MENG 3402-02

Quality & Process Control

Lecture #2
TQM & Six Sigma
Todays lecture
TQM
Six-Sigma
DMAIC
Malcolm Baldrige National Quality Award (MBNQA)
ISO 9000
History of quality management
In the 1960s, Japanese products were known for their poor quality and they
couldnt be sold in the western market.
Japanese manufactures invited some quality gurus such as Deming and Juran to
teach them how to implement statistical methods to improve their quality.
The work of quality gurus ended up with philosophies and guidelines which the
Japanese followed and developed. They succeeded to improve their quality.
Next 20 odd years, when top managers in USA focused on marketing, production
quantity and financial performance, Japanese managers improved quality at an
unprecedented rate.
Market started preferring Japanese products and American companies suffered
immensely. Ford Motor Company had operating losses of $3.3 billion between
1980 and 1982. Xerox market share dropped from 93% in 1971 to 40% in 1981.
America woke up to the quality revolution in early 1980s. Ford Motor Company
consulted Deming to help transform its operations.
(By then, 80-year-old Deming was virtually unknown in USA. Whereas Japanese
government had instituted The Deming Prize for Quality in 1950.)
Managers started to realize that quality of management is more important than
management of quality. Birth of the term Total Quality Management (TQM).
TQM Integration of quality principles into organizations management systems.
TQM
Total - made up of the whole
Quality - degree of excellence a product or service
provides
Management - act, art or manner of planning, controlling,
directing,.

Therefore,TQM is the art of managing the whole to

achieve excellence.
What does TQM mean?
Total Quality Management means that the organization's
culture is defined by and supports the constant
attainment of customer satisfaction through an integrated
system of tools, techniques, and training. This involves the
continuous improvement of organizational processes,
resulting in high quality products and services.
Whats the goal of TQM?

Do the right things right the first

time, every time.
Another way to put it
At its simplest, TQM is all managers leading and
facilitating all contributors in everyones two main
objectives:

(1) total client satisfaction through quality products

and services; and
(2) continuous improvements to processes, systems,
people, suppliers, partners, products, and services.
Productivity and TQM
Traditional view:
Quality cannot be improved without significant losses in
productivity.
TQM view:
Improved quality leads to improved productivity.
An illustration
A manufacturing process produces 100 parts per day.
Currently, 75% of process output conforms to specs.
About 60% of the fallout (25%) can be reworked into an
acceptable product.
Direct manufacturing cost = $20 and reworking costs$4
per part.
Therefore, the manufacturing cost per good part is
evaluated as:
$20 100 +$4(15)
/ = = $22.89
90
An illustration (cont.)
An engineering study reveals that excessive process
variability is the reason for extremely high fallout.
A new quality improvement program can reduce the
fallout from 25% to 5%.
Out of the 5% fallouts, 60% can be reworked and 40%
scrapped.
After implement the quality improvement program, the
cost per good part is evaluated as:
$20 100 +$4(3)
/ = = $20.53
98
 Basic Tenets of TQM
1. The customer makes the ultimate determination
of quality.
2. Top management must provide leadership and
support for all quality initiatives.
3. Preventing variability is the key to producing high
quality.
4. Quality goals are a moving target, thereby
requiring a commitment toward continuous
improvement.
5. Improving quality requires the establishment of
effective metrics. We must speak with data and
facts not just opinions.
The three aspects of TQM

Tools, techniques, and training in

Counting their use for analyzing,
understanding, and solving quality
problems

Customers Quality for the customer as a

driving force and central concern.

Culture Shared values and beliefs,

expressed by leaders, that define
and support quality.
TQM: A Buzzword Losing Popularity
For many companies, the term TQM is associated
with corporate programs (mid 1980s ~ early
1990s) aimed at implementing employee teams
and statistical process control.
Unfortunately, many companies were dissatisfied
with the perceived results of these programs,
concluding TQM does not work.
Why TQM failed?
Emphasis on widespread training, quality awareness
Training often turned over to HR function
Not enough emphasis on quality control and
improvement tools, poor follow-through, no project-by-
project implementation strategy
TQM was largely unsuccessful

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 1

Copyright (c) 2013 John Wiley & Sons, Inc.
 Quality traditionally means fitness for use, which has two
general aspects
- Quality of design
- Quality of conformance
The modern concept of quality is quality is inversely
proportional to variability

Quality Improvement: Reduction of variability in processes

and products (elimination of waste)
Six Sigma
Business improvement approach that seeks to find and
eliminate causes of defects and errors in processes by focusing
on outputs that are critical to customers.
Created first by Motorola in the 1980s, then popularized by
AlliedSignal and General Electric (GE) in the 1990s.
The late Bill Smith, a reliability engineer is credited with
conceiving the idea of Six Sigma.
GE (specifically CEO Jack Welch) extensively promoted it.
The term Six Sigma is based on a statistical measure that
equates 3.4 or fewer errors or defects per million opportunities.

16
 Why Quality Improvement is Important:
A Simple Example
A visit to a fast-food store: Hamburger (bun, meat, special
sauce, cheese, pickle, onion, lettuce, tomato), fries, and drink.

This product has 10 components - is 99% good okay?

P{Single meal good} (0.99)10 0.9044

Family of four, once a month: P{All meals good} (0.9044)4 0.6690
P{All visits during the year good} (0.6690)12 0.0080

P{single meal good} (0.999)10 0.9900, P{Monthly visit good} (0.99)4 0.9607
P{All visits in the year good} (0.9607)12 0.6186
Six Sigma
Core philosophy based on key concepts:
Think in terms of key business processes and customer
requirements with focus on strategic objectives.
Focus on corporate sponsors responsible for championing
projects.
Emphasize quantifiable measures such as defects per million
opportunities (dpmo).
Ensure appropriate metrics is identified to maintain
accountability.
Provide extensive training.
Create highly qualified process improvement experts -belts.
Set stretch objectives for improvement.
Focus of Six Sigma is on Process
Improvement with an Emphasis on
Achieving Significant Business Impact
A process is an organized sequence of activities that
produces an output that adds value to the
organization
All work is performed in (interconnected) processes
Easy to see in some situations (manufacturing)
Harder in others
Any process can be improved
An organized approach to improvement is necessary
The process focus is essential to Six Sigma
Six Sigma Approach
A disciplined and analytical approach to process
Specialized roles for people:
Six Sigma Deployment Leader
Six Sigma Champion
Six Sigma Master Black Belt (MBB)
Six Sigma Black Belt (BB)
Six Sigma Green Belt (GB)
Six Sigma Yellow Belt (YB)

Top-down driven (Champions from each business)

BBs and MBBs have responsibility (project definition,
leadership, training/mentoring, team facilitation)
 Responsible for approving improvement projects

Facilitate project identification and

selection, select BBs and other team
members, remove barriers,
Technical leader, work with champions insures availability of resources.
to select projects and provide technical May have several projects to work on.
support to BBs.
Have less training in Six Sigma tools.
Usually part of a black-belt lead team.

Team leaders involved in actual project

completion activities.

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 1

Copyright (c) 2013 John Wiley & Sons, Inc.
What Makes it Work?
Successful implementations characterized by:
Committed leadership
Use of top talent
Supporting infrastructure
Formal project selection process
Formal project review process
Dedicated resources
Financial system integration
Project-by-project improvement strategy (borrowed from
Juran)

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 1

Copyright (c) 2013 John Wiley & Sons, Inc.
Six Sigma and DMAIC approach
Six Sigma involves a five-step process: Define, Measure, Analyze,
Improve, Control - (DMAIC).
The DMAIC approach is based on the Shewhart cycle

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 1

Copyright (c) 2013 John Wiley & Sons, Inc.
DMAIC
DMAIC is a structured problem-solving technique
consisting of the following steps:
Define
Measure
Analyze
Improve
Control
DMAIC is usually associated with six sigma, but it can
be used with any business or process improvement
effort

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
The DMAIC process

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2
Copyright (c) 2013 John Wiley & Sons, Inc.
Six Sigma Projects
Essential part of DMAIC: Integral component of Six Sigma.
Quality and business improvement via projects traces
back to Juran.
Breakthrough opportunity: Focus on a project that will
result in a major improvement.
Financial systems integration: Project impact should be
evaluated in terms of financial benefits.
Value opportunity of a project must be clear: Project
objectives must be aligned with corporate business
objectives at all levels.
Project selection
Project management

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
Evaluating proposed Six Sigma projects

If the improvement goal is 50%, then x = 11 years, and if its

75% then x = 5 years.
Must focus on projects that have high impact

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
2.2 The Define Step

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
 A process map or value stream map (Chapter 5)
may also be prepared. These should be completed
by at least the end of the Measure step.

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
The Define Tollgate

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
2.3 The Measure Step
Purpose is to evaluate and determine the present
process state
Identify key process input variables (KPIV) and key
process output variables (KPOV)
Data from historical records, from sampling, from
observational studies
Histograms, box plots, Pareto charts, scatter diagrams,
stem-and-leaf diagrams may all be useful
In some businesses, the measurement system must be
developed
Measurement systems capability may be important

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
The Measure Tollgate

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
2.4 The Analyze Step
Determine cause-and-effect relationships
Sources of variability common cause versus assignable
cause
Tools control charts, hypothesis testing, confidence
intervals, regression models, failure modes and effects
analysis
Discrete event simulation

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
The Analyze Tollgate

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
2.5 The Improve Step
Process redesign to reduce bottlenecks
Mistake-proofing
Statistical tools particularly designed experiments
DOX can be applied to either the physical process or a
computer model of the process
Pilot test the solution to confirm that it will solve the
problem

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
The Improve Tollgate

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
2.6 The Control Step
Complete all remaining work on project
Provide the process owner with a process control plan
Training documents (if appropriate) should be provided
Methods and metrics for future audits
Transition plan to the new process might include a
validation step

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
The Control Tollgate

Statistical Quality Control, 7th Edition by Douglas C. Montgomery. Chapter 2

Copyright (c) 2013 John Wiley & Sons, Inc.
What Makes it Work?
Successful implementations characterized by:
Committed leadership
Use of top talent
Supporting infrastructure
Formal project selection process
Formal project review process
Dedicated resources
Financial system integration
Project-by-project improvement strategy (borrowed from
Juran)
Recognizing and Rewarding Quality
Promotion of High Quality Goods and Services
Malcolm Baldrige National Quality Award (MBNQA) (United
States)
ISO9000 certification
Deming Prize (Japan)
European Quality Award (European Union)
 Malcolm Baldrige National Quality Award
(MBNQA)
Background
Established in 1987 to recognize total quality management in American
industry.
Purpose
Stimulate U.S. companies to improve quality and productivity.
Establish guidelines and criteria to evaluate quality.
Recognize those firms that improve their quality.
Provide guidance in how to achieve quality.
 The Integrated Framework of
the Baldrige Award Criteria

Source: 2004 Criteria for Performance Excellence, U.S. Dept. of Commerce, Baldrige National Quality Program, National Institute of Standards and Technology,
Gaithersburg, MD 20899. (www.quality.nist.gov)

Copyright 2005 The McGraw-Hill Companies. All rights reserved.

2001 Award CriteriaItem Listing

Source: 2004 Criteria for Performance Excellence, U.S. Dept. of Commerce, Baldrige
National Quality Program, National Institute of Standards and Technology, Gaithersburg,
MD 20899. (www.quality.nist.gov)
Benefits of the Baldrige Quality Criteria
Baldrige guidelines can be used to:
Help define and design a total quality system.
Evaluate ongoing internal relationships among department,
divisions, and functional units within an organization.
Assessand assist outside suppliers of goods and services to
a company.
Assess customer satisfaction.
ISO 9000: 2000
Created by International Organization for Standardization
(IOS) which was created in 1946 to standardize quality
requirement within the European market.
IOS initially composed of representatives from 91 countries:
probably most wide base for quality standards.
Adopted a series of written quality standards in 1987 (first
revised in 1994, and more recently (and significantly) in 2000).
Prefix ISO in the name refers to the scientific term iso for
equal. Thus, certified organizations are assured to have quality
equal to their peers.
ISO 9000: 2000
Defines quality systems standards based on the premise that
certain generic characteristics of management principles can be
standardized.
And that a well-designed, well-implemented and well managed
quality system provides confidence that outputs will meet
customer expectations and requirements.
Standards are recognized by 100 countries including Japan and
USA.
Intended to apply to all types of businesses. (Recently, B2B
firm bestroute.com became the first e-commerce company to
get ISO certification.)
ISO 9000: 2000
Created to meet five objectives:
1. Achieve, maintain, and seek to continuously improve
product quality in relation to the requirements.
2. Improve the quality of operations to continually meet
customers and stakeholders needs.
3. Provide confidence to internal management that quality
requirements are being met.
4. Provide confidence to the customers that quality
requirements are being met.
5. Provide confidence that quality system requirements are
fulfilled.
ISO 9000: 2000 structure
Consists of three documents
1. ISO 9000 Fundamentals and vocabulary.

2. ISO 9001 Requirements.

Organized in four sections: Management Responsibility;
Resource Management; Product Realization; and
Measurement, Analysis and Improvement.

3. ISO 9004 Guidelines for performance improvements.

50
ISO 9000: 2000 Quality Management
Principles
Principle 1: Customer Focus
Principle 2: Leadership
Principle 3: Involvement of people
Principle 4: Process approach
Principle 5: Systems approach for management
Principle 6: Continual improvement
Principle 7: Factual approach to decision making
Principle 8: Mutually beneficial supplier relationships.

51
ISO 9000: 2000 registration
Originally intended to be a two-party process where the
supplier is audited by its customers, the ISO 9000 process
became a third-party accreditation process.
Independent laboratory or a certification agency conducts the
audit.
Recertification is required every three years.
Individual sites not entire company must achieve
registration individually.
All costs are to be borne by the applicant.
A registration audit may cost anywhere from $10,000 to
$40,000.
(more information at http://www.iso.org)

52