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