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Tata McGraw

C

HAPTER

9

Six-Sigma

Quality

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Chapter 9

Six-Sigma Quality

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Total Quality Management Defined

Quality Specifications and Costs

Six Sigma Quality and Tools

External Benchmarking

ISO 9000 Service Quality Measurement

OBJECTIVES

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Total Quality Management (TQM)

Total quality managementis

defined as managing the

entire organization so that itexcels on all dimensions of

products and services that

are important to thecustomer

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Quality Specifications

Design quality: Inherent value ofthe product in the marketplace

Dimensions include: Performance,Features, Reliability/Durability,Serviceability, Aesthetics, andPerceived Quality.

Conformance quality: Degree towhich the product or servicedesign specifications are met

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Costs of Quality

External Failure

Costs

Appraisal Costs

Prevention Costs

Internal Failure

Costs

Costs of

Quality

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Six Sigma Quality

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

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Six Sigma Quality (Continued)

Six Sigma allows managers to readily

describe process performance using acommon metric: Defects Per Million

Opportunities (DPMO)

1,000,000x

unitsofNo.xunit

pererrorforiesopportunitofNumber

defectsofNumber

DPMO

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Six Sigma Quality (Continued)

Example of Defects Per MillionOpportunities (DPMO) calculation.Suppose we observe 200 lettersdelivered incorrectly to the wrongaddresses in a small city during asingle day when a total of 200,000

letters were delivered. What is theDPMO in this situation?

000,1 1,000,000x

200,000x1

200DPMO

So, for every onemillion letters

delivered thiscitys postalmanagers canexpect to have1,000 lettersincorrectly sent

to the wrongaddress.

Cost of Quality: What might that DPMO mean in termsof over-time employment to correct the errors?

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Six Sigma Quality: DMAIC Cycle

Define, Measure, Analyze,Improve, and Control (DMAIC)

Developed by General Electricas a means of focusing effort onquality using a methodological

approach Overall focus of the

methodology is to understandand achieve what the customer

wants A 6-sigma program seeks toreduce the variation in theprocesses that lead to thesedefects

DMAIC consists of five steps.

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Six Sigma Quality: DMAIC Cycle (Continued)

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

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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 16 ounces

of cereal in a box.

What should we do?

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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.

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2 - Measure

How would we measure to

evaluate the extent of theproblem?

What are acceptable limits on

this measure?

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2Measure (continued)

Lets assume that thegovernment says that we mustbe 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

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2Measure (continued)

We go out and buy 1,000

boxes of cereal and find that

they weight an average of

15.875 ounces with a standarddeviation of .529 ounces.

What percentage of boxes are

outside the tolerance limits?

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Upper Tolerance

= 16.8

Lower Tolerance

= 15.2

Process

Mean = 15.875

Std. Dev. = .529

What percentage of boxes are defective (i.e. less than 15.2 oz)?

Z = (xMean)/Std. Dev. = (15.215.875)/.529 = -1.276

NORMSDIST(Z) = NORMSDIST(-1.276) = .100978

Approximately, 10 percent of the boxes have less than 15.2

Ounces of cereal in them!

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Step 3 - Analyze - How can we improve thecapability of our cereal box filling process?

Decrease VariationCenter Process

Increase Specifications

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Step 4ImproveHow good is good

enough? Motorolas Six Sigma

6 minimum from process

center to nearest spec

1 23 1 02 3

12s

6s

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Motorolas Six Sigma

Implies 2 ppB bad with no

process shift.

With 1.5sshift in either direction

from center (process will move),

implies 3.4 ppm bad.

1 23 1 02 3

12s

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Step 5Control

Statistical Process Control(SPC)

Use data from the actualprocess

Estimate distributions

Look at capability - is goodquality possible

Statistically monitor theprocess over time

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Analytical Tools for Six Sigma and Continuous Improvement:

Flow Chart

No,ContinueMaterialReceivedfrom

Supplier

Inspect

Material for

DefectsDefects

found?

Return to

Supplier

for Credit

Yes

Can be used tofind quality

problems

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Analytical Tools for Six Sigma and Continuous Improvement: Run Chart

Can be used to identifywhen equipment or

processes are not

behaving according to

specifications

0.440.460.48

0.50.520.540.560.58

1 2 3 4 5 6 7 8 9 10 11 12Time (Hours)

Diameter

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Analytical Tools for Six Sigma and Continuous Improvement: ParetoAnalysis

Can be used

to find when

80% of the

problemsmay be

attributed to

20% of the

causes

Assy.

Instruct.

Frequency

Design Purch. Training

80%

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Analytical Tools for Six Sigma and ContinuousImprovement: Checksheet

Billing Errors

Wrong Account

Wrong Amount

A/R Errors

Wrong Account

Wrong Amount

Monday

Can be used to keep track ofdefects or used to make sure

people collect data in a

correct manner

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Analytical Tools for Six Sigma and ContinuousImprovement: Histogram

Numbe

rofLots

Data RangesDefects

in lot

0 1 2 3 4

Can be used to identify the frequency of quality

defect occurrence and display quality

performance

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

Effect

ManMachine

Material

Method

Environment

Possible causes: The results

or effect

Can be used to systematically track backwards to

find a possible cause of a quality problem (or

effect)

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Analytical Tools for Six Sigma and Continuous Improvement: ControlCharts

Can be used to monitor ongoing production processquality and quality conformance to stated standards of

quality

970

980

990

1000

1010

1020

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

LCL

UCL

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Other Six Sigma Tools

Failure Mode and Effect Analysis

(DMEA) is a structured approach to

identify, estimate, prioritize, and

evaluate risk of possible failures ateach stage in the process

Design of Experiments(DOE) a

statistical test to determine cause-

and-effect relationships between

process variables and output

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Six Sigma Roles and Responsibilities

1. Executive leaders mustchampion the process ofimprovement

2. Corporation-wide trainingin Six Sigma concepts andtools

3. Setting stretch objectives

for improvement4. Continuous reinforcement

and rewards

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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 onerrors

Poka-Yoke includes: Checklists

Special tooling that preventsworkers from making errors

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ISO 9000 and ISO 14000

Series of standards agreed upon bythe International Organization forStandardization (ISO)

Adopted in 1987 More than 160 countries

A prerequisite for global competition?

ISO 9000 an international reference forquality, ISO 14000 is primarilyconcerned with environmentalmanagement

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Three Forms of ISO Certification

1. First party: A firm audits itself

against ISO 9000 standards

2. Second party: A customer audits

its supplier

3. Third party: A "qualified" nationalor international standards or

certifying agency serves as

auditor

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External Benchmarking Steps

1. Identify those processesneeding improvement

2. Identify a firm that is the world

leader in performing theprocess

3. Contact the managers of that

company and make a personalvisit to interview managers and

workers

4. Analyze data

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Question Bowl

Approximately what

percentage of every sales

dollar is allocated to the

cost of quality?

a. Less than 5%b. About 10%

c. Between 15 and 20 %

d. More than 30%e. None of the above

Answer: c. Between 15 and 20 % (for cost of

reworking, scrapping, repeated service, etc.)

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Question Bowl

Which of the following are

classifications of the cost

of quality?

a. Appraisal costs

b. Prevention costsc. Internal failure costs

d. External failure costs

e. All of the above

Answer: e. All of the above

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Question Bowl

Which of the following arefunctions of a quality control

department?

a. Testing product designs for

reliabilityb. Gathering product performance

data

c. Planning and budgeting the QC

programd. All of the above

e. None of the above

Answer: d. All of the above

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Question Bowl

Which of the following is a Critical

Customer Requirement (CCR) in

the context of a Six Sigma

program?

a. DMAICb. DPMO

c. PCDA

d. DOE


Answer: e. None of theabove (The CCR is the

criteria that is used to

define desired quality.

Processing a loan in 10

days is an example of a

CCR.)

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Question Bowl

The DMAIC cycle of SixSigma is similar to which ofthe following qualitymanagement topics?

a. Continuous improvementb. Servqualc. ISO 9000d. External benchmarkinge. None of the above

Answer: a. Continuous improvement

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Question Bowl

The A in DMAIC stands forwhich of the following?

a. Always

b. Accessibility

c. Analyze

d. Act


Answer: d. Analyze (Define, Measure,

Analyze, Improve and Control)

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Question Bowl

Which of the following

analytical tools depict

trends in quality data over

time?

a. Flowchartsb. Run charts

c. Pareto charts

d. Checksheetse. Cause and effect diagrams

Answer: b. Run charts

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End of Chapter 9

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