Quality Management, Process Capability and Six Sigma MGMT 511

1. Quality Management, Process Capability and Six SigmaMGMT 511

3. Quality Management • Quality Planning • Quality Control • Quality Improvement • Think of the process of designing, making, and improving a product: • The product and process are designed – planning • The product is manufactured – control • The product and process are enhanced – improvement Juran

4. Quality Management • Quality Planning  • Quality Control • Quality Improvement Juran

5. Quality Planning • Identify customers and their needs • Develop product or service that responds to those needs • Develop a process that is able to produce the product or deliver the service Juran

6. Customer Value Proposition • Quality • Price • Availability • Selection • Functionality • Service • Brand Kaplan and Norton

7. Two Components of Quality • Product or service dimensions • Free from deficiencies • We consider a product high quality if it has features that the customers value, and… • The product or service does not have deficiencies from the stated specifications Juran

8. Product Dimensions • Performance • Features • Reliability • Durability • Ease of Use • Serviceability • Esthetics • Reputation Gryna

9. Service Dimensions • Accuracy • Timeliness • Completeness • Friendliness and courtesy • Anticipating customer needs • Knowledge of server • Appearance of facility and personnel • Reputation Gryna

10. Two Components of Quality • Product or service dimensions • Free from deficiencies  Juran

11. Free from Deficiencies • Product • Free of defects and errors on delivery and during use • All processes free of rework loops, redundancy and waste • Service • Free of errors during service transaction • All processes free of rework loops, redundancy and waste Gryna

12. Quality Management • Quality Planning • Quality Control  • Quality Improvement Juran

13. Quality Control • Choose the control objects • Establish measurement • Measure actual performance • Compare to standards • Take action on the difference Gryna

14. Quality Control • Statistical Process Control or SQC • Even if a process is in control, it may not be as capable as it could be • For example, the defect rate could be high, and this may be acceptable, but it may cost too much • Which leads us to… Gryna

15. Quality Management • Quality Planning • Quality Control • Quality Improvement  Juran

16. Quality Improvement Types • Continuous • Incremental improvement – small steps • If done continually, major improvements occur over the long run • Breakthrough • Major improvement at one time • Can allow leap-frog of competitors

17. Quality Improvement • 1930’s and ‘40’s - Quality Control (QC) • Post-WW II - Total Quality (TQ) and Toyota Production system (TPS) • Total Quality Control (TQC) • Total Quality Management (TQM) – 1980’s and ’90’s • 6 Sigma – 1985 to present • Now emerging – Lean Six Sigma

18. W. Edwards Deming • Major source of poor quality is variation • Quality improvement is the responsibility of management • All employees should be trained in use of problem solving tools and statistical techniques.

19. W. Edwards Deming • Invited to Japan after WWII to assist in reconstruction of industry • Emphasized quality and variation reduction • The rest is history! • Deming Prize introduced in Japan in 1951

20. Total Quality Management (TQM) • Better to produce right the first time rather than inspect quality in. • Quality at the source – responsibility shifted from quality control department to workers.

21. Five Steps in TQM • Determine what customers want. • Develop products and services. • Develop production system. • Monitor the system. • Include customers and suppliers.

23. 6 Sigma • Utilizes tools and techniques that span the range of all of quality management • Systematic improvement process • Project and team driven • Training • Certification – Green Belt, Black Belt, Master Black Belt

24. What is 6 Sigma? • A statistical measure – standard deviation - σ • A measure of process capability • A method of quality improvement • A method to design quality in – recent – known as DFSS – Design for Six Sigma

25. Six Sigma Defined • “…a comprehensive and flexible system for achieving, sustaining, and maximizing business success.” • “…driven by … understanding of customer needs, …use of facts, data, and statistical analysis, and … attention to managing, improving and reinventing business processes.” The Six Sigma Way – Pande, et al., p. xi

26. History of Six Sigma • Developed by Bill Smith, an engineer at Motorola in 1985 as a way to standardize the way defects were recorded. • By 1990, Motorola University was instructing throughout Motorola and to outside companies. • Motorola insisted suppliers use the six sigma program. • Claims $16 billion in savings from 1986 to 2001.

27. History of Six Sigma continued • Generation I – variation reduction – 1980’s • Generation II – cost reduction – 1990’s • Generation III – customer focus – now

28. Companies using 6 sigma • Motorola • GE • Texas Instruments • Bank of America • Citibank • Boeing • Home Depot • and many more

29. GE • 1997 – 6000 projects, $320 million in savings. • 1998 - $750 million in savings • 1999 – $1.5 billion in savings • 1996 to 1999 – claimed a total of $4.5 billion in savings ~ 1.2% of revenue

30. Citibank • Reduced credit processing time by 50% • Reduced cycle times of processing statements from 28 days to 15 days

31. Bank of America • Started using six sigma in 2001 • Claimed ~$2 billion in benefits by 2003 • Many key customer processes near or at the 6 sigma level. • Customer delight indicators up 25% • Deposit processing improved by 47%

32. Standard Deviation σ • Normal probability distribution • Measure of dispersion of the data • Calculations

33. Measure of Process Capability • Capability is the measure of how well the process performs • Upper and lower specification limits – USL and LSL • Product is good within USL and LSL • Product is defective if outside the USL or LSL • The sigma level will be calculated using defects outside the USL and LSL

34. 6 Sigma Levels and Defects Assumes a 1.5 Z shift.

35. A Method of Quality Improvement • Customer focus • Data and fact driven • Process focus, management and improvement • Proactive • Boundary-less collaboration • Drive for perfection, tolerate failure

36. Key Concepts of Six Sigma • Critical to Quality: Attributes most important to customers. • Defect: Failing to deliver what the customer wants. • Process capability: What the process can deliver. • Variation: What the customer sees and feels. • Stable operations: Ensuring consistent, predictable processes to improve what the customer sees and feels. GE

37. 5 Step Process - DMAIC • Define the process and what customers require • Measure the defects and the process • Analyze the data and discover causes of defects • Improve the process to remove causes of defects • Control the process to prevent loss of the improvements

38. Design for Six Sigma - DFSS • Designing a new process • Or a major redesign of an existing process • 5 step process – DMADV • Define • Measure • Analyze • Design • Verify

39. Statistical Basis of Six Sigma • Example • LSL = 55, USL = 295, µ = 175, σ = 20 • Find Z units to USL and LSL then DPMO • The mean can shift up to 1.5 σ • Now find Z units to USL and LSL then DPMO

40. Process Capability • Location of the process mean • Natural variability inherent in the process. • Stability of the process. • Product’s design requirements

41. Calculating Process Capability • Process capability index = Cp • One sided capability index = Cpk = min (Cpu , Cpl ) • Examples

42. Calculating Sigma Levels • Variables – any value • Discrete (Attributes) • Good/defective (customer does not want) • Count of defects (attribute that does not conform)

43. Variable Measures • Normal Distribution • USL and LSL • Use Normal table to find % defects • Allow up to a 1.5 σ shift of the mean from center of USL to LSL • Determine Z units USL to LSL ÷ 2 = sigma level • Find the Defects Per Million Opportunities (DPMO)

44. Improving the Process • To reach desired sigma capability level, change the spec limits! Or… • Reduce variation • Calculate the USL and LSL • Calculate the std dev, sigma, to reach the desired sigma capability level.

45. Discrete • DPU = total defects per unit • DPU = total number of defects divided by total number of units sampled • DPMO = defects per million opportunities • Opportunities per unit = number of different possible defects • DPMO = DPU x 1,000,000 divided by opportunities per unit • DPMO = total defects x 1,000,000 divided by total units divided by opportunities per unit • Use table to find Sigma capability level

46. Calculation Examples • Statistical basis of six sigma • Process capability • Sigma level – variable measure • Improve the process • Sigma level – discrete measure • Improve the process

47. Some Good Information Sources • www.isixsigma.com • www.sixsigmazone.com • www.asq.org • www.asq.org/learn-about-quality/six-sigma/overview/overview.html • www.qualitydigest.com

50. Lumber Inventory Wood is trash Move lumber to sawing 5 min # 7 2nd Inspection, 15 min Transport 5 min. No: Rework at # 4, # 5 or # 6 Accept? # 1 Sawing 10 min. # 4 Assembly of subsections 15 min. # 5 Assembly of subsections 15 min. # 6 Assembly of subsections 15 min. Yes Transport, 5 min. Transport to sanding 5 min. Transport, 5 min. # 8 Final Assembly Touch-up 40 min.. Rework Yes Where to rework? Accept? No Rework #2 Hand finish, 5 min. # 3 1st Inspection 5 min. Transport 5 min.