Management Aspects of Quality Six Sigma saves millions at

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ManagementAspectsofQualityChapter2

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SixSigmasavesmillions atNationalSemiconductor

• NationalSemiconductorisacompanythatknowsalltoowellthatbeyondjusttheinitialfactoryconstruction,theentiresemiconductormanufacturingprocessisveryexpensive.• NationalSemiconductorranaverysuccessfulSix-Sigmaprojectandthenlaunched30otherSix-Sigmaprojects,leadingtotensofmillionsofdollarsincostsavings.• ThecompanyisalsoclearinnotingthatSix-Sigmahasenhanceditsproblemsolvingcapabilitiesandprovidedalogicalpathtofollowinmakingkeystrategydecisions.

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LearningObjectives

1.DescribethequalitymanagementphilosophiesofW.EdwardsDeming,JosephM.Juran,andArmandV.Feigenbaum2.Discusstotalqualitymanagement,six-sigma,theMalcolmBaldrigeNationalQualityAward,andqualitysystemsandstandards3.Understandtheimportanceofselectinggoodprojectsforimprovementactivities4.ExplainthefivestepsofDMAIC5.KnowwhenandwhennottouseDMAIC

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Discussiontopics

IntroductionHistorical

Development ofQualityPhilosophy

TotalQualityManagement

QualitySystemsandStandards Six-Sigma

Beyond Six-Sigma—DFSSand

Lean

TheDMAICProcess

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Introduction

§ Themanagement systemofanorganizationmustbeorganized toproperlydirect theoverall quality improvement philosophyandensure itsdeployment inallaspectsofthebusiness.

§ Theeffective management ofquality involves successfulexecutionofthreeactivities§ QualityPlanning,§ QualityAssurance,and§ QualityControlandImprovement.

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QualityPlanning

§ Qualityplanning isa strategicactivity

§ Qualityplanning involves§ identifyingcustomers,bothexternal andthose thatoperate

internal tothebusiness,and identifying theirneeds (thisissometimes called listening tothevoiceofthecustomer [VOC]).

§ Designanddevelopproductsorservices thatmeet orexceedcustomerexpectations.

§ Determine howtheseproductsandserviceswill berealized.§ Planning forquality improvement ona specific,systematic

basisisalsoavitalpartofthisprocess.

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QualityAssurance

§ Qualityassuranceisthesetofactivitiesthatensuresthatqualitylevelsofproductsandservicesareproperlymaintainedandthatsupplierandcustomerqualityissuesareproperlyresolved.

§ Qualitysystemdocumentationinvolvesfourcomponents.§ Policygenerallydealswithwhatistobedoneandwhy.§ Proceduresfocusonthemethodsandpersonnelthatwillimplementpolicy.§ Workinstructionsandspecificationsareusuallyproduct-,department-,

tool-,ormachine-oriented.§ Recordsareawayofdocumentingthepolicies,procedures,andwork

instructionsthathavebeenfollowed.

§ Development,maintenance,andcontrolofdocumentationareimportantqualityassurancefunctions.

“Saywhatyouaregoing todo,anddowhatyousay.”2 – 8

QualityControl

§ Qualitycontroland improvement involve thesetofactivities usedtoensure that theproductsandservices meet requirements andare improved onacontinuousbasis.

§ Variability isoftenamajor sourceofpoorqualityandstatisticaltechniques, includingSPCanddesignedexperiments, are themajor toolsofqualitycontrolandimprovement.

§ Quality improvement isoftendoneonaproject-by-projectbasisandinvolves teams ledbypersonnelwithspecializedknowledgeofstatisticalmethodsandexperience inapplying them.

§ Projects shouldbeselectedsothat theyhavesignificantbusinessimpactandare linkedwith theoverall businessgoalsforqualityidentifiedduring theplanningprocess.

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Discussiontopics






Lean

TheDMAICProcess

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HistoricalDevelopment ofQualityPhilosophy

§ Manypeoplehavecontributed tothestatisticalmethodologyofquality improvement however three individualsemerge astheleaders:§ W.E.Deming,§ J.M. Juran,and§ A.V.Feigenbaum.

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W.EDWARDSDEMING(1900– 1993)

§ HewaseducatedinengineeringandphysicsattheUniversityofWyomingandYaleUniversity.

§ HeworkedforWesternElectricandwasinfluencedgreatlybyWalterA.Shewhart.

§ FollowingWorldWarIIhebecameaconsultanttoJapaneseindustriesandconvincedtheirtopmanagementofthepowerofstatisticalmethodsandtheimportanceofqualityasacompetitiveweapon.

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Deming’s14points

1 Create aconstancyofpurpose focusedontheimprovement ofproductsandservices

2 Adoptanewphilosophythatrecognizeswe are inadifferenteconomicera

3 Donotrelyonmassinspection to“control”quality4 Donotawardbusinesstosuppliersonthebasisofpricealone,

butalsoconsiderquality5 Focusoncontinuousimprovement6 Practicemodern training methodsand investinon-the-job

training forallemployees7 Improve leadership, andpracticemodernsupervisionmethods

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Deming’s14points

8 DriveoutFear9 Break downthebarriersbetween functionalareas ofthe

business10 Eliminate targets, slogans,andnumerical goalsforthe

workforce11 Eliminate numerical quotasandworkstandards12 Remove thebarriers thatdiscourageemployees fromdoing

their jobs13 Instituteanongoingprogramofeducation forallemployees14 Create astructure intopmanagement thatwill vigorously

advocate the first13points

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Deming’s SevenDeadlyDiseasesofManagement

1 Lackofconstancyofpurpose2 Emphasisonshort-termprofits3 Evaluation ofperformance, merit rating,andannualreviews

ofperformance4 Mobilityoftopmanagement5 Runningacompanyonvisiblefiguresalone6 Excessivemedical costs7 Excessive legal damage awards

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Model toguide Improvement - ShewhartCycle

§ Plan-Do-Check-Act(PDCA)cycleorPlan-Do-Study-Act(PDSA)cycle

§ Iterative process

§ Mayrequireseveral cycles tosolvecomplexproblems

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ObstaclestoSuccess

1. Thebeliefthat automation, computers,andnewmachinery willsolveproblems.

2. Searching forexamples—trying tocopyexistingsolutions.

3. The“ourproblemsaredifferent”excuse—notrealizing that theprinciples thatwill solveproblemsareuniversal.

4. Obsoleteschools,wheregraduateshavenotbeentaughthowtosuccessfullyrunbusinesses.

5. Poorteachingofstatistical methods inindustry: teachingtoolswithoutaframework forusingthem isgoing tobeunsuccessful.

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ObstaclestoSuccess

6. Relianceoninspectiontoproducequality.

7. Relianceonthe“quality controldepartment” totakecareofallqualityproblems.

8. Blaming theworkforceforproblems.

9. Falsestarts, suchasbroad teachingofstatistical methodswithoutaplanastohowtousethem, qualitycircles,employeesuggestionsystems,andother formsof“instantpudding.”

10.Thefallacy of zerodefects:Companiesfaileventhoughtheyproduceproductsandservices withoutdefects.Meeting thespecificationsisn’t thecomplete storyinanybusiness.

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ObstaclestoSuccess

11. Inadequate testingofprototypes:Aprototypemaybeaone-offarticlewithartificially gooddimensions,butwithoutknowledge ofvariability, testingaprototypetellsvery little.Thisisasymptomofinadequate understandingofproductdesign,development, andtheoverall activityoftechnologycommercialization.

12.“Anyonethatcomestohelpusmustunderstandall aboutourbusiness.”Thisisbizarre thinking: therealready arecompetentpeople intheorganizationwhoknoweverything aboutthebusiness—excepthowtoimprove it.Newknowledge and ideas(oftenfromtheoutside)mustbefusedwithexistingbusinessexpertise tobringaboutchangeand improvement.

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JOSEPHM.JURAN(1904–2008)

§ Juran wasoneofthefoundingfathersofthequality-controlandimprovementfield.

§ HeworkedforWalterA.Shewhart atAT&TBellLaboratoriesandwasattheleadingedgeofqualityimprovementthroughouthiscareer.

§ AftertheWorldWarII,hebecametheheadoftheDepartmentofAdministrativeEngineeringatNewYorkUniversity.

§ HewasinvitedtospeaktoJapaneseindustryleadersastheybegantheirindustrialtransformationintheearly1950s.

§ Healsocreatedanactiveconsultingpractice(theJuran Institute)andlecturedwidelythroughtheAmericanManagementAssociation.

§ Hewastheco-author(withFrankM.Gryna)oftheQualityControlHandbook,astandardreferenceforqualitymethodsandimprovementsinceitsinitialpublicationin1957.

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JuranTriology

§ Juran tookamorestrategic approachtoqualitymanagement andimprovement thanDeming.

§ Juran Triology:§ Planning

§ Identifycustomerneeds§ Designanddevelopproducts/services andprocesses§ Planforquality improvement onaregular basis

§ Control§ Ensure thatproductsandservicesmeet requirements

§ Improvement§ Aims toachieve performance andquality levels thatare

higher thancurrent levels.

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ARMANDV.FEIGENBAUM(1922–)

§ Feigenbaum firstintroducedtheconceptofcompanywidequalitycontrolinhishistoricbookTotalQualityControl(1951)

§ Heproposedathree-stepapproachtoimprovingquality:§ Qualityleadership,§ Qualitytechnology, and§ Organizational commitment.

§ Heproposeda19-stepimprovementprocess,ofwhichuseofstatisticalmethodswasstep17.

§ Heinitiallysuggestedthatmuchofthetechnicalcapabilitybeconcentratedinaspecializeddepartmentwhichisincontrasttothemodernview.

§ Feigenbaum isconcernedwithorganizationalstructureandasystemsapproachtoimprovingqualitywhichisimportant.

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OtherContributors

§ KaoruIshikawa§ HeledJUSEduringitsearlygrowthyearsandultimatelybecameoneofthe

mostimportantandinfluentialleadersoftheJapanesequalityimprovementmovement.

§ Hedevelopedmanybasicqualityimprovementtools,themostfamousofwhichisthecause-andeffectdiagram(alsocalledtheIshikawadiagram)

§ PhilipCrosby§ Crosbybelievedthatqualitywasasourceofprofitandopportunityfora

company§ Hewrotetwowidelyreadbooksonquality;QualityIsFree(publishedin

1979),andQualitywithoutTears(publishedin1984).§ Thesebookswereeasytoreadandpromisedthatimprovementwas

possiblebyrelyingonthebehavorial andmotivationalaspectsofqualityimprovement.

§ Acentralfeaturewasthezerodefectsconcept

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OtherContributors

§ Genichi Taguchi§ Hebelievedthatunwanted

variabilitywasaleadingcauseofpoorquality.

§ Hearguedthatanydeviationfromtheidealortargetvalueforaqualitycharacteristicresultedinaloss,notjusttothecustomerandthebusiness,buttosociety.

§ thelossesbegintooccurassoonasthequalitycharacteristicdeviatesfromthetarget.

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OtherContributors

§ Amore traditionalview wouldbe that lossesonlyoccurwhen thequalitycharacteristic exceedseither the lowerorupperspecification

§ IntheTaguchi approach, someofthisexcessvariability inproductsorprocessesoccursasaresultoffactorsthataredifficultorimpossible tocontrol,called noisevariables.

§ Taguchi suggestedusingrobustparameter designtodeterminethe levelsofthe factorsthatcouldbewell controlled tobothoptimize the target levels ofqualitycharacteristicsandoffsetthevariability transmitted fromnoisevariables.

§ The technicalmethodsheadvocated toachieve robustnesswereshowntobe inefficientandoften ineffective andbetter methodswere developed inthe late1980sandearly1990s.

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Discussiontopics






Lean

TheDMAICProcess

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§ Total quality management (TQM) isasetofmanagementpracticesaimed atinstillingawareness ofqualityprinciplesthroughouttheorganizationandensuring that thecustomerrequirements are consistentlymetorexceeded.

§ TQMbegan intheearly 1980swiththephilosophiesofDemingandJuran asthe focalpoint.

§ Organizations thathave implemented aTQMapproachtoqualityimprovement have§ qualitycouncilsorhigh-levelteamsthatdealwithstrategicquality

initiatives,§ workforce-levelteamsthatfocusonroutineproductionorbusiness

activities,and§ cross-functionalteamsthataddressspecificqualityimprovementissues.

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TQM

§ TQMhasonlyhadmoderate successforavariety ofreasons§ Lackoftop-down,high-levelmanagementcommitmentandinvolvement;§ Inadequateuseofstatisticalmethodsandinsufficientrecognitionof

variabilityreductionasaprimeobjective;§ Generalasopposedtospecificbusiness-results-orientedobjectives;and§ Toomuchemphasisonwidespreadtrainingasopposedtofocused

technicaleducation.

§ Manymanagers andexecutives have regarded itas justanother“program” toimprove quality.

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TQM

§ Duringthe1950sand1960s,programssuchasZeroDefectsandValueEngineering abounded,buttheyhad little real impactonqualityandproductivityimprovement.

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Discussiontopics






Lean

TheDMAICProcess

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QualitySystemsandStandards

§ The International StandardsOrganization (foundedin1946inGeneva, Switzerland), knownasISO,hasdeveloped a seriesofstandardsforquality systems.§ Firstissuedin1987§ CurrentversionknownasISO9000series

§ The three standardsofISO9000are:§ ISO9000:2000QualityManagementSystem—Fundamentalsand

Vocabulary§ ISO9001:2000QualityManagementSystem—Requirements§ ISO9004:2000QualityManagementSystem—GuidelinesforPerformance

Improvement

§ ISO9000isalsoanAmerican NationalStandards InstituteandASQstandard.

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ISO9001:2000

§ The ISO9001:2000standardhaseightclauses:1. Scope,2. NormativeReferences,3. Definitions,4. QualityManagementSystems,5. ManagementResponsibility,6. ResourceManagement,7. Product(orService)Realization,and8. Measurement,Analysis,andImprovement.

§ Tobecomecertified under the ISOstandard,acompanymustselecta registrar andprepare foracertificationauditbythisregistrar.

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ISO9001:2000

§ Preparing forthecertification audit involvesmanyactivitiesincluding§ aninitialorphaseIauditthatchecksthepresentqualitymanagement

systemagainstthestandard.§ Establishteamstoensurethatallcomponentsofthekeyclauseare

developedandimplemented§ Trainingofpersonnel§ Developmentofapplicabledocumentation§ Developingandinstallingallnewcomponentsofthequalitysystemthat

mayberequired.

§ Finallycertification audit takesplace.

§ Ifthecompany iscertified, thenperiodicsurveillance auditsbytheregistrar continue,usuallyonanannual (orperhapssix-month)schedule.

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ISO9001:2000Requirements

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ISO9001:2000

§ Manyorganizationshave required their supplierstobecomecertified under ISO9000,oroneofthestandardsthataremoreindustryspecific.

§ Examples ofthese industry-specificquality systemstandardsare§ AS9100fortheaerospaceindustry;§ ISO/TS16949andQS9000fortheautomotiveindustry;and§ TL9000forthetelecommunicationsindustry.

§ Manycomponentsofthesestandardsarevery similar tothoseofISO9000.

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PitfallsofISOcertification

§ The focusofISOcertification isqualityassurance

§ There isfartoomucheffortdevoted todocumentation,paperwork, andbookkeeping andnotnearly enough toactuallyreducingvariability and improvingprocessesandproducts.

§ Manyofthethird-party registrars, auditors,andconsultantsthatwork inthisarea arenotsufficientlyeducatedorexperiencedenough inthe technical toolsrequiredforquality improvementorinhowthese toolsshouldbedeployed.

§ There isalsoevidence that ISOcertificationorcertificationunderoneoftheother industry-specificstandardsdoes little topreventpoorqualityproductsfrombeingdesigned, manufactured, anddelivered tothecustomer.

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§ The focusofISOcertification isqualityassurance

§ There isfartoomucheffortdevoted todocumentation,paperwork, andbookkeeping andnotnearly enough toactuallyreducingvariability and improvingprocessesandproducts.

§ Manyofthethird-party registrars, auditors,andconsultantsthatwork inthisarea arenotsufficientlyeducatedorexperiencedenough inthe technical toolsrequiredforquality improvementorinhowthese toolsshouldbedeployed.

§ There isalsoevidence that ISOcertificationorcertificationunderoneoftheother industry-specificstandardsdoes little topreventpoorqualityproductsfrombeingdesigned, manufactured, anddelivered tothecustomer.

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§ Ithasbeenestimated thatISOcertification activities areapproximately a$40billionannualbusiness,worldwide.

§ Muchofthismoney flowstothe registrars,auditors,andconsultantsanddoesnotincludealloftheinternal costsincurredbyorganizations toachieve registration.

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MalcolmBaldrigeNationalQualityAward(MBNQA)

§ TheMalcolmBaldrigeNationalQuality Award(MBNQA)wascreated bytheU.S.Congressin1987.

§ It isgivenannually torecognizeU.S.organizationsforperformance excellence.

§ Awardsare given toorganizations infivecategories: manufacturing,service, smallbusiness,healthcare, andeducation.

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Theperformance excellencecriteriaandtheir interrelationships

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Thepointvaluesforthecriteria

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MBNQAProcess

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Discussiontopics






Lean

TheDMAICProcess

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SixSigma

§ Six-Sigma isabusinessstrategythat seeks toimprovebusinessperformance byidentifying andremoving thecausesofdefectsanderrors

§ Motoroladeveloped theSix-Sigma program inthe late 1980sasaresponse tothedemand fortheirproducts.

§ The focusofsix-sigmaisreducingvariability inkeyproductqualitycharacteristics tothe level atwhichfailureordefectsare extremely unlikely.

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SixSigma§ Probabilityofproducingaproduct

withinthese specificationsis0.9973,whichcorrespondsto2700partspermillion(ppm)defective.

§ Thisisreferred toasthree-sigmaquality performance whichsoundspretty good

§ Nowsupposewehave aproductthatconsistsofanassemblyof100independent componentsandall100parts mustbenondefective for theproducttofunctionsatisfactorily.

§ The probabilitythat anyspecificunitofproductisnondefective is

0.9973*0.9973*...*0.9973=0.7631

§ 23.7%ofproductsaredefective.

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§ TheMotorolasix-sigmaconceptistoreducethevariabilityintheprocesssothatthespecificationlimitsareatleastsixstandarddeviationsfromthemean.

§ Generally,wecanonlymakepredictionsaboutprocessperformancewhentheprocessisstable.

§ Ifthemeanisdriftingaround,andendsupasmuchas1.5standarddeviationsofftarget,apredictionof3.4ppm defectivemaynotbeveryreliable,becausethemeanmightshiftbymorethanthe“allowed”1.5standarddeviations.

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SixSigmaQuality

§ Processperformance isnotpredictable unlesstheprocessbehavior isstable.

§ However, noprocessorsystemisever trulystable, andeven inthebestofsituations,disturbancesoccur.

§ These disturbancescanresult intheprocessmeanshiftingoff-target, an increase intheprocessstandarddeviation, orboth.

§ Theconceptofasix-sigmaprocessisoneway tomodel thisbehavior.

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SixSigma

§ Typical six-sigmaprojectsarefourtosixmonthsindurationandare selected fortheirpotential impact in thebusiness.

§ Six-sigmausesa specificfive-stepproblemsolvingapproach:Define, Measure,Analyze, Improve, andControl(DMAIC).

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SixSigma(Example)

§ Considerthevisittoafast-foodrestaurant.Thecustomerordersatypicalmeal:ahamburgerbun,meat,specialsauce,cheese,pickle,onion,lettuce,andtomato,fries,andasoftdrink.

§ Thisproducthastencomponents(independent).Is99%goodqualitysatisfactory?

P(Singlemealgood)=(0.99)10=0.9044

§ Nowsupposethatthecustomerisafamilyoffour.

P{Allmealgood}=(0.9044)4=0.6690

§ Nowsupposethatthishypotheticalfamilyoffourvisitsthisrestaurantonceamonth

P{Allvisitsduringtheyeargood}=(0.6690)12=0.0080

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GenerationsofSixSigma

§ Since itsorigins, therehave been threegenerations ofsix-sigmaimplementations.§ GenerationIsix-sigmafocusedondefecteliminationandbasicvariability

reduction.- Motorola§ InGenerationIIsix-sigmatheemphasisonvariabilityanddefectreduction

remained,butnowtherewasastrongefforttotietheseeffortstoprojectsandactivitiesthatimprovedbusinessperformancethroughcostreduction.– GeneralElectric

§ InGenerationIII,six-sigmahastheadditionalfocusofcreatingvaluethroughouttheorganizationandforitsstakeholders.- CaterpillarandBankofAmerica

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WherecanSixSigmabeapplied?

§ Someexamples ofsituationswhere a six-sigmaprogram canbeapplied toreduce variability, eliminate defects,andimprovebusinessperformance include:§ Meetingdeliveryscheduleanddeliveryaccuracytargets§ Eliminatingreworkinpreparingbudgetsandotherfinancialdocuments§ Proportionofrepeatvisitorstoane-commerceWebsite,orproportionof

visitorsthatmakeapurchase§ Minimizingcycletimeorreducingcustomerwaitingtimeinanyservice

system§ Reducingaverageandvariabilityindaysoutstandingofaccountsreceivable§ Optimizingpaymentofoutstandingaccounts§ Minimizingstock-outorlostsalesinsupplychainmanagement

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WherecanSixSigmabeapplied?

§ Minimizingcostsofpublicaccountants,legalservices,andotherconsultants

§ Improvinginventorymanagement(bothfinishedgoodsandworkin-process)

§ Improvingforecastingaccuracyandtiming

§ Improvingauditprocesses

§ Closingfinancialbooks,improvingaccuracyofjournalentryandposting(a3to4%errorrateisfairlytypical)

§ Reducingvariabilityincashflow

§ Improvingpayrollaccuracy

§ Improvingpurchaseorderaccuracyandreducingreworkofpurchaseorders

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SixSigmaOrganizationStructure

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Discussiontopics






Lean

TheDMAICProcess

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BeyondSix-Sigma—DFSSandLean

§ Inrecent years, twoother toolsetshavebecome identifiedwithsixsigma, lean systems,anddesign forsix-sigma (DFSS).

§ Design forSix-Sigmaseeks totakecustomer requirements andprocesscapabilities intoconsiderationtodesignproductsandservices that increase productandservice effectivenessasperceived bythecustomer.

§ DFSSspanstheentire development processfromtheidentificationofcustomerneeds tothe finallaunchofthenewproductorservice.

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DFSS

§ Traditionally, six-sigma isusedtoachieve operational excellence,while DFSSisfocusedonimprovingbusinessresultsbyincreasingthesalesrevenue generated fromnewproductsandservicesandfindingnew applicationsoropportunitiesforexistingones.

§ Animportant gainfromDFSSisthe reductionofdevelopmentlead time

§ TheDMAICprocessisalsoapplicable, althoughsomeorganizationsandpractitionershaveslightlydifferentapproaches(DMADV,orDefine,Measure, Analyze, Design,andVerify, isapopularvariation).

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DFSS

§ Animportant stepintheDFSSprocessisobtainingcustomerinput.

§ Customer inputisobtained throughvoiceofthecustomer(VOC)activities designedtodeterminewhatthecustomerreallywants, tosetprioritiesbasedonactual customerwants,and todetermine ifthebusinesscanmeet thoseneedsatacompetitiveprice thatwillenable ittomake aprofit.

§ SomeorganizationsuseQuality FunctionDeploymentorQFDtofocusthevoiceofthecustomerdirectly onthedesignofaproduct,service, orprocess.

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QFD

§ QualityFunctionDeploymentisatechniquetotransformcustomerrequirementsintodesignquality,downtocomponentlevelandspecificelementsofthemanufacturingsystem.

§ QFDwasdevelopedinJapaninthe1970s.

§ AnessentialcomponentofQFDisthehouseofquality.

§ Thisisessentiallyamatrixwithrowscorrespondingtocustomerrequirementsandcolumnsrepresentingthetechnicalresponsetotheserequirements.

§ Informationabouttheimportanceofeachrequirementandabouthowwellthecompany’sproductsorservicescomparetothecompetitionisobtained.

§ Analysisofthisinformationleadstodirectionsofimprovementinthedesignoftheproductorservice.

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§ Itisfairlytypicaltostepthisprocessdownfromahighlevelthatbeginswiththevoiceofthecustomerdataallthewaydowntoindividualprocessstepsandthecritical-to-processvariablesthatmustbecontrolledtoachievetheseresults.

QFD

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§ DFSSmakesspecificthe recognition thatevery designdecision isabusinessdecision,and thatthecost,manufacturability, andperformance oftheproductaredetermined duringdesign.

§ Specifically, matching thecapabilityoftheproductionsystemandthe requirements ateachstageorlevel ofthedesignprocess(refer toFigure 2.8)isessential.

DFSS

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DFSS

§ Throughout theDFSSprocess,it isimportant thatthe followingpointsbekept inmind:§ Istheproductconceptwellidentified?§ Arecustomersreal?§ Willcustomersbuythisproduct?§ Canthecompanymakethisproductatcompetitivecost?§ Arethefinancialreturnsacceptable?§ Doesthisproductfitwiththeoverallbusinessstrategy?§ Istheriskassessmentacceptable?§ Canthecompanymakethisproductbetterthanthecompetition?§ Canproductreliabilityandmaintainabilitygoalsbemet?§ Hasaplanfortransfertomanufacturingbeendevelopedandverified?

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Lean

§ Lean isa seriesofpracticesthat focusonthesystematicelimination ofwasteand thepromotionofefficiency.

§ Wastecanalsoinclude rework ofdoingsomethingoveragain toeliminate defectsintroduced thefirsttime) orscrap.

§ Rework andscrapareoften the resultofexcessvariability, sothere isanobviousconnectionbetween six-sigmaand lean.Animportantmetric inlean istheprocesscycleefficiencyPCE),definedas

Processcycleefficiency=Value-add time/Process cycle time

§ Ina leanprocess,thePCEwillexceed25%

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Lean

§ Processcycle time isalsorelated totheamountofwork thatisin-processthroughLittle’s Law

Processcycle time=Work-in-process/Average completion rate

§ Example:§ Consideramortgagerefinanceoperationatabank.§ Iftheaveragecompletionrateforsubmittedapplicationsis100

completionsperday,thenthereare1,500applicationswaitingforprocessing.

§ Theprocesscycletime=1500/100=15days

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LeanTools

§ OneofthemostimportanttoolsusedinLeanisdiscreteeventsimulation,inwhichacomputermodelofthesystemisbuiltandusedtoquantifytheimpactofchangestothesystemthatimproveitsperformance.

§ Othercommonlyusedleantoolsare:

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LeanTools(contd.)

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Howtheyfittogether?

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SixSigma,DFSS,Lean

§ Six-sigma (oftencombinedwithDFSSandlean)hasbeen muchmoresuccessfulthanitspredecessors,notablyTQM.

§ Theproject-by-projectapproachand thefocusonobtainingimprovement inbottomlinebusinessresultshasbeeninstrumental inobtainingmanagement commitment tosix-sigma.

§ Anothermajor componentinobtainingsuccessisdriving theproperdeployment ofstatisticalmethods intothe rightplaces intheorganization.

§ TheDMAICproblem-solving framework isanimportantpartofthis.

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QualityImprovementInitiatives

§ There havebeenmany initiatives devoted toimproving theproductionsystem.§ SomeoftheseincludetheJust-in-Timeapproachemphasizingin-process

inventoryreduction,rapidset-up,andapull-typeproductionsystem;§ Poka-Yokeormistake-proofingofprocesses;§ TheToyotaproductionsystemandotherJapanesemanufacturing

techniques(withonce-popularmanagementbooksbythosenames);§ reengineering;§ theoryofconstraints;agilemanufacturing;andsoon.

§ Mostoftheseprogramsdevote fartoolittle attention tovariability reduction.

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Discussiontopics






Lean

TheDMAICProcess

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DMAICProcess

§ DMAIC(typically pronounced“doh-MAY-iclc”)isa structuredfivestepproblem-solving procedurewidely usedinqualityandprocessimprovement.

§ The lettersDMAIC formanacronymforthefivesteps:Define,Measure, Analyze, Improve,andControl.

§ There are“tollgates” betweeneachofthemajor stepsinDMAIC.Ata tollgate, aproject team presents itswork tomanagers and“owners”oftheprocess.

§ Tollgates arewhere theproject isreviewed toensure that itisontrack; theyprovideacontinuingopportunitytoevaluate whetherthe teamcansuccessfullycomplete theprojectonschedule.

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DMAICProcess

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Statisticaltools usedinDMAIC

Oneofthereasons thatDMAICissosuccessfulisthatitfocusesontheeffective useofarelatively small setoftools.

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LeantoolsbyDMAICphase

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ImportanceofFinancialResults

§ Aprojectshouldrepresentapotentialbreakthroughinthesensethatitwillresultinamajorimprovementintheproductorservice.

§ Projectimpactshouldbeevaluatedintermsofitsfinancialbenefittothebusiness,asmeasuredandevaluatedbythefinanceoraccountingunit.

§ Thisfinancialsystemsintegrationisstandardpracticeinsix-sigmaandshouldbeapartofanyDMAICproject,eveniftheorganizationisn’tcurrentlyengagedinasix-sigma

§ Thevalueopportunityofprojectsmustbeclearlyidentifiedandprojectsmustbewellalignedwithcorporatebusinessobjectivesatalllevels.

§ Aligningprojectswithbothbusiness-unitgoalsandcorporate-levelmetricshelpsensurethatthebestprojectsareconsideredforselection.

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ProjectDefinition andSelection

§ Approaches toProjectDefinitionandSelection:§ Opportunistic

§ Theytypicallyarenotthebasisforlong-termsuccess;mosteasyopportunitiessoonareexhausted.

§ Tiedtostrategicbusinessobjectives§ Basedonstrategicbusinessobjectives.

§ Ideally, projectsare strategicandwell aligned withcorporatemetricsandarenotlocal (tactical).

§ Somecompaniesuseadashboard system—whichgraphicallytrackstrendsandresults—toeffectively facilitate theprojectselectionandmanagement process.

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Example2.1Whatshould beconsideredwhenevaluatingproposed projects?

§ Supposethatacompany isoperating atthe4σ level (that is,about6,210ppmdefective, assuming the1.5σ shiftinthemeanthat iscustomarywithsix-sigmaapplications).Thisisactuallyreasonably goodperformance, andmanyoftoday’sorganizationshaveachieved the4–4.5σ level ofperformance formanyoftheirkeybusinessprocesses.Theobjective istoachieve the6σperformance level (3.4ppm).What implicationsdoesthishaveforproject selectioncriteria? Suppose thatthecriterion isa25%annual improvement inquality level. Then toreach thesix-sigmaperformance level, itwill takexyears,where xisthesolutionto

3.4=6210(1- 0.25)x

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§ It turnsoutthatxisabout34years.Clearly, agoalofimprovingperformanceby25%annually isn’tgoing towork—noorganizationwillwait for34years toachieve itsgoal.Qualityimprovement isanever-ending process,butnomanagementteam thatunderstandshowtodotheabovearithmetic willsupportsuchaprogram.

§ Raising theannualprojectgoal to50%helpsa lot,reducingxtoabout11years,amuchmore realistic time frame. Ifthebusinessobjective istobea six-sigmaorganizationin fiveyears, then theannualproject improvement goal shouldbeabout75%.

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§ These calculationsare thereasonswhymanyquality-improvement authorities urgeorganizationstoconcentrate theireffortsonprojects thathave real impactandhighpayback totheorganization.Bythat theyusuallymeanprojects thatachieve atleasta50%annual return intermsofquality improvement.

§ Isthislevel ofimprovement possible?The answer isyes,andmanycompanieshaveachieved thisrateofimprovement. Forexample, Motorola’sannual improvement rateexceeded 65%during thefirstfewyearsoftheir six-sigma initiative. Todothisconsistently,however, companies mostdevoteconsiderableefforttoprojectdefinition,management, execution, andimplementation. It’salsowhythebestpossiblepeople intheorganizationshouldbeinvolved intheseactivities.

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ProjectCharter- Example

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TheDefineStep

§ ProjectCharter - Oneofthe firstitems thatmustbecompleted inthedefinestepisaprojectcharter.

§ Thecharter shouldalsoidentify thecustomer’s critical-to-qualitycharacteristics(CTQs)thatareimpactedby theproject.

§ Graphicaidsarealsousefulin thedefine step;themostcommononesusedincludeprocessmapsandflowcharts,value streammaps (seeChapter 3),andtheSIPOCdiagram.

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SIPOC

§ SIPOC isanacronymforSuppliers, Input,Process,Output,andCustomers,defined thus:§ Thesuppliersarethosewhoprovidetheinformation,material,orother

itemsthatareworkedonintheprocess.§ Theinputistheinformationormaterialprovided.§ Theprocessisthesetofstepsactuallyrequiredtodothework.§ Theoutputistheproduct,service,orinformationsenttothecustomer.§ Thecustomeriseithertheexternalcustomerorthenextstepinthe

internalbusiness.

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§ SIPOCdiagramsgive asimpleoverview ofaprocessandareusefulforunderstandingandvisualizingbasicprocesselements.

SIPOC

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DefineTollgate

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TheMeasureStep

§ Thepurposeofthemeasure stepistoevaluate andunderstandthecurrent stateoftheprocess.

§ Thisinvolvescollectingdataonmeasures ofquality, cost,andthroughput/cycle time.

§ It isimportant todevelopa listofallofthekeyprocessinputvariables (sometimesabbreviated KPIV)and thekeyprocessoutputvariables (KPOV).

§ Datamaybecollected byexamining historicalrecords,butthismaynotalwaysbesatisfactory,asthehistorymaybe incomplete,themethodsofrecordkeeping mayhavechangedover time, and,inmanycases, thedesired informationnevermayhave beenretained.

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TheMeasureStep

§ Thedata thatarecollectedare usedasthebasisfordeterminingthecurrent stateorbaselineperformanceoftheprocess.

§ Thecapability ofthemeasurementsystemshouldbeevaluated.

§ Thismaybedoneusingaformalgauge capability study(calledgaugerepeatabilityandreproducibility, orgaugeR&R).

§ Thedatacollectedduring themeasure stepmaybedisplayed invariouswayssuchashistograms, stem-and-leaf diagrams, runcharts, scatterdiagrams, andParetocharts.

§ Attheendofthemeasure step, the teamshouldupdate theprojectcharter (ifnecessary), re-examine theprojectgoalsandscope,and re-evaluate team makeup.

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MeasureTollgate

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TheAnalyzeStep

§ Intheanalyze step,theobjective istousethedata fromthemeasure steptobegin todetermine thecause-and-effectrelationships intheprocessandtounderstandthedifferentsourcesofvariability.

§ It isimportant toseparate thesourcesofvariability intocommoncausesandassignablecauses.

§ CommonlyusedAnalyze Step toolsare§ ControlCharts§ HypothesisTesting§ ConfidenceInterval§ RegressionAnalysis§ DiscreteEventComputerSimulation

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FMEA

§ Failure modesandeffectsanalysis (FMEA) isanotherusefultoolduring theanalyze stage.

§ FMEA isusedtoprioritize thedifferentpotential sourcesofvariability, failures,errors,ordefects inaproductorprocessrelative to threecriteria:§ Thelikelihoodthatsomethingwillgowrong(rankedona1to10scalewhere1=

notlikelyand10=almostcertain).§ Theabilitytodetectafailure,defect,orerror(rankedona1to10scalewhere1=

very likelytobedetectedand10=veryunlikelytobedetected).§ Theseverity ofafailure,defect,orerror(rankedona1to10scalewhere1=little

impactand10=extremeimpact).

§ The three scoresforeachpotential sourceofvariability, failure,error, ordefectaremultiplied toobtaina riskprioritynumber(RPN).

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AnalyzeTollgate

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TheImproveStep

§ Inthe improvestep, they turntocreative thinkingabout thespecificchanges thatcanbemade in theprocessandother thingsthatcanbedonetohave thedesired impactonprocessperformance.

§ Abroad rangeoftoolscanbeusedinthe improve step.§ Redesigningtheprocesstoimproveworkflowandreducebottlenecksand

work-inprocesswillmakeextensiveuseofflowchartsand/orvaluestreammaps.

§ Mistake-proofing(designinganoperationsothatitcanbedoneonlyoneway—therightway)anoperationwillbeuseful.

§ Designedexperimentsareprobablythemostimportantstatisticaltoolintheimprovestep.

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ImproveTollgate

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TheControlStep

§ Theobjectivesofthecontrolsteparetocompleteallremainingworkontheprojectandtohandofftheimprovedprocesstotheprocessowneralongwithaprocesscontrolplanandothernecessaryprocedurestoensurethatthegainsfromtheprojectwillbeinstitutionalized.

§ Theprocessownershouldbeprovidedwithbeforeandafterdataonkeyprocessmetrics,operationsandtrainingdocuments,andupdatedcurrentprocessmaps.

§ Theprocesscontrolplanshouldbeasystemformonitoringthesolutionthathasbeenimplemented,includingmethodsandmetricsforperiodicauditing.

§ ControlchartsareanimportantstatisticaltoolusedinthecontrolstepofDMAIC

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ControlStep

§ The transitionplanfortheprocessownershouldincludeavalidationcheckseveral monthsafterprojectcompletion.

§ It isimportant toensure thattheoriginal resultsarestillinplaceandstablesothatthepositive financial impactwillbesustained.

§ It isnotunusualtofindthatsomethinghasgonewrong inthetransition totheimproved process.

§ Theability torespondrapidly tounanticipated failures shouldbefactored intotheplan.

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ControlTollgate

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Litigationusuallycreatesaverylargenumberofdocuments.Thesecanbeinternalworkpapers,consultants’reports,affidavits,courtfilings,documentsobtainedviasubpoena,andpapersfrommanyothersources.Insomecases,therecanbehundredsofthousandsofdocumentsandmillionsofpages.DMAICwasappliedinthecorporatelegaldepartmentofDuPont,ledbyDuPontlawyer,JulieMazza,whospokeabouttheprojectatanAmericanSocietyforQualitymeeting[Mazza (2000)].ThecaseisalsodiscussedinSnee andHoerl (2005).Theobjectivewastodevelopanefficientprocesstoallowtimelyaccesstoneededdocumentswithminimalerrors.Documentmanagementisextremelyimportantinlitigation;italsocanbetime-consumingandexpensive.Theprocesswasusuallymanual,soitwassubjecttohumanerror,withlostorincorrectdocumentsfairlycommonproblems.InthespecificcasepresentedbyMazza,therewasanelectronicdatabasethatlistedandclassifiedallofthedocuments,butthedocumentsthemselveswereinhardcopyform.

Example2.2LitigationDocuments

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Example2.2LitigationDocumentsDEFINETheDuPontlegalfunctionandthespecificlegalteaminvolvedinthisspecificlitigationwerethecustomersforthisprocess.Rapidanderror-freeaccesstoneededdocumentswasessential.Forexample,ifarequestforadocumentcouldnotbeansweredin30days,thelegalteamwouldhavetofilearequestforanextensionwiththecourt.Suchextensionsaddcost,time,anddetractfromthecredibilityofthelegalteam.Aprojectteamconsistingofprocessowners,legalsubject-matterexperts,clerks,aninformationsystemsspecialist,andMazza (whowasalsoablackbeltinDupont’s six-sigmaprogram)wasformed.TheteamdecidedtofocusonCTQsinvolvingreductionofcycletime,reductionoferrors,eliminationofnon-value-addedprocessactivities,andreductionofcosts.Theybeganbymappingtheentiredocument-productionprocess,includingdefiningthestepsperformedbyDuPontlegal,outsidecounsel,andtheoutsidedocuments-managementcompany.Thisprocessmapwasinstrumentalinidentifyingnon-value-addedactivities.

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MEASURE

Inthemeasurestep,theteamformallymeasuredthedegreetowhichtheCTQswerebeingmetbyreviewingdataintheelectronicdatabase;obtainingactualinvoices;reviewingcopyingandotherlaborcharges,thecostsofdataentry,andthechargesforshipping,courtfeesforfilingforextensions;andstudyinghowfrequentlyindividualdocumentsinthedatabasewerebeinghandled.Itwasdifficulttoaccuratelymeasurethefrequencyofhandling.Manyofthecostcategoriescontainednon-value-addedcostsbecauseoferrors,suchashavingtocopyadifferentdocumentbecausethewrongdocumenthadbeenpulledandcopied.Anothererrorwasallowingaconfidentialdocumenttobecopied.

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ANALYZE

Theteamworkedwiththedataobtainedduringthemeasurestepandtheknowledgeofteammemberstoidentifymanyoftheunderlyingcausesandcostexposures.Afailuremodesandeffectsanalysishighlightedmanyofthemostimportantissuesthatneededtobeaddressedtoimprovethesystem.Theteamalsointerviewedmanyofthepeoplewhoworkedintheprocesstobetterunderstandhowtheyactuallydidtheworkandtheproblemstheyencountered.Thisisoftenveryimportantinnonmanufacturingandserviceorganizationsbecausethesetypesofoperationscanhaveamuchgreaterhumanfactor.

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ANALYZE

Someoftherootcausesofproblemstheyuncoveredwere:

1. Ahighturnoverrateforthecontractor’sclerks

2. Inadequatetraining

3. Inattentiontothejob,causedbyclerksfeelingtheyhadnoownershipintheprocess

4. Thelargevolumeofdocuments

Theteamconcludedthatmanyoftheproblemsinthesystemweretheresultofamanualdocument-handlingsystem.

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IMPROVE

Toimprovetheprocess,theteamproposedadigitalscanningsystemforthedocuments.Thissolutionhadbeenconsideredpreviouslybutalwayshadbeendiscardedbecauseofcost.However,theteamhaddoneaverythoroughjobofidentifyingtherealcostsofthemanualsystemandtheinabilityofamanualsystemtoeverreallyimprovethesituation.Thebetterinformationproducedduringthemeasureandanalyzestepsallowedtheteamtosuccessfullyproposeadigitalscanningsystemthatthecompanyaccepted.

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IMPROVE

TheteamworkedwithDuPont’sinformationtechnologygrouptoidentifyanappropriatesystem,getthesysteminplace,andscanallofthedocuments.Theyremappedthenewprocessand,onthebasisofapilotstudy,estimatedthattheunitcostofprocessingapageofadocumentwouldbereducedbyabout50%,whichwouldresultinabout$1.13millioninsavings.About70%ofthenon-value-addedactivitiesintheprocesswereeliminated.Afterthenewsystemwasimplemented,itwasproposedforuseinalloftheDuPontlegalfunctions;thetotalsavingswereestimatedatabout$10million.

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CONTROL

Thecontrolplaninvolveddesigningthenewsystemtoautomaticallytrackandreporttheestimatedcostsperdocument.ThesystemalsotrackedperformanceonothercriticalCTQsandreportedtheinformationtousersoftheprocess.Invoicesfromcontactorswerealsoforwardedtotheprocessownersasamechanismformonitoringongoingcosts.Explanationsabouthowthenewsystemworkedandnecessarytrainingwereprovidedforallthosewhousedthesystem.Extremelysuccessful,thenewsystemprovidedsignificantcostsavings,improvementincycletime,andreductionofmanyfrequentlyoccurringerrors.

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Example2.3ImprovingOn-TimeDelivery

Akeycustomercontactedamachine toolmanufacturer aboutpoorrecentperformance theyhadexperienced regarding on-timedelivery oftheproduct.On-time deliveries were at85%,insteadofthedesired target valueof100%,and thecustomercouldchoosetoexercise apenalty clause toreducebyupto15%ofthepriceofeachtool,orabouta$60,000lossforthemanufacturer.Thecustomerwasalsoconcernedabout themanufacturer’s factorycapacityanditscapability tomeet their productionscheduleinthe future.Thecustomer represented about$8millionofbusinessvolume fortheimmediate future—the manufacturer needed arevised businessprocesstoresolve theproblemor thecustomermightconsiderseeking asecondsourcesupplierforthecritical tool.

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Ateam was formed todetermine therootcausesofthedeliveryproblemand implement a solution.Oneteam member wasaprojectengineer whowassenttoa supplier factory,with thepurposetoworkcloselywith thesupplier, toexamine all theprocessesusedinmanufacturingofthe tool,and toidentifyanygapsintheprocessesthataffecteddelivery. Some ofthesupplier’sprocessesmightneed improvement.

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DEFINE

Theobjectiveoftheprojectwastoachieve100%on-timedelivery.Thecustomerhadaconcernregardingon-timedeliverycapability,andalatedeliveriespenaltyclausecouldbeappliedtocurrentandfutureshipmentsatacosttothemanufacturer.Latedeliveriesalsowouldjeopardizethecustomer’sproductionschedule,andwithoutanimprovedprocesstoeliminatetheon-timedeliveryissue,thecustomermightconsiderfindingasecondsourceforthetool.Themanufacturercouldpotentiallyloseasmuchashalfofthebusinessfromthecustomer,inadditiontoincurringthe15%penaltycosts.Themanufactureralsowouldexperienceadelayincollectingthe80%equipmentpaymentcustomarilymadeuponshipment.

Thepotentialsavingsformeetingtheon-timedeliveryrequirementwas$300,000perquarter.Maintainingasatisfiedcustomeralsowascritical.

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MEASURE

Thecontractualleadtimefordeliveryofthetoolwaseightweeks.Thatis,thetoolmustbereadyforshipmenteightweeksuponreceiptofthepurchaseorder.TheCTQforthisprocesswastomeetthetargetcontractualleadtime.Figure2.13showstheprocessmapfortheexistingprocess,frompurchaseorderreceipttoshipment.Thecontractualleadtimecouldbemetonlywhentherewasnoexcursionorvariationintheprocess.Somehistoricaldataonthisprocesswasavailable,andadditionaldatawascollectedoverapproximatelyatwo-monthperiod.

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ANALYZE

Basedonthedatacollectedfromthemeasurestep,theteamconcludedthatproblemareascamefrom:

1. Supplierqualityissues:Partsfailedprematurely.Thiscauseddelayinequipmentfinaltestingduetotroubleshootingorwaitingforreplacementparts.

2. Purchaseorderprocessdelay:Purchaseorderswerenotprocessedpromptly,resultingindelayedinternalprojectstartdates.

3. Delayincustomerconfirmation:Ittookuptothreedaystoconfirmthefinalequipmentconfigurationwiththecustomer.Thisdelayedmostoftheearlymanufacturingstepsandcomplicatedproductionscheduling.

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ANALYZE

4. Incorrecttoolconfigurationorders:Thereweremanyprocessesonthecustomerside,leadingtofrequentconfusionwhenthecustomerplacedtheorderandoftenresultinginanincorrecttoolconfiguration.Thiscausedreworkatthemid-streamofthemanufacturingcycleandcontributedgreatlytothedeliverydelayproblem.

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IMPROVE

Inordertomeettheeight-weekcontractualleadtime,theteamknewthatitwasnecessarytoeliminateanypossibleprocessvariation,startingfromreceiptofthepurchaseordertoshipmentoftheequipment.Threemajorcorrectiveactionsweretaken:

1. SupplierQualityControlandImprovement:Aninternalbuy-offchecklistforthesupplierwasimplementedthatcontainedallrequiredtestingofcomponentsandsubsystemsthathadtobecompletedpriortoshipment.Thisactionwastakentominimizepartfailuresbothinmanufacturingandfinaltestaswellasinthefield.Thesupplieragreedtoprovideconsignedcriticalsparepartstothemanufacturersothatitcouldsaveonshippingtimeforreplacementpartsifpartfailureswereencounteredduringmanufacturingandfinaltesting.

2. ImprovetheInternalPurchaseOrderProcess:Acommone-mailaddresswasestablishedtoreceiveallpurchaseordernotifications.Threepeople(asales

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IMPROVEsupportengineer,aprojectengineer,andanaccountmanager)weretohaveaccesstothee-mailaccount.Previously,onlyonepersoncheckedpurchaseorderstatus.Thisstepenhancedthetransparencyofpurchaseorderarrivalandallowedthecompanytoactpromptlywhenaneworderwasreceived.

2. ImprovetheOrderingProcesswiththeCustomer:Theteamrealizedthatvarioustoolconfigurationsweregeneratedovertheyearsduetonewprocessrequirementsfromthecustomer.Inordertoensureaccuracyoftoolconfigurationsinapurchaseorder,acustomizedspreadsheetwasdesignedtogetherwiththecustomertoidentifythekeydataforthetoolonorder.ThespreadsheetwassavedunderapurchaseordernumberandstoredinapredefinedWeblocation.Thetoolowneralsowastotakeownershipofwhathe/sheorderedtohelptoeliminatetheconfirmationstepwiththecustomerandtoensureaccuracyinthefinalorder.

Figure2.14showsaprocessmapofthenew,improvedsystem.Thestepsintheoriginalprocessthatwereeliminatedareshownasshadedboxesinthisfigure.

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CONTROL

Toensurethatthenewprocesswasincontrol,theteamrevisedtheproductiontrackingspreadsheetwithfirmmilestonedatesandprovidedamorevisualformat.Anupdatingprocedurewasprovidedonabiweeklybasisbythefactorytoreflectup-to-dateinformation.Theprojectengineerwouldbeabletomonitortheprogressofeachtoolonorderandtakeactionaccordinglyshouldanyunplanneddeviationfromthescheduleoccur.

Afterimplementingthenewprocess,includingthenewproductiontrackingprocedure,themanufacturerwasabletoshiptoolswith100%on-timedelivery.Thecostsavingsweremorethan$300,000eachquarter.Equallyimportant,thecustomerwassatisfiedandcontinuedtoremainconfidentinthemanufacturer’scapabilityandcapacity.

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Example2.4ImprovingServiceQualityinaBank

Kovach(2007)describeshowtheDMAICprocesscanbeusedtoimproveservicequalityforabankingprocess.Duringthedefineandmeasurephasesofthisproject,theteamidentifiedseveralCTQstobeimproved:1. Speedofservice2. Consistentservice3. Aneasy-to-useprocess4. Apleasantenvironment5. Knowledgeablestaff

ThereweremanyfactorsthatcouldbeinvestigatedtoimprovetheseCTQs.Theteamdecidedtofocusontwoareasofimprovement:improvedtellerandcustomerworkstationsandnewtrainingforthestaff.Intheimprovestage,theydecidedtouseadesignedexperimenttoinvestigatetheeffectsofthesetwofactorsontheCTQs.Fourdifferentbrancheswereselectedinwhichtoconducttheexperiment.

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Noticethatthisisaphysicalexperiment,notanexperimentwithacomputersimulationmodelofthebranchoperations.Newtellerandcustomerworkstationsweredesignedandinstalledintwoofthebranches.Theteamdesignedanewtrainingprogramanddeliveredittothestaffattwoofthebranches,onewiththenewworkstationsandonewithoutthenewfacilities.(Thiswasatwo-factorfactorialexperiment,witheachofthetwofactorshavingtwolevels.Wediscussthesetypesofexperimentsextensivelyinthisbook.)

Theteamdecidedtoconducttheexperimentfor30workingdays.Eachdaywasconsideredtobeablock(blockingisadesigntechniqueforeliminatingtheeffectsofnuisancefactorsontheexperimentalresults;herethenuisancefactorsweretransactiontypes,volumes,anddifferentcustomersateachofthefourbranches).TheresponsedatawasobtainedbyaskingcustomerstocompleteasurveyinstrumentthatregisteredtheirdegreeofsatisfactionwiththepreviouslyidentifiedCTQs.

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TheresultsoftheexperimentdemonstratedthattherewasastatisticallysignificantdifferenceintheCTQsresultingfromboththenewworkstationsandthenewtraining,withthebestresultsobtainedfromthecombinationofthenewworkstationsandthenewtraining.Implementationofthenewstationsandtrainingwasexpectedtosignificantlyimprovecustomersatisfactionwiththebankingprocessacrossthebank’sbranches.

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End- Chapter2