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KRM8 Chapter 6 - Process Performance and Quality © 2007 Pearson Education Process Performance and Quality Chapter 6 1 © 2007 Pearson Education Costs of Poor Process Performance Defects: Any instance when a process fails to satisfy its customer. Prevention costs are associated with preventing defects before they happen. Appraisal costs are incurred when the firm assesses the performance level of its processes. Internal failure costs result from defects that are discovered during production of services or products. External failure costs arise when a defect is discovered after the customer receives the service or product. © 2007 Pearson Education Total Quality Management Quality: A term used by customers to describe their general satisfaction with a service or product. Total quality management (TQM) is a philosophy that stresses three principles for achieving high levels of process performance and quality: Customer satisfaction Employee involvement Continuous improvement in performance © 2007 Pearson Education TQM Wheel Customer satisfaction 2 © 2007 Pearson Education Customer Satisfaction Customers, internal or external, are satisfied when their expectations regarding a service or product have been met or exceeded. Conformance: How a service or product conforms to performance specifications. Value: How well the service or product serves its intended purpose at a price customers are willing to pay. Fitness for use: How well a service or product performs its intended purpose. Support: Support provided by the company after a service or product has been purchased. Psychological impressions: atmosphere, image, or aesthetics © 2007 Pearson Education Employee Involvement One of the important elements of TQM is employee involvement. Quality at the source is a philosophy whereby defects are caught and corrected where they were created. Teams: Small groups of people who have a common purpose, set their own performance goals and approaches, and hold themselves accountable for success. Employee empowerment is an approach to teamwork that moves responsibility for decisions further down the organizational chart to the level of the employee actually doing the job. © 2007 Pearson Education Quality circles: Another name for problem-solving teams; small groups of supervisors and employees who meet to identify, analyze, and solve process and quality problems. Special-purpose teams: Groups that address issues of paramount concern to management, labor, or both. Self-managed team: A small group of employees who work together to produce a major portion, or sometimes all, of a service or product. Team Approaches © 2007 Pearson Education Continuous Improvement Continuous improvement is the philosophy of continually seeking ways to improve processes based on a Japanese concept called kaizen. Train employees in the methods of statistical process control (SPC) and other tools. Make SPC methods a normal aspect of operations. Build work teams and encourage employee involvement. Utilize problem-solving tools within the work teams. Develop a sense of operator ownership in the process. © 2007 Pearson Education The Deming Wheel Plan-Do-Check-Act Cycle Plan Do Check Act 9 © 2007 Pearson Education Using Continuous Improvement to Determine Process Capability Step 1: Collect data on the process output; calculate mean and standard deviation of the distribution. Step 2: Use data from the process distribution to compute process control charts. Step 3: Take a series of random samples from the process and plot results on the control charts. Step 4: Calculate the process capability index, Cpk, and the process capability ratio, Cp, if necessary. If results are acceptable, document any changes made to the process and continue to monitor output. If the results are unacceptable, further explore assignable causes. © 2007 Pearson Education Quality Engineering Quality engineering is an approach originated by Genichi Taguchi that involves combining engineering and statistical methods to reduce costs and improve quality by optimizing product design and manufacturing processes. Quality loss function is the rationale that a service or product that barely conforms to the specifications is more like a defective service or product than a perfect one. Quality loss function is optimum (zero) when the product’s quality measure is exactly on the target measure. © 2007 Pearson Education Taguchi's Quality Loss Function Loss (dollars) LowerNominalUpper specificationvaluespecification 33 © 2007 Pearson Education Six Sigma What is Six Sigma? Six Sigma is a rigorous and disciplined methodology that uses data and statistical analysis to measure and improve a company's operational performance by identifying and eliminating "defects." Six Sigma is a comprehensive and flexible system for achieving, sustaining, and maximizing business success by minimizing defects and variability in processes. It relies heavily on the principles and tools of TQM. It is driven by a close understanding of customer needs; the disciplined use of facts, data, and statistical analysis; and diligent attention to managing, improving, and reinventing business processes. © 2007 Pearson Education Six Sigma A six-sigma process is one in which 99.99966% of the products manufactured are statistically expected to be free of defects (3.4 defects per million). design margin, process capability, defects, field reliability, customer satisfaction, and economic success. © 2007 Pearson Education Six Sigma Improvement Model Define Determine the current process characteristics critical to customer satisfaction and identify any gaps. Measure Quantify the work the process does that affects the gap. Analyze Use data on measures to perform process analysis. Improve Modify or redesign existing methods to meet the new performance objectives. Control Monitor the process to make sure high performance levels are maintained. © 2007 Pearson Education Six Sigma Implementation Top Down Commitment from corporate leaders. Measurement Systems to Track Progress Tough Goal Setting through benchmarking best-in-class companies. Education: Employees must be trained in the “whys” and “how-tos” of quality. Communication: Successes are as important to understanding as failures. Customer Priorities: Never lose sight of the customer’s priorities. © 2007 Pearson Education Six Sigma Education Green Belt: An employee who achieved the first level of training in a Six Sigma program and spends part of his or her time teaching and helping teams with their projects. Black Belt: An employee who reached the highest level of training in a Six Sigma program and spends all of his or her time teaching and leading teams involved in Six Sigma projects. Master Black Belt: Full-time teachers and mentors to several black belts. © 2007 Pearson Education International Quality Documentation Standards ISO 9000 A set of standards governing documentation of a quality program. ISO 14000 Documentation standards that require participating companies to keep track of their raw materials use and their generation, treatment, and disposal of hazardous wastes. KRM Chapter 3 - Project Management © 2007 Pearson Education Project Management Chapter 3 1 © 2007 Pearson Education Projects A project is an interrelated set of activities with a definite starting and ending point, which results in a unique outcome for a specific allocation of resources. The three main goals of project management are… Complete the project on time or earlier. Do not exceed the budget. Meet the specifications to the satisfaction of the customer. © 2007 Pearson Education Project Management Project management is a systemized, phased approach to defining, organizing, planning, monitoring, and controlling projects. A collection of projects is called a program, which is an interdependent set of projects with a common strategic purpose. A cross-functional effort: Even though a project may be under the overall purview of a single department, other departments likely should be involved. © 2007 Pearson Education Project Scope and Objectives Defining a project’s scope, time frame, allocated resources and objective, is essential. A Project Objective Statement provides the objectives and essence of the project. Time frame should be specific for start and ending of the project. Necessary resources are also defined, either in dollar terms or in personnel allocation. © 2007 Pearson Education Project Team Selecting the right project manager is critical and specific skills are needed. Facilitator: Able to resolve conflicts, have leadership skills and a systems view. Communicator: Ability to keep senior management informed, communicate progress, and work with team members. Decision Maker: Able to organize members and make difficult decisions. Team members need to be technically competent, dedicated, and able to work well with other team members. © 2007 Pearson Education Organizational Structure The relationship of a project manager to the team is determined by the firm’s organizational structure. Functional Structure: The team is housed in a specific functional area. Assistance from other areas must be negotiated. Pure Project: Team members work exclusively for the project manager, which is best for large projects. Matrix Structure: A compromise between the functional and project structures. Members remain in various functional areas and the project manager coordinates across functional areas. Dual authority can cause problems. © 2007 Pearson Education Planning Projects Planning projects involves five steps: Defining the work breakdown structure -- a statement of all work that has to be completed. Diagramming the network -- a graphical network Developing the schedule -- specifying start times for each activity Analyzing cost-time trade-offs Assessing risks © 2007 Pearson Education Defining the Work Breakdown Structure A Work Breakdown Structure is simply a statement of all work that has to be completed. Major work components are identified and then broken down into smaller tasks by the project team. This process may involve a hierarchy of work levels. An Activity is the smallest unit of work effort consuming both the time and resources that the project manager can schedule and control. Task Ownership: Each activity must have an owner who is responsible for doing the work. © 2007 Pearson Education A Work Breakdown Structure (three levels) for a new business © 2007 Pearson Education © 2007 Pearson Education Diagramming the Network A Network Diagram visually displays the interrelated activities using nodes (circles) and arcs (arrows) that depict the relationships between activities. Two network planning methods (PERT & CPM) were originally distinctive, but today the differences are minor and will be jointly referred to as PERT/CPM. PERT (Program Evaluation and Review Technique) was utilized when activity times involved risk. CPM (Critical Path Method) was used when activity times were certain. © 2007 Pearson Education Precedence Relationships Precedence relationships determine a sequence for undertaking activities, and specify that any given activity cannot start until a preceding activity has been completed. In the AON approach, the nodes (circles) represent activities, and the arcs represent the precedence relationships between them. AON S T U Activity On Node approach “S” precedes “T” which precedes “U” 2 © 2007 Pearson Education Activity Relationships T U S T & U cannot begin until S has been completed. S T U S & T must be completed before U can be started. 3 © 2007 Pearson Education Activity Relationships S T U V U & V can’t begin until S & T have been completed. S T U V U cannot begin until S & T have been completed. V cannot begin until T has been completed. 4 © 2007 Pearson Education Activity Relationships S T V U T & U cannot begin until S has been completed; V cannot begin until both T & U have been completed. 7 © 2007 Pearson Education St