The Management And Control Of Quality · PDF fileTHE MANAGEMENT AND CONTROL OF QUALITY, 5e,...

1THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

Chapter 1Chapter 1

Introduction to Quality


Modern Importance of QualityModern Importance of Quality

“The first job we have is to turn out quality

merchandise that consumers will buy and keep

on buying. If we produce it efficiently and

economically, we will earn a profit, in which

you will share.”

- William Cooper Procter


Quality Assurance

...is any action directed toward providing

customers with goods and services of

appropriate quality.


History of Quality Assurance (1 of 2)History of Quality Assurance (1 of 2)

• Skilled craftsmanship during Middle Ages

• Industrial Revolution: rise of inspection and

separate quality departments

• Statistical methods at Bell System

• Quality control during World War II

• Quality management in Japan


History of Quality Assurance (2 of 2)History of Quality Assurance (2 of 2)

• Quality awareness in U.S. manufacturing industry during 1980s: “Total Quality Management”

• Malcolm Baldrige National Quality Award (1987)

• Quality in service industries, government, health care, and education

• Current and future challenge: keep progress in quality management alive


Contemporary Influences on

Quality• Parterning

• Learning systems

• Adaptability and speed of change

• Environmental sustainability

• Globalization

• Knowledge focus

• Customization and differentiation

• Shifting demographics


Definitions of QualityDefinitions of Quality

• Transcendent definition: excellence

• Product-based definition: quantities of product attributes

• User-based definition: fitness for intended use

• Value-based definition: quality vs. price

• Manufacturing-based definition: conformance to specifications


Quality PerspectivesQuality Perspectives

CustomerCustomer

DistributionDistribution

productsproducts

and and

servicesservices

needsneeds

transcendent &transcendent &

productproduct--basedbased useruser--basedbased

manufacturingmanufacturing--

basedbased

valuevalue--basedbased

MarketingMarketing

DesignDesign

ManufacturingManufacturing

Information flowInformation flowProduct flowProduct flow


Customer-Driven QualityCustomer-Driven Quality

• “Meeting or exceeding customer

expectations”

• Customers can be...

– Consumers

– External customers

– Internal customers


Total Quality

• People-focused management system

• Focus on increasing customer satisfaction and reducing costs

• A systems approach that integrates organizational functions and the entire supply chain

• Stresses learning and adaptation to change

• Based on the scientific method


Principles of Total Quality

• Customer and stakeholder focus

• Participation and teamwork

• Process focus and continuous

improvement

...supported by an integrated organizational

infrastructure, a set of management practices,

and a set of tools and techniques


Customer and Stakeholder Focus

• Customer is principal judge of quality

• Organizations must first understand

customers’ needs and expectations in order

to meet and exceed them

• Organizations must build relationships with

customers

• Customers include employees and society at

large


Participation and Teamwork

• Employees know their jobs best and therefore, how to improve them

• Management must develop the systems and procedures that foster participation and teamwork

• Empowerment better serves customers, and creates trust and motivation

• Teamwork and partnerships must exist both horizontally and vertically


Process Focus and Continuous

Improvement

• A process is a sequence of activities

that is intended to achieve some result


Continuous Improvement

• Enhancing value through new products and

services

• Reducing errors, defects, waste, and costs

• Increasing productivity and effectiveness

• Improving responsiveness and cycle time

performance


Deming’s View of a

Production SystemSuppliers of

materials and

equipment

Receipt and test

of materials

Design and

RedesignConsumer

research

ABCD

Production, assembly

inspection

Tests of processes, machines, methods

Distribution

Consumers

INPUTS PROCESSES OUTPUTS


Learning

• The foundation for improvement …Understanding why changes are successful through feedback between practices and results, which leads to new goals and approaches

• Learning cycle:– Planning

– Execution of plans

– Assessment of progress

– Revision of plans based on assessment findings


Infrastructure, Practices, and

Tools

Leadership Strategic HRM Process Data andLeadership Strategic HRM Process Data and information information

Planning mgt.Planning mgt. managementmanagement

Performance TrainingPerformance Training

appraisalappraisal

Trend chartTrend chartToolsTools

PracticesPractices

InfrastructureInfrastructure


TQ Infrastructure

• Customer relationship management

• Leadership and strategic planning

• Human resources management

• Process management

• Data and information management


Competitive AdvantageCompetitive Advantage

• Is driven by customer wants and needs

• Makes significant contribution to business success

• Matches organization’s unique resources with opportunities

• Is durable and lasting

• Provides basis for further improvement

• Provides direction and motivation

Quality supports each of these characteristics


Quality and ProfitabilityQuality and Profitability

Improved quality

of design

Higher perceived

value

Increased market

share

Higher

prices

Increased

revenues

Improved quality

of conformance

Lower

manufacturing and

service costs

Higher profitability


Evidence that Quality Impacts

Business Results

• General Accounting Office study of Baldrige Award applicants

• Baldrige stock study (see www.quality.nist.gov)

• Hendricks and Singhal study of quality award winners

• Performance results of Baldrige Award winners


GAO TQ Model

Product andservice quality

Customersatisfaction

Leadership forcontinuousimprovement

Quality systems andemployee involvement

Competitiveness

Organizationbenefits

Reliability

On-time delivery

Error/defects

Overall satisfaction

Customer retention

Complaints

CostsCycle timeTurnoverSatisfaction

Safety & health

Productivity

Market share

Profits


Three Levels of Quality

• Organizational level: meeting external

customer requirements

• Process level: linking external and

internal customer requirements

• Performer/job level: meeting internal

customer requirements


Quality and Personal ValuesQuality and Personal Values

• Personal initiative has a positive impact

on business success

• Quality begins with personal attitudes

• Quality-focused individuals often exceed

customer expectations

• Attitudes can be changed through

awareness and effort (e.g., personal

quality checklists)


Chapter 2Chapter 2

Total Quality in

Organizations


Growth of Modern

Quality Management

Manufacturingquality

Improvedproduct designs

Servicequality

Performanceexcellence


Systems Thinking

• A system is the functions or activities within an organization that work together for the aim of the organization.

• Subsystems of an organization are linked together as internal customers and suppliers.

• A systems perspective acknowledges the importance of the interactions of subsystems, not the actions of them individually.


Manufacturing Systems (1 of 2)

• Marketing and sales

• Product design and engineering

• Purchasing and receiving

• Production planning and scheduling

• Manufacturing and assembly

• Tool engineering


Manufacturing Systems (2 of 2)

• Industrial engineering and process design

• Finished goods inspection and test

• Packaging, shipping, and warehousing

• Installation and service


Quality in Business Support

Functions for Manufacturing

• General management

• Finance and accounting

• Human resource management

• Quality assurance

• Legal services


Quality in Services

• Service is defined as “any primary or

complementary activity that does not

directly produce a physical product – that is,

the non-goods part of the transaction

between buyer (customer) and seller

(provider).”


Critical Differences between

Service and Manufacturing (1 of 2)

• Customer needs and performance standards

are more difficult to identify and measure

• Services requires a higher degree of

customization

• Output is intangible


Critical Differences between Service

and Manufacturing (2 of 2)

• Services are produced and consumed

simultaneously

• Customers are often involved in actual

process

• Services are more labor-intensive than

manufacturing

• Services handle large numbers of transactions


Components of Service

System Quality

• Employees

• Information technology


The Ritz-Carlton Hotel Co.


Quality in Health Care

• Joint Commission on Accreditation of

Healthcare Organizations (JCAHO)

• National Committee for Quality Assurance

(NCQA)

• Institute for Healthcare Improvement (IHI)

• 1999 expansion of the Baldrige Award to

nonprofit health care organizations


Quality Issues in Health Care

• Avoidable errors

• Underutilization of services

• Overuse of services

• Variation in services


Quality in Education

• Koalaty Kid program

• 1999 expansion of the Baldrige Award to nonprofit education organizations

• Success stories

– Mt. Edgecumbe High School

– Brazosport ISD

– Hunderton Central Regional HS

– Pinellas County Schools


Higher Education

as a Production SystemDesign and

RedesignConsumer

research

Suppliers:families, high

schools, colleges,

business

Customers:business, families,

society, students

Inputs:students

faculty

Processes

Teaching, counseling,

scientific research

Outputs:able students

new knowledge


Quality in the Public Sector

• Quality in the Federal Government

• State and Local Quality Efforts


Chapter 3Chapter 3

Philosophies and

Frameworks


Leaders in the Quality Revolution

• W. Edwards Deming

• Joseph M. Juran

• Philip B. Crosby

• Armand V. Feigenbaum

• Kaoru Ishikawa

• Genichi Taguchi


Who’s Who?

ab

c

Deming ____

Juran ____

Crosby ____


Deming Chain Reaction

Improve quality

Costs decrease

Productivity improves

Increase market share with better

quality and lower prices

Stay in business

Provide jobs and more jobs


Deming’s System

of Profound Knowledge

• Appreciation for a system

• Understanding variation

• Theory of knowledge

• Psychology


Systems

• Most organizational processes are cross-

functional

• Parts of a system must work together

• Every system must have a purpose

• Management must optimize the system

as a whole


Variation

• Many sources of uncontrollable variation exist in any process

• Excessive variation results in product failures, unhappy customers, and unnecessary costs

• Statistical methods can be used to identify and quantify variation to help understand it and lead to improvements


Theory of Knowledge

• Knowledge is not possible without theory

• Experience alone does not establish a theory, it only describes

• Theory shows cause-and-effect relationships that can be used for prediction


Psychology

• People are motivated intrinsically and

extrinsically

• Fear is demotivating

• Managers should develop pride and joy

in work


Deming’s 14 Points (Abridged) (1 of 2)

1. Create and publish a company mission

statement and commit to it.

2. Learn the new philosophy.

3. Understand the purpose of inspection.

4. End business practices driven by price alone.

5. Constantly improve system of production

and service.

6. Institute training.

7. Teach and institute leadership.

8. Drive out fear and create trust.


Deming’s 14 Points (2 of 2)

9. Optimize team and individual efforts.

10. Eliminate exhortations for work force.

11. Eliminate numerical quotas and M.B.O.

Focus on improvement.

12. Remove barriers that rob people of pride

of workmanship.

13. Encourage education and self-improvement.

14. Take action to accomplish the transformation.

www.deming.org


Juran’s Quality Trilogy

• Quality planning

• Quality control

• Quality improvement

www.juran.com


Phillip B. Crosby

Quality is free . . . :

“Quality is free. It’s not a gift, but it is free. What

costs money are the unquality things -- all the

actions that involve not doing jobs right the first

time.”


Philip B. Crosby

Absolutes of Quality Management:

• Quality means conformance to requirements

• Problems are functional in nature

• There is no optimum level of defects

• Cost of quality is the only useful measurement

• Zero defects is the only performance standard

www.philipcrosby.com


A.V. Feigenbaum

• Three Steps to Quality

– Quality Leadership, with a strong focus

on planning

– Modern Quality Technology, involving

the entire work force

– Organizational Commitment, supported

by continuous training and motivation


Kaoru Ishikawa

• Instrumental in developing Japanese

quality strategy

• Influenced participative approaches

involving all workers

• Advocated the use of simple visual

tools and statistical techniques


Genichi Taguchi

• Pioneered a new perspective on quality based

on the economic value of being on target and

reducing variation and dispelling the

traditional view of conformance to

specifications:

No Loss LossLoss

Tolerance

0.500 0.5200.480


Deming Prize• Instituted 1951 by Union of Japanese Scientists

and Engineers (JUSE)

• Several categories including prizes for individuals, factories, small companies, and Deming application prize

• American company winners include:

Florida Power & Light, and

AT&T Power Systems Division


Malcolm Baldrige

National Quality Award• Help improve quality in U.S.

companies

• Recognize achievements of excellent firms and provide examples to others

• Establish criteria for evaluating quality efforts

• Provide guidance for other U.S. companies

Malcolm Baldrige,

former U.S. Secretary

of Commerce


Criteria for Performance

Excellence• Leadership

• Strategic Planning

• Customer and Market Focus

• Information and Analysis

• Human Resource Focus

• Process Management

• Business ResultsBaldrige

Award trophy


The Baldrige Framework –

A Systems Perspective

4

Information and Analysis

5

Human Resource

Focus

3

Customer & Market Focus

7

Business Results

7

Business Results

2

Strategic Planning

1

Leadership

6

Process Management

Organizational Profile:

Environment, Relationships, and

Challenges


Receive Applications

Judges Select for

Consensus Review?

Judges Select for

Site Visit Review?

Stage 1

Independent Review

Stage 2

Consensus Review

Stage 3

Site Visit Review

Stage 4

Judges Recommend Award

Recipients to

NIST Director/DOC

Feedback report

to applicant

Feedback report

to applicant

Feedback report

to applicant

No

No

Baldrige Award Evaluation Process


The Baldrige Award

Scoring System• Three evaluation dimensions - Approach,

Deployment, and Results

• Scoring is linked to the importance to the

applicant’s business

• Scoring guidelines (Table 3.5)


Feedback Report

• Strengths - approaches or results that

demonstrate effective response to the

Criteria

• Opportunities for improvement - how

the applicant can better address the

purposes of the Criteria, or issues that

require clarification


Self Assessment and the Baldrige

National Quality Program

A primary goal of the Program is to encourage many organizations to improve on their own by equipping them with a standard template for measuring their performance and their progress toward performance excellence.

Boeing Airlift & Tanker

Programs – 1998 winner


Growth of State Award Programs

Based on the Baldrige


Quality Awards Around the World

Programs in place

No programs


ISO 9000:2000

• Quality system standards adopted by

International Organization for Standardization

in 1987; revised in 1994 and 2000

• Technical specifications and criteria to be used

as rules, guidelines, or definitions of

characteristics to ensure that materials,

products, processes, and services are fit for

their purpose.


Objectives of ISO Standards (1 of 2)

• Achieve, maintain, and continuously improve

product quality

• Improve quality of operations to continually

meet customers’ and stakeholders’ needs

• Provide confidence to internal management

and other employees that quality

requirements are being fulfilled


Objectives of ISO Standards (2 of 2)

• Provide confidence to customers and other

stakeholders that quality requirements are

being achieved

• Provide confidence that quality system

requirements are fulfilled


Structure of ISO 9000 Standards

• 21 elements organized into four major

sections:

– Management Responsibility

– Resource Management

– Product Realization

– Measurement, Analysis, and Iimprovement

See Table 3.7


ISO 9000:2000 Quality

Management Principles1. Customer Focus

2. Leadership

3. Involvement of People

4. Process Approach

5. System Approach to Management

6. Continual Improvement

7. Factual Approach to Decision Making

8. Mutually Beneficial Supplier Relationships


Chapter 4Chapter 4

Focusing on Customers


Importance of Customer

Satisfaction and Loyalty

• “Satisfaction is an attitude; loyalty is a behavior”

• Loyal customers spend more, are willing otpay higher prices, refer new clients, and are less costly to do business with.

• It costs five times more to find a new customer than to keep an existing one happy.


American Customer

Satisfaction Index• Measures customer satisfaction at national

level

• Introduced in 1994 by University of Michigan and American Society for Quality

• Continual decline in index from 1994 through 1998 with a small improvement into 2000 suggests that quality improvements have not kept pace with consumer expectations


ACSI Model

of Customer SatisfactionPerceived

quality

Customer

complaints

Perceived

valueCustomer

satisfaction

Customer

expectations Customer

loyalty


Customer-Driven Quality Cycle

measurement and feedback

Customer needs and expectations

(expected quality)

Identification of customer needs

Translation into product/service specifications

(design quality)

Output (actual quality)

Customer perceptions (perceived quality)

PERCEIVED QUALITY = ACTUAL - EXPECTED


Leading Practices (1 of 2)

• Define and segment key customer groups

and markets

• Understand the voice of the customer

(VOC)

• Understand linkages between VOC and

design, production, and delivery



• Build relationships through commitments,

provide accessibility to people and

information, set service standards, and

follow-up on transactions

• Effective complaint management processes

• Measure customer satisfaction for

improvement


Key Customer Groups

• Organization level– consumers

– external customers

– employees

– society

• Process level– internal customer units or groups

• Performer level

– individual internal customers


Identifying Internal Customers

• What products or services are produced?

• Who uses these products and services?

• Who do employees call, write to, or answer

questions for?

• Who supplies inputs to the process?


AT&T Customer-Supplier Model

Requirements

and feedback

Requirements

and feedback

Your

Suppliers

Your

Processes

Your

CustomersInputs Outputs


Customer Segmentation

• Demographics

• Geography

• Volumes

• Profit potential


Key Dimensions of Quality• Performance – primary operating characteristics

• Features – “bells and whistles”

• Reliability – probability of operating for specific time and conditions of use

• Conformance – degree to which characteristics match standards

• Durability- amount of use before deterioration or replacement

• Serviceability – speed, courtesy, and competence of repair

• Aesthetics – look, feel, sound, taste, smell


Key Dimensions of Service Quality

• Reliability – ability to provide what was promised

• Assurance – knowledge and courtesy of

employees and ability to convey trust

• Tangibles – physical facilities and appearance of

personnel

• Empathy – degree of caring and individual

attention

• Responsiveness – willingness to help customers

and provide prompt service


Kano Model of Customer Needs

• Dissatisfiers: expected requirements

• Satisfiers: expressed requirements

• Exciters/delighters: unexpected

features


Customer Listening Posts

• Comment cards and formal surveys

• Focus groups

• Direct customer contact

• Field intelligence

• Complaint analysis

• Internet monitoring


Tools for Classifying

Customer Requirements

Affinity diagram Tree diagram


Customer Relationship

Management

• Accessibility and commitments

• Selecting and developing customer contact

employees

• Relevant customer contact requirements

• Effective complaint management

• Strategic partnerships and alliances


Measuring Customer Satisfaction• Discover customer perceptions of business

effectiveness

• Compare company’s performance relative

to competitors

• Identify areas for improvement

• Track trends to determine if changes result

in improvements


Example: The Olive Garden• The Lobby

– Was the lobby staff friendly and did they

welcome you to the restaurant?

– Were you seated in a timely, efficient

manner?

• The Table Area

– Was your table area clean when you were

seated?

• The Server

– Was your server attentive and there when

you needed him/her?

– Was your server knowledgeable and able to

answer your questions about our food and

beverages?

– How was the pace of your meal?

• The Food

– How would you rate the taste of

your food?

– Please rate the temperature of your

food, hot food being piping hot.

– Please rate your visit on the value

for the money.

– Overall, how would you rate your

visit

– Would you recommend this Olive

Garden to a close friend or relative?

Scale: 1 = poor ….5 = excellent


Example: The Olive Garden• Open-ended questions:

– What one thing did you like most about your

visit?

– What one thing could we do to improve your

experience at The Olive Garden?

• Survey form provides address, 800 number,

FAX, and TDD number for hearing

impaired


Performance-Importance Analysis

Performance

Importance

Low High

Low

High

Who cares? Overkill

Vulnerable Strengths


Difficulties with Customer

Satisfaction Measurement

• Poor measurement schemes

• Failure to identify appropriate quality dimensions

• Failure to weight dimensions appropriately

• Lack of comparison with leading competitors

• Failure to measure potential and former customers

• Confusing loyalty with satisfaction


Customer and Market Focus

in the Baldrige CriteriaThe Customer and Market Focus category examines how an

organization determines requirements, expectations, and

preferences of customers and markets; and how it builds

relationships with customers and determines the key factors

that lead to customer acquisition, satisfaction, and retention,

and to business expansion.

3.1 Customer and Market Knowledge

3.2 Customer Relationships and Satisfaction

a. Customer Relationships

b. Customer Satisfaction Determination


Chapter 5Chapter 5

Leadership and Strategic

Planning


Leadership

• The ability to positively influence

people and systems to have a

meaningful impact and achieve results


Strategic Planning

• The process of envisioning an

organization’s future and developing

the necessary procedures and

operations to achieve that future.


The Baldrige “Leadership Triad”

Leadership

Strategic Planning

Customer andMarket Focus

Operations


Executive Leadership• Defining and communicating business directions

• Ensuring that goals and expectations are met

• Reviewing business performance and taking appropriate aciton

• Creating an enjoyable work environment

• Soliciting input and feedback from customers

• Ensuring that employees are effective contributors

• Motivating, inspiring, and energizing employees

• Recognizing employee contributions

• Providing honest feedback


Core Leadership Skills

• Vision

• Empowerment

• Intuition

• Self-understanding

• Value congruence

Dale Crownover, President, Texas Nameplate Co.


Leading Practices - LeadershipLeading Practices - Leadership

• Create a customer-focused strategic vision and clear quality values

• Create and sustain leadership system and environment for empowerment, innovation, and organizational learning

• Set high expectations and demonstrate personal commitment and involvement in quality

• Integrate quality values into daily leadership and management and communicate extensively

• Integrate public responsibilities and community support into business practices


Leadership Theories• Trait approach

• Behavioral approach

• Contingency (situational) approach

• Role approach

• Emerging theories: – Attributional theory

– Transactional theory

– Transformational leadership theory

– Substitutes for leadership theory

– Emotional intelligence theory


Zenger-Miller

Leadership Competencies• Setting or sharing a vision

• Managing a change

• Focusing on the customer

• Dealing with individuals

• Supporting teams and groups

• Sharing information

• Solving problems, making decisions

• Managing business processes

• Managing projects

• Displaying technical skills

• Managing time and resources

• Taking responsibility

• Taking initiative beyond job requirements

• Handling emotions

• Displaying professional ethics

• Showing compassion

• Making credible presentations


Leadership SystemLeadership System

• Refers to how decisions are made,

communicated, and carried out at all levels;

mechanisms for leadership development,

self-examination, and improvement

• Effectiveness of leadership system depends

in part on its organizational structure


Common Organizational Structure

Customers

Customerteam

Customerteam

Customerteam

Systems and support services

Executive steering committee

CEO


Leadership and Public

Responsibilities

• Ethics

• Health, safety, and environment

• Community support


Strategic PlanningStrategic Planning

Formal strategy includes:Formal strategy includes:

• Goals to be achieved

• Policies to guide or limit action

• Action sequences, or programs,

that accomplish the goals

““A strategy is a pattern or plan that integrates an A strategy is a pattern or plan that integrates an

organizationorganization’’s major goals, policies, and action s major goals, policies, and action

sequences into a cohesive whole.sequences into a cohesive whole.””

James Quinn James Quinn


Tasks Accomplished

by Strategic Planning

Tasks Accomplished

by Strategic Planning• Understand important customer and operational

requirements

• Optimize use of resources and ensure bridging

between short-term and longer-term

requirements

• Ensure that quality initiatives are understood at

all organizational levels

• Ensure that work organizations and structures

will facilitate accomplishment of strategic plan


Leading Practices -

Strategic Planning

Leading Practices -

Strategic Planning• Active participation of top management,

employees, customers, suppliers

• Systematic planning systems for strategy

development and deployment, including

measurement, feedback, and review

• Use of a variety of external and internal data

• Align short-term action plans with long-term

strategic objectives, communicate them, and

track progress


Strategic Planning ProcessStrategic Planning Process

Mission Vision Guiding Principles

Environmental assessment

Strategies

Strategic Objectives

Action Plans

Broad statements of direction

Capabilities and risks

Things to change or

improve

Implementation

Reason for existence Future intent Attitudes and policies


Mission• Definition of products and services,

markets, customer needs, and distinctive competencies

• Solectron: “…to provide worldwide responsiveness to our customers by offering the highest quality, lowest total cost, customized, integrated, design, supply chain, and manufacturing solutions through long-term partnerships based on integrity and ethical business practices.”


Vision• Where the organization is headed and what

it intends to be

– Brief and memorable - grab attention

– Inspiring and challenging - creates excitement

– Descriptive of an ideal state - provides guidance

– Appealing to all stakeholders - employees can identify with

• Solectron: “Be the best and continuously improve”


Policy Deployment

(Hoshin Kanri)

Policy Deployment

(Hoshin Kanri)

• Top management vision leading to long-term

objectives

• Deployment through annual objectives and

action plans

• Negotiation for short-term objectives and

resources (catchball)

• Periodic reviewsSee Figure 5.7!See Figure 5.7!


The Seven Management

and Planning Tools

The Seven Management

and Planning Tools

• Affinity diagrams

• Interrelationship digraphs

• Tree diagrams

• Matrix diagrams

• Matrix data analysis

• Process decision program charts

• Arrow diagrams


Leadership in the Baldrige Criteria

The Leadership Category examines how an organization’s senior leaders address values, directions, and performance expectations, as well as a focus on customers and other stakeholders, empowerment, innovation, and learning. Also examined is how the organization addresses its responsibilities to the public and supports its key communities.

1.1 Organizational Leadership

a. Senior Leadership Direction

b. Organizational Performance Review

1.2 Public Responsibility and Citizenship

a. Responsibilities to the Public

b. Support of Key Communities


Strategic Planning

in the Baldrige CriteriaThe Strategic Planning Category examines how an

organization develops strategic objectives and action

plans. Also examined are how chosen strategic objectives

and action plans are deployed and how progress is measured.

2.1 Strategy Development

a. Strategy Development Process

b. Strategic Objectives

2.2 Strategy Deployment

a. Action Plan Development and Deployment

b. Performance Projection


Chapter 6Chapter 6

Human Resource Practices


Toyota Georgetown• “We’ve got nothing, technology-wise, that

anyone else can’t have. There’s no secret

Toyota Quality Machine out there. The

quality machine is the workforce -- the team

members on the paint line, the suppliers, the

engineers -- everybody who has a hand in

production here takes the attitude that we’re

making world-class vehicles.”


Human Resource ParadigmsOld Thinking New Thinking

People are part of the process

Process requires external control

Managers have to

control whatpeople do

People design andimprove processes

Workers who run theprocess control it

Managers must obtain

commitment of workers


Key Activities in HRM

• Determine organization’s HR needs to build a high-performance workplace

• Assist in design of work systems

• Recruit, select, train & develop, counsel, motivate, and reward employees

• Act as liaison with unions & government

• Handle other matters of employeewell-being



• Integrate HR plans with overall strategic

objectives and action plans

• Design work and jobs to promote organizational

learning, innovation, and flexibility

• Develop effective performance management

systems, compensation, and reward and

recognition approaches

• Promote cooperation and collaboration through

teamwork



• Empower individuals and teams to make decisions

that affect quality and customer satisfaction

• Make extensive investments in training and

education

• Maintain a work environment conducive to the

well-being and growth of all employees

• Monitor extent and effectiveness of HR practices

and measure employee satisfaction


Strategic Perspective• HR plans should be linked to business

strategy and aligned with business needs

• Key choices

– Planning

– Staffing

– Appraising

– Compensating

– Training and development


High Performance Work Systems

Work and Job

Design

Employee

Involvement

Suggestion

systems

Empowerment

Training and

Education

Teamwork and Cooperation

Compensation

and

recognition

Health and safety

Flexibility

Innovation

Knowledge and skill

sharing

Organizational

alignment

Customer focus

Rapid response


Designing High Performance

Work Systems

• Work design - how employees are

organized in formal and informal units

(departments, teams, etc.)

• Job design - responsibilities and tasks

assigned to individuals


Work Design Issues

• Performer/job level: initiative and

motivation

• Process level: cooperation and

teamwork

• Organizational level: well-being; link

to strategy


Hackman/Oldham Model

Core jobcharacteristics

Criticalpsychological

states

Outcomes

Skill variety

Task identity

Task significance

Experienced

meaningfulness

of work

Autonomy

Feedbackfrom job

Experienced

responsibility

Knowledge of

actual results

High motivation

High satisfaction

High work

effectiveness

Moderators


Employee Involvement• Employee Involvement - any activity by which

employees participate in work-related decisions

and improvement activities, with the objectives

of tapping the creative energies of all employees

and improving their motivation


Levels of Employee Involvement

1. Information sharing

2. Dialogue

3. Special problem

solving

4. Intra-group problem

solving

5. Inter-group problem

solving

6. Focused problem

solving

7. Limited self-direction

8. Total self-direction


Advantages of EI• Replaces adversarial

mentality with trust

and cooperation

• Develops skills and

leadership abilities

• Increases morale and

commitment

• Fosters creativity and

innovation

• Helps people understand quality principles and instilling them into the organization’s culture

• Allows employees to solve problems at the source

• Improves quality and productivity


Empowerment• Giving people authority to make decisions

based on what they feel is right, to have

control over their work, to take risks and

learn from mistakes, and to promote

change.

“A sincere belief and trust in people.”


Successful Empowerment

• Provide education, resources, and encouragement

• Remove restrictive policies/procedures

• Foster an atmosphere of trust

• Share information freely

• Make work valuable

• Train managers in “hands-off” leadership

• Train employees in allowed latitude


Training and Education

• Quality awareness

• Leadership

• Project management

• Communications

• Teamwork

• Problem solving

• Interpreting and using

data

• Meeting customer

requirements

• Process analysis

• Process simplification

• Waste reduction

• Cycle time reduction

• Error proofing


Teams

• Team - a small number of people with

complementary skills who are committed to a

common purpose, set of performance goals, and

approach for which they hold themselves mutually

accountable

• Effective teams are goal-centered,

independent, open, supportive,

and empowered


Types of Teams

• Quality circles

• Problem solving teams

• Management teams

• Work teams

• Project teams

• Virtual teams


Functions of Teams

Implementsolutions

Identifyproblems Select

problem

Collectdata

Focus attention

Find causesDevelop

solutions

Pick bestsolution

Developfollow-up

planSolve

Identify

Analyze


Self-Managed Teams

• Empowered

• Plan, control, improve

work processes

• Set own goals and inspect

own work

• Schedule & review

performance

• Prepare budgets &

coordinate work

• Order materials, keep

inventory, & deal with

suppliers

• Acquire any needed

training

• Hire replacements or

discipline members

• Take responsibility for

quality


Ingredients for

Successful Teams (1 of 2 )

• Clarity in team goals

• Improvement plan

• Clearly defined roles

• Clear communication

• Beneficial team behaviors


Ingredients for

Successful Teams (2 of 2)

• Well-defined decision procedures

• Balanced participation

• Established ground rules

• Awareness of group process

• Use of scientific approach


Compensation and Recognition• Compensation

– Merit versus capability/performance based plans

– Gainsharing

• Recognition

– Monetary or non-monetary

– Formal or informal

– Individual or group


Effective Recognition

and Reward Strategies

• Give both individual and team awards

• Involve everyone

• Tie rewards to quality

• Allow peers and customers to nominate and

recognize superior performance

• Publicize extensively

• Make recognition fun


Managing HR

in a TQ Environment

• Recruitment and Career Development

• Motivation

• Performance Appraisal

• Measuring Employee Satisfaction and

HRM Effectiveness


Motivation• An individual’s response to a felt need

• Theories

– Content Theories: Maslow; MacGregor;

Herzberg

– Process Theories: Vroom; Porter & Lawler

– Environmentally-based Theories: Skinner;

Adams; Bandura, Snyder & Williams


Performance Appraisal• How you are measured is how you perform!

• Conventional appraisal systems

– Focus on short-term results and individual

behavior; fail to deal with uncontrollable

factors

• New approaches

– Focus on company goals such as quality and

behaviors like teamwork

– 360-degree feedback; mastery descriptions


Measuring Employee

Satisfaction and Effectiveness

• Satisfaction

– Quality of worklife, teamwork, communications,

training, leadership, compensation, benefits,

internal suppliers and customers

• Effectiveness

– Team and individual behaviors; cost, quality, and

productivity improvements; employee turnover;

suggestions; training effectiveness


TQ and Labor Relations

• Union-management cooperation

• National Labor Relations Board

(NLRB) rulings on employee

participation programs

• Current legislative proposals and

actions


Human Resources

in the Baldrige Award Criteria

The Human Resource Focus Category examines how an organization motivates and enables employees to develop and utilize their full potential in alignment with the organization’s overall objectives and action plans. Also examined are the organization’s efforts to build and maintain a work environment and an employee support climate conducive to performance excellence and to personal and organizational growth.

5.1 Work Systems

5.2 Employee Education, Training, and Development

5.3 Employee Well-Being and Satisfaction

a. Work Environment

b. Employee Support and Satisfaction


Chapter 7Chapter 7

Process Management


Wisdom from Texas Instruments

“Unless you change the process, why would

you expect the results to change”


Scope of Process ManagementScope of Process Management

• Process Management: planning and

administering the activities – design,

control, and improvement – necessary to

achieve a high level of performance

• Four types of key processes

– Design processes

– Production/delivery processes

– Support processes

– Supplier processes


AT&T Process

Management Principles

• Focus on end-to-end process

• Mindset of prevention and continuous

improvement

• Everyone manages a process at some level

and is a customer and a supplier

• Customer needs drive the process

• Corrective action focuses on root cause

• Process simplification reduces errors


Control vs. ImprovementControl vs. Improvement

Controlled

processImprovement

Time

New zone

of control

Out-of-control


Leading Practices (1 of 2)Leading Practices (1 of 2)

• Translate customer requirements and internal

capabilities into product and service design

requirements early in the process

• Ensure that quality is built into products and services

and use appropriate tools during development

• Manage product development process to enhance

communication, reduce time, and ensure quality

• Define, document, and manage important

production/delivery and support processes


Leading Practices (2 of 2)Leading Practices (2 of 2)

• Define performance requirements for suppliers and ensure that they are met

• Control the quality and operational performance of key processes and use systematic methods to identify variations, determine root causes, and make corrections

• Continuously improve processes to achieve better quality, cycle time, and overall operational performance

• Innovate to achieve breakthrough performance using benchmarking and reengineering


Product Development ParadigmsProduct Development Paradigms

Traditional Approach

• Design the product

• Make the product

• Sell the product

Deming’s Approach

• Design the product

• Make it with

appropriate tests

• Put it on the market

• Conduct consumer

research

• Redesign with

improvements


Product Development ProcessProduct Development Process

Idea

generation

Idea

generation

Conceptdevelopment

Conceptdevelopment

Product &

process design

Full-scale

production

Full-scale

production

Product

introduction

Product

introduction

Market

evaluation

Market

evaluation


Quality EngineeringQuality Engineering

• System Design

– Functional performance

• Parameter Design

– Nominal dimensions

• Tolerance Design

– Tolerances


Loss Functions

loss lossno loss

nominaltolerance

loss loss

Traditional

View

Taguchi’s

View


Taguchi Loss Function Calculations

L(x) = k(x - T)2

Example: Specification = .500 ± .020

Failure outside of the tolerance range costs $50

to repair. Thus, 50 = k(.020)2. Solving for k

yields k = 125,000. The loss function is:

L(x) = 125,000(x - .500)2

Expected loss = k(σ2 + D2) where D is the deviation

from the target.


Design ObjectivesDesign Objectives

• Cost, Manufacturability, Quality,

Public Concerns

• Tools and Approaches

– Design for Manufacturability

– Design for Environment


Streamlining Product DevelopmentStreamlining Product Development

• Competitive need for rapid product development

• Concurrent engineering - a process in which all major functions involved with bringing a product to market are continuously involved with the product development from conception through sales

• Design reviews


House of Quality

Technical requirements

Voice of

the

customer

Relationship

matrix

Technical requirement

priorities

Customer

requirement

priorities

Competitive

evaluation

Interrelationships


Quality Function Deployment

technical

requirements

component

characteristics

process

operationsquality plan


Motorola’s Approach

to Process Design1. Identify the product or service

2. Identify the customer

3. Identify the supplier

4. Identify the process

5. Mistake-proof the process

6. Develop measurements and control, and

improvement goals.


Evaluating a Process

• Are steps arranged in logical sequence?

• Do all steps add value? Can some be eliminated or added? Can some be combined? Should some be reordered?

• Are capacities in balance?

• What skills, equipment, and tools are required at each step?

• At which points might errors occur and how can they be corrected?

• At which points should quality be measured?

• What procedures should employees follow where customer interaction occurs?


Projects

• Project initiation – direction, priorities,

limitations, and constraints

• Project plan – blueprint and resources

needed

• Execution – produce deliverables

• Close out – evaluate customer satisfaction

and provide learning for future projects


Basic Components of ServicesBasic Components of Services

• Physical facilities, processes, and

procedures

• Employee behavior

• Employee professional

judgment


Key Service DimensionsKey Service Dimensions

Customer contact and interaction

Labor intensity

Customization


ControlControl

• The continuing process of evaluating process

performance and taking corrective action when

necessary

• Components of control systems

– Standard or goal

– Means of measuring accomplishment

– Comparison of results with the standard as a basis

for corrective action

A well-controlled system is predictable


After Action Review

1. What was supposed to happen?

2. What actually happened?

3. Why was there a difference?

4. What can we learn?


Supplier and Partnering ProcessesSupplier and Partnering Processes

• Recognize the strategic importance of

suppliers

• Develop win-win relationships through

partnerships

• Establish trust through openness and

honesty


Supplier Certification Systems

• “Certified supplier” – one that, after

extensive investigation, is found to

supply material of such quality that

routine testing on each lot received is

unnecessary


Benefits of Effective Supplier

Process Management

• Reduced costs

• Faster time to market

• Increased access to technology

• Reduced supplier risk

• Improved quality


Process Improvement

• Productivity improvement

• Work simplification

• Planned methods change

• Kaizen

• Stretch goals

• Benchmarking

• Reengineering

Traditional

Industrial

Engineering

New approaches from

the total quality

movement


Kaizen

• Gradual and orderly continuous

improvement

• Minimal financial investment

• Involvement of all employees

• Exploit the knowledge and experience

of workers


Agility• Flexibility – the ability to adapt

quickly and effectively to changing requirements

• Cycle time – the time it takes to accomplish one cycle of a process

• Benefits

– Improve customer response

– Force process streamlining and simplification


Breakthrough Improvement• Discontinuous change resulting from innovative

and creative thinking

• Benchmarking – the search of industry best

practices that lead to superior performance

– Competitive benchmarking

– Process benchmarking

– Strategic benchmarking

• Reengineering – radical redesign of processes


Process Management


The Process Management Category examines the key

aspects of an organization’s process management,

including customer-focused design, product and service

delivery, key business, and support processes. This Category encompasses all key processes and all work units.

6.1 Product and Service Processes

a. Design Processes

b. Production/Delivery Processes

6.2 Business Processes

6.3 Support Processes


Chapter 8Chapter 8

Performance Measurement

and Strategic Information

Management


Information Management• If you don’t measure results, you can’t tell

success from failure

• If you can’t see success, you can’t reward it –

and if you can’t reward success, you are

probably rewarding failure

• If you can’t recognize failure,

you can’t correct it


Process FlowMeasurement

Data

Analysis

Information


CustomerRequirements

Measurements

Processes ResultsDesign

Control

Prediction

Validation

Use of Information and Analysis

Measurement supports executive performance review

and daily operations and decision making.


Benefits of

Information Management

• Understand customers and customer

satisfaction

• Provide feedback to workers

• Establish a basis for reward/recognition

• Assess progress and the need for corrective

action

• Reduce costs through better planning


Empirical Survey Results • Measurement-management companies are

more likely to:

– be in top third of industry financially

– complete organizational changes successfully

– reach clear agreement on strategy

– enjoy favorable cooperation and teamwork

– have more employee empowerment

– have a greater willingness to take risks


Example: Federal Express

• “We measure everything.

Then…we prioritize what

processes are key to the

company.”

• Most data collection systems are

automated, making it fast and

easy.

• Seeks internal measures that are

predictors for external measures.


Example: Ritz-Carlton• “We only measure what we must.

But, we make sure that what we

measure is important to our

customers.”

• 50% marketing and financial data;

50% quality-related productivity

data.

• Cost of quality is top priority. Are

improvements important to

customers, providing a good return,

and done quickly?



• Develop a set of performance indicators that reflect customer requirements and key business drivers

• Use comparative information and data to improve overall performance and competitive position

• Involve everyone in measurement activities and ensure that information is widely visible



• Ensure that data are reliable and accessible

to all who need them

• Use sound analytical methods to conduct

analyses and use the results to support

strategic planning and daily decision making

• Continually refine information sources and

their uses within the organization


Balanced Scorecard

1. Financial perspective

2. Internal perspective

3. Customer perspective

4. Innovation and learning perspective

Leading

measures

Lagging

measures


Key Types of Business

Performance Measures

• Customer satisfaction measures

• Financial and market performance measures

• Human resource measures

• Supplier and partner performance measures

• Company-specific measures


Example: Wainwright Industries

• Safety

• Internal customer satisfaction

• External customer satisfaction

• Six sigma quality (manufacturing

defects)

• Business performance


Common Quality Measures

• Nonconformities (defects) per unit

• Errors per opportunity

• Defects per million opportunities

(dpmo)


Importance of Comparative Data

• Comparative data: industry averages,

best competitor performance, world-

class benchmarks

• Helps recognize the need for

improvement

• Provides motivation to seek

improvement


Linkages to Strategy

Key business drivers

(key success factors)

Strategies and

action plans

Measures and indicators


Process-Level Measurements

• Does the measurement support our mission?

• Will the measurement be used to manage

change; that is, actionable?

• Is it important to our customers?

• Is it effective in measuring performance?

• Is it effective in forecasting results?

• Is it easy to understand and simple?


Creating Effective

Performance Measures

• Identify all customers and their requirements

and expectations

• Define work processes

• Define value-adding activities and process

outputs

• Develop measures for each key process

• Evaluate measures for their usefulness


The Cost of Quality (COQ)• COQ – the cost of avoiding poor quality,

or incurred as a result of poor quality

• Translates defects, errors, etc. into the

“language of management” – $$$

• Provides a basis for identifying

improvement opportunities and success

of improvement programs


Quality Cost Classification

• Prevention

• Appraisal

• Internal failure

• External failure


Quality Cost Management Tools

• Cost indexes

• Pareto analysis

• Sampling and work measurement

• Activity-based costing


Return on Quality (ROQ) • ROQ – measure of revenue gains against

costs associated with quality efforts

• Principles

– Quality is an investment

– Quality efforts must be made financially

accountable

– It is possible to spend too much on quality

– Not all quality expenditures are equally valid


Managing Data and Information

• Validity – Does the indicator measure what it says it does?

• Reliability – How well does an indicator consistently measure the “true value” of the characteristic?

• Accessibility – Do the right people have access to the data?


Analysis• Statistical summaries and charts

• Trends over time

• Comparisons with key benchmarks

• Aggregate summaries and indexes

• Cause-and-effect linkages and

correlations (interlinking)

• Data mining

Basic

Advanced


Interlinking• Quantitative modeling of cause and effect

relationships between external and internal

performance criteria

customer

satisfaction

rating

time on hold (telephone)

* ** * *


Information and Analysis


The Information and Analysis Category examines an

organization’s information management and performance

measurement systems and how the organization analyzes performance data and information.

4.1 Measurement and Analysis of Organizational

Performance

a. Performance Measurement

b. Performance Analysis

4.2 Information Management

a. Data Availability

b. Hardware and Software Quality


Chapter 9Chapter 9

Statistical Thinking

and Applications


Statistical Thinking

• All work occurs in a system of

interconnected processes

• Variation exists in all processes

• Understanding and reducing variation

are the keys to success


Sources of Variation

in Production Processes

Materials

Tools

Operators MethodsMeasurement

Instruments

HumanInspectionPerformance

EnvironmentMachines

INPUTS PROCESS OUTPUTS


Variation

• Many sources of uncontrollable variation

exist (common causes)

• Special (assignable) causes of variation

can be recognized and controlled

• Failure to understand these differences

can increase variation in a system


Importance of Understanding

Variation

time

PREDICTABLE

?UNPREDECTIBLE


Two Fundamental

Management Mistakes

1. Treating as a special cause any fault,

complaint, mistake, breakdown, accident

or shortage when it actually is due to

common causes

2. Attributing to common causes any fault,

complaint, mistake, breakdown, accident

or shortage when it actually is due to a

special cause


Note to Instructors

• The following slides can be used to guide a

class demonstration and discussion of the

Deming Red Bead experiment using small

bags of M&M’s® Chocolate Candies, from

a suggestion I found on a TQ newsgroup

several years ago. The good output (“red

beads”) are the blue M&Ms, with the

instructor playing the role of Dr. Deming.


We’re Going into Business!!!

We have a new global customer and have to start

up several factories. So I need teams of 5 to do

the work:

1 production worker

2 inspectors

1 Chief Inspector

1 Recorder


Production Setup

1. Take the bag in your left hand.

2. Tear a 3/4” opening in the right corner.

(only large enough for one piece at a

time)


Production Process

1. Production worker produces 10 pieces

and places them on the napkin.

2. Each inspector, independently, counts

the blue ones, and passes to the Chief

Inspector to verify.

3. If Chief Inspector agrees, s/he tells

the recorder, who reports it to me.


Do it right

the first

time!

Be a Quality Worker!

Take Pride inTake Pride inTake Pride inTake Pride in

Your Work!Your Work!Your Work!Your Work!


Lessons Learned

• Quality is made at the top.

• Rigid procedures are not enough.

• People are not always the main source of

variability.

• Numerical goals are often meaningless.

• Inspection is expensive and does not

improve quality.


Statistical Methods

• Descriptive statistics

• Statistical inference

• Predictive statistics


Review of Key Concepts

• Random variables

• Probability distributions

• Populations and samples

• Point estimates

• Sampling distributions

• Standard error of the mean


Important Probability

Distributions

• Discrete

– Binomial

– Poisson

• Continuous

– Normal

– Exponential


Central Limit Theorem

• If simple random samples of size n are

taken from any population, the

probability distribution of sample means

will be approximately normal as n

becomes large.


Sampling Methods

• Simple random sampling

• Stratified sampling

• Systematic sampling

• Cluster sampling

• Judgment sampling


Sampling Error

• Sampling error (statistical error)

• Nonsampling error (systematic error)

• Factors to consider:

– Sample size

– Appropriate sample design


Design of Experiments

• A test or series of tests to compare two or more methods to determine which is better, or to determine levels of controllable factors to optimize the yield of a process or minimize the variability of a response variable.

• Factorial experiment

– Analysis of all combinations of factor levels to understand main effects and interactions


Excel Descriptive Statistics Tool

• Tools…Data Analysis… Descriptive Statistics


Excel Histogram Tool

• Tools…Data Analysis…Histogram


Process Capability

• The range over which the natural variation

of a process occurs as determined by the

system of common causes

• Measured by the proportion of output that

can be produced within design

specifications


Types of Capability Studies

• Peak performance study - how a process

performs under ideal conditions

• Process characterization study - how a

process performs under actual operating

conditions

• Component variability study - relative

contribution of different sources of variation

(e.g., process factors, measurement system)


Process Capability Study

1. Choose a representative machine or process

2. Define the process conditions

3. Select a representative operator

4. Provide the right materials

5. Specify the gauging or measurement method

6. Record the measurements

7. Construct a histogram and compute descriptive

statistics: mean and standard deviation

8. Compare results with specified tolerances


Process Capability

specification specification

specification specification

natural variation natural variation

(a) (b)

natural variation natural variation

(c) (d)


Process Capability Index

Cp = UTL - LTL

6σ

Cpl, Cpu }

UTL - µ

3σ

Cpl = µ - LTL

3σ

Cpk = min{

Cpu =


PROCESS_CAPABILITY.XLS


Chapter 10Chapter 10

Quality Improvement


Traditional Economic Model

of Quality of Conformance

Total cost

Cost due to

nonconformanceCost of

quality

assurance

“optimal level” of quality100%


Modern Economic Model

of Quality of Conformance

Total cost

Cost due to

nonconformanceCost of

quality

assurance

100%


Problem Solving

• Problem: any deviation between what “should be” and what “is” that is important enough to need correcting– Structured

– Semistructured

– Ill-structured

• Problem Solving: the activity associated with changing the state of what “is” to what “should be”


Quality Problem Types

1. Conformance problems

2. Unstructured performance problems

3. Efficiency problems

4. Product design problems

5. Process design problems


Problem Solving Process

1. Redefining and analyzing the

problem

2. Generating ideas

3. Evaluating and

selecting ideas

1. Implementing ideas


The Deming Cycle

Plan

DoStudy

Act


Juran’s Improvement Program

• Proof of the need

• Project identification

• Organization for breakthrough

• Diagnostic journey

• Remedial journey

• Holding the gains


Bethesda Hospital Model

Start

Reviewcurrent

situation

Describe process

Explorecause theories

Collect andanalyze data

Improvement?

Generate solutions

Plan

Do

Check

Improvement?

Actyes

no

yes

no


Crosby Quality Improvement

Program1. Management

commitment

2. Quality improvement team

3. Quality measurement

4. Cost of quality evaluation

5. Quality awareness

6. Corrective action

7. Zero defect committee

8. Supervisor training

9. Zero defects day

10. Goal setting

11. Error cause removal

12. Recognition

13. Quality councils

14. Do it over again


Creative Problem Solving

• Mess Finding – identify symptoms

• Fact Finding – gather data; operational

definitions

• Problem Finding – find the root cause

• Idea Finding – brainstorming

• Solution Finding – evaluate ideas and

proposals

• Implementation – make the solution work


Six-Sigma Quality

• Ensuring that process variation is half the

design tolerance (Cp = 2.0) while allowing

the mean to shift as much as 1.5 standard

deviations.


Six-Sigma Metrics

• Defects per unit (DPU) = number of

defects discovered ÷ number of units

produced

• Defects per million opportunities

(dpmo) = DPU × 1,000,000 ÷opportunities for error


k-Sigma Quality Levels

• Six sigma results in at most 3.4 defects per

million opportunities


Six-Sigma Implementation

1. Emphasize dpmo as a standard metric

2. Provide extensive training

3. Focus on on corporate sponsor support

4. Create qualified process improvement

experts

5. Ensure identification of appropriate

metrics

6. Set stretch objectives


GE’s Six-Sigma

Problem Solving Approach

1. Define

2. Measure

3. Analyze

4. Improve

5. Control


Tools for Six-Sigma

and Quality Improvement

• Elementary statistics

• Advanced statistics

• Product design and reliability

• Measurement

• Process control

• Process improvement

• Implementation and teamwork


The Seven QC Tools

1. Flowcharts

2. Check sheets

3. Histograms

4. Cause-and-effect diagrams

5. Pareto diagrams

6. Scatter diagrams

7. Control charts


Flowcharts

• Shows unexpected complexity, problem areas, redundancy, unnecessary loops, and where simplification may be possible

• Compares and contrasts actual versus ideal flow of a process

• Allows a team to reach agreement on process steps and identify activities that may impact performance

• Serves as a training tool


Run Chart

• Monitors performance of one or more processes over time to detect trends, shifts, or cycles

• Allows a team to compare performance before and after implementation of a solution to measure its impact

• Focuses attention on truly vital changes in the process

* **

* **

*


Control Chart

• Focuses attention on detecting and

monitoring process variation over time

• Distinguishes special from common causes

of variation

• Serves as a tool for on-going control

• Provides a common language for discussion

process performance* *

*

* **

*


Check Sheet

• Creates easy-to-understand data

• Builds, with each observation, a clearer

picture of the facts

• Forces agreement o the definition of each

condition or event of interest

• Makes patterns in the data become

obvious quickly xx

xxxxxx

x


Pareto Diagram

• Helps a team focus on causes that have the

greatest impact

• Displays the relative importance of

problems in a simple visual format

• Helps prevent “shifting the problem” where

the solution removes some causes but

worsens others


Histogram• Displays large amounts of data that are

difficult to interpret in tabular form

• Shows centering, variation, and shape

• Illustrates the underlying distribution of the data

• Provides useful information for predicting future performance

• Helps to answer the question “Is the process capable of meeting requirements?


Cause and Effect Diagram

• Enables a team to focus on the content of a

problem, not on the history of the problem or

differing personal interests of team members

• Creates a snapshot of collective knowledge and

consensus of a team; builds support for solutions

• Focuses the team on causes, not symptoms

Effect

Cause


Scatter Diagram

• Supplies the data to confirm a hypothesis

that two variables are related

• Provides both a visual and statistical means

to test the strength of a relationship

• Provides a good follow-up to cause and

effect diagrams*

* *

* *

*


Poka-Yoke (Mistake-Proofing)

• An approach for mistake-proofing processes

using automatic devices or methods to avoid

simple human or machine error, such as

forgetfulness, misunderstanding, errors in

identification, lack of experience,

absentmindedness, delays,

or malfunctions


Poka-Yoke Examples (from John Grout’s Poka-Yoke Page)



Quality Control


Quality Control (QC)

• Control – the activity of ensuring conformance to requirements and taking corrective action when necessary to correct problems

• Importance

– Daily management of processes

– Prerequisite to longer-term improvements


Designing the QC System

• Quality Policy and Quality Manual– Contract management, design control and

purchasing

– Process control, inspection and testing

– Corrective action and continual improvement

– Controlling inspection, measuring and test equipment (metrology, measurement system analysis and calibration)

– Records, documentation and audits


Inspection/Testing Points

• Receiving inspection

• In-process inspection

• Final inspection


Receiving Inspection

• Spot check procedures

• 100 percent inspection

• Acceptance sampling


Acceptance Sampling

Lot received for inspection

Sample selected and analyzed

Results compared with acceptance criteria

Accept the lot

Send to production

or to customer

Reject the lot

Decide on disposition


Pros and Cons

of Acceptance Sampling• Arguments for:

– Provides an assessment of risk

– Inexpensive and suited for destructive testing

– Requires less time than other approaches

– Requires less handling

– Reduces inspector fatigue

• Arguments against:

– Does not make sense

for stable processes

– Only detects poor

quality; does not help

to prevent it

– Is non-value-added

– Does not help suppliers

improve


In-Process Inspection

• What to inspect?– Key quality characteristics that are related to

cost or quality (customer requirements)

• Where to inspect?

– Key processes, especially high-cost and value-added

• How much to inspect?– All, nothing, or a sample


Economic Model

C1 = cost of inspection and removal of

nonconforming item

C2 = cost of repair

p = true fraction nonconforming

Breakeven Analysis: p*C2 = C1

If p > C1 / C2 , use 100% inspection

If p < C1 / C2 , do nothing


Human Factors in Inspection

• complexity

• defect rate

• repeated inspections

• inspection rate

Inspection should never be a means of assuring

quality. The purpose of inspection should be to gather

information to understand and improve the processes

that produce products and services.


Gauges and

Measuring Instruments

• Variable gauges

• Fixed gauges

• Coordinate measuring machine

• Vision systems


Examples of Gauges


Metrology - Science of

Measurement

• Accuracy - closeness of agreement between

an observed value and a standard

• Precision - closeness of agreement between

randomly selected individual measurements


Repeatability and Reproducibility

• Repeatability (equipment variation) –variation in multiple measurements by an individual using the same instrument.

• Reproducibility (operator variation) -variation in the same measuring instrument used by different individuals


Repeatability and

Reproducibility Studies

• Quantify and evaluate the capability of a

measurement system

– Select m operators and n parts

– Calibrate the measuring instrument

– Randomly measure each part by each operator

for r trials

– Compute key statistics to quantify repeatability

and reproducibility


R&R Evaluation

• Under 10% error - OK

• 10-30% error - may be OK

• over 30% error - unacceptable


Calibration

• Calibration - comparing a

measurement device or system to one

having a known relationship to

national standards

• Traceability to national standards

maintained by NIST, National Institute

of Standards and Technology


Example of QC: HACCP System

1. Hazard analysis

2. Critical control points

3. Preventive measures with critical limits for each

control point

4. Procedures to monitor the critical control points

5. Corrective actions when critical limits are not met

6. Verification procedures

7. Effective record keeping and documentation


Quality Control in Services

• Identify important quality

characteristics

– Time, errors, behavior

• Measure and collect data using check

sheets, check lists, or other means

• Take corrective action



Statistical Process Control


Statistical Process Control (SPC)

• A methodology for monitoring a process to

identify special causes of variation and

signal the need to take corrective action

when appropriate

• SPC relies on control charts


Common

Causes

Special

Causes


Histograms do not

take into account

changes over time.

Control charts

can tell us when a

process changes


Control Chart Applications

• Establish state of statistical control

• Monitor a process and signal when

it goes out of control

• Determine process capability


Capability Versus Control

Control

Capability

Capable

Not Capable

In Control Out of Control

IDEAL


Commonly Used Control Charts

• Variables data

– x-bar and R-charts

– x-bar and s-charts

– Charts for individuals (x-charts)

• Attribute data

– For “defectives” (p-chart, np-chart)

– For “defects” (c-chart, u-chart)


Developing Control Charts

1. Prepare– Choose measurement

– Determine how to collect data, sample size, and frequency of sampling

– Set up an initial control chart

2. Collect Data– Record data

– Calculate appropriate statistics

– Plot statistics on chart


Next Steps

3. Determine trial control limits

– Center line (process average)

– Compute UCL, LCL

4. Analyze and interpret results

– Determine if in control

– Eliminate out-of-control points

– Recompute control limits as necessary


Typical Out-of-Control Patterns

• Point outside control limits

• Sudden shift in process average

• Cycles

• Trends

• Hugging the center line

• Hugging the control limits

• Instability


Shift in Process Average


Identifying Potential Shifts


Cycles


Trend


Final Steps

5. Use as a problem-solving tool

– Continue to collect and plot data

– Take corrective action when

necessary

6. Compute process capability


Process Capability Calculations


Excel Template


Special Variables Control Charts

• x-bar and s charts

• x-chart for individuals


Charts for Attributes

• Fraction nonconforming (p-chart)– Fixed sample size

– Variable sample size

• np-chart for number nonconforming

• Charts for defects– c-chart

– u-chart


Control Chart Selection

Quality Characteristic

variable attribute

n>1?

n>=10 or computer?

x and MRno

yes

x and s

x and Rno

yes

defective defect

constantsamplesize?

p-chart withvariable samplesize

no

p ornp

yes constantsampling

unit?

c u

yes no


Control Chart Design Issues

• Basis for sampling

• Sample size

• Frequency of sampling

• Location of control limits


Pre-Control

nominal

value

Green Zone

Yellow Zones

Red

Zone

Red

Zone

LTL UTL


SPC Implementation

Requirements

• Top management commitment

• Project champion

• Initial workable project

• Employee education and training

• Accurate measurement system



Reliability


ReliabilityReliability

• Generally defined as the ability of a product

to perform as expected over time

• Formally defined as the probability that a

product, piece of equipment, or system

performs its intended function for a stated

period of time under specified operating

conditions


Maintainability

• The probability that a system or product

can be retained in, or one that has failed

can be restored to, operating condition in

a specified amount of time.


Types of Failures

• Functional failure – failure that occurs

at the start of product life due to

manufacturing or material detects

• Reliability failure – failure after some

period of use


Types of Reliability

• Inherent reliability – predicted by

product design

• Achieved reliability – observed during

use


Reliability Measurement

• Failure rate (λ) – number of failures

per unit time

• Alternative measures

– Mean time to failure

– Mean time between failures


Cumulative Failure Rate Curve


Failure Rate Curve

“Infant

mortality

period”


Average Failure Rate


Reliability Function

• Probability density function of failures

f(t) = λe-λt for t > 0

• Probability of failure from (0, T)

F(t) = 1 – e-λT

• Reliability function

R(T) = 1 – F(T) = e-λT


Series Systems

RS = R1 R2 ... Rn

1 2 n


Parallel Systems

RS = 1 - (1 - R1) (1 - R2)... (1 - Rn)

1

2

n


Series-Parallel Systems

• Convert to equivalent series system

AA BB

CC

CC

DD

RRAA RRBB RRCCRRDD

RRCC

AA BB CC’’ DD

RRAA RRBB RRDD

RRCC’’ = 1 = 1 –– (1(1--RRCC)(1)(1--RRCC))


Reliability Engineering

• Standardization

• Redundancy

• Physics of failure

• Reliability testing

• Burn-in

• Failure mode and effects analysis

• Fault tree analysis


Reliability Management

• Define customer performance requirements

• Determine important economic factors and

relationship with reliability requirements

• Define the environment and conditions of product

use

• Select components, designs, and vendors that meet

reliability and cost criteria

• Determine reliability requirements for machines

and equipment

• Analyze field reliability for improvement


Configuration Management

1. Establish approved baseline

configurations (designs)

2. Maintain control over all changes in the

baseline programs (change control)

3. Provide traceability of baselines and

changes (configuration accounting)


MaintainabilityMaintainability

• Maintainability is the totality of design

factors that allows maintenance to be

accomplished easily

• Preventive maintenance reduces the risk

of failure

• Corrective maintenance is the response to

failures


Design Issues

• Access of parts for repair

• Modular construction and

standardization

• Diagnostic repair procedures and

expert systems


Availability

• Operational availability

• Inherent availability

MDTMTBM

MTBFAO

+=

MTTRMTBF

MTBFAO

+=

MTBM = mean time between

maintenance

MTD = mean down time

MTBF = mean time between

failures

MTTR = mean time to repair



Building and Sustaining

Total Quality

Organizations


Why Adopt TQ Philosophy?

• Reaction to competitive threat to

profitable survival

• An opportunity to improve


Selling the TQ Concept

1. Learn to think like top executives

2. Position quality as a way to address priorities of stakeholders

3. Align objectives with those of senior management

4. Make arguments quantitative

5. Make the first pitch to someone likely to be sympathetic

6. Focus on getting an early

win, even if it is small

7. Ensure that efforts won’t

be undercut by corporate

accounting principles

8. Develop allies, both

internal and external

9. Develop metrics for return

on quality

10. Never stop selling quality


Corporate Culture and Change

• Corporate culture is a company’s value system and its collection of guiding principles

• Cultural values often seen in mission and vision statements

• Culture reflected by management policies and actions


Baldrige Core Values

and Concepts

• Visionary leadership

• Customer-driven excellence

• Organizational and personal learning

• Valuing employees and partners

• Agility

• Managing for innovation

• Focus on the future

• Management by fact

• Public responsibility

and citizenship

• Focus on results and

creating value

• Systems perspective


TQ vs. Traditional Management

• Organizational structures

• Role of people

• Definition of quality

• Goals and objectives

• Knowledge

• Management systems

• Reward systems

• Management’s role

• Union-management relations

• Teamwork

• Supplier relationships

• Control

• Customers

• Responsibility

• Motivation

• Competition


Cultural Change

• Change can be accomplished, but it is difficult

• Imposed change will be resisted

• Full cooperation, commitment, and participation

by all levels of management is essential

• Change takes time

• You might not get positive results at first

• Change might go in unintended directions


Common Mistakes

in TQ Implementation (1 of 3)

• TQ regarded as a “program”

• Short-term results are not obtained

• Process not driven by focus on customer, connection to strategic business issues, and support from senior management

• Structural elements block change

• Goals set too low

• “Command and control” organizational culture


Common Mistakes


• Training not properly addressed

• Focus on products, not processes

• Little real empowerment is given

• Organization too successful and complacent

• Organization fails to address fundamental questions

• Senior management not personally and visibly committed


Common Mistakes


• Overemphasis on teams for cross-functional

problems

• Employees operate under belief that more data are

always desirable

• Management fails to recognize that quality

improvement is personal responsibility

• Organization does not see itself as collection of

interrelated processes


Building on Best Practices

• Universal best practices

– Cycle time analysis

– Process value analysis

– Process simplification

– Strategic planning

– Formal supplier certification programs


Best Practices:

Infrastructure Design (1 of 3)

• Low performers

– process management fundamentals

– customer response

– training and teamwork

– benchmarking competitors

– cost reduction

– rewards for teamwork and quality


Best Practices:


• Medium performers

– use customer input and market research

– select suppliers by quality

– flexibility and cycle time reduction

– compensation tied to quality and teamwork


Best Practices:


• High performers

– self-managed and cross-functional teams

– strategic partnerships

– benchmarking world-class companies

– senior management compensation tied to

quality

– rapid response


Self Assessment: Basic Elements

• Management involvement and leadership

• Product and process design

• Product control

• Customer and supplier communications

• Quality improvement

• Employee participation

• Education and training

• Quality information


Implementing Total Quality:

Key Players

• Senior management

• Middle management

• Workforce


Sustaining the Quality Organization

• View quality as a journey (“Race without a finish line”)

• Recognize that success takes time

• Create a “learning organization”– Planning

– Execution of plans

– Assessment of progress

– Revision of plans based on assessment findings

• Use Baldrige assessment and feedback

• Share internal best practices (internal benchmarking)

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