Total Quality Management and Six Sigma

Prof. D. Kim, Fall 20031

Total Quality Management and Six SigmaTotal Quality Management and Six Sigma

Marquette University – MBA ProgramOperations 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

• 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


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


• 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)


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


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


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)


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 )


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


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


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.


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


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)


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



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


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


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



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


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


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


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


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)


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


Control to Sustain

Institutionalize

Dynamic Process- From SPC to Process Capability Improvement to Zero Defect

Continuously Improve and Innovate

On-going Journey

Documents

Total Quality Management and Six Sigma