MAR3203 - Exam 3

What does managing quality support?

• Differentiation

• Cost

• Response Strategies

Quality helps firms increase ____ and reduce _____.

Sales, costs

Costs of quality

• Prevention Costs

• Appraisal Costs

• Internal Failure Costs

• External Failure Costs

Prevention Costs

Reducing the potential for defects.

• Includes: quality assurance and inspection equipment.

Quality Assurance

The creation and maintenance of the quality management systems.

Inspection Equipment (Prevention Costs)

Design, development, and/or purchase of equipment for use in inspection work.

Appraisal Costs

Evaluating products, parts, and services.

• Include quality audits and inspection equipment.

Quality Audits

Check that the quality management systems are functioning satisfactorily.

Inspection Equipment (Appraisal Costs)

Calibration and maintenance of equipment used in all inspection activities.

Internal Failure Costs

Producing defective parts or services before delivery.

• Includes scrap and re-inspection.

Scrap

Defective products or materials that cannot be repaired, used, or sold.

Re-inspection

The re-examination of products or work that have been fixed.

External Failure Costs

Defects discovered after delivery.

• Usually the biggest costs.

• Includes warranty claims and complaints.

Warranty Claims

Failed products that are replaced or services re-performed under some form of guarantee or promise.

Complaints

All work and costs associated with handling and servicing customers’ complaints.

Flow of Activities

Organizational Practices → Quality Principles → Employee Fulfillment → Customer Satisfaction

Quality

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

Views of Quality

• User-Based

• Manufacturing-Based

• Product-Based

User-Based View

Quality is defined by what the customer thinks.

Manufacturing-Based View

Quality is based on how well the product meets the company’s standards and specifications.

Product-Based View

Quality is based on measurable and specific attributes of the product itself.

What factors does quality affect about a company?

• Company reputation (perception of products, supplier relations, employer practices).

• Product liability (Good reputation reduces risk).

• Global implications (Improved ability to complete with others)

Malcolm Baldrige National Quality Award

Designed by the US Government to promote TQM practices.

• They are evaluated on factors such as leadership, strategic planning, and customer focus. 

ISO 9000 International Quality Standards

International TQM recognition. 

• Particular focus on risk-based thinking. 

• Focuses on principles such as customer satisfaction, process analysis, and involvement of people.

Takumi

A Japanese term meaning going beyond normal quality through deep skill and dedication.

What are some leaders in quality?

• W. Edwards Jenning

• Joseph M. Juran

• Philip B. Crosby

Total Quality Management (TQM)

A commitment by management to have a continuing drive towards excellence in all aspects of products and services for customers.

• Encompasses a company, supplier, and customer.

What are the 7 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

Continuous Improvement

Never-ending process of continuous improvement on people, equipment, materials, suppliers, and procedures.

Shewart’s PDCA Model

1. Plan

2. Do

3. Check

4. Act

• It is a CONTINUOUS PROCESS

Words used to describe continuous improvement

• Kaizen

• TQM

• Zero Defects

Six Sigma

• A process that is 99.999% achievable. (Only 3.4 of products are defective)

• A program designed to reduce defects, lower costs, save time, and improve customer satisfaction

• DMAIC Approach

DMAIC Approach

1. Defines

2. Measures

3. Analyzes

4. Improves

5. Control

Defines (DMAIC)

Project’s purpose, scope, and outputs, and then identifies the required process information.

Measures (DMAIC)

Measuring process and collecting data.

Analyzes (DMAIC)

Analyzing the data to guarantee repeatability and reproducibility.

Improves (DMAIC)

Improves the process by modifying or redesigning.

Controls (DMAIC)

Controls and monitors the new process to ensure that performance levels are maintained.

How to implement Six Sigma

• Provide extensive training.

• Set stretch objectives.

• Focus on top management leadership.

Employee Empowerment

Getting employees involved in product and process improvements.

Achieve by:

• Develop open and supportive supervisors.

• Move responsibility to employees.

• Create formal team structures.

• Quality circles (a group of employees who meet regularly to solve problems)

Benchmarking

Selecting the best practices to use as a standard of performance (benchmark).

Just-in-Time (JIT)

Waiting for demand to come in to begin the quality processes.

• Allows reduced inventory levels. 

• Cuts the costs to quality.

• Improves quality.

Taguchi Concept

Engineering and experimental design methods to improve product and process design.

1. Quality Robustness

2. Target-Oriented Quality

3. Quality Loss Function

Quality Robustness

Ability to produce products uniformly in varying manufacturing conditions and environments.

Quality-Loss Function

Costs increase as the product’s quality moves away from what they want. 

• Cost includes customer satisfaction, warranty and service, and scrap and repair. 

Tools of TQM

Tools for generating ideas:

• Check Sheet

• Scatter Diagram

• Cause-and-Effect Diagram

Tools to organize the data:

• Pareto Chart

• Flowchart

Tools for identifying problems:

• Histogram

• Statistical Process Control Chart

Check Sheet

An organized method of recording data. (A table)

Scatter Diagram

A graph of the value of one variable vs another variable.

Cause-and-Effect Diagram

A tool that identifies the causes that may affect an outcome.

Pareto Chart

A chart that is a mix of a histogram and a line chart, which identifies plot problems or defects in descending order of frequency.

Flowchart

Shows a process step by step and the flow of it through arrows.

Histogram

A distribution showing the frequency of occurrences of a variable. (Bell-curve) 

Statistical Process Control Graph

A chart with time on the x-axis to plot values of a statistic.

• Can be in whole or fractional numbers.

• Continuous random variables.

Service Quality

Much more difficult to measure than the quality of goods.

Depends on:

• Intangible differences between services.

• Intangible differences customers have about those products.

What are some determinants of service quality?

• Competence

• Reliability

• Access

• Courtesy

Service Recovery Strategy

LEARN

• L - Listen

• E - Empathize

• A - Apologize

• R - React

• N - Notify

Statistical Process Control

Provides a statistical signal when assignable causes of variation are present.

• Variability is inherent in every process: there are natural and special causes.

Assignable (Special) Causes

Change in the process. (Can be traced to a specific reason)

Five M’s

• Materials

• Mother Natures

• Methods

• Manpower

• Machinery

If there are data points that fall outside the bell-shaped curved area there what is present?

Assignable causes

X-Chart 

Tracks changes in the central tendency.

R-Chart

Indicates gain or loss of dispersion.

R-Chart and X-Chart MUST be used together.

True

Central Limit Theorem

Regardless of the distribution of the population, the distribution of the sample means drawn from the population will follow a normal curve.

• As the sample size increases, the variation decreases.

Mean of the sampling distribution is the SAME as the population mean.

True

How to find range?

Highest - lowest value

Process Capability

A measure of the relationship between the natural variation of the process and the design specifications.

• The natural variation should be small enough to produce products that meet the standard requirements. 

Difference between 3 Sigma and 6 Sigma

• 6 Sigma is more restrictive, better quality. (Hard to achieve)

• Most companies work under a 3 Sigma process.

What is one of the limitations of the CP Ratio?

Does not take into account how well the process is centered.

A capable process must have a CP of at least

1.0

Six Sigma Quality requires a CP of

2.0

Waste

Anything that does not add value from the customer's perspective.

• Some examples of waste are storage, delay, inspection, and waiting in line.

Ohno’s Seven Wastes

1. Overproduction

2. Queue’s

3. Transportation

4. Inventory

5. Motion

6. Overprocessing

7. Defective Products

Five S’s

1. Sort/Segregate: When in doubt, throw it out.

2. Simplify/Straighten: Method analysis tools.

3. Shine/Sweep: Clean daily.

4. Standardize: Remove variations from processes.

5. Sustain/Self-Discipline: Review work and recognize process

What two additional S’s did the USA add?

1. Safety - Built-in good practices.

2. Support/Maintenance - Reduces variability and unplanned downtime.

Variability

Any deviation from the optimum process.

• Inventory hides variability (overproduce).

• Less variability results in less waste.

What does lean operations do?

• Reduces Waste.

• Reduces Variability.

• Improves Throughput.

Both JIT and inventory reduction are effective tools in identifying variability.

True

Throughout

The rate at which units move through a process.

Manufacturing Cycle Time

Time between the arrival of a raw material and the shipping of the finished order.

Lean and JIT

• Materials arrive where they are needed, WHEN they are needed.

• Good relationship with suppliers.

• Results in a competitive advantage.

Supplier Partnerships

When a supplier and a purchaser work together to eliminate waste and reduce costs.

• Removal of unnecessary activities.

• Removal of in-plant inventory.

• Removal of in-transit inventory.

• Improved quality and reliability.

Concerns of Suppliers

• Diversification - Ties to only one customer increase risk.

• Scheduling - They don’t believe customers can create a smooth schedule.

• Lead time - Short lead times can lead to problems.

• Quality - Back quality due to limited capital budgets, technology, or processes.

• Lot sizes - Small lot sizes may transfer costs to suppliers. 

Toyota Production System

• Continuous Improvement

• Respect for People

• Standards work practice

• Utilized Jidoka

Jidoka

Stopping a production because of a defect.

Lean Organizations

Understanding the customer and their expectations.

• Gemba Walks to see work being performed.

• Open communication.

JIT Supplies

• Few vendors

• Supportive Supplier

• Quick delivery times

JIT Layout

• Work Cells

• Flexible machinery

• Organized

• Reduces space for inventory

JIT Inventory

Small lot sizes

JIT Scheduling

Zero deviation from the schedule.