Session: 9 & 10

15th February 2024

Quality Management

SOURCE: PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 1

Defining Quality

The totality of features and characteristics of a product or

service that bears on its ability to satisfy stated or implied
needs

American Society for Quality

 Quality and Strategy

An operations manager’s objective is to build a TQM - Total Quality

Management system that identifies and satisfies customer needs
e.g. Arnold Palmer Hospital meets all the components of service quality
Managing Quality Provides a Competitive
Advantage
Arnold Palmer Hospital

◆ Deliver over 16,000 babies annually

◆ Virtually every type of quality tool is employed
◆ Continuous improvement
◆ Employee empowerment
◆ Benchmarking
◆ Just-in-time
◆ Quality tools
Defining Quality – 5 Ways
1. Conformance to specifications
▪ Does product/service meet targets and tolerances defined by designers?
2. Fitness for use
▪ Evaluates performance for intended use
3. Value for price paid
▪ Evaluation of usefulness vs. price paid
4. Support services
▪ Quality of support after sale
5. Psychological
▪ Ambiance, prestige, friendly staff

5
Manufacturing Quality vs. Service Quality
Manufacturing quality focuses on tangible product features
◦Conformance, performance, reliability, features
Service organizations produce intangible products that must be
experienced
◦Quality often defined by perceptional factors like courtesy,
friendliness, promptness, waiting time, consistency

6
Different Views
◆ User-based: better performance, more features (Marketing
people and customers)

◆ Manufacturing-based: conformance to standards,

making it right the first time (Production Manager)
◆ Product-based: specific and measurable attributes of
the product
Examples of Quality Dimensions
Dimension (Product) (Service)
Automobile Auto Repair
1. Performance Everything works, fit & All work done, at agreed
finish price
Ride, handling, grade of Friendliness, courtesy,
materials used Competency, quickness
2. Aesthetics Interior design, soft touch Clean work/waiting area

3. Special features Gauge/control placement Location, call when ready

Cellular phone, CD player Computer diagnostics

9-8
Examples of Quality Dimensions (Cont’d)
Dimension (Product) (Service)
Automobile Auto Repair
5. Reliability Infrequency of breakdowns Work done correctly,
ready when promised

6. Durability Useful life in miles, resistance to Work holds up over time

rust & corrosion
Award-winning service
7. Perceived Top-rated car department
quality
Handling of complaints
8. Serviceability Handling of complaints and/or
requests for information

9-9
Key Contributors to Quality Management
Contributor Known for
Deming 14 points; special & common causes of
variation

Juran Quality is fitness for use; quality trilogy

Feignbaum Quality is a total field

Crosby Quality is free; zero defects

Ishikawa Cause-and effect diagrams; quality circles

Taguchi loss function

Taguchi
Continuous improvenment
Ohno and
Quality
Shingo

9-10
Two Ways Quality
Improves Profitability
Sales Gains via
• Improved response
• Flexible pricing
• Improved reputation

Improved Increased
Quality Profits
Reduced Costs via
• Increased productivity
• Lower rework and scrap costs
• Lower warranty costs
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
Seven Concepts of TQM
1. Continuous improvement
2. Six Sigma
3. Employee empowerment
4. Benchmarking
5. Just-in-time (JIT)
6. Taguchi concepts
7. Knowledge of TQM tools

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Continuous Improvement
◆ Represents continuous improvement of all processes
◆ Involves all operations and work centers including
suppliers and customers
◆ People, Equipment, Materials, Procedures

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Shewhart’s PDCA Model
4. Act 1.Plan
Implement the Identify the
plan problem/ pattern
document and make a plan

3. Check 2. Do
Is the plan Test the
working? plan
Six Sigma

◆ Two meanings
◆ Statistical definition of a process that is
99.9997% capable, 3.4 Defects Per Million
Opportunities (DPMO)
◆ A program designed to reduce defects,
lower costs, and improve customer
satisfaction

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Six Sigma
Lower limits Upper limits
► Two meanings
2,700 defects/million
► Statistical definition of a process that is
3.499.9997%
defects/million capable, 3.4 defects per
million opportunities (DPMO)
► A program designed to reduce defects,
lower costs, save time, and improve
customer satisfaction Mean
► A comprehensive system±3for achieving

and sustaining business ±6success
Six Sigma Program
◆ Originally developed by Motorola, adopted and
enhanced by Honeywell and GE
◆ Highly structured approach to process
improvement
◆ A strategy
◆ A discipline - DMAIC

6
Six Sigma
1. Define critical outputs
and identify gaps for
improvement DMAIC Approach
2. Measure the work and
collect process data
3. Analyze the data
4. Improve the process
5. Control the new process to
make sure new performance is
maintained

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Six Sigma Implementation
◆ Emphasize defects per million opportunities
as a standard metric
◆ Provide extensive training
◆ Focus on corporate sponsor support
(Champions)
◆ Create qualified process improvement experts
(Black Belts, Green Belts, etc.)
◆ Set stretch objectives
This cannot be accomplished without a major
commitment from top level management
Employee Empowerment
◆ Getting employees involved in product and process
improvements
◆ 85% of quality problems are due
to process and material
◆ Techniques
◆ Build communication networks
that include employees
◆ Develop open, supportive supervisors
◆ Move responsibility to employees
◆ Build a high-morale organization
◆ Create formal team structures

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Employee Empowerment -Quality
Circles
◆ Group of employees who meet regularly to
solve problems
◆ Trained in planning, problem solving, and
statistical methods
◆ Often led by a facilitator
◆ Very effective when done properly

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Benchmarking
Selecting best practices to use as a standard for
performance

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

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Best Practices for Resolving
Customer Complaints
Best Practice Justification
Make it easy for clients to It is free market research
complain
Respond quickly to It adds customers and loyalty
complaints
Resolve complaints on It reduces cost
first contact
Use computers to manage Discover trends, share them, and align your
complaints services
Recruit the best for It should be part of formal training and
customer service jobs career advancement

Table 6.3
Just-in-Time (JIT)
JIT systems are designed to produce or deliver goods just when
they are required/ needed
Relationship to quality:
◆ JIT cuts the cost of quality
◆ JIT improves quality
◆ Better quality means less inventory and
better, easier-to-employ JIT system
◆ E.g. Dell Laptops, Arnold Palmer Hospitals

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Taguchi Concepts
◆ Engineering and experimental design methods to
improve product and process design
◆ Identify key component and process variables
affecting product variation
◆ Taguchi Concepts for improving both product and
process quality
◆ Quality robustness
◆ Quality loss function
◆ Target-oriented quality
Quality Robustness

◆ Ability to produce products uniformly in

adverse manufacturing and environmental
conditions
◆ Remove the effects of adverse conditions
◆ Small variations in materials and process
do not destroy product quality

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Inspection
◆ Involves examining items to see if an item is good
or defective
◆ Detect a defective product
◆ Does not correct deficiencies in process or
product
◆ It is expensive
◆ Issues
◆ When to inspect (next slide - When and Where to Inspect)
◆ Where in process to inspect
(next slide - When and Where to Inspect)

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

When and Where to Inspect
1. At the supplier’s plant while the supplier is producing
2. At your facility upon receipt of goods from the supplier
3. Before costly or irreversible processes
4. During the step-by-step production process
5. When production or service is complete
6. Before delivery to your customer
7. At the point of customer contact

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Source Inspection
◆ Also known as source control
◆ The next step in the process is your customer
◆ Ensure perfect product to your
customer

Poka-yoke is the concept of foolproof devices or

techniques designed to pass only acceptable product

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Service Industry Inspection
What is
Organization Standard
Inspected
Jones Law Office Receptionist Is phone answered by the
performance second ring
Billing Accurate, timely, and
correct format
Attorney Promptness in returning
calls
Service Industry Inspection
What is
Organization Standard
Inspected
Arnold Palmer Billing Accurate, timely, and correct
Hospital format
Pharmacy Prescription accuracy,
inventory accuracy
Lab Audit for lab-test accuracy
Nurses Charts immediately updated
Data entered correctly and
Admissions completely
TQM In Services
◆ Service quality is more difficult to measure than the
quality of goods
◆ Service quality perceptions depend on
◆ Intangible differences between products
◆ Intangible expectations customers have of those
products

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Service Quality
The Operations Manager must recognize:

1. The tangible component of services is important

2. The service process is important
3. The service is judged against the customer’s
expectations
4. Exceptions will occur

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Determinants of Service Quality
Reliability Consistency of performance and dependability
Responsiveness Willingness or readiness of employees
Competence Required skills and knowledge
Access Approachability and ease of contact
Courtesy Politeness, respect, consideration, friendliness
Communication Keeping customers informed
Credibility Trustworthiness, believability, honesty
Security Freedom from danger, risk, or doubt
Understanding/ knowing
Understand the customer’s needs
the customer
Tangibles Physical evidence of the service
Service Recovery Strategy
◆ Managers should have a plan for when services fail
◆ Marriott’s LEARN routine
◆ Listen
◆ Empathize
◆ Apologize
◆ React
◆ Notify

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

A Pareto chart is just like a histogram except the bins are organised from highest frequency to lowest. A Pareto chart also
contains a line – this line shows the total cumulative frequency.

Source: https://seewhen.win/
Seven Tools of TQM
(a) Check Sheet: An organized method of
recording data

Hour
Defect 1 2 3 4 5 6 7 8
A /// / / / / /// /
B // / / / // ///
C / // // ////
Seven Tools of TQM
(b) Scatter Diagram: A graph of the value of one variable vs.
another variable

Productivity

Absenteeism

Figure 6.6
© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
Seven Tools of TQM
(c) Cause-and-Effect Diagram: A tool that identifies process elements (causes) that
might effect an outcome

Cause
Materials Methods
Effect

Manpower Machinery
Seven Tools of TQM
(d) Pareto Chart: A graph to identify and plot problems or defects in descending
order of frequency

Frequency

Percent
A B C D E
Seven Tools of TQM
(e) Flowchart (Process Diagram): A chart that describes the steps in a process (step by step
process
Seven Tools of TQM
(f) Histogram: A distribution showing the frequency of occurrences of a variable

Distribution

Frequency

Repair time (minutes)

Cause-and-Effect Diagrams
Material Method
(ball) (shooting process)
Grain/Feel Aiming point
(grip)
Size of ball
Air pressure Bend knees
Hand position
Balance
Lopsidedness
Follow-through
Missed
Training
free-throws
Rim size

Conditioning Motivation Rim height

Consistency Rim alignment Backboard

stability
Concentration

Machine
Manpower
(hoop &
(shooter)
backboard)
https://venngage.com/templates/diagrams/low-customer-satisfaction-fishbone-diagram-c74f58dd-6a7f-4155-a719-cb3ac99be355
Pareto Charts
Data for October
– 100
70 – – 93
– 88
60 –
54
Frequency (number)

– 72

Cumulative percent
50 –
40 –
Number of
30 –
occurrences
20 –
12
10 –
4 3 2
0 –
Room svc Check-in Pool hours Minibar Misc.
72% 16% 5% 4% 3%
Causes and percent of the total
Flow Charts
MRI Flowchart
1. Physician schedules MRI 7. If unsatisfactory, repeat
2. Patient taken to MRI 8. Patient taken back to room
3. Patient signs in 9. MRI read by radiologist
4. Patient is prepped 10. MRI report transferred to
5. Technician carries out MRI physician
6. Technician inspects film 11. Patient and physician discuss

8
80%
1 2 3 4 5 6 7 11
9 10
20%
 Toyota engineer Taiichi Ohno

Ohno’s Seven Wastes

▪Overproduction
▪Queues
▪Transportation
▪Inventory
▪Motion
▪Overprocessing
▪Defective products
Kanban System
Feature Description Example

Visual tool representing workflow Marketing team board with columns

stages with columns (e.g., "To Do," "In for content ideas, writing, editing,
Kanban board Progress," "Done") design, and published content

Represent individual tasks with Cards for articles being written,

information (description, assignee, graphics being designed, etc., with
Kanban cards deadline) assigned writer, editor, and designer
Maximum number of tasks allowed in Marketing team has a limit of 3 articles
WIP limits each stage in "In Progress"

Work pulled through the system one New articles are added to "To Do,"
Continuous flow card at a time completed tasks move to "Done"
Scenario: A content development team uses Kanban for their
workflow. They have the following information:

Average task completion time: 2 days

Desired lead time for completed stories: 5 days
Current WIP limit for "In Progress" stage: 4 tasks

Problem: The team is concerned about exceeding the desired lead time
for completed stories. They want to adjust the WIP limit to ensure a
smoother flow and faster completion times.
 Numerical Analysis:

Calculate the theoretical throughput:

Throughput = (WIP limit) / (Average task completion time)
Throughput = 4 tasks / 2 days/task = 2 tasks/day
Calculate the actual lead time for completed stories based on current WIP:
Lead time = (WIP limit) / (Throughput)
Lead time = 4 tasks / 2 tasks/day = 2 days
Compare actual lead time with desired lead time:
Desired lead time - Actual lead time = 5 days - 2 days = 3 days
Result: The current WIP limit of 4 tasks results in an actual lead time of only 2
days, which is faster than the desired 5 days. However, this also means tasks are
likely moving through the system too quickly, potentially leading to rushed work
and lower quality.
Possible Solutions:

Increase WIP limit: This would allow more tasks in progress, potentially
increasing throughput but also increasing lead time closer to the desired 5 days.

Decrease WIP limit: This would limit work in progress, potentially slowing
down throughput but also ensuring tasks have more time for completion and
higher quality.

Investigate other factors: Analyze if other bottlenecks or inefficiencies are

contributing to the lead time deviation.
Statistical Process Control (SPC)
◆ Uses statistics and control charts to tell when to
take corrective action
◆ Drives process improvement
◆ Four key steps
◆ Measure the process
◆ When a change is indicated, find the
assignable cause
◆ Eliminate or incorporate the cause
◆ Restart the revised process

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

An SPC Chart…Contd.
Plots the percent of free throws missed

20% Upper control limit

10% Coach’s target value

0% | | | | | | | | |
Lower control limit
1 2 3 4 5 6 7 8 9

Game number

© 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Statistical Process Control

The objective of a process control

system is to provide a statistical
signal when assignable causes of
variation are present
Statistical Process Control (SPC)
►Variability is inherent
in every process
► Natural or common
causes
► Special or assignable
causes
Provides a statistical signal when assignable causes
►
are present
► Detect and eliminate assignable causes of variation
Source: https://techqualitypedia.com/special-causes-of-variation/
 Process Capability

Process capability is a measure of

the relationship between the natural
variation of the process and the design
specifications
Process Capability Ratio
Upper Specification – Lower Specification
Cp =
6

► A capable process must have a Cp of at

least 1.0
► Does not look at how well the process is
centered in the specification range
► Often a target value of Cp = 1.33 is used to
allow for off-center processes
► Six Sigma quality requires a Cp = 2.0
Process Capability Ratio
Insurance claims process

Process mean x = 210.0 minutes

Process standard deviation  = .516 minutes
Design specification = 210 ± 3 minutes

Upper Specification - Lower Specification

Cp =
6
 Example
In a GE insurance claims process, x = 210.0 minutes, and s = .516
minutes.
The design specification to meet customer expectations is 210 ± 3
minutes. So the Upper Specification is 213 minutes and the lower
specification is 207 minutes. The OM manager wants to compute the
process capability ratio.
Process Capability Ratio
Insurance claims process

Process mean x = 210.0 minutes

Process standard deviation  = .516 minutes
Design specification = 210 ± 3 minutes

Upper Specification - Lower Specification

Cp =
6
213 – 207
= = 1.938
6(.516)
Process Capability Ratio
Insurance claims process

Process mean x = 210.0 minutes

Process standard deviation  = .516 minutes
Design specification = 210 ± 3 minutes

Upper Specification - Lower Specification

Cp =
6
213 – 207
= = 1.938 Process is
6(.516) capable
Process Capability Index
Upper Lower
Cpk = minimum of Specification – x , , x – Specification
Limit Limit
3 3

► A capable process must have a Cpk of at least

1.0
► A capable process is not necessarily in the
center of the specification, but it falls within the
specification limit at both extremes
 Example
You are the process improvement manager and have developed a new machine to cut
insoles for the company’s top-of-the-line running shoes. You are excited because the
company’s goal is no more than 3.4 defects per million, and this machine may be the
innovation you need. The insoles cannot be more than ±.001 of an inch from the required
thickness of .250 ″ . You want to know if you should replace the existing machine, which
has a Cpk of 1.0.
Process Capability Index
New Cutting Machine
New process mean x = .250 inches
Process standard deviation  = .0005 inches
Upper Specification Limit = .251 inches
Lower Specification Limit = .249 inches
Process Capability Index
New Cutting Machine
New process mean x = .250 inches
Process standard deviation  = .0005 inches
Upper Specification Limit = .251 inches
Lower Specification Limit = .249 inches

(.251) - .250
Cpk = minimum of ,
(3).0005
Process Capability Index
New Cutting Machine
New process mean x = .250 inches
Process standard deviation  = .0005 inches
Upper Specification Limit = .251 inches
Lower Specification Limit = .249 inches

(.251) - .250 .250 - (.249)

Cpk = minimum of ,
(3).0005 (3).0005
Process Capability Index
New Cutting Machine
New process mean x = .250 inches
Process standard deviation  = .0005 inches
Upper Specification Limit = .251 inches
Lower Specification Limit = .249 inches

(.251) - .250 .250 - (.249)

Cpk = minimum of ,
(3).0005 (3).0005

Both calculations result in

.001 New machine is
Cpk = = 0.67
.0015 NOT capable