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Total Quality Management and Six Sigma. Marquette University – MBA Program Operations and Supply Chain Management. Discussion and Learning Points. Views of Quality Views and Economics of Quality Malcolm Baldrige National Quality Award Total Quality Management (TQM) Principles - PowerPoint PPT Presentation
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Prof. D. Kim, Fall 20031
Total Quality Management and Six SigmaTotal Quality Management and Six Sigma
Marquette University – MBA ProgramOperations and Supply Chain Management
Prof. D. Kim, Fall 20032
Discussion and Learning Points
• Views of Quality– Views and Economics of Quality– Malcolm Baldrige National Quality Award– Total Quality Management (TQM) Principles
• Strategic Quality Management– Planning for Quality: Hoshin Kanri– Design for Quality– Managing and Controlling for Quality– ISO 9000 and Quality Improvement Programs
• Six Sigma Program– Six Sigma Methodology– Six Sigma Execution Pipeline– Six Sigma Tools
Prof. D. Kim, Fall 20033
Defining Quality
• Deming, Crosby, Juran, etc.
• Conformance to design specifications• Conformance to customer requirements• Doing it right the first time• Fair exchange of price and value• Careful and consistent attention to details• Consistently meeting customer expectations and production delivery
performance• General philosophy of a firm to excel
Prof. D. Kim, Fall 20034
• Characteristics• System’s Framework
1.0 Leadership (110 points)
2.0 Strategic Planning (80 points)
3.0 Customer and Market Focus (80 points)
4.0 Information and Analysis (80 points)
5.0 Human Resource Focus (100 Points)
6.0 Process Management (100 points)
7.0 Business Results (450 points)
Malcolm Baldrige National Quality Award
(www.quality.nist.gov)
Prof. D. Kim, Fall 20035
Total Quality Management (TQM) Principles
• Customer satisfaction ≈ Perception - Expectation• Kaizen (Continuous Improvement)• Employee involvement and empowerment• Management commitment• Leadership and education, Corporate social performance• Strategic orchestration• Coordination and information exchange• Product/process design and development• Prevention, Process control, Process improvement• Management by fact, Statistical thinking
• Japanese TQM– Hoshin Kanri + Cross functional management + Daily control
Prof. D. Kim, Fall 20036
Strategic Quality Management
• Planning for Quality– Hoshin Kanri (Policy Deployment)
• Maximize focus on strategic targets through total employee involvement• Key elements: capability and commitment, direction and focus, coordination
• Designing for Quality (for total customer satisfaction)– Understand customer expectations and perceptions
• Quality Function Deployment (QFD)• Concurrent Engineering (CE)• Value Analysis (VA), Value Engineering (VE); DFM, DFA, DFDA, DFRM, DFS• Product/Service Standards; Service Guarantee
• Managing and Controlling– Measure Quality– Analyze and manage production/delivery systems and processes– Marshal the resources– Reconcile quality and costs– Perform an effective service recovery
Prof. D. Kim, Fall 20037
Measuring Quality: Dimensions
• Product Quality Dimensions– Performance– Features– Reliability– Conformance– Durability– Serviceability– Aesthetics– Perceived quality
• Service Quality (ServQual) Dimensions– Tangibles– Reliability– Responsiveness– Assurance– Empathy
• E-Tailing Service Quality Dimensions– Reliable/Prompt Response– Credibility– Security– Ease of Use
(Garvin 1988, Parasuraman, Zeithaml, & Berry 1988, Jun, Yang, & Kim 2003)
Prof. D. Kim, Fall 20038
Managing Service Quality Gaps
External communications to consumers
Word-of-mouthcommunications
Personal needs Past experience
Expected service
Perceived service
Service delivery (includingpre- and post-contacts)
Translation of perceptions intoservice quality specifications
Management perceptions of consumer expectations
GAP 5
GAP 3
GAP 2
GAP 1GAP 4
Customer
Marketer
(Parasuraman, Zeithaml, & Berry 1988 )
Prof. D. Kim, Fall 20039
Costs of Quality (COQ)
Failure costs (Cf) Detection costs (Cd) Prevention costs (Cp)External failure: Process control Quality planning and audits
Customer complaints Peer review Training programWarranty charges Supervision Data acquisition and analysisLiability insurance Customer comment card Preventive maintenanceLegal judgments Inspection Supplier evaluationLoss of repeat service Recruitment and selection
Internal failure:Scrap, Rework
Recovery:Expedite, Labor and materials
Prof. D. Kim, Fall 200310
Economics of Quality
# (%) Defects
$, Cost
COQ
Cf
CdCp
# (%) Defects
$, Cost
COQ
Cf
CdCp
Traditional View Zero Defect View
Dynamic View: Quality vs. Cost/Productivity/Delivery/Speed/Flexibility
Prof. D. Kim, Fall 200311
ISO 9000
• Directs you to "document what you do and then do as you documented."• ISO 9000 Series
– 9000: Quality Management and Quality Assurance Standards -- Guidelines for Selection and Use
– 9001: Model for Quality Assurance in Design, Production, Installation, & Servicing– 9002: Model for Quality Assurance in Production and Installation– 9003: Model for Quality Assurance in Final Inspection Test– 9004: Quality Management and Quality System Elements -- Guidelines
• ISO 9001 Elements– Management responsibility, Quality system, Contract review, Design control, Document
control, Purchasing, Customer-supplied material, Product identification & traceability, Process control, Inspection & testing, Inspection, measuring, & test equipment, Inspection & test status, Control of nonconforming product, Corrective action, Handling, storage, packaging, & delivery, Quality records, Internal quality audits, Training, Servicing, Statistical techniques
• Certification Process1. A firm audits itself against ISO 9000 standards.2. A customer audits its supplier.3. A "qualified" national or international standards or certifying agency serves as auditor.
Prof. D. Kim, Fall 200312
Quality Improvement (QI) Programs
3S System Deming Circle Seven Step Method/QI Story
Search Plan Define the project/themeStudy the current situation
Solve Do Analyze potential causesImplement a solution/countermeasures
Check Check the resultsStandardize Act Standardize the improvement
Establish future plans
Prof. D. Kim, Fall 200313
GE Six Sigma Methodology
POWERFUL, SIMPLE METHODOLOGIES
DEFINE MEASURE ANALYZE IMPROVE CONTROL
OPPORTUNITY SYMPTOMS CAUSES SOLUTIONS SUSTAIN
CHARTER PERFORMANCE DRIVERS ACTIONS CONTROLS
PROGRAM NEEDS & HIGH LEVEL DETAILED ROLL-OUT &DESCRIPTION REQUIREMENTS DESIGN DESIGN CONTROL
DEFINE MEASURE ANALYZE DESIGN VERIFY
DMAIC
DMADV
(Source: GE Six Sigma Program Manual)
Prof. D. Kim, Fall 2003
Six Sigma Program
• GE Company-Wide Initiative– “This is the most important initiative GE has ever undertaken”
- J.F. Welch, Chairman and CEO• Vision/Philosophy of Product & Service Excellence• Value to Our Customers• Goal for Competitive Strength• Strategy/Culture for Running a Business • Quantitative Methodology
– Use measurements and scientific process• Metric/Benchmark of World Class Companies• Process to Reduce Defects Per Million Opportunities (DPMO)
– DPMO = [# defects / (# opportunities for error/unit x # units)] x 1M– “Sigma” is standard deviation from the ideal– From current levels to “Six Sigma”– Can be applied to all business functions
• Sourcing, Product development, Operations, Order fulfillment, Service, Sales Support• Method/Tool to Eliminate Variation
(Source: GE Six Sigma Program Manual)
Prof. D. Kim, Fall 2003
Target CustomerSpecification
1
2
3
A 3 process because 3 standard deviations fit between target and spec
3
6.6% Defects
Target
CustomerSpecification
Before
After
123456
6 VirtuallyNo Defects!
Six Sigma Concept
(Source: GE Six Sigma Program Manual)
By Reducing Variability, We Can Make a Robust
Product or Process
2 308,537.0
366,807.0
46,210.0
5233.0
63.4
DPMO
Prof. D. Kim, Fall 200316
QUALITY FOCUS AREAS
1. Clinical Excellence & Value 2. Reliable Products & Services 3. Six Sigma with Customers 4. Global Products Company 5. Systems & Support 6. Proactive Risk Management
ORGANIZATION: ACCOUNTABILITY
FU
NC
TIO
NA
LC
HA
MP
ION
S
PRIORITIESCHAMPIONS
EXECUTION:FINDING THE PEARLS
PROJECT
Master Black Belt
Black Belt / Green Belt
Project Team
Execution Pipeline
REVIEW & CONTROL:CLOSING THE LOOP
FOCUS, STRUCTURE, IMPACT
(Source: GE Six Sigma Program Manual)
Prof. D. Kim, Fall 2003
Define the Opportunity and Program
No, Continue…Receive Material
fromSupplier
Inspect Material for
DefectsDefects found?
Return to Supplier for
Credit
Yes
Flowchart (Flow Diagram) or Service Blueprint
Process Map
Prof. D. Kim, Fall 2003
Measure Symptoms
Billing Errors
Wrong Account
Wrong Amount
A/R Errors
Wrong Account
Wrong Amount
Monday
Check Sheet
Num
ber o
f Lot
s
Data RangesDefects
in lot0 1 2 3 4
Histogram
0.440.460.480.500.520.540.560.58
1 2 3 4 5 6 7 8 9 10 11 12Time (Hours)
Diam
eter
Run Chart
Prof. D. Kim, Fall 200319
Measure Symptoms (Cont’d)
Statistical Process Control (SPC): ± z
LCL
UCL
Mean
Variable Control Chart- chart- R chartAttribute Control Chart- p chart- c chart
x̄
0 1 2 3-3 -2 -1z
99.7%
LCL UCL
x̄
Look for Drift/Trend, Seasonality, Shift, Spike
Variability- Normal variability: random- Abnormal variability: assignable
Process Control- About the internal stability of the process- Not about the external satisfaction of the process performance
Prof. D. Kim, Fall 2003
Analyze the Causes
Effect
ManMachine
MaterialMethod
Environment
Fishbone (Cause & Effect) Diagram
Assy.
Freq
uenc
y
Design Purch. Training Other
80%
Pareto Diagram
Failure Mode Effect (and Criticality) Analysis (FEMA)- a structured approach to identify, estimate, prioritize, and evaluate risk of possible failures at each stage in the process
Regression AnalysisDesign of Experiments (DOE)- a statistical test to determine cause-and-effect relationships between process variables and output
Multivariate Analysis
BrainstormingHouse of QualityCritical To Quality (CTQ)
Scatter Plot
Prof. D. Kim, Fall 2003
Improve Solutions
Shifts in Process Mean
Capability Index shows how well parts being produced fit into upper & lower customer specs, design limit specs or tolerance limits.
Capability Index shows how well parts being produced fit into upper & lower customer specs, design limit specs or tolerance limits.
As a process produces items, small shifts in equipment or system can cause differences in performance from differing samples.
As a process produces items, small shifts in equipment or system can cause differences in performance from differing samples.
Process Capability Index (Cpk)
Cpk = min[(US - )/(3), ( - LS)/(3)]
Process Capability Ratio (Cp)
Cp = (US - LS)/(6)
Sigma Measure (S)
S = (US - LS)/(2)
Prof. D. Kim, Fall 200322
Improve Solutions (Cont’d)
Mean ShiftingVariability ReductionShingo’s Poka Yoke- Fail-safe design, Error-free method- Special tooling for human error prevention
Robust Design-Taguchi Method
Value Stream Mapping- Process mapping with identification of value-added and non-value-addedBenchmarkingKaizenBusiness Process ReengineeringKaizen Blitz (Rapid Event Improvement)
IncrementalCost of
Variability
High
ZeroLowerSpec
TargetSpec
UpperSpec
Taguchi Method
Prof. D. Kim, Fall 200323
Control to Sustain
Institutionalize
Dynamic Process- From SPC to Process Capability Improvement to Zero Defect
Continuously Improve and Innovate
On-going Journey