Chapter 10

1. Chapter 10 Lean Systems and Six-Sigma Quality

2. Lecture Outline • What is Lean? • Lean Production • Respect for People • Total Quality Management (TQM) • Statistical Quality Control (SQC) • Six-Sigma Quality • Lean Six-Sigma Supply Chain

3. What is Lean? Lean is a management approach for creating value for the end customer through the most efficient utilization resources possible • Standard in many industries • Often results in: • large cost reductions • improved quality • increased customer service

4. Lean Six Sigma Combines the approaches of Lean and Six Sigma • Six Sigma • methodology to identify and eliminate causes of quality problems

5. Tenets of Lean There are six tenets of the Lean Philosophy: • Elimination of Waste • eliminate all non-value adding activities • A Broad View • decisions made for the success of the entire supply chain • all supply chain members responsible for adding value • Simplicity • the simpler the solution the better

6. Tenets of Lean Continued • Continuous Improvement • emphasis on quality and continuous improvement • called kaizen • Visibility • visible problems are identified and solved • Flexibility • easily switch from one product type to another, using flexible workers that perform many different tasks

7. Elements of Lean Lean is composed of three elements that work in unison: • Lean Production • Total Quality Management (TQM) • Respect for People

8. Elements of Lean

9. Lean Production Coordinated system for producing the exact products desired, delivered in right quantities to where needed Just-in-Time • The Pull System • Visual Signals • Small Lot Production • Uniform Plant Loading

10. The Pull System • Traditional approach • supply chains work as “push” systems • inventory carried to cover up problems • Pull approach • each stage in supply chain requests quantities needed from the previous stage • no excess inventory generated • reduced inventory exposes problems

11. Visual Signals Communication between workstations • Kanban • “signal” or “card” in Japanese • contains information passed between stations • authorizes production

12. Visual Signals

13. Small Lot Production The amount of products produced at any one time is small • reduces inventory and excess processing • increases flexibility • shortens manufacturing lead time • responds to customer demands more quickly • setup time must be low

14. Uniform Plant Loading • Problem • demand changes are magnified throughout the supply chain • contributes to inefficiency and waste • Uniform Plant Loading • production schedule is frozen for the month • also called “leveling” • helps suppliers better plan own production

15. Respect for People Respect for all people must exist for an organization to be its best • flatter hierarchy than traditional organizations • ordinary workers given great responsibility • supply chain members work together in cross functional teams • Look at Role of: • workers, management, and suppliers

16. Role of Workers Workers have the ability to perform many different tasks and are actively engaged in pursuing company goals • Worker Duties • improve production process • monitor quality • correct quality problems • Work in Teams • quality circles

17. Role of Management Create the cultural change in the organization needed for Lean to succeed • provide atmosphere of cooperation • Empower workers to take action based on their ideas • develop incentive system for lean behaviors

18. Role of Suppliers Lean builds long-term supplier relationships • companies partner with suppliers • improve process quality • information sharing • goal to have single-source suppliers

19. Total Quality Management (TQM) TQM is an integrated organizational effort designed to improve quality at every level Look at: • Quality Gurus • Voice of the Customer • Costs of Quality • Quality Tools • ISO 9000

20. Quality Gurus

21. Voice of the Customer Quality is defined as meeting or exceeding customer expectations • Determine customer wants: • focus groups • market surveys • customer interviews

22. Costs of Quality

23. Quality Tools Lean requires workers to identify and correct quality problems • Seven Tools of Quality Control: • Cause and Effect Diagrams • Flowcharts • Checklists • Control Charts • Scatter Diagrams • Pareto Analysis • Histograms

24. Cause and Effect Diagrams Identify causes of a quality problem • sometimes called “fishbone diagrams”

25. Flowchart Diagrams the sequence of steps in an operation or process

26. Checklist Lists common defects and number of occurrences of the defects

27. Control Chart Determines whether a process is operating within expectations

28. Scatter Diagram Graph that visually shows how two variables are related to one another

29. Pareto Analysis Based on the premise that a small number of causes create the majority of problems • identifies problems based on degree of importance

30. Histogram Chart that shows the frequency distribution of observed values of a variable

31. ISO 9000 “Family” of standards for quality management • increased international trade developed a need • published by International Organization for Standards (ISO) in 1987 • concerns measuring and documenting the quality process • ISO provides a certification process • ISO 14000 • standards for environmental management

32. Statistical Quality Control (SQC) SQC is the use of statistical tools to measure product and process quality Three categories: • Descriptive Statistics • describe quality characteristics • Statistical Process Control (SPC) • a random sample of output is used to determine if characteristics are acceptable • Acceptance Sampling • sample determines if whole batch is acceptable

33. Sources of Variation All processes have variation • Assignable Variation • caused by factors that can be clearly identified and managed • Common Variation • inherent in the process • also called random variation

34. Process Capability Process Capability evaluates the variation of the process relative to product specifications • Product Specifications • ranges of acceptable quality characteristics • also called tolerances • Process Variation • all processes have natural variation • defects are produced when variation exceeds product specifications

35. Process Variation Equal to Specification Range

36. Process Variation Exceeds Specification Range

37. Process Variation Narrower than Specification Range

38. Process Capability Index where: USL = upper specification limit LSL = lower specification limit • CpValues: • Cp = 1: process is minimally capable • Cp ≤ 1: process is not capable of producing products within specification • Cp ≥ 1: process exceeds minimum capability

39. Cp Example Given a process with three separate machines that are used to fill jars with pasta sauce. • specification range is between 30 and 34 ounces • process mean, μ, is 31 ounces Calculate the Cp for each machine to determine capabilities

40. Cp Example Continued • A: • B: • C: Machine A has a Cp > 1, however the process mean is not centered

41. Cpk Example Cpk addresses the lack of centering of the process over the specification range • Machine A: Cpk = min (1.66, 0.55) = 0.55

42. Process Control Charts Graph that shows whether a sample of data falls within the common range of variation • sample process output • plot result on the control chart • use to determine if process is in control • can monitor: • variables • characteristics that can be measured • attributes • characteristics that can be counted

43. Process Control Charts

44. Control Charts for Attributes A p-chart monitors the proportion of defective items in a sample • centerline: average value of p across all samples, p • UCL = p + z sp • LCL = p – z sp where: z = standard normal variable p = sample proportion defective sp = = standard deviation of avg. proportion defective

45. P-Chart Example Given the following five samples of data tracking incorrect procedures in a hospital

46. P-Chart Example Continued p = 5/10 = 0.10 UCL = p + z sp = 0.10 + 3(0.095) = 0.385 LCL = p + z sp = 0.10 - 3(0.095) = 0.185