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Chapter 9.

Six-Sigma Quality Outline:  Total Quality Management (TQM) Defined  Quality Specifications and Costs  Six Sigma Quality and Tools  External Benchmarking  ISO 9000  Service Quality Measurement

TQM Defined
 Total quality management is defined as managing the entire organization so that it excels on all dimensions of products and services that are important to the customer  Two fundamental operational goals: 1. Careful design of product or service 2. Ensure consistent production of product or service

Philosophical Leaders of the Quality Movement

 Philip Crosby  W. Edwards Deming  Joseph M. Juran  Each has slightly different definitions of what quality is and how to achieve it (see Exhibit 8.1), but they all had the same general message:  To achieve outstanding quality requires:

quality leadership from senior management, a customer focus, total involvement of the workforce, and continuous improvement based upon rigorous analysis of processes.

Quality Specifications
 Design quality - Inherent value of the product in the marketplace  Conformance quality - Degree to which the product or service design specifications are met  Products can have high design quality but low conformance quality, and vice versa  Quality at the source

Related to conformance quality Means the person who does the work takes responsibility for making sure output meets specifications

 Both design quality and conformance quality should provide products that meet customer objectives

This is often termed fitness for use Entails identifying the dimensions of product (or service) that the customer wants i.e., the voice of the customer Developing a quality control program

Dimensions of Quality

Primary product or service characteristic Added touches, bells and whistles, secondary characteristics Consistency of performance over time, probability of failing Useful life Ease of repair Characteristics of the human-to-human interface (speed, courtesy, competence) Sensory characteristics (sound, feel, look, and so on) Past performance and other intangibles (perceived quality)

 Features  Reliability  Durability  Serviceability  Response  Aesthetics


 Perceived quality (reputation)

Dimensions of Quality Examples

Costs of Quality (COQ)

Costs of inspection, testing, and Appraisal Costs other tasks to ensure that the product or process is acceptable

External Failure Costs

Costs for defects that pass through the system

Costs of Quality

Prevention Costs
sum of all costs to prevent defects

Internal Failure Costs

Costs for defects incurred within the system: scrap, rework, repair

Costs of Quality
 No matter what the quality is, it will cost $...  So, the assumptions of cost of quality

Failures are caused Prevention is cheaper Performance can be measured

 Discuss the "internal" and "external failure costs" for a high end coffee house (e.g., Starbucks)

Six-Sigma Quality
 Six-sigma is a philosophy which reflects the goal of eliminating defects in the products.  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  Statistically speaking a process in six-sigma control limits will only produce 2 defects per billion units.

Six Sigma Quality: DMAIC Cycle

 Define, Measure, Analyze, Improve, and Control DMAIC  Developed by General Electric as a means of focusing effort on quality using a methodological approach  Firms striving to achieve six-sigma generally adopt DMAIC cycle.  DMAIC are the typical steps employed in continuous improvement (a.k.a. Kaizen) concept which seeks to continually improve all aspects of production (parts, machines, labor, processes, etc)  Overall focus of the methodology is to understand and achieve what the customer wants  A 6-sigma program seeks to reduce the variation in the processes that lead to these defects


Six Sigma Quality: DMAIC Cycle

Cases/examples from classmates

1. Define (D) 2. Measure (M) 3. Analyze (A) 4. Improve (I) 5. Control (C)

Customers and their priorities Process and its performance Causes of defects Remove causes of defects Maintain quality


Example to illustrate the process

 We are the maker of this cereal. Consumer Reports has just published an article that shows that we frequently have less than 15 ounces of cereal in a box.  What should we do?

 Step 1: Define  What is the critical-to-quality characteristic?  The CTQ (critical-to-quality) characteristic in this case is the weight of the cereal in the box.


Step 2 - Measure
 How would we measure to evaluate the extent of the problem?  What are acceptable limits on this measure?  Lets assume that the government says that we must be within 5 percent of the weight advertised on the box.  Upper Tolerance Limit = 16 + .05(16) = 16.8 ounces  Lower Tolerance Limit = 16 .05(16) = 15.2 ounces  We go out and randomly buy 1,000 boxes of cereal and find that they weight an average of 15.875 ounces with a standard deviation of 0.529 ounces.  What percentage of boxes are outside the tolerance limits?

Lower Tolerance = 15.2

Process Mean = 15.875 Std. Dev. = .529

Upper Tolerance = 16.8

What percentage of boxes are defective (i.e. less than 15.2 oz)? Z = (x Mean)/Std. Dev. = (15.2 15.875)/.529 = -1.276 NORMSDIST(Z) = NORMSDIST(-1.276) = 0.100978 Approximately, 10 percent of the boxes have less than 15.2 Ounces of cereal in them!


Step 3 - Analyze - How can we improve the capability of our cereal box filling process?
 Decrease Variation

Line vibration impacts scale Random delays in nozzle open/close

 Center the Process  Increase Specifications


Step 4 Improve How good is good enough? Motorolas Six Sigma

 Calibrate the equipment more frequently, upgrade process  6-sigma minimum from process center to nearest spec



Step 5 Control
 Statistical Process Control (SPC)  Use data from the actual process  Estimate distributions  Look at capability - is good quality possible  Statistically monitor the process over time


Analytical Tools for Six Sigma and Continuous Improvement: Flowchart


Analytical Tools for Six Sigma and Continuous Improvement: Runchart

Can be used to identify when equipment or processes are not behaving according to specifications


0.58 0.56 0.54 0.52 0.5 0.48 0.46 0.44


10 11


Time (Hours)

Analytical Tools for Six Sigma and Continuous Improvement: Checksheet

Can be used to keep track of defects or used to make sure people collect data in a correct manner (MEASURE MEASURE)
Billing Errors Wrong Account Wrong Amount A/R Errors Wrong Account Wrong Amount



Analytical Tools for Six Sigma and Continuous Improvement: Pareto Analysis
Can be used to find when 80% of the problems may be attributed to 20% of the causes (MEASURE MEASURE)



Assy. Instruct.


Training Other


Analytical Tools for Six Sigma and Continuous Improvement: Histogram

Can be used to identify the frequency of quality defect occurrence and display quality performance (MEASURE) MEASURE)
Number of Lots

Data Ranges

4 Defects
in lot 22

Analytical Tools for Six Sigma and Continuous Improvement: Cause & Effect Diagram


Analytical Tools for Six Sigma and Continuous Improvement: Opportunity Flow Diagram

Value added activities (Vertical steps) vs. Non-value added activities (horizontal steps)


Analytical Tools for Six Sigma and Continuous Improvement: Control Charts
Can be used to monitor ongoing production process quality and quality conformance to stated standards of quality


Other Six Sigma Tools

 Failure Mode and Effect Analysis (FMEA) is a structured approach to identify, estimate, prioritize, and evaluate risk of possible failures at each stage in the process  Design of Experiments (DOE) a statistical test to determine cause-and-effect relationships between process variables and output

a.k.a. multivariate analysis (testing) i.e., testing multiple independent variables (Xs) with respect to a dependent variable (Y)


The Shingo System: Fail-Safe Design

    Shingos argument: SQC methods do not prevent defects Defects arise when people make errors Defects can be prevented by providing workers with feedback on errors

 Poka-Yoke includes: 1. Checklists 2. Special tooling that


prevents workers from making errors Gives rapid feedback of abnormalities to worker in time to correct them


The Shingo System: Example

Exhibit 8.10 Poka-Yoke Example (Placing labels on parts coming down a conveyor)


ISO 9000
 Series of standards agreed upon by the International Organization for Standardization (ISO)  Adopted in 1987  More than 100 countries  A prerequisite for global competition?  ISO 9000 directs you to "document what you do and then do as you documented."
1. First party: A firm audits itself against ISO 9000 standards 2. Second party: A customer audits its supplier 3. Third party: A "qualified" national or international standards or certifying agency serves as auditor

 Is it important for small or medium sized businesses to have ISO 9000 certification? 29

External Benchmarking Steps

1. Identify those processes needing improvement 2. Identify a firm that is the world leader in performing the process

Obviously not a direct competitor Possibly from another industry

3. Contact the managers of that company and make a personal visit to interview managers and workers 4. Analyze data

Compare the processes Compare the results (performance of the processes)