Chapter 10

Lean Systems and

Six-Sigma Quality

10-1

Lecture Outline

10-2

• What is Lean?

• Lean Production

• Respect for People

• Total Quality Management (TQM)

• Statistical Quality Control (SQC)

• Six-Sigma Quality

• Lean Six-Sigma Supply Chain

What is Lean?

10-3

Lean is a management approach for creating value for the end customer through the most efficient utilization resources possible

•Standard in many industries

•Often results in:– large cost reductions– improved quality– increased customer service

Lean Six Sigma

Combines the approaches of Lean and Six Sigma

• Six Sigma– methodology to identify and eliminate causes of

quality problems

10-4

Tenets of Lean

There are six tenets of the Lean Philosophy:

1.Elimination of Waste– eliminate all non-value adding activities

2.A Broad View– decisions made for the success of the

entire supply chain– all supply chain members responsible for

adding value

3.Simplicity– the simpler the solution the better

10-5

Tenets of Lean Continued

4. Continuous Improvement– emphasis on quality and continuous

improvement– called kaizen

5. Visibility– visible problems are identified and solved

6. Flexibility– easily switch from one product type to

another, using flexible workers that perform many different tasks

10-6

Elements of Lean

Lean is composed of three elements that work in unison:

•Lean Production

•Total Quality Management (TQM)

•Respect for People

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Elements of Lean

10-8

Lean Production

Coordinated system for producing the exact products desired, delivered in right quantities to where needed Just-in-Time

•The Pull System

•Visual Signals

•Small Lot Production

•Uniform Plant Loading

10-9

The Pull System

• Traditional approach– supply chains work as “push” systems

– inventory carried to cover up problems

• Pull approach– each stage in supply chain requests

quantities needed from the previous stage

– no excess inventory generated

– reduced inventory exposes problems

10-10

Visual Signals

Communication between workstations

• Kanban– “signal” or “card” in Japanese– contains information passed between stations– authorizes production

10-11

Visual Signals

10-12

Small Lot Production

The amount of products produced at any one time is small

– reduces inventory and excess processing

– increases flexibility

– shortens manufacturing lead time

– responds to customer demands more quickly

– setup time must be low

10-13

Uniform Plant Loading

• Problem– demand changes are magnified throughout the

supply chain

– contributes to inefficiency and waste

• Uniform Plant Loading– production schedule is frozen for the month

– also called “leveling”

– helps suppliers better plan own production

10-14

Respect for People

Respect for all people must exist for an organization to be its best

–flatter hierarchy than traditional organizations

–ordinary workers given great responsibility

–supply chain members work together in cross functional teams

• Look at Role of:–workers, management, and suppliers

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Role of Workers

Workers have the ability to perform many different tasks and are actively engaged in pursuing company goals

•Worker Duties– improve production process– monitor quality– correct quality problems

•Work in Teams– quality circles

10-16

Role of Management

Create the cultural change in the organization needed for Lean to succeed

– provide atmosphere of cooperation

– Empower workers to take action based on their ideas

– develop incentive system for lean behaviors

10-17

Role of Suppliers

Lean builds long-term supplier relationships

– companies partner with suppliers

– improve process quality

– information sharing

– goal to have single-source suppliers

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Total Quality Management (TQM)

TQM is an integrated organizational effort designed to improve quality at every level

Look at: •Quality Gurus

•Voice of the Customer

•Costs of Quality

•Quality Tools

•ISO 9000

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Quality Gurus

10-20

Voice of the Customer

Quality is defined as meeting or exceeding customer expectations

• Determine customer wants:

– focus groups

– market surveys

– customer interviews

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Costs of Quality

10-22

Quality Tools

Lean requires workers to identify and correct quality problems

• Seven Tools of Quality Control:

– Cause and Effect Diagrams– Flowcharts– Checklists– Control Charts– Scatter Diagrams– Pareto Analysis– Histograms

10-23

Cause and Effect Diagrams

Identify causes of a quality problem– sometimes called “fishbone diagrams”

10-24

Flowchart

Diagrams the sequence of steps in an operation or process

10-25

Checklist

Lists common defects and number of occurrences of the defects

10-26

Control Chart

Determines whether a process is operating within expectations

10-27

Scatter Diagram

Graph that visually shows how two variables are related to one another

10-28

Pareto Analysis

Based on the premise that a small number of causes create the majority of problems

– identifies problems based on degree of importance

10-29

Histogram

Chart that shows the frequency distribution of observed values of a variable

10-30

ISO 9000

“Family” of standards for quality management

– increased international trade developed a need

– published by International Organization for Standards (ISO) in 1987

– concerns measuring and documenting the quality process

– ISO provides a certification process

• ISO 14000– standards for environmental management

10-31

Statistical Quality Control (SQC)

SQC is the use of statistical tools to measure product and process quality

Three categories:

•Descriptive Statistics– describe quality characteristics

•Statistical Process Control (SPC)– a random sample of output is used to

determine if characteristics are acceptable

•Acceptance Sampling– sample determines if whole batch is acceptable

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Sources of Variation

All processes have variation

•Assignable Variation– caused by factors that can be clearly

identified and managed

•Common Variation– inherent in the process

– also called random variation

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Process Capability

Process Capability evaluates the variation of the process relative to product specifications

•Product Specifications– ranges of acceptable quality characteristics– also called tolerances

•Process Variation– all processes have natural variation– defects are produced when variation exceeds

product specifications

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Process Variation Equal to Specification Range

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Process Variation Exceeds Specification Range

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Process Variation Narrower than Specification Range

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Process Capability Index

where: USL = upper specification limit

LSL = lower specification limit

• Cp Values:

– Cp = 1: process is minimally capable

– Cp ≤ 1: process is not capable of producing products within specification

– Cp ≥ 1: process exceeds minimum capability10-38

6

LSLUSL

rangeiationvarprocess

rangeionspecificatproductCp

Cp Example

Given a process with three separate machines that are used to fill jars with pasta sauce.

– specification range is between 30 and 34 ounces– process mean, μ, is 31 ounces

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Machine σ

A 0.6

B 0.7

C 1.2

Calculate the Cp for each machine to determine capabilities

Cp Example Continued

• A:

• B:

• C:

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6

LSLUSLCp

11.1)6.0(6

3034Cp

95.0)7.0(6

3034Cp

55.0)2.1(6

3034Cp

Machine A has a Cp > 1, however the process mean is not centered

Cpk Example

Cpk addresses the lack of centering of the process over the specification range

• Machine A:

Cpk = min (1.66, 0.55) = 0.55

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3

LSL,

3

USLminCpk

)6.0(3

3031,

)6.0(3

3134minCpk

Process Control Charts

Graph that shows whether a sample of data falls within the common range of variation

1.sample process output

2.plot result on the control chart

3.use to determine if process is in control

•can monitor: – variables

• characteristics that can be measured

– attributes• characteristics that can be counted

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Process Control Charts

10-43

Control Charts for Attributes

A p-chart monitors the proportion of defective items in a sample

• centerline: average value of p across all samples, p

• UCL = p + z sp

• LCL = p – z sp

where: z = standard normal variablep = sample proportion defective

sp = = standard deviation of

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n

)p1(p

avg. proportion defective

P-Chart Example

Given the following five samples of data tracking incorrect procedures in a hospital

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Sample# of Incorrect Procedures # Inspected

Fraction Defective

1 0 10 0.1

2 1 10 0.1

3 2 10 0.2

4 1 10 0.2

5 1 10 0.1

Total 5 50

P-Chart Example Continued

p = 5/10 = 0.10

UCL = p + z sp = 0.10 + 3(0.095) = 0.385

LCL = p + z sp = 0.10 - 3(0.095) = 0.185

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095.010

)10.01(10.0

n

)p1(psp