Operations Management in the Supply Chain

Read Six Sigma Case page 467 of Textbook

Operations Management in the Supply Chain: Decisions and Cases, Sixth Edition

©2013 | Schroeder, Goldstein, Rungtusanatham | McGraw-Hill Higher Education — USA

How is scheduling of patients in a doctor’s office similar to and different from the scheduling of jobs in a factory, scheduling vehicles for servicing, scheduling patients for surgery, and scheduling college students for subsequent courses in their degree program?
You may pick any two scheduling processes to compare and contrast or you can choose all of them.


Unit 4 Lecture

Slide 1

Operations and
Project Management
MBA 631
This is unit 4

Quality and Process Control

Slide 2

• Explain the concepts and definitions of quality.
• Describe the quality philosophies and principles of QA leaders.
• Describe the concepts and philosophy of ISO 9000:2000.
• Describe the philosophy and methods of Six Sigma.
• Explain the categories of cost of quality measurement.
• Describe how to apply the 7 QC Tools.
• Explain the concepts of kaizen and poka-yoke.
The remainder of this presentation will follow a question and answer format in an effort to maximize interest and interactivity.

Slide 3

What is Quality Management?

Quality management refers to systematic policies, methods, and procedures used to ensure that goods and services are produced with appropriate levels of quality to meet the needs of customers.

Organizations today integrate quality principles into their management systems using tools such as Total Quality Management (TQM), Six Sigma, and Lean Operating Systems

I will tell you a story. Wow!” exclaimed Lauren when she saw the ski runs at Deer Valley Resort in Park City, Utah. Deer Valley has been called “The Ritz- Carlton” of ski resorts, and Lauren’s dad was expecting exceptional services and a superior ski vacation experience after all he had read in ski magazines. He wasn’t disappointed. When he drove up to the slopes, a curbside ski valet took their equipment from his car, parking lot attendants directed him to the closest available parking, and a shuttle transported them from the lot to Snow Park Lodge. From the shuttle, he and his daughter walked to the slopes on heated pavers that prevent freezing and assist in snow removal. Staff provided complimentary mountain tours to familiarize them with the slopes. At the end of the day, they were able to store their skis without charge at the lodge and easily retrieve them the next morning. The resort limits the number of skiers on the mountain to reduce lines and congestion. Everyone is committed to ensuring that each guest has a wonderful experience. Even the food is consistently rated number one by ski-enthusiast magazines.

Slide 4

A little History of Quality Management?

Historical uses of quality management include the precision involved in building of Egyptian pyramids, interchangeable parts during Industrial Revolution, and statistical tools used for quality control during World War II.

Dr. Joseph Juran and Dr. W. Edwards Deming were pioneers in the field (more later on these two quality gurus).

The Japanese integrated quality ideas and methods throughout their organizations and developed a culture of continuous improvement.


Slide 5

Why is it important to understand quality?

Quality can be a confusing concept, partly because people view quality in relation to differing criteria based on their individual roles in the value chain, such as:
• perfection,
• delighting or pleasing the customer,
• eliminating waste,
• doing it right the first time, and/or
• consistency.
Fitness for use is the ability of a good or service to meet customer needs.
Quality of conformance is the extent to which a process is able to deliver output that confirms to design specifications.
Specifications are targets and tolerances determined by designers of goods and services.


Slide 6

What is quality control?

Quality Control means ensuring consistency in processes to achieve conformance.
Service Quality is consistently meeting or exceeding customer expectations (external focus) and service delivery system performance criteria (internal focus) during all service encounters.


Slide 7

What are the Principles of Total Quality?

A focus on customers and stakeholders,
A process focus supported by continuous improvement and learning, and
Participation and teamwork by everyone in the organization.

Slide 8

A little about W. Edwards Deming.

He focused on bringing about improvements in product and service quality by reducing uncertainty and variability in goods and services design and associated processes (the beginning of his ideas in 1920s and 1930s).

Recognized higher quality leads to higher productivity and lower costs.
Created Deming Cycle – Plan, Do, Study, and Act.


Slide 9

A little about Joseph Juran

Wrote Quality Control Handbook in 1951, a comprehensive quality manual.
Defined quality as “fitness for use.”
Advocated use of quality cost measurement.
Quality Trilogy: quality planning, quality control, and quality improvement.


Slide 10

A little about Philip B. Crosby

Wrote Quality is Free in 1979, which brought quality to the attention of top corporate managers in the U.S.
Crosby’s Absolutes of Quality Management include:
• Quality means conformance to requirements, not elegance.
• There is no such thing as a quality problem.
• There is no such thing as the economics of quality; doing the job right the first time is always cheaper.
• The only performance measurement is the cost of quality, which is the expense of nonconformance.
• The only performance standard is Zero Defects (ZD).

Slide 11

What is ISO 9000:2000?

Quality standards were created in 1987 and revised in 1994 and 2000 to improve product quality, improve the quality of operation’s processes, and provide confidence to organizations and customers that quality system requirements are fulfilled.
Internationally recognized (and sometimes required to do business in certain countries).

Standardizes key terms in quality and provides a set of basic principles for initiating quality management systems
Sears, Roebuck and Co., a wholly owned subsidiary of Sears Holdings Corp., is one of the largest retailers in North America. Sears is the largest national provider of product repair services, with more than 14 million repairs performed annually. The company wanted a consistent process for improving customer satisfaction and enhancing service capabilities. Recognizing that ISO 9000 provides a framework for large organizations to implement a consistent, cohesive program across geographic lines and throughout a multifaceted business, Sears sought ISO 9000 registration to enhance its organizational process compliance.

ISO 9000 became a fundamental tool that provides the company a base for continued improvements. ISO 9000 has been instrumental in helping to standardize the manner in which technicians record field observations. This is important for solving certain types of problems, such as an appliance or part malfunction and customer abuse of the equipment. To ensure consistency, technicians use a special tool kit for recording the event, including a disposable camera and standardized forms. Sears’ efficiency in completing repairs has improved; in one carry-in repair facility, the average daily completion rate for repairing lawn mowers almost doubled.


Slide 12

What is the Six Sigma process?

Define: identify customers and their priorities; identify and define a suitable project; identify CTQs (critical to quality characteristics).
Measure: determine how to measure the process and how it is performing; identify key internal processes that influence CTQs and measure current defects.
Analyze: determine likely causes of defects and understand why defects are generated by identifying key variables that cause process variation.
Improve: identify means to remove causes of defects; confirm key variables; modify the process to stay within acceptable range.
Control: determine how to maintain improvements; put tools in place to ensure that key variables remain within acceptable ranges under the modified process.


Slide 13

What is the cost of quality?

The cost of quality refers to the costs associated with avoiding poor quality or those incurred as a result of poor quality.
Prevention costs are those expended to keep nonconforming goods and services from being made and reaching the customer.
Appraisal costs are those expended on ascertaining quality levels through measurement and analysis of data to detect and correct problems.
Internal-failure costs are costs incurred as a result of unsatisfactory quality that is found before delivery of good or service to the customer.
External-failure costs are incurred after poor-quality goods or services reach the customer.


Slide 14

A major news story in 2009 was the case of Peanut Corporation of America. At least 677 people were sickened and nine died after eating salmonella-contaminated products made from peanut butter paste from the Peanut Corporation of America. At least 12 times, when one of the company’s products tested positive for salmonella, the company shopped around for new tests until a laboratory certified that the product was clean. They shipped the products and continued to use the same equipment and processes. Inspectors found roaches, mold, and a leaking roof in one of its factories. It has also led to more than 2,000 product recalls, one of the largest in U.S. history. On March 12, 2009, the company issued the following statement: “As you may know, certain recent events have made it necessary for Peanut Corporation of America to seek protection under the U.S. Bankruptcy Code. Effective immediately, all corporate operations will cease.” Food safety lawyers are optimistic that victims and their families can still be compensated.


Slide 15

What are the Seven QC Tools?

Flowcharts: process mapping to identify the sequence of activities or flow of materials/ information in a process.
Run Charts and Control Charts: a run chart is a line graph with data plotted over time; control charts include control limits.
Checksheets: simple tools for data collection, ensure completeness.
Histograms: graphically represent frequency of values within a specified group.
Pareto Diagrams: separate the vital few from the trivial many causes; provide direction for selecting projects for improvement.
Cause-and-Effect Diagrams: represent chain of relationships; often called a fishbone diagram.
Scatter Diagrams: graphical component of regression analysis.


Slide 16

What are Other Quality Improvement Strategies?

Kaizen focuses on small, gradual, and frequent improvements over the long term with minimum financial investment and with participation by everyone in the organization.
Poka-yoke (mistake-proofing) is an approach for mistake-proofing processes using automatic devices or methods to avoid simple human error.
Poka-Yoke Examples
Machines have limit switches connected to warning lights that tell the operator when parts are positioned improperly on the machine.
Fast food restaurants use automated french-frying machines that can only be operated one way; the french fries are prepackaged and the equipment automated to reduce the chance of human error.

Slide 17

This concludes the presentation for this unit. Please direct any questions, comments, or concerns to your instructor.

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