Chapter: Managing Quality

Course: OPERATIONS MANAGEMENT

Lecture 3

Week: 3rd (29th September)

Dr. Waqas Ahmed

Department of Operations and Supply Chain
NUST Business School (NBS)
National University of Sciences & Technology, Islamabad, Pakistan
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Learning Objectives

fter completing this chapter, you should be able to:

1. Discuss the philosophies of quality gurus.
2. Define the term quality as it relates to products and as it relates to services.
3. Identify the determinants of quality.
4 Explain why quality is important and the consequences of poor quality.
5. Describe and give examples of the costs associated with quality.
6. Discuss the importance of ethics in managing quality.
7. Describe TQM.
8. Describe the six sigma methodology.
9. Describe and use various quality tools.

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Quality and Strategy

► Managing quality supports differentiation, low cost,

and response strategies
► Quality helps firms increase sales and reduce costs
► Building a quality organization is a demanding task

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Two Ways Quality Improves Profitability

Sales Gains via

• Improved response
• Flexible pricing
Improved • Improved reputation Increased
Quality Profits
Reduced Costs via
• Increased productivity
• Lower rework and scrap costs
• Lower warranty costs

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Defining Quality

An operations manager’s objective is to

build a total quality management system
that identifies and satisfies customer needs

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Defining Quality

The totality of features and characteristics

of a product or service that bears on its
ability to satisfy stated or implied needs
American Society for Quality

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Different Views

► User-based: better performance, more features

► Manufacturing-based: conformance to standards,
making it right the first time
► Product-based: specific and measurable attributes
of the product

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Competing on Quality?

igh performance design:

⌂ Superior features, high durability, & excellent customer service

roduct & service consistency:

⌂ Meets design specifications
⌂ Close tolerances
⌂ Error free delivery

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Defining Quality – 5 Ways

onformance to specifications
⌂ Does product/service meet targets and tolerances defined by
designers?

itness for use

⌂ Evaluates performance for intended use

alue for price paid

⌂ Evaluation of usefulness vs. price paid
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Manufacturing Quality vs. Service Quality

anufacturing quality focuses on tangible product features

⌂ Conformance, performance, reliability, features, durability, serviceability

ervice organizations produce intangible products that must be

experienced
⌂ Quality often defined by perceptional factors like responsiveness, courtesy,
friendliness, promptness, waiting time, consistency
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Costs of Quality

Early detection/prevention is less costly

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Costs of Quality
»Dr. Waqas Ahmed

Total Total Cost

Cost
External Failure

Internal Failure

Quality Improvement

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https://www.youtube.com/watch?v=wi0d3aDsVfs&t=92s
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 Total Quality Management
»Dr. Waqas Ahmed

► Incorporates entire organization from supplier to

customer
► Stresses a commitment by management to have a
continuing companywide drive toward excellence in all
aspects of products and services that are important to
the customer

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Concepts of TQM

1. Continuous improvement
2. Six Sigma
3. Employee empowerment
4. Benchmarking
5. Just-in-time (JIT)
6. Knowledge of TQM tools

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Continuous Improvement

► Never-ending process of continual improvement

► Covers people, equipment, materials, procedures
► Every operation can be improved

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 Six Sigma
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► Two meanings
► Statistical definition of a process that is 99.9997% capable, 3.4
defects per million opportunities (DPMO)
► A program designed to reduce defects, lower costs, save time,
and improve customer satisfaction
► A comprehensive system for achieving and sustaining
business success

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Six Sigma
Lower limits Upper limits
2,700 defects/million

3.4 defects/million

Mean

±3
±6

https://www.youtube.com/watch?v=fTkGDXRnR9I
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TQM Tools
► Tools for Generating Ideas
► Check Sheet
► Scatter Diagram
► Cause-and-Effect Diagram
► Tools to Organize the Data
► Pareto Chart
► Flowchart (Process Diagram)
► Tools for Identifying Problems
► Histogram
► Statistical Process Control Chart
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Seven Tools of TQM

(a) Check Sheet: An organized

method of recording data

Hour

Defect 1 2 3 4 5 6 7 8

A /// / / / / /// /
B // / / / // ///
C / // // ////

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Seven Tools of TQM

(b) Scatter Diagram: A graph of the value of

one variable vs. another variable

Productivity

Absenteeism

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 Seven Tools of TQM
»Dr. Waqas Ahmed

(c) Cause-and-Effect Diagram: A tool that identifies process

elements (causes) that might effect an outcome
Cause
Materials Methods
Effect

Manpower Machinery

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Example: Delayed Flight Departures
Equipment Personnel

Gate agents cannot process passengers quickly enough

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

Delayed checkin procedure

Late baggage to aircraft 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

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Seven Tools of TQM

(d) Pareto Chart: A graph to identify and plot problems

or defects in descending order of frequency

Frequency

Percent
A B C D E

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Pareto Charts

Data for October

– 100
70 – – 93
– 88
60 – 54
Frequency (number)

Cumulative percent
– 72
50 –
40 –
Number of
30 – occurrences
20 –
12
10 –
4 3 2
0 –
Room svc Check-in Pool hours Breakfast Misc.
72% 16% 5% 4% 3%
Causes and percent of the total

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Seven Tools of TQM

(e) Flowchart (Process Diagram): A chart

that describes the steps in a process

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Flow Charts

MRI Flowchart
1. Physician schedules MRI 7. If unsatisfactory, repeat
2. Patient taken to MRI 8. Patient taken back to room
3. Patient signs in 9. MRI read by radiologist
4. Patient is prepped 10. MRI report transferred to
5. Technician carries out MRI physician
6. Technician inspects film 11. Patient and physician
discuss

8
80%
1 2 3 4 5 6 7 11
9 10
20%

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Seven Tools of TQM

(f) Histogram: A distribution showing the

frequency of occurrences of a variable
Distribution

Frequency

Repair time (minutes)

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Seven Tools of TQM

(g) Statistical Process Control Chart: A chart with time

on the horizontal axis to plot values of a statistic

Upper control limit

Target value

Lower control limit

Time

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Statistical Process Control (SPC)
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► Uses statistics and control charts to tell when to take

corrective action
► Drives process improvement
► Four key steps
► Measure the process
► When a change is indicated, find the assignable cause
► Eliminate or incorporate the cause
► Restart the revised process

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Control Charts

Plot the percent of goal missed

Upper control limit

40%

Coach’s target value

20%

| | | | | | | | | Lower control limit

0% 1 2 3 4 5 6 7 8 9

Game number

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Control Charts
Constructed from historical data, the purpose of control
charts is to help distinguish between natural variations
and variations due to assignable causes

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Process Control

(a) In statistical
control and capable
of producing within
Frequency control limits

Lower control limit Upper control limit

(b) In statistical control
but not capable of
producing within
control limits

(c) Out of control

Size
(weight, length, speed, etc.)
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Inspection
► Involves examining items to see if an item is good or
defective
► Detect a defective product
► Does not correct deficiencies in process or product
► It is expensive
► Issues
► When to inspect
► Where in process to inspect

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When and Where to Inspect

1. At the supplier’s plant while the supplier is producing

2. At your facility upon receipt of goods from your supplier
3. Before costly or irreversible processes
4. During the step-by-step production process
5. When production or service is complete
6. Before delivery to your customer
7. At the point of customer contact

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Source Inspection

► Also known as source control

► The next step in the process is your customer
► Ensure perfect product to your customer

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Source Inspection

► Poka-yoke is the concept of foolproof devices or

techniques designed to pass only acceptable product
► Checklists ensure consistency and completeness

● https://www.youtube.com/watch?v=oUjlDUR3Uig
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Reading Assignment
Page 286-291 (The Central Limit Theorem)
Source: Principles of Operations Management by Jay Heizer

Submitted Assignment 1
Due date: 5th October
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Thank you! Any Questions

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