Quality Mgt.

7/29/2019 Quality Mgt.

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To Accompany Russell and Taylor, Operations Management, 4th Edition, 2003 Prentice-Hall, Inc. All rights reserved.

Chapter 14

QualityManagement





“The degree of excellence of a

thing” (Webster’s Dictionary)

“The totality of features and characteristics that satisfy needs”

(ASQ)

Fitness for use

Quality of design

What Is Quality?




Dimensions of Quality (Garvin)

1. Performance

Basic operating characteristics

2. Features

“Extra” items added to basic features

3. Reliability

Probability product will operate overtime





4. Conformance

Meeting pre-established standards

5. Durability

Life span before replacement

6. Serviceability

Ease of getting repairs, speed &competence of repairs





7. Aesthetics

Look, feel, sound, smell or taste

8. Safety

Freedom from injury or harm

9. Other perceptions

Subjective perceptions based onbrand name, advertising, etc




1. Time & Timeliness

Customer waiting time, completed

on time2. Completeness

Customer gets all they asked for

3. Courtesy Treatment by employees

Service Quality


http://slidepdf.com/reader/full/quality-mgt 7/56To Accompany Russell and Taylor, Operations Management, 4th Edition, 2003 Prentice-Hall, Inc. All rights reserved.

4. Consistency

Same level of service for all customers

5. Accessibility & Convenience Ease of obtaining service

6. Accuracy

Performed right every time

7. Responsiveness

Reactions to unusual situations

Service Quality



Quality of

ConformanceEnsuring product or service

produced according to designDepends on

Design of production process

Performance of machinery

Materials

Training



Fitness for Consumer Use

Producer’s Perspective Consumer’s Perspective

Quality of Conformance

• Conformance to

specifications• Cost

Quality of Design

• Quality characteristics•

Price

MarketingProduction

The Meaning of Quality

Figure 14.1

The Meaning of Quality



Quality Philosophers

Walter Shewhart

W. Edwards Deming

J oseph J uran

Philip Crosby

Armand Feigenbaum



Deming’s 14 Points 1. Create constancy of purpose

2. Adopt philosophy of prevention

3. Cease mass inspection4. Select a few suppliers based on

quality

5. Constantly improve system andworkers

6. Institute worker training



Deming’s 14 Points

7. Instill leadership amongsupervisors

8. Eliminate fear among employees

9. Eliminate barriers betweendepartments

10. Eliminate slogans11. Remove numerical quotas



Deming’s 14 Points

12. Enhance worker pride

13. Institute vigorous training andeducation programs

14. Develop a commitment from top

management to implement these13 points




The Deming Wheel

(or PDCA Cycle)

1. PlanIdentify the

problem anddevelop theplan for improvement.

2. Do

Implement theplan on a testbasis.

3. Study/Check

Assess the plan;is it working?

4. ActInstitutionalize

improvement;continue thecycle.

Figure 14.2




Total Quality Management

1. Customer defined quality

2. Top management leadership

3. Quality as a strategic issue4. All employees responsible for quality

5. Continuous improvement

6. Shared problem solving7. Statistical quality control

8. Training & education for all employees




TQM Throughout the

OrganizationMarketing, sales, research

Engineering

Purchasing

Human resources

Management

Packing, storing, shipping

After-sale support




TQM and External

SuppliersSupport of suppliers required to

satisfy customer expectations

Single-sourcing

Partnering

Suppliers may be required toadopt quality programs or meetspecific standards




TQM and Customer

Satisfaction

Requires some form of

measurement systemCustomer surveys widely used

Total customer satisfaction is

often an organization’soverriding objective




TQM and Information

Technology Critical to monitoring and controlling

quality in an organization

IT systems must be structured to satisfythe requirements of TQM systems

IT systems tie together all theorganization's functions and processes

IT systems must be able to applyappropriate tools to drive improvement

It systems must be able to store andaccess relevant data for analysis




Strategic Implications of

TQMQuality is key to effective strategy

Clear strategic goal, vision, missionHigh quality goals

Operational plans & policies

Feedback mechanismStrong leadership




TQM in Service Companies

Inputs similar to manufacturingProcesses & outputs are differentServices tend to be labor intensiveQuality measurement

is harder Timeliness is

important measure TQM principles

apply to services




Quality on the Web

Internet creates new rules doingbusiness

Key factors in differentiating firms

B2B largest part of Internetbusiness

Direct sales more visible Internet removes the

human dimension




Dimensions of Web Quality

1. Ease of use

2. Clarity of information and instructions

3. Server reliability

4. Speed of page loading5. Transaction time

6. Aesthetics

7. Privacy and security8. Domain name

9. Human backup

10. Transaction reliability




Cost of Quality

Cost of achieving good quality

Prevention

Planning, Product design,Process, Training, Information

Appraisal

Inspection and testing,

Test equipment,Operator




Cost of Quality

Cost of poor qualityInternal failure costs

Scrap, Rework, Process failure,Process downtime, Price-downgrading

External failure costs

Customer complaints,Product return,Warranty, Productliability, Lost sales




Measuring and Reporting

QualityLabor indexQuality cost / labor hours

Cost indexQuality cost / manufacturing cost

Sales index

Quality cost / sales

Production indexQuality cost / units produced




Quality Costs and Index YEAR

1999 2000 2001 2002

Quality Costs

Prevention $ 27,000 41,500 74,600 112,300

Appraisal 155,000 122,500 113,400 107,000Internal failure 386,400 469,200 347,800 219,100

External failure 242,000 196,000 103,500 106,000

Total $ 810,400 829,200 639,300 544,400

Accounting Measures Sales $ 4,360,000 4,450,000 5,050,000 5,190,000

Mfg costs 1,760,000 1,810,000 1,880,000 1,890,000




Quality Costs and Index

Quality index = (100)total quality costs

base

Quality cost per sale = = 18.58$810,400(100)4,360,000

QUALITY QUALITY MANUFACTURING YEAR SALES INDEX COST INDEX

1999 18.58 46.042000 18.63 45.182001 12.66 34.002002 10.49 28.80




Quality –Cost Relationship

Increased prevention costs lead todecreased failure costs

Improved quality leads toincreased sales and market share

Quality improvement at the design

stageHigher quality products can

command higher prices




Profitability Deming Prize winners showed higher than

average results on financial performanceindicators

Baldrige Award winners consistently exceedindustry averages on financial performance

Quality leads to improved profitability and ROI

“Quality is ... a profit --maker” In the long run, quality and profitability are

closely related




Quality and Productivity

Quality improvement reduces inputs

Fewer defects increase output

Productivity =output

input




Measuring Yield and

Productivity

where

Y = yieldI = number units started in production

% G = percentage good units

% R = percentage of defective units reworked

Yield = (total input) (% good units) +

(total input)(1 - % good units)(% reworked)

Y = (I)(%G) + (I)(1 - %G)(%R)




Product YieldStart 100 motors per day

80% are good

50% of poor quality units can be reworked

Yield = (I)(%G) + (I)(1 - %G)(%R) Y = 100(0.80) + 100(1 - 0.80)(0.50)

= 90 motors

Y = 100(0.90) + 100(1 - 0.90)(0.50)

= 95 motors

If product quality is increased to 90% good,

Example 14.2




Product Cost

Product cost = (K d)(I) + (K r)(R) Y

Product cost =

(direct manufacturing cost per unit)(input)+ (rework cost per unit)(reworked units)

yield

where

K d = direct manufacturing cost per unitI = input

K r = rework cost per unit

R = reworked units

Y = yield




Product CostDirect mfg cost = $30, Rework cost = $12

100 motors started, 20% defective

50% of defective motors can be reworked

Product cost =

(K d)(I) + (K r)(R)

Y

Product cost = = $34.67 per motor ($30)(100) + ($12)(10)

90 motors

The manufacturing cost after quality improvement is

Product cost = = $32.21 per motor ($30)(100) + ($12)(5)

95 motors

Example 14.3




Multistage Product Yield

Y = (I) (%g1)(%g2)...(%gn)

where

I = input batch size

%gi = percent good at stage i




Multistage Process Yield

Start with100 motors

AVERAGE PERCENTAGESTAGE GOOD QUALITY

1 0.93

2 0.95

3 0.97

4 0.92

Y = (I) (%g1)(%g2)...(%gn)

= (100)(0.93)(0.95)(0.97)(0.92)

Y = 78.8 motors

Solve for I

I = = = 126.8 motors Y

(%g1)(%g2)...(%gn)

100

(0.93)(0.95)(0.97)(0.92)

Example 14.4




Quality Productivity Ratio

(QPR) Includes productivity and quality costs

Increases

if processing or rework costs decrease

if process yield increases

QPR = (100)Good-quality units(input)(processing cost) +

(defective units)(rework cost)




QPR ExampleDirect cost = $30/unit Rework cost = $12/unit

Start with 100 motors per day

80% are good, 50% of defective units can be reworked

Company studies 4 changes

1. Increase production to 200 units/day

2. Cut processing cost to $26 & rework cost to $10

3. Increase yield to 95%4. Combine 2 and 3




QPR ExampleDirect cost = $30/unit Rework cost = $12/unit

Start with 100 motors per day

80% are good, 50% of defective units can be reworked

Base case:

QPR = (100) = 2.8980 + 10

(100)($30) + (10)($12)

Case 1: Increase input to capacity of 200 units

QPR = (100) = 2.89160 + 10

(200)($30) + (20)($12)




QPR Example

Case 3: Increase initial good-quality to 95%

QPR = (100) = 3.2295 + 10

(100)($30) + (2.5)($12)

Case 4: Decrease costs and increase initial good-quality

QPR = (100) = 3.7195 + 2.5

(100)($26) + (2.5)($10)

Case 2: Reduce processing cost to $26 and rework to $10

QPR = (100) = 3.3380 + 10

(100)($26) + (10)($10)




Employees and

Quality ImprovementEmployee involvement

Quality circles

Process improvementteams

Employeesuggestions




The Quality

CircleProcessPresentationImplementation

Monitoring

SolutionProblem results

ProblemAnalysis

Cause and effectData collection

and analysis

ProblemIdentificationList alternatives

Consensus

Brainstorming

TrainingGroup processes

Data collectionProblem analysis

Organization8-10 members

Same areaSupervisor/moderator

Figure 14.3




Pareto Analysis

Flow Chart

Check Sheet

Histogram

Scatter Diagram

SPC Chart

Cause-and-Effect Diagram

Seven Quality Control Tools

1 2 3 4

Dirt

OldTemp

Fault

xx

x

xx

x xx

x

x x xx

x

xx UCL

LCL

1

2

3

4

5

Process




Pareto

ChartNUMBER OF

CAUSE DEFECTS PERCENTAGE

Poor design 80 64 %Wrong part dimensions 16 13Defective parts 12 10Incorrect machine calibration 7 6Operator errors 4 3

Defective material 3 2Surface abrasions 3 2

125 100 %




Pareto

Chart

P e r c e n t f r o m e a c h c a u s e

Causes of poor quality

0

10

20

30

40

50

60

70(64)

(13)(10)

(6)(3) (2) (2)




Flow Chart

Operation DecisionStart/Finish

Start/Finish

Operation

OperationOperation

Operation

Decision




Check Sheet

COMPONENTS REPLACED BY LABTIME PERIOD: 22 Feb to 27 Feb 2002REPAIR TECHNICIAN: Bob

TV SET MODEL 1013

Integrated Circuits ||||

Capacitors |||| |||| |||| |||| |||| ||

Resistors ||

Transformers ||||

Commands

CRT |




Histogram

0

5

10

15

20

25

1 2 6 13 10 16 19 17 12 16 20 17 13 5 6 2 1




Scatter Diagram Y

X




Control Chart

18

12

6

3

9

15

21

24

27

2 4 6 8 10 12 14 16

Sample number

N u m b e r o f

d e f e c t s

UCL = 23.35

LCL = 1.99

c = 12.67




Cause-and-Effect Diagram

QualityProblem

Out of adjustment

Tooling problems

Old / worn

MachinesFaultytesting equipment

Incorrect specifications

Improper methods

Measurement

Poor supervision

Lack of concentration

Inadequate training

Human

Deficienciesin product design

Ineffective qualitymanagement

Poor process design

Process

Inaccuratetemperaturecontrol

Dust and Dirt

Environment

Defective from vendor

Not to specifications

Material-handling problems

Materials

Figure 14.6




The Malcolm Baldrige Award

The Deming Prize

RIT/USA Today Quality Cup

European Quality Award

President’s Quality Award

Excellence in Productivity Improvement

NASA

Quality Awards and

Certifications




ISO 9000 Categories ISO 9001 ~ Suppliers and Designers

ISO 9002 ~ Production ISO 9003 ~ Inspection and Test

ISO 9004 ~ Quality Management




Implications Of ISO 9000

Truly international in scope

Certification required by many foreign

firms

U.S. firms export more than$150 billion annually to Europe

Adopted by U.S. Navy,DuPont, 3M, AT&T, and others



ISO Accreditation

European registration

3rd party registrar assesses quality program

European Conformity (CE) mark authorized

United States 3rd party registrars

American National Standards Institute (ANSI)

American Society for Quality (ASQ)

Registrar Accreditation Board (RAB)

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