Quality Management Chapter 1: Lean and Six Sigma Origins Lean tools and techniques are used to standardize

work and remove waste and non-value-added activities. Lean thinking is a mindset best described as a relentless war on waste. Elimination of seven sources of waste: overproduction idle time waste (waiting time / queue time) delivery waste (Transport / conveyance waste) waste in the work itself inventory waste wasted operator motions waste of rejected parts

Lean benefits: reduced cycle times lower handling costs faster lead times decreased floor used space lower inventory with greater inventory turns improved customer responsiveness and service improved quality higher profit margins

5 Key steps: study the process by directly observing the work activities, their connections and flow. study the process to systematically eliminate wasteful activities, connection and flow. establish agreement among those affected by the process in terms of what the process needs to accomplish and how the process will accomplish it. attack and solve problems using a systematic method integrate the approach throughout the organization

Six Sigma tools and techniques are used to attack the variation present in processes. It is a structured, data driven methodology for eliminating waste from processes, products and other business activities while having a positive impact on financial performance. Perceptions: Perceived to be a business system that improves the bottom line. Perceived as fitting naturally into the business systems of most companies. Perceived as being more easily and more successfully launched than traditional TQM programs TQM perceived as technical system owned by technical specialists. Benefits of Six Sigma: Enhanced ability to provide value to customer Enhanced understanding of key business processes Reduction of waste Improved profit performance

Methodology focuses on: Customer knowledge Critical to Quality information Core processes Key businesses processes that deliver value directly to the customer Accurate performance measures of both

Methodology based on: Statistical Process Control Techniques Data Analysis Methods Project Management Techniques Systematic Training of Participants

Data-driven and Profit-focused 3.4 defects per million (99.9997% quality) Six Sigma projects are selected based on their ability to contribute to and enhance an organizations financial performance. They seek out sources of waste (overtime, warranty claims, customer issues). Five phases: Define Measure Analyze Improve Control =DMAIC

Successful adopt Six Sigma: Visible management commitment Visible management involvement Clear definition of customer requirements Understanding of key business processes Sound measures of performance Discipline Rewards

Point to consider: Focuses on defects and results Fix existing problems, design SS into processes, products and services

Lead: to guide on a way. To direct on a course or in a direction. To direct operations/activity/performance Manage: To direct, control or handle. To administer or regulate. Improved Quality = Decreased Costs = Fewer Mistakes = Better use of resources = Improved Productivity = Capture Larger Market = Stay in Business = More Jobs The aim of leadership should be to improve the performance of man and machine, to improve quality, to increase output and simultaneously to bring pride of workmanship to people. Put in a negative way, the aim of leadership is not merely to find and record failures of men, but to remove the causes of failure: to help people to do a better job with less effort. Leader: innovate long range perspective asks what and why has eye on the horizon challenges status quuo

Manager: administer short range view asks how and when has eye on bottom line accept status quo

Leader earns respect, is a coach and encouraging, guides by example, inspires, makes work fun, rewards success and treat you as a valued colleague. Leaders look into the GAP what is and what should be. Manager demands respect, is a taskmaster, is critical, rules by fear, commands, makes work a burden and punishes mistakes.

Four styles of leadership: directing

Taking responsibility and making decisions on your own. Giving information about what to do, how to do it and why it should be done. Giving people recognition for following your directions. consultative

Involving people in your responsibilities and making decisions based on their input. Seeking information for analyzing and solving your problems. Giving people recognition for making contributions to problem-solving. participative

Supporting people with their responsibilities by helping them think through problems. Asking questions to help others analyze and solve their problems. Giving people recognition for seeking or accepting support. delegating

Giving people responsibility and letting them make decisions on their own. Maintaining limited communication through briefings and updates. Giving people recognition for accepting responsibilities. Converse of Four styles: dominating over-involving over-accommodating abdicating

Never propose anything to another person unless you are prepared to take full responsibility for making it happen. Control the presentation. Praise loudly and Blame softly. Strategic Planning is the process of involving everyone in matching the vision, mission and core values of an organization with the current situation to focus tactical activities now and in the future. Strategic Plans set the direction and pace for the entire organization. Strategic Plans describe how an organization plans to grow. A strategic plan essentially describes: how a business is going to compete what it goals will be what policies will be needed to carry out those goals

Strategic Plans allow leadership to put down in writing the direction the organization is heading and how it plans to get there.

Vision: The organizations strategic direction for the foreseeable future. Mission: The translation of the organizations vision into strategic actions. Critical Success Factors: The three to ten things, that absolutely must be done well if the company is going to thrive. CSFs answer the question: Where should the organization focus its resources in order to provide value to their customers? Goals: What must be achieved in order to support the CSFs. Objectives: The specific and quantitative actions that must be taken in order to support the accomplishment of the goals and ultimately the mission and vision. Indicators: The performance measures that indicate whether or not the organization is moving toward meeting their objectives, goals, mission and vision Contingency plans: The plans in place that enable an organization to remain flexible in a complex, competitive environment. Successful long-term strategic planning answers some basic questions: What business are we really in? What are our principal strengths and weaknesses for competing in this business, compared to what it takes to compete successfully? What are our critical success factors? What do we wish to become in the future?

How are strategic plans created: Preparation: Define the organizations core business (what business are we really in?). Gather internal and external information: strengths and weaknesses, information about customers, economic environment, competition, government and technology. Implementation: As the plan is implemented, performance must be measured. You should analyze the gap between what IS and what WAS planned (positive or negative). You must determine the root cause of the gap. Finally, you should take corrective action to eliminate the root cause or narrow the gap (negative), or enhance the gap (positive). Strategic Goal Deployment is a system for translating the organizations vision and objectives into actionable and measurable strategies throughout the company. Translate what needs to be accomplished into how it will be accomplished.

If good strategic planning is not practiced: goals are not known throughout the company goals change too often goals are not achieved goals are achieved without real improvement progress is not sustained organizational frustration occurs short-term achievement at the expense of long-term health

Customer focus From a customers standpoint, neither quality, cost nor schedule comes first. When customers evaluate the products and services they receive, they make trade-offs between all three key factors in order to maximize value. The challenge that suppliers face is to provide their customers with the maximum value, which often is a balancing act between quality, cost and schedule. Keeping a customer focus is about determining and translating the voice of the customer into a product or service. Quality is a customer determination which is based on the customers actual experience with the product or service, measured against his or her requirements - stated or unstated, conscious or merely sensed, technically operational or entirely subjective - always representing a moving target in a competitive market. (Feigenbaum) Creating a customer focused organization has at is core the ability to sustain an unwavering focus on the customer, which is not a task for a single department within the organization. Involve everyone! Lean six sigma organizations achieve a competitive advantage by carefully and constantly analyzing customers needs and by organizing and operating to meet these needs the first time and every time. How will we know what the customer wants? ASK THEM. You should capture the voice of the customer and use it to drive changes in the way you do business. This is called Quality Function Deployment. Steps to perform a QFD: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Determine the voice of the customer Have the customer rank the relative importance of his or her want Have the customer evaluate your company against competitors Determine how the wants will be met Determine the direction of improvement for the technical requirements Determine the operational goals for the technical requirements Determine the relationship between each of the customer wants and the technical requirements Determine the correlation between the technical requirements Compare the technical performance with that of competitors Determine the column weights Add regulatory and/or internal requirements Analyze the matrix

Process Improvement Teams Also called quality circles, these teams meet to solve quality problems related to their own work. The quality circle concept has been adapted and modified over time to become the process improvement teams used in lean Six Sigma organizations. Membership in a process improvement team is often voluntary Participants receive training in the key process improvement tools, determine appropriate problems to work on, develop solutions and establish new procedures to lock in quality improvements. Lean Six Sigma organizations tap into the knowledge and skills of their employees to improve company competitiveness. Change is a cycle that requires momentum and clear direction from leadership. People can have a variety of attitudes about change. (Wish, Want, Will, Will no matter what). To make a change, you should know: The desired end result What actions you will take The time frame Motivation of change How will you know what is changed? Indicators of change

Lean Six Sigma teams attack costs, productivity and quality issues. Teams consisting of people who have knowledge of the process or problem under study are given the task of investigating, analyzing and finding a solution to the problem situation within a specified time frame. Lean Six Sigma teams are composed of those closest to the problem, representatives of those affected by the change, as well as a few individuals from middle management with the power to effect change. Team members must possess a variety of skills, including problem-solving skills, planning skills, facilitation and communication skills, and feedback and conflict management skills. Team dynamics are personal identity (membership, influence, control, trust), relationships between members and identification with the organization. Stages in team growth: Forming Storming Performing Adjourning

Quality costs A quality cost is considered to be any cost that a company incurs in order to ensure that the quality of the product or service is perfect. Quality costs are the portion of the operating costs brought about by providing a product or service that does not conform to performance standards. Quality costs are also the costs associated with the prevention of poor quality. Quality costs increase as the faulty product or service reaches the customer. The four absolutes of quality management set expectations for a continuous improvement process to meet: conformance to requirements prevention of defects zero defects costs of quality

Types of Quality Costs: prevention costs

Those that occur when a company is performing activities designed to prevent poor quality in products or services. appraisal costs

Those that occur when measuring, evaluating or auditing products or services, to make sure that they conform to specifications or requirements. failure costs

Those that occur when the completed product or service does not conform to customer requirements. Internal failure costs are associated with product non-conformities or service failures found BEFORE the product is shipped or the service is provided to the customer. External failure costs occur when a nonconforming product or service reaches the customer. intangible costs

The hidden costs associated with providing a nonconforming product or service to a customer. They involve the companys image. Quality Cost Management System: by quantifying quality costs, all individuals producing a product or service understand what it will cost if quality suffers. It should be designed to keep track of the different types of quality costs so that they can be eliminated through root cause analysis.

Process Performance Measures Organizations measure what they value: What do organizations value? What does the organization measure? What measures does the organization use to make decisions and take action?

Measures create a link between philosophy and action. You ask yourself the following questions: How do we know what is important? How do we do what we do? How will we do what we said we would do? How do we know we did what we said we would do? What role does information play in creating an effective organization? How does the analysis of information support customer satisfaction? How does the analysis of information support a healthy bottom line?

Information enables you to make appropriate decisions. Inter-departmental relationships can be integrated through the use of information. Integrating customer information, processes and decision-making: use data collection and analysis to define the customer requirements within the identified market segments. Translate requirements into major design parameters to develop, produce, deliver and service the product that meets the customer requirements. Complement these primary processes with support activities such as finance, accounting, personnel, etcetera. Design the information requirements necessary to manage each process and to integrate all processes Measures of Performance answer the question: how do we know? Performance measures enable an organization to answer the following questions: How well is something performing its intended purpose? Is the organization able to measure the impact of the changes being made? How does the organization know that it has allocated its assets correctly?

An effective measurement system enables an organization to: determine the activities occurring within the company support the achievement of company goals and objectives determine whether or not those goals and objectives move the organization closer to the stated vision see where the organization is and where it is going

An effective measurement system links actions and plans to the goals and objectives.

Result measures: results are the objectives the organization wants to achieve results are what customers hope to obtain by doing business with the organization

Process measures: process measures monitor operational activities

Balanced scorecard Using measurements from four areas integrates the key business measures into a few manageable indicators of performance so that management is able to quickly access the short and long term health of the organization from several points of view. Four areas of focus: customer focus internal processes learning and growth financial analysis

When developing measures consider: what do we need to know? what are we measuring? how does what the organization needs to know compare with what it is currently measuring? how is this information being captured? is the information currently being captured useful and actually being used? are these measures being captured over time? do the identified, selected, and measured factors reflect what the customers need, require and expect? can these selected factors be acted upon within the organization? can the impact of the changes made be measured? have the organizations assets been allocated appropriately

Measurement systems allow effective organizations to: determine that a gap exists between desired and actual performance determine the root cause of the gap determine the necessary corrective action to eliminate the root cause of the gap determine whether the corrective actions eliminated the root cause and closed the gap between the actual and desired performance

Project Management Proposals: A project proposal should contain the scope, objectives and desired results of the project. It creates a general understanding of what is needed. In a proposal, the technical objectives are established. The basic areas of performance responsibility are assigned and accepted, tentative schedules and budgets are established, essential required tasks are outlined and a project manager is selected. Be sure to involve the right people in the creation of the project proposal. Project proposals go through many iterations. If accepted, the project proposal becomes the framework or outline of the eventual project plan. Plans: The purpose of a good project plan is to facilitate later accomplishment. Planning is tortuous, iterative and needed. Planning has three objectives: meet budget, finish on schedule, meet specifications that satisfy client. A plan includes the mission and the deliverables (scope and objectives). What will the final outcome be? What are the DESIRED RESULTS associated with the project? What are the specific goals and objectives supporting the mission? (Who, what, where, when, why, how). Plans include: Specifics of who is required to do what: reporting requirements, customer-supplied resources, cancellation procedures, agreements, specifications, project review, delivery schedules. Evaluation measures: performance, effectiveness, cost. Resources: What is needed to support each aspect of the plan (capital, expense, cost monitoring, cost control, special resources) Personnel: Who is needed to support each aspect of the plan? (special skills, tpes of training, legal aspects, security clearances) Contingency plans for potential problems: What could go wrong and how will you deal with it? Schedules: What time is needed to support each aspect of the plan? Schedules provide a vehicle for proper communication, an expected completion date, information about critical activities that might affect project completion, information about activities that can be adjusted as time and budget needs arise and information on start dates for activities. The Gantt Chart is a record of the events and the progress that has taken place: what work has been done? A Gantt Chart forces a person to have a plan and to keep track of happenings. It promotes the identification and assignment of clear-cut tasks and enables users to visualize the passing of time.

DMAIC Sig Sigma projects have five phases: Define, Measure, Analyze, Improve and Control: DMAIC Define: identify the problem/project define the requirements establish the goals to be achieved

Measure: Gather information about the current process Define and measure key process steps and inputs Refine the problem statement and goals

Analyze: Identify potential root causes of the problem Validate the cause and effect relationship Identify the vital few root causes

Improve Control Evaluate and monitor improvements Make adjustments as needed Establish standard procedures Implement solution to address root causes of the problem Test solutions Measure results

Tools of Quality: Flow chart, control chart, check sheet, histogram, pareto diagram, cause and effect diagram, scatter diagram. Tools used within DMAIC process: process maps, cause and effect diagrams, failure models, measurement system analysis, process capability studies, multivariate studies, design of experiments, process control plans