Inputs Transformation Process Throughput
Managing Operations:
A Focus on Excellence
Cox, Blackstone, and
Schleier, 2003
Chapter 3
The Total Quality Management Philosophy: Managing Operations For Quality
CBS Chapter 3 3-1
Continuous Improvement
Philosophies
• Just-in-Time
• Theory of Constraints
• Total Quality Management
CBS Chapter 3 3-2
Total Quality Management (TQM)
defined:
• A term coined to describe Japanese-style management approaches to quality improvement. Simply put, TQM is a management approach to long-term success through customer satisfaction. TQM is based on the participation of all members of an organization in improving processes, goods, services, and the culture in which they work ….(APICS Dictionary, 97)
CBS Chapter 3 3-3
What is Quality?
• Quality is a concept that does not lend itself to easy description or simple measurement.
• The definitions of quality vary with those who define it. However, for a total quality perspective any definition of quality must start with the customer --customer-focused quality.
CBS Chapter 3 3-4
Quality Defined
• Understanding that quality is defined by the customer is critical to the total quality approach.
• Key components of any definition of Quality:
– Quality involves meeting or exceeding customer expectations;
– Quality applies to products, services, people, processes, and environments;
– Quality is an ever-changing state (what is quality today may not be considered quality tomorrow.)
CBS Chapter 3 3-5
The Customer’s Perspective
• The basic definition from the customer’s perspective is fitness for use. This definition allows us to differentiate among various products.
• Is a Ford Focus a quality product compared to a Mercedes SLK?
• It depends on who is defining quality. That’s why markets exist for both automobiles.
CBS Chapter 3 3-6
Garvin’s Eight Dimensions
1. Performance 2. Features 3. Reliability 4. Conformance 5. Durability 6. Serviceability 7. Aesthetics 8. Perceived value CBS Chapter 3 3-7
The Producer’s Perspective
• Once the customer’s perception of quality is defined (using something like QFD) then the producer must turn this perception into a sellable product.
• Quality of Design - the ability of the product as designed to satisfy or exceed customer requirements
• Quality of Conformance - the ability of manufacturing to meet design requirements
– Defect detection v.defect prevention
CBS Chapter 3 3-8
Quality:
Fitness for Intended Use OR
CBS Chapter 3 3-9
Major concepts within TQM
• Concurrent engineering • Statistical quality control
• Gradual elimination of problems
These concepts correspond to the design, execution, and improvement phases of production.
CBS Chapter 3 3-10
Major Concept #1
DESIGN FOR MANUFACTURABILITY &
SERVICEABILITY
CONCURRENT ENGINEERING
CBS Chapter 3 3-11
Concurrent Engineering
• Reduces Cost of Manufacturing • Improves Reliability
CBS Chapter 3 3-12
Statistical Process Control
Reduce Variability
Major Concept #2:
CBS Chapter 3 3-13
Major Concept #3:
Gradually eliminate problems
CBS Chapter 3 3-14
Eliminate Problems
1. Stop Line for Problems 2. Fix It
3. Use Pareto Analysis to Find Most Common
4. Ask Why 5 Times
CBS Chapter 3 3-15
Some quality guru’s
• W. EDWARDS DEMING – Taught Japanese • WALTER SHEWHART – Invented SPC • KAORU ISHIKAWA – Fishbone Diagram • SHIGEO SHINGO – Mistake Proofing • GENICHI TAGUCHI – Field Failures CBS Chapter 3 3-16 Car Won’t Start Starter Alternator Battery Lights On Bad cell Corroded cable Out of gas
Ishikawa Diagram
CBS Chapter 3 3-17 12-OUNCE AMOUNT 0 COSTS $CBS Chapter 3 3-18
Cost of Quality – Enforcement
Cost of achieving good quality • Prevention
– Planning, Product design, Process, Training, Information
• Appraisal
– Inspection and testing, Test equipment, Operator
CBS Chapter 3 3-19
Cost of Quality – Defects
Cost of poor quality • Internal failure costs
– Scrap, Rework, Process failure, Process downtime, Price-downgrading
• External failure costs
– Customer complaints, Product return, Warranty, Product liability, Lost sales
CBS Chapter 3 3-20
“Cost of Quality” Viewpoint
$
Cost of Enforcement Cost of Defects 100 % QUALITY “Optimal Quality”CBS Chapter 3 3-21
EC of Cost of Quality
A To make more money, now as well as in the future. C Minimize our costs. (cost side) D’ Strive to make less than 100% quality. D Strive to make 100% quality. B Satisfy our customers. (revenue side) CBS Chapter 3 3-22The Cost of Quality Viewpoint Does
Not Consider:
1. Continuous improvements of process 2. Quality’s impact on revenue
CBS Chapter 3 3-23 Error Rate 2% 1% ½% Cost to Halve $100,000 $100,000 $100,000 Cost Savings $100,000 $50,000 $25,000 Payback Analysis 1 yr - Yes 2 yrs - ? 4 yrs - No 0.5% 0.0001%
Cost of Quality & Traditional
Payback Analysis
CBS Chapter 3 3-24
W.E. Deming:
• A Loyal Customer is a Profitable Customer.
CBS Chapter 3 3-25
Deming’s 14 Points
• Deming’s 14 points highlight the
differences between the TQM philosophy and the older “cost of quality” approaches.
CBS Chapter 3 3-26
Point One:
• Create constancy of purpose toward improvement of product and service with a plan to become competitive, stay in business, and provide jobs. Decide whom top management is responsible to.
CBS Chapter 3 3-27
Point Two:
• Adopt the new philosophy. We are in a new economic age. We can no longer live with commonly accepted levels of delays, mistakes, defective materials, and defective workmanship.
CBS Chapter 3 3-28
Quality - Old and New Concepts
OLD IMAGE
• Low quality caused by people
• Loss of work ethic • Some defects
acceptable • Inspect for product
problems
• Higher quality means higher costs
NEW IMAGE
• Low quality caused by management of people • Need for good
management • Zero defects is the
goal
• Inspect for process problems
• Higher quality means higher profits
CBS Chapter 3 3-29
Quality - Old and New Concepts
(Continued)
OLD IMAGE
• Quality comes from inspection
• Quality is quality control’s job
• Catch mistakes and fix them
• Suppliers are adversaries
NEW IMAGE
• Quality designed into the product
• Quality is everyone’s job
• Do it right the first time • Suppliers are trusted
CBS Chapter 3 3-30
Quality - Old and New Concepts
(Continued)
OLD IMAGE
• Buy from the lowest bidder
• Quality is a function of manufacturing
• Errors will be caught by inspectors
• Management must discover problems
NEW IMAGE • Buy for quality,
reliability and price • Quality is a function of
every stage
• Do not pass off defects • Employees must
discover problems
CBS Chapter 3 3-31
Quality - Old and New Concepts
(Continued)
OLD IMAGE • Statistics is an exotic tool NEW IMAGE • Statistics, properlyexplained, can be used by everyone
CBS Chapter 3 3-32
Point Three:
• Cease dependence on mass inspection. Require, instead, statistical evidence that quality is built in to eliminate the need for inspection on a mass basis. (Prevent defects rather than detect defects.)
CBS Chapter 3 3-33
Point Four:
• End the practice of awarding business on the basis of price tag. Instead, depend on meaningful measures of quality, along with price. Eliminate suppliers that cannot qualify with statistical evidence of quality. • Move toward a single supplier for any one
item, based on a long-term relationship of loyalty and trust.
CBS Chapter 3 3-34
Point Five:
Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs. It is management’s job to work continually on the system (design, incoming materials, composition of material, maintenance, improvement of machines, training, supervision, and retraining).
increase revenues!
CBS Chapter 3 3-35
Point Six:
CBS Chapter 3 3-36
Institute modern methods of supervision. The responsibility of foremen must be changed from sheer numbers to
quality...[which] will automatically improve productivity. Management must prepare to take immediate action on reports from
foremen concerning barriers such as inherited defects, machines not maintained, poor tools, fuzzy operational definitions.
Point Seven:
CBS Chapter 3 3-37
Point Eight:
Drive out fear, so that everyone may work effectively for the company.
Tolerance for failure
CBS Chapter 3 3-38
Point Nine:
• Break down barriers between
departments. People in research, design, sales and production must work as a team, to foresee problems of production that may be encountered with various materials and specifications.
CBS Chapter 3 3-39
Point Ten:
• Eliminate arbitrary numerical goals, posters, and slogans for the workforce which seek new levels of productivity without providing methods.
CBS Chapter 3 3-40
Point Eleven:
Eliminate work standards and numerical quotas.
Point Twelve:
Remove barriers that rob employees of their pride of workmanship.
CBS Chapter 3 3-41
Point Thirteen:
Institute a vigorous program of education and retraining.
Point Fourteen:
Create a structure in top
management that will push the prior 13 points every day.
CBS Chapter 3 3-42
Summary of Deming’s Points
• Long term view • Zero defects • Build on quality – Single supplier – Continuous improvements • Modern training • Modern supervision • Drive out fear
• No organizational barriers • Provide productivity methods
CBS Chapter 3 3-43
Deming’s 7 Deadly Diseases
1. Lack of constancy of purpose 2. Emphasis on short-term profits 3. Performance evaluation 4. Mobility of management
5. Management by visible figures alone 6. Excessive medical costs
7. Excessive liability costs
CBS Chapter 3 3-44
Seven tools of quality defined:
• Tools that help organizations understand their processes in order to improve them. The tools are cause-and-effect diagram, check sheet, control chart, flowchart, histogram, Pareto chart, and scatter chart. (APICS Dictionary, 87)
• Covered in detail in the Tools of Quality Chapter.
CBS Chapter 3 3-45
“Cost of Quality” Revisited
$
Cost of Enforcement Cost of Defects 100 % QUALITY CBS Chapter 3 3-46EC of Cost of Quality Revisited
A To make more money, now as well as in the future. C Minimize our costs. (cost side) D’ Strive to make less than 100% quality. D Strive to make 100% quality. B Satisfy our customers. (revenue side) CBS Chapter 3 3-47
Prerequisites of TQM Success
1. People Believe Improvement Will Not Cause Layoffs
2. No Local Efficiency Measures 3. Substantial Training
4. Direct Effort By TOC
CBS Chapter 3 3-48
Framework for Managing
Total Quality
• TQM is an integrated approach to focus all functions and levels of the organization on quality and continuous improvement.
• TQM process - is not static, but rather continuous. – The competition is not sitting still.
– Customer expectations are continuously increasing
• TQM is a strategicinitiative, not an operational goal.
CBS Chapter 3 3-49
Role of Top Management:
Leadership
• Leaders pull rather than push • Leaders know where they want to go • Leaders must be courageous and
trustworthy.
• A leader’s most important role after forming the vision and setting the course is helping people to do their jobs with pride.
CBS Chapter 3 3-50
Role of Middle Management
• Middle management must “play the hand dealt them” by top management, hence TQ is difficult without top management commitment. • Middle managers are often the biggest
obstacles to TQ implementation; however, • Middle managers are the ones who are
charged with achieving specific objectives and therefore must assume the leadership role in their area(s).
CBS Chapter 3 3-51
Employee Involvement
• Give employees ownership of quality.
– Three of Deming’s 14 points are: eliminate quotas; eliminate inspectors; and drive out fear.
• Organize for quality.
– Use cross-functional teams, quality circles, and/or process- or project-oriented teams.
• Quality Training and Education.
– Let the employees know what is happening, what is expected of them, and, most importantly, give them the tools (physically and mentally) to do the job well.
CBS Chapter 3 3-52
Implementing TQM:
Barriers to Successful TQM
• Misdirected focus - emphasis on the trivial many and not the vital few problems.
• Emphasis on internal processes while neglecting external (customer) factors.
• Emphasis on “quick fixes” and low-level reforms. • Training that is irrelevant and lacking focus. • Lack of cross-disciplinary/cross-functional efforts.
CBS Chapter 3 3-53
Figure 3.2. Current Reality Tree for Kent Moore Cabinets. 70 Cabinets don’t fit. 60 Houses are frequently mismeasured. 50 Marketing rep is inexperienced and poorly trained.
30 Moore has a high worker turnover rate. 20 Moore has poor winter pay.
10 Moore has few winter contracts. 40 Moore has an inadequate
CBS Chapter 3 3-54 Increase sales volume Adequate off-season sales volume Maintain current
profitability Maintain existingprices
Lower existing prices AB -- Moore operates only slightly above breakeven; and therefore must maintain existing profits.
AC -- Higher sales volume will enable guaranteed work week. BD -- Cannot lower costs.
CD’ -- Moore is already the leader in price and responsiveness; price is the only barrier to more volume.
DD’ -- Mutually exclusive; ‘price’ in D means the same thing as ‘price’ in D’. INJECTION -- ‘Price’ in D means price to existing business, ‘Price’ in D’ means price to new business. Offer one-time introductory offer to prospective clients during winter only. A C B D D’ CBS Chapter 3 3-55 80 Cabinets fit. 70 House is correctly measured. 30 Moore offers introductory discounts.
60 Marketing reps are experienced and well trained. 50 Moore experiences fewer rep turnovers.
40 Moore guarantees rep off-season pay.
20 Moore improves the rep training program. Figure 3.4. Future Reality Tree for Kent Moore Cabinets.
CBS Chapter 3 3-56
35 Kent Moore loses money.
25 Kent Moore gets little extra work.
15 Very little off-season
work exists. 10 Moore can guaranteeoff-season pay.
Injection: Use idle time to make stock cabinets.
5 Moore offers introductory work discount.
CBS Chapter 3 3-57
25 The customer is dissatisfied with the steak.
50 An undercooked steak takes about 10 minutes to correct. 45 An overcooked steak takes
about 16 minutes to correct.
60 Potential customers leave because of the long lines.
30 Some customers don’t complain they just don’t
return.
Figure 3.6. CRT of the cost of quality – Throughput world thinking 5 The grill is
too hot. 10 The grill is nothot enough.
15 The customer does not agree what rare, medium rare, medium, medium well, and well done means with respect to this
restaurant. 40 Some customers (3%) request the undercooked steak to be redone. This is
about 10% of the table. 35 Some customers (3%) request the
overcooked steak be replaced. This is about 10% of the tables.
70 Significant current sales are lost. 65 Some customers may not like the
quality of the service provided. 75 Significant future
sales are lost.
20 The cook does not prepare the steak to the customer’s specifications.
55 Approximately 20% of the tables are tied up significantly longer than expected.
CBS Chapter 3 3-58
BUSINESS PROCESSES
FIGURE 1.6g. BUSINESS SYSTEM MODEL INPUT TRANSFORMATION THROUGHPUT
SUPPLIERS CUSTOMERS ORGANIZATION INFORMATION SYSTEMS PHYSICAL RESOURCES PEOPLE MANA GEME NT PH ILOSO PHY M AN AGE M EN T P LAN N ING & CO N TROL MAN AGEM ENT POLI CY GO A LS & OB JEC TIVES S TRA TEGY DE S IGN IM P LEM EN TA TION P ER FORM ANC E ME AS UR EM EN TS THE ENVIRONMENT: GLOBAL COMPETITORS AND
SUPPLIERS, GOVERNMENTS, ECONOMIES, CONSUMER TASTES, UNIONS, ETC.
CBS Chapter 3 3-59
A
B D
C D'
Assumptions
-BD - Consultants are much more able than workers to develop solutions. CD'- Workers mistrust solutions developed by others. DD’ - Mutually exclusive.
Objective Requirements Prerequisites
To have a quality cafeteria. Good solutions must be developed. Consultants develop solutions. Solutions are Implemented. Workers develop Solutions.
Frances’s Figure 3.1. Frances’s cafeteria cloud Injection: Train workers in developing and implementing solutions.
