Chapter 1 • standardization of parts initially as

OPERATIONS MANAGEMENT AND replacement parts; enabled mass production

TOTAL QUALITY MANAGEMENT • Scientific management
Value Chain/Supply Chain • systematic analysis of work methods
• Mass production
Producing Goods and/or Services • high-volume production of a standardized
(Refer to Figure 1) product for a mass market
• Lean production
The Supply Chain • adaptation of mass production that prizes
quality and flexibility
(Refer to Figure 2)

Historical Events in Operations Management

Era Events/Concepts Dates Originator

James
Steam engine 1769
Watt
Industrial Adam
Division of labor 1776
Revolution Smith
Interchangeable Eli
1790
parts Whitney
Principles of
Frederick
scientific 1911
W. Taylor
management
Frank and
Time and motion
Scientific 1911 Lillian
studies
Management Gilbreth
Activity Henry
1912
Gems of Wisdom scheduling chart Gantt
The Pencil maker told his pencil five important lessons Moving assembly 1913 Henry
First: Everything you do will always leave a mark. line Ford
Second: You can always correct the mistakes you make.
Third: The most important part of you will always be what's
inside.
Fourth: In life, you will undergo painful sharpening's which Era Events/C Da Origi
will make you a better pencil. oncepts te nator
s
Fifth: The most important of all is; to be the best pencil you
can be, you must allow yourself to be held and guided by the Hum Hawthor
19 Elton
hand that holds you. an ne
30 Mayo
Relati studies
ons Motivati Abra
Evolution of Operations and Supply Chain Management 19
on ham
• Craft production 40
theories Masl
• process of handcrafting products or services s
ow
for individual customers
Frede
• Division of labor 19
rick
• dividing a job into a series of small tasks 50
Herz
each performed by a different worker s
berg
• Interchangeable parts
19 Doug
60 las
 Mc
s Greg
or
Geor The Business Imperative
Linear
19 ge “The first job we have is to turn out quality merchandise
program
47 Dantz that consumers will buy and keep on buying. If we produce
ming
ig it efficiently and economically, we will earn a profit, in which
Remi you will share.”
Digital
19 ngto - William Cooper Procter
compute
51 n  Quality, productivity, and cost remain imperatives
r
Rand for modern organizations.
Simulatio
n, Oper Importance of Quality
Oper waiting ation
• Quality is uniquely positioned to accelerate
ation line 19 s
organizational growth through better execution and
s theory, 50 resea
alignment
Rese decision s rch
• Quality provides the voice of the customer critical to
arch theory, grou
developing innovative products and services.
PERT/CP ps
M • Quality can provide an organization with a
competitive edge
Josep
• “No quality, no sales. No sales, no profit. No profit,
19 h
no jobs.”
60 Orlick
MRP, Defining Quality
s, y,
EDI, EFT,
19 IBM Providing a good, usable
CIM Doing it right the first time
70 and product
s other
s Eliminating waste Consistency

Delighting or pleasing
Fast delivery
Era Events/Concepts Dates Originator customers

Total customer service Compliance with policies

Taiichi Ohno
JIT (just-in-time) 1970s and satisfaction and procedures
(Toyota)

Formal Definitions of Quality

W. Edwards
TQM (total quality • Transcendent Perspective: excellence
1980s Deming,
management) • Product Perspective: quantities of product attributes
Joseph Juran
Quality • User Perspective: fitness for intended use
Revolution Strategy and Wickham • Value Perspective: quality vs. price
1980s Skinner, • Manufacturing Perspective: conformance to
operations
Robert Hayes specifications
Michael • Customer Perspective: meeting or exceeding
Reengineering 1990s Hammer, customer expectations
James Champy Customers
• Consumers
Six Sigma 1990s GE, Motorola
• Ultimate buyers of goods and services
• External customers
• Business-to-business
• Internal customers
 • Anyone who receives goods or services from • Performance Excellence
someone else within an organization • Focus on customer value, organizational
sustainability, improvement of effectiveness
and capabilities, and organizational and
personal learning
• Emergence of Six Sigma
• a customer-focused, results-oriented
approach to business improvement
• Globalization of Quality
• National quality efforts
• No significant differences among regions
around the world
• Current and future challenges
• Continue to apply the principles of quality
and performance excellence.
• Quality is “a race without a finish line.”

Growth of Modern Quality Management

History of Quality Management
• Ancient History
• Zhou Dynasty in China
• The Age of Craftsmanship
• Skilled workers during the Middle Ages
• Industrial Revolution
• Early 20th Century
• Separate quality departments
• Ford Motor Company
• Statistical methods and quality assurance
• Professional societies and publications Contemporary Influences on Quality
• Post World War II • Global Responsibility
• Evolution of quality management in Japan • Consumer Awareness
• W. Edwards Deming and Joseph Juran • Globalization
• U.S. “Quality Revolution” • Increasing Rate of Change
• Quality crisis around 1980 • Workforce of the Future
• Growth of product quality awareness in • Aging Population
manufacturing industries • Twenty-first Century Quality
• Rapid Growth in Business • Innovation
• Malcolm Baldrige National Quality Award
(1987)
• Books, consulting, training
• From Product Quality to Total Quality Management
• “Little Q” vs. “Big Q” and TQM
• Early Management Failures
• Cynicism and disinterest
• “No, TQM isn’t dead. TQM failures just prove
that bad management is still alive and
kicking.”
 Quality in Services
 Service is defined as “any primary or
complementary activity that does not
directly produce a physical product –
that is, the non-goods part of the
transaction between buyer (customer)
and seller (provider).”
Critical Differences Between Service and
Manufacturing
• Customer needs and performance
standards are more difficult to identify
and measure
• Services requires a higher degree of
customization
• Output is intangible
• Services are produced and consumed simultaneously
Quality in Marketing • Customers are often involved in actual process
 Marketing and sales personnel are responsible for • Services are more labor-intensive than
determining the needs and expectations of manufacturing
consumers.
• Services handle large numbers of transactions
Quality in Product Design
Components of Service Quality
 Product design and engineering functions develop
• People
technical specifications for products and production
• “If we take care of our people, they will take
processes to meet the requirements determined by
care of our customers.”
the marketing function.
Quality in Purchasing • Technology
 A purchasing agent should not simply be responsible • Computers and information technology
for low-cost procurement, but should maintain a • E-commerce
clear focus on the quality of purchased goods and Quality in Business Support Functions
materials. • Finance and Accounting
Quality in Production Planning & Scheduling  Budgeting, cost of quality
 Poor quality often results from time pressures • Legal Services
caused by insufficient planning and scheduling.  Liability
Quality in Manufacturing and Assembly
• Quality Assurance
 Both technology and people are essential to high-
 Coaching and special studies
quality manufacturing.
Quality in Process Design Competitive Advantage
 Manufacturing processes must be capable of • Is driven by customer wants and needs
producing output that meets specifications • Makes significant contribution to business success
consistently. • Matches organization’s unique resources with
Quality in Finished Goods Inspection and Testing opportunities
 The purposes of final product inspection are to judge • Is durable and lasting
the quality of manufacturing, to discover and help to • Provides basis for further improvement
resolve production problems that may arise, and to • Provides direction and motivation
ensure that no defective items reach the customer.
Quality in Installation and Service
 Quality supports each of these characteristics
 Service after the sale is one of the most important
factors in establishing customer perception of quality
and customer loyalty.
 Quality and Business Results
• Hendricks and Singhal study of quality award
winners
• Performance results of Baldrige Award recipients
• Example: The overall Net Promoter (NP)
scores (a loyalty metric defined by the level
of repeat sales and referrals) for MEDRAD, a
manufacturer of medical imaging devices,
were consistently 60 percent or higher
compared to the 50 percent or higher marks
for other organizations nationwide.
MEDRAD’s global customer satisfaction
ratings using the NP system steadily
increased from 50 percent to 63 percent,
surpassing the best-in-class benchmark of 50
percent.
Quality and Personal Values
• Personal initiative has a positive impact on business
success
• Quality-focused individuals often exceed customer
expectations
• Quality begins with personal attitudes
• Attitudes can be changed through awareness and
effort (e.g., personal quality checklists)
• Unless quality is internalized at the personal level, it
will never become rooted in the culture of an
organization.
• Thus, quality must begin at a personal level (and that
means you!).
Transformation Process
• Physical: as in manufacturing operations
• Locational: as in transportation or warehouse
operations
• Exchange: as in retail operations
• Physiological: as in health care
• Psychological: as in entertainment
• Informational: as in communication
Figure 1

Value-added
Efficient
utilization Lower cost
Inputs
Raw
materials, Conversion/ Outputs
components, Transformati Goods/
labor, on/Process Services
capital,
energy
Feedback

Feedback Feedback
Control

Figure 2
SIPOC