Outline:

1
Chapter 9. Six-Sigma Quality

• Outline
• Total Quality Management (TQM) Defined
• Quality Specifications and Costs
• Six Sigma Quality and Tools
• External Benchmarking
• ISO 9000
• Service Quality Measurement

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TQM Defined

• Total quality management is defined as managing
  the entire organization so that it excels on all
  dimensions of products and services that are
  important to the customer
• Two fundamental operational goals
• Careful design of product or service
• Ensure consistent production of product or
  service

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Philosophical Leaders of the Quality Movement

• Philip Crosby
• W. Edwards Deming
• Joseph M. Juran
• Each has slightly different definitions of what
  quality is and how to achieve it (see Exhibit
  8.1), but they all had the same general message
• To achieve outstanding quality requires
• quality leadership from senior management,
• a customer focus,
• total involvement of the workforce, and
• continuous improvement based upon rigorous
  analysis of processes.

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Quality Specifications

• Design quality - Inherent value of the product in
  the marketplace
• Conformance quality - Degree to which the product
  or service design specifications are met
• Products can have high design quality but low
  conformance quality, and vice versa
• Quality at the source
• Related to conformance quality
• Means the person who does the work takes
  responsibility for making sure output meets
  specifications
• Both design quality and conformance quality
  should provide products that meet customer
  objectives
• This is often termed fitness for use
• Entails identifying the dimensions of product (or
  service) that the customer wants i.e., the voice
  of the customer
• Developing a quality control program

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Dimensions of Quality

• Performance
• Primary product or service characteristic
• Features
• Added touches, bells and whistles, secondary
  characteristics
• Reliability
• Consistency of performance over time, probability
  of failing
• Durability
• Useful life
• Serviceability
• Ease of repair
• Response
• Characteristics of the human-to-human interface
  (speed, courtesy, competence)
• Aesthetics
• Sensory characteristics (sound, feel, look, and
  so on)
• Perceived quality (reputation)
• Past performance and other intangibles (perceived
  quality)

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Dimensions of Quality Examples
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Costs of Quality (COQ)
Costs of inspection, testing, and other tasks to
ensure that the product or process is acceptable
sum of all costs to prevent defects
Costs for defects that pass through the system
Costs for defects incurred within the system
scrap, rework, repair
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Costs of Quality

• No matter what the quality is, it will cost ...
• So, the assumptions of cost of quality
• Failures are caused
• Prevention is cheaper
• Performance can be measured
• Discuss the "internal" and "external failure
  costs" for a high end coffee house (e.g.,
  Starbucks)

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Six-Sigma Quality

• Six-sigma is a philosophy which reflects the
  goal of eliminating defects in the products.
• Seeks to reduce variation in the processes that
  lead to product defects
• The name, six sigma refers to the variation
  that exists within plus or minus six standard
  deviations of the process outputs
• Statistically speaking a process in six-sigma
  control limits will only produce 2 defects per
  billion units.

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Six Sigma Quality DMAIC Cycle

• Define, Measure, Analyze, Improve, and Control
  ?DMAIC
• Developed by General Electric as a means of
  focusing effort on quality using a methodological
  approach
• Firms striving to achieve six-sigma generally
  adopt DMAIC cycle.
• DMAIC are the typical steps employed in
  continuous improvement (a.k.a. Kaizen) concept
  which seeks to continually improve all aspects
  of production (parts, machines, labor, processes,
  etc)
• Overall focus of the methodology is to understand
  and achieve what the customer wants
• A 6-sigma program seeks to reduce the variation
  in the processes that lead to these defects

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Six Sigma Quality DMAIC CycleCases/examples
from classmates
1. Define (D)
Customers and their priorities
2. Measure (M)
Process and its performance
3. Analyze (A)
Causes of defects
4. Improve (I)
Remove causes of defects
5. Control (C)
Maintain quality
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Example to illustrate the process

• We are the maker of this cereal. Consumer
  Reports has just published an article that shows
  that we frequently have less than 15 ounces of
  cereal in a box.
• What should we do?
• Step 1 Define
• What is the critical-to-quality characteristic?
• The CTQ (critical-to-quality) characteristic in
  this case is the weight of the cereal in the box.

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Step 2 - Measure

• How would we measure to evaluate the extent of
  the problem?
• What are acceptable limits on this measure?
• Lets assume that the government says that we
  must be within 5 percent of the weight
  advertised on the box.
• Upper Tolerance Limit 16 .05(16) 16.8
  ounces
• Lower Tolerance Limit 16 .05(16) 15.2
  ounces
• We go out and randomly buy 1,000 boxes of cereal
  and find that they weight an average of 15.875
  ounces with a standard deviation of 0.529 ounces.
• What percentage of boxes are outside the
  tolerance limits?

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Process Mean 15.875 Std. Dev. .529
Upper Tolerance 16.8
Lower Tolerance 15.2
What percentage of boxes are defective (i.e. less
than 15.2 oz)? Z (x Mean)/Std. Dev. (15.2
15.875)/.529 -1.276 NORMSDIST(Z)
NORMSDIST(-1.276) 0.100978 Approximately, 10
percent of the boxes have less than 15.2 Ounces
of cereal in them!
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Step 3 - Analyze - How can we improve the
capability of our cereal box filling process?

• Decrease Variation
• Line vibration impacts scale
• Random delays in nozzle open/close
• Center the Process
• Increase Specifications

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Step 4 Improve How good is good
enough?Motorolas Six Sigma

• Calibrate the equipment more frequently, upgrade
  process
• 6-sigma minimum from process center to nearest
  spec

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Step 5 Control

• Statistical Process Control (SPC)
• Use data from the actual process
• Estimate distributions
• Look at capability - is good quality possible
• Statistically monitor the process over time

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Analytical Tools for Six Sigma and Continuous
Improvement Flowchart
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Analytical Tools for Six Sigma and Continuous
Improvement Runchart
Can be used to identify when equipment or
processes are not behaving according to
specifications
MEASURE
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Analytical Tools for Six Sigma and Continuous
Improvement Checksheet
Can be used to keep track of defects or used to
make sure people collect data in a correct manner
(MEASURE)
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Analytical Tools for Six Sigma and Continuous
Improvement Pareto Analysis
Can be used to find when 80 of the problems may
be attributed to 20 of the causes (MEASURE)
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Analytical Tools for Six Sigma and Continuous
Improvement Histogram
Can be used to identify the frequency of quality
defect occurrence and display quality performance
(MEASURE)
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Analytical Tools for Six Sigma and Continuous
Improvement Cause Effect Diagram
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Analytical Tools for Six Sigma and Continuous
Improvement Opportunity Flow Diagram
Value added activities (Vertical steps) vs.
Non-value added activities (horizontal steps)
IMPROVE
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Analytical Tools for Six Sigma and Continuous
Improvement Control Charts
Can be used to monitor ongoing production process
quality and quality conformance to stated
standards of quality
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Other Six Sigma Tools

• Failure Mode and Effect Analysis (FMEA) is a
  structured approach to identify, estimate,
  prioritize, and evaluate risk of possible
  failures at each stage in the process
• Design of Experiments (DOE) a statistical test to
  determine cause-and-effect relationships between
  process variables and output
• a.k.a. multivariate analysis (testing)
• i.e., testing multiple independent variables
  (Xs) with respect to a dependent variable (Y)

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The Shingo System Fail-Safe Design

• Shingos argument
• SQC methods do not prevent defects
• Defects arise when people make errors
• Defects can be prevented by providing workers
  with feedback on errors
• Poka-Yoke includes
• Checklists
• Special tooling that
• prevents workers from making errors
• Gives rapid feedback of abnormalities to worker
  in time to correct them

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The Shingo System Example
Exhibit 8.10 Poka-Yoke Example (Placing labels on
parts coming down a conveyor)
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ISO 9000

• Series of standards agreed upon by the
  International Organization for Standardization
  (ISO)
• Adopted in 1987
• More than 100 countries
• A prerequisite for global competition?
• ISO 9000 directs you to "document what you do and
  then do as you documented."
• First party A firm audits itself against ISO
  9000 standards
• Second party A customer audits its supplier
• Third party A "qualified" national or
  international standards or certifying agency
  serves as auditor
• Is it important for small or medium sized
  businesses to have ISO 9000 certification?

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External Benchmarking Steps

• Identify those processes needing improvement
• Identify a firm that is the world leader in
  performing the process
• Obviously not a direct competitor
• Possibly from another industry
• Contact the managers of that company and make a
  personal visit to interview managers and workers
• Analyze data
• Compare the processes
• Compare the results (performance of the
  processes)