Chapter 9 Six Sigma Quality

Learning Objectives Understand total quality management. Describe how quality is measured and be aware of the different dimensions of quality. Understand the meaning of six sigma and be able to explain the define, measure, analyze, improve, and control (DMAIC) quality improvement process. Understand what ISO certification means. 2

Key Six Sigma Concepts Critical to quality: attributes most important to the customer Defect: failing to deliver what customer wants Process capability: what your process can deliver Variation: what customer sees and feels Stable operations: ensuring consistent, predictable processes to improve what the customer sees and feels Design for six-sigma: designing to meet customer needs and process capability LO 1

Total Quality Management (TQM) Total quality management: 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 the product or service Ensuring that the organization’s systems can consistently produce the design TQM was a response to the Japanese superiority in quality LO 1 3

Malcolm Baldridge National Quality Award Established in 1987 by Department of Commerce Goal is to help companies review and structure their quality programs Has requirement that suppliers demonstrate they are measuring and documenting their quality practices LO 1

Three Quality Gurus Define Quality Crosby: conformance to requirements Deming: A predictable degree of uniformity and dependability at low cost and suited to the market Juran: fitness for use (satisfies customer’s needs) LO 1

Deming’s Fourteen Points Create consistency of purpose Lead to promote change Build quality into the products Build long term relationships Continuously improve product, quality, and service Start training Emphasize leadership One point to make here is that this list represents a recent expression of Demings 14 points - the list is still evolving. Students may notice that many of these fourteen points seem to be simply common sense. If they raise this issue - ask them to consider jobs they have held. Were these points emphasized or implemented by their employers? If not, why not? This part of the discussion can be used to raise again the issue that proper approaches to quality are not “programs,” with limited involvement and finite duration, but rather philosophies which must become ingrained throughout the organization. LO 1

Deming’s Points Drive out fear Break down barriers between departments Stop haranguing workers Support, help, improve Remove barriers to pride in work Institute a vigorous program of education and self-improvement Put everybody in the company to work on the transformation LO 1

Quality Specifications and Quality Costs Design quality: inherent value of the product in the marketplace Conformance quality: degree to which the product or service design specifications are met Quality at the source: the person who does the work takes responsibility for making sure it meets specifications LO 1 7

The Dimensions of Design Quality Performance: primary product or service characteristics Features: added touches, bells and whistles, secondary characteristics Reliability/durability: consistency of performance over time Serviceability: ease of repair Aesthetics: sensory characteristics Perceived quality: past performance and reputation LO 2

Cost of Quality Basic cost assumptions Cost of quality Failures are caused Prevention is cheaper Performance can be measured Cost of quality Appraisal cost Prevention cost Internal failure cost External failure cost LO 2

Shewhart’s PDCA Model 4.Act 1.Plan 3.Check 2.Do Implement the plan Identify the improvement and make a plan 3.Check 2.Do Is the plan working Test the plan LO 3

Six Sigma Quality A philosophy and set of methods companies use to eliminate defects in their products and processes 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 three standard deviations of the process outputs LO 3

Six Sigma Quality (Continued) Six Sigma allows managers to readily describe process performance using a common metric: Defects Per Million Opportunities (DPMO) LO 3

Six Sigma Quality (Continued) Example of Defects Per Million Opportunities (DPMO) calculation. Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered. What is the DPMO in this situation? So, for every one million letters delivered this city’s postal managers can expect to have 1,000 letters incorrectly sent to the wrong address. Cost of Quality: What might that DPMO mean in terms of over-time employment to correct the errors? LO 3

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 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 DMAIC consists of five steps…. LO 3

DMAIC Methodology Define Measure Analyze Identify customers and their priorities Identify a project Identify critical-to-quality characteristics Measure Determine how to measure the process Identify key internal processes Analyze Determine most likely causes of defects Understand why key defects are generated LO 3

DMAIC Methodology Continued Improve Identify means to remove causes of defects Confirm the key variables Identify the maximum acceptance ranges Modify process to stay within acceptable range Control Determine how to maintain improvements Put tools in place to track key variables LO 3

Six-Sigma Methodology Uses many of the same statistical tools as other quality movements Used in a systematic project-oriented fashion through define, measure, analyze, improve, and control (DMAIC) cycle More detailed version of Deming PDCA cycle Continuous improvement: seeks continual improvement in all aspects of operations Also uses scientific method LO 2

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? LO 3

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. LO 3

2 - Measure How would we measure to evaluate the extent of the problem? What are acceptable limits on this measure? LO 3

2 – Measure (continued) Let’s 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 LO 3

2. Measure (continued) We go out and buy 1,000 boxes of cereal and find that they weight an average of 15.875 ounces with a standard deviation of .529 ounces. What percentage of boxes are outside the tolerance limits? LO 3

What percentage of boxes are defective (i.e. less than 15.2 oz)? 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) = .100978 Approximately, 10 percent of the boxes have less than 15.2 Ounces of cereal in them! LO 3

Step 3 - Analyze – What is Causing the Low Weight of Our cereal box filling process? Worker error Machine issues Raw material mix . . . LO 3

Step 4 – Improve – How good is good enough? Motorola’s “Six Sigma” 6s minimum from process center to nearest spec LO 3

Motorola’s “Six Sigma” Implies 2 ppB “bad” with no process shift With 1.5s shift in either direction from center (process will move), implies 3.4 ppm “bad”. LO 3

Step 4: Improve What changes are to be made to reduce variation? Center process Change process specifications LO 3

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 LO 3

Analytical Tools for Six Sigma and Continuous Improvement Flowcharts Run charts Pareto charts Checksheets Cause-and-effect diagrams Opportunity flow diagrams Control charts LO 2

Example: Flowchart LO 2

Example: Run Chart LO 2

Example: Pareto Chart LO 2

Example: Checksheet LO 2

Example: Cause-and-Effect Diagram LO 2

Example: Opportunity Flow Diagram

Example: Control Chart LO 2

Other Six Sigma Tools Failure mode and effect analysis (DMEA): 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 LO 3

Six Sigma Roles and Responsibilities Executive leaders must champion the process of improvement Corporation-wide training in Six Sigma concepts and tools Setting stretch objectives for improvement Continuous reinforcement and rewards LO 3

The Shingo System: Fail-Safe Design Shingo’s argument: SQC methods do not prevent defects Defects arise when people make errors Defects can be prevented by providing workers with feedback on errors Successive check Self-check Source inspection Poka-Yoke includes: Checklists Special tooling that prevents workers from making errors LO 3 21

ISO 9000 and ISO 14000 Series of standards agreed upon by the International Organization for Standardization (ISO) Adopted in 1987 More than 160 countries A prerequisite for global competition? ISO 9000 an international reference for quality, ISO 14000 is primarily concerned with environmental management LO 4 24

Three Forms of ISO Certification 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 LO 4 27

External Benchmarking Steps Identify those processes needing improvement Identify a firm that is the world leader in performing the process Contact the managers of that company and make a personal visit to interview managers and workers Analyze data LO 4 20