Agenda

1. Agenda Week 7 • Review homework • Chapter 3 -  11, 36(c) • Case Study: “How We Slashed Response Time” • Lecture/discussion • Chapter 4: Statistics • Metrics • Measurement • Statistics • Week 8 assignment • Homework • Problems chapter 4 – 2, 3 Quality Metrics

2. Quality Metrics Chapter Four “We best manage what we can measure” Quality Metrics

3. Metric • A metric is a verifiable measure stated in either quantitative or qualitative terms. • “95 percent inventory accuracy” • “as evaluated by our customers, we are providing above-average service” Quality Metrics

4. Metric • A metric is a verifiable measure • that • captures performance in terms of how something is being done relative to a standard, • allows and encourages comparison, • supports business strategy. Quality Metrics

5. Customer quality measures • Customers typically relate quality to: • Feature based measures; “have” or “have not” - determined by design • Performance measures - “range of values” - conformance to design or ideal value Quality Metrics

6. True versus substitute performance measures • Customers - use “true” performance measures. • example: a true measure of a car door may be “easy to close”. • true performance measures typically vary by each individual customer. • Unfortunately, producers cannot measure performance as each individual customer does. • Producers - use “substitute” performance measures • these measures are quantifiable (measurable units). • Substitute measure for a car door: door closing effort (foot-pounds). • Other example: light bulb • true performance measure -- brightens the room • substitute performance measure – wattage or lumens Quality Metrics

7. Educating Consumers • Sometimes, producers educate consumers on their substitute performance measures. • What are substitute performance measures for the following customer desires: • Good Gas Mileage • Powerful Computer • What is the effect of educating consumers on performance measures? Quality Metrics

8. What is a “metric”? • Another term for a substitute performance measure is a metric. • Metric is a standard of measurement. • In quality management, we use metrics to translate customer needs into producer performance measures. • Internal quality metrics • scrap and rework • process capability (Cp or Cpk) • first time through quality (FTTQ) Quality Metrics

9. Identifying effective metrics • Effective metrics satisfy the following conditions: • performance is clearly defined in a measurable entity (quantifiable). • a capable system exists to measure the entity (e.g., a gage). • Effective metrics allow for actionable responses if the performance is unacceptable. • There is little value in a metric which identifies nonperformance if nothing can or will be done to remedy it. • Example: Is net sales a good metric to measure the performance of a manufacturing department? Quality Metrics

10. Use of quality metrics • Quality metric data may be used to: • spot trends in performance. • compare alternatives. • predict performance. • However, organizations should consider the costs and benefits of collecting information for a particular quality metric. • collecting data will not necessarily result in higher performance levels. • higher quality companies often use fewer metrics than their competitors. Quality Metrics

11. Acceptable ranges • In practice, identifying effective metrics is often difficult. • Main reason: non-performance of a metric does not always lead to customer dissatisfaction. • Consider the car door example again, if door closing effort is the metric, will a customer be dissatisfied if the actual effort is 50 foot-pounds versus 55 foot-pounds. • Producers typically identify ranges of acceptable performance for a metric. • (a) For services, ranges often referred to as break points. • (b) In manufacturing, these ranges are known as targets, tolerances, or specifications. Quality Metrics

12. Break points • Break points are levels where improved performance will likely change customer behavior. • Example: waiting in line • Suppose the average customer will only wait for 5 minutes • Wait longer than 5 minutes -- customer is dissatisfied. • 1-5 minutes -- customer is satisfied. • less than 1 minute -- customer is extremely satisfied • Should a company try to reduce average wait time from 4 to 2 minutes.? Quality Metrics

13. Targets, tolerances and specifications • Target (nominal) - desired value of a characteristic. • A tolerance specifies an allowable deviation from a target value where a characteristic is still acceptable. Lower specification limit (LSL) Upper specification limit (USL) TARGET -1 +1 Quality Metrics