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Productivity and Quality Management
Introductory Lecture
Introductory Lecture
• Instructor’s Profile• Course Outline• Productivity and Quality Explained• Productivity Defined• Quality Defined
INSTRUCTOR’S PROFILE
Dr. Muhammad Tahir Nawaz
• Currently Serving as HOD Engineering Management Dept, EME College, NUST
• Member – Conduct of GRE Subject Type Test in Engineering Management at NUST
• Served as a Visiting Faculty Member in different reputed universities from 2004 onwards.
• Working as Thesis Supervisor for 5 PhD level thesis.• Supervised for more than 10 MS level thesis.
Dr. Muhammad Tahir Nawaz
• PhD, Engineering Management , UET, Taxila
• MSc, Engineering Management , UET, Taxila
• BSc, Electrical Engineering , UET, Lahore
Dr. Muhammad Tahir Nawaz
• Author of over 30 journal and conference papers
• PUBLISHED BOOKS– “Moving Towards Happy Lane” in 2014– “Khushiyon Bhari Zindagi Ka Aaghaaz” in 2014
Dr. Muhammad Tahir NawazCOURSES TAUGHT AT MSC/PHD LEVEL
• Business Process Re-engineering• Productivity and Quality Management• Technology & Entrepreneurship• Engineering Project Management• Supply Chain Management• Production and Operations Management• Quality Management for Project Managers• Seminar in Competitiveness and Technology• Seminar in Technology, Governance and Globalization• Strategic Decision and Risk Management• Research Methodology for Engineering Managers• Business and Industrial Engineering Economics• Leadership and Motivation• Managing of Organizational Change in Technical Organizations• Total Quality Management• Business Research Methods• Project Management• Strategic Human Resource Management
COURSE OUTLINE
Course Outline
• The Course is divided into two parts– Productivity Management– Quality Management
Sr. No. Lec No. Lecture Topic Topics
1 1 Introduction to Productivity and Quality Introductory Lecture
2 2 Productivity: Concept and Definition Different types of Productivity measures, misconceptions about productivity, Low Productivity Trap
3 3 History and Background of Productivity Improvement Factors
History of Background of Productivity, Productivity ModelsProductivity Measurement Models, Productivity Improvement
4 4 Productivity and Operations ManagementRole of Productivity in Operations Management, Efficiency Versus Effectiveness, Production and Productivity, Productivity Calculations, Examples of Productivity
5 5 Productivity Improvement FactorsImproving Productivity, Historical Background, Productivity Growth, Productivity Improvement Factors (1st Theory)Internal Factors, External Factors, Productivity Improvement Factors, Technical Factors
6 6 Productivity Improvement FactorsProductivity Improvement Factors - 2nd Theory, Organizational Factors, Management Factors, Production Factors, Government Factors, Finance Factors, Government Factors
7 7 Productivity and Global Economic Growth and Development
Background, Economic Growth, Causes of Economic Growth, Economic Development, Issues and Applications
8 8 Productivity Analysis and Appraisal Productivity Appraisal Methods, Productivity measurement in Services, Government and Organizations
Sr. No. Lec No. Lecture Topic Topics
9 9 Performance and Productivity in Non-profit organizations
Performance and Productivity, Public and Private Organizations, Some reasons for Performance, Major Performance Challenges, Stakeholders, OrganizationsProjects, People
10 10Quick Productivity Appraisal, Steps in Company Performance Appraisal (CPA), Problems of Productivity Analysis, Misunderstanding of Productivity measurementSound Productivity measurement system
11 11 Total Productive MaintenancePhilosophy of Total Productive Maintenance (TPM)History of TPM, Types of Maintenance, TPM Policies and Objectives, Similarities and Differences between TPM and TQM
12 12 Total Productive Maintenance ModelsTPM Models and Theories, 5S TheoryPillars of TPM, TPM Implementation, Benefits of Applying Total Productive Maintenance
13 13 Productivity in Oil and Gas Sector Factors that improve productivity in Oil and Gas
14 14 Motion and Time Study (MTS)History of Motion and Time Study, Defining Work Systems and Productivity, Methods Design, Motion StudyWork Methods Design
15 15 Time Study in Quality and Productivity Time Study, Work Measurement, Normal Performance
16 16 Introduction to QualityWhat is Quality? Century of Quality, History of Quality Methodology, Deming’s Principles, Taguchi’s Contributions And Philosophy
Sr. No. Lec No. Lecture Topic Topics
17 17 Quality Management: Definition and Concepts
Total Quality Management, Quality Improvement ToolsCosts related to quality, Benefits/Drawbacks
18 18 Quality Management ParadigmsThe Quality Management ParadigmsInspection Era, Statistical Quality Control EraQuality Assurance Era, Strategic Management EraTotal Quality Management
19 19 The Philosophies of Quality
The Quality Management PhilosophiesDeming’s System of Profound Knowledge,Appreciation for a system, Understanding variationTheory of knowledge, Psychology, Perspectives on Profound Knowledge
20 20 The Quality Gurus Deming's Philosophy, Juran Quality Triology
21 21 The Quality Gurus Philip B. Crosby, Shingo , Ishikawa, Genichi Taguchi,Peter Drucker, Tom Peters
22 22 The Business Quality PlanningTo emphasize the importance of planning in the quality management system, To compare and contrast formal and informal planning, To provide a systematic approach to planning
23 23 The Project Quality Planning The process of Quality Planning in Projects
24 24 Controlling for QualityDefine the control process, and discuss the elements of reporting. Develop an appreciation for business, process, and product performance reporting. Introduce and describe the various reporting structures.
Sr. No. Lec No. Lecture Topic Topics
25 25 Controlling for Quality The Journalizing Process, Posting and Analysis
26 26 Staffing for Quality
Define the employee-forecasting process, and discuss the elements of resource planning. Develop a scheme for the development of job descriptions and requirements. Describe the various education and training methodologies.
27 27 Leadership Leadership Styles, Performance Appraisals, Theory of Needs
28 28 Total Quality Management
Definition and Explanation of TQM, History of TQM, Five Approaches of Quality, Characteristics of TQM, Quality chains, Company policy and accountability Control , Monitoring the process , Teamwork , Consumer views, Zero defects
29 29 Introduction to Six Sigma Introduction to Six Sigma Methodology
30 30 Six Sigma MethodologiesBPMS-Business Process Management SystemDMAIC-Six Sigma Improvement Methodology,DMADV- Creating new process which will perform at Six Sigma
31 31 ISO Quality management system The Quality Management System explained32 32 Revision Lecture Revision of all the lectures in the course.
BACKGROUND
Ultimate Goal of a Company
Improve Profit
– Increase Sales Volume (Increase Market share) – Increase Sale Price – Reduce Purchase cost of Input – Reduce cost of production – Improve quality (Reduce cost of Quality) – Improve productivity
Productivity and Quality Management
– Differentiate – Production and Productivity – Inspection and Quality Control – System, Procedures and Processes – Quality Control and Total Quality Mgmt (TQM) – TQM and Six Sigma
Productivity
• Productivity is a tool of measurement that determines the efficiency of the organization in terms of the ratio of output produced with respect to inputs used.
• Various factors like technology, plant layouts, equipment, and machinery affect productivity.
• Operations managers need to carry out a regular review of all these factors to maintain as well as improve productivity.
Productivity
• Productivity can be either measured as total productivity or as partial productivity where single variable or multiple variables are considered.
• Measuring productivity in production organizations is relatively easy.
• But measuring productivity for knowledge workers and in the service organizations is difficult.
• Maintaining time sheets to determine the time spent on each task and the quantity of work done is one of the ways of measuring productivity in the services industry.
Quality
• Quality is one of the key issues, which defines an organization's competitive position in the market.
• Till the mid-seventies quality was only defined by periodic maintenance
• But companies today are using quality as a competitive advantage against the competitors.
• To gain competitive advantage in the market through quality, organizations have adopted the Total Quality Management (TQM) approach
Quality
• Quality is conformance to requirements. • A well designed and properly produced
product without any error may not be perceived as a quality product by the customers if it does not satisfy their requirements.
Quality
• There are eight different quality dimensions that a company can leverage to gain competitive advantage. – performance, – features, – reliability, – conformance, – durability, – serviceability, – aesthetics – perceived quality
• Random samples, statistical control charts, and acceptance plans are some of the tools that are used for quality control.
Quality• Control charts (X-Charts, R-Charts, P-Charts and C-Charts) are used
to find out if the quality of the product is within acceptable limits. • The P-chart is used to control the percentage of defectives in the
sample. • X-chart and R-chart are used to control sample means and sample
ranges. • Average outgoing quality (AOQ) curves and operating
characteristics (OC) curves explain the workings of acceptance plans.
For a service organization, the quality can be judged only through the feedback from the customers.
PRODUCTIVITY
Productivity Definition
Productivity is the relationship between the outputs generated from a system and the inputs that are used to create those outputs. Mathematically
OP =
I
Productivity
Productivity is a ratio – The amount of output per unit of input
• (labor, equipment, and capital). – Number of products / No. of hours taken to
produce them – Revenue generated by employee / Salary of
employee
System, Procedure and Process
– System is a set of interactive elements corresponding to the given inputs to produce the desired output
– Procedure is a set of activities which have to follow in a systematic format without taking any shortcuts
– Process is a set of activities/operations which follow the procedures and systems with right RM and intermittent checking to avoid any lapses
Systems Concept
outputs
SYSTEM
transformationsinputs
productivity
OI
CustomersGoodsandservices
Landpeoplecapital
facilitiesequipment
toolsenergy
materialsinformation
Process
• Process is a summation of activities such as – operations, – inspection, – delays, – storage, – Transportation – everything else that happens between the
beginning and the end of the process
Mathematically, How Can We Increase Productivity?
Productivity Improvement
OIOIOI
OIOI
Productivity Improvement (PI) is the result of managing and intervening in transformation or work processes.
PI will occur if:
Measuring Productivity
• Static: P=O/I in a given period of time (t). Useful for benchmarking purposes.
• Dynamic: p(1)=O(1)/I(1); p(2)=O(2)/I(2); then p(2)/p(1) yields a dimensionless index that reflects change in productivity between periods. ((p(2)-p(1))/p(1))*100 yields the percentage change between periods.
Measuring Productivity (Continued)
• Partial-Factor: Uses a single “I” factor; e.g., output/labor-hour, sales/employee
• Multi-Factor: Uses more than one “I” factor; e.g. output/direct costs (labor, materials, and overhead).
• Total-Factor: Uses all “I” factors. (Note: Total-Factor captures “trade-offs”
between input factors.)
Measurement Problems
• Multiple products/services (aggregation-O)
• Varied categories, types, and levels of input
resources (aggregation-I)
• Price/cost changes of outputs & inputs
• Redesigned products, services, processes
• “Hard-to-measure” factors (e.g., quality)
Application of Productivity Measures
• Individual level
• Group level
• Department level
• Corporate level
• National level
• Global level
Global-Level Productivity
• Why are global-level productivity measures
important?
• How do we compare productivity among
nations?
• How can a nation increase productivity in a
global economy?
Importance of Global-Level Productivity Measures
• Measure and compare competitiveness among nations.
• Contribute to the development of a nation’s economic, social, and political policies.
• Develop global cooperation among nations.
• Help business organizations make investment decisions.
Global-Level Productivity Measures
• Organisation for Economic Co-operation and Development (OECD) – http://www.oecd.org/home/
• GDP per capita (labor productivity * fraction of people who work) is widely regarded as the best measure.
• A common currency is used to measure the GDP.
Factors Affecting Productivity Improvement at Global Level
• Education• Technology• Macroeconomic policies• Social and culture environments• Foreign aids• Foreign investments• Industry policies & competition
Competing on Productivity
• At the national level, growing productivity– leads to a higher standard of living– holds inflation in check– enhances international competitiveness.
• The annual GDP growth is partially due to – growth in productivity – growth in inflation
National Productivity Measures (http://www.bls.gov/)
• Comparisons within a segment of economy
over time
• Comparisons of specific productivity measures
• International comparisons
Labor Productivity - Percent Change from Previous Year
2001 2002 2003 1994 - 2003
Business Sector 2.2 4.9 4.5 2.6
Non-Farm Sector 2.1 5.0 4.4 2.6
Manufacturing 2.2 7.2 5.1 4.2
Other Measures Affecting Productivity
• Efficiency
• Effectiveness
• Quality
• Quality of Work Life
• Innovation
Efficiency
• Measures the resources expected to be
consumed to the resources actually
consumed.
• Hence, it focuses on the input side of the
system. (To what degree did the system utilize
the “right” things.)
Effectiveness
• Measures what the system sets out to
accomplish (objective) with what was actually
accomplished; plan vs. actual
• Hence, effectiveness is an output measure. (Is
the output “right” - right quality, right quantity,
on time, etc.)
QUALITY
Quality
• Degree to which the outputs (products and services) from the system conform to requirements or meet customer expectations.
• The focus is on quality attributes (e.g., conformance, performance, convenience, responsiveness, perceived quality.)
Meaning of Quality
Quality
• The TQM philosophy states that maintaining and improving quality is not just the prerogative of quality control department but each and every employee of an organization is equally responsible.
• A clever and well-executed advertising may attract customers initially, but if the product supplied does not match customer’s quality expectations then in all probability the customer will shift to a competitor's product
Quality of Work Life (QWL)
• Measures the way that employees in a system respond to the sociotechnical aspects of that system.
Innovation
• Measures the applied creativity of the system.
• Relates to the design and development of improved products, services, and processes.
How Do Those Other Measures Affect Productivity?
TQM
• What is TQM ? – Total quality management ( TQM ) is a business
management strategy aimed at embedding awareness of quality in all organizational processes.
– TQM has been widely used in manufacturing, education, hospitals, call centers, government, and service industries, as well as NASA space and science programs
TQM
• Total Quality Management (TQM) is a structured system for meeting and exceeding customer needs and expectations by creating organization-wide participation in the planning and implementation of improvement (continuous and breakthrough) processes
TQM
• Total Quality Management – Total : Involve all functions to have customer focus and
give reliable delivery of product+service in line with customer’s expectations at lowest cost
– Quality : Design and manufacture the product+service to achieve zero defect and 100% customer satisfaction
– Management : Lead to achieve quality for customers by communicating the vision, mission and values to all employees and creating continuous improvement culture
TQM
• Techniques for TQM – Total Employee Involvement – Kaizen, Small Group Activity, Quality Circles, Key Business
Process /Biz Process Re-engineering, – customer satisfaction surveys, Training – Just in Time/ Waste Elimination – TPM, Zero Defect, supplier Partnership – Total Quality Control – TQC is applicable to all functions, use of 7 QC Tools, use of
SPC/SQC and PDCA, ISO 9000, Six Sigma, ISO 14000, understand the processes critical to quality (CTQ)
Six Sigma
– Six Sigma- (The statistical Representation) is a process of Quality measurement, which helps the organization in the improvement of their Quality
– Six Sigma is a systematical process which helps the organization to eliminate the defects which prevent it from reaching perfection
– Six Sigma ensures the QC, TQM and Zero Defect – When a process attains six sigma level it means that
there is no room for the product to fail – Six sigma is professionalizing of the Quality Management
functions
Six Sigma Process
Copyright 2011 John Wiley & Sons, Inc. 2-59
3.4 DPMO
67,000 DPMOcost = 25% of sales
DEFINE CONTROLIMPROVEANALYZEMEASURE
Total Productive Maintenance
• Maintenance – Maintenance is done on the equipments to keep
them running as efficiently as possible for as long as possible
– There are three types of maintenance : – Breakdown maintenance (unplanned) – Preventive maintenance (planned) – Predictive maintenance ( High tech analysis )
Total Productive Maintenance
– TPM , developed in Japan, is a scientific company wide approach in which every employee is concerned about the maintenance , quality and efficiency of the equipment
– The objective is to reduce the whole life cost of equipment through more efficient maintenance management and to integrate the maintenance and manufacturing functions
– Teamwork is a key element of TPM – Analysis of each equipment focuses on reduction of
manufacturing losses and costs
Total Productive Maintenance
– TPM aims to achieve improvements in cost, quality and speed (productivity)
– This is equivalent to TQM (reduces variations due to automation)
– TPM addresses six big losses – reduced yield process defects – reduced speed idling and minor stoppages – setup and adjustment equipment failure
Product Quality
• Product and Service Quality Factors affecting Product Quality – Men – Materials – Machines – Manufacturing conditions – Manufacturing process – Capability to invest money – Management commitment to Quality – Product design (Tangible and *Intangible) – After sales service (*Safety and Reliability)
Product and Service Quality
• Ten Dimensions of Service Quality 1. Quality 2. Tangibility 3. Reliability 4. Responsiveness 5. Communication 6. Security 7. Competence 8. Courtesy 9. Understanding 10. Access
Summary• Course Outline• Productivity and Quality Defined• Concepts Introduced
– Efficiency
– Effectiveness
– National and Global Productivity
– Quality
– Quality of Work Life
– Innovation
– Total Productive Maintenance
– Six Sigma
– Product and Service Quality
Improving Productivity
