1. Lean Systems and Six-Sigma Quality
Chapter 10
Lean Systems and
Six-Sigma Quality

2. Lecture Outline What is Lean? Lean Production Respect for People
Total Quality Management (TQM)
Statistical Quality Control (SQC)
Six-Sigma Quality
Lean Six-Sigma Supply Chain

3. What is Lean?
Lean is a management approach for creating value for the end customer through the most efficient utilization resources possible
Standard in many industries
Often results in:
large cost reductions
improved quality
increased customer service

4. Lean Six Sigma Combines the approaches of Lean and Six Sigma Six Sigma
methodology to identify and eliminate causes of quality problems

5. Tenets of Lean There are six tenets of the Lean Philosophy:
Elimination of Waste
eliminate all non-value adding activities
A Broad View
decisions made for the success of the entire supply chain
all supply chain members responsible for adding value
Simplicity
the simpler the solution the better

6. Tenets of Lean Continued
Continuous Improvement
emphasis on quality and continuous improvement
called kaizen
Visibility
visible problems are identified and solved
Flexibility
easily switch from one product type to another, using flexible workers that perform many different tasks

7. Elements of Lean
Lean is composed of three elements that work in unison:
Lean Production
Total Quality Management (TQM)
Respect for People

8. Elements of Lean

9. Lean Production
Coordinated system for producing the exact products desired, delivered in right quantities to where needed Just-in-Time
The Pull System
Visual Signals
Small Lot Production
Uniform Plant Loading

10. The Pull System Traditional approach Pull approach
supply chains work as “push” systems
inventory carried to cover up problems
Pull approach
each stage in supply chain requests quantities needed from the previous stage
no excess inventory generated
reduced inventory exposes problems

11. Visual Signals Communication between workstations Kanban
“signal” or “card” in Japanese
contains information passed between stations
authorizes production

12. Visual Signals

13. Small Lot Production
The amount of products produced at any one time is small
reduces inventory and excess processing
increases flexibility
shortens manufacturing lead time
responds to customer demands more quickly
setup time must be low

14. Uniform Plant Loading Problem Uniform Plant Loading
demand changes are magnified throughout the supply chain
contributes to inefficiency and waste
Uniform Plant Loading
production schedule is frozen for the month
also called “leveling”
helps suppliers better plan own production

15. Respect for People
Respect for all people must exist for an organization to be its best
flatter hierarchy than traditional organizations
ordinary workers given great responsibility
supply chain members work together in cross functional teams
Look at Role of:
workers, management, and suppliers

16. Role of Workers
Workers have the ability to perform many different tasks and are actively engaged in pursuing company goals
Worker Duties
improve production process
monitor quality
correct quality problems
Work in Teams
quality circles

17. Role of Management
Create the cultural change in the organization needed for Lean to succeed
provide atmosphere of cooperation
Empower workers to take action based on their ideas
develop incentive system for lean behaviors

18. Role of Suppliers Lean builds long-term supplier relationships
companies partner with suppliers
improve process quality
information sharing
goal to have single-source suppliers

19. Total Quality Management (TQM)
TQM is an integrated organizational effort designed to improve quality at every level
Look at:
Quality Gurus
Voice of the Customer
Costs of Quality
Quality Tools
ISO 9000

20. Quality Gurus

21. Voice of the Customer
Quality is defined as meeting or exceeding customer expectations
Determine customer wants:
focus groups
market surveys
customer interviews

22. Costs of Quality

23. Quality Tools
Lean requires workers to identify and correct quality problems
Seven Tools of Quality Control:
Cause and Effect Diagrams
Flowcharts
Checklists
Control Charts
Scatter Diagrams
Pareto Analysis
Histograms

24. Cause and Effect Diagrams
Identify causes of a quality problem
sometimes called “fishbone diagrams”

25. Flowchart
Diagrams the sequence of steps in an operation or process

26. Checklist
Lists common defects and number of occurrences of the defects

27. Control Chart
Determines whether a process is operating within expectations

28. Scatter Diagram
Graph that visually shows how two variables are related to one another

29. Pareto Analysis
Based on the premise that a small number of causes create the majority of problems
identifies problems based on degree of importance

30. Histogram
Chart that shows the frequency distribution of observed values of a variable

31. ISO 9000 “Family” of standards for quality management ISO 14000
increased international trade developed a need
published by International Organization for Standards (ISO) in 1987
concerns measuring and documenting the quality process
ISO provides a certification process
ISO 14000
standards for environmental management

32. Statistical Quality Control (SQC)
SQC is the use of statistical tools to measure product and process quality
Three categories:
Descriptive Statistics
describe quality characteristics
Statistical Process Control (SPC)
a random sample of output is used to determine if characteristics are acceptable
Acceptance Sampling
sample determines if whole batch is acceptable

33. Sources of Variation All processes have variation Assignable Variation
caused by factors that can be clearly identified and managed
Common Variation
inherent in the process
also called random variation

34. Process Capability
Process Capability evaluates the variation of the process relative to product specifications
Product Specifications
ranges of acceptable quality characteristics
also called tolerances
Process Variation
all processes have natural variation
defects are produced when variation exceeds product specifications

35. Process Variation Equal to Specification Range

36. Process Variation Exceeds Specification Range

37. Process Variation Narrower than Specification Range

38. Process Capability Index
where: USL = upper specification limit
LSL = lower specification limit
Cp Values:
Cp = 1: process is minimally capable
Cp ≤ 1: process is not capable of producing
products within specification
Cp ≥ 1: process exceeds minimum capability

39. Cp Example
Given a process with three separate machines that are used to fill jars with pasta sauce.
specification range is between 30 and 34 ounces
process mean, μ, is 31 ounces
Machine σ A
0.6 B
0.7 C
1.2
Calculate the Cp for each machine to determine capabilities

40. Cp Example Continued A: B: C:
Machine A has a Cp > 1, however the process mean is not centered

41. Cpk Example
Cpk addresses the lack of centering of the process over the specification range
Machine A:
Cpk = min (1.66, 0.55) = 0.55

42. Process Control Charts
Graph that shows whether a sample of data falls within the common range of variation
sample process output
plot result on the control chart
use to determine if process is in control
can monitor:
variables
characteristics that can be measured
attributes
characteristics that can be counted

43. Process Control Charts

44. Control Charts for Attributes
A p-chart monitors the proportion of defective items in a sample
centerline: average value of p across all samples, p
UCL = p + z sp
LCL = p – z sp
where: z = standard normal variable
p = sample proportion defective
sp = = standard deviation of
avg. proportion defective

45. # of Incorrect Procedures
P-Chart Example
Given the following five samples of data tracking incorrect procedures in a hospital
Sample
# of Incorrect Procedures
# Inspected
Fraction Defective 1 10
0.1 2 3
0.2 4 5
Total 50

46. P-Chart Example Continued
p = 5/10 = 0.10 UCL = p + z sp = (0.095) = LCL = p + z sp = (0.095) = 0.185