Chapter 5 - Six Sigma Quality- updated by hcj


									Six-Sigma Quality

 u Six Sigma Quality and Tools
 u ISO 9000
 u Service Quality Measurement

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

Six Sigma Quality: DMAIC Cycle

u Define, Measure, Analyze, Improve, and Control àDMAIC
u Developed by General Electric as a means of focusing effort on
  quality using a methodological approach
u Firms striving to achieve six-sigma generally adopt DMAIC
u 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)
u Overall focus of the methodology is to understand and achieve
  what the customer wants
u A 6-sigma program seeks to reduce the variation in the processes
  that lead to these defects

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

Example to illustrate the process…

u 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.
u What should we do?

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

Step 2 - Measure

u How would we measure to evaluate the extent of the
u What are acceptable limits on this measure?
u Let’s assume that the government says that we must
  be within ± 5 percent of the weight advertised on the
u Upper Tolerance Limit = 16 + .05(16) = 16.8 ounces
u Lower Tolerance Limit = 16 – .05(16) = 15.2 ounces
u 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.
u What percentage of boxes are outside the tolerance

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!

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

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

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

u Calibrate the equipment more frequently, upgrade
u 6-sigma minimum from process center to nearest spec

Step 5 – Control

u Statistical Process Control (SPC)
u Use data from the actual process
u Estimate distributions
u Look at capability - is good quality possible
u Statistically monitor the process over time

Analytical Tools for Six Sigma and Continuous
Improvement: Flowchart

     Analytical Tools for Six Sigma and Continuous
     Improvement: Runchart

                  Can be used to identify when
                  Can be used to identify when
                  equipment or processes are
                  equipment or processes are
                  not behaving according to
                  not behaving according to

           0.58   specifications
        1   2           3   4    5   6   7       8   9   10   11   12
    MEASURE                     Time (Hours)
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)

         Billing Errors

             Wrong Account

             Wrong Amount

         A/R Errors

             Wrong Account

             Wrong Amount

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)


                 Design    Assy.      Purch.   Training Other

                 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

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

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

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

       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

Other Six Sigma Tools

u 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

u Design of Experiments (DOE) a statistical test to determine cause
  -and-effect relationships between process variables and output
    u   a.k.a. multivariate analysis (testing)
    u   i.e., testing multiple independent variables (X’s) with respect to a
        dependent variable (Y)

The Shingo System: Fail-Safe Design

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

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

The Shingo System:

 Exhibit 8.10
 Poka-Yoke Example
 (Placing labels on parts
 coming down a conveyor)

  ISO 9000
u Series of standards agreed upon by the International
  Organization for Standardization (ISO)
u Adopted in 1987
u More than 100 countries
u A prerequisite for global competition?
u 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
u Is it important for small or medium sized businesses to have ISO
  9000 certification?

External Benchmarking Steps

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


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