Quality and competitive strategy
Higher quality may be important factors in DIFFERENTIATION competitive strategy. Quality may reduce cost in some cases through increased productivity, lower rework and scrap.
Firm mission, culture, emphasis on quality. Employer fulfillment, Empowerment, commitment to the organization. Customer service.
Views of Quality
User based, better performance, more features. Manufacturing base, conformance to standards, making it right the first time. Product based, specific and measurable attributes of the product.
Implications of Quality
Company Reputation, Employment practices, product liability, global implications, perception of new products, supplier relations, reduce risk, improved ability to compete.
Dimensions of quality
Performance, conformance, aesthetics, features, durability, perceived quality, reliability, serviceability, value.
Malcom Baldrige National Quality Award
Established in 1988 by the U.S. government, designed to promote TQM practices, includes a variety of criteria.
Cost of Poor Quality
Prevention cost, appraisal costs, internal failure, external failure.
International Quality Standards
Industrial Standard Z8101 – 1981 (Japan) ISO 9000 series (Europe/EC): Common quality standards for products sold in Europe ( even if made in U.S.)
Names in Quality Management
W. Edwards Deming 14 pints for Management. Joseph M. Juran top management commitment fitness for use. Philip B. Crosby Quality is free.
Ethics and quality management
Operations managers must deliver healthy, sage quality products and services. Poor quality risk injuries, lawsuits, recall, and regulation. Organizations are judged by how they respond to problems.
Total Quality Management TQM
Encompasses entire organization, from supplier to customer. Stresses a commitment by management to have a continuing, companywide drive toward excellence in all aspects of products and services that are important to the customer.
Demings 14 points
1. Create consistency of purpose, 2. Build quality into product, stop depending on inspection, 3. Build long term relationships based on performance, not price. 4. Continuously improve product, quality, and service. 5. Start training.
6. Drive out fear, 7. Stop haranguing workers, 8. Remove barriers to pride in work.
9. Institute a vigorous program of education and sell-improvement. 10. Put everybody in the company to work on the transformation. 11. Lead to promote change. 12. Emphasize leadership. 13. Break down barriers between departments. 14. Support, help, improve.
Seven Related Concepts of TQM
Continuous improvement: Represent continual improvement of all process. Involves all operations and work centers including suppliers and customers. People, equipment, materials, procedures.
Originally developed by Motorola, Six Sigma refers to an extremely high measure of process capability. A Six Sigma capable process will return no more than 3.4 defects per million operations. Highly structured approach to process improvement.
Getting employees involved in product and process improvements. Build communication network that include employees. Develop open, supportive supervisor. Build a high-morale organization. Quality circles. Move responsibility to employees. Create forma team structure.
Benchmarking: Selecting best practices to use as a standard for performance.
Determine what to benchmark. Identify benchmarking partners. Take action to match or exceed the benchmark. Form a benchmark team. Collect & analyze benchmarking info.
Just – in – time JIT
Pull’ system of production scheduling including supply management. Production only when signaled. Allow reduced inventory levels. Inventory costs money and hides process and material problems. Encourages improved process an product quality.
Experimental design methods to improve product an process design. Identify key components an process variable affecting product variation. Quality Robustness, ability to produce uniformly in adverse manufacturing and environmental conditions.
Remove the effects of adverse conditions.
Small variations in materials and process do not destroy product quality. Quality loss function, shows costs including customer satisfaction, warranty and service, internal scrap & repair, etc. increase as the product moves away from what the customer wants.
Tools of TQM
Tools for generating ideas, check sheets, scatter diagrams, cause and effect diagrams. Tools to organize the Data, Pareto charts, flow charts. Tools for identifying problems, histograms.
Statistical process control chart
Uses statistics and control charts to tell when to take corrective action, drives process improvement, four key steps, measure the process, when a change indicated, find the assignable cause, restart the revised process.
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, Many problem, work fatigue, measurement error, process variability, cannot inspect quality into a product.
TQM in Services
Service quality is more difficult to measure than the quality of goods.
Determinants of Service Quality
Reliability, Responsiveness, Competence, Access, Courtesy, Communication, Credibility, Security, Understanding/ knowing the customer.
Creation of goods and services
Operations Management / Production
A set of activities that creates value in the form of goods and services by transforming inputs into outputs. Design, operation and improvement of the system that creates and deliver the firm’s primary products and services.
Operations is one of the basic functions of any business.
Efficiency, effectiveness and value. Operations Management provides a systematic way of looking at at organization and its process. Concepts and tools of Operations Management are used across other functions of a business.
Some of the Activities of operations Management.
Service and product design, Quality management, Process and capacity design, Location Strategies, layout design, human resources & job design, supply-chain management, material requirements planning and inventory management, scheduling, maintenance.
Development of Operations Management
Early Development, Adam Smith  and Charles Babbage  specialization of labor. Eli Whitney  interchangeable parts.
Fredrick Taylor  father of scientific management. Gantt  Gantt charts. Frank & Lillian Gilbreth  Motion Studies. Henry Ford & Charles Sorensen  Assembly lines.
Walter Shewhart  Statistical Quality Control. W. Edward Deming  TQM. Baldrige Award, ISO, Six Sigma Quality, etc. Business Process Reengineering.
Many Researchers, EOQ, Linear Programming, Simulation, PERT/CPM, Waiting-line Theory, etc.
Goods VS. Services
Goods, Usually tangible, can be inventoried, production separate from Consumption, can be produced to “tight” specification.
Usually intangible, cannot normally be inventoried and usually perishable, Often produced and consumed simultaneously it the interaction with customer. Inherently heterogeneous or variable, often involve a package of services. Continuum between pure goods and pure services.
Ratio of outputs to the inputs, output divided by input.
Productivity can be improved by reducing inputs, while holding outputs constant or increasing outputs while holding constant.
Other partial measures of productivity
Capital, materials,energy, etc.
Consider more than one input relative to outputs, usually inputs are measured in dollars so that they can be added together. Measurement of productivity.
Examples of operations management positions.
Plant manager, hospital administrator, branch manager of a bank, department store manager, call center manager, supply chain manager, purchasing manager, business process improvement manager, facilities manager, chief operating officer.
Operations and Strategy
Mission: Why do we exist? Who are our customers?, What customers needs are being satisfied? What products or services do we provide?
How a firm competes: Competitive strategy, differentiation, cost leadership.
How operations fits in
Operations management supports the business strategy.
Activities Strategic operations management decisions
Service and product design, Quality management, process and capacity design, location, layout design, Human resources & job design, supply-chain management, inventory, scheduling, maintenance.
Three phases, 1. planning, 2. scheduling, 3. Controlling.
Definition of a project: series of related tasks directed towards a major output.
Characteristics of typical projects
Defined with a specific goal and deadline, may be unique or somewhat unfamiliar, may contain complex, interrelated task requiring specialized skills, finite life, cuts across organizational lines.
Typical organized in a matrix fashion.
High visibility, responsible for making sure project is finished on time, within budget, and according to specifications, manage people assigned to the project.
Sequencing and allotting of time to project activities. Show relationship of each activity to others and to the whole project. Identify precedence relationship among activities.
Sets realistic time and cost estimates for each activity. Identifies critical bottlenecks in the project, thus allowing better use of people and other resources.
Project Management Techniques
The Techniques are next
Gantt Chart: useful for smaller projects, Pert: Program Evaluation and Review Technique. CPM: Critical Path Method.
PERT & CPM
Were developed to schedule, monitor and control large & complex projects.
Six Basic Steps for PERT & CPM
1. Define project an prepare work breakdown structure, 2. Development relationship among the activities, including which activities must precede and which activities must follow others.
3. Draw network connecting all of the activities 4. Assign time and / or cost estimates to each activity.
5. Compute the longest time path through the network also called the critical path. 6. Use the network to help plan, schedule, monitor and control projects.
Activity on Node AON AND Activity on Arrow AOA
PERT & CPM Advantages
Especially useful for large and or complex projects. Straightforward and not mathematically complex. Graphical network help to visualize relationships among projects activities.
Critical path an slack time analyses help pinpoint activities that need to be most closely monitored
Applicable to a wide variety of projects.
PERT & CPM
Determine project schedule.
Earliest start, the earliest time which an activity can start, assuming all predecessor have been completed.
Earliest finish, the earliest time at which an activity can be finished.
Latest start, the latest time at which an activity can start so as to not delay the completion of the entire project.
Latest finish, the latest time by which an activity has to be finished so as to not delay the completion time of th entire project.
Begin at starting event and work forward.
Earliest Start time rule
If an activity has only 1 predecessor, the ES is the EF of the predecessor. If an activity has multiple predecessors, then the ES is the maximum of the EFs of all the predecessors.
Earliest Finish Time Rule
The earliest finish time EF of an activity is the sum of the earliest start time ES and its activity time.
Begin with the lat event and work backwards.
Latest finish rule
If an activity is an immediate predecessor for just a single activity, its LF is the minimum of ALL activity that immediately follow it. If an activity is an immediate predecessor to more than one activity, its LF is the minimum of ALL activities that immediately follow it.
Latest Start time rule
The last start time LS of an activity is the difference of its latest finish time LF and its activity time .
Compute Slack Time for Each Activity
Slack is the length of time an activity can be delayed without delaying the entire project.
Slack = LS – ES or Slack = LF – EF
The critical path has no slack!
Variability in activity times
CPM assumes a fixed tim with no variability. PERT uses a probability distribution for activity times.
Three time estimates
Optimistic time a, Most-likely time m, Pessimistic time b.
Sum of variances for critical activities.
Project standard deviation
Square root of project variance.
PERT assumes that total project completion times are normally distributed.
Probability of project completion on time can be estimated using the normal distiribution.
Shortening the projects’s duration. Select activity on critical path can be crashed and the smallest crash cost.