must include goals in annual business plan that are

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Chapter 3 Quality Improvement and Cost Reduction

• Course Instructor
• Ibrahim Abdulla

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Major Topics

• Sporadic and Chronic Problems
• Project-by-Project Approach
• Example of a project
• Wide Quality Improvement Initiative
• Experiences with Project-by-Project Approach
• Introduction to Six-Sigma Improvement
• Define Phase
• Measure Phase
• Analyze Phase
• Improve Phase
• Control Phase
• Six Sigma Summary and Project Example
• Maintaining a focus on Continuous improvement

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1- Sporadic and Chronic Problems

• Costs Associated with wastes (cost, quality and
  time related) are due to Sporadic and Chronic
  Problems

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• Sporadic Problem is a sudden change from
  Statuesque
• Chronic Problems is a long standing adverse
  situation
• The differences between Sporadic and Chronic
  Problems
• Approach to solving is different
• Sporadic are dramatic and require immediate
  attention
• The reason for chronic waste is the lack of
  structured approach to identify and reduce waste
• Structured approach to improvement does not apply
  only to quality but also to productivity, cycle
  time, and safety

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2- Project-by-Project Approach

• Most effective approach to improvement
• Main Steps
• Proving the need
• Identifying the project
• Organizing the project team
• Quality improvement project tasks
• Verifying the project need an mission
• Diagnosing the cause
• Providing remedy
• Dealing with resistance to change
• Instituting control to hold the gains
• It is also called Jurans breakthrough sequence
• Six-Sigam is an alternative approach

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3- Example of a project

• Verifying the project need an mission (Define
  Step in Six-Sigma)
• Reduce the number of defective solder connections

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• Diagnosing the cause (Measure and Analyze Step in
  Six-Sigma)

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• Providing remedy (Improve Step in Six-Sigma)
• Either the temperature of the soldering need to
  be raised or the speed of the wave soldering
  machine need to be reduced
• Dealing with resistance to change (Improve Step
  in Six-Sigma)
• One engineer had pre-defined position, did not
  change his mind until the experiment proved him
  wrong
• Instituting control to hold the gains (Improve
  Step in Six-Sigma)
• To insure the improvement was maintained the
  process was monitored

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4 - Wide Quality Improvement Initiative

• Steps of Major quality improvement initiatives
• Estimate the size of chronic waste or other
  quality related issues
• Estimate the saving and other benefits
• Set a goal to cut down costs to half in five
  years
• Do not imply costs would be reduced to zero
• Verify unquantifiable benefits
• Calculate the return on investment resulting
  from improvement
• Use a successful case history in the organization
  to justify a broader program

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5- Experiences with Project-by-Project Approach

• Large cost reductions and improved quality to
  customers have been achieved. 1 5 to 10
• Investment require for improvement has been
  modest and not capital intensive
• Most Projects can be completed in Six months
• The Key chronic problems cut through departments
  and thus require cross-functional project team
• In companies consisting of autonomous units, a
  project that is successful in one unit can be
  applied to the other units without need for
  duplicating diagnostic work

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• The improvement approach should include suppliers
• Improvement must include goals in annual business
  plan that are aligned with other business goals
  and strategies, etc.

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6 - Introduction to Six-Sigma Improvement
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7 - Organization Culture and Quality
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8 - Assessment of Current Quality Activities
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9- National Quality Awards

• National Institute of Standards and Technology
  (NIST)
• Areas
• Industry
• Services
• Small Business
• Education
• Health Care
• Each country has its own System and regulatory
  body

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10 - ISO 9000 Quality System Standards

• Developed by International Organization for
  Standards
• Minimum Criteria for quality Systems
• Required to meet domestic and International
  competition
• Some industries have their own quality systems
  (Example QS9000 for Automotive Industry). These
  systems includes ISO 9000 and additional industry
  related standards
• ISO Do not emphasis on results, but rather on
  Existence of quality systems
• Baldrige Criteria Focus on Customer Satisfaction.
• Baldrige and ISO 9000 complement each other

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Questions/Queries