1. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 1 Chapter 10 Principles of Six Sigma

2. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Idea Although we view quality improvement tools and techniques from the perspective of Six Sigma, it is important to understand that they are simply a collection of methods that have been used successfully in all types of quality management and improvement initiatives, from generic TQM efforts, to ISO 9000, and in Baldrige processes.

3. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Six-Sigma Metrics  Defect – any mistake or error that is passed on to a customer  Defects per unit (DPU) = number of defects discovered  number of units produced  Defects per million opportunities (dpmo) = DPU  1,000,000  opportunities for error

4. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Six-Sigma Quality  Ensuring that process variation is half the design tolerance (Cp = 2.0) while allowing the mean to shift as much as 1.5 standard deviations, resulting in at most 3.4 dpmo.

5. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Idea Although originally developed for manufacturing in the context of tolerance- based specifications, the Six Sigma concept has been operationalized to apply to any process and has come to signify a generic quality level of at most 3.4 defects per million opportunities.

6. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing k-Sigma Quality Levels

7. 7 Problem Solving  Problem: any deviation between what “should be” and what “is” that is important enough to need correcting  Structured  Semistructured  Ill-structured  Problem Solving: the activity associated with changing the state of what “is” to what “should be”

8. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Quality Problem Types 1. Conformance problems 2. Unstructured performance problems 3. Efficiency problems 4. Product design problems 5. Process design problems

9. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Factors in Six Sigma Project Selection  Financial return, as measured by costs associated with quality and process performance, and impacts on revenues and market share  Impacts on customers and organizational effectiveness  Probability of success  Impact on employees  Fit to strategy and competitive advantage

10. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Problem Solving Process 1. Redefining and analyzing the problem 2. Generating ideas 3. Evaluating and selecting ideas 4. Implementing ideas

11. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Idea A structured problem-solving process provides all employees with a common language and a set of tools to communicate with each other, particularly as members of cross- functional teams.

12. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing DMAIC Methodology 1. Define 2. Measure 3. Analyze 4. Improve 5. Control

13. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Common Six Sigma Tools

14. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Define  Describe the problem in operational terms  Drill down to a specific problem statement (project scoping)  Identify customers and CTQs, performance metrics, and cost/revenue implications

15. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Measure  Key data collection questions  What questions are we trying to answer?  What type of data will we need to answer the question?  Where can we find the data?  Who can provide the data?  How can we collect the data with minimum effort and with minimum chance of error?

16. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Analyze  Focus on why defects, errors, or excessive variation occur  Seek the root cause  5-Why technique  Experimentation and verification

17. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Improve  Idea generation  Brainstorming  Evaluation and selection  Implementation planning

18. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Control  Maintain improvements  Standard operating procedures  Training  Checklist or reviews  Statistical process control charts

19. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Tools for Six-Sigma and Quality Improvement  Elementary statistics  Advanced statistics  Product design and reliability  Measurement  Process control  Process improvement  Implementation and teamwork

20. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Design for Six Sigma  Focus on optimizing product and process performance  Features  A high-level architectural view of the design  Use of CTQs with well-defined technical requirements  Application of statistical modeling and simulation approaches  Predicting defects, avoiding defects, and performance prediction using analysis methods  Examining the full range of product performance using variation analysis of subsystems and components

21. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Idea All Six Sigma projects have three key characteristics: a problem to be solved, a process in which the problem exists, and one or more measures that quantify the gap to be closed and can be used to monitor progress.

22. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Six Sigma Metrics in Services  Accuracy  Cycle time  Cost  Customer satisfaction

23. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Lean Production and Six Sigma  The 5S’s: seiri (sort), seiton (set in order), seiso (shine), seiketsu (standardize), and shitsuke (sustain).  Visual controls  Efficient layout and standardized work  Pull production  Single minute exchange of dies (SMED)  Total productive maintenance  Source inspection  Continuous improvement

24. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Traditional Economic Model of Quality of Conformance Total cost Cost due to nonconformance Cost of quality assurance “optimal level” of quality 100%

25. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Modern Economic Model of Quality of Conformance Total cost Cost due to nonconformance Cost of quality assurance 100%