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1
Chapter 9
Six Sigma Quality
2
Total Quality Management Defined
Quality Specifications and Costs
Six Sigma Quality and Tools
External Benchmarking
ISO 9000
Service Quality Measurement
OBJECTIVES
3
Total Quality Management (TQM)
Total quality management is defined as managing the
_____________________ so that it excels on all
dimensions of products and services that are important to
the customer
4
Quality Specifications
Design quality: Inherent value of the product in the
_____________________.
Dimensions include: Performance, Features,
Reliability/Durability, Serviceability, Aesthetics, and
Perceived Quality.
Conformance quality: Degree to which the product or
service __________________ specifications are met
5
Costs of Quality
Failure Costs
Costs
Costs
Failure Costs
Costs of
Quality
6
Costs of Quality Costs are often hidden and are not reported
• Reworking
• Fine-tuning
• Touch-ups
• Management approvals, next-day deliveries to compensate
for delays
A common rule or thumb: if an error costs
$1 to ________________, it will cost
$10 to _______________, and
$100 if the __________________detects it.
7
Six Sigma Quality
A philosophy and set of methods companies use to
__________________ defects in their products and processes
Seeks to _____________________ 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
8
Six Sigma Quality
Six Sigma allows managers to readily describe process
performance using a common metric: Defects Per Million
O_________________________ (DPMO)
0000001 ,, x
units x No. of
unit per for error iesopportunit
Number of
defectsNumber of DPMO
9
Defects Per Million Opportunities (DPMO)
10
Example of Defects Per Million Opportunities (DPMO)
Suppose that the Coffee shop sells 1,500 cups of coffee in one day. It takes three steps to make a proper cup of coffee. Also, suppose twelve customers complained that something was wrong with the order. What is the DPMO in this situation?
DPMO
11
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
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
DMAIC consists of five steps….
12
Six Sigma Quality: DMAIC Cycle
1. D_____________
2. M_____________
3. A_____________
4. I_____________
5. C_____________
Customers and their priorities-critical to quality
Process and its performance
Causes of defects
Remove causes of defects
Maintain quality
13
Example to illustrate the process…
Ron Valdez Café roasts and nationally distributes 16 ounce
bags of coffee beans. The Omaha World Herald has just
published an article that claims that the bags frequently have
less than 15 ounces of coffee beans in out 16 ounce bags.
What should we do?
14
Step 1 - Define
What is the critical-to-quality characteristic?
The CTQ (critical-to-quality) characteristic in this
case is the ________________ of the bags of
coffee beans.
Define, Measure, Analyze, Improve, and Control (DMAIC)
15
2 - Measure
What would we measure to evaluate the extent of the
problem?
What are acceptable limits on this measure?
Define, Measure, Analyze, Improve, and Control (DMAIC)
16
2 – Measure
Let’s assume that the government says that we must be
within ± 5 percent of the weight advertised on the bag.
Upper Tolerance Limit =
Lower Tolerance Limit =
Define, Measure, Analyze, Improve, and Control (DMAIC)
17
2. Measure
We go out and buy 1,000 bags of Ron Valdez Café
coffee beans and find that on average they weigh
16.102 ounces with a standard deviation of .629
ounces.
What percentage of bags are outside the tolerance
limits?
Define, Measure, Analyze, Improve, and Control (DMAIC)
18
What percentage of bags are defective (i.e. less than 15.2 oz)?
Upper Tolerance
= 16.8 Lower Tolerance
= 15.2
Process
Mean = 16.102
Std. Dev. = .629
)2.15(xP
Approximately, 7.6 percent of the bags have less than 15.2 Ounces of beans in them!
NORM.DIST
19
Step 3 – Analyze
How can we improve the capability of
our coffee bean bag filling process?
Decrease Variation
Center Process
Increase Specifications
Define, Measure, Analyze, Improve, and Control (DMAIC)
20
6s minimum from process center to nearest spec
1 23 1 02 3
12s
6s
Define, Measure, Analyze, Improve, and Control (DMAIC)
Step 4 – Improve How good is good enough?
Motorola’s “Six Sigma”
21
Implies 2 ppB “bad” with no process shift
With 1.5s shift in either direction from center (process will move),
implies 3.4 ppm “bad”.
1 23 1 02 3
12s
Define, Measure, Analyze, Improve, and Control (DMAIC)
Motorola’s “Six Sigma”
22
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
Define, Measure, Analyze, Improve, and Control (DMAIC)
Step 5 - Control
23
Analytical Tools for Six Sigma and Continuous Improvement:
Flow Chart
No,
Continue… Material
Received from
Supplier Inspect Material
for Defects Defects
found?
Return to
Supplier for
Credit
Yes
Can be used to find
quality problems
24
Analytical Tools for Six Sigma and Continuous Improvement:
Run Chart
Can be used to identify when equipment or processes are not behaving according to
specifications
0.44 0.46
0.5
0.54
0.58
1 2 3 4 5 6 7 8 9 10 11 12 Time (Hours)
Dia
me
ter
25
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
Assy.
Instruct.
Fre
quen
cy
Design Purch. Training
80%
26
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
27
Analytical Tools for Six Sigma and Continuous Improvement:
Histogram
Nu
mb
er
of
Lo
ts
Data Ranges Defects in lot 0 1 2 3 4
Can be used to identify the frequency of quality defect occurrence
and display quality performance
28
Analytical Tools for Six Sigma and Continuous Improvement:
Cause & Effect Diagram
Effect
Man Machine
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)
29
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
970
980
990
1000
1010
1020
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
LCL
UCL
30
Other Six Sigma Tools
Failure Mode and Effect Analysis (DMEA) 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 (multivariate) to
determine cause-and-effect relationships between process
variables and output
31
Six Sigma Roles and Responsibilities
1. Executive leaders must champion the process of improvement
2. Corporation-wide training in Six Sigma concepts and tools
3. Setting stretch objectives for improvement
4. Continuous reinforcement and rewards
32
The Shingo System: Fail-Safe Design
Shingo’s 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:
Checklists
Special tooling that prevents workers from making errors
33
Mistakes
On September 14, 1997 an F117 stealth fighter airplane
crashed, destroying the $42 million aircraft. Investigation
revealed that four of five one-inch diameter fasteners that
attached the wing to the fuselage were missing. The pilot had
complained to the maintenance crew about the unusual wing
vibrations, but inspection did not reveal the missing bolts
because a stiffener plate that concealed the missing bolts was
not removed during inspection. (Pemberton 1997)
34
Mistakes
In the Saturn automobile startup, fluids were incorrectly labeled.
As a result, thousands of cars were shipped with fluids that
eventually would have caused critical engine seals to fail. Saturn
realized that their reputation was on the line. Rather than fixing
the cars, Saturn’s management elected to replace the vehicles
by taking replacement vehicles to the owners regardless of the
remoteness of the destination. GM’s loss for this simple labeling
error was estimated to be in the multibillion-dollar range.
(Hinkley 2001)
35
Mistakes
We would like to think that mistakes are rare events that are not
likely to affect us. However, in November 1999, the Institute of
Medicine estimated that between 44,000 to 98,000 people die in
hospitals each year due to mistakes, and that medical mistakes
are the eighth top killer in the nation. Hospital errors alone have
been estimated to cost the nation $8.8 billion a year (Kohn,
Corrigan, and Donaldson 2000)
36
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"
37
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" national or international standards or
certifying agency serves as auditor