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Operations Management Rabindra Silwal: Quality Management Norman Augustine
Operations Management Rabindra Silwal: Quality Management Norman Augustine
Operations Management
Rabindra Silwal
OM - Quality Management 1
Definitions of Quality
Quality tries to manage all aspects of the
organization in order to excel in all
dimensions that are important to customers
OM - Quality Management 5
Costs of Quality
Cost of Achieving Good quality
Prevention costs - reducing the potential for
defects e.g. training, QI programs
Appraisal costs - evaluating products & processes
e.g. testing, labs, inspectors
OM - Quality Management 6
Prevention Costs
Quality planning costs Training costs
costs of developing and costs of developing and
implementing quality putting on quality training
management program programs for employees and
Product-design costs management
costs of designing products Information costs
with quality characteristics
costs of acquiring and
Process costs maintaining data related to
costs expended to make quality, and development of
sure productive process reports on quality
conforms to quality performance
specifications
Appraisal Costs
Inspection and testing
costs of testing and inspecting materials, parts, and
product at various stages and at the end of a process
Test equipment costs
costs of maintaining equipment used in testing
quality characteristics of products
Operator costs
costs of time spent by operators to gather data for
testing product quality, to make equipment
adjustments to maintain quality, and to stop work to
assess quality
Internal Failure Costs
Scrap costs Process downtime costs
costs of poor-quality products
that must be discarded, costs of shutting down
including labor, material, and productive process to fix
indirect costs problem
Rework costs
costs of fixing defective
Price-downgrading costs
products to conform to quality costs of discounting poor-
specifications quality productsthat is,
Process failure costs selling products as
costs of determining why seconds
production process is
producing poor-quality
products
External Failure Costs
Customer complaint costs Product liability costs
costs of investigating and litigation costs resulting
satisfactorily responding to a from product liability
customer complaint resulting and customer injury
from a poor-quality product
Product return costs Lost sales costs
costs of handling and replacing costs incurred because
poor-quality products returned customers are
by customer dissatisfied with poor
Warranty claims costs quality products and do
costs of complying with product not make additional
warranties purchases
Ways in Which Quality Can Improve Profits
Sales Gains
Improved response
Higher Prices
Improved reputation
Improved Increased
Quality Profits
Reduced Costs
Increased productivity
Lower rework and scrap
costs
Lower warranty costs
OM - Quality Management 11
Quality Awards and Certification
OM - Quality Management
ISO 9000 Standards
OM - Quality Management
ISO 14000 Standards
OM - Quality Management
Malcolm Baldrige Award
www.baldrige.gov
OM - Quality Management
Categories - Malcolm Baldrige
Award
Manufacturing companies
Service companies
Small businesses
Health care organizations
Education institutions
Non-profit organizations (including government)
OM - Quality Management
Total Quality Management
Find out what customers want Internal and
external
Design a product or service that will meet (or
exceed) what customers want. Make it easy to
use and easy to produce
Design processes that facilitate doing the job
right the first time ensure fail-safing in design
Keep track of results, and use them to guide
improvement in the system. Never stop trying
to improve.
Extend these concepts throughout the supply
chain.
OM - Quality Management
Quality Pioneer: W. Edwards
Deming
OM - Quality Management 13
Demings Wheel
Quality Pioneer: Joseph Juran
OM - Quality Management 13
Total Quality Management - Other
renowned contributors
OM - Quality Management 13
Seven Concepts of TQM
Continuous improvement (Kaizen)
Six Sigma
Employee empowerment
Benchmarking
Just-in-time (JIT)
Taguchi concepts
Knowledge of TQM tools
OM - Quality Management 16
Continuous Improvement
Represents continual
improvement of process &
customer satisfaction
Involves all operations
& work units
Other names
Kaizen (Japanese)
Zero-defects
OM - Quality Management 17
Six Sigma
A method that provides organisations tools to
improve the capability of their business
processes
Six Sigma quality is a term generally used to
indicate a process is well controlled
The process is extremely capable - 3.4 defect
in a million.
Qualitative and Quantitative tools to improve
process
Follows DMAIC methodology of improvement
(Define, Measure, Analyse, Implement,
Control) OM - Quality Management 19
Benchmarking
OM - Quality Management 20
Just-in-Time (JIT)
Relationship to quality:
JIT cuts cost of quality
JIT improves quality
Better quality means less
inventory and better, easier-to-
employ JIT system
OM - Quality Management 22
Taguchi Techniques
Quality control methodology that
combines control charts and process
control with product and process
design to achieve a total robust design.
Aims to reduce product variability with
a system for developing specification
and designing them into a product or
process
OM - Quality Management 23
Taguchi Concept
OM - Quality Management 25
Seven Tools for TQM
OM - Quality Management 26
Fish Bone Diagram
Service Quality
For services, the assessment of
quality is made during the service
delivery process.
OM - Quality Management 29
Gaps in Service Quality
Measuring the gap between
expected service and perceived
service is a routine customer
feedback process practiced by many
companies
Walk-Through-Audit (WtA)
First flow chart must be prepared to
highlight areas of customer interaction
Statements must be declarative rather
than questions
WtA must be limited to two pages since
customers would not be interested in
filling out long questionnaires
Best way to administer is through one-
on-one interview/dialogue
OM - Quality Management 30
Identifying GAPS with WtA
Another way to Measure Service
quality