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BASIC DEFINITION OF QUALITY IN SERVICES:

Excellent quality = you would highly recommend this service

Good quality = you would recommend this service

Poor quality = you would not recommend using this service

Very poor quality = you would recommend against using this service

SERVICE SITUATIONS:

Auto brake job

American Express Card

One-day training seminar

Executive search firm

Catered wedding

City police department

Financial planning

Computer repair

Rock concert

Used car sales

Theme park

Travel agent

Landscaping

U.S. Postal Service

Interior decorating

Federal Express

State auto license bureau

Car wash

Temporary office help agency

Movie theater

Airline

Public utility (elec. or gas)

Nursing care

Defense attorney

Trash pickup-city or private

Dome stadium

Dry cleaner

U.S. Army combat unit

Pre-school

Accounting firm

Pet grooming

Gambling casino

Bank checking account

Hospital emergency room

Barber/beauty shop

Mexican restaurant

Purchasing dept. in mfg. firm

Security service

Newspaper

Information systems department

Photo developing

Student copy service

SPECIFIC SERVICE CHOSEN

EXPLAIN ALL OF YOUR ANSWERS — “YES” OR “NO” IS NOT ACCEPTABLE.

1. Is there a physical product involved? Which is dominant, the product or the service?

2. How unique or how standardized is the product and/or service from the same company from one time to the next?

3. Give three specific examples of characteristics of the product and/or service that would determine how well the quality of the service is rated.

4. Is the customer involved in the production and delivery of the service? How?

5. What is an example of (a) a critical defect, (b) a major defect, and (c) a minor defect?

6. Give two or more examples of the cost(s) of a defect for the company?

7. After the service is delivered, is corrective action possible? Is restitution possible?

8. Is service quality most affected by the contact employee, by technology, or by management? Explain your choice.

9. Is service quality the same as customer satisfaction?

What is SQC?

Statistical Quality Control (SQC)

The term used to describe the set of statistical tools used by quality professionals to evaluate organizational quality.

Statistical Quality Control (SQC)

1

3 Categories of SQC

Statistical process control (SPC) inspecting a random sample of an output from process, within range and functioning properly

Descriptive statistics the mean, standard deviation, and range

Involve inspecting the output from a process

Quality characteristics are measured and charted

Helps identify in-process variations

Acceptance sampling used to randomly inspect a batch of goods to determine acceptance/rejection

Does not help to catch in-process problems

Statistical Quality Control (SQC)

2

Sources of Variation

Variation exists in all processes.

Variation can be categorized as either:

Common or Random causes of variation

Random causes that we cannot identify

Unavoidable, i.e.; slight differences in process variables like diameter, weight, service time, temperature

Assignable causes of variation

Causes can be identified

Eliminate cause i.e.; poor employee training, worn tool, machine needing repair

Statistical Quality Control (SQC)

3

Descriptive Statistics

The Mean- measure of central tendency

The Range- difference between largest/smallest observations in a set of data

Standard Deviation measures the amount of data dispersion around mean

Distribution of Data shape

Normal or bell shaped or

Skewed

Statistical Quality Control (SQC)

4

Distribution of Data

Normal distributions

Skewed distribution

Statistical Quality Control (SQC)

5

SPC Methods-Developing Control Charts

Control Charts (aka process or QC charts) show sample data plotted on a graph with CL, UCL, and LCL

Control chart for variables are used to monitor characteristics that can be measured, e.g. length, weight, diameter, time

Control charts for attributes are used to monitor characteristics that have discrete values and can be counted, e.g. % defective, # of flaws in a shirt, etc.

Statistical Quality Control (SQC)

6

Setting Control Limits

Percentage of values under normal curve

Control limits balance risks like Type I error

Statistical Quality Control (SQC)

7

7

Control Charts for Variables

Use x-Bar and R-bar charts together

Used to monitor different variables

x-Bar and R-bar charts reveal different problems

What is the statistical control difference from one chart to the next?

Statistical Quality Control (SQC)

8

Control Charts for Variables

Use x-Bar charts to monitor the changes in the mean of a process (central tendencies)

Use R-bar charts to monitor the dispersion or variability of the process

System can show acceptable central tendencies but unacceptable variability

System can show acceptable variability but unacceptable central tendencies

Statistical Quality Control (SQC)

9

Constructing an x-Bar Chart: A quality control inspector at the Cocoa Fizz soft drink company has taken three samples with four observations each of the volume of bottles filled. If the standard deviation of the bottling operation is .2 ounces, use the below data to develop control charts with limits of 3 standard deviations for the 16 oz. bottling operation.

Time 1 Time 2 Time 3
Observation 1 15.8 16.1 16.0
Observation 2 16.0 16.0 15.9
Observation 3 15.8 15.8 15.9
Observation 4 15.9 15.9 15.8
Sample means (X-bar) 15.875 15.975 15.9
Sample ranges (R) 0.2 0.3 0.2

Statistical Quality Control (SQC)

10

Center line and control limit formulas

Solution and x-Bar Control Chart

Statistical Quality Control (SQC)

11

Control limits for±3σ limits:

Center line (x-double bar):

x-Bar Control Chart

Statistical Quality Control (SQC)

12

Control Chart for Range (R)

Center Line and Control Limit formulas:

Statistical Quality Control (SQC)

13

Factors for three sigma control limits

Factor for x-Chart

A2

D3

D4

2

1.88

0.00

3.27

3

1.02

0.00

2.57

4

0.73

0.00

2.28

5

0.58

0.00

2.11

6

0.48

0.00

2.00

7

0.42

0.08

1.92

8

0.37

0.14

1.86

9

0.34

0.18

1.82

10

0.31

0.22

1.78

11

0.29

0.26

1.74

12

0.27

0.28

1.72

13

0.25

0.31

1.69

14

0.24

0.33

1.67

15

0.22

0.35

1.65

Factors for R-Chart

Sample Size

(n)

R-Bar Control Chart

Statistical Quality Control (SQC)

14

Second Method for the x-Bar Chart Using R-bar & A2 Factor

Use this method, Control limits solution, when sigma for the process distribution is not known:

Statistical Quality Control (SQC)

15

Control Charts for Attributes –
P-Charts & C-Charts

Attributes are discrete events: yes/no or pass/fail

Use P-Charts for quality characteristics that are discrete and involve yes/no or good/bad decisions

Number of leaking caulking tubes in a box of 48

Number of broken eggs in a carton

Use C-Charts for discrete defects when there can be more than one defect per unit

Number of flaws or stains in a carpet sample cut from a production run

Number of complaints per customer at a hotel

Statistical Quality Control (SQC)

16

16

P-Chart Example: A production manager for a tire company has inspected the number of defective tires in five random samples with 20 tires in each sample. The table below shows the number of defective tires in each sample of 20 tires. Calculate the control limits.

Sample Number of Defective Tires Number of Tires in each Sample Proportion Defective
1 3 20 .15
2 2 20 .10
3 1 20 .05
4 2 20 .10
5 2 20 .05
Total 9 100 .09

Solution:

Statistical Quality Control (SQC)

17

P-Charts are used when both the total sample size

and the number of defects can be computed

P- Control Chart

Statistical Quality Control (SQC)

18

C-Chart Example: The number of weekly customer complaints are monitored in a large hotel using a c-chart. Develop three sigma control limits using the data table below.

Week Number of Complaints
1 3
2 2
3 3
4 1
5 3
6 3
7 2
8 1
9 3
10 1
Total 22

Solution:

Statistical Quality Control (SQC)

19

C-Charts are used when you can compute only

the number of defects but not the proportion

that is defective

C- Control Chart

Statistical Quality Control (SQC)

20

Process Capability

Product Specifications

Preset product or service dimensions, tolerances: bottle fill might be 16 oz. ±.2 oz. (15.8oz.-16.2oz.)

Based on how product is to be used or what the customer expects

Statistical Quality Control (SQC)

21

±6 Sigma versus ± 3 Sigma

In 1980’s, Motorola coined “six-sigma” to describe their higher quality efforts

Six-sigma quality standard is now a benchmark in many industries

Before design, marketing ensures customer product characteristics

Operations ensures that product design characteristics can be met by controlling materials and processes to 6σ levels

Other functions like finance and accounting use 6σ concepts to control all of their processes

PPM Defective for ±3σ versus ±6σ quality

Statistical Quality Control (SQC)

22

Acceptance Sampling

Defined: the third branch of SQC refers to the process of randomly inspecting a certain number of items from a lot or batch in order to decide whether to accept or reject the entire batch

Different from SPC because acceptance sampling is performed either before or after the process rather than during

Sampling before typically is done to supplier material

Sampling after involves sampling finished items before shipment or finished components prior to assembly

Used where inspection is expensive, volume is high, or inspection is destructive

Statistical Quality Control (SQC)

23

Acceptance Sampling Plans

Goal of Acceptance Sampling plans is to determine the criteria for acceptance or rejection based on:

Size of the lot (N)

Size of the sample (n)

Number of defects above which a lot will be rejected (c)

Level of confidence we wish to attain

There are single, double, and multiple sampling plans

Which one to use is based on cost involved, time consumed, and cost of passing on a defective item

Can be used on either variable or attribute measures, but more commonly used for attributes

Statistical Quality Control (SQC)

24

Implications for Managers

How much and how often to inspect?

Consider product cost and product volume

Consider process stability

Consider lot size

Where to inspect?

Inbound materials

Finished products

Prior to costly processing

Which tools to use?

Control charts are best used for in-process production

Acceptance sampling is best used for inbound/outbound; attribute measures

Control charts are easier to use for variable measures

Statistical Quality Control (SQC)

25

SQC in Services

Service Organizations have lagged behind manufacturers in the use of statistical quality control

Statistical measurements are required and it is more difficult to measure the quality of a service

Services produce more intangible products

Perceptions of quality are highly subjective

A way to deal with service quality is to devise quantifiable measurements of the service element

Check-in time at a hotel

Number of complaints received per month at a restaurant

Number of telephone rings before a call is answered

Acceptable control limits can be developed and charted

Statistical Quality Control (SQC)

26

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Defining Quality

Definition of quality is dependent on the people defining it

There is no single, universal definition of quality

“performance to standards”, “meeting customer’s needs”, “satisfying the customer”

Total Quality Management (TQM)

1

Defining Quality – 5 Definitions

1. Conformance to specifications

How well a product/service meet targets and tolerances defined by its designers.

2. Fitness for use

Evaluates performance for intended use

3. Value for price paid

Evaluation of usefulness vs. price paid

4. Support services

Quality of support after sale

5. Psychological

Ambiance, prestige, friendly staff

Total Quality Management (TQM)

2

Manufacturing Quality vs. Service Quality

Manufacturing focuses on tangible product features (can be seen, touched, directly managed)

Conformance

Performance

Reliability

Features

Durability

Serviceability

Service produce intangible products that must be experienced (cannot be seen or touched)

Intangible factors

Consistency

Responsiveness

Courtesy, friendliness

Promptness, timeliness

Atmosphere

Total Quality Management (TQM)

3

Cost of Quality

Quality affects all aspects of the organization

Quality has dramatic cost implications of:

Quality control costs (to achieve high quality)

Prevention costs

Appraisal costs

Quality failure costs (consequences of poor quality)

Internal failure costs

External failure costs

Total Quality Management (TQM)

4

Cost of Quality – 4 Categories

Early detection/prevention is less costly

(Could be by a factor of 10)

Total Quality Management (TQM)

5

Evolution of TQM – New Focus

Total Quality Management (TQM)

6

Reactive

Proactive

Quality Gurus

Total Quality Management (TQM)

7

TQM Philosophy

Total Quality Management (TQM)

8

TQM focuses on identifying quality problem root causes

Encompasses the entire organization

Involves the technical as well as people

Relies on seven basic concepts of

Customer focus

Continuous improvement

Employee empowerment

Use of quality tools

Product design

Process management

Managing supplier quality

TQM Philosophy Concepts

Focus on Customer

Identify and meet customer needs

Stay tuned to changing needs, e.g. fashion styles

Continuous Improvement

Continuous learning and problem solving, e.g. Kaizen, 6 sigma

Plan-Do-Study-Act (PDSA)

Benchmarking

Total Quality Management (TQM)

9

Ways of Improving Quality

Plan-Do-Study-Act Cycle (PDSA)

Also called the Deming Wheel after originator

Circular, never ending problem solving process or continuous improvement process

Seven Tools of Quality Control

Tools typically taught to problem solving teams

Quality Function Deployment (QFD)

Used to translate customer preferences to design

Total Quality Management (TQM)

10

PDSA Details

Plan

Evaluate current process

Collect procedures, data, identify problems

Develop an improvement plan, performance objectives

Do

Implement the plan – trial basis

Study

Collect data and evaluate against objectives

Act

Communicate the results from trial

If successful, implement new process

Total Quality Management (TQM)

11

PDSA Details – cont’d

Cycle is repeated

After act phase, start planning and repeat process

Total Quality Management (TQM)

12

TQM Philosophy Concepts – cont’d

Employee Empowerment

Empower all employees; external and internal customers

Team Approach

Teams formed around processes; 8-10 people

Meet weekly to analyze and solve problems

Use of Quality Tools

Ongoing training on analysis, assessment, and correction, & implementation tools

Studying practices at “best in class” companies

Total Quality Management (TQM)

13

Seven Tools of Quality Control

Cause-and-Effect Diagrams

Flowcharts

Checklists

Control Charts

Scatter Diagrams

Pareto Analysis

Histograms

Total Quality Management (TQM)

14

1. Cause-and-Effect Diagrams

Called Fishbone Diagram

Focused on solving identified quality problem

Used by quality control teams; brainstorming

Total Quality Management (TQM)

15

2. Flowcharts

Schematic diagram

Used to document the detailed steps in a process

Often the first step in Process Re-Engineering

Total Quality Management (TQM)

16

3. Checklist

Simple data check-off sheet

Designed to identify type of quality problems at each work station; per shift, per machine, per operator

Total Quality Management (TQM)

17

4. Control Charts

The UCL and LCL are calculated limits used to show when a process is in or out of control i.e.; weight, width, or volume

Key tool used in Statistical Process Control – Chap. 6

Total Quality Management (TQM)

18

5. Scatter Diagrams

A graph showing how two variables are related to one another

The greater the degree of correlation, the more linear are the observations

Total Quality Management (TQM)

19

6. Pareto Analysis

Technique that displays the degree of importance for each element

Named after the 19th century Italian economist; often called the 80-20 Rule

Principle is that quality problems are the result of only a few problems i.e.; 80% of problems are caused by 20% of causes

Total Quality Management (TQM)

20

7. Histograms

A chart that shows the frequency distribution of observed values of a variable (i.e.; service time

at a bank drive-up window)

Displays whether the distribution is symmetrical (normal) or skewed

Total Quality Management (TQM)

21

Reliability – Critical to Quality

Reliability is the probability that the product, service or part will function as expected

No product is 100% certain to function properly

Reliability is a probability function dependent on sub-parts or components

Total Quality Management (TQM)

22

Reliability; Critical to Quality – cont’d

Reliability of a system is the product of component reliabilities

RS = (R1) (R2) (R3) . . . (Rn)

RS = reliability of the product or system

R1 = reliability of the components 1 thru n

Total Quality Management (TQM)

23

Reliability; Critical to Quality – cont’d

Increase reliability by placing components in parallel

Parallel components allow system to operate if one or the other fails

Total Quality Management (TQM)

24

RS = R1 + (R2* Probability of needing 2nd component)

Process Management & Managing Supplier Quality

Quality products come from quality sources

Quality must be built into the process

Quality at the source is the belief that it is better to uncover source of quality problems and correct it

TQM extends to quality of product from company’s suppliers

Total Quality Management (TQM)

25

Quality Awards and Standards

Malcolm Baldrige National Quality Award (MBNQA)

The Deming Prize

ISO 9000 Certification

ISO 14000 Standards

Total Quality Management (TQM)

26

MBNQA- What Is It?

Award named after the former Secretary of Commerce – Regan Administration

Intended to reward and stimulate quality initiatives

Given to no more that two companies in each of three categories; manufacturing, service, and small business

Past winners; Motorola Corp., Xerox, FedEx, 3M, IBM, Ritz-Carlton

Total Quality Management (TQM)

27

MBNQA- Criteria

# Categories Points
1 Leadership 120
2 Strategic Planning 85
3 Customer and Market Focus 85
4 Information and Analysis 90
5 Human Resource Focus 85
6 Process Management 85
7 Business Results 450
TOTAL POINTS 1000

Total Quality Management (TQM)

28

Criteria represents Quality belongs to everyone!

And criteria promotes “continuous improvement”.

The Deming Prize

Given by the Union of Japanese Scientists and Engineers since 1951

Named after W. Edwards Deming who worked to improve Japanese quality after WWII

Not open to foreign companies until 1984

1989 – Florida P & L was first US company winner

Total Quality Management (TQM)

29

ISO Standards

ISO 9000 Standards: (1987)

Certification developed by International Organization for Standardization

Set of internationally recognized quality standards

Companies are periodically audited & certified

ISO 9000:2000 QMS – Fundamentals and

Standards

ISO 9001:2000 QMS – Requirements

ISO 9004:2000 QMS – Guidelines for Performance

More than 40,000 companies have been certified

ISO 14000: (1987)

Focuses on a company’s environmental responsibility

Total Quality Management (TQM)

30

Why TQM Efforts Fail

Lack of a genuine quality culture

Lack of top management support and commitment

Over- and under-reliance on SPC methods

Total Quality Management (TQM)

31

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