Chapter 9 Classroom

9-1 Management of Quality
Operations Management
William J. Stevenson
8th edition
CHAPTER
9
Management
of Quality
Operations Management, Eighth Edition, by William J. Stevenson

McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Quality Management
 What does the term quality mean?

 Quality is the ability of a product or service to
consistently meet or exceed customer
expectations.
Evolution of Quality Management
 1924 - Statistical process control charts

 1930 - Tables for acceptance sampling
 1940’s - Statistical sampling techniques
 1950’s - Quality assurance/TQC
 1960’s - Zero defects
 1970’s - Quality assurance in services

Quality Assurance vs. Strategic Approach
 Quality Assurance
 Emphasis on finding and correcting defects
before reaching market
 Strategic Approach
 Proactive, focusing on preventing mistakes
from occurring
 Greater emphasis on customer satisfaction
The Quality Gurus
 Walter Shewhart
 “Father of statistical quality control”
 W. Edwards Deming
 Joseph M. Juran
 Armand Feignbaum
 Philip B. Crosby
 Kaoru Ishikawa
 Genichi Taguchi
Key Contributors to Quality Management

Table 9.2
Contributor Known for

Deming 14 points; special & common causes of
variation
Juran Quality is fitness for use; quality trilogy
Feignbaum Quality is a total field
Crosby Quality is free; zero defects
Ishikawa Cause-and effect diagrams; quality

circles
Taguchi Taguchi loss function
Quality
Dimensions of Quality
 Performance - main characteristics of the

product/service
 Aesthetics - appearance, feel, smell, taste
 Special Features - extra characteristics
 Conformance - how well product/service
conforms to customer’s expectations
 Reliability - consistency of performance
Dimensions of Quality (Cont’d)
 Durability - useful life of the product/service

 Perceived Quality - indirect evaluation of
quality (e.g. reputation)
 Serviceability - service after sale
Examples of Quality Dimensions
Dimension (Product) (Service)

Automobile Auto Repair
1. Performance Everything works, fit & All work done, at agreed
finish price
Ride, handling, grade of Friendliness, courtesy,
materials used Competency, quickness
2. Aesthetics Interior design, soft touch Clean work/waiting area
3. Special features Gauge/control placement Location, call when ready

Cellular phone, CD Computer diagnostics
player
Examples of Quality Dimensions (Cont’d)
Dimension (Product) (Service)

Automobile Auto Repair
5. Reliability Infrequency of breakdowns Work done correctly,
ready when promised
6. Durability Useful life in miles, resistance Work holds up over

to rust & corrosion time
7. Perceived Top-rated car Award-winning service

quality department
8. Serviceability Handling of complaints and/or Handling of complaints

requests for information
Service Quality
 Tangibles
 Convenience
 Reliability
 Responsiveness
 Time
 Assurance
 Courtesy
Examples of Service Quality

Table 9.4
Dimension Examples
1. Tangibles Were the facilities clean, personnel neat?
2. Convenience Was the service center conveniently located?
3. Reliability Was the problem fixed?
4. Responsiveness Were customer service personnel willing and able

to answer questions?
5. Time How long did the customer wait?
6. Assurance Did the customer service personnel seem

knowledgeable about the repair?
7. Courtesy Were customer service personnel and the
cashierfriendly and courteous?
Determinants of Quality
Ease of
Design
use
Conforms
to design Service
Determinants of Quality (cont’d)
 Quality of design
 Intension of designers to include or exclude
features in a product or service
 Quality of conformance
 The degree to which goods or services
conform to the intent of the designers
The Consequences of Poor Quality
 Loss of business
 Liability
 Productivity
 Costs
Responsibility for Quality
 Top management
 Design
 Procurement
 Production/operations
 Quality assurance
 Packaging and shipping
 Marketing and sales
 Customer service
Costs of Quality
 Failure Costs - costs incurred by defective

parts/products or faulty services.
 Internal Failure Costs
 Costs incurred to fix problems that are detected
before the product/service is delivered to the
customer.
 External Failure Costs
 All costs incurred to fix problems that are detected
after the product/service is delivered to the
customer.
Costs of Quality (continued)
 Appraisal Costs
 Costs of activities designed to ensure quality
or uncover defects
 Prevention Costs
 All TQ training, TQ planning, customer
assessment, process control, and quality
improvement costs to prevent defects from
occurring
Ethics and Quality
 Substandard work
 Defective products
 Substandard service
 Poor designs
 Shoddy workmanship
 Substandard parts and materials
Having knowledge of this and failing to correct

and report it in a timely manner is unethical.
Quality Awards
Baldrige Award
Deming Prize
Malcolm Baldrige National Quality Award
 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)
Benefits of Baldrige Competition
 Financial success
 Winners share their knowledge
 The process motivates employees
 The process provides a well-designed quality

system
 The process requires obtaining data
 The process provides feedback

The Deming Prize
 Honoring W. Edwards Deming

 Main focus on statistical quality
control
Quality Certification
 ISO 9000
 Set of international standards on quality
management and quality assurance, critical to
international business
 ISO 14000
 A set of international standards for assessing
a company’s environmental performance
ISO 14000
 ISO 14000 - A set of international standards

for assessing a company’s environmental
performance
 Standards in three major areas
 Management systems
 Operations
 Environmental systems
Total Quality Management
A philosophy that involves everyone in an

organization in a continual effort to improve
quality and achieve customer satisfaction.
T Q M
The TQM Approach
1. Find out what the customer wants

2. Design a product or service that meets or
exceeds customer wants
3. Design processes that facilitates doing the
job right the first time
4. Keep track of results
5. Extend these concepts to suppliers
Elements of TQM
 Continual improvement
 Competitive benchmarking
 Employee empowerment
 Team approach
 Decisions based on facts
 Knowledge of tools
 Supplier quality
 Champion
 Quality at the source
 Suppliers
Continuous Improvement
 Philosophy that seeks to make never-ending
improvements to the process of converting
inputs into outputs.
 Kaizen: Japanese
word for continuous
improvement.
Quality at the Source
The philosophy of making each

worker responsible for the
quality of his or her work.
Six Sigma is a disciplined, statistical-based, data-

driven approach and continuous improvement
methodology for eliminating defects in a product,
process or service.
For example, if a product must have a thickness
between 10.32 and 10.38 inches to meet customer
requirements, then the process mean should be
around 10.35, with a standard deviation less than
0.005 (10.38 would be 6 standard deviations away
from 10.35)
Six Sigma
 Statistically
 Having no more than 3.4 defects per million
 Conceptually
 Program designed to reduce defects
 Requires the use of certain tools and
techniques
Six Sigma Programs
 Six Sigma programs

 Improve quality
 Save time
 Cut costs
 Employed in
 Design
 Production
 Service
 Inventory management
 Delivery
Six Sigma Management
 Providing strong leadership

 Defining performance merits
 Selecting projects likely to succeed
 Selecting and training appropriate people

Six Sigma Technical
 Improving process performance

 Reducing variation
 Utilizing statistical models
 Designing a structured improvement strategy

Six Sigma Team
 Top management
 Program champions
 Master “black belts”
 “Black belts”
 “Green belts”
Six Sigma Process
 Define
 Measure
 Analyze
 Improve DMAIC
 Control
Obstacles to Implementing TQM
 Lack of:
 Company-wide definition of quality
 Strategic plan for change
 Customer focus
 Real employee empowerment
 Strong strong motivation
 Time to devote to quality initiatives
 Leadership
Obstacles to Implementing TQM
 Poor inter-organizational communication

 View of quality as a “quick fix”
 Emphasis on short-term financial results
 Internal political and “turf” wars

Criticisms of TQM
 Blind pursuit of TQM programs

 Programs may not be linked to strategies
 Quality-related decisions may not be tied to

market performance
 Failure to carefully plan a program
Basic Steps in Problem Solving
1. Define the problem and establish an

improvement goal
2. Collect data
3. Analyze the problem
4. Generate potential solutions
5. Choose a solution
6. Implement the solution
7. Monitor the solution to see if it accomplishes the
goal
The PDSA Cycle

Plan
Act
Do
Study
Process Improvement
 Process Improvement: A systematic

approach to improving a process
 Process mapping
 Analyze the process
 Redesign the process

The Process Improvement Cycle

Select a
process
Document
Study/document
Evaluate
Seek ways to
Implement the
Improve it
Improved process
Design an
Improved process
Process Improvement and Tools

 Process improvement - a systematic approach to improving a process
 Process mapping
 Analyze the process
 Redesign the process
 Tools
 There are a number of tools that can be used for problem solving and process
improvement
 Tools aid in data collection and interpretation, and provide the basis for decision
making
Basic Quality Tools

 Flowcharts
 Check sheets
 Histograms
 Pareto Charts
 Scatter diagrams
 Control charts
 Cause-and-effect diagrams
 Run charts
Check Sheet
Billing Errors Monday

Wrong Account
Wrong Amount
A/R Errors
Wrong Account
Wrong Amount
Pareto Analysis
80%
80% ofof the
the
problems
problems
may
may be
be
Number of defects
attributed
attributed toto
20%
20% ofof the
the
causes.
causes.
Off Smeared Missing Loose Other

center print label
Control Chart
Figure 9.11
1020
UCL
1010
1000
990
980
LCL
970
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Cause-and-Effect Diagram
Figure 9.12
Methods Materials
Cause
Cause
Cause
Cause
Cause Cause
Environment Effect
Cause Cause
Cause Cause
Cause Cause
People Equipment
Run Chart
0.58
0.56
Diameter
0.54
0.52
0.5
0.48
0.46
0.44
1 2 3 4 5 6 7 8 9 10 11 12
Time (Ho urs )
Time (Hours)
Tracking Improvements
Figure 9-17
UCL UCL
UCL
LCL
LCL
Additional improvements
LCL Process centered made to the process
Process not centered and stable
and not stable
Methods for Generating Ideas
 Brainstorming
 Quality circles
 Interviewing
 Benchmarking
 5W2H
Benchmarking Process
 Identify a critical process that needs

improving
 Identify an organization that excels in this
process
 Contact that organization
 Analyze the data
 Improve the critical process

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9-1 Management of Quality

Operations Management, Eighth Edition, by William J. Stevenson

 What does the term quality mean?

Evolution of Quality Management

 1924 - Statistical process control charts

 1940’s - Statistical sampling techniques

 1950’s - Quality assurance/TQC

 1960’s - Zero defects

 1970’s - Quality assurance in services

Quality Assurance vs. Strategic Approach

The Quality Gurus

Key Contributors to Quality Management

Contributor Known for

Juran Quality is fitness for use; quality trilogy

Feignbaum Quality is a total field

Crosby Quality is free; zero defects

Ishikawa Cause-and effect diagrams; quality

Taguchi Taguchi loss function

 Performance - main characteristics of the

Dimensions of Quality (Cont’d)

 Durability - useful life of the product/service

Examples of Quality Dimensions

Dimension (Product) (Service)

3. Special features Gauge/control placement Location, call when ready

Examples of Quality Dimensions (Cont’d)

Dimension (Product) (Service)

6. Durability Useful life in miles, resistance Work holds up over

7. Perceived Top-rated car Award-winning service

8. Serviceability Handling of complaints and/or Handling of complaints

Examples of Service Quality

2. Convenience Was the service center conveniently located?

3. Reliability Was the problem fixed?

4. Responsiveness Were customer service personnel willing and able

6. Assurance Did the customer service personnel seem

Determinants of Quality (cont’d)

The Consequences of Poor Quality

Responsibility for Quality

 Failure Costs - costs incurred by defective

Costs of Quality (continued)

Ethics and Quality

 Substandard parts and materials

Having knowledge of this and failing to correct

Malcolm Baldrige National Quality Award

 1.0 Leadership (125 points)

Benefits of Baldrige Competition

 The process motivates employees

 The process provides a well-designed quality

 The process provides feedback

The Deming Prize

 Honoring W. Edwards Deming

 ISO 14000 - A set of international standards

Total Quality Management

A philosophy that involves everyone in an

The TQM Approach

1. Find out what the customer wants

Quality at the Source

The philosophy of making each

Six Sigma is a disciplined, statistical-based, data-

Six Sigma Programs