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Quality Management

It costs a lot to produce a bad product.


Norman Augustine
Cost of quality

1. Prevention costs

2. Appraisal costs

3. Internal failure costs

4. External failure costs

5. Opportunity costs
What is quality management all about?

Try to manage all aspects of the organization


in order to excel in all dimensions that are
important to customers

Two aspects of quality:


features: more features that meet customer needs
= higher quality
freedom from trouble: fewer defects = higher
quality
The Quality Gurus Edward Deming

Quality is
uniformity and
dependability
Focus on SPC
and statistical
tools
14 Points for
1900-1993
management
1986 PDCA method
The Quality Gurus Joseph Juran

Quality is
fitness for use
Pareto Principle
Cost of Quality
General
management
approach as well 1904 - 2008
as statistics
1951
History: how did we get here

Deming and Juran outlined the principles of Quality


Management.
Tai-ichi Ohno applies them in Toyota Motors Corp.
Japan has its National Quality Award (1951).
U.S. and European firms begin to implement Quality
Management programs (1980s).
U.S. establishes the Malcolm Baldridge National
Quality Award (1987).
Today, quality is an imperative for any business.
What does Total Quality Management encompass?

TQM is a management philosophy:


continuous improvement
leadership development
partnership development

Technical
Tools
Cultural
Customer (Process
Alignment
Analysis, SPC,
QFD)
Developing quality specifications

Design Design quality

Input Process Output

Dimensions of quality
Conformance quality
Six Sigma Quality
6
A philosophy and set of methods companies use to
eliminate defects in their products and processes
Seeks to reduce variation in the processes that lead to
product defects
The name six sigma refers to the variation that
exists within plus or minus six standard deviations of
the process outputs
Six Sigma Quality
Six Sigma Roadmap (DMAIC)
Define
Next Project Customers, Value, Problem Statement Validate
Scope, Timeline, Team Project $
Celebrate Primary/Secondary & OpEx Metrics
Project $ Current Value Stream Map
Measure
Voice Of Customer (QFD)
Control Assess specification / Demand
Document process (WIs, Std Work) Measurement Capability (Gage R&R)
Mistake proof, TT sheet, CI List Correct the measurement system
Analyze change in metrics Process map, Spaghetti, Time obs.
Value Stream Review Measure OVs & IVs / Queues
Prepare final report

Validate
Project $
Validate
Project $

Improve Analyze (and fix the obvious)


Optimize KPOVs & test the KPIVs Root Cause (Pareto, C&E, brainstorm)
Redesign process, set pacemaker Find all KPOVs & KPIVs
Validate
5S, Cell design, MRS FMEA, DOE, critical Xs, VA/NVA
Project $
Visual controls Graphical Analysis, ANOVA
Value Stream Plan Future Value Stream Map
Six Sigma Organization
Quality Improvement

e me nt
I mp r ov
inuo us
Co n t
Quality

Traditional

Time
Continuous improvement philosophy

1. Kaizen: Japanese term for continuous improvement.


A step-by-step improvement of business processes.
2. PDCA: Plan-do-check-act as defined by Deming.

Plan Do

Act Check

3. Benchmarking : what do top performers do?


Tools used for continuous improvement

1. Process flowchart
Tools used for continuous improvement

2. Run Chart

Performance

Time
Tools used for continuous improvement

3. Control Charts

Performance Metric

Time
Tools used for continuous improvement

4. Cause and effect diagram (fishbone)

Machine Man

Environment

Method Material
Tools used for continuous improvement

5. Check sheet

Item A B C D E F G
-------
-------
-------
Tools used for continuous improvement

6. Histogram

Frequency
Tools used for continuous improvement

7. Pareto Analysis

100%
60
50 75%

Percentage
Frequency

40
50%
30
20 25%
10
0%
A B C D E F
Summary of Tools

1. Process flow chart


2. Run diagram
3. Control charts
4. Fishbone
5. Check sheet
6. Histogram
7. Pareto analysis
Case: shortening telephone waiting time

A bank is employing a call answering service

The main goal in terms of quality is zero waiting time


- customers get a bad impression
- company vision to be friendly and easy access

The question is how to analyze the situation and improve quality


The current process

Custome Receiving
Operator
rA Party

Custome
rB
How can we reduce
waiting time?
Fishbone diagram analysis

Absent receiving Working system of


party operators

Absent Too many phone calls

Out of office Lunchtime

Not at desk Absent


Makes
customer
Not giving receiving wait
partys coordinates Does not
Lengthy talk understand
Does not know customer
Complaining organization well

Leaving a Takes too much time to


message explain

Customer Operator
Reasons why customers have to wait
(12-day analysis with check sheet)

Daily Total
average number
A One operator (partner out of office) 14.3 172
B Receiving party not present 6.1 73

C No one present in the section receiving call 5.1 61

D Section and name of the party not given 1.6 19

E Inquiry about branch office locations 1.3 16


F Other reasons 0.8 10

29.2 351
Pareto Analysis: reasons why customers have to wait

Frequency Percentage

300 87.1%

250 71.2%
200
49%
150
100

0%
A B C D E F
Ideas for improvement

1. Taking lunches on three different shifts


2. Ask all employees to leave messages when leaving desks
3. Compiling a directory where next to personnels name
appears her/his title
Results of implementing the recommendations

Before After
Frequency Percentage Frequency Percentage

100%

300 87.1% 300

71.2%
Improvement
200 200
49%

100 100 100%

0% 0%

A B C D E F B C A D E F
In general, how can we monitor quality?

By observing
variation in
output measures!

1. Assignable variation: we can assess the cause


2. Common variation: variation that may not be possible to
correct (random variation, random noise)
Statistical Process Control (SPC)

Every output measure has a target value and a level of


acceptable variation (upper and lower tolerance limits)

SPC uses samples from output measures to estimate the


mean and the variation (standard deviation)

Example
We want beer bottles to be filled with 12 FL OZ 0.05 FL OZ

Question:
How do we define the output measures?
In order to measure variation we need

The average (mean) of the observations:


N
1
X
N
x i 1
i

The standard deviation of the observations:

i
( x X ) 2

i 1
N
Average & Variation example

Number of pepperonis per pizza: 25, 25, 26, 25, 23, 24, 25, 27

Average:
Standard Deviation:

Number of pepperonis per pizza: 25, 22, 28, 30, 27, 20, 25, 23

Average:
Standard Deviation:

Which pizza would you rather have?


When is a product good enough?
High

a.k.a
Incremental Upper/Lower Design Limits
Cost of (UDL, LDL)
Variability
Upper/Lower Spec Limits
(USL, LSL)
Upper/Lower Tolerance Limits
Zero (UTL, LTL)

Lower Target Upper


Tolerance Spec Tolerance

Traditional View

The Goalpost Mentality


But are all good products equal?

High

Incremental
Cost of
Variability
Taguchis View
Quality Loss Function
Zero (QLF)
Lower Target Upper
Spec Spec Spec

LESS VARIABILITY implies BETTER PERFORMANCE !


Capability Index (Cpk)
It shows how well the performance measure
fits the design specification based on a given
tolerance level

A process is k capable if

X k UTL and X k LTL

UTL X X LTL
1 and 1
k k
Capability Index (Cpk)
Another way of writing this is to calculate the capability index:

X LTL UTL X
C pk min ,
k k

Cpk < 1 means process is not capable at the k level

Cpk >= 1 means process is capable at the k level


Accuracy and Consistency

We say that a process is accurate if its mean X is close to


the target T.

We say that a process is consistent if its standard deviation


is low.
Example 1: Capability Index (Cpk)

X = 10 and = 0.5
LTL = 9
UTL = 11

LTL X UTL

10 9 11 10
C pk min or 0.667
3 0.5 3 0.5
Example 2: Capability Index (Cpk)

X = 9.5 and = 0.5


LTL = 9
UTL = 11

LTL X UTL
Example 3: Capability Index (Cpk)

X = 10 and = 2
LTL = 9
UTL = 11

LTL X UTL
Example
Consider the capability of a process that puts
pressurized grease in an aerosol can. The design
specs call for an average of 60 pounds per square
inch (psi) of pressure in each can with an upper
tolerance limit of 65psi and a lower tolerance limit
of 55psi. A sample is taken from production and it
is found that the cans average 61psi with a standard
deviation of 2psi.

1. Is the process capable at the 3 level?


2. What is the probability of producing a defect?
Solution
LTL = 55 UTL = 65 X 61 =2

X LTL UTL X
C pk min( , )
3 3
61 55 65 61
C pk min( , ) min(1,0.6667) 0.6667
6 6

No, the process is not capable at the 3 level.


Solution
P(defect) = P(X<55) + P(X>65)
=P(X<55) + 1 P(X<65)
=P(Z<(55-61)/2) + 1 P(Z<(65-61)/2)
=P(Z<-3) + 1 P(Z<2)
=G(-3)+1-G(2)
=0.00135 + 1 0.97725 (from standard normal table)
= 0.0241

2.4% of the cans are defective.


Example (contd)
Suppose another process has a sample mean of 60.5 and
a standard deviation of 3.

Which process is more accurate? This one.


Which process is more consistent? The other one.
Control Charts

Upper Control Limit

Central Line

Lower Control Limit

Control charts tell you when a process measure is


exhibiting abnormal behavior.
Two Types of Control Charts

X/R Chart
This is a plot of averages and ranges over time
(used for performance measures that are variables)

p Chart
This is a plot of proportions over time (used for
performance measures that are yes/no attributes)
Statistical Process Control with p Charts

When should we use p charts?

1. When decisions are simple yes or no by inspection


2. When the sample sizes are large enough (>50)

Sample (day) Items Defective Percentage


1 200 10 0.050
2 200 8 0.040
3 200 9 0.045
4 200 13 0.065
5 200 15 0.075
6 200 25 0.125
7 200 16 0.080
Statistical Process Control with p Charts

Lets assume that we take t samples of size n

total number of "defects"


p
(number of samples) (sample size)

p (1 p )
sp
n

UCL p zs p
LCL p zs p
Statistical Process Control with p Charts

80 1
p 0.066
6 200 15

0.066(1 0.066)
sp 0.017
200

UCL 0.066 3 0.017 0.117


LCL 0.066 3 0.017 0.015
Statistical Process Control with p Charts

UCL = 0.117

p = 0.066

LCL = 0.015
Statistical Process Control with X/R Charts

When should we use X/R charts?

1. It is not possible to label good or bad


2. If we have relatively smaller sample sizes (<20)
Statistical Process Control with X/R Charts

Take t samples of size n (sample size should be 5 or more)

1 n
X xi
n i 1

X is the mean for each sample

R max{xi } min{xi }

R is the range between the highest and the lowest for each sample
Statistical Process Control with X/R Charts

1 t
X Xj
t j 1

X is the average of the averages.

1 t
R Rj
t j 1

R is the average of the ranges


Statistical Process Control with X/R Charts

define the upper and lower control limits

UCLX X A2 R
LCLX X A2 R

Read A2, D3, D4 from


UCLR D4 R Table TN 8.7
LCLR D3 R
Example: SPC for bottle filling

Sample Observation (xi) Average Range (R)


1 11.90 11.92 12.09 11.91 12.01
2 12.03 12.03 11.92 11.97 12.07
3 11.92 12.02 11.93 12.01 12.07
4 11.96 12.06 12.00 11.91 11.98
5 11.95 12.10 12.03 12.07 12.00
6 11.99 11.98 11.94 12.06 12.06
7 12.00 12.04 11.92 12.00 12.07
8 12.02 12.06 11.94 12.07 12.00
9 12.01 12.06 11.94 11.91 11.94
10 11.92 12.05 11.92 12.09 12.07
Example: SPC for bottle filling

Calculate the average and the range for each sample

Sample Observation (xi) Average Range (R)


1 11.90 11.92 12.09 11.91 12.01 11.97 0.19
2 12.03 12.03 11.92 11.97 12.07 12.00 0.15
3 11.92 12.02 11.93 12.01 12.07 11.99 0.15
4 11.96 12.06 12.00 11.91 11.98 11.98 0.15
5 11.95 12.10 12.03 12.07 12.00 12.03 0.15
6 11.99 11.98 11.94 12.06 12.06 12.01 0.12
7 12.00 12.04 11.92 12.00 12.07 12.01 0.15
8 12.02 12.06 11.94 12.07 12.00 12.02 0.13
9 12.01 12.06 11.94 11.91 11.94 11.97 0.15
10 11.92 12.05 11.92 12.09 12.07 12.01 0.17
Then

X 12.00

is the average of the averages

R 0.15

is the average of the ranges


Finally

Calculate the upper and lower control limits

UCLX 12.00 0.58 0.15 12.09


LCL X 12.00 0.58 0.15 11.91

UCLR 2.11 0.15 1.22


LCLR 0 0.15 0
The X Chart

UCL = 12.10

X = 12.00

LCL = 11.90
The R Chart

UCL = 0.32

R = 0.15

LCL = 0.00
The X/R Chart
UCL

LCL
What can you
conclude?
UCL

LCL