Quality Management, Process Capability and Six Sigma MGMT 311

Quality Control Statistical Process Control or SQC Even if a process is in control, it may not be as capable as it could be For example, the defect rate could be high, and this may be acceptable, but it may cost too much Which leads us to… Gryna

Quality Management Quality Planning Quality Control Quality Improvement  Juran

Quality Improvement Types Continuous Incremental improvement – small steps If done continually, major improvements occur over the long run Breakthrough Major improvement at one time Can allow leap-frog of competitors

Quality Improvement 1930’s and ‘40’s - Quality Control (QC) Post-WW II - Total Quality (TQ) and Toyota Production system (TPS) Total Quality Control (TQC) Total Quality Management (TQM) – 1980’s and ’90’s 6 Sigma – 1985 to present

W. Edwards Deming Major source of poor quality is variation Quality improvement is the responsibility of management All employees should be trained in use of problem solving tools and statistical techniques.

W. Edwards Deming Invited to Japan after WWII to assist in reconstruction of industry Emphasized quality and variation reduction The rest is history! Deming Prize introduced in Japan in 1951

6 Sigma Utilizes tools and techniques that span the range of all of quality management Systematic improvement process Project driven Training Certification – Green Belt, Black Belt, Master Black Belt

What is 6 Sigma? A statistical measure – standard deviation A measure of process capability A method of quality improvement Generation I – variation reduction – 1980’s Generation II – cost reduction – 1990’s Generation III – customer focus – now A method to design quality in – recent DFSS

Companies using 6 sigma Motorola – inventor, mid 1980’s GE Texas Instruments Bank of American Citibank Boeing Home Depot and many more

Six Sigma Defined “…a comprehensive and flexible system for achieving, sustaining, and maximizing business success.” “…driven by … understanding of customer needs, …use of facts, data, and statistical analysis, and … attention to managing, improving and reinventing business processes.” The Six Sigma Way – Pande, et al., p. xi

GE 1997 – 6000 projects, $320 million in savings. 1999 – $1.5 billion in savings 1996 to 1999 – claimed a total of $4.5 billion in savings ~ 1.2% of revenue

Citibank Reduced credit processing time by 50% Reduced cycle times of processing statements from 28 days to 15 days

Bank of America Started using six sigma in 2001 Claimed ~$2 billion in benefits by 2003 Many key customer processes near or at the 6 sigma level. Customer delight indicators up 25% Deposit processing improved by 47%

Standard Deviation Normal probability distribution Measure of dispersion of the data Calculations

Measure of Process Capability Capability is the measure of how well the process performs Upper and lower specification limits – USL and LSL Product is good within USL and LSL Product is defective if outside the USL or LSL The sigma level will be calculated using defects outside the USL and LSL

6 Sigma Levels and Defects Defects per million opportunities – DPMO 2 308,537 3 66,807 4 6210 5 233 6 3.4 Assumes a 1.5 Z shift.

A Method of Quality Improvement Customer focus Data and fact driven Process focus, management and improvement Proactive Boundary-less collaboration Drive for perfection, tolerate failure

Key Concepts of Six Sigma Critical to Quality: Attributes most important to customers. Defect: Failing to deliver what the customer wants. Process capability: What the process can deliver. Variation: What the customer sees and feels. Stable operations: Ensuring consistent, predictable processes to improve what the customer sees and feels. GE

5 Step Process - DMAIC Define the process and what customers require Measure the defects and the process Analyze the data and discover causes of defects Improve the process to remove causes of defects Control the process to prevent loss of the improvements

Improving the Process To reach desired sigma capability level, change the spec limits! Or… Reduce variation Calculate the USL and LSL Calculate the std dev, sigma, to reach the desired sigma capability level.

Calculating Sigma Levels Variables – any value Discrete (Attributes) – good/bad, count of defects

Variable Measures Normal Distribution USL and LSL Use Normal table to find % defects Find the Defects Per Million Opportunities (DPMO) Use Table to Find Sigma Capability Level

Discrete TDU = total defects per unit TDU = total number of defects divided by total number of units sampled DPMO = defects per million opportunities Opportunities per unit = number of different possible defects DPMO = TDU x 1,000,000 divided by opportunities per unit Use table to find Sigma capability level

Design for Six Sigma - DFSS Designing a new process Or a major redesign of an existing process 5 step process – DMADV Define Measure Analyze Design Verify