Ch 12 - Six Sigma Quality

Question 1

So, what is Six Sigma?

Answer 1

It’s best to first explain what it is not. It is not a secret society, a slogan, or a cliché. Six Sigma is a highly disciplined process that helps us focus on developing and delivering near-perfect products and services.

Question 2

Why “Sigma”?

Answer 2

The word is a statistical term that measures how far a given process deviates from perfection. The central idea behind Six Sigma is that if you can measure how many “defects” you have in a process, you can systematically figure out how to eliminate them and get as close to “zero defects” as possible. To achieve Six Sigma Quality, a process must produce no more than 3.4 defects per million opportunities. An “opportunity” is defined as a chance for nonconformance, or not meeting the required specifications. This means we need to be nearly flawless in executing our key processes.

Question 3

What is Total Control Management (TCM)?

Answer 3

Total quality management(TQM) may be defined as managing the entire organization so it excels in all dimensions of products and services important to the customer. It has two fundamental operational goals, namely

1. Careful design of the product or service.
2. Ensuring that the organization’s systems can consistently produce the design.

These two goals can only be achieved if the entire organization is oriented toward them— hence, the term total quality management.

Question 4

Which common messages had the quality gurus?

Answer 4

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.

Question 5

some fundamental concepts that underlie any quality effort?

Answer 5

• Quality Specifications and Quality Costs: Fundamental to any quality program is the determination of quality specifications and the costs of achieving (or not achieving) those specifications. The quality specifications of a product or service derive from decisions and actions made relative to the quality of its design and the quality of its conformance to that design.
• Developing Quality Specifications: Design quality refers to the inherent value of the product in the marketplace and is thus a strategic decision for the firm. The dimensions of quality refer to features of the product or service that relate directly to design issues.

Question 6

Which are the dimensions of quality (“product, laster printer, or service, checking account at a bank)? - Criteria by which quality is measured.

Answer 6

• Performance: Primary product or service characteristics. Eg. Pages per minute Print density or time to process customer requests.
• Features: Added touches, bells and whistles, secondary characteristics. Eg. Multiple paper trays/color capability or Automatic bill paying
• Reliability/durability: Consistency of performance over time, probability of failing, useful life. Eg. Mean time between failures/estimated time to obsolescence/expected life of major components or
  Variability of time to process requests Keeping pace with industry trends
• Serviceability: Ease of repair. Availability of authorized repair centers/number of copies per print cartridge/modular design or Online reports Ease of getting updated information
• Aesthetics Sensory characteristics (sound, feel, look, and so on). Eg. Control button layout/case style/courtesy of dealer or Appearance of bank lobby/courtesy of teller
• Perceived quality: Past performance and reputation. This may be very important to the long-run success of the product or service. Eg. Brand name recognition/rating in Consumer Reports or Endorsed by community leaders

Question 7

What is conformance quality?

Answer 7

Conformance quality refers to the degree to which the product or service design specifications are met. The activities involved in achieving conformance are of a tactical, day-to-day nature. It should be evident that a product or service can have high design quality but low conformance quality, and vice versa.

Question 8

What is quality at the source?

Answer 8

Quality at the source is frequently discussed in the context of conformance quality. This means that the person who does the work takes responsibility for making sure that his or her output meets specifications. Where a product is involved, achieving the quality specifications is typically the responsibility of manufacturing management; in a service firm, it is usually the responsibility of the location operations manager. One is a laser printer that meets the pages-per-minute and print density standards; the second is a checking account transaction in a bank.

Question 9

Although few can quarrel with the notion of prevention, management often needs hard numbers to determine how much prevention activities will cost. cost of quality (COQ) analyses are common in industry and constitute one of the primary functions of QC departments, what is COQ?

Answer 9

Expenditures related to achieving product or service quality, such as the costs of prevention, appraisal, internal failure, and external failure.

There are a number of definitions and interpretations of the term cost of quality. From the purist’s point of view, it means all of the costs attributable to the production of quality that is not 100 percent perfect. A less stringent definition considers only those costs that are the difference between what can be expected from excellent performance and the current costs that exist. How significant is the cost of quality? It has been estimated at between 15 and 20 percent of every sales dollar—the cost of reworking, scrapping, repeated service, inspections, tests, warranties, and other quality-related items.

Question 10

The costs of quality are generally classified into four types:

Answer 10

1. Appraisal costs. Costs of the inspection, testing, and other tasks to ensure that the product or process is acceptable.
2. Prevention costs. The sum of all the costs to prevent defects, such as the costs to identify the cause of the defect, to implement corrective action to eliminate the cause, to train personnel, to redesign the product or system, and to purchase new equipment or make modifications.
3. Internal failure costs. Costs for defects incurred within the system: scrap, rework, repair.
4. External failure costs. Costs for defects that pass through the system: customer warranty replacements, loss of customers or goodwill, handling complaints, and product repair.

Question 11

What is a defect according to the six sigma?

Answer 11

A defect is simply any component that does not fall within the customer’s specification limits. Each step or activity in a company represents an opportunity for defects to occur, and Six Sigma programs seek to reduce the variation in the processes that lead to these defects. Indeed, Six Sigma advocates see variation as the enemy of quality, and much of the theory underlying Six Sigma is devoted to dealing with this problem.

Question 12

What is the six sigma?

Answer 12

A statistical term to describe the quality goal of no more than 3.4 defects out of every million units. Also refers to a quality improvement philosophy and program.

Question 13

What is one benefit of the six sigma thinking?

Answer 13

One of the benefits of Six Sigma thinking is that it allows managers to readily describe the performance of a process in terms of its variability and to compare different processes using a common metric (DPMO)

Question 14

What is the metric DPMO and how is it calculated?

Answer 14

This metric is defects per million opportunities (DPMO). This calculation requires three pieces of data:
1. Unit. The item produced or being serviced.
2. Defect. Any item or event that does not meet the customer’s requirements.
3. Opportunity. A chance for a defect to occur. A straightforward calculation is made using the following formula:
DPMO=[Numberofdefects/(Numberofopportunitiesforerrorperunit × Numberofunits)]
× 1, 000, 000

Question 15

An example of DPMO calculation?

Answer 15

The customers of a mortgage bank expect to have their mortgage applications processed within 10 days of filing. This would be called a critical customer requirement, or CCR, in Six Sigma terms.

Suppose all defects are counted (loans in a monthly sample taking more than 10 days to process), and it is determined that there are 150 loans in the 1,000 applications processed last month that don’t meet this customer requirement. Thus, the DPMO = 150/1,000 × 1,000,000, or 150,000 loans out of every million processed that fail to meet a CCR.

Put differently, it means that only 850,000 loans out of a million are approved within time expectations. Statistically, 15 percent of the loans are defective and 85 percent are correct. This is a case where all the loans processed in less than 10 days meet our criteria.

Often, there are upper and lower customer requirements rather than just a single upper requirement as we have here.

Question 16

While Six Sigma’s methods include many of the statistical tools that were employed in other quality movements, here they are used in a systematic project-oriented fashion through the define, measure, analyze, improve, and control (DMAIC) cycles. The overarching focus of the methodology is understanding and achieving what the customer wants, because that is seen as key to profitability of a production process. In fact, to get across this point, some use the DMAIC as an acronym for “Dumb Managers Always Ignore Customers.” What is the standard approach to Six Sigma projects is the following DMAIC methodology?

Answer 16

1. Define (D)
   ∙ Identify customers and their priorities.
   ∙ Identify a project suitable for Six Sigma efforts based on business objectives as well as customer needs and feedback.
   ∙ Identify CTQs (critical-to-quality characteristics) that the customer believes have the most impact on quality.
2. Measure (M)
   ∙ Determine how to measure the process and how it is performing.
   ∙ Identify the key internal processes that influence CTQs and measure the defects currently generated relative to those processes.
3. Analyze (A)
   ∙ Determine the most likely causes of defects.
   ∙ Understand why defects are generated by identifying the key variables most likely to create process variation.
4. Improve (I)
   ∙ Identify means to remove the causes of defects.
   ∙ Confirm the key variables and quantify their effects on the CTQs.
   ∙ Identify the maximum acceptance ranges of the key variables and a system for measuring deviations of the variables.
   ∙ Modify the process to stay within an acceptable range.
5. Control (C)
   ∙ Determine how to maintain the improvements.
   ∙ Put tools in place to ensure that the key variables remain within the maximum acceptance ranges under the modified process.

Question 17

The analytical tools of Six Sigma have been used for many years in traditional quality improvement programs. What makes their application to Six Sigma unique is the integration of these tools in a corporatewide management system. What are the tools common to all quality efforts?

Answer 17

• Flowcharts. There are many types of flowcharts. The one shown in Exhibit 12.5 depicts the process steps as part of a SIPOC (supplier, input, process, output, customer) analysis. SIPOC is essentially a formalized input-output model, used in the define stage of a project.
• Run charts. They depict trends in data over time, and thereby help in understanding the magnitude of a problem at the define stage.
• Pareto charts. These charts help to break down a problem into the relative contributions of its components. They are based on the common empirical finding that a large percentage of problems are due to a small percentage of causes. In the example, 80 percent of customer complaints are due to late deliveries, which are 20 percent of the causes listed.
• Checksheets. These are basic forms that help standardize data collection. They are used to create histograms such as shown on a Pareto chart.
• Cause-and-effect diagrams. Also called fishbone diagrams, they show hypothesized relationships between potential causes and the problem under study. Once the C&E diagram is constructed, the analysis would proceed to find out which of the potential causes were in fact contributing to the problem.
• Opportunity flow diagram. This is used to separate value-added from non–valueadded steps in a process.
• Process control charts. These are time-sequenced charts showing plotted values of a statistic, including a centerline average and one or more control limits. It is used to assure that processes are in statistical control.

Question 18

Other tools that have seen extensive use in Six Sigma projects are failure mode and effect analysis (FMEA) and design of experiments (DOE)., what is it?

Answer 18

• Failure mode and effect analysis. This is a structured approach to identify, estimate, prioritize, and evaluate risk of possible failures at each stage of a process. It begins with identifying each element, assembly, or part of the process and listing the potential failure modes, potential causes, and effects of each failure.
• Design of experiments (DOE). DOE, sometimes referred to as multivariate testing, is a statistical methodology used for determining the cause-and-effect relationship between process variables (X’s) and the output variable (Y).

Question 19

What is lean six sigma?

Answer 19

Combines the implementation and quality control tools of Six Sigma and the inventory management concept of lean manufacturing (JIT, eliminate waste).

Question 20

Successful implementation of Six Sigma is based on using sound personnel practices, as well as technical methodologies. The following is a brief summary of the personnel practices commonly employed in Six Sigma implementation.

Answer 20

1. Executive leaders, who are truly committed to Six Sigma and who promote it throughout the organization, and champions, who take ownership of the processes to be improved. Champions are drawn from the ranks of the executives, and managers are expected to identify appropriate metrics early in the project and make certain that the improvement efforts focus on business results. (See the “What Makes a Good Champion?”)
2. Corporatewide training in Six Sigma concepts and tools. To convey the need to vigorously attack problems, professionals in Six Sigma firms are given martial arts titles reflecting their skills and roles: black belts, who coach or actually lead a Six Sigma improvement team; master black belts, who receive in-depth training on statistical tools and process improvement (they perform many of the same functions as black belts but for a larger number of teams); and green belts, who are employees who have received enough Six Sigma training to participate in a
   Project team or, in some companies, to work individually on a small-scale project directly related to their own job. Different companies use these “belts” in different combinations with sponsors and champions to guide teams.
3. Setting of stretch objectives for improvement.
4. Continuous reinforcement and rewards. Before savings from a project are declared, the black belt in charge must provide proof that the problems are fixed permanently.

Question 21

Two aspects of the Shingo system (another system) in particular have received great attention, which are they?

Answer 21

One is how to accomplish drastic cuts in equipment setup times by single-minute exchange of die (SMED) procedures. The other, the focus of this section, is the use of source inspection and the poka-yoke system to achieve zero defects.

Shingo argued that SQC methods do not prevent defects. Although they provide information to tell us probabilistically when a defect will occur, they are after the fact. The way to prevent defects from coming out at the end of a process is to introduce controls within the process.

Question 22

What is an integral part of the Shingo system?

Answer 22

Central to Shingo’s approach is the difference between errors and defects. Defects arise because people make errors. Even though errors are inevitable, defects can be prevented if feedback leading to corrective action takes place immediately after the errors are made. Such feedback and action require inspection, which should be done on 100 percent of the items produced. This inspection can be one of three types: successive check, self-check, and source inspection

Question 23

All three types of inspection rely on controls consisting of conssiting of what?

Answer 23

fail-safe procedures (Simple practices that help prevent errors) or devices called poka-yokes.

Question 24

Examples of poka yokes?

Answer 24

There are a wide variety of poka-yokes, ranging from kitting parts from a bin (to ensure that the right number of parts are used in assembly) to sophisticated detection and electronic signaling devices.

Question 25

What is ISO 9000 and ISO 14000?

Answer 25

ISO 9000 and ISO 14000 are international standards for quality management and assurance. The standards are designed to help companies document that they are maintaining an efficient quality system. The standards were originally published in 1987 by the International Organization for Standardization (ISO), a specialized international agency recognized by affiliates in more than 160 countries. ISO 9000 has become an international reference for quality management requirements in business-to-business dealing, and ISO 14000 is primarily concerned with environmental management.

Question 26

The ISO 9000 standards are based on seven quality management principles. These principles focus on business processes related to the following areas in the firm:

Answer 26

(1) customer focus,
(2) leadership,
(3) involvement of people,
(4) process approach,
(5) continual improvement,
(6) factual approach to decision making, and
(7) mutually beneficial supplier relationships.

The ISO documents provide detailed requirements for meeting the standards and describe standard tools used for improving quality in the firm. These documents are intended to be generic and applicable to any organization producing products or services.

Question 27

The ISO 14000 family of standards on environmental management addresses the need to be environmentally responsible. The standards define a three-pronged approach for dealing with environmental challenges. Which are those three parts?

Answer 27

1. definition of more than 350 international standards for monitoring the quality of air, water, and soil. For many countries, these standards serve as the technical basis for environmental regulation.
2. a strategic approach defining the requirements of an environmental management system that can be implemented using the monitoring tools.
3. the environmental standard encourages the inclusion of environment aspects in product design and encourages the development of profitable environment-friendly products and services.

Question 28

The ISO standards provide accepted global guidelines for quality. Although certification is not required, many companies have found it is essential to be competitive in the global markets. There are three forms of certification:

Answer 28

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 an auditor.

Question 29

External Benchmarking for Quality Improvement The quality improvement approaches described so far are more or less inward looking. They seek to make improvements by analyzing in detail the current practices of the company itself. External benchmarking, however, goes outside the organization to examine what industry competitors and excellent performers outside the industry are doing. Benchmarking typically involves the following steps:

Answer 29

• Identify processes needing improvement. Identify a firm that is the world leader in performing the process. For many processes, this may be a company that is not in the same industry. Examples would be Procter & Gamble using Amazon as the benchmark in evaluating its order entry system. Company can sent visitors to the benchmark company.
• Analyze data. This entails looking at gaps between what your company is doing and what the benchmarking company is doing. There are two aspects of the study: One is comparing the actual processes; the other is comparing the performance of these processes according to a set of measures. The processes are often described using flowcharts and subjective evaluations of how workers relate to the process. In some cases, companies even permit video recording.