Lecture 7

Process Improvement
Chapter 07
Quality level

Check Do

Act Plan

McGraw-Hill/Irwin Time
Service Management: Operations,
Strategy, and Information Technology, Copyright © 2008 by The McGraw-Hill Companies, Inc. All
Rights Reserved.
6e
Learning Objectives

 Quality and Productivity

Improvement Process
 Use quality tools for process
analysis and problem solving.
 Benchmarking for service
improvement.
 Quality improvement programs

7-2
 Quality and Productivity
Improvement Process
 Foundations of Continuous Improvement
 Customer Satisfaction
 Focus on satisfying your ______________________
 Management by Facts
 Collecting objective data for ___________________
 Respect for People
 Employees are given support and their ideas are solicited in an
environment of mutual respect

7-3
 Quality and Productivity
Improvement Process

 The principal objective of continuous improvement is to

eliminate the
___________of problems so they do not recur.

 Focus on the process

 Deming’s approach – PDCA cycle

 A ______________________ cycle with quality improvements

7-4
Quality and Productivity
Improvement Process
Plan-Do-Check-Act (PDCA) Cycle
 Plan, select and analyze the problem
(customer indicators, focus, as-is, to-be)

 Do, implement the solution (trial, progress)

 Check, the results of the change (the effect)

 Act, to standardize the solution and reflect

on learning from experience (communicate)

7-5
 Quality and Productivity
Improvement Process
 Problem-Solving approach in the PDCA Cycle:
 Step 1: Recognizing the Problem & Establishing Priorities
(problem outline)
 Step 2: Forming Quality Improvement Teams
(interdisciplinary and management)
 Step 3: Defining the Problem (pareto analysis)
 Step 4: Developing Performance Measures (pre & post)
 Step 5: Analyzing the Problem/Process (Flowcharting)

7-6
Quality and Productivity
Improvement Process

 Step 6: Determining Possible Causes (Fishbone diagram)

 Step 7: Selecting & Implementing the Solution (criteria-cause, prevention, cost
& time)
 Step 8: Evaluating the Solution: The Follow-up (compare performance)
 Step 9: Ensuring Permanence (control charts)
 Step 10: Continuous Improvement (new round of improvement analysis)

7-7
Quality Tools for Analysis and
Problem Solving
 Check Sheet
 Run Chart
 Histogram
 Pareto Chart
 Flowchart
 Cause-and-Effect Diagram
 Scatter Diagram
 Control Chart

Case: Data from an airline

7-8
Check Sheet of Problems
historical record of observations
Month Lost Departure Mechanical Overbooked Other
Luggage Delay
January 1 2 3 3 1
February 3 3 0 1 0
March 2 5 3 2 3
April 5 4 4 0 2
May 4 7 2 3 0
June 3 8 1 1 1
July 6 6 3 0 2
August 7 9 0 3 0
September 4 7 3 0 2
October 3 11 2 3 0
November 2 10 1 0 0
December 4 12 2 0 1

Total 44 84 24 16 12

7-9
Run Chart of Departure
Delays
tracks change in a variable over time
(compare)

14

12

10
Departure Delays

0
1 2 3 4 5 6 7 8 9 10 11 12
Months

7-10
Histogram of Lost Luggage
data collected over time as a frequency
distribution
3.5

2.5
Frequency

1.5

0.5

0
1 2 3 4 5 6 7
Occurrences per Month

7-11
 Pareto Chart of Problems
orders problems by relative frequency
Number of Problems
90
80
70
60
50
40
30
20
10
0
Departure Lost Mech. Over- Other
Delay Luggage booked

7-12
 Pareto Analysis of Flight
Departure Delay Causes
Cause Percentage of Incidents Cumulative Percentage

Late passengers 53.3 53.3

Waiting for pushback 15.0 68.3

Waiting for fuel 11.3 79.6

Late weight and balance 8.7 88.3

sheet

7-13
Flowchart at Departure Gate
process flow for intervention points

7-14
 Cause-and-Effect Chart for
Flight Departure Delay
(Fishbone Chart)
Equipment Personnel

Gate agents cannot process passengers quickly enough

Aircraft late to gate Too few agents
Late arrival Agents undertrained
Agents undermotivated
Gate occupied Agents arrive at gate late
Other Mechanical failures Late cabin cleaners
Weather Late or unavailable cabin crews
Late pushback tug
Air traffic Late or unavailable cockpit crews
Delayed
Flight
Poor announcement of departures Departure
Weight and balance sheet late

Late baggage to aircraft Delayed checkin procedure

Confused seat selection
Late fuel Passengers bypass checkin counter
Late food service Checking oversize baggage
Issuance of boarding pass

Acceptance of late passengers

Cutoff too close to departure time
Desire to protect late passengers
Material Desire to help company’s income
Poor gate locations

Procedure
7-15
Cause-and-Effect Chart for
Flight Departure Delay
(Fishbone Chart)
 Service categories: Information,
customers, material, procedures,
personnel, and equipment
 Uncovered causes by asking the 1H5W
 Eliminate causes through discussion
and consensus
 Investigate remaining possibilities/root
causes
Scatter Diagram of Departure
Delay vs Late Passengers
relationship between 2 variables
(correlation) to identify root cause
12

10

8
Departure Delays

0
0 1 2 3 4 5 6 7
Late Passe nge rs

7-17
 Control Chart of Departure
Delays
monitor a process (shows when a process
is out of control)
100
Percentage of ontime

90
flights

80 Target

70 Lower Control Limit

60

1998 199
9

p (1 − p p (1 − p
UCL = p + 3 LCL = p − 3
n n
7-18
Benchmarking

 Measuring a firm’s performance by

comparing with the performance of other

“______________” companies

 For every performance dimension, some

firm has earned the reputation, and, thus,
is a benchmark for comparision.
Benchmarking

The benchmarking process:

 Determine what to benchmark

(improvement)
 Identify the company, form a

benchmark team
 Contact the benchmark firm, make a

visit, & study the process

 Collect and analyze information

 Take action to match or exceed the

benchmark
Reasons to benchmark
 Establishing the difference
 Examine the process that contribute to
giving your market differential
 Setting the highest possible standards
 Learning from Best in Class
 Creating synergy of ideas
 Any degree of sharing of ideas is likely to
benefit your company
 Focus on ___________________
Possible Processes to
Benchmark
 Customer satisfaction
 Reducing set up time
 Improved training
 On-time delivery
 Product consistency
 Correct invoicing
 Speed of service
 Pricing and purchasing
 Quality Improvement
Programs

 Personnel Programs for Quality Assurance

 individual development (skills and knowledge)
 management training (development)
 human resource planning (identify resources)
 standards of performance (procedures)
 career progression (job-advancement)
 opinion surveys
 fair treatment
 profit sharing
7-23
 Quality Improvement
Programs

Other QIP:
 Deming’s 14 Point Program

 Refocus attention on meeting customer needs

continuously to saty ahead of the competition.
 Baldrige National Quality Award
 Annual award to U.S. companies that excel in
quality achievement and management

7-24
 Quality Improvement
Programs

Other QIP:
 ISO 9000

 Series of quality management system standards

 Documentation of processes and consistent
performance
 Certification signals that the firm has a quality
management system that ensures consistency
output quality

7-25
 Quality Improvement
Programs

Other QIP:
 Six-Sigma

 Objective is to reduce variations in

performance
 A rigorous and disciplined methodology that

uses data and statistical analysis

7-26
 Tutorial Questions
• Prepare a cause-and-effect or fishbone diagram for
a problem such as “Why customers have long waits
for coffee in a restaurant.” Use Figure 7.16, pg 164
as a guide.

• Explain how the application of the PDCA cycle can

support a competitive strategy of low cost
leadership.

• Explain why it is necessary for Step 10 – continuous

improvement in PDCA cycle

• What are the limitations of “benchmarking”?

7-27
 Common Test

• Seating Plan

7-28