Operations management 12th stevenson ch09 management of quality

Chapter 9
Management of
Quality

McGraw-Hill/Irwin

Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.


Chapter 9: Learning Objectives
 You should be able to:
1. Define the term quality as it relates to products and
as it relates to services
2. Explain why quality is important and the
consequences of poor quality
3. Identify the determinants of quality
4. Distinguish the costs associated with quality
5. Compare the quality awards
6. Discuss the philosophies of quality gurus
7. Describe TQM
8. Give an overview of problem solving
9. Give an overview of process improvement
10. Describe and use various quality tools
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Quality Management
Quality
 The ability of a product or service to consistently

meet or exceed customer expectations
For a decade or so, quality was an important focal point in

business. After a while, this emphasis began to fade as
other concerns took precedence
There has been a recent resurgence in attention to quality
given recent experiences with the costs and adverse
attention associated with highly visible quality failures:
 Auto recalls
 Toys
 Produce
 Dog food
 Pharmaceuticals
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Dimensions of Product Quality
 Performance– main characteristics of the product
 Aesthetics– appearance, feel, smell, taste
 Special features– extra characteristics
 Conformance– how well the product conforms to design

specifications
 Reliability– consistency of performance
 Durability– the useful life of the product
 Perceived quality– indirect evaluation of quality
 Servicebility– handling of complaints or repairs

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9-4


Dimensions of Service Quality
 Convenience– the availability and accessibility of the service
 Reliability– ability to perform a service dependably, consistently,

and accurately
 Responsiveness– willingness to help customers in unusual

situations and to deal with problems
 Time– the speed with which the service is delivered
 Assurance– knowledge exhibited by personnel and their ability

to convey trust and confidence
 Courtesy– the way customers are treated by employees
 Tangibles– the physical appearance of facilities, equipment,

personnel, and communication materials
 Consistency– the ability to provide the same level of good

quality repeatedly
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9-5

Assessing Service Quality
 Audit service to identify strengths and

weaknesses
 In particular, look for discrepancies
between:
Customer expectations and management perception of
those expectations
2. Management perceptions customer expectations and
service-quality specifications
3. Service quality and service actually delivered
4. Customers’ expectations of the service provider and
their perceptions of provider delivery
1.

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Determinants of Quality
 Quality of design
 Intention 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
 Ease-of-Use and user instructions

 Increase the likelihood that a product will be used for its intended

purpose and in such a way that it will continue to function
properly and safely
 After-the-sale service
 Taking care of issues and problems that arise after the sale

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Responsibility for Quality
 Everyone in the

organization has some
responsibility for
quality, but certain
areas of the
organization are
involved in activities
that make them key
areas of responsibility.

Instructor Slides

 Top management
 Design
 Procurement
 Production/operations

 Quality assurance
 Packaging and

shipping
 Marketing and sales
 Customer service
9-8


Benefits of Good Quality
Enhanced reputation for quality
Ability to command premium prices
Increased market share
Greater customer loyalty
Lower liability costs
Fewer production or service problems
Lower production costs
Higher profits

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The Consequences of Poor Quality
Loss of business
Liability
Productivity
Costs

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Costs of Quality
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

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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

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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.

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Quality Contributors
Contributo
r

Key Contributions

Shewart

Control charts; variance reduction

Deming

14 points; special vs. common causes of
variation

Juran

Quality is fitness-for-use; quality trilogy

Feigenbaum

Quality is a total field; the customer defines
quality

Crosby

Quality is free; zero defects

Ishikawa

Cause-and-effect diagrams; quality circles

Taguchi

Taguchi loss function

Ohno and
Shingo

Continuous improvement

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Deming’s 14 Points
Deming’s 14 Points
1. Create constancy of purpose toward improvement of product and service with
a plan to become competitive and stay in business.
2. Adopt the new philosophy. We are in a new economic age. We can no longer
live with commonly accepted levels of delays, mistakes, defective materials,
and defective workmanship
3. Cease dependence on mass inspection.
4. End the practice of awarding on the basis of price tag.
5. Find problems. It is management’s job to work continually on the system.
6. Institute modern methods of training on the job
7. The responsibility of foremen must be changed from sheer numbers to
quality.
8. Drive out fear, so that everyone may work effectively for the company.

9. Break down barriers between departments.
10. Eliminate numerical goals, posters, and slogans for the workforce asking for
new levels of productivity without providing methods.
11. Eliminate work standards that prescribe numerical quotas.
12. Remove barriers that stand between the hourly worker and his right to pride
of workmanship.
13. Institute a vigorous program of education and retraining.
14. Create a structure in top management that will push every day on the above
13 points.
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Quality Awards and Certification
Quality Awards
 Deming Prize
 Malcolm Baldrige National Quality Award
 European Quality Award

Quality Certifications
 ISO 9000
 ISO 14000
 ISO 24700

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The Baldrige Competition
 Benefits of the Baldrige Competition
1.
2.
3.
4.
5.

Winners achieve financial success
Winners share their knowledge
The process motivates employees
The process requires obtaining data
The process provides feedback

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The Baldrige Competition
 Award Categories
1.
2.
3.
4.
5.
6.

Education
Healthcare

Manufacturing
Nonprofit/Government
Service
Small Business

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Baldrige Criteria

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Quality Certification
 International Organization for Standardizati

on
 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 24700

 Pertains to the quality and performance of office

equipment that contains reused components

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Quality Certification
ISO 9000: 2005
 Quality Principles:
 Principle 1 Customer focus
 Principle 2 Leadership
 Principle 3 Involvement of people
 Principle 4 Process approach
 Principle 5 System approach to management
 Principle 6 Continual improvement
 Principle 7 Factual approach to decision making
 Principle 8 Mutually beneficial supplier relationships

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Quality and the Supply Chain
Business leaders are increasingly recognizing

the importance of their supply chains in

achieving their quality goals
 Requires:
Measuring customer perceptions of quality
Identifying problem areas
Correcting these problems

 Supply chain quality management can benefit

from a collaborative relationship with suppliers
Helping suppliers with quality assurance efforts
Information sharing on quality-related matters

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Total Quality Management
A philosophy that involves everyone in an

organization in a continual effort to improve
quality and achieve customer satisfaction.

T

Instructor Slides

Q

M

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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 facilitate doing the job
right the first time
4. Keep track of results
5. Extend these concepts throughout the supply
chain

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TQM Elements
Continuous improvement
2. Competitive benchmarking
3. Employee empowerment
1.

4.
5.
6.
7.

8.

Team approach
Decision based on fact, not opinion
Knowledge of tools
Supplier quality
Champion

Quality at the source
10. Suppliers are partners in the process
9.

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