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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
e. None of the above
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
e. None of the above
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