OPERATIONS & TECHNOLOGY MANAGEMENT (JMP 5023) MANAGING QUALITY & SIX SIGMA

Managing Quality and Six Sigma Quality management refers to systematic policies, methods, and procedures used to ensure that goods and services are produced with appropriate levels of quality to meet the needs of customers. Quality management refers to systematic policies, methods, and procedures used to ensure that goods and services are produced with appropriate levels of quality to meet the needs of customers. Organizations today integrate quality principles into their management systems, using tools such as Total Quality Management (TQM), Six Sigma, and Lean Operating Systems. Organizations today integrate quality principles into their management systems, using tools such as Total Quality Management (TQM), Six Sigma, and Lean Operating Systems.

Understanding Quality Quality can be a confusing concept, partly because people view quality in relation to differing criteria based on their individual roles in the value chain such as: Quality can be a confusing concept, partly because people view quality in relation to differing criteria based on their individual roles in the value chain such as:  perfection,  doing it right the first time, and/or  consistency. Fitness for use is the ability of a good or service to meet customer needs. Fitness for use is the ability of a good or service to meet customer needs.

The GAP Model The GAP model recognizes that there are several ways to mis-specify and mismanage the creation and delivery of high levels of quality. Gap 1 is the discrepancy between customer expectations and management perceptions of those expectations. Gap 2 is the discrepancy between management perceptions of what features constitute a target level of quality and the task of translating these perceptions into executable specifications.

The GAP Model Gap 3 is the discrepancy between quality specifications documented in operating and training manuals and plans, and their implementation. Gap 3 is the discrepancy between quality specifications documented in operating and training manuals and plans, and their implementation. Gap 4 is the discrepancy between actual manufacturing and service delivery system performance and external communications to the customers. Gap 4 is the discrepancy between actual manufacturing and service delivery system performance and external communications to the customers. Gap 5 is the difference between the customer's expectations and perceptions. The fifth gap depends on the other four. Gap 5 is the difference between the customer's expectations and perceptions. The fifth gap depends on the other four.

Gap Model of Quality

Quality in Operations Fitness for Use: the ability of a good or service to meet customer needs. Quality of Conformance: extent to which a process is able to deliver output that confirms to design specifications. Specifications: targets and tolerances determined by designers of goods and services.

Quality in Operations Quality Control: means of ensuring consistency in processes to achieve conformance. Service Quality: consistently meeting or exceeding customer expectations and service delivery system performance criteria during all service encounters.

Quality in Operations Principles of Total Quality 1.A focus on customers and stakeholders. 2.A process focus supported by continuous improvement and learning. 3.Participation and teamwork by everyone in the organization.

Quality and Business Results Investment in Quality Yields Business Results  Increased employee participation  Improved product and service quality  Improved customer satisfaction  Improved productivity  Improved employee skills  Improved financial performance

W. Edwards Deming Bringing about improvements in product and service quality by reducing uncertainty and variability in goods and services design and associated processes (the beginning of his ideas in 1920s and 1930s).

W. Edwards Deming Higher quality leads to higher productivity and lower costs. Deming’s “Chain Reaction” theory “14 Points” management philosophy. Deming Cycle – Plan, Do, Study, and Act.

The Deming Chain Reaction

Joseph Juran Wrote Quality Control Handbook in 1951, a comprehensive quality manual. Defined quality as “fitness for use.” Advocated use of quality cost measurement. Quality Trilogy: quality planning, quality control, and quality improvement.

Philip B. Crosby Wrote Quality is Free in 1979, which brought quality to the attention of top corporate managers. Quality means conformance to requirements, not elegance.

Philip B. Crosby There is no such thing as the economics of quality; doing the job right the first time is always cheaper. The only performance measurement is the cost of quality which is the expense of nonconformance. The only performance standard is Zero Defects (ZD).

ISO 9000:2000 Quality standards were created in 1987 and revised in 1994 and 2000 to improve product quality, improve the quality of operation’s processes, and provide confidence to organizations and customers that quality system requirements are fulfilled. Internationally recognized (and sometimes required to do business in certain countries). Standardizes key terms in quality and provides a set of basic principles for initiating quality management systems.

Designing Quality Management and Control Systems Contract management, design control, and purchasing. Process control: ensure that a process performs as it should and take corrective action when it does not. Corrective action and continual improvement Controlling inspection, measuring, and test equipment.

Designing Quality Management and Control Systems Metrology is the collection of people, equipment, facilities, methods, and procedures used to assure the correctness or adequacy of measurements.

Designing Quality Management and Control Systems Repeatability, or equipment variation, is the variation in multiple measurements by an individual using the same instrument. This is a measure of how precise and accurate the equipment is. Reproducibility, or operator variation, is the variation in the same measuring instrument when it is used by different individuals to measure the same parts. This indicates how robust the measuring process is to the operator and environmental conditions.

Designing Quality Management and Control Systems Records, documentation, and audits All the elements required for a quality system, such as control processes, measuring and test equipment, and other resources needed to achieve the required quality of conformance, should be documented in a quality manual, which serves as a permanent reference for implementing and maintaining the system.

Six Sigma Six Sigma is a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and results in a clear financial return for the organization. Used by companies including Motorola, Allied Signal, Texas Instruments, and General Electric.

Six Sigma’s DMAIC Process Define: identify customer and priorities, identify and define a suitable project, identify CTQs (critical to quality characteristics). Measure: determine how to measure the process, identify key internal processes that influence CTQs. Analyze: determine likely causes of defects and understand why defects are generated by identifying key variables that cause process variation.

Six Sigma’s DMAIC Process Improve: identify means to remove defects, confirm key variables, modify the process to stay within acceptable range. Control: determine how to maintain improvements, put tools in place to ensure that key variables remain within acceptance ranges under the modified process.

Implementing Six Sigma Six Sigma teams are comprised of Champions - senior-level managers who promote and lead the deployment of Six Sigma in a significant area of the business. Champions - senior-level managers who promote and lead the deployment of Six Sigma in a significant area of the business. Master Black Belts - full-time Six Sigma experts who are responsible for Six Sigma strategy, training, mentoring, deployment, and results. Master Black Belts - full-time Six Sigma experts who are responsible for Six Sigma strategy, training, mentoring, deployment, and results. Black Belts - fully-trained Six Sigma experts with up to 160 hours of training who perform much of the technical analyses required of Six Sigma projects, usually on a full-time basis. Black Belts - fully-trained Six Sigma experts with up to 160 hours of training who perform much of the technical analyses required of Six Sigma projects, usually on a full-time basis.

Implementing Six Sigma Six Sigma teams are comprised of Green Belts – functional employees who are trained in introductory Six Sigma tools and methodology and work on projects on a part-time basis, assisting Black Belts while developing their own knowledge and expertise. Green Belts – functional employees who are trained in introductory Six Sigma tools and methodology and work on projects on a part-time basis, assisting Black Belts while developing their own knowledge and expertise. Team Members are individuals from various functional areas who support specific projects. Team Members are individuals from various functional areas who support specific projects.

Cost of Quality Measurements Cost of quality: costs associated with avoiding poor quality or those incurred as a result of poor quality. Prevention costs: expended to keep nonconforming goods and services from being made and reaching the customer. Appraisal costs: expended on ascertaining quality levels through measurement and analysis of data to detect and correct problems.

Cost of Quality Measurements Internal-failure costs: costs incurred as a result of unsatisfactory quality that is found before delivery of good or service to the customer. External-failure costs: incurred after poor- quality goods or services reach the customer.

The “Seven QC Tools” 1.Flowcharts: process mapping to identify the sequence of activities or flow of materials/information in a process. 2.Run Charts and Control Charts: line graph with data plotted over time; control charts include control limits. 3.Checksheets: simple tools for data collection, ensure completeness. 4.Histograms: graphically represents frequency of values within a specified group.

The Structure of a Control Chart

Defective Item Checksheet

The “Seven QC Tools” 5.Pareto Analysis: separates vital few from the trivial many causes; provides direction for selecting project improvement. 6.Cause-and-Effect Diagrams: represents chain of relationships; often called a fishbone diagram. 7.Scatter Diagrams: graphical component of regression analysis.

Use of Pareto Diagrams for Progressive Analysis

Cause-and-Effect (Fishbone) Diagram for Hospital Emergency Admission

Application of the Seven QC Tools in Six Sigma

Seven Tools of Quality Management 1.Flowcharts: process mapping to identify the sequence of activities or flow of materials/information in a process. 2.Run Charts and Control Charts: line graph with data plotted over time; control charts include control limits. 3.Checksheets: simple tools for data collection, ensure completeness. 4.Histograms: graphically represents frequency of values within a specified group. 5.Pareto Analysis: separates vital few from the trivial many causes; provides direction for selecting project improvement. 6.Cause-and-Effect Diagrams: represents chain of relationships; often called a fishbone diagram. 7.Scatter Diagrams: graphical component of regression analysis.

The Deming Cycle Plan: study current situation Do: Implement plan on trial basis Study: determines if trial is working correctly Act: standardize improvements

Kaizen: focuses on small, gradual, and frequent improvements over the long term with minimum financial investment and with participation by everyone in the organization. Poka-Yoke (Mistake-Proofing): an approach for mistake-proofing processes using automatic devices or methods to avoid simple human error. Managing Quality and Six Sigma

Process Simulation: an approach for building a logical model of a real process, and experimenting with the model to obtain insight about the behavior of the process or to evaluate the impact of changes in assumptions or potential improvements to it. Managing Quality and Six Sigma

Process simulation should be used when the process is very complex and difficult to visualize, involves many decision points, or when the goal is to optimize the use of resources for a process. Process simulation should be used when the process is very complex and difficult to visualize, involves many decision points, or when the goal is to optimize the use of resources for a process. Building, maintaining and using a simulation model can be expensive. Building, maintaining and using a simulation model can be expensive.