ISDS 3115 Ch 6 TB

6.2C Philip crosby once stated that quality is free

"What costs money are the unquality things - all actions that involve not doing it right the first time"

6.3B Benchmarking is another ingredient in an organization's TQM

"program"

6.3E Techniques for building employee empowerment include

1) Building communication networks that include employees 2) developing open, supprotive supervisors 3) Moving responsibility from both managers and staff to productions employees. 4) Building high morale organizations 5) Creating such formal organization strucutres as teasms and quality circles

6.2 In addition to being a critical element in operations, quality has other implications. What are the three reasons why quality is important?

1) Company reputation 2) Product liability 3) Global implications

Intro: What are the management quality techniques in place at Arnold Palmer Hospital that are presented in this chapter

1) Continuous improvement 2) Employee empowerment 3) Benchmarking 4)just in time 5) Tolls such as Pareto charts and flow charts

6.3I Quality expert W Edwards Deming used 14 points to indicate how he implemented TQM. We develop these into seven concepts for an effective TQM program

1) Continuous improvement 2) six sigma 3) Employee empowerment 4) Benchmarking 5) Just in time (JIT) 6) Taguchi 7) Knowledge of TQM tools

6.3B The steps for developing benchmarks are

1) Determine what to benchmark 2) Form a benchmark team 3) Identify benchmark partners 4) Collect and analyze benchmarking info 5) Take action to match or exceed the benchmark

6.3B list of best practices found in other firms or in other divisions

1) Make it easy for clients to complain 2) Respond quickly to complaints 3) Resolve complaints on the first contact 4) Use computers to manage complaints 5) Recruit the best for customer service jobs

6.1 What are the activies for an organization to use to achieve total quality management?

1) Organization practices

6.2C - Four major categories of costs associated with quality (the costs of quality)

1) Prevention costs 2) Appraisal costs 3) Internal failure costs 4) External failure costs

6.6 The determinants of service quality are

1) Relaibility 2) Responsivenesss 3) Competence 4) Access 5) courtesy 6) Communication 7) Credibility 8) Security 9) Understanding/ knowing the customer 10) Tangibles

6.1 Improved quality leads to what? (two ways to improve profitability)

1) Sales gains via Improved response Flexible pricing Improved reputation 2) Reduced Costs via Increased productivity Lower rework and scrap costs Lower warranty costs

6.2I The ISO 9000's focus is to enhance success through which eight quality management principles

1) Top management leadership 2) Customer satisfaction 3) Continual improvement 4) involvement of people 5) process analysis 6) Use of data driven decision making 7) A systems approach to management 8) mutually beneficial supplier relationships

6.2C Leaders in quality

1) W Edwards Deming 2) Joseph M Juran 3) Armand Feigenbaum 4) Phillip B Crosby

6.6What is very different about the selection of services is the poor defintion of the

1) intangible differences between products 2) Intangible expectations customers have of these products

6.36 The term sigma, has two meanings in TQM.

1) statistical 2) a program designed to reduce defects to help lower costs, save time, and improve customer satisfaction

6.5R Inspection should be thought of as a vehicele for improving the system. Operations managers need to know critical points in the system

1) when to inspect 2) where to inspect

6.3J the three ways JIT is related to quality?

1)JIT cuts the cost of quality 2) JIT Improves quality 3) Better quality means less inventory and a better, easier to employ JIT system

6.36 The more common three sigma program would result in

2700 passengers with misplaced bags every month

6.3T Genichi Taguchi has provided us with

3 concepts aimed at improving both product and process quality 1) Quality robustness 2) Target oriented quality 3) The quality loss function

6.6 The user of a service has features in mind that form a basis for comparison among alternatives

A lack of any of these features may eliminate the service from consideration

6.2I The move toward global supply chains has placed so much emphasis on quality that the world has united around

A single quality standard, ISO 9000

6.2 1) Company reputation

An organization can expect its reputation for quality, be it good or bad - to follow it. Quality will show up in perceptions about the firms new products, employment practices, and supplier relations. Self promotion is not a substitute for quality products

6.3J JIT improves quality

As JIT shrinks lead time, it keeps evidence of errors fresh and limits the number of sources of error. JIT creates, in effect, an early warning system for quality problems, both within firms and with vendors

6.3B OM in action

Britains largest childrens hospital turned to Formula one for help revamping patient hand off techniques. Armed with video and slides, the racing team described how they analyze pit crew performance. It also explained how its system for recording errors stressed small errors that go unnoticed. Ferrari invited doctors to practice sessions at the British Grand Prix to get closer looks at pit stops.

6.2C Prevention costs

Costs associated with reducing the potential for defective parts or services (training, quality improvement programs)

6.2C External failure costs

Costs that occur after delivery of defective parts or services (rework, returned goods, liabilities, lost goodwill, costs to society)

6.1 2) Quality principles

Customer focus, continuous improvement, benchmarking, just in time, tools of TQM Yields:How to do what is important and to be accomplished

6.3T quality robustness

Describes products that can be produced uniformly and consistently in adverse manufacturing and environmental conditions. Taguchi's idea is to remove the effects of adverse conditions instead of removing the causes. Taguchi suggests that removing the effects is often cheaper than removing the causes and more effective in producing a robust product. In this way, small variations in materials and process do not destroy product quality

6.1 3) Employee fulfillment

Empowerment, organizational commitment Yields: Employee attitudes that can accomplish what is important

6.36 Examples of firms with successful six sigma

GE, Motorola, Dupont, and Texas Instruments

6.5R - Om in action - inspecting the boeing 737

Imagine

6.2 3) Global implications

In this technological age, quality is an international, as well as Om, concern. For botha compnay and a country to compete in the global economy, products must meet global quality, design, and price expectation. Inferior products harm a firm's profitbailtiy and a nation's balance of payments

6.1Improvement in quality helps firms

Increase sales and reduce costs, both of which increase profitability

6.36Pro How is six sigma a strategy for achieving and sustaining business success

It focuses on total customer satisfaction

6.36Pro How is six sigma a discipline for achieving and sustaining business success

It follows the formal six sigma improvement model known as DMAIC. This five step process improvement model 1) Defines the projects purpose, scope, and outputs and then identifies the required process information, keeping in mind the customers definitions of quality 2) Measures the process and collects data 3) Analyzes the data - enusirng repeatability and reproduceabiltiy 4) Improves by modifying existing procedure s 5) Controls the new process to make sure performacne levels are maintained

6.36 How is it a set of tools

It is a set of seven tools that we introduce shortly in this chapter: Check sheets, scatter diagrams, cause and effect diagrams, pareto charts, flowcharts, histograms, and statistical process control

6.3C the Japanese use the word

Kaizen to describe the ongoing process of unending improvement- the setting and achieving of ever higher goals. In the US, TQM and zero defects are also used to describe continuous improvement efforts.

6.1 1) Organizational practices

Leadership, mission statement, effective operating procedures, staff support, training Yields: What is important and what is to be accomplished

6.3J Better quality means less inventory and a better, easier to employ JIT system

Often the purpose of keeping inventory is to protect against poor production performance resulting from unreliable quality. If consistent quality exists, JIT allows firms to reduce all the costs associated with inventory

6.3C Walter Shewhart, another pioneer in quality management, developed a circular model known as

PDCA- Plan, do, check. act as his version of continuous improvement. The cycle is shown as a circle to stress the continuous nature of the improvement process

6.3E Why is delegating responsibilty to shop floor employees leading to twice the success as companies that implement "top down" directives

Quality problems usually are the result of problems in materials and processes, not employee performance. Therefore, it is most important to design equipment and processes that produce the desired quality. shop floor employees who deal with the system on a daily basis understand these processes and equipment better than anyone else

6.1 LW: When the implication sof an organization's long term costs and potential for increased sales are considered, total costs may well be at a minimum when 100% of the goods or services are perfrect and defect free

SW: Total costs are lowest when goods are of the highest quality

6.6Managers of service firms may find Servqual useful when evaluating performance

Servqual is a widely used instrument that provides direct comparisons between customer service expectations and actual service provided. Servqual focuses on the gaps between customer service expectations and service provided

Intro: Just in time (JIT)

Supplies are delivered to arnold palmer on a JIT basis. This keeps inventory costs low and keeps quality problems from hiding.

6.3I Identifying and meeting customer expectations requires and emphasis on

TQM if a firm is to compete as a leader in world marketts

6.3E What are quality circles?

Teams that adddress quality issues. These groups of employees meet regularly to solve work related problems. Members reveive training in group planning, problem solving, and statistical quality control. They generally meet once a week (usually after work but sometimes on company time)

6.2 2) Product liability

The courts increasignly hold organizations that produce faulty products liable ot damages or injuries. Legislation such as the Consumer Product Safety Act sets and enforces product standards by banning products that do not reach those standards. Impure foods that cause illness etc can all lead to huge legal expenses and terrible publicity

6.2 Malcolm Baldridge National quality award

The global implications of quality are so important the the US has est the Malcolm Baldridge National Quality Award for quality achievement. Recent winners include PricewaterhouseCoopers, Lockheed Martin, Nestle Purina, Honeywell, and the City of Fort Collins, CO. The japanese have a similar award, the Deming Prize, named after an American. Dr. W Edwards Deming

Intro: Benchmarking

The hospital belongs to a 2000 member organization that monitors standards in many ares and provides monthly feedback to the hospital

Intro: Continous improvement

The hospital constantly seeks new ways to lower infection rates, readmission rates, deathsm costs, and hospital stay times

6.36 Successful six sigma projects are clearly related to

The strategic direction of a company. It is a management directed, team based, expert led approach

6.2 We accept the definition of quality as adopted by the "American Society for Quality" as _____

The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs

Intro: Tools such as pareto charts and flow charts

These tools monitor processes and help the staff graphically spot problem areas and suggest ways they can be improved

6.3J JIT cuts the cost of quality

This occurs because scrap, rework, inventory investment, and damage costs are directly related to inventory on hand. Because there is less inventory on hand with JIT, costs are lower. In addition. inventory hides bad quality, whereas JIT immediately exposes bad quality

6.4 Seven tools that are helpful in the TQM process are

Tools for generating ideas 1) Checksheets 2) Scatter diagram 3) Cause and effect diagram Tools for organizing the data 4) Pareto Chart 5) Flow chart tools for identifying problems 6) Histogram 7) Statistical process control

6.1 One measure of productivity

Units produced per labor hour. Companies with the highest quality are five times more productive than those with the lowest quality

6.2 Others believe that quality can fall into several categories.

User based - quality lies in the eyes of the beholder. Marketing people like this approach and so do customers. To them , higher qulaity means better performance, nicer features, and other imporvements. Manufacturing based- Quality means conforming to standards and "making it right the first time. Product based- views quality as a precise and measurable variable, in this view, for example, relaly good ice cream has high butterfat levels

6.3BI Internal Benchmarking

When an organization is large enough to have many divisions a natural approach is an internal benchmark

Intro: Employee empowerment

When employees see a problem, they are trained to take care of it; staff are empowered to give gifts to patients displeased with some aspect of service

6.5A Inspection of attributes versus variables -

When inspections take place, quality characteristics may be measured as either attributes or variables. Attribute inspection classifies items as being good or defective. It does not address the degree of failure. Variable inspection measures dimensions such as weight, spped, size, or strenght to see if an item falls within a range.

6.1 4) Customer satisfaction

Winning orders, repeat customers Yields: An effective organization with a competitive advantage

6.4C example of a check sheet

a drawing that shows a tally of the areas where defects are occurring or a check sheet showing the type of customer complaints

6.3T Taguchi states that

a final proudct containing many parts produced near their specification boundaries may contain numerous loose and tight fits, which could cause assembly, performance, or aesthetic concerns.

6.5S Poka yoke

a foolproof device or technique that ensures production of good units every tiome. These special devices avoid errors and provide quick freedback of problems. A simple example of a poka yoke device is the diesel pump that will not fit into the unleaded gas opening in your car

6.4F flowcharts graphically present

a process or system using annotated boxes and interconnected lines

6.36 In a statistical sense, it describes

a process, product, or service with an extremely high capability (99.9997 accuracy) . For example, if 1 million passengers pass through the St louis airport with checked baggage each month, a six sigma program for baggage handling will result in only 3.4 passengers with misplaced luggage

6.3I Total quality management refers to

a quality emphasis that encompasses the entire organization, from supplier to customer. TQM stresses a commitment by management to have a continuing companywide drive toward excellence in all aspects of products and services that are important to the customer.

6.3T The QLF takes the general form of

a simple quadratic equation

6.2EResponsible action dictated by ethical conduct may be

a worldwide recall, as conducted by both Johnson and Johnson and Perrier, whn each of these products was found to be contaminated. A manufacturer must accept responsibility for any poor quality product released to the public

6.36 Second definition (program): six sigma is a comprehensive system - a strategy, discipline, a set of tools, for

achiving and sustaining business success

6.6 The operations manager plays a significant role in

addressing several major aspects of service quality. First, the tangible component of many services is important. How well the service is designed and produced does make a difference

6.3B You find particular organizations that are leaders in the paritcular areas you want to study

and benchmark yourself against them. The company need not be in your industry

6.4C Check sheet

any kind of form that is designed for recording data. In many cases, the recording is done so the patterns are easily seen while the data are being taken .

6.5S Checklists

are a type of poka yoke to help ensure consistency and completeness in carrying out a task. A basic exmple is a to-do list. This tool may take the form of preflight checklists used by airplane pilots, surgical safety checklists ussed by doctors, or software quality assurance lists used by programs

6.2 The operation manager's objective is to _____

build a total quality management system that identifies and satisfies customer needs.

6.4CE Another tool for id'ing quality issues and inspection points is the

cause and effect diagram, also known as an Ishikawa diagram ofr a fish bone chart

6.3J- The philosophy behind just in time is one of

continuous improvement and enforced problem solving. JIT systems are designed to produce or deliver goods just as they are needed.

6.3C TQM requires a never ending process of

continuous improvment that covers people, equipment, suppliers, materials, and procedures. The basis of the philosophy is that every aspect of an operation can be improved. The end goal is perfection, which is never achieved but always sought

6.5R To make sure the system is producing as expected

control of the process is needed. The best processes have little variation from the standard expected

6.2E Every company needs to develop

core values that become day to day guidelines for everyone from the CEO to production line employees.

6.5R Inspection does not

correct deficiencies in the system of defects in the products, nor does it change a product or increase its value. Inspection only finds deficiencies and defects. Moreover, inspections are expensive and do not add value to the product

6.2C Appraisal costs

costs related to evaluating products, processes, parts, and services (e.g. testing, labs, inspectors)

6.2C Internal failure costs

costs that result from production of defective parts or services before delivery to customers (rework, scrap, downtime)

6.3T The QLF is an excellent way to esitmate quality costs of

different processes. A

6.1 Defining customer quality expectations can help a customer

differentiate its product from the competition, produce at the lowest cost possible by developing efficient processes that produce consistent quality, and respond to customer orders rapidly because quality systems have allowed it to achieve a rapid throughput in its plants

6.1 Managing quality helps build successful strategies of

differentiation, low cost, and response

6.2E If a firm believes that it has intro'd a questionable product,

ethical conduct must dictate responsible action.

6.6 Fourth, the manager must

expect exceptions. There is a standard quality level at which the regular service is delivered, such as the bank teller's handling of a transaction. However, there are exveptions initiated by the customer or by less than optimal operating conditions. This implies that the quality control system must recognize and have a set of alternative plans for less than optimal conditions

6.3E A specially trained member, called the

facillitator, usually helps train the members and keeps the meetings running smoohtly

6.4C Check sheets help analysts

find the facts or patterns that may aid subsequent analysis

6.4SP Control charts are

graphic presentations of data over time that show upper and lower limits for the process we want to control

6.2E One of the most important jobs for operations managers is to deliver

healthy, safe, and quality products and services to customers

6.5I Service industry inspection

in service oriented organizations, inspection points can be assigned at a wide range of locations. Again, operations manager must decide where inspections are justified and may find the seven tools of TQM useful when making these judgements

6.2I Over 1.6 million certifications have been awarded to firms in 201 countries, including about 30,000

in the US. To do business globallym it is critical for a firm to be certiied and listed in the ISO directory.

6.1Improved quality allows costs to drop as firms

increase productivity and lower rework, scrap, and warranty costs.

6.2I ISO 9000 is THE quality standard with

international recognition

6.3E Employee empowerment means

involving employees in every stop of the production process.

6.2E The development of poor quality products, because of inadequate design and production processes, not only results in higher production costs but also

leads to injuries, lawsuits, and increased government regulation

6.2I The latest modification of the standard, ISO 9001, follows a structure that

makes it more compatible with other management systems. This verision gives greater emphasis to risk based thinking, attempting to prevent undesirable outcomes

6.4CE the four M's are the "causes"

material, methods, manpower, machines

6.5R Inspection can involve

measurement, tasting, touching, weighing, or testing of the product.

6.4SP - Statistical process control

monitors standards, makes measurements, and takes corrective action as a product or service is being produced. Samples of process outputs are examined; if they are within acceptable limits, the process continues

6.6 The personal component of services is

more diffficult to measure than the quality of the tangible component.

6.3T A process that produces closer to the actual target value may be

more expensive, but it may yield a more valuable product. The QLF is the tool that helps the manager determine if this added cost is worthwhile.

6.4SP Control charts are constructed in such a way that

new data can be quickly compared with past performance data

6.5S the best inspection can be thought of as

no inspection at all; this inspection is always done at the source- it is just doing the job properly with the operator ensuring that this is so. This may be called source inspection and is consistent with the concept of employee empowerement, where individual employees self check their own work. this idea is that each supplier, process, and employee treats the next step in the process as the customer, ensuring perfect product to the next cusotmer

6.2C Observers of quality management believe that, on balance, the cost of quality products is

only a fraction of benefits. They think the real losers are organizations that fail to work aggressively at quality.

6.4P Pareto charts are method of

organizing errors, problems, or defects to help focus on problem solving efforts

6.3B What are some typical measures used in benchmarking

percentage of defects, cost per unit or per order, processing time per unit, service response time, return on investment, customer satisfaction rates, and customer retention rates

6.3T Most quality problems are the result of

poor product or process design

6.4P Pareto analysis indicates which

problems may yield the greatest payoff. Pacifi

6.6 Second, another aspect of service and service quality is the

process

6.5R Inspection must be often performed to ensure that

processes are performing to standard. T

6.2E There are many stakeholders involved in the

production and marketing of poor quality products, including stockholders, employees, customers, suppliers, distributors, and creditors. As a matter of ethics, management must ask if any of these stakeholders are being wronged.

6.3B Benchmarking involves selecting a demonstrated standard of

products, services, costs, or practices that represent the very best performance for processes or activities very similar to your own. The idea is to develop a target at which to shoot and then to develop a standard or benchmark against which to compare your performance

6.2I The ISO standard encourages establishment of

quality management procedures, detailed documentation, work instructions, and recordkeeping. Like the baldridge awards, the assessment includes self appraisal and problem identification. Unlike the Baldridge, ISO certified organizations must be reaudited every 3 years

6.2C Prevention, appraisal, and internal failure costs can be

reasonably esitmated, but external costs are hard to quantify

6.6Well run companies have

service recovery strategies, meaning they train and empower employees to immediately solve a problem. For instance, staff at mariott hotesl drilled in the LEARN routine- Listen, emphasize, aplogize, react, and notify - with the final step ensuring that the complaint is fed back into the system

6.4H Histograms

show a range of values of a measurement and the frequency with which each value occurs.

6.3I Each of the 10 decisions made by operations mangers deals with

some aspect of identifying and meeting customer expectations

6.1 Increase in sales often occur as firms

speed response, increase or lower selling prices, and imrove their reputation for quality products

6.1Quality, or lack of quality, affects the entire organization from

supplier to customer and from product design to maintenance

6.3T Taguchi introduced the concept of

target oriented quality, a philosophy of continuous improvment to bring the product exactly on target. As a measure,________

6.3T Taguchi's "Quality loss function" attempts to estimate

the cost of deviating from the target value. Even though the item is produced within specification limits, the variation in quality can be expected to increase costs as the item outpout moves away from its target value (These quality related costs are esitmates of the average cost over many such units produced)

6.6 Third, the operations manager should realize that

the customers expectations are the standard against which the service is judged. Customer's perceptions of service quality result from a comparison of their "before service expectations" with their "actual service experience". In other words, service quality is judged on the basis of whether it meets expectations. The manageer may be able to influence both the quality of the service and the expectation. Dont promise more than you can deliver

6.4S Scatter diagrams show

the relationship between two measurements. An example is the positive relationship between the length of a service call and the number of trips a repair person makes back to the truck for parts

6.6 9 out of 10 determinants of service quality are realted to

the service process. Such things as reliability and courtesy are part of the process. an operations manager can design processses that have these attributes and can ensure their quality through the TQM techniques discussed in this chapter

6.5R Deciding when and where top inspect depends on

the type of process and the value added at each stage.

6.3E When nonperformance occurs,

the worker is seldom at fault. Either the product was designed wrong, the process that makes the product was designed wrong, or the employee was improperly trained.

6.1 Quality is a

wonderful tonic for improving operations.