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Sales Order Management
AggregatePlanning
MasterScheduling
Production ActivityControl
QualityControl
DistributionMngt. © 2001 Victor E. Sower, Ph.D., C.Q.E.
Business Processes
Ch 3 - 2© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
What Is Quality?
• “The degree of excellence of a thing” (Webster’s Dictionary)
• “The totality of features and characteristics that satisfy needs” ( ASQ)
• Fitness for use (Juran)
Ch 3 - 3© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Dimensions Of Product Quality (Garvin)
1. Performance –basic operating characteristics
2. Features –“extra” items added to basic features
3. Reliability –probability product will operate over time
Ch 3 - 4© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
4. Conformance –meeting pre-established standards
5. Durability –life span before replacement
6. Serviceability –ease of getting repairs, speed & competence of repairs
Ch 3 - 5© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
7. Aesthetics–look, feel, sound, smell or taste
8. Safety–freedom from injury or harm
9. Other perceptions–subjective perceptions based on brand name, advertising, etc
Ch 3 - 6© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Service Quality
1. Time & Timeliness –customer waiting time, completed on time
2. Completeness –customer gets all they asked for
3. Courtesy–treatment by employees
Ch 3 - 7© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
4. Consistency
–same level of service for all customers
5. Accessibility & Convenience –ease of obtaining service
6. Accuracy–performed right every time
7. Responsiveness–reactions to unusual situations
Ch 3 - 8© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality Of Conformance
• Ensuring product or service produced according to design
• Depends on–design of production process–performance of machinery–materials–training
Ch 3 - 9© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
The Meaning of Quality
Quality of Conformance Quality of Design
Producer’s Perspective Consumer’s Perspective
Fitness forConsumer Use
Production Marketing•Conformance to specifications•Cost
•Quality characteristics•Price
Ch 3 - 10© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality Philosophers
• Walter Shewhart• W. Edwards Deming• Joseph Juran• Philip Crosby• Armand Feigenbaum
Ch 3 - 11© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Deming’s 14 Points
1. Create constancy of purpose2. Adopt philosophy of prevention3. Cease mass inspection4. Select a few suppliers based on quality5. Constantly improve system and workers6. Institute worker training
Ch 3 - 12© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
7. Instill leadership among supervisors8. Eliminate fear among employees9. Eliminate barriers between departments10. Eliminate slogans11. Remove numerical quotas12. Enhance worker pride13. Institute vigorous training & education
programs14. Implement these 13 points
Ch 3 - 13© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
The Deming Wheel(or P-D-C-A Cycle)
Identify problemDevelop plan for improvement
Implement plan on test basis
Is the plan working
Institutionalize improvementContinue cycle
1. Plan
2. Do
3. Study / Check
4. Act
Ch 3 - 14© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Total Quality Management
1. Customer defined quality2. Top management leadership3. Quality as a strategic issue4. All employees responsible for quality5. Continuous improvement6. Shared problem solving7. Statistical quality control8. Training & education for all employees
Ch 3 - 15© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
TQM Throughout The Organization
• Marketing, sales, R&D• Engineering• Purchasing• Personnel• Management• Packing, storing, shipping• Customer service
Ch 3 - 16© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Strategic Implications Of TQM
• Quality is key to effective strategy• Clear strategic goal, vision, mission• High quality goals• Operational plans & policies• Feedback mechanism• Strong leadership
Ch 3 - 17© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
TQM In Service Companies
• Inputs similar to manufacturing• Processes & outputs are different• Services tend to be labor intensive• Quality measurement is harder• Timeliness is important measure• TQM principles apply to services
Ch 3 - 18© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Cost Of Quality
• Cost of achieving good quality–Prevention–Appraisal
• Cost of poor quality–Internal failure costs–External failure costs
Ch 3 - 19© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality Indexes• Labor index
–quality cost / labor hours• Cost index
–quality cost / manufacturing cost• Sales index
–quality cost / sales• Production index
–quality cost / units produced
Ch 3 - 22© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality Is...
• An important determinant of business profitability
• Positively & significantly related to higher return on investment
Ch 3 - 23© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality And Productivity
• Productivity = output / input
• Fewer defects increase output
• Quality improvement reduces inputs
Ch 3 - 35© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Employees & Quality Improvement
• Quality circles• Employee suggestions• Process improvement teams• Self-managed work teams
Ch 3 - 36© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
The Quality Circle Process
Organization 8-10 members
Same area ModeratorPresentation
Implementation Monitoring
Solution Problem results Problem analysis
Cause & effect Data collection &
analysis
Problem ID List alternatives
Consensus Brainstorming
Training Group processes Data collection
Problem analysis
Ch 3 - 37© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Seven Quality Control Tools
1. Pareto analysis2. Flowcharts3. Check sheets4. Histograms5. Scatter diagrams6. Control charts7. Fishbone diagram
Ch 3 - 38© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
A Pareto Chart
Per
cent
fro
m e
ach
caus
e
Causes of poor quality
Mac
hine
cal
ibra
tions
Defec
tive
parts
Wro
ng d
imen
sions
Poor D
esig
n
Ope
rato
r erro
rsDef
ectiv
e m
ater
ials
Surfa
ce a
bras
ions
0
10
20
30
40
50
60
70(64)
(13)(10)
(6)(3) (2) (2)
Ch 3 - 40© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Check Sheet
COMPONENTS REPLACED BY LABTIME PERIOD: 22 Feb to 27 Feb 1998REPAIR TECHNICIAN: Bob
TV SET MODEL 1013
Integrated Circuits ||||
Capacitors |||| |||| |||| |||| |||| ||
Resistors ||
Transformers ||||
CommandsCRT |
Ch 3 - 41© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Histogram
0
510152025303540
1 2 6 13 10 16 19 17 12 16 20 17 13 5 6 2 1
Ch 3 - 43© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Control Chart
18
12
6
3
9
15
21
24
27
2 4 6 8 10 12 14 16
Sample number
Num
ber
of d
efec
ts
UCL = 23.35
LCL = 1.99
c = 12.67
Ch 3 - 44© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Fishbone Diagram
QualityProblem
MachinesMeasurement Human
ProcessEnvironment Materials
Faulty testing equipment
Incorrect specifications
Improper methods
Poor supervision
Lack of concentration
Inadequate training
Out of adjustment
Tooling problems
Old/worn
Defective from vendor
Not to specifications
Material-handling problems
Deficienciesin product design
Ineffective qualitymanagement
Poor process design
Inaccuratetemperature control
Dust and Dirt
Ch 3 - 45© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Quality Awards And Certifications
• The Malcolm Baldrige Award• The Deming Prize• Industry, regional, and company awards
–Institute of Industrial Engineers–NASA–European Quality Award
Ch 3 - 46© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
ISO 9000 CategoriesPrior to 2000
• ISO 9001 ~ Suppliers and Designers
• ISO 9002 ~ Production
• ISO 9003 ~ Inspection and Test
• ISO 9004 ~ Quality Management
Ch 3 - 46© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
ISO 9000-2000 Categories
• ISO 9001 ~ Quality Management SystemsRequirements
• ISO 9004 ~ Quality Management Systems—Guidelines for PerformanceImprovements
Ch 3 - 47© 2000by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
Implications Of ISO 9000
• Truly international in scope• Certification required by many foreign firms• U.S. firms export > $100 billion/yr to Europe• Adopted by U.S. Navy, DuPont, 3M, AT&T, &
others
Ch 3 - 48© 2000 by Prentice-Hall IncRussell/Taylor Oper Mgt 3/e
ISO Accreditation
• European registration–3rd party registrar assesses quality program–European Conformity (CE) mark authorized
• United States 3rd party registrars–American National Standards Institute (ANSI)–American Society for Quality Control (ASQC)–Registrar Accreditation Board (RAB)