PRODUCTION AND

OPERATIONS
MANAGAEMENT (UNIT 5)
DEFINING QUALITY

 “Quality is a subjective term for which each person has his or her
own definition”

 What’s your definition?

2
DEFINING QUALITY

 In technical usage, quality can have two meanings:

 the characteristics of a product or service that bear on its ability to
satisfy stated or implied needs, and
 a product or service free of deficiencies

3
 DEFINING QUALITY- DIFFERENT
VIEWS
 Customer’s view (more subjective)
 the quality of the design (look, feel, function)
 product does what’s intended and lasts
 Producer’s view
 conformance to requirements
 costs of quality (prevention, scrap, warranty)
 increasing conformance raises profits
 Government’s view
 products should be safe
 not harmful to environment
4
Quality = Performance
Expectation

MEM 650 Quality Control 5

VALUE-BASED APPROACH

 Manufacturing
 Service
dimensions
 Performance dimensions
 Reliability
 Features
 Responsiveness
 Reliability
 Assurance
 Conformance
 Empathy
 Durability
 Serviceability  Tangibles
 Aesthetics
 Perceived quality
MEM 650 Quality Control 6
OUR TEXTBOOK DEFINITION

 “Quality is a customer determination based on the customer’s actual

experience with the product or service, measured against his or her
requirements - stated or unstated, conscious or merely sensed,
technically operational or entirely subjective - and always representing
a moving target in a competitive market.”

7
 NEED FOR A NEW STRATEGY
(QUALITY)
 Foreign markets have grown
 Import barriers and protection are not the answer.
 Consumers are offered more choices
 They have become more discriminating.
 Consumers are more sophisticated
 They demand new and better products.

8
WHY QUALITY IMPROVEMENT?

 Global Competition
 Economic and political boundaries are slowly vanishing
 The 1950’s slogan “Built by Americans for Americans” is very far from
reality in the 2000’s.

9
HOW DO ORGANIZATIONS
COMPETE?

 Most common competitive measures:

 Quality (both real and perceived)
 Cost
 Delivery (lead time and accuracy)
 Other measures
 safety,
 employee morale,
 product development (time-to-market, innovative products)

10
TOTAL QUALITY MANAGEMENT

TQM
TQM

 Total - made up of the whole

 Quality - degree of excellence a product or service provides
 Management - act, art or manner of planning, controlling,
directing,….

Therefore, TQM is the art of managing the whole to achieve

excellence.

Total Quality Management

WHAT DOES TQM MEAN?

Total Quality Management means that the organization's culture is

defined by and supports the constant attainment of customer
satisfaction through an integrated system of tools, techniques, and
training. This involves the continuous improvement of
organizational processes, resulting in high quality products and
services.

Total Quality Management

WHAT’S THE GOAL OF TQM?

“Do the right things right the first

time, every time.”

Total Quality Management

ANOTHER WAY TO PUT IT

 At it’s simplest, TQM is all managers leading and facilitating all

contributors in everyone’s two main objectives:

(1) total client satisfaction through quality products

and services; and
(2) continuous improvements to processes,
systems, people, suppliers, partners, products, and
services.

Total Quality Management

PRODUCTIVITY AND TQM

 Traditional view:
 Quality cannot be improved without significant losses in productivity.
 TQM view:
 Improved quality leads to improved productivity.

Total Quality Management

 BASIC TENETS OF TQM

 1. The customer makes the ultimate

determination of quality.
 2. Top management must provide
leadership and support for all quality
initiatives.
 3. Preventing variability is the key to
producing high quality.
 4. Quality goals are a moving target,
thereby requiring a commitment toward
continuous improvement.
 5. Improving quality requires the
Total Quality Management
THE THREE ASPECTS OF TQM
Tools, techniques, and training in
Counting their use for analyzing,
understanding, and solving quality
problems

Customers Quality for the customer as a

driving force and central concern.

Shared values and beliefs,

Culture expressed by leaders, that define
and support quality.

Total Quality Management

 TOTAL QUALITY MANAGEMENT
AND CONTINUOUS
IMPROVEMENT
 TQM is the management process used to make continuous
improvements to all functions.
 TQM represents an ongoing, continuous commitment to
improvement.
 The foundation of total quality is a management philosophy that
supports meeting customer requirements through continuous
improvement.

Total Quality Management

CONTINUOUS IMPROVEMENT
VERSUS TRADITIONAL
APPROACH
Traditional Approach Continuous Improvement
 Market-share focus  Customer focus
 Individuals”  Cross-functional teams
 Short-term focus  Long-term focus
 Status quo focus  Continuous improvement
 Product focus  Process improvement
focus
 Innovation
 Incremental
 Fire fighting improvements
 Problem solving
Total Quality Management
QUALITY THROUGHOUT
 “A Customer’s impression of quality begins
with the initial contact with the company
and continues through the life of the
product.”
 Customers look to the total package - sales,
service during the sale, packaging, deliver, and
service after the sale.
 Quality extends to how the receptionist answers
the phone, how managers treat subordinates, how
courteous sales and repair people are, and how
the product is serviced after the sale.
 “All departments of the company must strive
to improve the quality of their operations.”
Total Quality Management
VALUE-BASED APPROACH

 Service
Manufacturing
Dimensions
Dimensions
 Reliability
Performance
 Responsiveness
Features
 Assurance
Reliability
 Empathy
Conformance
 Tangibles
Durability
 Serviceability
 Aesthetics
 Perceived quality

Total Quality Management

THE TQM SYSTEM
Objective Continuous
Improvement

Principles Customer Process Total

Focus Improvement Involvement

Leadership
Education and Training
Elements Supportive structure
Communications Reward and recognition
Measurement

Total Quality Management

ISO 9000

ISO 9000
WHAT ARE ISO 9000 STANDARDS?

 ISO 9000 Standards

 Define the required elements of an effective quality management
system
 Can be applied to any company
 Adopted by the United States as the ANSI/ASQC Q90 series.

ISO 9000
WHO CREATED THE STANDARDS?

 International Organization for Standardization - Geneva

 ISO tech committee - TC 176 started in 1979
 Standards created in 1987
 To eliminate country to country differences
 To eliminate terminology confusion
 To increase quality awareness

ISO 9000
ISO ORGANIZATION
General
Assembly

Policy
Technical
Development Council
Management Board
Committees
Technical
Advisory
Groups

Technical Committees
Technical Committees
Technical Committees
Technical Committees

ISO 9000
ISO 9000:2000 CONSISTS OF 3
AREAS
 ISO 9000:2000 Quality Management Systems:
fundamentals and vocabulary
 ISO 9001:2000 Quality Management Systems –
Requirements (required for certification)
Management responsibility
Resource management
Product/service realization
Measurement, analysis, improvement
 ISO 9004-2000 Quality Management Systems –
Guidelines for performance improvement

ISO 9000
ISO 9000 FAMILY OF STANDARDS

 ISO 8402 - QA and Quality management vocabulary

 ISO 9000-2 - Generic guidelines for applying ISO 9001, ISO 9002,
and ISO 9003
 ISO 9000-3 - Guidelines for applying ISO 9001 to the
development, supply, and maintenance of software
 ISO 9000-4 Application for dependability management
 ISO 9004-2 Guidelines for services
 ISO 9004-3 Guidelines for processed material
 ISO 9004-4 Guidelines for quality improvement
 ISO 9004-5 Guidelines for quality plans
 ISO 9004-6 Guidelines for configuration management
ISO 9000
WHAT ARE THE ELEMENTS OF THE
STANDARDS?
 Inspection and Testing
 Management
 Inspection, Measuring
responsibility
and Test Equipment
 Resource management
 Inspection and Test Status
 Quality System
 Control of Non-
 Contract Review conforming product
 Design Control  Corrective Action
 Document Control  Quality Records
 Purchasing  Internal Quality Audit
 Purchaser-Supplied  Training
Product
 Servicing
 Product Identification and
Traceability  Statistical TechniquesISO 9000
ELEMENT STANDARD: MANAGEMENT
RESPONSIBILITY
 Management must have a written policy
statement of their commitment to quality. This
policy must be communicated to and understood
by all employees.
 Management must clearly define quality-related
organizational responsibilities and
interrelationships.
 A management representative must be assigned
to oversee the implementation and continuous
improvement of the quality system.
 Senior management must continually review the
ISO 9000
ELEMENT STANDARD:
PROCESS CONTROL
 The company must identify all processes that
directly affect the quality of the product or
service and ensure that these processes are
carried out under controlled conditions, including:
 Formal approval of process design and equipment.
 Documented work instructions.
 Development of quality plans describing how the
process is to be monitored.
 A suitable working environment.
 Documented quality criteria.

ISO 9000
WHY IS ISO 9000 IMPORTANT?

 European Union directive

 ISO 9000 certification required by suppliers of “Regulated Products”
 health, safety, and the environment
 EC has strict corporate liability legislation protecting consumers
 Globalization impact

ISO 9000
WHY ADOPT ISO 9000?

 To comply with customers who require ISO 9000

 To sell in the European Union market
 To compete in domestic markets
 To improve the quality system
 To minimize repetitive auditing by similar and different customers
 To improve subcontractors’ performance

ISO 9000
TEN STEPS TO ISO REGISTRATION
10. Registration!

9. Final assessment by registrar

8. Take corrective actions

7. Pre-assessment by registrar

6. Submit quality manual for approval

5. Perform self-analysis audit

4. Select a third-party registrar and apply

3. Develop and implement the quality system

2. Select the appropriate standard

1. Set the registration objective

ISO 9000
SIX ESSENTIAL ELEMENTS OF A
SUCCESSFUL REGISTRATION
EFFORT
Senior Management Commitment to the Effort

Appropriate ISO 9000 Training

An Effective Management Review Process

Documentation of the Quality System

An Effective Internal Auditing System

An Effective Corrective Action Process

ISO 9000
STATISTICAL PROCESS
CONTROL
 BASICS OF
STATISTICAL PROCESS
CONTROL
 Statistical Process Control
(SPC)
 monitoring production
process to detect and UCL
prevent poor quality
 Sample
 subset of items produced to
use for inspection LCL

 Control Charts
 process is within statistical
control limits

. 4-38
 SPC IN TQM

 SPC
 tool for identifying problems and make
improvements
 contributes to the TQM goal of continuous
improvements

. 4-39
 APPLYING SPC TO
SERVICE

 Nature of defect is different in services

 Service defect is a failure to meet customer
requirements
 Monitor times, customer satisfaction

. 4-40
 APPLYING SPC TO
SERVICE (CONT.)
 Hospitals
 timeliness and quickness of care, staff responses to requests, accuracy
of lab tests, cleanliness, courtesy, accuracy of paperwork, speed of
admittance and checkouts
 Grocery Stores
 waiting time to check out, frequency of out-of-stock items, quality of
food items, cleanliness, customer complaints, checkout register errors
 Airlines
 flight delays, lost luggage and luggage handling, waiting time at ticket
counters and check-in, agent and flight attendant courtesy, accurate
flight information, passenger cabin cleanliness and maintenance

4-41
 APPLYING SPC TO
SERVICE (CONT.)
 Fast-Food Restaurants
 waiting time for service, customer complaints,
cleanliness, food quality, order accuracy,
employee courtesy
 Catalogue-Order Companies
 order accuracy, operator knowledge and
courtesy, packaging, delivery time, phone order
waiting time
 Insurance Companies
 billing accuracy, timeliness of claims processing,
agent availability and response time

. 4-42
WHERE TO USE CONTROL CHARTS

 Process has a tendency to go out of control

 Process is particularly harmful and costly if it
goes out of control
 Examples
 at the beginning of a process because it is a waste of
time and money to begin production process with bad
supplies
 before a costly or irreversible point, after which product
is difficult to rework or correct
 before and after assembly or painting operations that
might cover defects
 before the outgoing final product or service is delivered

4-43
CONTROL CHARTS

 A graph that establishes control limits of a process

 Types of charts
 Control limits  Attributes
 upper and lower bands of a control chart
 p-chart
 c-chart
 Variables
 range (R-chart)
 mean (x bar – chart)

. 4-44
 PROCESS
CONTROL CHART
Out of control
Upper
control
limit

Process
average

Lower
control
limit

1 2 3 4 5 6 7 8 9 10
Sample number
. 4-45
 A PROCESS IS IN
CONTROL IF …

1. … no sample points outside limits

2. … most points near process average
3. … about equal number of points above
and below centerline
4. … points appear randomly distributed

4-46
 CONTROL CHARTS
FOR ATTRIBUTES

 p-charts
 uses portion defective in a sample
 c-charts
 uses number of defects in an item

Copyright 2006 John Wiley & Sons, Inc. 4-47

P-CHART EXAMPLE

NUMBER OF PROPORTION
SAMPLE DEFECTIVES DEFECTIVE
1 6 .06
2 0 .00
3 4 .04
: : :
: : :
20 18 .18
200

20 samples of 100 pairs of jeans

4-48
 CONTROL CHARTS
FOR VARIABLES

 Mean chart ( x -Chart )

 uses average of a sample
 Range chart ( R-Chart )
 uses amount of dispersion in a
sample

4-49
 USING X- BAR AND R-
CHARTS TOGETHER

 Process average and process variability must be

in control.
 It is possible for samples to have very narrow
ranges, but their averages is beyond control
limits.
 It is possible for sample averages to be in
control, but ranges might be very large.

4-50