Q8 IM11 Final

CHAPTER 11
Six Sigma and Process Improvement

Teaching Notes
This chapter brings the Six Sigma concept into a sharp focus, and builds on the
need to integrate a performance management framework with operational
requirements in managing quality. In this chapter, we introduce the statistical
basis
for
Six
Sigma,
and
outline
the
requirements
for
Six
Sigma
implementation. This chapter also extends the concepts of Chapter 10 on

statistical thinking and introduces the 7 QC Tools used for kaizen -- continuous
improvement -- Six Sigma and lean projects. Key objectives for this chapter
should be to assist students:
To fully understand the concept of breakthrough, defined as the accomplishment of any

improvement that takes an organization to unprecedented levels of performance. Six
Sigma projects often focus on breakthrough improvements that add value to the
organization and its customers through systematic approaches to problem solving.
To become aware of the tools and techniques of Six Sigma which represent a collection
of quality improvement and statistical methods and have been used successfully over the
years in generic TQM initiatives, ISO 9000, and in Baldrige processes.
To learn that a defect, or nonconformance, is any mistake or error that is passed on to

the customer. A unit of work is the output of a process or an individual process step. A
common measure of output quality is defects per unit (DPU), computed as Number of
defects discovered/Number of units produced, and in Six Sigma metrics, defects per
million opportunities (dpmo) = DPU 1,000,000/opportunities for error. A six-sigma
quality level corresponds to at most 3.4 dpmo which is equivalent to a process variation
equal to half of the design tolerance, while allowing the mean to shift as much as 1.5
standard deviations from the target. The sigma level can easily be calculated on a
spreadsheet using the Excel formula =NORMSINV(1 Number of Defects/Number of
Opportunities) + SHIFT or equivalently, =NORMSINV(1 dpmo/1,000,000) + SHIFT
To learn about and practice problem solving -- correcting deviations between what is
happening and what should be happening. Quality related problems often fall into five
categories: conformance problems, unstructured performance problems, efficiency
problems, product design problems, and process design problems.
To appreciate that a structured problem solving process provides employees and teams
with a common language and a set of tools to communicate with each other.
To develop understanding of the Six Sigma stages of: 1) Define - the process of drilling
down to a more specific problem statement is sometimes called project scoping; 2)
Measure - collecting good data, observation, and careful listening; 3) Analyze - focuses
on why defects, errors, or excessive variation occur, and focuses on the root cause; 4)
Improve - focuses on idea generation, evaluation, and selection; 5) Control - focuses on
how to maintain the improvements.
To appreciate that projects are the vehicles that are used to organize team efforts and to
implement the DMAIC process. Being able to manage a large portfolio of projects, as
would be found in Six Sigma environments, is vital to organizational success.
To study factors that should be considered when selecting Six Sigma projects including:
financial return, impacts on revenues and market share, impacts on customers and
organizational effectiveness, probability of success, impacts on employees, and strategic
fit.
To introduce Six Sigma tools, in the light of two unique features of DMAIC: its emphasis
on customer requirements and the disciplined use of statistical and other types of
improvement tools. Typical types of tools include elementary statistical tools, advanced
statistical tools, product design and reliability, measurement, process control, process
improvement, and implementation and teamwork.
To become familiar with, and learn to apply the "seven QC tools" and related tools for
quality problem solving. The seven tools include flowcharts or process maps, run charts,
data sheets or check sheets, histograms, cause-and-effect diagrams, Pareto diagrams,
scatter diagrams and control charts.
To introduce the concept of lean production which refers to approaches initially

developed by the Toyota Motor Corporation that focus on the elimination of waste in all
forms, including defects requiring rework, unnecessary processing steps, unnecessary
movement of materials or people, waiting time, excess inventory, and overproduction. In
service contexts, lean production is often called lean enterprise. Some of the key tools
used in lean production are the 5Ss; visual controls; efficient layout and standardized
work; pull production; single minute exchange of dies (SMED); total productive
maintenance; source inspection; and continuous improvement.
To comprehend that tools and approaches used in Six Sigma and lean production are
different, yet complementary. Lean is focused on efficiency by reducing waste and
improving process flow while Six Sigma is focused on effectiveness by reducing errors
and defects. Lean Six Sigma is a synthesis of the best practices of both Six Sigma and
lean production and has gained considerable favor among practitioners in many
organizations.
To appreciate that although Six Sigma was developed in the manufacturing sector, it can
easily be applied to a wide variety of transactional, administrative, and service areas.
Within the service sector, Six Sigma is beginning to be called transactional Six Sigma.
However, differences between services and manufacturing make opportunities in services
more difficult to identify, and projects more difficult to define. Small organizations can
use Six Sigma, although perhaps in a more informal fashion.
The Instructors Resource section of the website accompanying this text has a number of
Baldrige video clips which give an inside view of organizations that have received the Baldrige
award. Some of these, that are especially appropriate for this chapter, have scenes that show how
process improvement approaches can enhance an organizations quest for world-class quality.
ANSWERS TO QUALITY IN PRACTICE KEY ISSUES

An Application of Six Sigma to Reduce Medical Errors
1.
Process mapping was an essential early step for Froedtert Hospital to take in order to
identify the points at which failures in the IV infusion process could possibly take place.
When combined with the FMEA, it provided clues as to where errors were generated,
their severity, and suggested the next steps to be taken for measurement, in order to point
the way toward control and improvement.
2.
The teams and task forces were multidisciplinary because the processes crossed
organizational boundaries. For example, the IVs could be used in emergency rooms,
surgical theatres, maternity wards, etc. They would be of interest and concern to physicians,
nurses, pharmacists, and administrators, as pointed out in the case. The approach has the
benefit of bringing people with different perspectives and expertise together to work on a
complex problem, which may not be fully understood by any one person or smaller group of
people.
Applying Quality Improvement Tools to an Order Fulfillment Process
1.
The DMAIC process from this chapter, and the Deming cycle and the creative problemsolving process from an earlier chapter are basically parallel statements of statistical
thinking used to solve problems.
Although not a perfect fit these processes can be compared in a parallel fashion as
follows:
Six Sigma
Deming
Define
Measure
Plan
Do
Analyze
Study
Improve
Control
Act
Creative Problemsolving
Understanding the
"mess"
Finding facts
Identifying specific
problems
Generating ideas
Developing solutions
Implementation
In the case study the team defined the problem (initially) as discover
ways to reduce order processing time so that at least 98% of orders
would be shipped on time (within 24 hours of receipt). They then sought
to understand the process by gathering facts the data of times for
processing 50 orders. They then analyzed the data in a search for the
causes for variation and select the most likely cause. Once they
discovered that order-picking was the bottleneck operation, they could
generate ideas and test them for effectiveness in solving the problem.
They found out that their first solution did not work well. They had to use
a longer cart, rather than wider one in order to become more efficient in
the order-picking step in the process. Once they had tested their
improvement they undertook a longer study of effectiveness to prove
the solution.
2.
Although not mentioned in the case, Deming would suggest that the
cycle could be repeated over and over for continuous improvement.
Therefore, if sufficient time had not been shaved off the average time for
picking each order, then additional analysis might produce further
methods improvements to reduce the time.
3.
Alternatively, the packing process might be examined for improvements.

The same set of problem-solving steps should be used to gather facts,
analyze the facts, develop ideas for improvement, test the proposed
solution, and make it a part of the entire order picking process.
BONUS MATERIALS - QUALITY IN PRACTICE

Improving Patient Services at Middletown Regional Hospital
Note: Data from Press Ganey surveys, mentioned in the body of the case, are available in
spreadsheet MRHCase.xls on the instructors website for this chapter. Instructors may
choose to make these data available to the students for more detailed analysis.
Key Issues for Discussion
1.
The Deming Cycle of Plan-Do-Study-Act is certainly covered by the steps of Middletown

Regional Hospitals Total Quality Improvement Implementation System. Planning is done
using steps 1-3 of MRHs process. Organizational awareness and environmental
transformation are used as preparation for identifying and defining the problem. The
Do part of the Deming Cycle is performed during steps 4 and 5 of MRHs process. The
Study phase of the Deming process takes place in step 6, analysis, of MRHs process.
The Deming Act phase takes place in step 6, make recommendations, of MRHs
process. Follow-up on actions taken is the step 7 requirement of MRHs process, to remeasure in order to assess improvement. Coverage of Demings Act phase does not
indicate whether or not a pilot study is usually performed before action is taken to
implement the change systemwide.
The DMAIC process may be an even better fit for MRHs process. Define, Measure,
Analyze, Improve, and Control are covered by steps 1-3 of MRHs process (define); steps
4 and 5 (measure); step 6 (analyze and improve); and step 7 (control).
2.
EVS has used checksheets (from the Press Ganey surveys), control charts and correlation
matrixes to analyze the problem situation. This combination has provided more insights
into the nature of the problem and possible solutions than as single technique would have
done.
3.
Another insight from analysis of graphs developed from the Press Gainey surveys stems
from the fact that there is very little variability in results over the 11-quarter period. This
indicates a very stable process, but also indicates that changes that were made had little
impact. The root cause for not being able to raise satisfaction levels still has not been
found. Approaches to service recovery should be explored, as well as after the fact
determination of quality deficiencies.
4.
These three initiatives have helped to slightly reduce the gap between managements
goals and the actual customer perceptions. This is what a control and improvement
system is supposed to do. However, the gap has not yet been completely closed.
5.
Other approaches that EVS might try in order to close the gap would be to benchmark the
hotel industry (perhaps by visiting The Ritz-Carlton Hotel Company), develop a fast
feedback form that would help identify strengths and OFIs and could be acted on while
the patient was still in the facility, and do in-depth interviews with patients upon their
discharge.
Six Sigma at National Semiconductor
1.
An example of how National Semiconductor applied the DMAIC process was at the
South Portland, Maine, facility, which produces advanced CMOS devices. The site saw
an opportunity to improve yields on a 0.35-m fabrication process by finding and
eliminating sources of variation in the manufacturing flow.
Define
The fab was experiencing losses at the final electrical test (ET) operation. An 18-week
baseline study of ET yield showed that there was an opportunity for approximately 1.5
percent additional yield for all wafers in this technology, meaning that they were leaving
more than $1 million in profit on the table. The goal of eliminating the systematic yield
loss caused by transistor leakage and gate oxide breakdown was set. The team was also
challenged to establish a control plan for measurement of critical-to-function
parameters in the process flow that could be used to prevent failing wafers from getting
to the final ET step.
Measure
Analysis of the reasons for failed wafers at electrical test identified three process modules
that showed excessive variation in the fabrication process. These modules included the
spacer formation, channel implants, and post-implant acid cleaning steps. Other suspect
areas were eliminated by performing commonality studies on past events, discussing the
issue with industry experts, and re-evaluating experiments that had been previously run.
Analyze
Analysis revealed seven factors were determined to have an effect on the three key failure
modes. Utilizing the design of experiments (DOE) function of JMP statistical software,
the team developed three experiments to determine which interactions had the greatest
effect on yield.
Improve
Prior to running the DOEs, the team had already collected enough information to know
that tighter controls were needed on certain in-fab process parameters in the transistor
modules. By taking early action to put these controls in place, the team was able to
realize some yield improvements after only two months. Once the DOE results came out,
the team was able to validate the earlier actions and fully characterize the process
window for these critical steps. In the improve step, the team leveraged the results of the
DOEs performed during the previous (analyze) step to make necessary changes to specs,
procedures, and equipment. These changes ensured that variation during the spacer,
implant, and acid cleaning steps wouldnt affect yield at electrical test.
Control
To ensure that the process improvements developed by the team became permanent, a
control plan was created and transferred to the manufacturing group, defining the
requirements for every critical-to-function parameter in terms of control charts, control
limits, sampling plans, gage capability, and out-of-control action plans. By implementing
improved process control methods, the team was able to surpass the initial goal, provide
Nationals designers with a competitive advantage in their efforts to develop new
products for the analog marketplace, and increase yield by more than 1.5 percent, with a
projected annual savings of $1.1 million. The project lasted about nine months.
2.
National Semiconductor produces highly complex integrated circuits that generally

require clean-room technology to avoid quality problems. With all of these complex
processes, isolating and reducing variables is a Herculean taskone that is perfect for
Six Sigma. National Semiconductor has a field defective rate of less than 20 defective
parts per million, but it still saw room for improvement, particularly in the area of
internal yield. Kamal Aggarwal, executive V.P. of the CTMG, mandated that all CTMG
units would deploy Six Sigma.
It took a number of initiatives, in at least six stages, to build momentum and establish the
Six Sigma process. 1) A large CTMG-wide continuous improvement (CI) effort yielded
good results, but it suffered from inconsistency. Each unit -- three wafer fabs, three
assembly sites, and the CTMG headquarters in Santa Clara, California used its own
methods to improve quality. 2) So National Semiconductor invited GE Consulting to help
with implementing Six Sigma, but the idea met with resistance, because the employees
felt that they were already using Six Sigma tools and believed that they were quite good
at it. 3) Then, a year later, another consulting firm that had experience in high-tech
processes was brought in to reintroduce Six Sigma. They convinced the senior V.P. of
Nationals plant in Melaka, Malaysia, to launch a pilot Six Sigma program with 10
projects. 4) Nine months later at the next CTMG Summit, a key National Semiconductor
supplier, DuPont Electronic Technologies, made a presentation on how to quantify Six
Sigma. This, coupled with the results of the 10 Melaka pilot projects (initial savings of
nearly $900,000 and projected annual savings of nearly $2.3 million), convinced
Aggarwal to implement Six Sigma across CTMG. 5) The first wave of projects began in
June 2003. Since then, 52 projects have been completed with an 84 percent success rate,
resulting in tens of millions of dollars in both hard and soft savings. 6) In March 2004,
CTMG launched its second wave of Six Sigma programs, targeting similar savings from
44 projects. Four of these projects target issues that exist on multiple sites, whereas nine
are aimed at customer satisfaction, quality, or safety improvement.
Although not addressed by this case, chances are that National Semiconductor is a highperforming company based on various financial and quality measures (see Ch. 9). If that
is the case, research indicates that best practices should include: providing customerrelationship training for new employees, emphasizing quality and teamwork for senior
management assessment, encouraging widespread participation in quality meetings
among non-management employees, using world-class benchmarking, communicating
strategic plans to customers and suppliers, conducting after-sales service to build
customer loyalty, and emphasizing competitor-comparison measures and customer
satisfaction measures when developing plans. The key to establishing the Six Sigma
process at National Semiconductor was executive support at several levels. It seems
likely that outstanding effort in the form of team participating in quality meetings, worldclass benchmarking, and communicating strategic plans, relating to quality, to customers
also played a part in the eventual success of the Six Sigma initiative and related projects.
Answers to Review Questions

1.
A six sigma quality level corresponds to a process variation equal to half of the design
tolerance (in terms of the process capability index, Cp = 2.0) while allowing the mean to
shift as much as 1.5 standard deviations from the target, which is the manufacturing
specification. The allowance of a shift in the distribution is important, since no process
can be maintained in perfect control, due to natural variation.
2.
The recognized benchmark for Six Sigma implementation is General Electric. GEs Six
Sigma problem solving approach (DMAIC) employs five phases:
a)
b)
c)
d)
e)
Define (D)
i)
Identify customers and their priorities.
ii)
Identify a project suitable for Six Sigma efforts based on business
objectives as well as customer needs and feedback.
iii)
Identify CTQs (critical to quality characteristics) that the customer
considers to have the most impact on quality.
Measure (M)
i)
Determine how to measures the process and how is it performing.
ii)
Identify the key internal processes that influence CTQs and measure the
defects currently generated relative to those processes
Analyze (A)
i)
Determine the most likely causes of defects.
ii)
Understand why defects are generated by identifying the key variables that
are most likely to create process variation.
Improve (I)
i)
Identify means to remove the causes of the defects.
ii)
Confirms the key variables and quantify their effects on the CTQs.
iii)
Identify the maximum acceptable ranges of the key variables and a system
for measuring deviations of the variables.
iv)
Modify the process to stay within the acceptable range.
Control
i)
Determine how to maintain the improvements.
ii)
Put tools in place to ensure that the key variables remain within the
maximum acceptable ranges under the modified process.
Note that this approach is similar to the other quality improvement approaches we
discussed and incorporates many of the same ideas. The key difference is the emphasis
placed on customer requirements and the use of statistical tools and methodologies.
3.
There are significant differences between project selection and problem definition.
Project selection generally responds to symptoms of a problem and usually results in a
rather vague problem statement. In project definition, one must describe the problem in
operational terms that facilitate further analysis. For example, a firm might have a history
of poor reliability of electric motors it manufactures, resulting in a Six Sigma project to
improve motor reliability. A preliminary investigation of warranty and field service repair
data might suggest that the source of most problems was brush wear, and more
specifically, suggest a problem with brush hardness variability. Thus, the problem might
be defined as reduce the variability of brush hardness. This process of drilling down to
a more specific problem statement is sometimes called project scoping.
4.
NCR Corporation defines root cause as that condition (or interrelated set of conditions)
having allowed or caused a defect to occur, which once corrected properly, permanently
prevents recurrence of the defect in the same, or subsequent, product or service generated
by the process. As with a medical analogy, eliminating symptoms of problems usually
provides only temporary relief; eliminating root causes provides long-term relief.
A useful approach for identifying the root cause is the 5 Why technique. This approach
forces one to redefine a problem statement as a chain of causes and effects to identify the
source of the symptoms by asking Why? (ideally five times). In a classic example at
Toyota, a machine failed because a fuse blew. Replacing the fuse would have been the
obvious solution; however, this would have only addressed the symptom of the real
problem. Why did the fuse blow? Because the bearing did not have adequate lubrication.
Why? Because the lubrication pump was not working properly. Why? Because the pump
axle was worn. Why? Because sludge seeped into the pump axle this was the root
cause. Toyota attached a strainer to the lubricating pump to eliminate the sludge, thus
correcting the problem of the machine failure.
5.
Several key principles are necessary for effective implementation of Six Sigma:
a)
b)
c)
d)
e)
f)
g)
6.
Committed leadership from top management.

Integration with existing initiatives, business strategy, and performance measurement.
Process thinking.
Disciplined customer and market intelligence gathering.
A bottom-line orientation.
Leadership in the trenches.
Continuous reinforcement and rewards.
The tools used in Six Sigma efforts have been around for a long time. What is unique
about Six Sigma is the integration of the tools and methodology into management
systems across the organization. The topics covered may be categorized into seven
general groups:
10
a) Elementary statistical tools (basic statistics, statistical thinking, hypothesis testing,

correlation, simple regression)
b) Advanced statistical tools (design of experiments, analysis of variance, multiple
regression)
c) Product design and reliability (quality function deployment, failure mode and effects
analysis)
d) Measurement (process capability, measurement systems analysis)
e) Process control (control plans, statistical process control)
f) Process improvement (process improvement planning, process mapping, mistake
proofing)
g) Implementation and teamwork (organizational effectiveness, team assessment,
facilitation tools, team development)
7.
Successful quality improvement depends on the ability to identify and solve problems.
According to Kepner and Tregoe, a problem is a deviation between what should be
happening and what actually is happening that is important enough to make someone
think the deviation ought to be corrected. Problem solving is the activity associated with
changing the state of what is actually happening to what should be happening.
8.
All quality problem-solving can be classified into the following five categories:
a. Conformance problems are defined by unsatisfactory performance by a well-specified
system. Users are not happy with system outputs, such as quality or customer service
levels. Traditional quality improvement tools and Six Sigma methods are often used
here.
b. Efficiency problems result from unsatisfactory performance from the standpoint of
stakeholders other than customers. Typical examples are cost and productivity issues.
Lean tools are often used to address such problems.
c. Unstructured performance problems result from unsatisfactory performance by a
poorly specified system. That is, the task is nonstandardized and not fully specified by
procedures and requirements. Unstructured problems require more creative approaches
to solving them.
d. Product design problems involve designing new products that better satisfy user needs
the expectations of customers that matter most to them. For such problems, Design
for Six Sigma (see Chapter 12) tools and methods are applicable.
e. Process design problems involve designing new processes or substantially revising
existing processes. The challenge here is determining process requirements, generating
new process alternatives, and linking these processes to customer needs. Work systems
design approaches discussed in Chapter 7 are typically used.
9.
The Seven QC (quality control) Tools include flowcharts, check sheets, histograms,
Pareto diagrams, cause-and-effect diagrams, scatter diagrams, and control charts. These
tools support quality improvement problem solving efforts.
11
In the CPS process, these tools will be useful in charting and understanding messes.
They can help in finding and recording facts and in identifying specific problems. Once
solution ideas have been generated, these ideas can be added to the QC Tools to produce
what if we? scenarios. Problem solvers can use the tools in cause-and-effect
scenarios to figure out which solutions will work, and which ones will not.
10.
Flowcharts are best developed by having the people involved in the processemployees,
supervisors, managers, and customersconstruct the flowchart. A facilitator provides
objectivity in resolving conflicts. The facilitator can guide the discussion through
questions such as What happens next?, Who makes the decision at this point?, and
What operation is performed at this point? Quite often, the group does not universally
agree on the answers to these questions due to misconceptions about the process itself or
a lack of awareness of the big picture.
Flowcharts help all employees understand how they fit into a process and who are their
suppliers and customers. This realization then leads to improved communication among
all parties. Flowcharts also help to pinpoint places where quality-related measurements
should be taken. Once a flowchart is constructed, it can be used to identify quality
problems as well as areas for productivity improvement. Questions such as How does
this operation affect the customer?, Can we improve or even eliminate this operation?
or Should we control a critical quality characteristic at this point? trigger the
identification of opportunities.
11.
A control chart is simply a run chart to which two horizontal lines, called control limits
are added: the upper control limit (UCL) and lower control limit (LCL). Control
limits are chosen statistically so that there is a high probability (generally greater than
0.99) that points will fall between these limits if the process is in control. Control limits
make it easier to interpret patterns in a run chart and draw conclusions about the state of
control.
A run chart is a line graph in which data are plotted over time. The vertical axis
represents a measurement; the horizontal axis is the time scale. Run charts show the
performance and the variation of a process or some quality or productivity indicator over
time. They can be used to track such things as production volume, costs, and customer
satisfaction indexes. Run charts summarize data in a graphical fashion that is easy to
understand and interpret, identify process changes and trends over time, and show the
effects of corrective actions.
12.
Check sheets are simple tools for data collection. Nearly any kind of form may be used
to collect data. Data sheets are simple columnar or tabular forms used to record data.
However, to generate useful information from raw data, further processing generally is
necessary. Check sheets are special types of data collection forms in which the results
may be interpreted on the form directly without additional processing.
12
In manufacturing, check sheets similar to Figure 11.9 are simple to use and easily
interpreted by shop personnel. Including information such as specification limits makes
the number of nonconforming items easily observable and provides an immediate
indication of the quality of the process. For example, in Figure 11.9 a significant
proportion of dimensions are clearly out of specification, with a larger number on the
high side than the low side.
A second type of check sheet for defective items is illustrated in Figure 11.10, which
shows the type of defect and a tally in a resin production plant. Such a check sheet can be
extended to include a time dimension so that data can be monitored and analyzed over
time and trends and patterns, if any, can be detected. Figure 11.11 shows an example of a
defect location check sheet.
13.
A histogram is a basic statistical tool that graphically shows the frequency or number of
observations of a particular value or within a specified group. Histograms provide clues
about the characteristics of the parent population from which a sample is taken. Patterns
that would be difficult to see in an ordinary table of numbers become apparent.
The Pareto principle was observed by Joseph Juran in 1950. Juran found that most
effects resulted from only a few causes. Pareto analysis clearly separates the vital few
from the trivial many and provides direction for selecting projects for improvement.
Pareto analysis is often used to analyze data collected in check sheets. A Pareto
distribution is one in which the characteristics observed are ordered from largest
frequency to smallest. A Pareto diagram is a histogram of the data from the largest
frequency to the smallest.
14.
The cause-and-effect diagram was introduced in Japan by Kaoru Ishikawa. It is a simple,

graphical method for presenting a chain of causes and effects and for sorting out causes
and organizing relationships between variables. Because of its structure, it is often called
a fishbone diagram. The general structure of a cause-and-effect diagram is shown in
Figure 11.15. At the end of the horizontal line, a problem is listed. Each branch pointing
into the main stem represents a possible cause. Branches pointing to the causes are
contributors to those causes. The diagram identifies the most likely causes of a problem
so that further data collection and analysis can be carried out.
15.
Scatter diagrams are the graphical component of regression analysis. While they do not
provide rigorous statistical analysis, they often point to important relationships between
variables, such as the percentage of an ingredient in an alloy and the hardness of the
alloy. Typically, the variables in question represent possible causes and effects obtained
from Ishikawa diagrams.
16.
Some of the tools and approaches used for lean operations in organizations include: the
5Ss; visual controls; efficient layout and standardized work; pull production; single
minute exchange of dies (SMED); total productive maintenance; source inspection; and
continuous improvement. Six Sigma is a useful and complementary approach to lean
production where the concepts might be used in combination, in order to reduce cycle
13
times, streamline an order entry processes, or drill down to the root causes of the
problems and identify solutions. Because of their similarities, many industry training
programs and consultants have begun to focus on Lean Six Sigma, drawing upon the
best practices of both approaches. Both are driven by customer requirements, focus on
real dollar savings, have the ability to make significant financial impacts on the
organization, and can be used in non-manufacturing environments.
However, lean and Six Sigma concepts are different. They attack different types of
problems. Lean production addresses visible problems in processes, for example,
inventory, material flow, and safety, while Six Sigma is more concerned with less visible
problems, for example, variation in performance. Another difference is that lean tools are
more intuitive and easier to apply by anybody in the workplace, while many Six Sigma
tools require advanced training and expertise of Black Belt or Master Black Belt
specialists, or consultant equivalents. The concept of the 5Ss is easier to grasp than
statistical methods.
17.
Small organizations are often confused and intimidated by the size, costs, and extensive
technical training they see in large organizations that implement formal Six Sigma
processes. Because of this, they often they dont even try to adopt these approaches.
Small organizations are usually lean by necessity, but their processes often operate at
quality levels of two to three sigma, and they are not even aware of it. Small
organizations thinking about adopting Six Sigma or lean production are advised to:
Obtain management commitment

Identify key processes and goals
Prioritize the improvement projects
Be systematic
Dont worry about training Black and Green Belts
Use just-in-time practices to learn the Six Sigma tools necessary to
successfully carry out specific projects
Communicate successes and reward and recognize
performers
Small companies often need to bring in consultants for training or improvement
initiatives in the early stages of learning. This can help to develop in-house expertise and
put them on the right track.
Discussion Questions
1.
As with many other criticisms of quality improvement efforts, this Fortune article
focuses on what happens if organizations fail to apply the basic quality concepts to socalled improvement initiatives. Deming frequently said: There is no instant pudding.
in making quality work. Thus, the statements in the article are largely bogus.
14
a. If Six Sigma has no noticeable impact on company financial statements, its because
not many home runs (large return) projects have been done. One of the strengths of
the Six Sigma concept is that it documents financial impacts of the projects.
b. It is unclear why only early adopters can benefit, since every organization has its
own unique set of process and opportunities will differ from any other organization.
Thus any organization should be able to benefit from Six Sigma process
improvements.
c. Yes, defects are more difficult to define and measure for service organizations than
for manufacturing, but numerous service organizations (such as Baldrige winners)
have proven that it is possible and profitable to do so.
d. Six Sigma cannot guarantee that your product will have a market, but nothing else
can guarantee it, either, -- other than continuous innovation and continuous
improvement (of which Six Sigma can be a vital part).
2.
Six Sigma projects can be devised to improve activities and processes in such areas as:
Sales and marketing projects
Perceived product value
Overall customer satisfaction
Sales force effectiveness
Complaint reduction
Gains and losses of customers
Customer awards/recognitions
Supply chain management projects
Internal supplier quality measurements
Defect levels
Response time
Customer ratings of prod/service performance
Managing information technology projects
Internal information technology quality measurements
Defect levels
Response time
Customer ratings of service performance
Improvement of procurement process for software and hardware
Human resource projects
Root cause analysis and reduction of absenteeism
Root cause analysis and reduction of turnover
Measurement and improvement of employee satisfaction
Measurement and improvement of training effectiveness
Grievance reduction
Suggestion system improvement
Safety improvement

3.
15
A set of CTQs that might influence overall service satisfaction for service at an
automobile dealership includes the dimensions of service quality found in Chapter 4, as
well as a couple of related ones (timeliness and time):
Empathy ability to understand and empathize with the problems of customers who may
or may not have the technical know-how to explain them in mechanical terms
Timeliness return of the car at the time promised is essential to busy customers
Time the amount of time required is related to the size of the repair bill
Assurance with limited technical proficiency, customers have to feel comfortable
relying on the expertise of the repair staff
Reliability customers wan the problems fixed right, the first time, so that they dont
have to keep returning, over and over, for the same problem
Responsiveness customers would like to have answers as to how, when and where a
repair can be done, by a responsive service representative
Tangibles last, but perhaps not least, customers would like to see clean, attractive work
areas, waiting areas, and toilet facilities
4.
Resistance to change is to be expected in introduction of a new approach, such as Six

Sigma, and plays a key part in successful adoption of the concept. As pointed out in
Chapter 6, keys to overcoming resistance to change, more often held by managers than by
first-line employees, are: a) early involvement by all parties, b) open and honest dialogue,
and c) good planning. Managers must believe in workers and their ability to contribute.
Workers, of course, must believe that managers will support the change to empower them
and help them to learn new skills required to be effective contributors. Managers must also
show commitment to the practices of EI, such as training, rewards, and recognition. Thus,
adoption of Six Sigma cannot be successful in the long run without supervisor and
employee buy-in.
5.
Processes that students might encounter at their college or university due to part-time work
on campus might include accounting, budgeting, purchasing, training and development, and
research. Non-educational institutions they might benchmark might be hospitals
(accounting); relief agencies, such as the Red Cross (budgeting); discount stores
(purchasing); consulting firms (training and development); and pharmaceutical firms
(research and development).
In addition students in this course might be assigned the personal TQM project (see
Chapter 1 for details) and asked to identify a number of objectives for improvement.
Some typical objectives are get up on time (no snooze alarm), study chapters before
coming to class, eat no more than one junk food item out of the vending machine each
day, etc. Students might use the DMAIC process in order to make improvements. To do
so, they would need to define the critical to quality characteristics that they desired
(such as those things that contribute to higher grades), decide how to measure and
analyze them (using a PTQM checksheet and scatter diagrams, for example), and then
deciding on required improvements and a control process to hold the gains.
16
6.
Companies today face incredible pressures to continually improve the quality of their
products while simultaneously reducing costs, to meet ever-increasing legal and
environmental requirements, and to shorten product life cycles to meet changing
consumer needs and remain competitive. The ability to achieve these goals depends on a
large extent on product design. The complexity of todays products makes design a
difficult activity; a single state-of-the-art integrated circuit may contain millions of
transistors and involve hundreds of manufacturing steps. Thus six sigma quality levels are
difficult to attain, due to multiple variables that may affect quality. Nevertheless,
improved designs not only reduce costs, but also increase quality.
7.
The appropriate tools to attack the problems would be:

a. If the significant causes of the copier jams are known, use a flowchart to show the
method for clearing each type of jam so that users would know how to fix them.
b. Use a cause-effect diagram to identify the problem and to focus in on the most
significant one in the engineering publications.
c. Gather data using a checksheet to identify the significant causes of errors with the laser
printer, and then use a Pareto diagram to graph them.
d. Use a scatter diagram to see if the weights show a stable pattern. If a weight reduction
program is not needed and the process is stable, plot the weight results on a control
chart.
e. Use process simulation to determine the number of positions of different types.
f. Use a scatter diagram and do a correlation analysis between changes and dollar value,
or changes and days between the request for proposal and contract award.
g. Use a scatter diagram and do a regression analysis by time of year, in order to predict
staffing needs.
8.
Lean concepts similar to those used in small businesses may have applicability to
classrooms, such as:
9.
Obtain administrative commitment

Identify key processes and goals
Prioritize the improvement projects
Be systematic
Dont worry about training Black and Green Belts
Use just-in-time practices to learn the Six Sigma tools necessary to
successfully carry out specific projects
Communicate successes and reward and recognize performers
Ideally, the skills of technical experts (Green or Black Belts) will

complement those of team members (often called subject matter
experts, or SMEs). The two types of experts may be at odds if they
cannot agree ways to analyze problems, what their measures show, and
how to implement improvements and hold the gains through appropriate
control techniques. To prevent them from clashing in such a way as to
17
harm the results of the Six Sigma process, it is useful to see that each
has training and/or orientation to the environmental factors, methods,
and concepts used by the others. Also, the project champion has
responsibility to see that any disputes are mediated and resolved in such
a way as to enhance project success.
10.
The DMAIC process for a registration process design/improvement should begin with
customer needs and expectations (expected quality), and end with what the customer sees
and believes the quality of the product to be (perceived quality). These might include
characteristics as follows:
Attributes
Technical Requirements
Convenience
Time, dates, internet, phone
Speed
Process standards
Costs
Fees
Accuracy
Error prevention
Empathy
Understanding/willingness of
personnel to solve problems
Expected quality needs to be considered in the Define stage based on what the customer
assumes will be received from the process as a reflection of the customer's needs. The
university must focus on the key dimensions that are reflected in specific customer needs. If
these expectations are not identified correctly or are misinterpreted, then the final product
will not be perceived to be of high quality by customers. For registration, this will typically
involve availability of classes, timeliness of the process, time required to complete the
process, etc.
Technical requirements determine the design quality of the product. Process designers' must
Measure and Analyze not only the technical requirements for providing and registering
students for courses, but also perceptions of their needs, which may differ from what is
feasible. Other customers of the process also have some CTQ issues that registration
process designers must be aware of. For instance, while the "average" student might need
general courses, curriculum majors may need in depth or specialized courses. If
registration process designers never have an opportunity to interact with customers
(students, academic department administrators, faculty), the probability that they will not
understand or will misinterpret the expected delivery requirements and expected quality is
greatly increased.
After the registration process design is transferred to people or organizational units
responsible for delivering the service, poor attention to customer needs can affect the
perceived quality. For example, if the system is not designed to assure conformance to the
technical specifications, then the actual quality produced may not be the same as the
18
design quality. The equation that relates these different levels of quality is: perceived
quality = actual quality - expected quality. These characteristics must be taken into
account when the Improve and Control phases are completed.
Admission processes have many of the same process considerations as registration.
However, the needs of certain stakeholders, such as potential students and parents of
students, must also be taken into account.
11.
To balance the who, what, where, when why, and how of Six Sigma implementation, a
manager, assisted by the team, must evaluate them and select the most promising. This
includes confirming that the proposed solution will positively impact the key process
variables and the CTQs, and identifying the maximum acceptable ranges of these
variables. Since problem solutions often entail technical or organizational changes, some
sort of decision or scoring model may be used to assess possible solutions against
important criteria. These may include: cost, time, quality improvement potential,
resources required, effects on supervisors and workers, and barriers to implementation
such as resistance to change or organizational culture. To implement a solution
effectively, responsibility must be assigned to a person or a group who will follow
through on what must be done, where it will be done, when it will be done, and how it
will be done.
12.
An argument can be made on either side of the question. On the positive side, Welchs
action could be taken as a clear signal that Six Sigma was going to be vital process at
G.E. for both management development and continuous improvement. It is still alive
and well in G.E., as of this writing, almost 15 years later. On the negative side, there are
often unintended consequences of threats such as these, as managers seek to carry out the
letter of such a mandate, rather than the spirit.
13.
The problem of proposing changes in one area that cancels out gains in
the other area would appear to be due to a lack of communication
between the two project teams. However, it may also have indicated a
weakness in defining the scope of the projects. The team leaders should
have been aware of the other project going on. They should then have
coordinated on boundaries so as to prevent overlap. Finally project
champions should have been consulted on how to either expand or
break out the projects before they were started, or soon afterward.
14.
Phantom" capacity in service operations is the equivalent of the hidden factory in

manufacturing. By simplifying or eliminating processes in banks or hospitals that require
excessive waiting time, maintenance, and rework, actual capacity could be increased by
25 percent or more without investing in additional equipment.
19
SOLUTIONS TO PROBLEMS
1.
Wellplace Insurance Company set a standard that policy applications should be processed
within three days of receipt. If, out of a sample of 1,000 applications, 65 fail to meet this
requirement, at what sigma level is this process operating?
ANS. The defect rate is 65/1000 = 0.065. This is the same as: 0.065 X 1,000,000 =
65,000 dpmo. From Table 11.1, we see that this is slightly better than 3 sigma with off
centering of 1.5 sigma.
2.
During one month, 35 preflight inspections were performed on an airplane at Southstar

Airlines. Nine nonconformances were noted. Each inspection checks 30 items. What
sigma level does Southstar maintain if this incidence of nonconformance is typical of
their entire fleet of airplanes?
ANS. To calculate the dpmo, we use 9/35 to get the number of defects per unit (DPUs).
However, 30 opportunities per aircraft checked must be taken into consideration, as
shown, in order to calculate dpmo.
dpmo = (18/35) X 1,000,000/30 = 8571.4, which is less than 4 sigma with off centering of 1.5
sigma.
3.
Over the last year 1,054 injections were administered at the Fairhealth clinic. Quality is
measured by the proper amount of dosage as well as the correct drug. In two instances,
the incorrect amount was given, and in one case, the wrong drug was given. At what
sigma level is Fairhealths process?
ANS. We use 3/1054 to get the number of defects per unit (DPUs). However, there are
2 opportunities per injection (wrong drug, wrong dosage) to make an error. They must be
considered, in order to calculate dpmo.
dpmo = (3/1054) X 1,000,000/2 = 1423.1, which is slightly less than 4.5 sigma with off centering
of 1.5 sigma.
4.
A few years back, the Wall Street Journal reported that about 750,000 airplane
components are manufactured, machined, or assembled for Boeing Co. by workers from
the Seattle Lighthouse for the Blind. A Boeing spokeswoman noted that the parts have an
exceptionally low rejection rate of one per thousand. At what sigma level is this
process operating?
ANS. There is no indication of how many opportunities for defects there are per
component, so we will have to assume that the defect rate is 1 per 1000 units produced.
20
Therefore, only 750 defective items (0.001 X 750,000) were produced. To calculate
dpmo, we see:
dpmo = (1/1000) X 1,000,000 = 1000, which is slightly better than 4.5 sigma with off
centering of 1.5 sigma.
5.
Broadwork Electronics manufactures 500,000 circuit boards per month. A random

sample of 5,000 boards is inspected every week for five characteristics. During a recent
week, two defects were found for one characteristic, and one defect each was found for
the other four characteristics. If these inspections produced defect counts that were
representative of the population, what is the overall sigma level for this Broadwork
process? What is the sigma level for the characteristic that showed two defects?
ANS. To calculate the overall dpmo and sigma level, we have:
dpmo = (6/5000) X 1,000,000/5 = 240, which is approximately 5 sigma with offcentering of 1.5 sigma.
But for the one characteristic, we have:
dpmo = (2/5000) X 1,000,000 = 400, which is still good, but somewhat less than 5 sigma
with off centering of 1.5 sigma.
A Six Sigma project should be launched to determine root causes for the defects from this
one characteristic.
6.
Outsource Microprocessor Corporation (OMC) sells 1500 specialized computer

processing chips each month at a price of $1200 each. Variable costs amount to
$1,000,000, and fixed costs are $400,000. Currently the company has a defect rate of 8
percent (which are chips returned by customers, scrapped by OMC, and replaced). Note
that the variable costs include the cost of producing the defective chips.
a. What is the hidden cost to the company of making this rate of defectives instead of
1500 good chips each month?
b. Suppose a Six Sigma effort can reduce the defects to a six sigma level (assume for
simplicity that the defective rate is essentially zero). What is the impact on profitability?
ANS. In order to produce and sell 1,500 good computer chips, OMC must start
1,500/0.92 = 1,631 chips into production. However, since the variable cost of $1,000,000
includes the cost of making scrap, the unit variable cost is therefore not $1,000,000/
1,500 = $666.67 but $1,000,000/1,631 = $613.12. Thus the price paid for poor quality,
21
sometimes called the hidden factory, is 131 x $613.12 = $80,319. This additional cost is
incurred to make useless products that cant be sold.
If a quality improvement initiative achieves a six sigma defect level, the defective rate is
essentially zero. This will remove the variable cost of making the 131 defective units.
The table below shows that the $80,319 poor quality cost is eliminated from the variable
costs, and the saved money trickles falls to the bottom line to increase profits. Thus, the
profit increased to $480,319. The 8% reduction in operational costs produced a 20%
increase in profit ($80,319/ $400,000).
Monthly Baseline
Monthly Six Sigma Results
Sales
1500 X $1200.00 =
1800000
Sales
1500 X $1200.00 =1800000
Variable Cost
1631 X $ 613.12 =
1000000
Variable Cost
1500 X $ 613.12 = 919682
Contribution margin
800000
Contribution margin
880319
Fixed cost
400000
Fixed cost
400000
Net Profit
480319
Net Profit
Profit margin
7.
400000
0.222
Profit margin
0.267
A flowchart for a fast-food drive-through window is shown in Figure 11.25 (see text).
Determine the important quality characteristics inherent in this process and suggest
possible improvements.
ANS. The important quality characteristics for this drive-through window are: the
machinery, materials, methods, and people (manpower). The machinery must work well,
e.g. most important is the speaker system by which the order is transmitted and received,
the bell and its operating system must work well, the menu sign must be readable and
conveniently placed, the order computer/cash register must be working properly to give
the total bill, and all the necessary equipment in the food preparation area must also be
working properly. The materials used in order taking are few. However, the sign must
be kept up-to-date with the latest prices and selection of menu items. The method
currently being used is shown on the flowchart, and possible improvements are discussed
in the next paragraph. The people who take the order must be trained to be courteous,
friendly, accurate, and knowledgeable, or the systems quality will suffer.
Possible improvements to the system might include installation of a second window, so
that the order is taken at the first window, money is collected there, and the pickup is
made at the second window. A radio transmit/receive unit linking the customer at the sign
to the employee wearing a headset could increase the ability of the employee to hear the
order and to move around to assemble the order while the customer is driving through.
22
Automatic order entry of standard selections might be built into the menu board with
push buttons (similar to an automated teller machine in a drive-through banking
operation). This would probably need to be coupled with personal assistance from
employees for special orders via a speaker system.
8.
The current process for fulfilling a room service request at the Luxmark hotel can be
described as follows. After the tray is prepared at the room service station, the server
proceeds to the room, knocks on the door, sets up the meal, has the customer sign the
check, asks if anything else is needed, and then returns to the room service station.
a. Draw a flowchart that describes this process.
b. From the perspective of creating a high level of customer satisfaction from this
experience, what improvements might you suggest to enhance this process?
Think
creatively!
ANS. 8 a. Flowchart
Ta
Prepare
tray
ke
tra
y
to
Knock,
Set up
saying
En
Room
service
ro
o
m
Request
Ask if
signature
anything
on check
else is
needed
Re
tu
rn
to
se
rvi
ce
ar
ea
ter
meal
23
8.b. A number of things could be done to enhance the service experience and make it
more memorable for the guest.1 Broadly, these could be categorized as preparation,
performance, and leave-taking.
9.
Preparation steps
o Tray layout liner, flower, salt/pepper, silverware, tray card
o Food preparation salad, entree, condiments
Performance
o Knock (exactly 3 times) and announce Room service.
o Warm greeting and self-introduction (use names)
o Permission to enter, enter, place tray, give a tour of the meal
o Provide weather report and forecast
o Request guest to sign check (use name)
Leave-taking
o Offer a wake-up call
o Ask if anything else is needed; if yes, radio for it
o Warm thanks (use name)
o Exit room, return to service area
Placewrite, Inc., an independent outplacement service, helps unemployed executives find

jobs. One of the major activities of the service is preparing resumes. Three word
processors work at the service typing resumes and cover letters. Together they handle
about 120 individual clients. Turnaround time for typing is expected to be 24 hours. The
word-processing operation begins with clients placing work in the assigned word
processors bin. When the word processor picks up the work (in batches), it is logged in
using a time clock stamp, and the work is typed and printed. After the batch is completed,
the word processor returns the documents to the clients bins, logs in the time delivered,
and picks up new work. A supervisor tries to balance the workload for the three word
processors. Lately, many of the clients have been complaining about errors in their
documentsmisspellings, missing lines, wrong formatting, and so on. The supervisor has
told the word processors to be more careful, but the errors still persist.
a. Develop a cause-and-effect diagram that might clarify the source of errors.
b. What tools might the supervisor use to study ways to reduce the number of errors?
Appreciation is expressed for several of these ideas to Scott Flasch, one of Professor Evans students who provided
an extremely detailed flowchart for an In-Room Dining process.
24
ANS. The C-E diagram, shown below, for this process analysis can be found in cleaner
format in spreadsheet Prob 11-09 on the Premier website for this chapter.
PROCESSING
METHOD
EMPLOYEES
Experience
Number of clients per processor
Empowerment to contact client
Sequencing of work
Training on the
equipment
Error check
method
Training on how to handle errors in copy
Instruction on resume
writing
Format used by clients
Delivery of
instructions
to
processor
CLIENT PROCEDURES
b. The supervisor might use flowcharts, checksheets and Pareto analysis to classify the
types of defects and their frequencies. Then, training, crosschecking for errors, and work
redesign might be done in order to remove those error causes. Once the process is under
control, control charts might be used to hold the gains.
10.
A catalog order-filling process at Cats Catalog Company for personalized printed

products for pet owners can be described as follows: Telephone orders are taken over a
12-hour period each day. Orders are collected from each person at the end of the day and
checked for errors by the supervisor of the phone department, usually the following
morning. The supervisor does not send each one-day batch of orders to the data
processing department until after 1:00 p.m. In the next stepdata processingorders are
invoiced in the one-day batches. Then they are printed and matched back to the original
25
orders. At this point, if the order is from a new customer, it is sent to the person who did
the customer verification and setup of new customer accounts. This process must be
completed before the order can be invoiced. The next steporder verification and
proofreadingoccurs after invoicing is completed. The orders, with invoices attached,
are given to a person who verifies that all required information is present and correct to
permit typesetting. If the verifier has any questions, they are checked by computer or by
calling the customer. Finally, the completed orders are sent to the typesetting department
of the print shop.
a. Develop a flowchart for this process.
b. Identify opportunities for improving the quality of service in this situation.
ANS. See flowchart, below, for the summary of the process at Cats Catalog Company.
The most serious problem from the standpoint of customer service is the potential for a
12-hour delay before an order reaches the supervisor for error checking, and another 3-4
hours may be required before entry into the computer. Obviously too much checking and
handling of the order occurred, and much of it was many hours after the customer and
order information had originally been taken. Suggestions for improvement include: a)
processing small batches of orders (perhaps within 1-2 hours, or less); b) building in error
checking, perhaps through direct entry of telephone orders into the computer; c)
processing information needed for customer verification and setup of new accounts at the
time the order is taken; d) having the phone department supervisor simply audit or sample
orders for errors; e) developing a computerized method of matching orders and invoices,
so that manual verification is not required; generating an exceptions report after step (e),
with proofreading required for printing information that cannot be computerized, if order
verification and proofreading is a vital step.
11.
26
A Six Sigma analyst in Riverside United Bank suspected that errors in counting and
manually strapping cash into bundles were related to the number of weeks that employees
had been employed on that job. The data found in the C11Data.xls file for Prob. 11-11 on
the student Premier website for this chapter were gathered from the process. What do you
conclude from your analysis? What do you recommend?
ANS. The scatter diagram shows that the employees accuracy in the strapping
department of Riverside United Bank improves for approximately the first 25 weeks.
27
After that, it basically levels off. The differences dont appear to be significant after about
30 weeks. (see spreadsheet Prob11-11.xls for details)
12.
The times required for trainees in an electronics course at Elecktronica Tech to assemble
a component used in a computer were measured. These are shown in the C11Data.xls file
for Prob. 11-12 on the student Premier website for this chapter. Construct a histogram to
graphically show the data. What recommendations for improvement would you give the
course instructor, based on your findings?
ANS. The histogram indicates that the assembly time for the computer component in the
electronics course at Elecktronica Tech is concentrated in the two periods from 9 up to 15
minutes and from 16 up to 20 minutes, which shows a bi-modal distribution. The highest
frequency is for 17 minutes, representing the times of 20% of the students. Many students
(approximately 50 percent) appear to be slower than the average (15.24 minutes) in the
class. If the assembly quality is the same for the slower group as it is for the faster one, then
the instructor should attempt to find the root cause, by observing the methods of both
groups, as well as testing to see if there are any significant differences in abilities between
the groups. Then the techniques of the two groups may be compared and the slower group
members times may be reduced. (see Prob11-12.xls for details)
13.
28
The times required to prepare standard-size packages for shipping at Pakman Shipping
Company were measured. The packers were divided into two equal groups of 20 people, each,
having similar experience in packing. These data are shown in the C11Data.xls file for Prob.
11-13 on the student Premier website for this chapter. Construct a scatter diagram for
these data. What recommendations for improvement would you give the section leader,
based on your findings?
ANS. The scatter diagram below (see spreadsheet Prob11-13) shows the packing time for
a standard size package for Pakman Shipping is lowest for the first group of 20 packers,
who average 13.85 minutes. In group 2, packers #22 and 37 are considerably slower than
the faster group members, such as #30 and #31. Still, the overall packing time for a
standard size package is higher for the second group of 20 packers, who average 18.45
minutes. This suggests that some workers, especially in group 1, are able to perform the
29
task much faster than the norm (mean of 16.15). If the output quality is the same for the
faster group, as well as the slower one, then the production coordinator should attempt to
find the root cause, by observing the methods of both groups, as well as testing to see if
there are any significant differences in abilities between the group members. If the
methods used by the first group can be taught to the slower group members, this could
increase productivity, reduce cost, and perhaps even improve quality, simultaneously.
14.
The data found in the C11Data.xls file for Prob. 11-14 on the student Premier website for
this chapter were gathered from a process used to make PrintGear, Inc.s plastic gears for
a computer printer. The gears were designed to be 2.75 0.05 centimeters (cm) in
diameter. Construct a histogram based on the data given. What can you observe about the
shape of the distribution? What would you recommend to the production manager, based
on your analysis?
ANS. The histogram on the graph below (see spreadsheet Prob11-14.xls for details)
shows that, although the data are fairly uniformly distributed, 18 points are above the
upper specification limit of 2.80 cm and 4 points are below the lower specification limit
of 2.70 cm. It is likely that the process needs to be improved, with the first step being the
removal of any special causes. Also, attention should be given to reducing variation in the
process and centering it on the nominal dimension. A control chart would have to be
30
constructed and/or a process capability study performed in order to get a fuller picture of
the process.
15.
Ace Printing Company realized that they were losing customers and orders due to various
delays and errors. In order to get to the root cause of the problem, they decided to track
problems that might be contributing to customer dissatisfaction. The list of the problems
found in the C11Data.xls file for Prob. 11-15 on the student Premier website for this
chapter shows their frequencies of occurrence over a six-month period. What technique
might you use to graphically show the causes of customer dissatisfaction? What
recommendations could you make to reduce errors and increase customer satisfaction?
ANS. It is obvious from the table and Pareto chart below that the first two categories,
accounting for 64.3% of the errors, need improvement. See spreadsheet Prob. 11-15 for
more detail
31
ACE PRINTING COMPANY

QUALITY ERRORS AND PERCENTAGES
Percent
Setup delays
No press time
No paper
Design delays
Order info error
Cust. chg, delays
Lost order
Total
16.
35.00%
29.29%
11.43%
10.00%
5.57%
5.00%
3.71%
Cumulative
%
35.00%
64.29%
75.71%
85.71%
91.29%
96.29%
100.00%
Frequency
245
205
80
70
39
35
26
700
In an AcmeWidget, Inc. process, the production rate (parts/hour) was thought to affect the
number of defectives found during a subsequent inspection. To test this theory, the
production rate was varied and the numbers of defects were collected for the same batch
sizes. The results can be found in the C11Data.xls file for Prob. 11-16 on the student
Premier website for this chapter. Construct a scatter diagram for these data. What
conclusions can you reach?
32
ANS. The scatter diagram (see spreadsheet Prob11-16.xls for details) for the AcmeWidget
process, shows an interesting, and counter-intuitive result. As the production rate increases,
the defect rate increases, then decreases. This could be because of the "learning curve" effect
in that as operators become more skilled and familiar with the process and production runs
are longer, the defect rate can be improved.
17.
The number of defects found in 25 samples of 100 Gamma Candy Company lemon drops
taken on a daily basis from a production line over a five-week period is given in the
C11Data.xls file for Prob. 11-17 on the student Premier website for this chapter. Plot these
data on a run chart, computing the average value (center line), but ignoring the control
limits. Do you suspect that any special causes are present? Why?
ANS. The scatter diagram on the graph below (see spreadsheet Prob11-17.xls for details)
shows that samples 11 and 12 were extremely distant from the average of 5.21. It is likely
that an assignable cause was present. Other than that, the process appears to be stable,
without excessive variations or trends up or down.
18.
33
Analysis of customer complaints at DOT.COM Apparel Company revealed errors in five

categories, such as billing, shipping, etc. Data can be found in the C11Data.xls file for Prob.
11-18 on the student Premier website for this chapter. Construct a Pareto diagram for these
data. What conclusions can you reach?

ANS. From the Pareto diagram, below (and spreadsheet Prob11-18.xls), we can conclude
that 54.2% of the problems are with electronic charge errors and another 25.1% are due to
shipping errors, for a total in the top two categories of 79.3 %. These categories should be
improved first.
DOT.COM APPAREL HOUSE
QUALITY ERRORS AND PERCENTAGES
Electronic charge errors

Shipping errors
Billing errors
Delivery errors
Long delays
Total
Percent
Cumulative %
Frequency
54.20%
25.10%
7.95%
6.95%
5.80%
54.20%
79.30%
87.25%
94.20%
100.00%
5420
2510
795
695
580
10000
34
19. A pharmaceutical company that manufactures individual syringes is conducting a process

capability study (see Chapter 13). The data shown in the C11Data.xls file for Prob. 11-19 on
the student Premier website for this chapter represent the lengths of 35 consecutive samples.
Plot these data on a run chart. Do the data appear to come from a stable system so that a
process capability study may be conducted appropriately?
ANS. The data on the syringes, shown in the graph below (further details can be found in
spreadsheet Prob11-19.xls) show a suspicious pattern that indicates that the process may be
unstable. Ten values, from samples 20 to 29 are alternating above and below the average,
indicating that some instability may be found in the system, if it is carefully investigated.
35
20. The Monterey Fiesta Mexican Restaurant is trying to determine whether sales of its popular
Pan Con Mucho Sabor breadsticks are correlated with the sales of margaritas. It has data on
sales of breadstick baskets and margaritas for 25 weeks, shown in the C11Data.xls file for
Prob. 11-20 on the student Premier website for this chapter. Use the correlation utility, along
with a scatter diagram, in Microsoft Excel to analyze these data. What do they indicate?
ANS. It can be seen on the correlation matrix (see Prob11-20.xls for details) that breadstick
orders are highly correlated with numbers of margaritas. There is a 0.968 correlation coefficient.
The scatter diagram also shows a consistent pattern, as well.
Correlation Matrix
Margarita
Week
Orders
Week
1
Orders
0.071102
1
Margaritas -0.06291 0.968071
36
Answers to Projects, Etc.

1.
This project is designed to help the student to find how Six Sigma is viewed by various
interested parties and reflected on their websites. Dont be surprised to see lack of
agreement on concepts and definitions on the three sites.
2.
This project will take significant time to develop, but can pay tremendous dividends in
learning how to use the DMAIC process and some useful quality tools for problem
solving and improvement. This would be a good term project for one or more students.
3.
This project is designed to help the student to find which Six Sigma or lean techniques
are used in businesses to improve their processes. Results will vary, but often are related
to the quality focus in the firm. Most companies now track some output measures. Some
Pareto charts and control charts may be found in many firms. Dont expect to see causean-effect diagrams, scatter diagrams, correlation and regression, or experimental design,
except in the most sophisticated quality-minded organizations (for example, those with a
Six Sigma program.)
4.
Results will vary. A flowchart for exams should be prepared, based on the steps that each
student takes.

5.
See the diagrams for a and b, below. The C-E diagram for c will be similar.
37
38
Answers to Case Questions

Case - LT, Inc.
1.
There are a number of steps that could be taken to improve the process. The Six Sigma
team involved in this study recommended, and then carried out, the following
improvement steps. They included:
Replaced the existing batch and queue system with a flow system. Customer orders
were processed one at a time as they arrived. Individuals in each step were trained to do
all activities in that step.
Automated the billing system and encouraged customers to submit orders via the
internet.
Trained order processing employees to take data correctly, verify data for accuracy and
completeness, and look for special terms.
Created a system in which data was only entered once and transmitted electronically,
with passwords to limit access.
Developed standard formats with built-in internal checks and fl ags to alert users about
incomplete data, incorrect part numbers and faulty descriptions.
Trained shipping personnel to communicate with the billing department in a timely
manner regarding partial shipments and returned goods.
Sent invoices only after receiving confirmation from shipping personnel that orders
were sent.
Printed the name and phone number of the customers contact person, due dates and
discounts on invoices to avoid runaround experienced by customers. Highlighting
payment due dates and available discounts minimized customer calls and shrunk
collection intervals.
Simplified the chaotic pricing structure and computerized it. Any deviations from the
posted prices were immediately communicated to the necessary parties.
Suggested blanket agreements be negotiated and invoices sent on a monthly basis via
the internet when possible. The free time that resulted would be used for training, to
pursue value adding activities and to perform further kaizens.
2.
Final actions development of metrics and next steps
39
The Six Sigma team developed a set of relevant performance measurements to track the
efficiency and effectiveness of the billing process. The metrics selected were:
Total number of billing documents processed divided by the number processed per day.
Lead time to process customer order.
Cycle time to prepare a customer bill.
Average amount in accounts receivable divided by average number of sales.
Percentage of accounts received past due.
Sum of the dollar amount in accounts receivable, multiplied by the number of days
since the sale, divided by the total number of days.
Percentage of erroneous bills.
Average time to correct an erroneous bill.
Number of billing complaints.
Average time to resolve billing complaints.
The team was fully aware of the powerful nature of working in cells and the success of
just-in-time in manufacturing. For the next level of improvement, the Six Sigma team
suggested that LT consolidate all activities into one cell manned by a team of personnel
from sales (covering order taking, order preparation, order pricing and data processing),
accounting (covering credit check, sales tax and billing) and shipping. The cells would be
located in the shipping area, and cell personnel would take full responsibility for all
activities from order taking through invoicing. Throughout the improvement project, the
team communicated with LT management and received managements support.
Case Janson Medical Clinic2
Analysis of the patient complaint data reveals that the three top complaint categories are
wait for doctor, ease of appointment, and ease of phoning. All three of these are
complicated to handle because of the nature of the business. It does appear that the
telephone process is overly complex. The lack of empowerment of receptionists appears
to be part of the problem. In addition there seems to be little telephone automation and no
easy way of handling routine calls. This might be improved by providing routine phone
options, such as ask about appointment date, ask about making an appointment, and
billing questions. See Pareto charts, cause-effect diagram, and flowcharts, below. Also
see spreadsheet C11JansonCase in the instructor materials for more details.
2
Appreciation is expressed to Lisa Ann Janson, one of Prof. Evans students, who performed the study from which
this case is adapted.
1.
40
The data, for the Pareto Diagram, in order, from highest complaint level to lowest are:
Wait for doctor
13
Ease of appointment
12
Ease of phoning
10
Convenient hours
Courtesy of receptionist
Friendliness of phone receptionist
Responsive care via phone
Comfortable waiting
Physician listens
Respectful physician
Explanation of condition/treatment
Confidence in physicians ability
Time to register
Respect of nurses
Wait for doctor

Ease of appointment
Ease of phoning
Convenient hours
Courtesy of receptionist
Friendliness of phone receptionist
Responsive care via phone
Comfortable waiting
Physician listens
Respectful physician
Explanation of
condition/treatment
Confidence in physicians ability
Time to register
Respect of nurses
13
12
10
7
7
5
5
4
3
2
2
1
1
0
41

2.
42
For the top three sources of patient dissatisfaction, the following C-E diagram shows
some possible causes. Note that the answering method is closely related to the difficulty
that patients experience in quickly and easily obtaining appointments. The C-E diagram,
shown below, for this process analysis can be found in cleaner format in spreadsheet
JansonCase.xls on the website for this chapter.
TELEPHONE ANSWERING METHOD
TELEPHONE EQUIPMENT
Lack of receptionist empowerment

Number of phone lines
Number of receptionists
Lack of telephone automation
Routine calls - same as emergencies
Inability to reach busy secretaries
Patient
Lack of refreshments in waiting area
Excessive waiting time
dissatisfactio
Magazines out of date or

Lengthy check-in process
unappealing
No information on length of wait

No TV in waiting area
WAITING
Below are flowcharts that address some of the problems being experienced with the
current call answering and check-in process at the clinic.
43
44
Proposed Patient Registration Process
Patient signs in
Receptionist
offers to validate
parking ticket
Copy of
insurance card
Receptionist finds
made, if
proper encounter
required
Signature
form with chart
Papers
Information
embedded in
input
chart form
into
computer
Chart w/
Answers to Case Questions
taken, if
encounter form
Receptionist determines if
needed
placed into in-
Readilunch Restaurant
any information is needed
basket
Receptionist
from patient based on
1.
What Carol has, here, is a mess. She must sort out the demand pattern, the effects of time
pages nurse
chart and
information
day, if any, and the reasons for customer dissatisfaction. Note that the analysis presented
Co-payment
here is not necessarily the only one for
this complex set of data and issues*.
collected, if
The average number of available tables is slightly less than 3.5. Although the scatter
Nurse gets chart
needed
If nothing
more
diagram
onisthe graph below (see C11Readi1.xls
on the instructor website for more details
needed, patient
takes a seat
and calls patient
45
and graphs) shows that the utilization of tables is the highest from 11:30 - 12:15, the results,
are somewhat difficult to sort out.
Average Vacant Seats by Time

8.00
7.00
Vacant Seats
6.00
5.00
Mean by time
4.00
Grand Mean
3.00
2.00
1.00
2:00
1:45
1:30
1:15
1:00
12:45
12:30
12:15
12:00
11:45
11:30
11:15
11:00
0.00
Tim e (Qtr. Hours)
Scatter diagrams (in C11Read1.xls, not shown here) for Mon. -Tues.
versus the one for Wed. - Fri. show some interesting differences. The
Tuesday and Friday patterns are similar to each other in that tables
appear to fill up earlier, and especially on Friday, seem to stay filled
longer. These two days appear to differ from other days of the week and
should be investigated further.
2.
Analysis of the checksheet data on Complaints by Time may be done by

looking at totals and constructing line graphs to try to discover patterns
(see graph below and spreadsheet C11Readi2.xls on the instructor
website). Nothing jumps out of these views of the data, although
complaints about the long table wait peaks at 12:30. The total
complaints remain high all the way from 12:30 until 2:00 p.m.
46
Complaints by Time
Num ber of Com plaints
100
80
Take-out probs.
60
Long table w ait

Inefficient service
40
Surly w aiters
20
0
11:00
Totals by time
11:30
12:00
12:30
1:00
1:30
2:00
Time (Half Hours)
3.
Pareto analyses of the complaints by category are much more revealing

than the line graph shown above. This chart shows that long table waits
and long lines are the two top causes. However these may both be
related to inefficient service (cause 3).
Complaints by Cause
Num ber of Com plaints
120
100
80
60
Series1
40
20
0
Long
table w ait
Long
lines
Ineff icient
service
Take-out
probs.
Surly
w aiters
Cause
Another Pareto diagram (in C11readi2.xls, not shown here) shows that there are
more complaints on Monday and fewest on Wednesday, although the
totals are not significantly different by day.

4.
47
Based on the Pareto analysis it appears that the long wait for tables is
the most critical problem. Carol should investigate expanding the
restaurant. If that is not feasible, she should at least consider the
number of tables and their arrangement. She might also investigate a
system for taking reservations during peak periods.
Since inefficient service (the third highest cause) may contribute to
slow turnover of tables, she should consider ways to improve methods,
including having wait people learn how to move customers along in a
friendly way, and having bussers trained to quickly and efficiently clear
tables.
To alleviate the problem of the long checkout line, Carol should also
consider either adding another cash register, or perhaps placing the
register at an exit door in such a way as to not conflict with customers
who are entering.
If you come up with an alternate interpretation that you like better

than this one, please forward it to Bill Lindsay (lindsay@nku.edu). If we
use it in the next edition, we will acknowledge your contribution.
Bonus Cases
Case - Implementing Six Sigma at GE-Fanuc
1.
Jack Welch borrowed the initial vision of applying the six sigma
probability concept to operations at GE from Larry Bossidy, the CEO of
Allied Signal Corporation, who had initially borrowed it from Motorola.
Welchs vision was to deploy the methods and approach down to the
operating levels where it could be applied to numerous processes. Thus,
he specified that employees be trained in its science and methodology
so that they would be able to improve efficiency and reduce variation in
internal operations. This was done, more than 100,000 people were
trained, and over $1 Billion has been saved since it was implemented.
2.
Direct labor savings occur when a position can be eliminated from a

department (for example, if a dryer operator is no longer needed
because a dryer is removed). Labor cost avoidance savings are really
indirect savings because only part of the workers duties are eliminated,
thus freeing him/her to be used for other productive duties. If there are
no other duties to be performed the worker must still be retained and
paid for remaining tasks, even though not fully productive.
3.
The calculation can be verified by taking 1/7703 X 1,000,000 = 129.8 or

130 dpmo.

4.
48
The improvement started with a feeling that the step of testing the
boards after running them through a high temperature oven was
unnecessary. However, to verify that feeling required application of
GEs systematic DMAIC problem-solving approach of defining,
measuring, analyzing, improving, and controlling the process. After
carefully defining the problem, Splauns team (measured) collected
information on costs, and test failures at each point; analyzed what the
impact of the testing was, improved the operation, and monitored
(controlled) it to ensure that there were no unintended effects on quality.
Future teams that hear of this successful project can be assured of
coming up with useful results on their projects if they carefully follow the
DMIAC steps, as Splauns team did.
Case - National Furniture

The process used by National Furniture for special orders appears to have numerous
points where orders can be misrouted or can go wrong. The C-E diagram and process
map, shown below, for this process analysis can be found in cleaner format in spreadsheet
NatFurnCase.xls on the instructors website for this chapter.
1.
Below is the process map for the current process.
2.
Below is the cause-effect diagram for why orders go wrong. Although it is not shown, or
discussed in the case, it seems obvious that things could go wrong in the manager
approval stage, or the front office for the store. The office manager or store manager
probably related the information to the case writer!
3.
The process map shows the steps in the process, while the cause-effect diagram shows
where things can and do go wrong. The two can be used to improve the process. For
example, the manager could check the form for completeness before giving the associate
approval to process the order. The office manager could provide a clear label on the bin
where the form is to be placed for processing, so that it is virtually mistakeproof. A
Re-FAX stamp could be placed on orders that were resubmitted after more information
was obtained. The office manager could help on follow-up for customer information by
having a logbook that lists follow-ups to be done by order number and due dates for order
delivery.
National
Furniture Store
C-E Diagram for Special Order Errors
SALES ASSOCIATE ORDER PREPARATION
Lack of complete information from customer

Incorrect FAX bin
Lack of additional customer info to office
No request for office to re-FAX order
Lost or misplaced order

Wrong merchandise ordered
Store not notified when order is due there
REGIONAL OFFICE
ORDER PROCESSING
49
50
National Furniture Store

Current Special Order Process
Sales associate
takes customer
information
Obtains managers
Sales associate
approval to process
contacted if error
order
occurs or info needed
Associate places
Regional office
processes order
order form in bin to be
Error corrected
FAXed by office
Office notifies store
manager
Office manager FAXes form

and files it in notebook
No
Inform store -
when order is due
more information
to arrive
needed
Order
accurat
e?
Order received at
regional office
and checked for
accuracy
Yes
51
Case - Welz Business Machines

For the Welz Business Machines case problem, a comprehensive analysis
is required. The data and Pareto diagram, shown below, for this process analysis can be
found in cleaner format in spreadsheet WelzCase.xls on the instructors website for this
chapter.
Parts a. & b. See the cause and effect and Pareto diagrams, below.
c. The cause and effect diagram and the Pareto analysis help to determine where the problem
of long telephone waiting may lie and point the way to some possible solutions. First, the
Pareto diagram shows that the two major categories that account for most of the customer
problems are no operator (operators short-staffed) and no receiver (receiving party not
present). These reasons account for 73.1% of the customer complaints about long waits. The
causes for these problems for phone service representatives seem to be that peak periods are
not well staffed and there is no lunch break coverage. For the "no receiver" category, the
sales representatives who are frequently out of the office seem to have no "back up" people
who stay to receive calls.
Possible solutions are to bring in extra phone representatives for peak morning and
afternoon periods, and either "stagger" lunch breaks or bring in extra representatives, then.
The sales representatives, and/or their supervisors, should attempt to develop cross-training,
so that everyone in the office is equally well-trained, sales representatives should be
scheduled to be "on call" in the office at certain times, and communications should be set up
in such a way that phone reps and sales reps work to coordinate customer service and
communications, perhaps even giving the phone reps pager access to reach sales reps in the
field. (See the welzcase.xls spreadsheet for further details.)
CAUSE & EFFECT DIAGRAM FOR WELZ
BUSINESS MACHINES CASE
REPRESENTATIVES
- ABSENT
STAFFING
9 a.m. peak
period
Sales Calls
Operator not at
desk
Trips to review
products
Lack of lunch-time
coverage
Away from desk
4 - 5 p.m.
peak period
Customer
complains
at length
Customer
starts personal
conversation
CUSTOMER BEHAVIOR
Long
Telephone
Waiting Time
Complex
problem requires a
long time to
understand
Callmisrouted
OPERATOR
KNOWLEDGE
52
WELZ BUSINESS MACHINES

TELEPHONE WAITING TIME REASONS
AND PERCENTAGES
Percent
No operator
No call rcvr.
No understnd.
Customer
Other
Cumulative %
51.34%
21.79%
18.21%
5.67%
2.99%
Frequency
51.34%
73.13%
91.34%
97.01%
100.00%
172
73
61
19
10
Total
335
Percent
Cumulative %
Pareto Chart for Welz Business Machines

60.00%
100.00%
90.00%
70.00%
40.00%
60.00%
30.00%
50.00%
40.00%
20.00%
30.00%
20.00%
10.00%
10.00%
Defect Categories
Other
Customer
No understnd.
0.00%
No call rcvr.
0.00%
Cum ulative Percent
80.00%
No operator
Percent Within Defect Category
50.00%
53

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CHAPTER 11

Six Sigma and Process Improvement

implementation. This chapter also extends the concepts of Chapter 10 on

To fully understand the concept of breakthrough, defined as the accomplishment of any

To learn that a defect, or nonconformance, is any mistake or error that is passed on to

Six Sigma and Process Improvement

To introduce the concept of lean production which refers to approaches initially

Six Sigma and Process Improvement

ANSWERS TO QUALITY IN PRACTICE KEY ISSUES

Applying Quality Improvement Tools to an Order Fulfillment Process

Six Sigma and Process Improvement

Alternatively, the packing process might be examined for improvements.

Six Sigma and Process Improvement

BONUS MATERIALS - QUALITY IN PRACTICE

The Deming Cycle of Plan-Do-Study-Act is certainly covered by the steps of Middletown

Six Sigma and Process Improvement

Six Sigma and Process Improvement

National Semiconductor produces highly complex integrated circuits that generally

Six Sigma and Process Improvement

Answers to Review Questions

Six Sigma and Process Improvement

Committed leadership from top management.

Six Sigma and Process Improvement

a) Elementary statistical tools (basic statistics, statistical thinking, hypothesis testing,

Six Sigma and Process Improvement

Six Sigma and Process Improvement

The cause-and-effect diagram was introduced in Japan by Kaoru Ishikawa. It is a simple,

Six Sigma and Process Improvement

Obtain management commitment

Six Sigma and Process Improvement

Six Sigma and Process Improvement

Resistance to change is to be expected in introduction of a new approach, such as Six

Six Sigma and Process Improvement

The appropriate tools to attack the problems would be:

Obtain administrative commitment

Ideally, the skills of technical experts (Green or Black Belts) will

Six Sigma and Process Improvement

Time, dates, internet, phone

Six Sigma and Process Improvement

Phantom" capacity in service operations is the equivalent of the hidden factory in

Six Sigma and Process Improvement

During one month, 35 preflight inspections were performed on an airplane at Southstar

Six Sigma and Process Improvement

Broadwork Electronics manufactures 500,000 circuit boards per month. A random

Outsource Microprocessor Corporation (OMC) sells 1500 specialized computer

Six Sigma and Process Improvement

Monthly Six Sigma Results

1500 X $1200.00 =1800000

1500 X $ 613.12 = 919682

Six Sigma and Process Improvement

Six Sigma and Process Improvement

Placewrite, Inc., an independent outplacement service, helps unemployed executives find

Six Sigma and Process Improvement

Training on how to handle errors in copy

A catalog order-filling process at Cats Catalog Company for personalized printed

Six Sigma and Process Improvement

Six Sigma and Process Improvement

Six Sigma and Process Improvement

Six Sigma and Process Improvement

Six Sigma and Process Improvement

Six Sigma and Process Improvement

Six Sigma and Process Improvement

ACE PRINTING COMPANY

Six Sigma and Process Improvement