Class 15

1
Operations Management Performance Modeling

• 1 Operations Strategy
• 2 Process Analysis
• 3 Lean Operations
• 4 Supply Chain Management
• 5 Capacity Management in Service
• 6 Quality Management
• Class 7b Quality the Voice of the Customer
• The Goal summary
• What is Quality?
• Hank Kolb
• Voice of the Customer
• 7 Business Process Reengineering

2
Levers for Reducing Flow Time

• is to decrease the work content of (only ?)
  critical activities,
• and/or move it to non critical activities.
• Reduce waiting time
• reduce variability
• arrivals service requests
• synchronize flows within the process
• increase safety capacity
• lower utilization
• Pooling
• Match resource availability with flows in and out
  of process

3
E.g. Analysis of Service Systems

• Divide day into blocks based on arrival rates
• For each block evaluate performance measures
  given current staffing
• Quantify financial impact of each action
• Workforce training reduces mean and variability
  of service time
• Work flexibility from workforce pools available
  capacity
• Time flexibility from workforce better
  synchronization
• Retain experienced employees increased safety
  capacity
• Additional workforce Increases safety capacity
• Improved Scheduling better synchronization
• Incentives to affect arrival patterns better
  synchronization
• Decrease product variety reduces variability of
  service time
• Increase maximum queue capacity
• Consignment program, fax, e-mail etc.

S
D
4
Framework for Process Flow Management
Flow Chart Process
Identify Bottlenecks Maximal Flow Rate
Identify Critical Path Minimal Flow Time
mean
Macro Average Performance
Process Re-Design
No
Competitive?
Demand Pattern
Yes
Micro Variability Performance
Demand Supply Mgt
No
Competitive?
variability
Continuous Improvement
Yes
5
Dimensions of Quality

• Performance
• Features
• Reliability
• Conformance
• Durability
• Serviceability
• Aesthetics
• Perceived Quality

6
Elements of TQM

• Management by fact
• Cross-functional (process) approach
• Culture and leadership
• Customer focus
• Employee focus
• High performance focus
• Continuous improvement
• Benchmarking
• External alliances - the value chain
• Source Eitan Zemel

7
Malcolm Baldrige National Quality Award

• 1 Leadership 110
• 2 Strategic Planning 80
• Strategy Development Process
• 3 Customer and Market Focus 80
• 4 Information and Analysis 80
• 5 Human Resource Development and Management 100
• 6 Process Management 100
• Product and Service Processes
• Support Processes
• Supplier and Partnering Processes
• 7 Business Results 450
• TOTAL POINTS 1000

8
Malcolm Baldridge Award Winners

• Ames Rubber Corporation (1993)
• Armstrong World Industries Building Products
  Operations (1995)
• ATT Consumer Communications Services (1994)
• ATT Network Systems Group (1992)
• ATT Universal Card Services (1992)
• Cadillac Motor Car Company (1990)
• Corning Telecommunications Products Division
  (1995)
• Eastman Chemical Company (1993)
• Federal Express Corporation (1990)
• Globe Metallurgical Inc. (1988)
• Granite Rock Company (1992)
• GTE Directories Corporation (1994)

• IBM Rochester (1990)
• Marlow Industries (1991)
• Milliken Company (1989)
• Motorola Inc. (1988)
• The Ritz-Carlton Hotel Company (1992)
• Solectron Corporation (1991)
• Texas Instruments Incorporated - Defense Systems
  Electronics Group (1992)
• Wainwright Industries, Inc. (1994)
• Wallace Co., Inc. (1990)
• Westinghouse Electric Corporation - Commerical
  Nuclear Fuel Division (1988)
• Xerox Corporation - Business Products Systems
  (1989)
• Zytec Corporation (1991)

Last Updated November 8, 1996
9
ISO 9000

• Series of standards agreed upon by the
  International Organization for Standardization
  (ISO)
• Adopted in 1987
• More than 100 countries
• A prerequisite for global competition?
• ISO 9000 document what you do and then do as
  you documented.

Design
Procurement
Production
Final test
Installation
Servicing
ISO 9003
ISO 9002
ISO 9001
Source Adapted from Chase Aquilano
10
Costs of Quality

• Cost of Conformance
• Cost of Appraisal
• Cost of Prevention
• Cost of Non-Conformance
• Cost of Internal Failure
• Cost of External Failure

11
Components of Quality

• Voice of the customer
• Customer Needs
• Quality of Design
• Voice of the process
• Quality of Conformance
• Process Capability
• Process Control and Improvement

12
Voice of the Customer Linking Customer Needs to
Business Processes

• Business Process Customer Need
  Internal Metric

Source Kordupleski et al., CMR 93.
13
Voice of the Customer Quality Function
Deployment

• What do customers want?
• Are all preferences equally important?
• Will delivering perceived needs deliver a
  competitive advantage?
• How can we change the product?
• How do engineering characteristics influence
  customer perceived quality?
• How does one engineering attribute affect
  another?
• What are the appropriate targets for the
  engineering characteristics?

14
House of Quality
Source Hauser and Clausing 1988
15
Linked Houses From Customer To Manufacturing
16
Benefits of QFD
Startup and Preproduction costs at Toyota Auto
Body
Japanese automaker with QFD made fewer changes
than US company without QFD
Source Hauser and Clausing 1988
17
More New Product Development Tools

• Value analysis / Value engineering
• Design for manufacturability
• Robust design

18
Value Analysis/Value Engineering

• Achieve equivalent or better performance at a
  lower cost while maintaining all functional
  requirements defined by the customer
• Does the item have any design features that are
  not necessary?
• Can two or more parts be combined into one?
• How can we cut down the weight?
• Are there nonstandard parts that can be
  eliminated?

19
Robust Quality Taguchis View of Cost of
Variability
Traditional View
Taguchis View
20
Class 7b Key Learning Objectives

• Elements of TQM / Baldridge / ISO 9000
• Costs of Quality
• Components of Quality
• Voice of the Customer
• Linking business processes to customer needs
• Product Design Methodologies
• Convert customer needs to product and process
  specifications QFD
• Value Engineering