Chapter 9.

Six-Sigma Quality

Outline:
Total Quality Management (TQM) Defined
Quality Specifications and Costs
Six Sigma Quality and Tools
External Benchmarking
ISO 9000
Service Quality Measurement

1
TQM Defined

Total quality management is defined as

managing the entire organization so that it
excels on all dimensions of products and
services that are important to the customer

Two fundamental operational goals:

1. Careful design of product or service
2. Ensure consistent production of product or
service

2
Philosophical Leaders of the Quality
Movement
Philip Crosby
W. Edwards Deming
Joseph M. Juran

Each has slightly different definitions of what quality is

and how to achieve it (see Exhibit 8.1), but they all had
the same general message:

To achieve outstanding quality requires:

quality leadership from senior management,
a customer focus,
total involvement of the workforce, and
continuous improvement based upon rigorous analysis of
processes.

3
Quality Specifications
Design quality - Inherent value of the product in the
marketplace
Conformance quality - Degree to which the product or
service design specifications are met
Products can have high design quality but low
conformance quality, and vice versa
Quality at the source
Related to conformance quality
Means the person who does the work takes responsibility for
making sure output meets specifications
Both design quality and conformance quality should
provide products that meet customer objectives
This is often termed fitness for use
Entails identifying the dimensions of product (or service)
that the customer wants i.e., the voice of the customer
Developing a quality control program

4
Dimensions of Quality
Performance
Primary product or service characteristic
Features
Added touches, bells and whistles, secondary characteristics
Reliability
Consistency of performance over time, probability of failing
Durability
Useful life
Serviceability
Ease of repair
Response
Characteristics of the human-to-human interface (speed,
courtesy, competence)
Aesthetics
Sensory characteristics (sound, feel, look, and so on)
Perceived quality (reputation)
Past performance and other intangibles (perceived quality)

5
Dimensions of Quality Examples

6
 Costs of Quality (COQ)

Costs of inspection, testing, and

Appraisal Costs other tasks to ensure that the
product or process is
acceptable

External Failure Costs of

Quality Prevention Costs
Costs

Costs for defects that sum of all costs to prevent defects

pass through the
system
Internal Failure
Costs
Costs for defects incurred
within the system: scrap,
rework, repair

7
Costs of Quality

No matter what the quality is, it will cost $...

So, the assumptions of cost of quality
Failures are caused
Prevention is cheaper
Performance can be measured

Discuss the "internal" and "external failure

costs" for a high end coffee house (e.g.,
Starbucks)

8
 Six-Sigma Quality
Six-sigma is a philosophy
which reflects the goal of
eliminating defects in the
products.
Seeks to reduce variation in the
processes that lead to product
defects
The name, six sigma refers to
the variation that exists within
plus or minus six standard
deviations of the process outputs
Statistically speaking a process
in six-sigma control limits will
only produce 2 defects per
billion units.

9
Six Sigma Quality: DMAIC Cycle
Define, Measure, Analyze, Improve, and Control DMAIC
Developed by General Electric as a means of focusing
effort on quality using a methodological approach
Firms striving to achieve six-sigma generally adopt
DMAIC cycle.
DMAIC are the typical steps employed in continuous
improvement (a.k.a. Kaizen) concept which seeks to
continually improve all aspects of production (parts,
machines, labor, processes, etc)
Overall focus of the methodology is to understand and
achieve what the customer wants
A 6-sigma program seeks to reduce the variation in the
processes that lead to these defects

1
Six Sigma Quality: DMAIC Cycle
Cases/examples from classmates

1. Define (D) Customers and their priorities

2. Measure (M) Process and its performance

3. Analyze (A) Causes of defects

4. Improve (I) Remove causes of defects

5. Control (C) Maintain quality

1
Example to illustrate the process

We are the maker of this cereal. Consumer

Reports has just published an article that
shows that we frequently have less than 15
ounces of cereal in a box.
What should we do?

Step 1: Define
What is the critical-to-quality characteristic?
The CTQ (critical-to-quality) characteristic in
this case is the weight of the cereal in the box.

1
Step 2 - Measure

How would we measure to evaluate the extent of

the problem?
What are acceptable limits on this measure?
Lets assume that the government says that we
must be within 5 percent of the weight advertised
on the box.
Upper Tolerance Limit = 16 + .05(16) = 16.8 ounces
Lower Tolerance Limit = 16 .05(16) = 15.2 ounces
We go out and randomly buy 1,000 boxes of cereal
and find that they weight an average of 15.875
ounces with a standard deviation of 0.529 ounces.
What percentage of boxes are outside the tolerance
limits?

1
 Process
Lower Tolerance Mean = 15.875 Upper Tolerance
= 15.2 Std. Dev. = .529 = 16.8

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

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

NORMSDIST(Z) = NORMSDIST(-1.276) = 0.100978

Approximately, 10 percent of the boxes have less than 15.2

Ounces of cereal in them!

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

Decrease Variation
Line vibration impacts scale
Random delays in nozzle open/close
Center the Process
Increase Specifications

1
Step 4 Improve How good is good
enough?
Motorolas Six Sigma
Calibrate the equipment more frequently,
upgrade process
6-sigma minimum from process center to
nearest spec
12

6
12

3 2 1 0 1 2 3

3 2 1 0 1 2 3

1
Step 5 Control

Statistical Process Control (SPC)

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

1
Analytical Tools for Six Sigma and
Continuous Improvement: Flowchart

1
 Analytical Tools for Six Sigma and Continuous
Improvement: Runchart

Can
Canbebeused
usedtotoidentify
identifywhen
when
equipment
equipmentor orprocesses
processesare
arenot
not
behaving
behavingaccording
accordingtoto
Diameter

0.58 specifications
specifications
0.56
0.54
0.52
0.5
0.48
0.46
0.44
1 2 3 4 5 6 7 8 9 10 11 12
MEASURE Time (Hours)
1
Analytical Tools for Six Sigma and
Continuous Improvement:
Checksheet
Can be used to keep track of defects or used to
make sure people collect data in a correct manner
(MEASURE)
MEASURE
Billing Errors
Monday

Wrong Account

Wrong Amount

A/R Errors

Wrong Account

Wrong Amount

2
Analytical Tools for Six Sigma and Continuous
Improvement: Pareto Analysis
Can be used to find when 80% of the problems
may be attributed to 20% of the causes
(MEASURE)
MEASURE
80%
Frequency

Design Assy. Purch. Training Other

Instruct.

2
 Analytical Tools for Six Sigma and
Continuous Improvement: Histogram
Can be used to identify the
frequency of quality defect
occurrence and display quality
performance (MEASURE)
Number of Lots

0 1 2 3 4 Defects
Data Ranges in lot

2
Analytical Tools for Six Sigma and
Continuous Improvement: Cause & Effect
Diagram

2
Analytical Tools for Six Sigma and Continuous
Improvement: Opportunity Flow Diagram

Value added activities

(Vertical steps) vs.
Non-value added activities
(horizontal steps)

IMPROVE
2
 Analytical Tools for Six Sigma and
Continuous Improvement: Control Charts

Can be used to monitor

ongoing production
process quality and
quality conformance to
stated standards of
quality

2
Other Six Sigma Tools
Failure Mode and Effect Analysis (FMEA) is a structured
approach to identify, estimate, prioritize, and evaluate
risk of possible failures at each stage in the process

Design of Experiments (DOE) a statistical test to

determine cause-and-effect relationships between
process variables and output
a.k.a. multivariate analysis (testing)
i.e., testing multiple independent variables (Xs) with
respect to a dependent variable (Y)

2
The Shingo System: Fail-Safe Design

Shingos argument:
SQC methods do not prevent defects
Defects arise when people make errors
Defects can be prevented by providing
workers with feedback on errors

Poka-Yoke includes:
1. Checklists
2. Special tooling that
prevents workers from making errors
Gives rapid feedback of abnormalities to worker in
time to correct them

2
The Shingo System:
Example
Exhibit 8.10
Poka-Yoke Example
(Placing labels on parts
coming down a conveyor)

2
 ISO 9000
Series of standards agreed upon by the International
Organization for Standardization (ISO)
Adopted in 1987
More than 100 countries
A prerequisite for global competition?
ISO 9000 directs you to "document what you do and
then do as you documented."
1. First party: A firm audits itself against ISO 9000 standards
2. Second party: A customer audits its supplier
3. Third party: A "qualified" national or international standards or
certifying agency serves as auditor
Is it important for small or medium sized businesses to
have ISO 9000 certification?

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External Benchmarking Steps

1. Identify those processes needing improvement

2. Identify a firm that is the world leader in
performing the process
Obviously not a direct competitor
Possibly from another industry
3. Contact the managers of that company and
make a personal visit to interview managers
and workers
4. Analyze data
Compare the processes
Compare the results (performance of the processes)