OM&PM/Class 7b 1

1 Operations Strategy

2 Process Analysis

3 Lean Operations

4 Supply Chain Management

5 Capacity Management in Service

6 Quality Management– Class 7b: Quality & the Voice of the Customer

» The Goal: summary

» What is Quality?

» Hank Kolb

» Voice of the Customer

7 Business Process Reengineering

Operations Management & Performance Modeling

OM&PM/Class 7b 2

Levers for Reducing Flow Time

“is to decrease the work content of (only ?) critical activities”,

and/or move it to non critical activities.

Reduce waiting time:

– reduce variability» arrivals & service requests

» synchronize flows within the process

– increase safety capacity» lower utilization

» Pooling

– Match resource availability with flows in and out of process

OM&PM/Class 7b 3

E.g.: Analysis of Service Systems Divide day into blocks based on arrival rates For each block evaluate performance measures given current staffing Quantify financial impact of each action

– Workforce training: reduces mean and variability of service time

– Work flexibility from workforce: pools available capacity

– Time flexibility from workforce: better synchronization

– Retain experienced employees: increased safety capacity

– Additional workforce: Increases safety capacity

– Improved Scheduling: better synchronization

– Incentives to affect arrival patterns: better synchronization

– Decrease product variety: reduces variability of service time

– Increase maximum queue capacity

– Consignment program, fax, e-mail etc.

S

D

OM&PM/Class 7b 4

Framework for Process Flow Management

Competitive?No

Flow Chart Process

Identify Bottlenecks

Maximal Flow Rate

Identify Critical Path

Minimal Flow Time

DemandPattern

Macro AveragePerformance

ProcessRe-Design

Competitive?NoMicro Variability

PerformanceDemand &Supply Mgt

ContinuousImprovement

mean

variability

Yes

Yes

OM&PM/Class 7b 5

Dimensions of Quality

Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived Quality

OM&PM/Class 7b 6

Elements of TQM

Management by fact Cross-functional (process) approach Culture and leadership

– Customer focus

– Employee focus

– High performance focus» Continuous improvement

» Benchmarking

External alliances - the value chain

Source: Eitan Zemel

OM&PM/Class 7b 7

1 Leadership 110 2 Strategic Planning 80

– Strategy Development Process 3 Customer and Market Focus 80 4 Information and Analysis 80 5 Human Resource Development and Management 100 6 Process Management 100

– Product and Service Processes – Support Processes – Supplier and Partnering Processes

7 Business Results 450 TOTAL POINTS 1000

Malcolm Baldrige National Quality Award

OM&PM/Class 7b 8

Malcolm Baldridge Award Winners Ames Rubber Corporation (1993) Armstrong World Industries Building

Products Operations (1995) AT&T Consumer Communications Services

(1994) AT&T Network Systems Group (1992) AT&T Universal Card Services (1992) Cadillac Motor Car Company (1990) Corning Telecommunications Products

Division (1995) Eastman Chemical Company (1993) Federal Express Corporation (1990) Globe Metallurgical Inc. (1988) Granite Rock Company (1992) GTE Directories Corporation (1994)

IBM Rochester (1990) Marlow Industries (1991) Milliken & Company (1989) Motorola Inc. (1988) The Ritz-Carlton Hotel Company (1992) Solectron Corporation (1991) Texas Instruments Incorporated - Defense

Systems & Electronics Group (1992) Wainwright Industries, Inc. (1994) Wallace Co., Inc. (1990) Westinghouse Electric Corporation -

Commerical Nuclear Fuel Division (1988) Xerox Corporation - Business Products &

Systems (1989) Zytec Corporation (1991)

Last Updated: November 8, 1996

OM&PM/Class 7b 9

ISO 9000

Series of standards agreed upon by the International Organization for Standardization (ISO)

Adopted in 1987

More than 100 countries

A prerequisite for global competition?

ISO 9000: “document what you do and then do as you documented.”

Source: Adapted from Chase & Aquilano

Design Procurement Production Final test Installation Servicing

ISO 9003

ISO 9002

ISO 9001

OM&PM/Class 7b 10

Costs of Quality

Cost of Conformance

– Cost of Appraisal

– Cost of Prevention

Cost of Non-Conformance

– Cost of Internal Failure

– Cost of External Failure

100:1

10:1

1:1

ProductDesign Process

Design

Production

ImproveProduct

Quality LeverBenefits of Building Q in Early

Low VisibilityReward

High VisibilityReward

Time

OM&PM/Class 7b 11

Components of Quality

Voice of the customer

– Customer Needs

– Quality of Design

Voice of the process

– Quality of Conformance

– Process Capability

Process Control and Improvement

OM&PM/Class 7b 12

Voice of the Customer: Linking Customer Needs to Business Processes

Business Process Customer Need Internal Metric

Overall Quality

Product (30%)

Sales (30%)

Installation (10%)

Repair (15%)

Billing (15%)

Reliability (40 %) % Repair Call

Easy to Use (20%) % Calls for Help

Features/Functions (40%) Function Performance Test

Knowledge (30%) Supervisor Observations

Response (25%) % Proposals Mad on Time

Follow-Up (10%) % Follow-Up Made

Delivery Interval (30%) Average Order Interval

Does Not Break (25%) % Repair Reports

Installed When Promised % Installed on Due Date

No Repeat Trouble (30%) % Repeat Reports

Fixed Fast (25%) Average Speed of Repair

Kept Informed (10%) % Customers Informed

Accuracy, No Surprise (45%) % Billing Inquiries

Response on First Call (35%) % Respolved First Call

Easy to Understand (10%) % Billing InquiriesSource: Kordupleski et al., CMR ‘93.

OM&PM/Class 7b 13

Voice of the Customer: Quality Function Deployment

What do customers want? Are all preferences equally important? Will delivering perceived needs deliver a competitive

advantage? How can we change the product? How do engineering characteristics influence customer

perceived quality? How does one engineering attribute affect another? What are the appropriate targets for the engineering

characteristics?

House of Quality

Source: Hauser and Clausing 1988

Customer Requirements

Importance to Cust.

Easy to close

Stays open on a hill

Easy to open

Doesn’t leak in rain

No road noise

Importance weighting

Engineering Characteristics

Ene

rgy

need

ed

to c

lose

doo

r

Che

ck f

orce

on

leve

l gro

und

Ene

rgy

need

ed

to o

pen

door

Wat

er r

esis

tanc

e

10 6 6 9 2 3

7

5

3

3

2

X

X

X

X

X

Correlation:

Strong positive

Positive

NegativeStrong negative

X*

Competitive evaluation

X = OursA = Comp. AB = Comp. B(5 is best)

1 2 3 4 5

X AB

X AB

XAB

A X B

X A B

Relationships:

Strong = 9

Medium = 3

Small = 1Target values

Red

uce

ener

gy

leve

l to

7.5

ft/l

b

Red

uce

forc

eto

9 lb

.

Red

uce

ener

gy to

7.5

ft/

lb.

Mai

ntai

ncu

rren

t lev

el

Technical evaluation(5 is best)

5

4321

B

A

X

BA

X B

A

X

B

X

A

BXABA

X

Doo

r se

al

resi

stan

ce

Acc

oust

. Tra

ns.

Win

dow

Mai

ntai

ncu

rren

t lev

el

Mai

ntai

ncu

rren

t lev

el

X

OM&PM/Class 7b 15

Linked Houses From Customer To Manufacturing

EngineeringCharacteristics

PartsCharacteristics

Key ProcessCharacteristics

ProductionCharacteristics

House ofQuality

PartsDeployment

ProcessPlanning

ProductionPlanning

I II III IV

Eng

inee

ring

Cha

ract

eris

tics

Par

tsC

hara

cter

isti

cs

Key

Pro

cess

Cha

ract

eris

tics

Cus

tom

er A

ttri

bute

s

OM&PM/Class 7b 16

Benefits of QFD

Startup and Preproduction costs at Toyota Auto Body

Japanese automaker with QFD made fewer changes than US company without QFD

time20 - 24months

90% of total Japanese changes complete

Job # 1

Japan

US

Design Changes

14 - 17months

1 - 3months

1 - 3months

Before QFD

After QFD(39% of preQFD costs)

tJob # 1

Source: Hauser and Clausing 1988

OM&PM/Class 7b 17

More New Product Development Tools

Value analysis / Value engineering

Design for manufacturability

Robust design

OM&PM/Class 7b 18

Value Analysis/Value Engineering

Achieve equivalent or better performance at a lower cost while maintaining all functional requirements defined by the customer– Does the item have any design features that are not

necessary?

– Can two or more parts be combined into one?

– How can we cut down the weight?

– Are there nonstandard parts that can be eliminated?

OM&PM/Class 7b 19

Robust Quality: Taguchi’s View of Cost of Variability

Traditional View Taguchi’s View

Non-conformance to design cost

$$$

0

LowerTolerance

DesignSpec

UpperTolerance

Actual value Lower

ToleranceDesignSpec

UpperTolerance

OM&PM/Class 7b 20

Class 7b: Key Learning Objectives

Elements of TQM / Baldridge / ISO 9000

Costs of Quality

Components of Quality

Voice of the Customer– Linking business processes to customer needs

– Product Design Methodologies:» Convert customer needs to product and process specifications: QFD

» Value Engineering