MANAGING

QUALITY
SIX SIGMA

Learning Objectives

Define the term quality.

Explain why quality is important and
describe the consequences of poor quality.
Identify the determinants of quality.
Describe the costs associated with quality.
Describe some of the current quality
awards.

9-2

What is Quality?
Quality
A term used by
customers to
describe their
general
satisfaction
with a service
or product.

FOUNDATIONS OF MODERN QUALITY

MANAGEMENT: THE GURUS
WALTER SHEWART
Pioneer in the field of quality
control
Known as Father of statistical
quality control
Develop methods for analyzing the
output of industrial processes to
determine whether corrective
action is necessary

FOUNDATIONS OF MODERN QUALITY

MANAGEMENT: THE GURUS
W.EDWARDS DEMING

Bringing about improvements in product

and service quality by reducing uncertainty
and variability in goods and services
design and associated processes (the
beginning of his ideas
in 1920s and 1930s)
Higher quality leads to higher productivity
and lower costs.
Demings Chain Reaction theory
14 Points management philosophy.
Deming Cycle Plan, Do, Study, and Act.
5

FOUNDATIONS OF MODERN QUALITY

MANAGEMENT: THE GURUS

Others:

Armand Feigenbaum
Philip B. Crosby
Kaoru Ishikawa
Genichi Taguchi
Taichi Ohno & Shigeo Shingo
6

Key Contributors to
Quality Management

Understanding Quality

Quality can be a CONFUSING

CONCEPT
WHY??

Perceived quality is governed by the gap between

customers expectations and their perceptions of the
product or service

Customers
expectations
for the
product or
service

Gap

Gap
Customers
perceptions
of the
product or
service

Expectations >
perceptions

Perceived quality is poor

Customers
expectations
for the
product or
service

Customers
perceptions
of the
product or
service

Expectations =
perceptions

Perceived quality is
acceptable

Customers
expectations
for the
product or
service

Customers
perceptions
of the
product or
service

Expectations <
perceptions

Perceived quality is
good

INSIGHTS ON QUALITY
MANAGEMENT: defining quality
PRODUCT QUALITY

Performance

Aesthetics
Special Features
Conformance
Reliability
Durability
Perceived Quality
Serviceability
10

INSIGHTS ON QUALITY
MANAGEMENT: defining quality
SERVICE QUALITY

Convenience
Reliability
Responsiveness
Time
Assurance
Courtesy
Tangibles
11

Challenges with Service Quality

Customer expectations often change
Different customers have different
expectations
Each customer contact is a moment of truth
Customer participation can affect perception
of quality
Fail-safing must be designed into the system

9-12

INSIGHTS ON QUALITY
MANAGEMENT: defining quality
The dimensions of both product and service
quality establish a conceptual framework for
thinking about quality.
QUALITY must be stated in terms of specific,
measurable characteristics.

13

DETERMINANTS OF QUALITY
The degree to which a product or a service
successfully satisfies its intended purpose
has 4 primary determinants

14

Determinants of Quality

Design

Ease of
use

Conforms
to design
9-15

Service
After
delivery

Determinants of Quality
Quality of design

Intention of designers to include or exclude

features in a product or service

Quality of conformance

9-16

The degree to which goods or services

conform to or achieve the intent of the
designers

Quality in Operations
Fitness for Use: the ability of a good or
service to meet customer needs.
Quality of Conformance: extent to which
a process is able to deliver output that
confirms to design specifications.
Specifications: targets and tolerances
determined by designers of goods and
services.

Quality in Operations
Quality Control: means of ensuring
consistency in processes to achieve
conformance.
Service Quality: consistently meeting or
exceeding customer expectations and
service delivery system performance
criteria during all service encounters.

The Consequences of Poor Quality

Loss of business
Liability
Reduced productivity
Increased costs

9-19

Costs of Quality
Prevention Costs
Appraisal Costs
Internal Failure Costs
External Failure Costs

QUALITY MANAGEMENT SYSTEM

Quality management refers to systematic
policies, methods, and procedures used to
ensure that goods and services are produced
with appropriate levels of quality to meet the
needs of customers.
Organizations today integrate quality principles
into their management systems, using tools
such as Total Quality Management (TQM), Six
Sigma, and Lean Operating Systems.

Total Quality Management

TQM
A
philosophy
that
stresses
principles
for
achieving
high levels

Six Sigma
Six Sigma is a business improvement approach that
seeks to find and eliminate causes of defects and
errors in manufacturing and service processes by
focusing on outputs that are critical to customers
and results in a clear financial return for the
organization.
Used by companies including Motorola, Allied
Signal, Texas Instruments, and General Electric.

Six Sigma Approach

Process average OK;Process variability OK;
too much variation process off target
X
X
X

X
X

X
X

Process
on target with
low variability
Reduce
spread

Center
process

X
XX
XX
X XX

X
X
X X
X
X XX
X

The plandocheckact (or Deming) improvement cycle,

and the definemeasureanalyzeimprovecontrol
(or DMAIC) six sigma improvement cycle

Define
Plan

Do

Act

Check

Control

Improve

Measure

Analyze

Six Sigmas DMAIC Process

Define: identify customer and priorities, identify and
define a suitable project, identify CTQs (critical to
quality characteristics).
Measure: determine how to measure the process,
identify key internal processes that influence CTQs.
Analyze: determine likely causes of defects and
understand why defects are generated by identifying
key variables that cause process variation.

Six Sigmas DMAIC Process

Improve: identify means to remove defects, confirm
key variables, modify the process to stay within
acceptable range.
Control: determine how to maintain improvements,
put tools in place to ensure that key variables
remain within acceptance ranges under the
modified process.

The Seven QC Tools

1. Flowcharts: process mapping to identify
the sequence of activities or flow of
materials/information in a process.
2. Run Charts and Control Charts: line
graph with data plotted over time;
control charts include control limits.
3. Checksheets: simple tools for data
collection, ensure completeness.
4. Histograms: graphically represents
frequency of values within a specified
group.

The Structure of a Control Chart

Exhibit 7.7

Defective Item Checksheet

Source: K. Ishikawa, Guide

to Quality Control (Tokyo:
Asian Productivity
Organization, 1982), p. 33.

The Seven QC Tools

5. Pareto Analysis: separates vital few
from the trivial many causes; provides
direction for selecting project
improvement.
6. Cause-and-Effect Diagrams:
represents chain of relationships; often
called a fishbone diagram.
7. Scatter Diagrams: graphical
component of regression analysis.

Use of Pareto
Diagrams for
Progressive
Analysis

Source: Small Business Guidebook to Quality Management,

Office of the Secretary of Defense, Quality Management
Office, Washington, DC (1988).

Cause-and-Effect (Fishbone) Diagram for

Hospital Emergency Admission

1. Flowcharts: process mapping to identify the

sequence of activities or flow of materials/information
in a process.
2. Run Charts and Control Charts: line graph with
data plotted over time; control charts include control
limits.
3. Checksheets: simple tools for data collection, ensure
completeness.
4. Histograms: graphically represents frequency of
values within a specified group.
5. Pareto Analysis: separates vital few from the trivial
many causes; provides direction for selecting project
improvement.
6. Cause-and-Effect Diagrams: represents chain of
relationships; often called a fishbone diagram.
7. Scatter Diagrams: graphical component of
regression analysis.

The Deming Cycle

Plan: study current situation

Do: Implement plan on trial basis
Study: determines if trial is working
correctly
Act: standardize improvements

Kaizen: focuses on small, gradual, and

frequent improvements over the long
term with minimum financial
investment and with participation by
everyone in the organization.
Poka-Yoke (Mistake-Proofing): an
approach for mistake-proofing
processes using automatic devices or
methods to avoid simple human
error.

Poka-Yoke Examples
Machines have limit switches connected
to warning lights that tell the operator
when parts are positioned improperly on
the machine.
Fast food restaurants used automated
French frying machines that can only be
operated one way and the French fries
are prepackaged and the equipment
automated to reduce the chance of
human error.