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Total Quality Management and Six Sigma

Total Quality Management and Six Sigma. Marquette University – MBA Program Operations and Supply Chain Management. Discussion and Learning Points. Views of Quality Views and Economics of Quality Malcolm Baldrige National Quality Award Total Quality Management (TQM) Principles

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Total Quality Management and Six Sigma

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  1. Total Quality Management and Six Sigma Marquette University – MBA Program Operations and Supply Chain Management

  2. Discussion and Learning Points • Views of Quality • Views and Economics of Quality • Malcolm Baldrige National Quality Award • Total Quality Management (TQM) Principles • Strategic Quality Management • Planning for Quality: Hoshin Kanri • Design for Quality • Managing and Controlling for Quality • ISO 9000 and Quality Improvement Programs • Six Sigma Program • Six Sigma Methodology • Six Sigma Execution Pipeline • Six Sigma Tools

  3. Defining Quality • Deming, Crosby, Juran, etc. • Conformance to design specifications • Conformance to customer requirements • Doing it right the first time • Fair exchange of price and value • Careful and consistent attention to details • Consistently meeting customer expectations and production delivery performance • General philosophy of a firm to excel

  4. Malcolm Baldrige National Quality Award • Characteristics • System’s Framework 1.0 Leadership (110 points) 2.0 Strategic Planning (80 points) 3.0 Customer and Market Focus (80 points) 4.0 Information and Analysis (80 points) 5.0 Human Resource Focus (100 Points) 6.0 Process Management (100 points) 7.0 Business Results (450 points) (www.quality.nist.gov)

  5. Total Quality Management (TQM) Principles • Customer satisfaction ≈ Perception - Expectation • Kaizen (Continuous Improvement) • Employee involvement and empowerment • Management commitment • Leadership and education, Corporate social performance • Strategic orchestration • Coordination and information exchange • Product/process design and development • Prevention, Process control, Process improvement • Management by fact, Statistical thinking • Japanese TQM • Hoshin Kanri + Cross functional management + Daily control

  6. Strategic Quality Management • Planning for Quality • Hoshin Kanri (Policy Deployment) • Maximize focus on strategic targets through total employee involvement • Key elements: capability and commitment, direction and focus, coordination • Designing for Quality (for total customer satisfaction) • Understand customer expectations and perceptions • Quality Function Deployment (QFD) • Concurrent Engineering (CE) • Value Analysis (VA), Value Engineering (VE); DFM, DFA, DFDA, DFRM, DFS • Product/Service Standards; Service Guarantee • Managing and Controlling • Measure Quality • Analyze and manage production/delivery systems and processes • Marshal the resources • Reconcile quality and costs • Perform an effective service recovery

  7. Product Quality Dimensions Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived quality Service Quality (ServQual) Dimensions Tangibles Reliability Responsiveness Assurance Empathy E-Tailing Service Quality Dimensions Reliable/Prompt Response Credibility Security Ease of Use Measuring Quality: Dimensions (Garvin 1988, Parasuraman, Zeithaml, & Berry 1988, Jun, Yang, & Kim 2003)

  8. Word-of-mouth communications Personal needs Past experience Customer Expected service GAP 5 Perceived service Marketer Service delivery (including pre- and post-contacts) External communications to consumers GAP 4 GAP 3 GAP 1 Translation of perceptions into service quality specifications GAP 2 Management perceptions of consumer expectations Managing Service Quality Gaps (Parasuraman, Zeithaml, & Berry 1988 )

  9. Failure costs (Cf) Detection costs (Cd) Prevention costs (Cp) • External failure: Process control Quality planning and audits • Customer complaints Peer review Training program • Warranty charges Supervision Data acquisition and analysis • Liability insurance Customer comment card Preventive maintenance • Legal judgments Inspection Supplier evaluation • Loss of repeat service Recruitment and selection • Internal failure: • Scrap, Rework • Recovery: • Expedite, Labor and materials Costs of Quality (COQ)

  10. Traditional ViewZero Defect View $, Cost $, Cost COQ Cf Cd Cp COQ Cf Cd Cp # (%) Defects # (%) Defects Economics of Quality Dynamic View: Quality vs. Cost/Productivity/Delivery/Speed/Flexibility

  11. ISO 9000 • Directs you to "document what you do and then do as you documented." • ISO 9000 Series • 9000: Quality Management and Quality Assurance Standards -- Guidelines for Selection and Use • 9001: Model for Quality Assurance in Design, Production, Installation, & Servicing • 9002: Model for Quality Assurance in Production and Installation • 9003: Model for Quality Assurance in Final Inspection Test • 9004: Quality Management and Quality System Elements -- Guidelines • ISO 9001 Elements • Management responsibility, Quality system, Contract review, Design control, Document control, Purchasing, Customer-supplied material, Product identification & traceability, Process control, Inspection & testing, Inspection, measuring, & test equipment, Inspection & test status, Control of nonconforming product, Corrective action, Handling, storage, packaging, & delivery, Quality records, Internal quality audits, Training, Servicing, Statistical techniques • Certification Process 1. A firm audits itself against ISO 9000 standards. 2. A customer audits its supplier. 3. A "qualified" national or international standards or certifying agency serves as auditor.

  12. Quality Improvement (QI) Programs 3S System Deming Circle Seven Step Method/QI Story Search Plan Define the project/theme Study the current situation Solve Do Analyze potential causes Implement a solution/countermeasures Check Check the results Standardize Act Standardize the improvement Establish future plans

  13. D M A I C D M A D V DEFINE MEASURE ANALYZE IMPROVE CONTROL OPPORTUNITY SYMPTOMS CAUSES SOLUTIONS SUSTAIN CHARTER PERFORMANCE DRIVERS ACTIONS CONTROLS PROGRAM NEEDS & HIGH LEVEL DETAILED ROLL-OUT & DESCRIPTION REQUIREMENTS DESIGN DESIGN CONTROL DEFINE MEASURE ANALYZE DESIGN VERIFY POWERFUL, SIMPLE METHODOLOGIES GE Six Sigma Methodology (Source: GE Six Sigma Program Manual)

  14. Six Sigma Program • GE Company-Wide Initiative • “This is the most important initiative GE has ever undertaken” - J.F. Welch, Chairman and CEO • Vision/Philosophy of Product & Service Excellence • Value to Our Customers • Goal for Competitive Strength • Strategy/Culture for Running a Business • Quantitative Methodology • Use measurements and scientific process • Metric/Benchmark of World Class Companies • Process to Reduce Defects Per Million Opportunities (DPMO) • DPMO = [# defects / (# opportunities for error/unit x # units)] x 1M • “Sigma” is standard deviation from the ideal • From current levels to “Six Sigma” • Can be applied to all business functions • Sourcing, Product development, Operations, Order fulfillment, Service, Sales Support • Method/Tool to Eliminate Variation (Source: GE Six Sigma Program Manual)

  15. s DPMO A 3s process because 3 standard deviations fit between target and spec 2 308,537.0 3 66,807.0 4 6,210.0 5 233.0 6 3.4 3s 1s 6.6% Defects By Reducing Variability, We Can Make a Robust Product or Process 2s 3s 1s Virtually No Defects! 2s 6s ! 3s 4s 5s 6s Six Sigma Concept Before Target CustomerSpecification CustomerSpecification Target After (Source: GE Six Sigma Program Manual)

  16. ORGANIZATION: ACCOUNTABILITY QUALITY FOCUS AREAS PRIORITIES CHAMPIONS 1. Clinical Excellence & Value 2. Reliable Products & Services 3. Six Sigma with Customers 4. Global Products Company 5. Systems & Support 6. Proactive Risk Management FUNCTIONAL CHAMPIONS EXECUTION: FINDING THE PEARLS REVIEW & CONTROL: CLOSING THE LOOP Master Black Belt Black Belt / Green Belt Project Team PROJECT FOCUS, STRUCTURE, IMPACT Execution Pipeline (Source: GE Six Sigma Program Manual)

  17. No, Continue… Receive Material from Supplier Inspect Material for Defects Defects found? Yes Return to Supplier for Credit Define the Opportunity and Program Flowchart (Flow Diagram) or Service Blueprint Process Map

  18. Check Sheet Histogram Monday Billing Errors Wrong Account Wrong Amount A/R Errors Wrong Account Wrong Amount 0.58 0.56 Diameter 0.54 0.52 0.50 Run Chart 0.48 Number of Lots 0.46 0.44 1 2 3 4 5 6 7 8 9 10 11 12 Time (Hours) 0 1 2 3 4 Defectsin lot Data Ranges Measure Symptoms

  19. Variable Control Chart • chart • R chart • Attribute Control Chart • p chart • c chart UCL Mean x ¯ 99.7% x ¯ LCL m z -1 -3 -2 0 1 2 3 UCL LCL Measure Symptoms (Cont’d) Statistical Process Control (SPC):  ± z  Look for Drift/Trend, Seasonality, Shift, Spike • Variability • - Normal variability: random • Abnormal variability: assignable • Process Control • About the internal stability of the process • Not about the external satisfaction of the process performance

  20. Machine Man Effect Environment 80% Method Material Frequency Other Design Assy. Purch. Training Analyze the Causes Fishbone (Cause & Effect) Diagram Pareto Diagram Brainstorming House of Quality Critical To Quality (CTQ) Scatter Plot Failure Mode Effect (and Criticality) Analysis (FEMA) - a structured approach to identify, estimate, prioritize, and evaluate risk of possible failures at each stage in the process Regression Analysis Design of Experiments (DOE) - a statistical test to determine cause-and-effect relationships between process variables and output Multivariate Analysis

  21. Process Capability Index (Cpk) Capability Index shows how well parts being produced fit into upper & lower customer specs, design limit specs or tolerance limits. Cpk = min[(US - )/(3), ( - LS)/(3)] As a process produces items, small shifts in equipment or system can cause differences in performance from differing samples. Shifts in Process Mean Process Capability Ratio (Cp) Sigma Measure (S) Cp = (US - LS)/(6) S = (US - LS)/(2) Improve Solutions

  22. Taguchi Method High Incremental Cost of Variability Zero Upper Spec Lower Spec Target Spec Improve Solutions (Cont’d) • Mean Shifting • Variability Reduction • Shingo’s Poka Yoke • Fail-safe design, Error-free method • Special tooling for human error prevention • Robust Design • Taguchi Method • Value Stream Mapping • Process mapping with identification of value-added and non-value-added • Benchmarking • Kaizen • Business Process Reengineering • Kaizen Blitz (Rapid Event Improvement)

  23. Control to Sustain Institutionalize Dynamic Process - From SPC to Process Capability Improvement to Zero Defect Continuously Improve and Innovate On-going Journey

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