Quality and Innovation
Quality and Innovation
Quality and Innovation
MANAGEMENT
#3 Qua l it y a n d I n n ov a t ion in t h e Era of D igit a l Econ om y
OUTLINE
• Quality and strategy
• Flow of activities and profitability
• Defining quality
• Total Quality Management (TQM)
• Continuous improvement
• Six sigma
• Inspections
• Service quality
• Network fundamentals
• Information systems basics
• Collaboration and communications
QUALITY AND STRATEGY
• Managing quality supports differentiation, low cost, and response strategies
• Quality helps firms increase sales and reduce costs
• Building a quality organization is a demanding task
TWO WAYS QUALITY IMPROVES
PROFITABILITY
Sales Gains via
• Improved response
• Flexible pricing
• Improved reputation
Improved Increased
Quality Profits
Reduced Costs via
• Increased productivity
• Lower rework and scrap costs
• Lower warranty costs
Organizational Practices
Leadership, Mission statement, Effective operating
THE FLOW OF
procedures, Staff support, Training
Yields: What is important and what is to be
accomplished
ACTIVITIES Quality Principles
Customer focus, Continuous improvement, Benchmarking,
Just-in-time, Tools of TQM
Yields: How to do what is important and to be
accomplished
Employee Fulfillment
Empowerment, Organizational commitment
Yields: Employee attitudes that can accomplish
what is important
Customer Satisfaction
Winning orders, Repeat customers
Yields: An effective organization with
a competitive advantage
DEFINING QUALITY
An operations manager’s objective is to build a total quality
management system that identifies and satisfies customer
needs (Heizer and Render)
• Product liability
• Reduce risk
• Global implications
• Improved ability to compete
MALCOLM BALDRIGE NATIONAL
QUALITY AWARD
• Established in 1988 by the U.S.
government EVALUATION CATEGORIES POINTS
• Designed to promote TQM practices Leadership 120
Strategic Planning 85
• Recent winners include MidwayUSA,
Charter School of San Diego, Mid- Customer Focus 85
America Transplant Services, Hill Measurement, Analysis, and 90
Country Memorial, Knowledge Management
PricewaterhouseCoopers Public Sector
Practice, Elevations Credit Union, Workforce Focus 85
Lockheed Martin Missiles and Fire Operations Focus 85
Control, MESA Products Inc.
Results 450
ISO 9000 INTERNATIONAL QUALITY
STANDARDS
• International recognition • Management principles
• Top management leadership
• Encourages quality management
procedures, detailed documentation, • Customer satisfaction
work instructions, and recordkeeping • Continual improvement
• Involvement of people
• 2015 revision gives greater emphasis
• Process analysis
to risk-based thinking
• Use of data-driven decision making
• Over one million certifications in 206 • A systems approach to management
countries • Mutually beneficial supplier relationships
• Critical for global business
TAKUMI
A Japanese character that symbolizes a broader dimension than quality, a deeper
process than education, and a more perfect method than persistence
LEADERS IN THE FIELD OF QUALITY
MANAGEMENT
LEADER PHILOSOPHY/CONTRIBUTION
Deming insisted management accept responsibility for building good systems. The
W. Edwards employee cannot produce products that on average exceed the quality of what the process
Deming is capable of producing. His 14 points for implementing quality improvement are also
presented here.
A pioneer in teaching the Japanese how to improve quality, Juran believed strongly in top-
management commitment, support, and involvement in the quality effort. He was also a
Joseph M. Juran believer in teams that continually seek to raise quality standards. Juran varies from Deming
somewhat in focusing on the customer and defining quality as fitness for use, not necessarily
the written specifications.
His 1961 book Total Quality Control laid out 40 steps to quality improvement processes. He
Armand viewed quality not as a set of tools but as a total field that integrated the processes of a
Feigenbaum company. His work in how people learn from each other’s successes led to the field of cross-
functional teamwork.
Quality Is Free was Crosby’s attention-getting book published in 1979. Crosby believed that
in the traditional trade-off between the cost of improving quality and the cost of poor quality,
Philip B. Crosby the cost of poor quality is understated. The cost of poor quality should include all of the
things that are involved in not doing the job right the first time. He coined the term zero
defects, “There is absolutely no reason for having errors or defects in any product or service.”
DEMING'S 14 POINTS FOR IMPLEMENTING
QUALITY IMPROVEMENT
1. Create consistency of purpose 8. Drive out fear
2. Lead to promote change 9. Break down barriers between
departments
3. Build quality into the product; stop
depending on inspections to catch 10. Stop haranguing workers
problems
11. Support, help, and improve
4. Build long-term relationships based
on performance instead of awarding 12. Remove barriers to pride in work
business on price 13. Institute a vigorous program of
5. Continuously improve product, education and self-improvement
quality, and service 14. Put everyone in the company to work
6. Start training on the transformation
7. Emphasize leadership
ETHICS AND QUALITY MANAGEMENT
• Operations managers must deliver healthy, safe, quality products and services
• Poor quality risks injuries, lawsuits, recalls, and regulation
• Ethical conduct must dictate response to problems
• All stakeholders must be considered
ETHICS AND SUSTAINABILITY
• Global Warming
• Upward trend in global mean temperature (GMT) rising more than 20C since preindustrial
times.
• Damages include water and food scarcity, rising sea levels, and greater incidence and
severity of disease.
• Unsustainability
• Profit-motivated without concern for damage to the environment contributing to climate
change threatening quality of life.
• Conduct that is unethical, socially irresponsible, and/or environmentally damaging.
• Sustainability
• Reduce
• Reuse
• Recycle
• Recover
TOTAL QUALITY MANAGEMENT
• 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
• Seven Concepts of Total Quality Management (TQM)
• Continuous improvement
• Six Sigma
• Employee empowerment
• Benchmarking
• Just-in-time (JIT)
• Taguchi concepts
• Knowledge of TQM tools
CONTINUOUS IMPROVEMENT
Never-ending process of continuous
improvement
Covers people, equipment, suppliers, 4. Act 1. Plan
materials, procedures
Implement Identify the
Every operation can be improved the plan, pattern and
document make a plan
Kaizen describes the ongoing process of
unending improvement
3. Check 2. Do
TQM and zero defects also used to describe
continuous improvement Is the plan Test the
working? plan
6s
SIX SIGMA
1. Defines the project’s purpose, scope, • Emphasize defects per million
and outputs, then identifies the required opportunities as a standard metric
process information keeping in mind the
customer’s definition of quality • Provide extensive training
2. Measures the process and collects data • Focus on top management leadership
(Champion)
3. Analyzes the data ensuring
repeatability and reproducibility • Create qualified process improvement
experts (Black Belts, Green Belts, etc.)
4. Improves by modifying or
redesigning existing • Set stretch objectives
processes and procedures • This cannot be accomplished without a
5. Controls the new process major commitment from top level
to make sure performance management
levels are maintained
DMAIC Approach
EMPLOYEE EMPOWERMENT
• Getting employees involved in product and process improvements
• 85% of quality problems are due to materials and process
• Techniques
• Build communication networks that include employees
• Develop open, supportive supervisors
• Move responsibility to employees
• Build a high-morale organization
• Create formal team structures
QUALITY CIRCLES
• Group of employees who meet regularly to solve problems
• Trained in planning, problem solving, and statistical methods
• Often led by a facilitator
• Very effective when done properly
BENCHMARKING
Selecting best practices to use as a standard for performance
1. Determine what to benchmark
2. Form a benchmark team
3. Identify benchmarking partners
4. Collect and analyze benchmarking information
5. Take action to match or exceed the benchmark
Internal benchmarking:
1. When the organization is large enough
2. Data more accessible
3. Can and should be established in a variety of areas
BEST PRACTICES FOR RESOLVING
CUSTOMER COMPLAINTS
BEST PRACTICE JUSTIFICATION
• Taguchi Concepts
• Quality robustness
• Target-oriented quality
• Quality loss function
QUALITY ROBUSTNESS
• Ability to produce products 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
• Target-oriented quality High loss
Unacceptable
• Shows that costs increase Loss (to
producing Target-oriented quality
as the product moves organization,
Poor
yields more product in
away from what the customer, Fair the "best" category
customer wants and society) Good
Low loss Best
• Costs include customer
Target-oriented quality
dissatisfaction, warranty brings product toward
and service, internal the target value
scrap and repair, and
costs to society Frequency
Conformance-oriented
• Traditional conformance quality keeps products
specifications are too within 3 standard
deviations
simplistic Lower Target Upper
Specification
TQM TOOLS
• Tools for Generating Ideas
• Check Sheet
• Scatter Diagram
• Cause-and-Effect Diagram
Hour
Defect 1 2 3 4 5 6 7 8
A /// / / / / /// /
B // / / / // ///
C / // // ////
(2) SCATTER DIAGRAM
Scatter Diagram is a graph of the value of one variable vs. another variable
Productivity
Absenteeism
(3) CAUSE-AND-EFFECT DIAGRAM
Cause-and-Effect Diagram is a tool that identifies process elements (causes) that may
effect an outcome
Cause
Materials Methods
Effect
Manpower Machinery
Material Method
(ball) (shooting process)
Grain/Feel (grip)
Aiming point
Size of ball
Air pressure Bend knees
Hand position
Balance
Lopsidedness
Follow-through
Missed
free-throws
Training Rim size
Concentration
Machine
Manpower (hoop &
(shooter) backboard)
(4) PARETO CHART
Pareto Chart is a graph to identify and plot problems or defects in descending order
of frequency
Frequency
Percent
A B C D E
Data for October
– 100
70 –
– 93
– 88
60 –
54
50 – – 72
Frequency (number)
40 –
Cumulative percent
30 –
Number of
20 – occurrences
10 –
12
0 –
4 3 2
8
80%
1 2 3 4 5 6 7 11
9 10
20%
(6) HISTOGRAM
Histogram is a distribution showing the frequency of occurrences of a variable
Distribution
Frequency
Time
CONTROL CHARTS
Plot the percent of free throws missed
Upper
40%
control limit
Coach’s
20% target
value
Lower
0% | | | | | | | | | control
1 2 3 4 5 6 7 8 9 limit
Game number
INSPECTION
• Involves examining items to see if an • Many problems
item is good or defective • Worker fatigue
• Detect a defective product • Measurement error
• Does not correct deficiencies in process • Process variability
or product
• Cannot inspect quality into a product
• It is expensive
• Robust design, empowered employees,
• Issues and sound processes are better
• When to inspect solutions
• Where in process to inspect
WHEN AND WHERE TO INSPECT
1. At the supplier’s plant while the supplier is producing
2. At your facility upon receipt of goods from your supplier
3. Before costly or irreversible processes
4. During the step-by-step production process
5. When production or service is complete
6. Before delivery to your customer
7. At the point of customer contact
SOURCE INSPECTION
Also known as source control Poka-yoke is the concept of foolproof
devices or techniques designed to pass
The next step in the process is your only acceptable products
customer
Checklists ensure consistency and
Ensure perfect product to your customer completeness
EXAMPLES OF INSPECTION IN SERVICES
ORGANIZATION WHAT IS STANDARD ORGANIZATION WHAT IS STANDARD
INSPECTED INSPECTED
Alaska Airlines Last bag on Less than 20 minutes Arnold Palmer Billing Accurate, timely, and correct
carousel after arrival at the gate Hospital format
Less than 2 minutes Pharmacy Prescription accuracy,
Airplane door after arrival at the gate inventory accuracy
opened
Lab Audit for lab-test accuracy
Jones Law Office Receptionist Phone answered by Nurses Charts immediately updated
performance the second ring
Data entered correctly and
Accurate, timely, and Admissions completely
Billing correct format
Olive Garden Busboy Serves water and bread
Promptness in
Restaurant within 1 minute
Attorney returning calls
Busboy Clears all entrée items and
Hard Rock Hotel Reception desk Use customer’s name crumbs prior to dessert
Doorman Greet guest in less Waiter Knows and suggest specials,
than 30 seconds desserts
Room All lights working,
Nordstrom Display areas Attractive, well-organized,
spotless bathroom
Department stocked, good lighting
Minibar Restocked and Store
Stockrooms Rotation of goods,
charges accurately
organized, clean
posted to bill
Salesclerks Neat, courteous, very
knowledgeable
ATTRIBUTES VERSUS VARIABLES
• Attributes
• Items are either good or bad, acceptable or unacceptable
• Does not address degree of failure
• Variables
• Measures dimensions such as weight, speed, height, or strength
• Falls within an acceptable range
Data (or information) silos are ISs that do not have the
capability to exchange data with other ISs, making timely
coordination and communication across functions or
departments difficult.
NETWORK FUNDAMENTALS
• Bandwidth: the capacity or throughput per
second of a network measured in bits per
second (bps).
• Protocol: rules and standards that govern
device functionality.
• TCP/IP: Basic communication protocol of the
Internet supported by every major network
operating system.
• Network Speed: data flowing that depends on
the amount of traffic.
• Commonly referred to by generation (2G, 3G, etc.).
• Data transferred over guided (wired/fixed-line) or
unguided (wireless and mobile) media.
DATA NETWORKS, IP ADDRESSES, AND APIs
High Demand for High-Capacity Networks Pure IP Networks
• Voice over IP (VoIP): voice calls (analog) • WiMAX
converted to digital signals. • IEEE 802.16
• VoIP voice and data transmissions travel in • 30 miles range
packets over telephone wires. • 70 Megabits per second (Mbps)
• Rely on 5 basic functions through switches • Line-of-site not required
and routers: communication, mobility, • Same principles as WiFi
collaboration, relationships, search • Long-Term Evolution (LTE)
Quality of Service (QoS) • GSM deployed by Verizon, AT&T, and T-Mobile
• 100 Mbps download, 50Mbps upload
• Latent-sensitivity: data such as real-time voice
and high-quality video.
• Prioritized Traffic: data and apps that are time-
delay-sensitive or latency-sensitive apps.
• Throttle Traffic: gives latency-sensitive apps
priority, other types of traffic need to be held
back (throttled).
• Traffic Shaping: the ability to prioritize and
throttle network traffic.
DATA NETWORKS, IP ADDRESSES, AND APIs
Near-Field Communication (NFC) Application Program Interface (API)
• Close proximity radio waves more secure • Boundary where two separate systems
than other wireless technologies meet.
• Apple iWatch • Consists of a set of functions, commands,
• Digital tickets providing access to concerts and protocols used by programmers for
• Kiosks to transmit moves in Supermarkets OS-interactivity without having to write a
• Transmit public transport payment through phones program from scratch.
• Can be automated for simplified usability.
Mashup
• Twitter
• General term referring to the integration of • Facebook
two or more technologies such as • Amazon
Bluetooth and Wi-Fi
• Provide intelligence
• Inter-Automobile collision avoidance
DATA NETWORKS, IP ADDRESSES, AND APIs
WIRELESS NETWORKS AND MOBILE
INFRASTRUCTURE
Modern Mobile Communications
• 2Mbps per mobile device by 2016
• 66% of traffic through smartphones by 2018
• Mobile traffic surpasses 2.5EB*/month by 2018
• Greater than 15% all traffic through tablets by 2016
• Greater than 50% mobile traffic is 4G by 2018
Mobile Networks
• Bluetooth: short-range wireless communication technology allowing device pairing.
• Wi-Fi: standard way to wirelessly connect computing devices through routers commonly
connected to the Internet.
Principle of “any”
Growing need to connect
anybody, anytime, anywhere on
any device
DATA CENTERS, CLOUD COMPUTING,
AND VIRTUALIZATION
Unified Data Center compared to traditional data integration and
replication methods: