eliminate or incorporate the cause

Restart the revised process

STATISTICAL PROCESS CONTROL, SPC

Concerned with checking a product or
service during its creation
Quantitative method
monitoring a repetitive process
Determine consistency of operation

Important
Understand variation
Process output

32

Variation in process output

Common causes
Cannot be eliminated
But minimised
Variation should be within 3
Where is standard deviation

Examples
Variation in material
Performance of a task by workforce
Environmental variations

Question: Is variation acceptable?

Answer:
depends on acceptable range
33

Run Charts and Control Charts

Run chart a line chart where the
independent variable is time and the
dependent variables is the value of a sample
statistic
Control chart a run chart with control limits
that describe limits of common cause
variation

Copyright 2013 Pearson Education,

Inc. publishing as Prentice Hall

8-34

Control Chart Structure

Copyright 2013 Pearson Education,

Inc. publishing as Prentice Hall

8-35

x- and R-charts
The x-chart monitors the centering of a
process over time as measured by the mean
of each sample
The R-chart monitors the variability in data as
measured by the range of each sample

Copyright 2013 Pearson Education,

Inc. publishing as Prentice Hall

8-36

Control Limit Calculations

UCLR = D4R
LCLR = D3R
UCLx = x + A2R
LCLx = x - A2R

Copyright 2013 Pearson Education,

Inc. publishing as Prentice Hall

8-37

In-Control Indicators
No points outside control limits
Number of points above and below center
line about the same
Points fall randomly above and below
center line
No steady upward or downward trends
Most points, but not all are near the center
line; only a few are close to control limits
Copyright 2013 Pearson Education,
Inc. publishing as Prentice Hall

8-38

Out-of-Control Indicator: Trend

Copyright 2013 Pearson Education,

Inc. publishing as Prentice Hall

8-39

p-Chart
p-Chart monitors the fraction nonconforming
(fraction defective) for attribute data
Control limits

UCLp = p + 3s
s
8-40

LCLp = p - 3s
p(1 p)
n

Copyright 2013 Pearson Education,

Inc. publishing as Prentice Hall

Process Capability Analysis

Compare the distribution of process output to
design specifications when only common
causes are present.
Process capability is measured by the
proportion of output that can be produced
within design specifications.

8-41

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Inc. publishing as Prentice Hall

Capable Process

8-42

Copyright 2013 Pearson Education,

Inc. publishing as Prentice Hall

Incapable Process

8-43

Copyright 2013 Pearson Education,

Inc. publishing as Prentice Hall

Process Capability Index

USLLSL
Cp
6s
Cp is the ratio of the specification range to the natural variability of
the process as measured by the standard deviation

8-44

Copyright 2013 Pearson Education,

Inc. publishing as Prentice Hall

Inspection
Involves examining items to see if an
item is good or defective
Detect a defective product
Does not correct deficiencies in
process or product
It is expensive

Issues
When to inspect
Where in process to inspect

When and Where to Inspect

1. At the suppliers plant while the supplier is
producing
2. At your facility upon receipt of goods from the
supplier
3. Before costly or irreversible processes
4. During the step-by-step production process
5. When production or service is complete
6. Before delivery to your customer
7. At the point of customer contact

Inspection
Many problems
Worker fatigue
Measurement error
Process variability

Cannot inspect quality into a product

Robust design, empowered
employees, and sound processes
are better solutions

Source Inspection
Also known as source control
The next step in the process is
your customer

Ensure perfect product

to your customer
Poka-yoke is the concept of foolproof devices or techniques
designed to pass only acceptable product

Service Industry Inspection

Organization
Jones Law Office

What is
Inspected

Standard

Receptionist
performance

Is phone answered by the

second ring

Billing

Accurate, timely, and

correct format

Attorney

Promptness in returning
calls

Table 6.5

Service Industry Inspection

Organization
Hard Rock Hotel

What is
Inspected

Standard

Reception
desk

Use customers name

Doorman

Greet guest in less than 30

seconds

Room

All lights working, spotless

bathroom

Minibar

Restocked and charges

accurately posted to bill

Table 6.5

Attributes Versus Variables

Attributes
Items are either good or bad, acceptable or
unacceptable
Does not address degree of failure

Variables
Measures dimensions such as weight, speed,
height, or strength
Falls within an acceptable range

Use different statistical techniques

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

Service Quality
The Operations Manager must
recognize:
1. The tangible component of
services is important
2. The service process is important
3. The service is judged against the
customers expectations
4. Exceptions will occur

Determinants of Service Quality

Reliability

Credibility

Responsiveness

Security

Competence

Understanding/
knowing the
customer

Access
Courtesy
Communication

Tangibles

Service Recovery Strategy

Managers should have a plan for when
services fail
Marriotts LEARN routine
Listen
Empathize
Apologize
React
Notify