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Operations Management For Competitive Advantage 1
Quality ManagementQuality Management
Operations ManagementFor Competitive Advantage
Chapter 7
Operations Management For Competitive Advantage 2
Chapter 7
Quality Management Total Quality Management Defined Malcolm Baldrige National Quality Award Quality Specifications Costs of Quality Continuous Improvement SPC Tools Benchmarking Fail-safing ISO 9000
Operations Management For Competitive Advantage 3
Total Quality Management (TQM)Defined
Total quality management is defined as
managing the entire organization so that it
excels on all dimensions of products and
services that are important to the customer.
Operations Management For Competitive Advantage 4
1.0 Leadership (125 points) 2.0 Strategic Planning (85 points) 3.0 Customer and Market Focus (85
points) 4.0 Information and Analysis (85 points) 5.0 Human Resource Focus (85 Points) 6.0 Process Management (85 points) 7.0 Business Results (450 points)
1999 Malcolm Baldrige National Quality Award
Operations Management For Competitive Advantage 5
Categories for the Baldrige Award
Manufacturing companies or subsidiaries that– produce and sell manufactured products or
manufacturing processes or– produce agricultural, mining, or construction products.
Service companies or subsidiaries that sell service Small businesses Health care organizations Educational institutions
Operations Management For Competitive Advantage 6
Characteristics of a Baldrige Award Winner The companies formulated a vision of what they
thought quality was and how they would achieve it.
Senior management was actively involved.
Companies carefully planned and organized their quality effort to be sure it would be effectively initiated.
They vigorously controlled the overall process.
Operations Management For Competitive Advantage 7
Quality Specifications
Design quality: Inherent value of the product in the marketplace
– Dimensions include: Performance, Features, Reliability, Durability, Serviceability, Response, Aesthetics, and Reputation.
Conformance quality: Degree to which the product or service design specifications are met
Operations Management For Competitive Advantage 8
Costs of Quality
External Failure Costs
Appraisal Costs
Prevention Costs
Internal FailureCosts
Costs ofQuality
Operations Management For Competitive Advantage 9
Continuous Improvement (CI)
Management's view of performance standards of the organization– performance level of the firm as something to be
"continuously challenged and incrementally upgraded."
The way management views the contribution and role of its workforce– believe employee involvement and team efforts
are the key to improvement
Operations Management For Competitive Advantage 10
CI Methodology: PDCA Cycle (Deming Wheel)
1. Plan a change aimed at improvement.
1. Plan
2. Execute the change.
2. Do
3. Study the results; did it work?
3. Check
4. Institutionalize the change or abandon or do it again.
4. Act
Operations Management For Competitive Advantage 11
Example: Process Flow Chart
No, Continue…
Material Received
from Supplier
Inspect Material for
Defects Defects found?
Return to Supplier for
Credit
Yes
Can be used to find quality problems.
Can be used to find quality problems.
Operations Management For Competitive Advantage 12
Example: Pareto Analysis
Can be used to find when 80% of the problems may be attributed to 20% of thecauses.
Can be used to find when 80% of the problems may be attributed to 20% of thecauses.
Assy.
Instruct.
Fre
quen
cy
Design Purch.Training
Other
80%
Operations Management For Competitive Advantage 13
Example: Run Chart
0.440.460.48
0.50.520.540.560.58
1 2 3 4 5 6 7 8 9 10 11 12Time (Hours)
Dia
me
ter
Can be used to identify when equipment or processes are not behaving according to specifications.
Can be used to identify when equipment or processes are not behaving according to specifications.
Operations Management For Competitive Advantage 14
Example: HistogramN
um
be
r o
f Lo
ts
Data RangesDefects in lot
0 1 2 3 4
Can be used to identify the frequency of quality defect occurrence and display quality performance.
Can be used to identify the frequency of quality defect occurrence and display quality performance.
Operations Management For Competitive Advantage 15
Example: Scatter Diagram
02468
1012
0 10 20 30
Hours of Training
De
fect
s
Can be used to illustrate the relationships between quality behavior and training.
Can be used to illustrate the relationships between quality behavior and training.
Operations Management For Competitive Advantage 16
Example: Checksheet
Billing Errors
Wrong Account
Wrong Amount
A/R Errors
Wrong Account
Wrong Amount
Monday
Can be used to keep track of defects or used to make sure people collect data in a correct manner.
Can be used to keep track of defects or used to make sure people collect data in a correct manner.
Operations Management For Competitive Advantage 17
Example: Cause & Effect Diagram
Effect
ManMachine
MaterialMethod
Environment
Possible causes:Possible causes: The results or effect.
The results or effect.
Can be used to systematically track backwards to find a possible cause of a quality problem (or effect).
Can be used to systematically track backwards to find a possible cause of a quality problem (or effect).
Operations Management For Competitive Advantage 18
Example: Control Charts
970
980
990
1000
1010
1020
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
LCL
UCL
Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality.
Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality.
Operations Management For Competitive Advantage 19
Benchmarking
1. Identify those processes needing improvement.
2. Identify a firm that is the world leader in performing the process.
3. Contact the managers of that company and make a personal visit to interview managers and workers.
4. Analyze data.
Operations Management For Competitive Advantage 20
The Shingo System: Fail-Safe Design
Shingo’s argument:– SQC methods do not prevent defects– Defects arise when people make errors– Defects can be prevented by providing workers
with feedback on errors
Poka-Yoke includes:– Checklists– Special tooling that prevents workers from
making errors
Operations Management For Competitive Advantage 21
ISO 9000
Series of standards agreed upon by the International Organization for Standardization (ISO)
Adopted in 1987
More than 100 countries
A prerequisite for global competition?
ISO 9000 directs you to "document what you do and then do as you documented."
Operations Management For Competitive Advantage 22
Three Forms of ISO Certification
First party: A firm audits itself against ISO 9000 standards.
Second party: A customer audits its supplier.
Third party: A "qualified" national or international standards or certifying agency serves as auditor.
Operations Management For Competitive Advantage 23
ISO 9000 versus the Baldrige Award
Which should we pursue first?
What are the differences between the two?
Do you have to be ISO 9000 certified before going for the Baldrige Award?