INFO 564
Operations & Supply Chain Management
Module 3a: Total Quality Management
Copyright 2017 Montclair State University
History
• Quality as inspection
• Focus on output
• Quality as an organizational-wide effort
• Purchasing, engineering, training & supervision, process management
• Quality as customer-defined, continuous improvement, competitive
advantage.
• Customer-defined quality
• Enlarged process view of quality to include product, process, timeliness, cost,
service
• TQM – Total Quality Management
Customer Defines
Quality
Continuous
Improvement
Just-In-Time
Total Quality
Management
Benchmarking
Employee
Involvement
Customer Defines Quality
• Who are our customers?
Feedback on Quality (Demand,
Surveys, Complaints, Returns)
• What do they want from us?
• What are their needs?
• How are they currently being met?
• How do their needs evolve?
• Customer perceptions of our quality
• Entrenched perceptions are hard to
change
Us
Product/Service
Customer
Marketing and Advertising
Shaping Quality Perception
Feedback on Quality
(Demand, Surveys, Complaints, Returns)
Us
Product/Service
Customer
Marketing and Advertising
Shaping Quality Perception
Continuous Improvement
• Quality can always be improved
• Product
• Design, production, better materials
• Process
• Cost, waste, time taken, worker effort, inventory
• Timely delivery
• Providing options
• Service
• During sales, emergencies, after sales
• Warranty
• Reuse and recycling
The Continuous Improvement Cycle
PLAN
Analyze & identify
Possible Solution
ACT
Implement on
full scale
Implement a
small scale
solution
Monitor
Solution
Collect
Process Data
Identify quality
improvement
opportunity
DO
Put SOPs and
Processes in Place
CHECK
Did it work?
• PDCA
• Deming or Shewhart
Circle
• Kaizen
• Zero defects
Employee Involvement & Empowerment
• Quality is everyone’s responsibility
• Employees often know
• When a problem is about to arise
• Where and how to fix it
• Formal involvement of employees
• Problem identification, solution, and implementation
• Quality circles, suggestion schemes
• Organization that fosters and rewards participation
Benchmarking
• Selecting an external or internal process to learn from and emulate
• External benchmarking
• A competitor (GM and Toyota)
• Non-competitor within the industry (US healthcare delivery networks and Geisinger
Health Care)
• Universities benchmarking each other
• Outside the industry
• Xerox and Mercedes Benz benchmarked L.L. Bean for inventory management
• Great Ormond Street Hospital benchmarked the Ferrari Racing Team on process
management
• Internal benchmarking
• Division A learns from Division B in the company;
• Cordis (a J&J Company) learns about managing sales-force incentives from OrthoMcNeil (another J&J Company)
Prerequisites to Success of TQM
• Complete commitment from top management
• Long-term
• Appropriate level of resources (skills, training, equipment,
organizational)
• Integration into all aspects of company’s operations
• Integration into decision making at all levels
• Ensuring communication
• Supportive environment
INFO 564
Operations & Supply Chain Management
Module 3b: Six Sigma
History of Six Sigma
• Set of statistical techniques for process control
• Developed at Motorola in the 1980s
• Aims for very high levels of quality (or low levels of
defects)
• Widely-adopted approach and philosophy
• Organization-wide
• Continuous improvement
• Variation reduction
• Measurement and data driven
• Often seen as part of TQM
What is Six-Sigma (6σ)?
• Set of tools and techniques for process control
•
•
•
•
Charts and graphs for problem identification and diagnosis
Control charts for process control
Process capability measures
Covered in more detail in Module 4
• Philosophy of business problem solving – the DMAIC approach
• Define, Measure, Analyze, Improve, and Control
• Organization
• An ambitious quality standard
• Variation in output is half of variation considered “tolerable”
• No more than 3.4 defects per million opportunities
The DMAIC approach
A continuous cycle of
process quality
improvement
DEFINE
the problem
with the
process
MEASURE
CONTROL
maintain the
improvement
IMPROVE
by eliminating
the cause
the impact of
the problem on
the process
ANALYZE
the data to
understand the
cause
• Define problem - scope,
customer, and symptoms
• Measure impact of the problem
by collecting data on the
symptoms
• Analyze data collected to identify
root causes
• Improve the process by treating
or eliminating root causes
• Control the process by
implementing the fixes and
monitoring the symptoms
The DMAIC
approach
DEFINE
the problem with the
process
MEASURE
CONTROL
maintain the
improvement
IMPROVE
by eliminating the cause
the impact of the
problem on the process
ANALYZE
the data to understand
the cause
Process Improvement Organization
• Master Blackbelts
• Coaches or leaders of process improvement teams
• Expertise in DMAIC approach and statistical analysis
• Training responsibilities
• Blackbelts
• Coaches or leaders of process improvement teams
• Expertise in DMAIC approach and statistical analysis
• Greenbelts
• Some training DMAIC approach and statistical analysis
• Work under supervision of BBs
• Project champions
• Business leader of project
Six Sigma as a Quality Standard
• All processes have some natural variation
Process Output Distribution
• Six Sigma aims for very high quality (very
low defect) levels
σ = Process
Standard
Deviation
• By cutting natural variation to less than half
of tolerable variation
• Continuous process improvement
• Reducing process standard deviation σ
Natural Process Variation=6σ
LTL
Tolerable Variation=12σ
Customer will accept product that is in
this range
UTL
• Probability of a defective product (falling
outside tolerable variation) is 0.0000034
• 3.4 defects per million
Success of Six Sigma
• Complete commitment from top management
• Long-term
• Appropriate investment in resources (skills, training, equipment,
organizational)
• Problem-solving approach integrated into all aspects of
company’s operations
• Commitment to a measurement mind-set
• Belief in and support of data-driven statistical techniques
INFO 564
Operations & Supply Chain Management
Module 3c: ISO 9001
ISO 9001 – A Quality Management System
• ISO: International Standards Organization
• Representatives from 165 countries
• How organizations can meet the needs of their customers
• Based on seven principles
• Adapted to specific industries – Petrochemicals, software engineering,
medical devices, local government, etc.
• Organizations implement the system
• External certification of implementation by certified third parties
• Over a million organizations certified world-wide
• Some evidence of higher product and process quality
ISO 9001-The Seven Quality Management Principles
• Customer focus
• Leadership
• Engagement of people
Similar to
TQM and Six
• Improvement
Sigma
• Process approach
• Evidence-based decision making
• Relationship management with external providers
ISO 9001 - Prescriptions
• Focus on processes
• Aligning quality with business strategy
• Designing processes so that only the right outcomes are
possible
• Collecting and analyzing evidence
• Risk-based thinking
• PDCA cycle
• Documentation
ISO 9001 – Certification Process
Problems
12-18 month
process
Audit
Auditor
Improvement Plan
Organization
Certification
renewed
periodically
Certification
Corrective Action
Auditor
Organization
ISO 9001
• Certification is a desirable badge
• Often required by customers and regulators
• Many companies have reported higher quality products and
processes
•
•
•
•
Greater awareness of quality-focused operations
More competitive
Greater growth in sales
Safety of operations
Requirements for Success
• Long-term orientation
• Top management commitment and support
• Resources
• Goal-setting
• Organization-wide commitment and support
• Employee education and empowerment
• Communication
• High organization morale
INFO 564
Operations & Supply Chain Management
Module 3d: Quality and Services
Services
• A very big part of business landscape
• Well over 80% of US economy employment is service-based
• Banks and insurance, transportation, education, retailers, health-care,
construction, entertainment, etc.
• Thoroughly integrated into US economy
• Present challenges in managing quality
Services – Challenges with Quality
• Output of service
• Intangible components
• Customer involvement in service
• Not fully controllable
• Labor intensiveness
• Services often delivered by humans
• Perceptions of quality
• In eye of customer
Output of a Service
• Service outputs are often a mix of tangible and intangible
components
• Tangible components: food, drugs, money, college degree
• Intangible components: safety, security, pleasure, relief, prestige, fun,
pride
• Intangible components
• Hard to define
• Cannot count or measure
• Difficult to create conformance specifications
• Impact of process on intangible components is unclear
Customer Involvement
• Customer part of the process
• Provides input needed to provide service
• Specifies output needed
• Adds uncontrollable variability to the process
• People skills become important
• Politeness, courtesy, attentiveness, promptness become part of service
expectations
• Forces consideration of customer comfort
• Servicescape: environment in which service is provided – lighting,
music, seating, etc.
Labor Intensiveness
• Humans still a big part of service delivery
• Receive inputs from customers
• Provide knowledge, experience, physical skills
• Hard to automate
• Human actions have high degree of variability
• Variability impacts quality
• Reduced through standardization, training, and supervision
Perceptions of Quality
• Perceptions of quality are important
• May be at odds with “actual” or “objective” quality
• First impressions are important
• Once set, perceptions are hard to shape or change
• Perceptions will vary among customers
• Market research to understand perceptions
• Marketing strategies to shape perceptions
• How much effort to expend on improving objective quality
versus improving perceived quality
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