Managing Quality

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Operations Management
Lecture 4 Managing Quality
Reference

• PowerPoint presentation to accompany
• Heizer/Render
• Principles of Operations Management, 7e
• Operations Management, 9e
• CASE Material

2
Recap

• Competitiveness
• Dimension of Competitiveness
• Basic Concepts
• Strategy
• Elements of Strategy
• Competitive advantage
• OM contribution to strategy
• Operations Strategy

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Lecture Outline

• Defining Quality
• What is Quality
• Basic Quality function
• Quality Assessment Criteria
• Principles dimensions of quality
• Quality and Strategy
• Implications of Quality
• Quality Control, assurance and Management

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Outline Continued

• Cost of Quality
• Leaders in Quality
• Ethics and Quality Management
• International Quality Standards
• ISO 9000
• ISO14000

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Learning Objectives

• When you complete this chapter you should be able
  to

• Define quality and Dimensions
• Assessing quality-criteria
• Implications of Quality
• Implications of cost of quality
• Describe the ISO international quality standards

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INTRODUCTION TO QUALITY

• Productivity, Cost of Operations Quality all
  contribute to Profitability
• Most important determinant of a companys
  long-term success or failure is QUALITY

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What is Quality?

• The totality of characteristics of an entity
  that bear on its ability to satisfy stated
  implied needs.
• Meeting or exceeding customer satisfaction

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Basic Quality Function
2. COMPLAINTS
3. CONSISTENCY
4. PRECISION
5. ACCURACY
6. VARIATION
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Quality Assessment Criteria

• Judgmental Criteria
• Product based criteria
• Manufacturing based criteria
• Value based criteria

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PRINCIPAL QUALITY DIMENSIONS

1. Performance
2. Features
3. Reliability
4. Conformance
5. Durability
6. Serviceability
7. Aesthetics
8. Perceived quality

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PRINCIPAL QUALITY DIMENSIONS

• Performance primary operating characteristics.
  Example A cars acceleration, braking distance,
  steering and handling

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PRINCIPAL QUALITY DIMENSIONS

• Features the bells and whistles of a product.
  A car may have power options, a tape or CD deck,
  antilock brakes, and reclining seats

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PRINCIPAL QUALITY DIMENSIONS

• Reliability the probability of a products
  consistent performance. A cars ability to start
  on cold days and frequency of failures are
  reliability factors

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PRINCIPAL QUALITY DIMENSIONS

• Conformance the degree to which physical and
  performance characteristics of a product match
  pre-established standards.
• cars fit/finish, freedom from noises can
  reflect this.

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PRINCIPAL QUALITY DIMENSIONS

• Durability the amount of use one gets from a
  product before it physically deteriorates or
  until replacement is preferable.
• For car - corrosion resistance long wear of
  upholstery fabric

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PRINCIPAL QUALITY DIMENSIONS

• Serviceability
• speed, courtesy, competence of repair work.
• auto owner -access to spare parts.

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PRINCIPAL QUALITY DIMENSIONS

• Aesthetics
• how a product looks, feels, sounds, tastes, or
  smells.
• cars color, instrument panel design and feel of
  road
• make aesthetically pleasing

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PRINCIPAL QUALITY DIMENSIONS

• Perceived quality
• Subjective assessment of quality resulting from
  image, advertising, or brand names.
• car, - shaped by magazine reviews-manufacturers
  brochures

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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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Two Ways Quality Improves Profitability
Figure 6.1
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Implications of Quality

• Company reputation
• Perception of new products
• Improved productivity and profits
• Employment practices
• Supplier relations
• Product liability
• Reduce risk
• Global implications
• Improved ability to compete

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Quality Control

• Quality Control include efforts to ensure
  quality through inspection by acceptance or
  rejection
• Review quality of all factors involved in
  production

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Quality Assurance
Quality assurance includes all planned
systematic activities implemented within the
quality system, demonstrated as needed, to
provide adequate confidence that an entity will
fulfill requirements for quality. Confidence
level of Operations Manager that quality products
are produced.
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Quality Management

• All activities of the overall management function
  that determine the quality policy, objectives and
  responsibilities and implement planning, quality
  control, quality assurance and quality
  improvement within the quality system (ISO 840)

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What is Cost of Quality??????

• Quality is measured by the cost of quality
  which is the expense of of non conformance the
  cost of
• doing things wrong.
• Vs

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These Two Main Areas Can Be Split Further As
Shown Below
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• four segments of quality costs
• A. PREVENTION. covers avoiding defects
  planning, Quality training, Quality circles,
  training, preventative maintenance evaluation.
• B. APPRAISAL. area covers finding defects by
  inspection, audit, test measurement.
• C. INTERNAL FAILURE. Cost incurred prior to the
  shipment of the product or the delivery of the
  service. These costs are associated with defects
  that are found prior to customer delivery. covers
  costs borne by organization itself such as
  scrap, rework, redesign,.
• D. EXTERNAL FAILURE. These are the costs of
  discovered defects after product shipment or
  service delivery. covers costs borne by customer
  such as warranty, administrative cost in dealing
  with failure loss of goodwill.

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Cost of Quality

• Prevention costs
• build it right the first time
• Appraisal costs
• inspection and testing
• Internal failure costs
• scrap and rework
• External failure costs
• warranty claims, recalls, lost business

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Total cost of quality

• Total Quality cost, is a combination of
  prevention, appraisal failure. Reducing any of
  these reduces total. key to minimum cost, is
  striking correct balance b/w three.
• Clearly prevention reduces both appraisal and
  failure costs, -eventually cost of prevention
  itself starts to increase total cost so must be
  controlled set at an effective level.

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COMPARATIVE COST OF QUALITY

Most costly


Less costly
Least costly
The companys quality management system is
designated, planned, organized for defect
prevention continuous quality improvement.
The customer finds defects in delivered parts/
services
The manufacturer Or service org. Finds
corrects defects internally
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A Manager Who Fails To Provide Resources And Time
For Prevention Activities Is Practicing False
Economy

• Concentrate on Prevention, Not Correction

Prevention
Correction
Quality
Prevention has more leverage when improving
quality
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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 zero defects
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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
• All stakeholders must be considered

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International Quality Standards

• ISO 9000 series
• Common quality standards for products
• 2000 update places greater emphasis on leadership
  and customer satisfaction
• ISO 14000 series

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ISO 14000Environmental Standard

• Core Elements

• Environmental management
• Auditing
• Minimizing how their operations negatively effect
  the environment

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Forthcoming lecture- Managing Quality (TQM,
Deming 14 points, Quality Tools, Quality in
Service)