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Chapter Sixteen – Total Quality Management

CPIM Exam – Basics of Supply Chain Management Practice Study Sheet  Ch... thumbnail 1 summary

CPIM Exam – Basics of Supply Chain Management Practice Study Sheet 

Chapter Sixteen – Total Quality Management

Quality means user satisfaction – that goods or services satisfy the needs and expectations of the user

• Product designers must build the product to the quality level described in the general specification

• Quality for manufacturing is responsible for meeting the minimum specifications in the product design

• Quality is formed in the “loop” containing 1) product policy 2) product design 3) operations 4) the user

• Performance – quality dimension implies that the product or service is ready for the customer’s use at the time of sale. 1) reliability – consistency of performance (use between failures) 2) durability – ability to continue functioning even when subjected to hard wear or frequent use 3) maintainability – able to return a product to operating condition after it has failed

Conformance – meeting established standards or specifications (manufacturing’s responsibility)

Total Quality Management (TQM) – it is based on the participation of all members of an organization in improving processes, products, services and the culture they work in. The objective of TQM is to provide a quality product to customers at a lower price. TQM is both a philosophy and a set of guiding principles that lead to a continuously improving organization
        1. A committed and involved management – must be part of culture
        2. focus on the customer – listening to the customer, improving design
        3. involvement of the total workforce – training, empowering
        4. continuous process improvement
        5. supplier partnering
        6. performance measurement
• Management commitment includes establishment of a quality council

• Customers have 6 expectations of their suppliers 1) high quality level 2) high flexibility 3) high service level 4) short lead times 5) low variability 6) low cost

• Employee involvement includes 1) training (cross training) 2) organization (teams or customer contact) 3) local ownership (empowerment)

Empowerment gives people authority to make decisions or take actions in their work area without getting prior approval

Performance measures can be used to understand performance, compare actuals with targets, and show trends. They can be measured in terms of 1) quantity (production) 2) cost 3) time / delivery (on-time) 4) quality

• Possible measures include 1) customer (complaints, on-time delivery) 2) production (inventory turns, scrap) 3) suppliers (on time delivery, quality) 4) sales (new customers, sales per square foot)

Cost of Failure (cost of failing quality control) include 1) Internal Failure costs (correcting problems while still in the facility) 2) External failure costs (after delivery to customer including warranty, service, etc…)

Cost of controlling quality 1) prevention costs (doing the job right the first time) 2) appraisal costs (cost of audits in the organization)

Chance variation is inherent in any manufacturing process and comes from six things
        1. people – poorly trained operators less consistent
        2. machine – well-maintained machines work better
        3. material – better raw materials
        4. method – improve method
        5. environment – changes in temperature, humidity
        6. measurement – bad tools
Assignable variation is the specific reason for the cause of the variation

Statistical control occurs when only chance variation is occurring

Variability patterns include 1) shape (bell curve) 2) center (mean) 3) spread (variation)

• One standard deviation (68.3%), two standard deviations (95.4%), three standard deviations (99.7%)

• Lowest specification limit (tolerance) and upper specification limit

Process capability index Cp = (upper specification limit - lower specification limit) / 6 standard deviation

Cpk Index is the lower of (upper specification limit – mean) / 3 sigma or (mean – lower specification limit) / 3 sigma

• Cpk of less than one is unacceptable, Cpk 1 to 1.33 is marginal, Cpk greater than 1.33 good

Run charts – gives a visible description of process (every ½ hour sample) but doesn’t distinguish between chance variation and assignable cause variation

X bar and R chart – take samples and put on a range and run between upper and lower control limit

Control limits are set so that there is a 99.7% probability that the process is in control.

Sample inspection 1) 100% inspection (every unit) 2) acceptance sampling (take a sample for the whole batch and then accept / reject)

• 4 reasons for sampling 1) sampling is destructive 2) not enough time 3) too expensive 4) human error is high

• Conditions necessary for sampling include 1) all items must be produced under similar conditions 2) a random sample 3) lot should be homogenous 4) batches should be large

Consumers risk – probability of accepting a bad lot. Producers risk – probability of rejecting a good lot. Cost – balance consumers risk and producers risk

ISO Certification (the international organization for standardization is based in Geneva, Switzerland). The standards are intended to prevent non-conformities during all stages of business functions. A third party (registrar) assesses the adequacy of the supplier’s quality system

ISO 9000 consists of 5 standards (explains the basic quality concepts, defines key terms, and provides guidelines for selecting, using, and modifying ISO 9001, 9002 and 9003.

• ISO 9001 provides a model for quality assurance in design, production, installation and servicing. ISO 9002 provides a model for quality assurance in production and installation. ISO 9003 provides a model for quality assurance in final inspection

• There are 20 ISO 9000 elements. All 20 are required for ISO 9001, but fewer are required for ISO 9002 and ISO 9003. ISO 9000 places emphasis on all internal processes, especially manufacturing, sales, administration and technical support

Benchmarking – comparing yourself to best in class operations
        1. select process to benchmark
        2. identify best in class organization
        3. study the benchmarked organization
        4. analyze the data
• JIT and TQM should be considered 2 sides of the same coin – providing customers what they want at low cost. Both JIT and TQM are part of the MRP II environment