Quality Management

Total Quality Management (TQM) definition: 
Total quality management is defined as managing the entire organization so that it excels on all dimensions of products and services that are important to the customer.

Quality Specifications

• Design quality: Inherent value of the product in the marketplace

Dimensions include: Performance, Features, Reliability/Durability, Serviceability, Aesthetics,  and Perceived Quality.

• Conformance quality: Degree to which the product or service design specifications are met 

Costs of Quality

Six Sigma Quality 

• A philosophy and set of methods companies use to eliminate defects in their products and processes
• Seeks to reduce variation in the processes that lead to product defects
• Six Sigma allows managers to readily describe process performance using a common metric: Defects Per Million Opportunities (DPMO)

Example of Defects Per Million Opportunities (DPMO) calculation.  Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered.  What is the DPMO in this situation?

So, for every one million letters delivered this city’s postal managers can expect to have 1,000 letters incorrectly sent to the wrong address.

Cost of Quality: What might that DPMO mean in terms of over-time employment to correct the errors?

Six Sigma Quality: DMAIC Cycle

• Define, Measure, Analyze, Improve, and Control (DMAIC) 
• Developed by General Electric as a means of focusing effort on quality using a methodological approach
• Overall focus of the methodology is to understand and achieve what the customer wants
• A 6-sigma program seeks to reduce the variation in the processes that lead to these defects
• DMAIC consists of five steps.

Example to illustrate the process…

• We are the maker of this cereal.  Consumer reports has just published an article that shows that we frequently have less than 16 ounces of cereal in a box.
• What should we do?

Step 1 - Define

• What is the critical-to-quality characteristic?
• The CTQ (critical-to-quality) characteristic in this case is the weight of the cereal in the box.

Step 2 - Measure

• How would we measure to evaluate the extent of the problem?
• What are acceptable limits on this measure?
• Let’s assume that the government says that we must be within ± 5 percent of the weight advertised on the box.
• Upper Tolerance Limit = 16 + .05(16) = 16.8 ounces
• Lower Tolerance Limit = 16 – .05(16) = 15.2 ounces.
• We go out and buy 1,000 boxes of cereal and find that they weight an average of 15.875 ounces with a standard deviation of .529 ounces.
• What percentage of boxes are outside the tolerance limits?  
     
  

What percentage of boxes are defective (i.e. less than 15.2 oz)?

Z = (x – Mean)/Std. Dev. = (15.2 – 15.875)/.529 = -1.276

NORMSDIST(Z) = NORMSDIST(-1.276) = .100978

Approximately, 10 percent of the boxes have less than 15.2 

Ounces of cereal in them!

Step 3 - Analyze - How can we improve the capability of our cereal box filling process?

• Decrease Variation
• Center Process
• Increase Specifications

Step 4 – Improve – How good is good enough? Motorola’s “Six Sigma”

-6s minimum from process center to nearest spec

Motorola’s “Six Sigma”

Implies 2 ppB “bad” with no process shift

With 1.5s shift in either direction from center (process will move), implies 3.4 ppm “bad”.

Step 5 – Control

• Statistical Process Control (SPC)

1. Use data from the actual process
2. Estimate distributions
3. Look at capability - is good quality possible
4. Statistically monitor the process over time

Analytical Tools for Six Sigma and Continuous Improvement: Flow Chart 

Analytical Tools for Six Sigma and Continuous Improvement: Run Chart

Analytical Tools for Six Sigma and Continuous Improvement: Pareto Analysis

Analytical Tools for Six Sigma and Continuous Improvement: Checksheet

Analytical Tools for Six Sigma and Continuous Improvement: Histogram

Analytical Tools for Six Sigma and Continuous Improvement: Cause & Effect Diagram

Analytical Tools for Six Sigma and Continuous Improvement: Control Charts

Other Six Sigma Tools

• Failure Mode and Effect Analysis (DMEA) is a structured approach to identify, estimate, prioritize, and evaluate risk of possible failures at each stage in the process.
• Design of Experiments (DOE) a statistical test to determine cause-and-effect relationships between process variables and output.

Six Sigma Roles and Responsibilities

1. Executive leaders must champion the process of improvement
2. Corporation-wide training in Six Sigma concepts and tools
3. Setting stretch objectives for improvement
4. Continuous reinforcement and rewards

The Shingo System: Fail-Safe Design

• Shingo’s argument:

SQC methods do not prevent defects

Defects arise when people make errors

Defects can be prevented by providing workers with feedback on errors

• Poka-Yoke includes:

Checklists

Special tooling that prevents workers from making errors

ISO 9000 and ISO 14000

• Series of standards agreed upon by the International Organization for Standardization (ISO)
• Adopted in 1987
• More than 160 countries
• A prerequisite for global competition?
• ISO 9000 an international reference for quality, ISO 14000 is primarily concerned with environmental management      

Three Forms of ISO 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

External Benchmarking Steps

1. Identify those processes needing improvement 

2. Identify a firm that is the world leader in performing the process

3. Contact the managers of that company and make a personal visit to interview managers and workers

4. Analyze data