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Managing Quality ofServices
Operation management (Gaither N., Frazier, Render Heizer)
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Definitions of Quality
User-Based: What consumer says it is
Manufacturing-Based: Degree to which
a product conforms to designspecification
Product-Based: Level of measurable
product characteristic
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What is Quality?
The quality of a productor service is a customersperception of the degree to whichthe product or service meets his orher expectations.
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Nature of Quality
Dimensions of Quality
Determinants of Quality
Costs of Quality
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Dimensions of Product
Quality
Performance relative to customersintended use
Features special characteristics
Reliability likelihood ofbreakdowns, malfunctions
Serviceability
speed/cost/convenience of servicingDurability amount of time/usebefore repairs
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Dimensions of Product
Quality
Durability amount of time/use beforerepairs
Appearance effects on human sensesCustomer service treatmentbefore/during/after sale
Safety user protectionbefore/during/after use
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Under-standing
Tangibles
Reliability
CommunicationCredibility
Security
Responsiveness
Competence
Courtesy
Access
1995 Corel Corp.
Service Quality Attributes
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Determinants of Quality
Quality of design products/servicedesigned based on customersexpectations and desires
Quality capability of production processes processes must be capable of producingthe products designed for the customers
Quality of conformance capableprocesses can produce inferior product ifnot operated properly
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Determinants of Quality
Quality of customer service a superiorproduct does not mean success; must
have quality service alsoOrganization quality culture superiorproduct and service requiresorganization-wide focus on quality
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Costs of Quality
Internal failure - of producing defectiveparts or service, Scrap and rework -rescheduling, repairing, retesting
External costs - occur after deliveryDefective products in the hands of thecustomer - recalls, warranty claims, law
suits, lost business,
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Costs of Quality
Appraisal costs - evaluating productsdetecting defects - inspection, testing, .
Prevention costs: reducing the potential fordefects through training, chartingperformance, product/process redesign,supplier development, .
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Traditional Quality
Management
Defective products will be identified anddiscarded
Quality can be inspected into products
Main decision is how many products to
inspect (largely a question of economics)
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Traditional View of How Much
to InspectAnnual Cost ($)
% of Products Inspected0
Optimal
Level of
Inspection
Cost of Scrap,Rework, and
Detecting Defects
Cost of DefectiveProducts toCustomers
Total QualityControl Costs
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Modern Quality Management
Quality Drives the Productivity Machine
Other Aspects of the Quality Picture
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Quality Gurus
W. Edwards DemingAssisted Japan in improving productivityand quality after World War II
In 1951 Japan established Deming PrizeUS was slow in recognizing hiscontributions
Introduced Japanese companies to the
Plan-Do-Check-Act (PDCA) cycle(developed by Shewart)
Developed 14 Points for managers
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PDCA Cycle
2. DO
Try plan on
a test basis
1. PLAN
Identify im-provements and
develop plan
3. CHECK
Evaluate plan
to see if itworks
4. ACT
Permanentlyimplement
improvements
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Demings 14 Points for
Managers
1. Create constancy of purpose toward productquality to achieve organizational goals
2. Refuse to allow commonly accepted levels of
poor quality3. Stop depending on inspection to achieve
quality
4. Use fewer suppliers, selected based on qualityand dependability instead of price
5. Instill programs for continuous improvementof costs, quality, service, and productivity
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Demings 14 Points for
Managers
6. Train all employees on quality concepts
7. Focus supervision on helping people do abetter job
8. Eliminate fear, create trust, and encouragetwo-way communications betweenworkers and management
9. Eliminate barriers between departmentsand encourage joint problem-solving
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Demings 14 Points for
Managers
10. Eliminate the use of numerical goals andslogans to make workers work harder
11. Use statistical methods for continuousimprovement of quality and productivityinstead of numer. quotas
12. Remove barriers to pride of workmanship
13. Encourage education and self-improvement
14. Clearly define managements permanentcommitment to quality and productivity
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Quality Gurus
Philip B. Crosby
Wrote Quality Is Freein 1979
Company should have the goal of zerodefects
Cost of poor quality is greatlyunderestimated
Traditional trade-off between costs ofimproving quality and costs of poor qualityis erroneous
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Quality Gurus
Armand V. Feigenbaum
Developed concept of total quality control(TQC)
Responsibility for quality must rest with thepersons who do the work (quality at thesource)
Kaoru IshikawaWrote Guide to Quality Controlin 1972
Credited with the concept of quality circles
Suggested the use of fishbone diagrams
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Quality Gurus
Joseph M. JuranLike Deming, discovered late by US companies
Played early role in teaching Japan aboutquality
Wrote Quality Control Handbook
Genichi Taguchi
Constant adjustment of processes to achieve
product quality is not effective
Products should be designed to be robustenough to handle process and field variation
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ISO 9000 Standards
Quality management guidelines developed bythe International Organization forStandardization
Companies become certified by applying tothird-party providers who assess the level ofconformity to the standards
More than 300,000 companies worldwide areISO 9000-certified
The US big three automakers have adopted asimilar set of standards called QS-9000
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ISO 9000 Standards
Standards based on 8 quality managementprinciples
Customer focused organization
LeadershipInvolvement of people
Process approach
System approach to management
Continual improvementFactual approach to decision making
Mutually beneficial supplier relationship
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Quality Management in
Services
Since many services are intangible, it isdifficult to determine their quality
Customers set their own standards forservices
Perceived quality of service affected by thesurroundings
Performance of service employeesdetermines in large part the quality of theservices
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Wrap-Up: World-Class
Practice
Quality begins when business strategy isformulated
Quality is the weapon of choice to capture global
marketsQuality drives the productivity machine
Not depending on inspection to catch defects;concentrating on doing things right the first time
Committing tremendous resources to put in placeTQM programs aimed at continuous improvement
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Continuous Improvement
Represents continual improvement ofprocess & customer satisfaction
Involves all operations & work units
Other names
Kaizen (Japanese)
Zero-defects
Six sigma
1984-1994 T/Maker Co.
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Employee Empowerment
Getting employees involved in product& process improvements
85% of quality problems are due toprocess & material
Techniques
Support workers
Let workers make decisions
Build teams & quality circles
1995 Corel Corp.
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Quality Circles
Group of 6-12 employees from samework area
Meet regularly to solve work-related
problems
4 hours/month
Facilitator trains & helps
with meetings
1995 Corel Corp.
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Benchmarking
Selecting best practices to use as astandard for performance
Determine what to benchmark
Form a benchmark teamIdentify benchmarking partners
Collect and analyze benchmarking
informationTake action to match or exceed thebenchmark
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Quality Loss Function
Frequenc
y
Target Upper Lower
Target-oriented quality
yields more product in
the "best" category
Distribution of Specifications for Products Produced
Conformance-oriented
quality keeps products
within 3 standard
deviations
Loss
High Loss
Low Loss
Unacceptable
Poor
Fair
Good
Best
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Tools of TQM
Tools for generating ideasCheck sheet
Scatter diagram
Cause and effect diagramTools to organize data
Pareto charts
Process charts (Flow diagrams)
Tools for identifying problems
Histograms
Statistical process control chart
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Services and Their Customer
Expectations
Hospital
Patient receive the correct treatments?
Patient treated courteously by all personnel?
Hospital environment support patientrecovery?
Bank
Customers transactions completed withprecision?
Bank comply with government regulations?
Customers statements accurate?
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Products and Their Customer
Expectations
Automaker
Auto have the intended durability?
Parts within the manufacturing tolerances?
Autos appearance pleasing?
Lumber mill
Lumber within moisture content tolerances?
Lumber properly graded?
Knotholes, splits, and other defects excessive?
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Service quality is more difficult to measurethan for goods
Service quality perceptions depend onExpectations versus reality
Process and outcome
Types of service quality
Normal: Routine service delivery
Exceptional: How problems are handled
TQM In Services
f S
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Determinants of Service
Quality
Reliability consistency and dependability
Responsiveness willingness/readiness of
employees to provide service; timelinessCompetence possession of skills andknowledge required to perform service
Credibility can buyers trust what theyretold?