Quality Management, Process Capability and Six Sigma MGMT 311

1. Quality Management, Process Capability and Six SigmaMGMT 311

3. 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

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

5. 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

6. 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

7. 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.

8. 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

9. 6 Sigma • Utilizes tools and techniques that span the range of all of quality management • Systematic improvement process • Project driven • Training • Certification – Green Belt, Black Belt, Master Black Belt

10. What is 6 Sigma? • A statistical measure – standard deviation • A measure of process capability • A method of quality improvement • Generation I – variation reduction – 1980’s • Generation II – cost reduction – 1990’s • Generation III – customer focus – now • A method to design quality in – recent • DFSS

11. Companies using 6 sigma • Motorola – inventor, mid 1980’s • GE • Texas Instruments • Bank of American • Citibank • Boeing • Home Depot • and many more

12. 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

13. 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

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

15. 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%

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

17. 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

18. 6 Sigma Levels and Defects Assumes a 1.5 Z shift.

19. 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

20. 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

21. 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

22. 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.

23. Calculating Sigma Levels • Variables – any value • Discrete (Attributes) – good/bad, count of defects

24. Variable Measures • Normal Distribution • USL and LSL • Use Normal table to find % defects • Find the Defects Per Million Opportunities (DPMO) • Use Table to Find Sigma Capability Level

25. Discrete • TDU = total defects per unit • TDU = 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 = TDU x 1,000,000 divided by opportunities per unit • Use table to find Sigma capability level

26. 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