Operation Management

1. Managing quality
Alex Hill and Terry
Hill

2. Lecture outline
• INTRODUCTION
• Defining QUALITY and its role
• Quality PHILOSOPHIES
• STEPS to effectively managing quality
- TOOLS and TECHNIQUES
• APPROACHES to managing quality
• Critical REFLECTIONS
• SUMMARY

4. Defining quality and its
role

5. Quality conformance means: CONSISTENTLY delivering services and products in line with their DESIGN SPECIFICATIONS, which, in turn need to rreefflleecctt ccuussttoommeerr nneeeeddss
Quality conformance means
CONSISTENTLY delivering services and
products in line with their DESIGN
SPECIFICATIONS, which, in turn need to
reflect customer needs
OPERATION MANAGERS SHOULD
Ensures that the actual service or product
CONFORMS to its INTERNALLY SPECIFIED
quality level

6. ways for improving the
quality consistency of
organization
Quality
philosophies
W Edwards
DEMING
Joseph M JURAN
Philip B CROSBY

7. Deming
IMPROVING QUALITY
1. Clear quality VISION
2. Focus on correcting SYSTEMS and PROCEDURES
3. Drive to eliminate ERRORS
4. Build LONG-TERM supplier relationships
5. Continuously reduce WASTE
6. Centre TRAINING on producing acceptable work
7. LEAD rather than supervise
8. Encourage QUESTIONS
9. Use cross-functional TEAMS
10.Give employees the right TOOLS to do the job
11.Focus quotas and targets on QUALITY not output
12.Encourage PRIDE in one’s work
13.Continuously TRAIN people on new tools and
techniques
14.Work CONTINUOUSLY on the other 13 points

8. COSTS OF QUALITY
Juran
• INTERNAL cost of failure
- Defects, rework, losses, re-inspection, removal
• EXTERNAL cost of failure
- Complaints, returns, field service support,
repairs
• APPRAISAL costs
- Inspection, test, checks, assurance and control
• PREVENTION costs
- Planning, reviews, controls, analysis, reporting

9. Crosby
IMPROVING QUALITY
• Apparent management COMMITMENT
• Improvement supported by MULTI-FUNCTIONAL team
• Quality MEASURES in place
• Quality AWARENESS promoted throughout organisation
• Improvement ideas ACTIONED
• Goal is to achieve ZERO DEFECTS
• Improvement based on EDUCATION and TRAINING
• Make EVERYONE responsible for identifying and fixing
errors
• Form quality COUNCIL to help share knowledge
• CONTINUOUSLY improve quality by returning to step 1

10. Steps to effectively manage
quality
CONTROL
IMPROVEMEN
T

11. Steps to effectively manage
quality
Control
1.Define quality CHARACTERISTICS (E.g.
reliability, durability, appearance)
• Decide how to MEASURE characteristics
• Set quality STANDARDS
• CONTROL quality against standards

12. Steps to effectively manage
DEqCuIDaEli tHyOW TO MEASURE CHARACTERISTICS
• VARIABLES
- Measured on a continuous
SCALE
- E.g. length, weight or time
• ATTRIBUTES
- Have TWO states
- Assessed by JUDGEMENT
- DESCRIPTIVE
- E.g. right/wrong, looks OK/NOT
OK

13. Control
SETTING QUALITY STANDARDS
That LEVEL of quality which
defines the boundary
between ACCEPTABLE and
unacceptable
E.g. customers should be
served within 90 seconds of
arriving

14. Quality conformance must be CONTROLLED
before it be IMPROVED
CONTROL
Improvement
• Find and correct CAUSES of poor quality
• CONTINUE to make improvements

15. > KEY IDEA
Organizations must
PROACTIVELY improve quality by
CONTINUALLY identifying what could go
wrong before it does and then
PREVENTING these problems from
occurring

16. CASE 10.3
REGAINING
CONSUMER
CONFIDENCE AT
COCA-COLA AND
PERRIER
1.How did they REACT to
the quality conformance
problems?
2.Was quality
conformance an
ORDER-WINNER or
QUALIFIER in their
markets?
3.How did this affect their
MARKETS?

17. Question Answer
Reaction
Order-winner
or
qualifier
Market
impact
• Lost consumer CONFIDENCE
• Lost SALES
- Perrier has never really regained market
share
CASE 10.3
• SLOW to react
• Initially DENIED that there was a
problem
• QUALIFIER

18. HAVING THE RIGHT TOOLS TO DO THE JOB
Question Answer
Point
Importanc
e
• Managers need to equip employees
with the right TOOLS to do the job
• It is NOT ENOUGH to simply motivate
and support them
• One of the key FIRST STEPS in any
improvement program must be to:
- EDUCATE staff in the use of quality
improvement TOOLS and TECHNIQUES

19. Tools and
techniques
• CHECKLISTS
• PARETO analysis
• CAUSE and EFFECT diagram
• GAP analysis
• CONTROL charts
• Statistical process control (SPC)
• SIX-SIGMA quality
> KEY IDEA
Quality conformance can be IMPROVED by changing
how services or products are either
DESIGNED or DELIVERED

20. Checklists record how OFTEN a problem
occurs

21. Pareto analysis: Pareto analyses identify the MOST FREQUENT
causes of a problem and thereby help FOCUS improvement
activities and resource

22. Cause and effect diagrams
1. Identify the PROBLEM to be addressed
2. Identify the major CATEGORIES of causes
3. List all the DETAILED causes
4. Identify the PRINCIPAL causes

23. Five Easy
Pieces
(1970)
Breakfast
at Tiffany’s
•What is the OUTCOME? What
are the CAUSES of this?
The diner
(1961)

24. Cause and effect diagrams
Film clip The Diner
Film
Title
Director
(year)
Five Easy Pieces
Rafelson (1970)
Clip Start
Finish
00:45:42
00:46:13
What clip shows A group of people being served in a diner
Key learning
objective
Identifying why the customers’ expectations
were not met

25. Cause and effect diagrams
Film clip Tiffany’s
Film
Title
Director
(year)
Breakfast at Tiffany’s
Edwards (1961)
Clip Start
Finish
01:05:41
01:09:49
What clip shows A couple being served in Tiffany’s
Key learning
objective
Identifying how the business identified and met
the customers’ expectations

26. The Diner
Systems People
Unprofessional
Not empowered
Inflexible Outcome
High expectation
Materials Customer
Customers do not eat
and leave upset
Low variety
Inflexible

27. Tools and
tTeifcfahnny’isques
Systems People
Skilled / professional
Empowered
Flexible Outcome
Low expectation
Materials Customer
Satisfied customers
will come again
High variety
Flexible

28. Gap analysis
1.KNOWLEDGE gap
2.DESIGN gap
3.PERFORMANCE gap
4.COMMUNICATION gap
5.OVERALL gap
Gap analysis helps identify why customers’
PERCEPTIONS of the quality of a service or
product are LESS THAN their
EXPECTATIONS

29. Control charts
•WHAT
- aspects of PERFORMANCE need to be measured
•WHERE
- which POINT in the delivery system
•HOW
- which TYPE of control chart - attribute or variable
- FREQUENCY of measurement
• By WHOM
- who will MEASURE performance
- who will take corrective ACTION when it moves
outside of its limits
Control charts can be used to control a process
and ensure that it PERFORMS within specified
SPECIFIC LIMITS

30. Key Concepts of Six Sigma
At its core, Six Sigma revolves around a few key concepts.
Six-sigma quality
1.Critical to Quality: Attributes most important to the customer
2.Defect: Failing to deliver what the customer wants
3.Process Capability: What your process can deliver
4.Variation: What the customer sees and feels
5.Stable Operations: Ensuring consistent, predictable processes to
improve what the customer sees and feels
6.Design for Six Sigma: Designing to meet customer needs and process
capability

31. Approaches to managing
quaTliotytal quality management
MANAGEMENT PHILOSOPHY
• Meet CUSTOMER needs and
expectations
• Cover all FUNCTIONS
• Involve all LEVELS
• Examine the current COST of quality
• Deliver services and products RIGHT
first time
• Develop a quality management
APPROACH
• CONTINUOUSLY look for ways to

32. IMPLEMENTATION
• Develop a quality STRATEGY
• Get top-management SUPPORT
• Use a TQM group
• Use improvement TEAMS
• RECOGNISE success
• Use quality TOOLS and TECHNIQUES
• TRAIN staff in the aims and tools of TQM

33. To implement TQM, companies must broaden their SKILLS and
be more INNOVATIVE. This requires CHANGES in attitude,
behavior and working practices
A number of FRAMEWORKS are available to help organizations
consistently DESIGN and DELIVER services and products
for example :Systems and procedures
• ISO 9000

34. ISO 9000
HELPS CONTROL BUSINESS PROCESSES
• DESIGNING and DEVELOPING new services
and products
• Control MATERIALS
• DELIVER services and products
• INSPECT, MEASURE and TEST services and
products
• HANDLE, STORE and PACK products
• SERVICE products after installation
•Maintain and audit quality RECORDS for the
above

36. Summar
y•
QUALITY conformance: Either order-winner or qualifier
in most markets
• MANAGING quality: Characteristics, measures, levels
and monitors
• Quality LEVELS must be: Controlled before they can be
improved
• TOOLS and TECHNIQUES for improving quality:
Checklists, Pareto analysis, cause and effect, gap
analysis
SYSTEMS and PROCEDURES: ISO 9000, Baldrige
Award, EFQM Excellence Award