Managing Quality

Quality and Strategy

► Managing quality supports differentiation, low cost, and response strategies
► Quality helps firms increase sales and reduce costs
► Building a quality organization is a demanding task

Two Ways Quality Improves Profitability:


1) Sales Gains via
• Improved response
• Flexible pricing
• Improved reputation


2) Reduced Costs via
• Increased productivity
• Lower rework and scrap costs
• Lower warranty costs

The Flow of Activities:
Organizational Practices > Quality Principles > Employee Fulfillment > Customer Satisfaction

Quality

  • An operations manager’s objective is to build a total quality management system that identifies and satisfies customer needs
  • The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs

Different Views
► User based: better performance, more features ► Manufacturing based: conformance to standards, making it right the first time
► Product based: specific and measurable attributes of the product

Implications of Quality


  1. Company reputation
    ► Perception of new products
    ► Employment practices
    ► Supplier relations
  2. Product liability
    ► Reduce risk
  3. Global implications
    ► Improved ability to compete

Costs of Quality


► Prevention costs - reducing the potential for defects
► Appraisal costs - evaluating products, parts, and services
► Internal failure costs - producing defective parts or service before delivery
► External failure costs - defects discovered after delivery

Seven Concepts of TQM


1) Continuous improvement
2) Six Sigma
3) Employee empowerment
4) Benchmarking
5) Just-in-time (JIT)
6) Taguchi concepts
7) Knowledge of TQM tools

1) Continuous improvement


► Never-ending process of continuous improvement
► Covers people, equipment, suppliers, materials, procedures
► Every operation can be improved

3) Employee empowerment


► Getting employees involved in product and process improvements
► 85% of quality problems are due to materials and process
► Techniques:
1) Build communication networks that include employees
2) Develop open, supportive supervisors
3) Move responsibility to employees
4) Build a high-morale organization
5) Create formal team structures

4) Benchmarking


Selecting best practices to use as a standard for performance

  1. Determine what to benchmark
  2. Form a benchmark team
  3. Identify benchmarking partners
  4. Collect and analyze benchmarking information
  5. Take action to match or exceed the benchmark

5) Just-in-time (JIT)


► 'Pull' system of production scheduling including supply management
► Production only when signaled
► Allows reduced inventory levels
► Inventory costs money and hides process and material problems
► Encourages improved process and product quality

6)Taguchi Concepts


► Engineering and experimental design methods to improve product and process design
► Identify key component and process variables affecting product variation
► Taguchi Concepts:
1) Quality robustness
2) Target-oriented quality
3) Quality loss function

7) Knowledge on TQM Tools


► Tools for Generating Ideas
(a)Check Sheet: An organized method of recording data
(b)Scatter Diagram: A graph of the value of one variable vs. another variable
(c)Cause-and-Effect Diagram: A tool that identifies process elements (causes) that may effect an outcome
► Tools to Organize the Data
(d)Pareto Chart: A graph to identify and plot problems or defects in descending order of frequency
(e)Flowchart (Process Diagram): A chart that describes the steps in a process
►Tools for Identifying Problems
(f) Histogram: A distribution showing the frequency of occurrences of a variable
(g)Statistical Process Control Chart: A chart with time on the horizontal axis to plot values of a statistic

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

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 products
► Checklists ensure consistency and completenes

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
1) Intangible differences between products
2) Intangible expectations customers have of those products

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Service Quality The operations manager must recognize:

Determinants of Service Quality:


  • Reliability
  • Responsiveness
  • Competence
  • Access involves approachability and ease of contact - Courtesy
  • Communication
  • Credibility
  • Security
  • Understanding/knowing the customer
  • Tangibles

Service Recovery Strategy


► Managers should have a plan for when services fail
► Marriott's LEARN routine

  • Listen
  • Empathize
  • Apologize
  • React
  • Notify

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► The tangible component of services is important

► The service process is important

► The service is judged against the customer’s expectations

► Exceptions will occur



2) Six Sigma

  1. Controls the new process to make sure performance levels are maintained
  1. Improves by modifying or redesigning existing processes and procedures
  1. Analyzes the data ensuring repeatability and reproducibility
  1. Measures the process and collects data
  1. Defines the project’s purpose, scope, and outputs, then identifies the required process information keeping in mind the customer’s definition of quality