Operations Management

CHASE

For Competitive Advantage

AQUILANO

ninth edition

JACOBS

Operations Management
For Competitive Advantage
Chapter 7

Quality Management
CHASE AQUILANO JACOBS
The McGraw-Hill Companies, Inc., 2001

ninth edition

Operations Management Chapter 7

For Competitive Advantage

ninth edition

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
CHASE AQUILANO JACOBS
The McGraw-Hill Companies, Inc., 2001

Operations Management

For Competitive Advantage

ninth edition

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.

CHASE

AQUILANO

JACOBS

The McGraw-Hill Companies, Inc., 2001

Operations Management

For Competitive Advantage

ninth edition

1999 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)
CHASE AQUILANO JACOBS
The McGraw-Hill Companies, Inc., 2001

Operations Management

For Competitive Advantage

ninth edition

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

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The McGraw-Hill Companies, Inc., 2001

Operations Management

For Competitive Advantage

ninth edition

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.
CHASE AQUILANO JACOBS
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Operations Management

For Competitive Advantage

ninth edition

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
CHASE AQUILANO JACOBS
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Operations Management

For Competitive Advantage

ninth edition

Costs of Quality
Appraisal Costs

External Failure Costs

Costs of Quality

Prevention Costs

Internal Failure Costs CHASE AQUILANO JACOBS

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Operations Management

For Competitive Advantage

ninth edition

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
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Operations Management

For Competitive Advantage

ninth edition

10

CI Methodology: PDCA Cycle (Deming Wheel)

4. Institutionalize the change or abandon or do it again.
4. Act

1. Plan a change aimed at improvement.

1. Plan

3. Check

2. Do

3. Study the results; did it work?

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2. Execute the change.

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Operations Management

For Competitive Advantage

ninth edition

11

Example: Process Flow Chart

Material Received from Supplier Inspect Material for Defects

No, Continue
Defects found?

Yes Can be used to find quality problems.

Return to Supplier for Credit

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Operations Management

For Competitive Advantage

ninth edition

12

Example: Pareto Analysis

Can be used to find when 80% of the problems may be attributed to 20% of the causes.
80%

Frequency
Design

Assy. Instruct.

Purch.

Training Other

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Operations Management

For Competitive Advantage

ninth edition

13

Example: Run Chart

Can be used to identify when equipment or processes are not behaving according to specifications.

Diameter

0.58 0.56 0.54 0.52 0.5 0.48 0.46 0.44 1 2

4
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10

11

12

Time (Hours)
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Example: Histogram
Number of Lots
Can be used to identify the frequency of quality defect occurrence and display quality performance.

Data Ranges
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Defects in lot

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Example: Scatter Diagram

12 10 8 6 4 2 0 0 10
Can be used to illustrate the relationships between quality behavior and training.

Defects

20

30

Hours of Training
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Operations Management

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16

Example: Checksheet
Can be used to keep track of defects or used to make sure people collect data in a correct manner.

Monday
Billing Errors Wrong Account Wrong Amount

A/R Errors
Wrong Account Wrong Amount

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Operations Management

For Competitive Advantage

ninth edition

17

Example: Cause & Effect Diagram

Possible causes: The results or effect.

Machine

Man

Environment
Method Material

Effect

Can be used to systematically track backwards to find a possible cause of a quality problem (or effect).

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Operations Management

For Competitive Advantage

ninth edition

18

Example: Control Charts

Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality.
1020 1010 1000 990 980 970

UCL

LCL

10 11 12 13 14 15

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Operations Management

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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.
CHASE AQUILANO JACOBS
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Operations Management

For Competitive Advantage

ninth edition

20

The Shingo System: Fail-Safe Design

Shingos 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
CHASE AQUILANO JACOBS
The McGraw-Hill Companies, Inc., 2001

Operations Management

For Competitive Advantage

ninth edition

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."
CHASE AQUILANO JACOBS
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Operations Management

For Competitive Advantage

ninth edition

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.
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Operations Management

For Competitive Advantage

ninth edition

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?

CHASE

AQUILANO

JACOBS

The McGraw-Hill Companies, Inc., 2001