"We want to change the competitive landscape by being not just better than our competitors, but by taking

quality to a whole new level. Jack Welch Lean and six sigma have the same goal to continually add value to the business by continually increasing the focus on internal and external customer requirements, and on improving the production processes and quality Lean operations management and the six sigma methodology both aim to achieve cheaper, lower cost of production with efficient processes and minimal waste. Implementing either approach requires reviewing business process flows in detail to eliminate variances in processes that lead to problems and defects.

Irwin/McGraw-Hill

Definition: Total Quality Management

Total Quality Management (TQ, QM or TQM) and Six Sigma (6) are sweeping culture change efforts to position a company for greater customer satisfaction, profitability and competitiveness. TQM may be defined as managing the entire organization so that it excels on all dimensions of products and services that are important to the customer.
2

Irwin/McGraw-Hill

Quality Descriptions
Design Quality (Features)
vs. Conformance Quality

Irwin/McGraw-Hill

Conformance Quality
Meeting Our Customers Requirements Doing (the Right) Things Right the First Time; Freedom from Failure (Defects) Consistency (Reduction in Variation) Continuous Improvement Quality in Everything We Do
Irwin/McGraw-Hill
4

Quality Management History

Frederick Winslow Taylor wrote Principles of Scientific Management in 1911

Walter A. Shewhart used statistics in quality control and inspection, and showed that productivity improves when variation is reduced (1924); wrote Economic Control of Manufactured Product in 1931
W. Edwards Deming and Joseph M. Juran, students of Shewhart, went to Japan in 1950; began transformation from shoddy to world class goods In 1960, Dr. K. Ishikawa formalized quality circles - the use of small groups to eliminate variation and improve processes In the late 70s and early 80s: - Deming returned from Japan to write Out of the Crisis, and began his famous 4-day seminars in the United States - Phil Crosby wrote Quality is Free - NBC ran If Japan can do it, why cant we? - Motorola began 6 Sigma
Irwin/McGraw-Hill
5

Quality Management History

On the assembly line at the Ford Motor Company in 1923, most of the workers producing Model Ts were immigrants and could not speak English. Many were also illiterate. Workers learned their trade by modeling the actions of other workers. They were unable to plan, problem-solve, and make decisions. As a result, the Taylor scientific school of management flourished, and MBAs and industrial engineers were invented to do this work. Today, however, the workforce is educated. Workers know what is needed to improve their jobs, and companies that do not tap into this significant source of knowledge will truly be at a competitive disadvantage. Joseph M. Juran (1991)

Irwin/McGraw-Hill

Quality Management History

Knowledge-worker productivity is the biggest of the 21st-century management challenges. In the developed countries, it is their first survival requirement. In no other way can the developed countries hope to maintain themselves, let alone to maintain their leadership and their standards of living. Peter F. Drucker (1999)

Irwin/McGraw-Hill

Quality Management History

Demings 14 Points 1. Create constancy of purpose for improvement 2. Adopt a new philosophy 3. Cease dependence on mass inspection 4. Do not award business on price alone 5. Work continually on the system of production and service 6. Institute Modern methods of training 7. Institute modern methods of supervision of workers 8. Drive out fear 9. Break down barriers between departments 10. Eliminate slogans, exhortations, and targets for the work force 11. Eliminate numerical quotas 12. Remove barriers preventing pride of workmanship 13. Institute a vigorous program of education and retraining 14. Take action to accomplish the transformation
Irwin/McGraw-Hill
8

A Quality Management System Is

A belief in the employees ability to solve problems A belief that people doing the work are best able to improve it A belief that everyone is responsible for quality

Quality Management History

Demings Concept of Profound Knowledge Understanding (and appreciation) of Systems - optimizing sub-systems sub-optimizes the total system - the majority of defects come from systems, the responsibility of management (e.g., machines not in good order, defective material) Knowledge of Statistics (variation, capability, uncertainty in data, etc.) - to identify where problems are, and point managers and workers toward solutions Knowledge of Psychology (Motivation) - people are afraid of failing and not being recognized, so they fear how data will be used against them Theory of Knowledge - understanding that management in any form is a prediction, and is based on assumptions
Irwin/McGraw-Hill
10

Elements for Success

Management Support/Involvement Mission Statement Proper Planning Customer and Bottom Line Focus Measurement Empowerment/Shared Leadership Teamwork/Effective Meetings Continuous Process Improvement Dedicated Resources/Training

Benchmarking
1. Identify those processes needing improvement. 2. Identify a firm that is the world leader in performing the process (Library & WWW). 3. Contact the managers of that company and make a personal visit to interview managers and workers. 4. Analyze data
Irwin/McGraw-Hill
12

Baldrige Award Criteria Framework

Organizational Profile: Environment, Relationships, and Challenges

2 Strategic Planning 1 Leadership

3 Customer and Market Focus

5
Human Resource Development & Management

7 Business Results

6 Process Management

Information, Analysis, and Knowledge Management

Malcolm Baldrige National Quality Award (2004)

1.0 Leadership (120 points)

2.0 Strategic Planning (85 points)

3.0 Customer and Market Focus (85 points)

4.0 Information and Analysis (90 points)

5.0 Human Resource Focus (85 Points) 6.0 Process Management (85 points) 7.0 Business Results (450 points)
Irwin/McGraw-Hill
14

Categories for the Baldrige Award

Manufacturing companies or subsidiaries that:

produce and sell manufactured products or manufacturing processes or produce agricultural, mining, or construction products.

Service companies or subsidiaries that sell service Small businesses Education Institutions Health Care Organizations Non-Profit (new)
15

Irwin/McGraw-Hill

Characteristics of a Baldrige Award Winner

The companies formulated a vision of quality and how they would achieve it. Senior management was actively involved.

Companies carefully planned and organized their quality effort to insure effective initiation. They vigorously controlled the overall process.
Studies have shown MBA Winners success.
16

Irwin/McGraw-Hill

ISO 9000

Series of standards agreed upon by the International Organization for Standardization(ISO) Adopted in 1987

More than 100 countries

A prerequisite for global competition? ISO 9000 directs you to:

document what you do and then do as you documented.

17

Irwin/McGraw-Hill

ISO 9000 Series

9001

Model for Quality Assurance in Design, Production Installation, and Servicing. Model for Quality Assurance in Production and Installation
Model for Quality Assurance in Final Inspection Test
18

9002

9003

Irwin/McGraw-Hill

Three Forms of Certification

1. First party: A firm audits itself against ISO 9000 standards. 2. Second party: A customer audits its supplier. 3. Third party: A "qualified" national or international standards or certifying agency serves as auditor.
Irwin/McGraw-Hill
19

ISO 9000 versus the Baldrige Award

Which should we pursue first? What are the differences between the two? Do you have to be ISO 9000 certified before going for the Baldrige Award?
20

Irwin/McGraw-Hill

ISO 9000 versus the Baldrige Award

Baldrige

QS 9000

ISO 9000

Irwin/McGraw-Hill

Evans and Lindsay The Management and Control of Quality, Southwestern Books, p536.

21

Costs of Quality: Categories

Appraisal costs Prevention costs Internal failure costs External failure costs
22

Irwin/McGraw-Hill

The 1-10-100 Rule

1 10

100 Defects caught at their source cost the organization $1. Defects caught outside of the source department but within the organization cost $10. Defects that reach the external customer cost $100!
Irwin/McGraw-Hill
23

Cost of Poor Quality Category Examples

Failure Costs Internal Re-shipping Unnecessary Travel Time Re-picking/Picking Unpacking/Storing Returns Re-order Time Crediting Time Failure Costs External Loss of Sales Complaints Returns Warranty Claims
Irwin/McGraw-Hill

Prevention Costs Quality Administration Quality Planning Quality Systems Design Calibration and Maintenance Production/Inspection Equipment Vendor Assessment Quality Training Appraisal Costs Incoming Test and Inspection In-Process Inspection Final Inspection Sampling Procedures Quality Audits
24

COPQ Projections
$ Saved External Failure Costs

$
Internal Failure Costs
Total Cost Using a COPQ System Total Cost Without Using A COPQ System

Appraisal Costs Prevention Costs

Months
Irwin/McGraw-Hill
25

Process Flow Chart

Buffer: Material Received from Supplier Inspect Material for Defects

No, Continue
Defects found?

Yes

Can be used to find quality problems.

Return to Supplier for Credit

26

Irwin/McGraw-Hill

Input-Output Analysis
Suppliers Inputs SubProcesses Outputs Customers Measures

S
Irwin/McGraw-Hill

P
From Flowchart

O C
27

Example SIPOC - Specifying Equipment Selection and Installation Procedures at Coca-Cola USA
Suppliers
Customers Coca-Cola Fountain

Inputs
Technical Information Technical Questions Customer Input

Process
Developing Installation Cost Reduction Programs Developing Equipment Selection Policies and Procedures Designing Installation Policies and Procedures

Outputs

Customers

Measures
Number of Entities Using Guidelines Installation Audit Ratings Survey of Users Effectively Using Selection Guidelines

Equipment Burger King Selection Guide McDonalds Equipment Sales Prestige Manuals Technology Cost/ Benefit Matrix Installation Guidelines Installation Time Standards Installation Rating System Installation Design Guidelines Coca-Cola Fountain Equipment Suppliers

Irwin/McGraw-Hill

28

Pareto Analysis

80% of the problems may be attributed to 20% of the causes.

Frequency Design Assy. Purch. Other Training Instruct.

29

Irwin/McGraw-Hill

Run Chart
0.58 0.56 0.54 0.52 0.5 0.48 0.46 0.44 1 2 3 4 5 6 7 8 9 10 11 12

Diameter

Time (Hours)
Irwin/McGraw-Hill
30

Histogram
Frequency

Data Ranges

Irwin/McGraw-Hill

31

Scatter Diagram
12 10 8 6 4 2 0 0 10 20 30

Defects

Hours of Training
Irwin/McGraw-Hill
32

Checksheet (data collection)

Monday
Billing Errors

Wrong Account
Wrong Amount A/R Errors

Wrong Account
Wrong Amount

Irwin/McGraw-Hill

33

Cause & Effect Diagram

Machine Man Effect

Environment Method Material

Irwin/McGraw-Hill

34

Fishbone Analysis: Existing Hiring Process Problems

Irwin/McGraw-Hill

35

Control Charts
1020 1010 1000 990 980 970

UCL

LCL

10 11 12 13 14 15

Irwin/McGraw-Hill

36

Customer Survey
Worst Are We On Time? Are We Courteous? Does The Product Work? Is It Cost Effective? Overall Rating? General Comments:
Irwin/McGraw-Hill
37

Best 4 4 4 4 4 3 3 3 3 3 2 2 2 2 2 1 1 1 1 1

5 5 5 5 5

Example Customer Survey Results - Quantas Airways

Survey of Frequent Flier Needs Order of Priority: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. No lost baggage No damaged baggage Clean toilets Comfortable seats Prompt baggage delivery Ample leg room Good quality meals Prompt reservation service Friendly/efficient cabin crew Clean and tidy cabin Comfortable cabin temp 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. Assistance with connections Being kept informed of delays Transport to cities Accurate arrival info Well-organized boarding Quick/friendly airport check-in Self-service baggage trolleys On-time arrival Provision of pillows/rugs Assistance with customs On-time departures

Irwin/McGraw-Hill

38

Continuous Improvement Process

Orlando Remanufacturing And Distribution Center

Irwin/McGraw-Hill

39

Remanufacturing Procedures
Disassembly and Cleaning Reassembly Remove Cup Rest Splash Plate Drain Pan Valves Mounting Blocks Remove Product Hoses, Tower and Disassemble Inspect Soda Manifold Install Drain Pan Riser Onto Ice Chest Assembly Install and Connect Valve Wiring Assembly Prepare Rear Tower Panel on Woodgrain Units for Sabre Vinyl Repair Dents Sand Clean Surface

Flush Cooling Circuits Inspect Fittings

Install Tower Structure Onto Drain Pan Riser

Install Valve Mounting Blocks

Clean Ice Chest Parts Tower Assembly

Sanitize Cooling Circuits Install New Beverage Tubing and Rubatex

Install Valves

Flush Out

Apply Sabre Vinyl

Install Sabre Valve Covers, Nozzles and Decals

Remanufacturing

Polish Stainless Steel Surfaces That Will Be Visible

Install Clamps at Each Tubing End Install Tubing to Mounting Block Fittings Put O rings on Fittings

Install Lid

Load Test Ice Bin by Drain Evaluate Cold Plate

Impact and Evaluate Fittings Inspect Legs

Leak Test Drain Pan

Install Tube Protector on Inlets Install Drain Pan, Drain Fittings and Hose

Hold for Write-off if Bin Leaks or Circuits are Unusable

Drill and Tap New Mounting Holes for Broken Hardware

Clean Electrical Junction Box Check for Frayed Wires Tape Connections

Install Splash Plate

Requisition Needed Parts

Test Junction Box Continuity Correct Secondary Voltage

Install Cup Rest

Send to QA

Irwin/McGraw-Hill

Install Valve Mounting Plate

40

Phase 1: Internal Kickbacks

To Be Remanufactured Equipment Tear Down And Wash Remanufacture Reassembly Final Clean-up

Unit Not OK

QA

Irwin/McGraw-Hill

41

Five Most Common Reasons For Returns From QA

Missing/ Wrong Part

Dirt/Rust

Defective Part

Leaks

Poor Insulation

January-May (61 units)

Irwin/McGraw-Hill
42

Reasons for Returns from QA - Weighted Average

Leaks

Dirt/Rust

Stainless Steel

Missing/ Wrong Part

Defective Part

Poor Insulation

Weighted Avg. = % Occurring X Defect Cost (0-10, Based on Time to Repair)

43

Irwin/McGraw-Hill

Why Dirt?
Methods

Materials

Environment

Need to Rinse Parts off after Sandblasting Need Better Procedure for Determining What to Remanufacture Based on its Condition

Cleaning Compounds watered down

Need Larger Wire Brushes

Dust/Humidity

Poor Lighting
Space Limitations

People

Measurement

Need More Training More Attention to Detail Do it Right the First Time

Machines

QA Manager Fixes Some Things Without Informing the Technicians

Best tools for $$?

Irwin/McGraw-Hill

44

Environment

Why Leaks? Materials

Machines

High Temperatures in Warehouse

Bad Tubing O Rings Out of Spec

Bad Dispenser Design Need Rims That Make it Easier to Install Tubing

Poor Lighting

O Rings Too Old (Dry)

Use Wrong Clamps

Methods

People

Measurement

Softening Tubing with Water thats Too Hot Need to Check Units for All Possible Ways They Could Leak

Dont Crimp Properly

Forget to Connect

No Testing for Leaks Prior to QA Need to ID by Mfr./Model Which Units Leak the Most

Irwin/McGraw-Hill

45

PDCA Cycle (Deming Wheel)

4. Institutionalize the change or abandon or do it again. 4. Act 1. Plan a change aimed at improvement. 1. Plan

3. Check

2. Do

3. Study the results; did it work?

Irwin/McGraw-Hill

2. Execute the change.

46

What is Six Sigma?

A sweeping culture change effort to position a company for greater customer satisfaction, profitability and competitiveness (developed by Motorola in the late 1970s) A goal of near perfection in meeting customer requirements A comprehensive and flexible system for achieving, sustaining and maximizing business success; uniquely driven by close understanding of customer needs, disciplined use of facts, data, and statistical analysis, and diligent attention to managing, improving and reinventing business processes
Irwin/McGraw-Hill
47

Six Sigma DMAIC Process

Control Improve Define Analyze Measure

Define: Define who your customers are, and what their requirements are for your products and services Their expectations. Define your team goals, project boundaries, what you will focus on and what you wont. Define the process you are striving to improve by mapping the process.

Irwin/McGraw-Hill

48

An Example:

Irwin/McGraw-Hill

49

Six Sigma DMAIC Process

Control Improve Define Analyze Measure

Irwin/McGraw-Hill

Measure: Eliminate guesswork and assumptions about what customers need and expect and how well processes are working. Collect data from many sources to determine speed in responding to customer requests, defect types and how frequently they occur, client feedback on how processes fit their needs, how clients rate us over time, etc. The data collection may suggest Charter revision. 50

An Example

Measure Input, Process and output Parameters. GARBAGE IN, GARBAGE OUT

Irwin/McGraw-Hill

51

Six Sigma DMAIC Process

Control Improve Define Analyze Measure

Analyze: Grounded in the context of the customer and competitive environment, analyze is used to organize data and look for process problems and opportunities. This step helps to identify gaps between current and goal performance, prioritize opportunities to improve, identify sources of variation and root causes of problems in the process.
52

Irwin/McGraw-Hill

Six Sigma DMAIC Process

Control Improve Define Analyze Measure

Improve: Generate both obvious and creative solutions to fix and prevent problems. Finding creative solutions by correcting root causes requires innovation, technology and discipline.

Irwin/McGraw-Hill

53

Six Sigma DMAIC Process

Control Improve Define Analyze Measure

Control: Insure that the process improvements, once implemented, will hold the gains rather than revert to the same problems again. Various control tools such as statistical process control can be used. Other tools such as procedure documentation helps institutionalize the improvement.

Irwin/McGraw-Hill

54

Six Sigma DMADV Process

Validate Design Define Analyze Measure

Design: Develop detailed design for new process. Determine and evaluate enabling elements. Create control and testing plan for new design. Use tools such as simulation, benchmarking, DOE, Quality Function Deployment (QFD), FMECA analysis, and cost/benefit analysis.
55

Irwin/McGraw-Hill

Six Sigma DMADV Process

Validate Design Define Analyze Measure

Validate: Test detailed design with a pilot implementation. If successful, develop and execute a full-scale implementation. Tools in this step include: planning tools, flowcharts/other process management techniques, and work documentation.
56

Irwin/McGraw-Hill