LSM733-PRODUCTION OPERATIONS MANAGEMENT

1. LECTURE 9 LSM733-PRODUCTION OPERATIONS MANAGEMENT By: OSMAN BIN SAIF

2. Summary of last session • Global Company Profile: Arnold Palmer Hospital • Quality and Strategy • Defining Quality • Implications of Quality • Malcolm Baldrige National Quality Award • Cost of Quality (COQ) • Ethics and Quality Management

3. Summary of last session (Contd.) • International Quality Standards • ISO 9000 • ISO14000

4. Summary of last session (Contd.) • Total Quality Management • Continuous Improvement • Six Sigma • Employee Empowerment • Benchmarking • Just-in-Time (JIT) • Taguchi Concepts • Knowledge of TQM Tools

5. Agenda for this session • Tools of TQM • Check Sheets • Scatter Diagrams • Cause-and-Effect Diagrams • Pareto Charts • Flowcharts • Histograms • Statistical Process Control (SPC)

6. Agenda for this session (Contd.) • The Role of Inspection • When and Where to Inspect • Source Inspection • Service Industry Inspection • Inspection of Attributes versus Variables • TQM in Services

7. Agenda for this session (Contd.) • Tools for Generating Ideas • Check sheets • Scatter diagrams • Cause-and-effect diagrams • Tools to Organize the Data • Pareto charts • Flowcharts • Tools for Identifying Problems • Histogram • Statistical process control chart

8. Seven Tools of TQM (a) Check Sheet: An organized method of recording data / / / / /// / // /// // //// /// // / Hour Defect 1 2 3 4 5 6 7 8 A B C / / // / Figure 6.6

9. Productivity Absenteeism Seven Tools of TQM (b) Scatter Diagram: A graph of the value of one variable vs. another variable Figure 6.6

10. Cause Materials Methods Effect Manpower Machinery Seven Tools of TQM (c) Cause-and-Effect Diagram: A tool that identifies process elements (causes) that might effect an outcome Figure 6.6

11. Percent Frequency A B C D E Seven Tools of TQM (d) Pareto Chart: A graph to identify and plot problems or defects in descending order of frequency Figure 6.6

12. Seven Tools of TQM (e) Flowchart (Process Diagram): A chart that describes the steps in a process Figure 6.6

13. Distribution Frequency Repair time (minutes) Seven Tools of TQM (f) Histogram: A distribution showing the frequency of occurrences of a variable Figure 6.6

14. Upper control limit Target value Lower control limit Time Seven Tools of TQM (g) Statistical Process Control Chart: A chart with time on the horizontal axis to plot values of a statistic Figure 6.6

15. Method (shooting process) Material (ball) Grain/Feel (grip) Aiming point Size of ball Bend knees Air pressure Hand position Balance Lopsidedness Follow-through Missed free-throws Training Rim size Conditioning Rim height Motivation Rim alignment Consistency Backboard stability Concentration Machine (hoop & backboard) Manpower (shooter) Cause-and-Effect Diagrams Figure 6.7

16. Data for October 70 – 60 – 50 – 40 – 30 – 20 – 10 – 0 – – 100 – 93 – 88 – 72 54 Frequency (number) Number of occurrences Cumulative percent 12 4 3 2 Room svc Check-in Pool hours Minibar Misc. 72% 16% 5% 4% 3% Causes and percent of the total Pareto Charts

17. 8 80% 7 11 6 3 2 4 5 1 9 10 20% Flow Charts MRI Flowchart • Physician schedules MRI • Patient taken to MRI • Patient signs in • Patient is prepped • Technician carries out MRI • Technician inspects film • If unsatisfactory, repeat • Patient taken back to room • MRI read by radiologist • MRI report transferred to physician • Patient and physician discuss

18. Statistical Process Control (SPC) • Uses statistics and control charts to tell when to take corrective action • Drives process improvement • Four key steps • Measure the process • When a change is indicated, find the assignable cause • Eliminate or incorporate the cause • Restart the revised process

19. Plots the percent of free throws missed 20% 10% 0% Upper control limit Coach’s target value | | | | | | | | | 1 2 3 4 5 6 7 8 9 Lower control limit Game number An SPC Chart Figure 6.8

20. Inspection • Involves examining items to see if an item is good or defective • Detect a defective product • Does not correct deficiencies in process or product • It is expensive • Issues • When to inspect • Where in process to inspect

21. When and Where to Inspect At the supplier’s plant while the supplier is producing At your facility upon receipt of goods from the supplier Before costly or irreversible processes During the step-by-step production process When production or service is complete Before delivery to your customer At the point of customer contact

22. Inspection • Many problems • Worker fatigue • Measurement error • Process variability • Cannot inspect quality into a product • Robust design, empowered employees, and sound processes are better solutions

23. Source Inspection • Also known as source control • The next step in the process is your customer • Ensure perfect product to your customer Poka-yoke is the concept of foolproof devices or techniques designed to pass only acceptable product

24. Service Industry Inspection Table 6.5

25. Service Industry Inspection Table 6.5

26. Service Industry Inspection Table 6.5

27. Service Industry Inspection Table 6.5

28. Service Industry Inspection Table 6.5

29. 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 • Use different statistical techniques

30. TQM In Services • Service quality is more difficult to measure than the quality of goods • Service quality perceptions depend on • Intangible differences between products • Intangible expectations customers have of those products

31. Service Quality The Operations Manager must recognize: The tangible component of services is important The service process is important The service is judged against the customer’s expectations Exceptions will occur

32. ServiceSpecificationsat UPS

33. Determinants of Service Quality • Reliability • Responsiveness • Competence • Access • Courtesy • Communication • Credibility • Security • Understanding/ knowing the customer • Tangibles

34. Service Recovery Strategy • Managers should have a plan for when services fail • Marriott’s LEARN routine • Listen • Empathize • Apologize • React • Notify

36. Dell Computer Company Mass customization provides a competitive advantage • Sell custom-built PCs directly to consumer • Lean production processes and good product design allow responsiveness • Integrate the Web into every aspect of its business • Focus research on software designed to make installation and configuration of its PCs fast and simple

37. Volume Low Volume Repetitive Process High Volume Process, Volume, and Variety Figure 7.1 High Variety one or few units per run, high variety (allows customization) Process Focus projects, job shops (machine, print, carpentry) Standard Register Mass Customization (difficult to achieve, but huge rewards) Dell Computer Changes in Modules modest runs, standardized modules Repetitive (autos, motorcycles) Harley-Davidson Changes in Attributes (such as grade, quality, size, thickness, etc.) long runs only Product Focus (commercial baked goods, steel, glass) Nucor Steel Poor Strategy (Both fixed and variable costs are high)

38. Process Strategies • How to produce a product or provide a service that • Meets or exceeds customer requirements • Meets cost and managerial goals • Has long term effects on • Efficiency and production flexibility • Costs and quality

39. Process Strategies Four basic strategies • Process focus • Repetitive focus • Product focus • Mass customization Within these basic strategies there are many ways they may be implemented

40. Process Focus • Facilities are organized around specific activities or processes • General purpose equipment and skilled personnel • High degree of product flexibility • Typically high costs and low equipment utilization • Product flows may vary considerably making planning and scheduling a challenge

41. Many variety of outputs Many inputs Many departments and many routings Process Focus Job Shop

42. Customer Customer sales representative Purchasing Vendors PREPRESS DEPT Accounting Receiving PRINTING DEPT Warehouse COLLATING DEPT GLUING, BINDING, STAPLING, LABELING POLYWRAP DEPT Information flow Material flow SHIPPING Customer Process Flow Diagram Figure 7.2

43. Repetitive Focus • Facilities often organized as assembly lines • Characterized by modules with parts and assemblies made previously • Modules may be combined for many output options • Less flexibility than process-focused facilities but more efficient

44. Modules combined for many output options Raw materials and module inputs Few modules Repetitive Focus Automobile Assembly Line

45. Frame tube bending Frame-building work cells Frame machining Hot-paint frame painting THE ASSEMBLY LINE Engines and transmissions TESTING 28 tests Incoming parts From Milwaukee on a JIT arrival schedule Air cleaners Oil tank work cell Fluids and mufflers Shocks and forks Fuel tank work cell Handlebars Wheel work cell Fender work cell Roller testing Crating Process Flow Diagram Figure 7.3

46. Product Focus • Facilities are organized by product • High volume but low variety of products • Long, continuous production runs enable efficient processes • Typically high fixed cost but low variable cost • Generally less skilled labor

47. Output variations in size, shape, and packaging Few inputs Product Focus Continuous Work Flow

48. D Scrap steel A B C Electric furnace Continuous caster Ladle of molten steel Continuous cast steel sheared into 24-ton slabs Hot tunnel furnace - 300 ft E F Hot mill for finishing, cooling, and coiling G H I Product Focus Nucor Steel Plant

49. Mass Customization • The rapid, low-cost production of goods and service to satisfy increasingly unique customer desires • Combines the flexibility of a process focus with the efficiency of a product focus

50. Number of Choices Item 1970s 21st Century Vehicle models 140 286 Vehicle types 18 1,212 Bicycle types 8 19 Software titles 0 400,000 Web sites 0 98,116,993 Movie releases 267 458 New book titles 40,530 77,446 Houston TV channels 5 185 Breakfast cereals 160 340 Items (SKUs) in 14,000 150,000 supermarkets LCD TVs 0 102 Mass Customization Table 7.1