Chapter 6 Quality Management Overview n Quality

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Chapter 6 Quality Management

Overview n Quality & Strategy n What is quality? n n Malcom Baldridge Quality Award Total quality management (TQM) n n n Facets of TQM Tools of TQM Six Sigma

Dimensions of Quality for Goods n Operation n Reliability & durability n Conformance n Serviceability n Appearance n Perceived quality Quality

Malcom Baldrige National Quality Award n Established in 1988 by the U. S. government n Designed to promote TQM practices

2005 Baldrige Awards Manufacturing Sunny Fresh Foods Monticello, MN Service Dyn. Mc. Dermott Petroleum Operations Company New Orleans, LA Education Richland College Dallas, TX Jenks Public Schools Jenks, OK Small Business Park Place Lexus Plano, TX Health Care Bronson Methodist Hospital Kalamazoo, MI

TQM – Total Quality Management n Encompasses entire organization, from supplier to customer n Stresses a commitment by management to have a continuing company-wide drive toward excellence in all aspects of products and services that are important to the customer.

Deming’s Fourteen Points Create consistency of purpose n Lead to promote change n Build quality into the products n Build long term relationships n Continuously improve product, quality, and service n Start training n Emphasize leadership n

Deming’s Points - continued n n n n Drive out fear Break down barriers between departments Stop haranguing workers Support, help, improve Remove barriers to pride in work Institute a vigorous program of education and self-improvement Put everybody in the company to work on the transformation

Concepts of TQM Continuous improvement n Employee empowerment n Benchmarking n Just-in-time (JIT) n Taguchi concepts n Knowledge of tools n

Continuous Improvement Represents continual improvement of process & customer satisfaction n Involves all operations & work units n Other names n Kaizen (Japanese) n Zero-defects n Six sigma n

Employee Empowerment n Getting employees involved in product & process improvements n n 85% of quality problems are due to process & material Techniques n Support workers n Let workers make decisions n Build teams & quality circles

Benchmarking

Benchmarking Selecting best practices to use as a standard for performance Determine what to benchmark n Form a benchmark team n Identify benchmarking partners n Collect and analyze benchmarking information n Take action to match or exceed the benchmark n

Benchmarking examples n Xerox n Pioneered benchmarking n 1989 Baldrige Award winner n Benchmarked competitors. WHY? n Benchmarked American Express. WHY? n Benchmarked L. L. Bean. WHY?

Benchmarking examples n Granite Rock n n 1992 Baldrige Award winner produce aggregate and concrete n Benchmarked companies in their industry n Benchmarked Dominoes’ Pizza. WHY?

Just-in-Time (JIT) Relationship to quality: n JIT cuts cost of quality n JIT improves quality n Better quality means less inventory and better, easierto-employ JIT system

Tools for TQM n Check sheets (read) n Scatter diagrams (read) n Histograms (read) n Flow charts (read) n Pareto charts n Cause-and-effect diagrams n Statistical process control (Chapter 6 S)

Perroti’s Pizza Pareto Chart n The manager of Perroti’s Pizza collects data concerning customer complaints about delivery. n He created a frequency distribution of the problems from a check sheet. Problem Frequency Topping stuck to box 17 Pizza is late 35 Wrong topping 9 Wrong crust 6 Wrong size 4 Partially eaten (? !) 3 Pizza didn’t show 6

Perroti’s Pareto Chart

Perroti’s Pareto Chart n What does the chart show? n Worst problem? n What is it? n What percent of all problems? n If you want to solve 80% of the problems, which problems should you solve?

Perrotti’s Pizza Pareto Chart Sort frequency distribution from highest frequency to lowest frequency.

Perrotti’s Pizza Pareto Chart 52 35+17 = 52 61 52+ 9 = 61 Create the cumulative frequency distribution.

Perrotti’s Pizza Pareto Chart

Perrotti’s Pizza Pareto Chart Calculate the cumulative percent frequency distribution 43. 8%

Perrotti’s Pizza Pareto Chart

Perroti’s Pareto Chart

Perrotti’s Pizza Pareto Chart

Perroti’s Pareto Chart

Checksheet: Airline Complaints Type Wk 1 Lost Baggage | Baggage Delay Wk 2 || |||| | Missed connections || | Poor cabin service ||| Ticketing error | Wk 3 Wk 4 Total | ||||| ||| |

Pareto Chart: Airline Complaints Complaint Frequenc Cumulativ y e Percent Baggage delay 23 0. 46 Poor cabin service 14 0. 74 Missed connections 7 0. 88 Lost Baggage 4 0. 96 Ticketing error 2 1 50

Cause-and-Effect Diagrams

Cause and Effect Diagram n Used to find problem sources/solutions n Other names n n Fish-bone diagram, Ishikawa diagram Steps n Identify problem to correct n Draw main causes for problem as ‘bones’ n Ask ‘What could have caused problems in these areas? ’ Repeat for each sub-area.

Cause-and-Effect Diagrams Machines Personnel Effect Materials Process

Checker Board Airlines

Checker Board Airlines Delayed flight departures

Checker Board Airlines Equipment Aircraft late to gate Mechanical failures Delayed flight departures

Checker Board Airlines Equipment Aircraft late to gate Mechanical failures Personnel Passenger processing at gate Late cabin cleaners Unavailable cockpit crew Late cabin crew Delayed flight departures

Checker Board Airlines Equipment Personnel Aircraft late to gate Mechanical failures Passenger processing at gate Late cabin cleaners Unavailable cockpit crew Late cabin crew Late baggage to aircraft Late fuel Late food service Contractor not provided updated schedule Materials Delayed flight departures

Checker Board Airlines Personnel Equipment Aircraft late to gate Mechanical failures Passenger processing at gate Late cabin cleaners Unavailable cockpit crew Late cabin crew Late baggage to aircraft Late fuel Weight/balance sheet late Late food service Contractor not provided updated schedule Materials Poor announcement of departures Procedures Delayed check-in procedure Waiting for late passengers Delayed flight departures

Checker Board Airlines Personnel Equipment Aircraft late to gate Other Mechanical failures Late cabin cleaners Unavailable cockpit crew Weather Late cabin crew Air traffic delays Late baggage to aircraft Late fuel Poor announcement of departures Weight/balance sheet late Late food service Contractor not provided updated schedule Materials Passenger processing at gate Delayed check-in procedure Waiting for late passengers Procedures Source: Adapted from D. Daryl Wyckoff, “New Tools for Achieving Service Quality. ” The Cornell Hotel and Restaurant Administration Quarterly, November 1984, pg. 89. © 1984 Cornell H. R. A. Quarterly. Used by permission. All rights reserved. Delayed flight departures

Six Sigma Quality improvement and business strategy developed at Motorola in the 1980’s n Goals n Reduce defects to 4 defects per million n Reduce cycle time n Reduce costs n n Utilize an organization infrastructure and statistical tools to implement

Six Sigma at Motorola ROI 1987 -1994 • Reduced in-process defect levels by a factor of 200. • Reduced manufacturing costs by $1. 4 billion. • Increased employee production on a dollar basis by 126%. • Increased stockholders share value fourfold.

Six Sigma at GE GE is the current benchmark for Six Sigma success. General Electric ROI 1995 -1998 • Company wide savings of over $1 Billion. • Estimated annual savings to be $6. 6 Billion by the year 2000

Six Sigma Lessons n Implement in BOTH manufacturing and nonmanufacturing areas – Jack Welch, former CEO of GE