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MG
MT
3620 M
anaging Quality
Why Study Quality?
Customers "buy" quality with higher price and Customers "buy" quality with higher price and loyaltyloyalty
Total quality leads to substantial cost reduction in Total quality leads to substantial cost reduction in rework, repair, scrap, warranty costs, etc.rework, repair, scrap, warranty costs, etc.
Total quality "pays" with the higher productivity, Total quality "pays" with the higher productivity, profits and market shareprofits and market share
Quality is built-in into all products and servicesQuality is built-in into all products and services Quality is everybody’s responsibility including Quality is everybody’s responsibility including
design, operations, marketing, purchasing, etc.design, operations, marketing, purchasing, etc. Quality improvement requires effective tools and Quality improvement requires effective tools and
good training good training
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anaging Quality
Defining Quality
The American National Standards Institute (ANSI) The American National Standards Institute (ANSI) and the American Society for Quality (ASQ) and the American Society for Quality (ASQ) definition:definition:
Quality is the totality of features and Quality is the totality of features and characteristics of a product or service that bears characteristics of a product or service that bears on its ability to satisfy given needs.on its ability to satisfy given needs.
Purchaser-based definitions (user-based):Purchaser-based definitions (user-based): Quality of the product deliveredQuality of the product delivered Quality of supplier’s service and Quality of supplier’s service and
capability during the transactionscapability during the transactions
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anaging Quality
Purchasing Qualified Tires for UPS Delivery Vehicles What are UPS’s needs for tiresWhat are UPS’s needs for tires What are UPS’s quality/value concerns of What are UPS’s quality/value concerns of
the tires deliveredthe tires delivered What are UPS’s concerns of the supplier’s What are UPS’s concerns of the supplier’s
performance during the product/service performance during the product/service delivery and transactiondelivery and transaction
What’s UPS’s “best buy”?What’s UPS’s “best buy”?
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anaging Quality
Dimensions of Product Quality
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
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anaging Quality
Dimensions of Product Quality
Durability
Amount of use one gets from a product before it physically Amount of use one gets from a product before it physically deteriorates or until replacement is preferabledeteriorates or until replacement is preferable
AestheticsAesthetics
How a product looks, feels, sounds, tastes, or smellsHow a product looks, feels, sounds, tastes, or smells Perceived quality (reputations)Perceived quality (reputations)
Subjective assessment resulting from image, advertising, or Subjective assessment resulting from image, advertising, or brand namesbrand names
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anaging Quality
Dimensions of Service Quality
Competence, Access and CommunicationCompetence, Access and Communication
Possession of the skills and knowledge required to perform Possession of the skills and knowledge required to perform the transactions; ease of contact; educating and informing the transactions; ease of contact; educating and informing buyersbuyers
Serviceability and responsivenessServiceability and responsiveness
Speed and willingness of providing service/repairingSpeed and willingness of providing service/repairing SecuritySecurity
Freedom from danger, risk, or doubtFreedom from danger, risk, or doubt CommitmentCommitment
Making an effort to meet the customer's needsMaking an effort to meet the customer's needs
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anaging Quality
Importance of Quality
Identify cost Identify cost saving & value saving & value creationcreation
Profits including Profits including company’s company’s reputation or reputation or lower product lower product liabilityliability
International International implicationsimplications
IncreasedProfits
Lower CostsProductivityRework/ScrapWarranty
Market GainsReputationVolumePrice
ImprovedQuality
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anaging Quality
Description by Specification
Establish clear standards for measuringEstablish clear standards for measuring Serve as instructions of handlingServe as instructions of handling Advantages and limits of using specsAdvantages and limits of using specs Three types of specsThree types of specs
Physical or Chemical CharacteristicsPhysical or Chemical Characteristics Defining functions or performance in both Defining functions or performance in both
products and delivery processproducts and delivery process Description by engineering drawingDescription by engineering drawing
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anaging Quality
Alternatives to Specification
Description by sampleDescription by sample Use market gradeUse market grade
Common for commodities such as Common for commodities such as agriculture or raw materialsagriculture or raw materials
Use standard specificationUse standard specification For example RS232 interface, IEEE1394 For example RS232 interface, IEEE1394
standardstandard
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anaging Quality
ISO 9000 Quality Standards
Formed by International Organization for Formed by International Organization for Standardization (ISO) in Geneva, SwitzerlandStandardization (ISO) in Geneva, Switzerland
U.S. counterpart: American National Standards U.S. counterpart: American National Standards Institute (ANSI)Institute (ANSI)
Internal benefitsInternal benefits Better documentationBetter documentation Greater quality awareness by employeeGreater quality awareness by employee
External benefitsExternal benefits Higher perceived qualityHigher perceived quality Reduced customer quality auditsReduced customer quality audits
MG
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anaging Quality
Total Quality Management (TQM) Principles Customer focusCustomer focus Continuous improvementContinuous improvement BenchmarkingBenchmarking Consistency in the goalConsistency in the goal Suppliers are partners in TQM processSuppliers are partners in TQM process Use statistical tools of TQMUse statistical tools of TQM
Yields: How to do what is important and to be Yields: How to do what is important and to be accomplishedaccomplished
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anaging Quality
To Make the Quality Focus Work
Motorola:Motorola: Aggressively began a worldwide Aggressively began a worldwide
education program to be sure that education program to be sure that employees understood quality and employees understood quality and statistical process controlstatistical process control
Established goalsEstablished goals Established extensive employee Established extensive employee
participation and employee teamsparticipation and employee teams
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anaging Quality
Flow of Activities Necessary to Achieve Total Quality Management
Organizational PracticesOrganizational Practices
Quality PrinciplesQuality Principles
Employee FulfillmentEmployee Fulfillment
Customer SatisfactionCustomer Satisfaction
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anaging Quality
Organizational Practices
LeadershipLeadership Mission statementMission statement Effective operating procedureEffective operating procedure Staff supportStaff support TrainingTraining
Yields: What is important and what is to be Yields: What is important and what is to be accomplishedaccomplished
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anaging Quality
Benchmarking the quality of Potential Suppliers
Selecting best practices to use Selecting best practices to use as a standard for performanceas a standard for performance
Determine what to benchmarkDetermine what to benchmark Form a benchmark teamForm a benchmark team Identify benchmarking partnersIdentify benchmarking partners Collect and analyze benchmarking informationCollect and analyze benchmarking information Take action to match or exceed the benchmarkTake action to match or exceed the benchmark
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anaging Quality
Employee and Supplier Fulfillment Incentive sharing and empowermentIncentive sharing and empowerment Mutual commitments between Motorola and Mutual commitments between Motorola and
shipping agentsshipping agents EmpowermentEmpowerment Organizational commitmentOrganizational commitment
Yields: Suppliers’ attitudes that they are Yields: Suppliers’ attitudes that they are willing to accomplish what is important for willing to accomplish what is important for buyersbuyers
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anaging Quality
Quality Circle and Six-Sigma Team Group of 6-12 employees from same work areaGroup of 6-12 employees from same work area Meet regularly to solve work-related problemsMeet regularly to solve work-related problems
4 hours/month4 hours/month Six-Sigma team: Internal consulting group of Six-Sigma team: Internal consulting group of
outstanding employees from different work areasoutstanding employees from different work areas Meet regularly to solve quality-related problemsMeet regularly to solve quality-related problems Facilitates, trains, Facilitates, trains,
and helps with and helps with quality circle quality circle
meetingsmeetings© 1995 Corel Corp.
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anaging Quality
The Baldrige National Quality Award and Deming Prize Malcolm Baldrige Award is to recognize US Malcolm Baldrige Award is to recognize US
organizations’ quality achievement on organizations’ quality achievement on diffusion of Total Quality Management diffusion of Total Quality Management (TQM) practices(TQM) practices
Deming Prize granted by Japanese Empire Deming Prize granted by Japanese Empire annually to Japanese companiesannually to Japanese companies Since 1950’s, Deming’s quality crusade Since 1950’s, Deming’s quality crusade
in Japan changed the world’s concepts of in Japan changed the world’s concepts of quality managementquality management
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anaging Quality
Deming’s Points for Implementing Quality Improvement
Create consistent and continuous Create consistent and continuous improvement on product and service qualityimprovement on product and service quality
Build quality into the product; stop Build quality into the product; stop depending on inspections to catch problemsdepending on inspections to catch problems
Build long-term relationships in supplier Build long-term relationships in supplier based on performance instead of pricebased on performance instead of price
Emphasize top manager’s responsibilityEmphasize top manager’s responsibility
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anaging Quality
Deming’s Points for Implementing Quality Improvement
Break down barrier between departmentsBreak down barrier between departments Support, help, and improveSupport, help, and improve Remove barriers of pride in workRemove barriers of pride in work Institute a vigorous program of education Institute a vigorous program of education
and self-improvementand self-improvement Put everybody in the company to work on Put everybody in the company to work on
the transformationthe transformation
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anaging Quality
Shewhart’s PDCA Model
4.Act 1.Plan
3.Check 2.Do
Identify the improvement and make a plan
Test the planIs the plan working
Implement the plan
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anaging Quality
Exam Information
A sample quiz will be discussedA sample quiz will be discussed Midterm exam will cover Chapter 1, 2, 4, 5, Midterm exam will cover Chapter 1, 2, 4, 5,
66
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anaging Quality
Cost of Quality
INTERNAL FAILURE COSTSINTERNAL FAILURE COSTS Incurred directly--prior to shipment or service--as Incurred directly--prior to shipment or service--as
a result of defective output:a result of defective output: scrap scrap rework rework repairrepair salvagesalvage downtime downtime dispositiondisposition
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anaging Quality
Cost of Quality
EXTERNAL FAILURE COSTSEXTERNAL FAILURE COSTS Incurred to the provider when defects are Incurred to the provider when defects are
discovered after shipment to customers:discovered after shipment to customers: warranty expenseswarranty expenses returned materialsreturned materials complaint processingcomplaint processing liability settlementsliability settlements legal feeslegal fees
MG
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anaging Quality
Cost of Quality
PREVENTION COSTSPREVENTION COSTS Incurred in an effort to improve quality system and Incurred in an effort to improve quality system and
avoid nonconformance in products and services:avoid nonconformance in products and services: process analysis and process controlprocess analysis and process control quality planningquality planning quality trainingquality training system development and managementsystem development and management reportingreporting
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anaging Quality
Cost of Quality
APPRAISAL COSTSAPPRAISAL COSTS Incurred for determining the degree of quality:Incurred for determining the degree of quality:
inspection and testing inspection and testing materials and toolsmaterials and tools maintenance of test equipmentmaintenance of test equipment field testingfield testing
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anaging Quality
Traditional View of Quality-Cost Trade offs
Low correction cost
High detection cost
High prevention cost
High correction cost
Low detection cost
Low prevention cost
Optimum Quality % of defects
Cost
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anaging Quality
Taguchi Techniques and Quality Loss Function
Experimental design methodsExperimental design methods Identify key component & process variables Identify key component & process variables
affecting product variationaffecting product variation improve product & process designimprove product & process design
Taguchi Taguchi ConceptsConcepts Quality robustnessQuality robustness Quality loss functionQuality loss function Target-oriented qualityTarget-oriented quality
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anaging Quality
Freq.
XTarget USLLSL
A study found U.S. consumers preferred Sony TV’s 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.
Japanese factory (Target-oriented)
U.S. factory (Conformance-oriented)
Target-Oriented Quality
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anaging Quality
Quality Loss Function; Distribution of Products Produced
Low loss
High loss
Frequency
Lower Target UpperSpecification
Loss (to producing organization, customer, and society)
Quality Loss Function (a)Unacceptable
Poor
Fair
Good
Best
Target-oriented quality yields more product in the “best” category
Target-oriented quality brings products toward the target valueConformance-oriented quality keeps product within three standard deviations
Distribution of specifications for product produced (b)
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anaging Quality
Assignment and Case Discussion for Managing Quality
Assignment 3: LuckWay SupermarketAssignment 3: LuckWay SupermarketChristy Allen, the manager of the LuckWay Christy Allen, the manager of the LuckWay supermarket, was very concerned with the supermarket, was very concerned with the large number of complaints from customers, large number of complaints from customers, particularly on Sundays, so over the last particularly on Sundays, so over the last eight weeks she obtained Sunday's eight weeks she obtained Sunday's complaint records from the store's service complaint records from the store's service desk… desk…
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anaging Quality
Tools of TQM and Continuous Improvement
Flow charts or process diagramsFlow charts or process diagrams Check sheetCheck sheet Pareto chartsPareto charts Cause and effect diagramCause and effect diagram (Scatter diagram)(Scatter diagram) (Histograms)(Histograms) Statistical process control chartsStatistical process control charts
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anaging Quality
Shows sequence of events in processShows sequence of events in process Depicts activity relationshipsDepicts activity relationships Has many usesHas many uses
Identify data collection pointsIdentify data collection points Find problem sourcesFind problem sources Identify places for improvementIdentify places for improvement Identify where travel distances can be Identify where travel distances can be
reducedreduced
Flow Chart (Process Diagram)
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anaging Quality
Flow Charts (Chicken Processing Plant)
Packing station
Weighting & labeling
Quick freeze
(60 min)
Storage (4 to 6 hrs)
Shipping dock
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Check Sheets
Check sheet is designed for recording dataCheck sheet is designed for recording data Help identify patterns or facts during the Help identify patterns or facts during the
recording period and lead to subsequent recording period and lead to subsequent analysisanalysis
For example, recording customer complains For example, recording customer complains or inspection results as time goes byor inspection results as time goes by
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anaging Quality
Check SheetTypes of Error
-------------------------------------------------------------------Month Broken Wrong Mixed Contamination
package label items---------------------------------------------------------------------------------------------Jan 7 5 3 0
Feb 5 7 4 0
Mar 9 3 2 0
Apr 4 5 3 3
May 5 7 2 7
Jun 2 5 4 6----------------------------------------------------------------------------------------------TotalPercentage
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anaging Quality
Pareto Charts
Organize errors, problems, or defectsOrganize errors, problems, or defects Help focus on problem-solving effortsHelp focus on problem-solving efforts Based on the work of Vilfredo Pareto, a 19-Based on the work of Vilfredo Pareto, a 19-
century economistcentury economist 80% of a firm’s problem are a result of only 80% of a firm’s problem are a result of only
20% of the causes.20% of the causes.
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anaging Quality
Pareto Analysis of Production Process (Total Defects = 44)
PARETO CHART
0
5
10
15
20
25
Del
iver
y
Raw
Mat
eria
ls
Fab
ricat
ion
Fin
alA
ssem
bly
Sub
asse
mbl
y
Nu
mb
er o
f E
rro
rs
0
10
20
30
40
50
60
70
80
90
100
Cu
mu
lati
ve P
erce
nta
ge,
%
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anaging Quality
Used to find problem sources/solutionsUsed to find problem sources/solutions Other namesOther names
Fish-bone diagram, Ishikawa diagramFish-bone diagram, Ishikawa diagram StepsSteps
Identify problem to correctIdentify problem to correct Draw main causes for problem as ‘bones’Draw main causes for problem as ‘bones’ Ask ‘What could have caused problems in Ask ‘What could have caused problems in
these areas?’ Repeat for each sub-area.these areas?’ Repeat for each sub-area.
Cause and Effect Diagram
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anaging Quality
Too many defects
Too many defects
Problem
Cause and Effect Diagram Example
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anaging Quality
Method Manpower
Material Machinery
Too many defects
Too many defects
Main Cause
Main Cause
Cause and Effect Diagram Example
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anaging Quality
Method Manpower
Material Machinery
DrillDrillDrillDrillOverOverOverOverTimeTimeTimeTime
SteelSteelSteelSteelWoodWoodWoodWood
LatheLatheLatheLathe
Too many defects
Too many defects
Sub-Cause
Cause and Effect Diagram Example
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anaging Quality
Method Manpower
Material Machinery
DrillDrillDrillDrillOverOverOverOverTimeTimeTimeTime
SteelSteelSteelSteelWoodWoodWoodWood
LatheLatheLatheLathe
Too many defects
Too many defects
TiredTiredTiredTired
OldOldOldOld
SlowSlowSlowSlow
Cause and Effect Diagram Example
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anaging Quality
Uses statistics & control charts to tell when to Uses statistics & control charts to tell when to adjust processadjust process
Developed by Shewhart in 1920’sDeveloped by Shewhart in 1920’s InvolvesInvolves
Creating standards (upper & lower limits)Creating standards (upper & lower limits) Measuring sample output (e.g. mean wgt.)Measuring sample output (e.g. mean wgt.) Taking corrective action (if necessary)Taking corrective action (if necessary)
Done while product is being producedDone while product is being produced
Statistical Process Control (SPC)
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anaging Quality
Process Control Chart
Plot of Sample Data Over Time
010203040506070
1 5 9 13 17 21
Time
Sam
ple
Valu
e
SampleValueUCL
Average
LCL
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anaging Quality
Involves examining items to see if an item is Involves examining items to see if an item is good or defectivegood or defective
Detect a defective productDetect a defective product Does not correct deficiencies in process or Does not correct deficiencies in process or
productproduct IssuesIssues
When to inspectWhen to inspect Where in process to inspectWhere in process to inspect
Use TQM tools to help analyze, organize, and Use TQM tools to help analyze, organize, and interoperate result from inspection interoperate result from inspection
Inspection
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When and Where to Inspect (Aided by Flow Chart) Before costly or irreversible processesBefore costly or irreversible processes
At the supplier’s plant while the supplier is At the supplier’s plant while the supplier is producingproducing
At your facility upon receipt of goods from the At your facility upon receipt of goods from the suppliersupplier
Before delivery from your facilityBefore delivery from your facility During the step-by-step production processesDuring the step-by-step production processes When production or service is completeWhen production or service is complete
Conducting survey or interviewConducting survey or interview
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Routine Inspection vs. Probing Inspection Probing inspection is to identify the source Probing inspection is to identify the source
of emerging quality problemof emerging quality problem Routine inspection is for tracking and Routine inspection is for tracking and
monitoring those existing quality issuesmonitoring those existing quality issues Flow chart or process diagram is useful for Flow chart or process diagram is useful for
designing and studying both types of designing and studying both types of inspectioninspection
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anaging Quality
Luckway Supermarket
Only use open-ended comments but include timelineOnly use open-ended comments but include timeline Analyze the issues with insightful flow chartAnalyze the issues with insightful flow chart RequirementsRequirements
Check sheetCheck sheet Pareto chartPareto chart Control chart (record the frequency without Control chart (record the frequency without
consider UCL and LCL)consider UCL and LCL) Cause-and-effect diagramCause-and-effect diagram
Make recommendation (for example, tie to TQM Make recommendation (for example, tie to TQM principles)principles)
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anaging Quality
Southwestern University (B)
Why we need quantitative tools for managing Why we need quantitative tools for managing quality?quality?
How to identify quality problemsHow to identify quality problems Collect dataCollect data Organize data Organize data Interoperate dataInteroperate data
Plan for improving qualityPlan for improving quality BenchmarkingBenchmarking EmpowermentEmpowerment Continuous improvementContinuous improvement
MG
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anaging Quality
Southwestern University (B)
Two types of data in this caseTwo types of data in this case Survey dataSurvey data Open-ended commentsOpen-ended comments
Start from considering the tools of TQMStart from considering the tools of TQM Flow chartFlow chart Pareto chartPareto chart Cause and effect diagramCause and effect diagram
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Survey Data vs. Open-Ended Comments All types of data collection is costlyAll types of data collection is costly When should we use survey?When should we use survey? When should open-ended comments be When should open-ended comments be
elicited?elicited? How to encode open-ended comments?How to encode open-ended comments? Advantages of using data from comments?Advantages of using data from comments? How to design questions in survey?How to design questions in survey? Advantages of using survey dataAdvantages of using survey data
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Analyze Survey Data
Weights Total/250
4 3 2 1 0 Total (Average)
Parking 360 315 135 10 0 820 3.28 Entertainment 640 105 52 10 0 807 3.23 Traffic 200 255 96 52 0 603 2.41 Printed Program 264 102 196 22 0 584 2.34 Seating 180 90 230 35 0 535 2.14
Ticket Pricing 420 312 32 65 10 839 3.36 Season Ticket
Plans 300 240 108 41 5 694 2.78
Food Selection 620 180 48 11 0 859 3.44 Concession
Prices 66 348 116 58 2 590 2.36
Speed of Service 140 135 92 48 75 490 1.96
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Ranking
Speed of Service 1.96 Poor
Seating 2.14
Printed Program 2.34
Concession Prices 2.36
Traffic 2.41
Season Ticket Plans 2.78
Entertainment 3.23
Parking 3.28
Ticket Pricing 3.36
Items in Weighted Descending Order
Food Selection 3.44 Good
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Issues for Analyzing Open-Ended Comments A direct way to find out customer’s biggest A direct way to find out customer’s biggest
concerns about qualityconcerns about quality Data would be abstract and subjectiveData would be abstract and subjective Difficult to encodeDifficult to encode Difficult to rank and interoperateDifficult to rank and interoperate May miss some secondary issuesMay miss some secondary issues Good for pilot study on qualityGood for pilot study on quality
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Categorize Open-Ended Comments
Results by Topic Negative Entertainment Positive Negative Facilities Positive Entertainment 8 14 Seats — 3 Student
Behavior 9 Parking —
2 Crowded 5 Need Sky Boxes — 1 Cheerleaders 5 Other 1 1 Programs 2 Bathroom — Band 1 1 Traffic — Coach 3 Food 3 Access/Variety — 1 Quality 1 1 Price —
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anaging Quality
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
Speed of Service 1.96 Poor
Seating 2.14
Printed Program 2.34
Concession Prices 2.36
Traffic 2.41
Season Ticket Plans 2.78
Entertainment 3.23
Parking 3.28
Ticket Pricing 3.36
Items in Descending Order
Food Selection 3.44 Good
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anaging Quality
Pareto Chart
0
5
10
15
20Pareto Chart of Comment Results 100%
70%
40%
10%
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anaging Quality
Internal Facility Manpower
External Facility Food Stands
Too many complains
Too many complains
Main Cause
Main Cause
Cause and Effect Diagram
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Other Concerns about Data Collection Time horizonTime horizon DemographyDemography Sample sizeSample size Sampling techniquesSampling techniques Question designQuestion design
Set hypothesisSet hypothesis Identify factorsIdentify factors
Data analysisData analysis Statistic methodsStatistic methods Models for testing hypothesisModels for testing hypothesis