Process Performance and Quality Chapter 5

Ch.5 Agenda Definition of quality Quality costs TQM Employee Involvement Continuous improvement Control Charts for Variables Control Chart for Attributes Six sigma Quality Philosophy ISO 9000 and standards Quality awards and standards

What is Quality? Prior to 1980’s quality was not a top priority 1980s –US manufacturers was loosing market share Mid-1980s—more attention given to quality Later total quality concept was embraced

Benefits of Quality Increased market share Reduced production costs Increased price

Customer-Driven Definitions of Quality  Conformance to Specifications  Value  Fitness for Use  Support  Psychological Impressions

The Costs of Poor Quality  Prevention Costs  Appraisal Costs  Internal Failure Costs  External Failure Costs

Prevention Costs  Re-design the process to remove causes of defects  Re-design the product to make it simpler, easy to produce  Train employees  Train suppliers

Appraisal Costs  Inspections  Quality audits  Statistical quality control program

Internal Failure Costs  Scrap  Rework

External Failure Costs  Warranty service  Litigation  Loss of market share  Increased regulation

What are the hidden costs of internal and external failure  More labor  More machine capacity needed  Increased wip  Extended lead times  Reduced employee morale

Costs of Detecting Defects

Figure 6.2 Process Final testing Customer Where defect is detected Cost of detection and correction

Customer satisfaction TQM Wheel Figure 5.2

Employee Involvement  Cultural Change  Teams

Cultural Change  Top management should facilitate cultural change  Everyone is supposed to participate

Team Building  Common commitment  Shared leadership roles  Collective performance evaluation  Open-ended Communication

Management’s role in Team Building  Assign meaningful projects, clear rules  Set some immediate performance oriented tasks and goals for early success  Facilitate team members to spend a lot of time together  Have ways other than direct compensation to give the team positive reinforcement

Three Approaches to Teamwork  Problem-solving teams  Special-purpose teams  Self-managing teams –highest level of worker participation

Individual Development  Education seminar  University courses and degrees  On the job training  Cross training  Web-based learning

Getting started with Continuous Improvement  SPC training  Make SPC a normal aspect of Daily Operations  Build Work Teams and Employee Involvement  Utilize problem Solving Techniques within the work teams  Develop operator process ownership

Plan Do Check ActDemingWheel Figure 5.3

Problem Solving process: The Deming Wheel  Plan –select a process needing improvement, document process, analyse data, set improvement goals, discuss alternatives, assess benefits and costs, develop a plan and performance measures.  Do – implement plan  Check – Analyse data and check the performance  Act- document and disseminate the improved process as standard

Show changes in data pattern –e.g., trends Make corrections before process is out of control Show causes of changes in data –Assignable causes Data outside control limits or trend in data –Natural causes Random variations around average Control Chart Purposes

Characteristics for which you focus on defects Classify products as either ‘good’ or ‘bad’, or count # defects –e.g., radio works or not Categorical or discrete random variables AttributesVariables Quality Characteristics Characteristics that you measure, e.g., weight, length May be in whole or in fractional numbers Continuous random variables

Using Control Charts for Process Improvement  Measure the process  When changes are indicated, find the assignable cause  Eliminate problems, incorporate improvements  Repeat the cycle

Control Charts R Chart Variables Charts Attributes Charts X Chart P C Continuous Numerical Data Categorical or Discrete Numerical Data Control Chart Types

Type of variables control chart –Interval or ratio scaled numerical data Shows sample means over time Monitors process average Example: Weigh samples of coffee & compute means of samples; Plot  X Chart

Type of variables control chart –Interval or ratio scaled numerical data Shows sample ranges over time –Difference between smallest & largest values in inspection sample Monitors variability in process Example: Weigh samples of coffee & compute ranges of samples; Plot R Chart

Using Control Charts for Process Improvement  Sample the process  When changes are indicated, find the assignable cause  Eliminate problems, incorporate improvements  Repeat the procedure

Control Charts for Variables Example 5.1 Sample Number1234R x Special Metal Screw _

Control Charts for Variables Sample Number1234R x R = x = Special Metal Screw Example 5.1 = _

Control Charts for Variables Control Charts—Special Metal Screw x -Charts UCL x = (0.0021) = in. LCL x = – (0.0021) = in. UCL x = x + A 2 R LCL x = x - A 2 R = = R = A 2 = x = =

Example 5.1 Control Charts for Variables Control Charts—Special Metal Screw R -Charts R = D 4 = D 3 = 0 UCL R = (0.0021) = in. LCL R = 0 (0.0021) = 0 in. UCL R = D 4 R LCL R = D 3 R

Factors for Computing Control Chart Limits

x -Chart— Special Metal Screw Figure 5.9

Range Chart - Special Metal Screw Figure 5.8

Different Out of Control Situations

Type of attributes control chart –Nominally scaled categorical data e.g., good-bad Shows % of nonconforming items Example: Count # defective chairs & divide by total chairs inspected; Plot –Chair is either defective or not defective p Chart

Control Charts for Attributes Hometown Bank UCL p = p + z  p LCL p = p – z  p  p = p (1 – p )/ n Example 5.3

Type of attributes control chart –Discrete quantitative data Shows number of nonconformities (defects) in a unit –Unit may be chair, steel sheet, car etc. –Size of unit must be constant Example: Count # defects (scratches, chips etc.) in each chair of a sample of 100 chairs; Plot c Chart

c Chart Control Limits # Defects in Unit i # Units Sampled Use 3 for 99.7% limits

Six Sigma Improvement Model Define the current process using characteristics critical to customer satisfaction and determine gapsDefine the current process using characteristics critical to customer satisfaction and determine gaps Measure the work processes that affect the gapMeasure the work processes that affect the gap Analyze the data focusing on process analysisAnalyze the data focusing on process analysis Improve the processImprove the process Control the revised process to maintain new performance levelsControl the revised process to maintain new performance levels

,537 66,807 6,210   Defects per Million opportunities Process Capability Process Capability Sigma is a statistical unit of measure which Reflects process capability. Six Sigma as a Goal

% Good (6 Sigma) 20,000 lost articles of mail per hour Unsafe drinking water for almost 15 minutes each day 5,000 incorrect surgical operations per week Two short or long landings at most major airports each day 200,000 wrong drug prescriptions each year No electricity for almost seven hours each month Seven articles lost per hour One unsafe minute every seven months 1.7 incorrect operations per week One short or long landing every five years 68 wrong prescriptions per year One hour without electricity every 34 years 99% Good (3.8 Sigma) Six Sigma -- Practical Meaning

Six Sigma Implementation Top Down CommitmentTop Down Commitment Measurement Systems to Track ProgressMeasurement Systems to Track Progress Tough Goal SettingTough Goal Setting EducationEducation CommunicationCommunication Customer PrioritiesCustomer Priorities ASQ 6 Sigma Forum

ISO9000 ISO14000 International Quality Documentation and Environmental Management System

What is ISO 9000 Certification International quality standards Consists of series ISO Certified companies are listed in the directory Compliance with ISO 9000 standards indicate that quality claims can be verified.

What is ISO An environmental management system standard covering: –Environmental management system –Environmental performance evaluation –Environmental leveling –Life-cycle assessment

Quality Awards Malcolm Baldrige –USA Deming --Japan

Malcolm Baldrige national Quality Award Established in 1987 Named for Secretary of Commerce Malcolm Baldrige Focus then was to improve quality to reduce trade deficit Idea is to learn strengths and weaknesses and find ways to improve Seven major criteria

 Category 1—Leadership 120 points  Category 2—Strategic Planning 85 points  Category 3—Customer and Market Focus 85 points  Category 4—Information and Analysis 90 points  Category 5—Human Resource Focus 85 points  Category 6—Process Management 85 points  Category 7—Business Results 450 points Criteria for Performance Excellence

 Leadership— Leadership system, values, expectations, and public responsibilities  Strategic Planning— The effectiveness of strategic and business planning and deployment of plans, focusing on performance requirements  Customer and Market Focus— How the company determines customer and market requirements and achieves customers satisfaction  Information and Analysis— The effectiveness of information systems to support customer driven performance excellence and marketplace success  Human Resource Focus— The success of efforts to realize the full potential of the work force to create a high-performance organization  Process Management— The effectiveness of systems and processes for assuring the quality of products and services  Business Results— Performance results and competitive benchmarking in customer satisfaction, financials, human resources, suppliers, and operations