Managing Quality Outlines

Why Study Quality?  Defining Quality  Quality in Product and Service  International Quality Standards: ISO 9000  Total Quality Management (TQM): Principles and Elements  Cost of Quality  Implementing TQM and Continuous Quality Improvement : Procedure, Problems and Tools


MGMT 3620 Managing Quality

Why Study Quality?

     

Customers "buy" quality with higher price and loyalty Total quality leads to substantial cost reduction in rework, repair, scrap, warranty costs, etc. Total quality "pays" with the higher productivity, profits and market share Quality is built-in into all products and services builtQuality is everybodys responsibility including design, operations, marketing, purchasing, etc. Quality improvement requires effective tools and good training

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Defining Quality

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The American National Standards Institute (ANSI) and the American Society for Quality (ASQ) definition: Quality is the totality of features and characteristics of a product or service that bears on its ability to satisfy given needs. PurchaserPurchaser-based definitions (user-based): (user Quality of the product delivered  Quality of suppliers service and capability during the transactions

Purchasing Qualified Tires for UPS Delivery Vehicles

What are UPSs needs for tires  What are UPSs quality/value concerns of the tires delivered  What are UPSs concerns of the suppliers performance during the product/service delivery and transaction  Whats UPSs best buy?

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Dimensions of Product Quality


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Performance Product's primary operating characteristics Features "Bells and whistles" of a product Reliability Probability of a product's surviving over a specified period of time Conformance Degree to which physical and performance characteristics of a product match pre-established standards

Dimensions of Product Quality


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Durability Amount of use one gets from a product before it physically deteriorates or until replacement is preferable Aesthetics How a product looks, feels, sounds, tastes, or smells Perceived quality (reputations) Subjective assessment resulting from image, advertising, or brand names

Dimensions of Service Quality




Managing Quality

Competence, Access and Communication Possession of the skills and knowledge required to perform the transactions; ease of contact; educating and informing buyers Serviceability and responsiveness Speed and willingness of providing service/repairing Security Freedom from danger, risk, or doubt Commitment Making an effort to meet the customer's needs

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Importance of Quality

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Identify cost saving & value creation Profits including companys reputation or Improved lower product Quality liability International implications

Market Gains Reputation Volume Price Increased Profits Lower Costs Productivity Rework/Scrap Warranty

Description by Specification
Establish clear standards for measuring  Serve as instructions of handling  Advantages and limits of using specs  Three types of specs  Physical or Chemical Characteristics  Defining functions or performance in both products and delivery process  Description by engineering drawing

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Alternatives to Specification
Description by sample  Use market grade  Common for commodities such as agriculture or raw materials  Use standard specification  For example RS232 interface, IEEE1394 standard

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ISO 9000 Quality Standards

  

Formed by International Organization for Standardization (ISO) in Geneva, Switzerland U.S. counterpart: American National Standards Institute (ANSI) Internal benefits  Better documentation  Greater quality awareness by employee External benefits  Higher perceived quality  Reduced customer quality audits

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How to Manage Quality?

From OMs perspective  Manufacturing-based definitions Manufacturing Conforming to standards  Make it right the first time  Product-based definitions Product Quality of design/redesign  Quality are precise and measurable variables (specific product attributes)
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Total Quality Management (TQM) Principles


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Customer focus  Continuous improvement  Benchmarking  Consistency in the goal  Suppliers are partners in TQM process  Use statistical tools of TQM Yields: How to do what is important and to be accomplished

To Make the Quality Focus Work

Motorola:  Aggressively began a worldwide education program to be sure that employees understood quality and statistical process control  Established goals  Established extensive employee participation and employee teams
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Flow of Activities Necessary to Achieve Total Quality Management


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Organizational Practices


Quality Principles


Employee Fulfillment


Customer Satisfaction

Organizational Practices

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Leadership  Mission statement  Effective operating procedure  Staff support  Training Yields: What is important and what is to be accomplished

Benchmarking the quality of Potential Suppliers

Selecting best practices to use as a standard for performance
  
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Determine what to benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking information Take action to match or exceed the benchmark

Employee and Supplier Fulfillment

Incentive sharing and empowerment  Mutual commitments between Motorola and shipping agents  Empowerment  Organizational commitment Yields: Suppliers attitudes that they are willing to accomplish what is important for buyers

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Quality Circle and Six-Sigma Team

 
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Group of 6-12 employees from same work area 6Meet regularly to solve work-related problems work 4 hours/month SixSix-Sigma team: Internal consulting group of outstanding employees from different work areas Meet regularly to solve quality-related problems qualityFacilitates, trains, and helps with quality circle meetings
1995 Corel Corp.

The Baldrige National Quality Award and Deming Prize

Malcolm Baldrige Award is to recognize US organizations quality achievement on diffusion of Total Quality Management (TQM) practices  Deming Prize granted by Japanese Empire annually to Japanese companies  Since 1950s, Demings quality crusade in Japan changed the worlds concepts of quality management

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Demings Points for Implementing Quality Improvement

Create consistent and continuous improvement on product and service quality  Build quality into the product; stop depending on inspections to catch problems  Build long-term relationships in supplier longbased on performance instead of price  Emphasize top managers responsibility

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Demings Points for Implementing Quality Improvement

Break down barrier between departments  Support, help, and improve  Remove barriers of pride in work  Institute a vigorous program of education and self-improvement self Put everybody in the company to work on the transformation

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Shewharts PDCA Model

4.Act 1.Plan

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Implement Identify the improvement and the plan make a plan Is the plan working

3.Check

2.Do

Test the plan

Exam Information
A sample quiz will be discussed  Midterm exam will cover Chapter 1, 2, 4, 5, 6

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Cost of Quality
INTERNAL FAILURE COSTS  Incurred directly--prior to shipment or service--as directly--prior service--as a result of defective output:  scrap  rework  repair  salvage  downtime  disposition

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Cost of Quality
EXTERNAL FAILURE COSTS  Incurred to the provider when defects are discovered after shipment to customers:  warranty expenses  returned materials  complaint processing  liability settlements  legal fees

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Cost of Quality
PREVENTION COSTS  Incurred in an effort to improve quality system and avoid nonconformance in products and services:  process analysis and process control  quality planning  quality training  system development and management  reporting

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Cost of Quality
APPRAISAL COSTS  Incurred for determining the degree of quality:  inspection and testing  materials and tools  maintenance of test equipment  field testing

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Traditional View of Quality-Cost Trade offs

Cost
Low correction cost High detection cost High prevention cost High correction cost Low detection cost Low prevention cost
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Optimum Quality

% of defects

Taguchi Techniques and Quality Loss Function


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Managing Quality

Experimental design methods  Identify key component & process variables affecting product variation  improve product & process design Taguchi Concepts  Quality robustness  Quality loss function  Target-oriented quality Target-

Target-Oriented Quality
A study found U.S. consumers preferred Sony TVs made in Japan to those made in the U.S. Both factories used the same designs & specifications. The difference in quality goals made the difference in consumer preferences.
Freq.
Managing Quality

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Japanese factory (Target-oriented) U.S. factory (ConformanceX oriented)

LSL

Target

USL

Quality Loss Function; Distribution of Products Produced

High loss Loss (to producing organization, customer, and society) Low loss
Unacceptable Poor Fair Good Best

Quality Loss Function (a) Target-oriented quality yields more product in the best category Target-oriented quality brings products toward the target value Conformance-oriented quality keeps product within three standard deviations Upper Distribution of specifications for product produced (b)

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Frequency

Lower

Target Specification

Quality Loss Function Graph

Loss = (Actual X - Target)2 (Cost of Deviation)
Loss
Greater deviation, more people are dissatisfied, higher cost
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LSL

Target

USL

Lower (upper) specification limit

Measurement

Quality Loss Function Example

The specifications for
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the

diameter of a gear are 25.00 0.25 mm. mm. However, even within the specifications, there is still loss due to quality deviation. Need to identify the loss function
1984-1994 T/Maker Co.

Quality Loss Function Solution



Setup equation based on Taguchis assumptions

L = D2C = (X - Target)2C  L = Loss ($); D = Deviation; C = Cost

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Design experiments to find out key coefficients

4.00 = (25.25 - 25.00)2C  Item scrapped if greater than 25.25 (USL = 25.00 + 0.25) with a cost of $4.00 C = 4.00 / (25.25 - 25.00)2 = 64 L = D2 64 = (X - 25.00)264

Enter various X values to obtain L & plot

Quality Robustness

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Managing Quality

Ability to produce products uniformly regardless of manufacturing conditions Different conditions may lead to different yield or process time. But the quality of finished parts will be consistent.

1995 Corel Corp.

1984-1994 T/Maker Co.

Assignment and Case Discussion for Managing Quality

 Assignment

3: LuckWay Supermarket

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Christy Allen, the manager of the LuckWay supermarket, was very concerned with the large number of complaints from customers, particularly on Sundays, so over the last eight weeks she obtained Sunday's complaint records from the store's service desk

Tools of TQM and Continuous Improvement


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Flow charts or process diagrams  Check sheet  Pareto charts  Cause and effect diagram  (Scatter diagram)  (Histograms)  Statistical process control charts

Flow Chart (Process Diagram)

Shows sequence of events in process  Depicts activity relationships  Has many uses  Identify data collection points  Find problem sources  Identify places for improvement  Identify where travel distances can be reduced

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Flow Charts (Chicken Processing Plant)

Packing station Weighting & labeling
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Quick freeze (60 min)

Storage (4 to 6 hrs)

Shipping dock

Check Sheets
Check sheet is designed for recording data  Help identify patterns or facts during the recording period and lead to subsequent analysis  For example, recording customer complains or inspection results as time goes by

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Check Sheet
Types of Error ------------------------------------------------------------------Month Broken Wrong Mixed Contamination package label items --------------------------------------------------------------------------------------------Jan 7 5 3 0 Feb Mar Apr
Managing Quality

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5 9 4 5

7 3 5 7

4 2 3 2

0 0 3 7

May

Jun 2 5 4 6 ---------------------------------------------------------------------------------------------Total Percentage

Pareto Charts
Organize errors, problems, or defects  Help focus on problem-solving efforts problem Based on the work of Vilfredo Pareto, a 1919century economist  80% of a firms problem are a result of only 20% of the causes.

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Pareto Analysis of Production Process (Total Defects = 44)

PARETO CHART
25 100 90 20 Nu mber of Errors 80 70 15 60 50 10 40 30 5 20 10 0 De li very Ra w Materials Fabrication Subassembly Final Assembly 0 Cu mulative Percentage, %

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Cause and Effect Diagram

 
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Used to find problem sources/solutions Other names  Fish-bone diagram, Ishikawa diagram FishSteps  Identify problem to correct  Draw main causes for problem as bones  Ask What could have caused problems in these areas? Repeat for each sub-area. sub-

Cause and Effect Diagram Example

Problem Too many defects
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Cause and Effect Diagram Example

Method Main Cause Too many defects
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Manpower

Material

Machinery Main Cause

Cause and Effect Diagram Example

Method Drill
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Manpower Over Time Wood Steel

Too many defects Lathe Machinery Sub-Cause

Material

Cause and Effect Diagram Example

Method Drill Slow
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Manpower Tired Over Time Wood Steel Old Lathe Machinery Too many defects

Material

Statistical Process Control (SPC)



 

Uses statistics & control charts to tell when to adjust process Developed by Shewhart in 1920s Involves  Creating standards (upper & lower limits)  Measuring sample output (e.g. mean wgt.)  Taking corrective action (if necessary) Done while product is being produced

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Process Control Chart

Plot of Sample Data Over Time
70 60 50 40 30 20 10 0 1 5 9 13 Time 17 21 Sample Value
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Sample Value UCL Average LCL

Patterns to Look for in Control Charts

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Inspection
 


Managing Quality

Involves examining items to see if an item is good or defective Detect a defective product  Does not correct deficiencies in process or product Issues  When to inspect  Where in process to inspect Use TQM tools to help analyze, organize, and interoperate result from inspection

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When and Where to Inspect (Aided by Flow Chart)


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Before costly or irreversible processes  At the suppliers plant while the supplier is producing  At your facility upon receipt of goods from the supplier  Before delivery from your facility During the step-by-step production processes step-byWhen production or service is complete  Conducting survey or interview

Routine Inspection vs. Probing Inspection

Probing inspection is to identify the source of emerging quality problem  Routine inspection is for tracking and monitoring those existing quality issues  Flow chart or process diagram is useful for designing and studying both types of inspection

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Inspection Points in Services

Organization
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Some Points of Inspection

Teller stations Loan accounts

Issues to Consider
Shortages, courtesy, speed, accuracy Collateral, proper credit checks, rates, terms of loans, default rates, loan rates Accuracy, speed of entry, rate of overdraws

Bank

Checking accounts

Inspection Points in Services

Organization
Retail store
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Some Points of Inspection

Stockrooms

Issues to Consider
Clean, uncluttered, organized, level of stockouts, amply supply, rotation of goods Attractive, well-organized, stocked, visible goods, good lighting Neat, courteous knowledgeable personnel; waiting time; accuracy in credit checking and sales entry

Display areas

Sales counters

Inspection Points in Services

Organization
Restaurant Kitchen
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Some Points of Inspection

Issues to Consider
Clean, proper storage, unadulterated food, health regulations observed, wellorganized Speed, accuracy, appearance Clean, comfortable, regular monitoring by personnel,

Cashier station Dining areas

Luckway Supermarket
  

Only use open-ended comments but include opentimeline Analyze the issues with insightful flow chart Requirements  Check sheet  Pareto chart  Control chart (record the frequency without consider UCL and LCL)  Cause-and-effect diagram Cause-andMake recommendation (for example, tie to TQM principles)

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Southwestern University (B)


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Why we need quantitative tools for managing quality? How to identify quality problems  Collect data  Organize data  Interoperate data Plan for improving quality  Benchmarking  Empowerment  Continuous improvement

Southwestern University (B)

Two types of data in this case  Survey data  Open-ended comments Open Start from considering the tools of TQM  Flow chart  Pareto chart  Cause and effect diagram

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Survey Data vs. Open-Ended Comments

All types of data collection is costly  When should we use survey?  When should open-ended comments be openelicited?  How to encode open-ended comments? open Advantages of using data from comments?  How to design questions in survey?  Advantages of using survey data

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Analyze Survey Data

Weights 4
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3 315 105 255 102 90 312 240 180 348 135

2 135 52 96 196 230 32 108 48 116 92

1 10 10 52 22 35 65 41 11 58 48

0 0 0 0 0 0 10 5 0 2 75

Parking Entertainment Traffic Printed Program Seating Ticket Pricing Season Ticket Plans Food Selection Concession Prices Speed of Service

360 640 200 264 180 420 300 620 66 140

Total/25 0 Total (Average ) 820 3.28 807 3.23 603 2.41 584 2.34 535 2.14 839 694 859 590 490 3.36 2.78 3.44 2.36 1.96

Ranking
Items in Weighted Descending Order Speed of Service Seating Printed Program Concession Prices Traffic Season Ticket Plans
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1.96 2.14 2.34 2.36 2.41 2.78 3.23 3.28 3.36 3.44

Poor

Entertainment Parking Ticket Pricing Food Selection

Good

Issues for Analyzing Open-Ended Comments

A direct way to find out customers biggest concerns about quality  Data would be abstract and subjective  Difficult to encode  Difficult to rank and interoperate  May miss some secondary issues  Good for pilot study on quality

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Categorize Open-Ended Comments

Results by Topic Negative Entertainment Positive Negative Facilities Entertainment 8 14 Seats 3 Student 9 Parking Behavior 2 Crowded 5 Need Sky Boxes 1 Cheerleaders 5 Other 1 Programs 2 Bathroom Band 1 1 Traffic Coach 3 Food 3 Access/Variety 1 Quality 1 Price Positive 1
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Ranking (ABC Analysis)

Results in Descending Order (Most negative to least negative) Seats 14 Parking 9 Need Sky Boxes 5 Other Facilities 5 Student Behavior 3 Access/Variety 3 Crowded 2 Bathrooms 2 Cheerleaders 1 Programs 1 Traffic 1 Quality 1 Price 1 Band Coach
Items in Descending Order Speed of Service Seating Printed Program Concession Prices Traffic Season Ticket Plans Entertainment Parking Ticket Pricing Food Selection 1.96 Poor 2.14 2.34 2.36 2.41 2.78 3.23 3.28 3.36 3.44 Good

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Pareto Chart
20 15
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Pareto Chart of Comment Results

100%

70%

10

40%
5 0

10%

Cause and Effect Diagram

Internal Facility Main Cause Too many complains
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Manpower

External Facility

Food Stands Main Cause

Other Concerns about Data Collection

 
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Time horizon Demography Sample size Sampling techniques Question design  Set hypothesis  Identify factors Data analysis  Statistic methods  Models for testing hypothesis