Lecture Principle of inventory and material management - Lecture 29

Lecture 29
Total Quality Management

Books
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Introduction to Materials Management, Sixth Edition, J. R. Tony Arnold, P.E., CFPIM, CIRM, Fleming 
College, Emeritus, Stephen N. Chapman, Ph.D., CFPIM, North Carolina State University, Lloyd M. 
Clive, P.E., CFPIM, Fleming College
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Operations Management for Competitive Advantage, 11th Edition, by Chase, Jacobs, and Aquilano, 2005, 
N.Y.: McGraw­Hill/Irwin.
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Operations Management, 11/E, Jay Heizer, Texas Lutheran University, Barry Render, Graduate School of 
Business, Rollins College, Prentice Hall


Objectives
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Why quality is important
What is quality

Dimensions of Quality
Why improve quality
Statistical quality control
Understanding variations
Statistical process control
Process capability
Three sigma vs. six sigma
Process control
Data types


Orlando Utilities Commission
Maintenance of power generating plants
þ
Every year each plant is taken off-line for 1-3
weeks maintenance
þ
Every three years each plant is taken off-line
for 6-8 weeks for complete overhaul and
turbine inspection
þ
Each overhaul has 1,800 tasks and requires
72,000 labor hours
þ
OUC performs over 12,000 maintenance
tasks each year
þ


Orlando Utilities Commission

Every day a plant is down costs OUC
$110,000
þ
Unexpected outages cost between $350,000
and $600,000 per day
þ
Preventive maintenance discovered a
cracked rotor blade which could have
destroyed a $27 million piece of
equipment
þ


Why Quality is Important

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Costs and market share
Company’s reputation
Product liability
International implications


What is Quality?
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Conformance to requirements?
Zero defects?
Fitness for use?
Consistency?
“I can’t define it, but I know it when I 
see it”?


Garvin’s 8 Dimensions of Quality
Dimension Meaning
Performance
Primary operating characteristics.
Features
Secondary operating characteristics, added 
touches.
Reliability Extent of failure free operation.
Durability Amount of use before replacement is 
preferable to repair.
Consistency Uniformity around a target
Serviceability Resolution of problems and complaints.
Aesthetics Subjective characteristics that relate to senses.
Perceived Quality  Indirect measures or inferences: reputation.


What is Quality?
Quality means user satisfaction: that 
goods and services satisfy the needs and 

expectations of the user.
Arnold


Why Improve Quality?


Quality Chain Reaction
Improve Quality
Costs decrease because of less rework,
fewer mistakes, fewer delays, snags;
better use of machine-time and materials
Productivity improves
Capture market with better quality and lower price
Stay in business
Provide jobs and more jobs


Two Ways to Improve Quality
Improving Quality

Inspection of
Product

Improvement of
Process

As Quality Improves

As Quality Improves

Productivity Declines

Productivity Increases


Sources of Improvement
Control
Chart:

Required
Action:

Responsibility:

Common
Causes

Special
Causes

Change the
Process

Fix the
Process

Management
(94%)

Workers
(6%)


Statistical Quality Control:Process Definition 

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Process: “A ‘process’ is any set of conditions, or set of causes, 
which work together to produce a given result.  In its narrowest 
sense the term ‘process’ refers to the operation of a single cause.  In 
its broadest sense it may refer to the operation of a very 
complicated ‘cause system.’  
Reference: Statistical Quality Control Handbook, Western Electric


Statistical Quality Control 

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Statistical: With the help of numbers or data

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Quality: we study the characteristics of our process

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Control: In order to make it behave the way we want it to 
behave.

Reference: Statistical Quality Control Handbook, Western Electric


Understanding Variation
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Variation exists in everything
Understanding variation is the key to improving 
quality
Two Kinds of Variation
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Chance variation
Assignable variation


Cause and Effect Diagrams
Materials

Methods

Measurement

Process Doc.

PM

Training

Machines

Manpower

Desired Effect
or Undesired
Effect
Motivation

Environment


SPC ­ Assignable Causes
The operational definition of assignable variation is 
variation that causes out­of­control points on a control 
chart.


Statistical Quality Control: Natural Patterns or 
Variations 
Natural patterns exhibit the following characteristics:
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Most of the points are near the centerline.
A few points spread out and approach the control limits.
None (or only on rare occasions) of the points exceeds the control 

limits.
Reference: Statistical Quality Control Handbook, Western Electric


Statistical Quality Control
Unnatural Patterns or Variations 
Unnatural patterns exhibit the following characteristics:
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Absence of points near the centerline produces a pattern known as a 
“mixture.”  
Absence of points near the control limits produces an unnatural 
pattern known as “stratification.” 
Presence of points outside of the control limits produces an 
unnatural pattern known as “instability.”  
Reference: Statistical Quality Control Handbook, Western Electric


Statistical Quality Control
Tests for Unnatural Patterns
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Instability
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A single point falls outside of the 3 sigma control limits.
Two out of three successive points fall in the outer one third of the control 
limits.
Four out of five successive points fall in the outer two thirds of the control 
limits.
Eight successive points fall on one side of the centerline.

Systematic variable
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A long series of points are high, low, high, low without interruption.
Reference: Statistical Quality Control Handbook, Western Electric


Statistical Process Control (SPC)

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Chance variations are the many sources of 
variation within a process that is in statistical 
control.  They behave like a constant system of 
random chance causes.
If only natural causes of variation are present, the 
output of a process forms a distribution that is 

stable over time and is predictable.


Statistical Process Control (SPC)

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Assignable variation in a process can be traced to 
a specific reason.
✏  Machine wear
✏  Misadjusted equipment
✏  Fatigued or untrained workers

If assignable causes of variation are present, the 
process output is not stable over time and is not 
predictable.


Statistical Process Control
Why use averages?
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To create a normal distribution
Averages are more sensitive to change than 
individuals

The Process (2 of 2)

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The distribution of a process’ output has a mean,  , 
and a standard deviation,  ; it can have a wide variety 
of shapes

Process
distribution

Mean


Process Capability (1 of 3)

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When selecting a process to perform an operation, the 
inherent variability of process output should be 
compared to the range or tolerances allowed by the 
designer’s specifications