Operations management heizer 6e ch06

Operations
Management
Chapter 6 –
Managing Quality
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e
© 2006
Prentice
Hall, Inc. Hall, Inc.
©
2006
Prentice

6–1


Outline
 Global Company Profile: Arnold
Palmer Hospital
 Quality And Strategy
 Defining Quality
 Implications of Quality
 Malcolm Baldrige National Quality
Award
 Cost of Quality (COQ)
© 2006 Prentice Hall, Inc.

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Outline – Continued
 Ethics and Quality Management
 International Quality Standards
 ISO 9000
 ISO14000

© 2006 Prentice Hall, Inc.

6–3


Outline – Continued
 Total Quality Management
 Continuous Improvement
 Six Sigma
 Employee Empowerment
 Benchmarking
 Just-in-Time (JIT)
 Taguchi Concepts
 Knowledge of TQM Tools
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6–4


Outline – Continued
 Tools Of TQM
 Check Sheets
 Scatter Diagrams

 Cause-and-Effect Diagram
 Pareto Charts
 Flow Charts
 Histograms
 Statistical Process Control (SPC)
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6–5


Outline – Continued
 The Role Of Inspection
 When and Where to Inspect
 Source Inspection
 Service Industry Inspection
 Inspection of Attributes versus
Variables

 TQM In Services
© 2006 Prentice Hall, Inc.

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Learning Objectives
When you complete this chapter, you
should be able to:
Identify or Define:
 Quality
 Malcolm Baldrige National Quality

Award
 ISO International Quality Standards
 Taguchi Concepts
© 2006 Prentice Hall, Inc.

6–7


Learning Objectives
When you complete this chapter, you
should be able to:
Explain:
 Why quality is important
 Total Quality Management (TQM)
 Seven tools of TQM
 Quality robust products
 Deming, Juran, Feigenbaum, and
Crosby’s ideas
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6–8


Managing Quality Provides a
Competitive Advantage
Arnold Palmer Hospital
 Deliver over 10,000 babies annually
 Virtually every type of quality tool is
employed
 Continuous improvement

 Employee empowerment
 Benchmarking
 Just-in-time
 Quality tools
© 2006 Prentice Hall, Inc.

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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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Ways Quality Improves
Productivity
Sales Gains
 Improved response
 Higher Prices
Improved
Quality

 Improved reputation
Reduced Costs

Increased
Profits

 Increased productivity
 Lower rework and scrap costs
 Lower warranty costs
© 2006 Prentice Hall, Inc.

Figure 6.1
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The Flow of Activities
Organizational Practices
Leadership, Mission statement, Effective operating
procedures, Staff support, Training
Yields: What is important and what is to be accomplished
Quality Principles
Customer focus, Continuous improvement, Benchmarking,
Just-in-time, Tools of TQM
Yields: How to do what is important and to be
accomplished
Employee Fulfillment
Empowerment, Organizational commitment
Yields: Employee attitudes that can accomplish
what is important

Figure 6.2
© 2006 Prentice Hall, Inc.

Customer Satisfaction
Winning orders, Repeat customers
Yields: An effective organization with
a competitive advantage
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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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6 – 13


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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Implications of Quality
1. Company reputation
 Perception of new products
 Employment practices
 Supplier relations

2. Product liability
 Reduce risk

3. Global implications
 Improved ability to compete
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6 – 15


Key Dimensions of Quality
 Performance

 Durability

 Features

 Serviceability

 Reliability

 Aesthetics

 Conformance

 Perceived quality
 Value

© 2006 Prentice Hall, Inc.

6 – 16


Malcom Baldrige National
Quality Award
 Established in 1988 by the U.S.
government
 Designed to promote TQM practices
 Recent winners
 The Bama Companies, Kenneth W.
Monfort College of Business,
Caterpillar Financial Services, Baptist
Hospital, Clarke American Checks,
Los Alamos National Bank
© 2006 Prentice Hall, Inc.

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Baldrige Criteria
Applicants are evaluated on:
Categories
Leadership
Strategic Planning
Customer & Market Focus
Information & Analysis
Human Resource Focus
Process Management
Organizational Results
© 2006 Prentice Hall, Inc.

Points
120
85
85
90
85
85
450
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Takumi
A Japanese character
that symbolizes a
broader dimension
than quality, a deeper

process than
education, and a more
perfect method than
persistence
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6 – 19


Costs of Quality
 Prevention costs - reducing the
potential for defects
 Appraisal costs - evaluating
products, parts, and services
 Internal failure - producing defective
parts or service before delivery
 External costs - defects discovered
after delivery
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Costs of Quality
Total
Cost

Total Cost
External Failure

Internal Failure
Prevention
Appraisal

Quality Improvement
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International Quality
Standards
 Industrial Standard Z8101-1981 (Japan)
 Specification for TQM

 ISO 9000 series (Europe/EC)
 Common quality standards for products
sold in Europe (even if made in U.S.)
 2000 update places greater emphasis on
leadership and customer satisfaction

 ISO 14000 series (Europe/EC)
© 2006 Prentice Hall, Inc.

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ISO 14000
Environmental Standard
Core Elements:

 Environmental management
 Auditing
 Performance evaluation
 Labeling
 Life-cycle assessment
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Leaders in Quality
W. Edwards Deming

14 Points for
Management

Joseph M. Juran

Top management
commitment,
fitness for use

Armand Feigenbaum

Total Quality
Control

Philip B. Crosby

Quality is Free

© 2006 Prentice Hall, Inc.

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Ethics and Quality
Management
 Operations managers must
deliver healthy, safe, quality
products and services
 Poor quality risks injuries,
lawsuits, recalls, and regulation
 Organizations are judged by
how they respond to problems
© 2006 Prentice Hall, Inc.

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