Chapter 12 Supply Chain

Total Quality Management

Managing the entire organization so it excels in all dimensions of products and services important to the customer

Total quality management goals:

• Careful design of the product or service

• Ensuring that the organization’s systems can consistently produce the design

How did total quality management come about?

The U.S was being manhandled by Japan in the manufacturing of automobiles and other durable goods in the 1980s

Malcolm Baldrige National Quality Award

An award established by the U.S Department of Commerce given annually to companies that excel in quality

The philosophical leaders of the quality movement:

• Phillip Crosby

• W. Edwards Deming

• Joseph Juran

What were these philosophical leaders called?

Quality Gurus

Steps in achieving outstanding quality:

• Quality leadership

• Customer focus

• Total involvement of the workforce

• Continuous improvement

Design quality

The inherent value of the product in the marketplace

Dimensions of design quality:

• Performance = primary functions

• Features = secondary functions

• Aesthetics = sensory traits

• Reliability = consistency of performance

• Serviceability = Ease of repair

Conformance quality

The degree to which the product or service design specifications are met

Quality at the source

The philosophy of making workers personally responsible for the quality of their output. Workers are expected to make the part correctly the first time and to stop the process immediately if there is a problem

Cost of quality (COQ)

Expenditures related to achieving product or service quality, such as the costs of prevention, appraisal, internal failure, and external failure

3 basic assumptions that justify an analysis of the costs of quality:

• Failures occur

• Prevention is cheaper

• Performance can be measured

Costs of quality are generally classified into 4 types:

• Appraisal costs

• Preventions costs

• Internal failure costs

• External failure costs

Appraisal costs

Costs of the inspection, testing, and other tasks to ensure that the product or process if acceptable

Prevention costs

The sum of all costs to prevent defects, such as the costs to identify the cause of the defect, to implement corrective action to eliminate the cause, to train personnel, to redesign the product or system, and to purchase new equipment or make modifications

Internal failure costs

Costs for defects incurred within the system: scrap, rework, repair

External failure costs

Costs for defects that pass through the system: customer warranty replacements, loss of customers or goodwill, handling complaints, and product repair

Six Sigma

A statistical term to describe the quality goal of no more than 3.4 defects out of every million units.

Defects per million opportunities (DPMO)

A metric used to describe the variability of a process

DPMO formula

Number of defects/(# of opportunities for error per unit)x(# of units) x 1,000,000

DMAIC

An acronym for the define, measure, analyze, improve, and control improvement methodology

Define

• Identity customers and their priorities

• Identify a project suitable for Six Sigma efforts based on business objectives as well as customer needs and feedback

• Identify CTQs (critical-to-quality characteristics) that the customer believes have the most impact on quality

Measure

• Determine how to measure the process and how it is performing

• Identify the key internal processes that influence CTQs and measure the defects currently generated relative to those processes

Analyze

• Determine the most likely cause of defects

• Understand why defects are generated by identifying the key variables most likely to create process variation

Improve

• Identify means to remove the causes of defects

• Confirm the key variables and quantify their effects on the CTQs

• Identify the maximum acceptance ranges of the key variables and a system for measuring deviations of the variables

• Modify the process to stay within an acceptable range

Control

• Determine how to maintain the improvements

• Put tools in place to ensure that the key variables remain within the maximum acceptance ranges under the modified process

Fishbone diagram (Cause and effect diagrams)

Show hypothesized relationships between potential causes and the problem under study

Lean Six Sigma

Combines the implementation and quality control tool of Six Sigma and the inventory management concept of lean manufacturing

What is a key driver in Lean Six Sigma?

Reducing variability

Personnel practices commonly employed in Six Sigma implementation:

• Executive leaders

• Corporate wide training in Six Sigma concepts and tools

• Setting of stretch objectives for improvement

• Continuous reinforcement and rewards

Two key aspects of Shingo system:

• How to accomplish drastic cuts in equipment setup times by single-minute exchange of die procedures

• The use of source inspection and the poka-yoke system to achieve 0 defects

Successive check inspection

Performed by next person in the process or by an objective evaluator such as group leader.

Self check

Done by the individual worker and is appropriate by itself on all but items that require sensory judgement

Source inspection

Performed by the individual worker checking for errors that will cause defects

Fail-safe procedures

Simple practices that help prevent errors

Poka-yoke

Procedures that prevent mistakes from becoming defects. Includes such things as checklists or special tooling that prevents the worker from:

• making an error that leads to a defect before starting a process

• Gives rapid feedback of abnormalities in the process to the worker in time to correct them

ISO 9000

Formal standards for quality certification developed by the International Organization for Standardization

ISO 9000 7 quality management principles:

• Customer focus

• Leadership skills

• Involvement of people

• Process approach

• Continuous improvement

• Factual approach to decision making

• Mutually beneficial supplier relationship

ISO 1400

Environmental management

External benchmarking

Looking outside the company to examine what excellent performers inside and outside the company’s industry are doing in the way of quality

Run chart

Depicts trends in data over time, and thereby help in understanding the magnitude of a problem at a define stage

Pareto charts

Help to break down a problem into the relative contributions of its components

Checksheets

Basic forms that help standardize data collection

Opportunity flow diagram

Used to separate value-added from non-value-added steps in a process

Process control chart

Time sequenced chart showing plotted values of a statistic

The cost of quality has been estimated at ____ of every sales dollar

15-20%