ILOCOS SUR POLYTECHNIC STATE COLLEGE
Main Campus
MODULE 7
Operations Management
(TQM)
Course Code: STRAT 102
Descriptive Title: Operations Management (TQM)
Instructor: MICHAEL JERROLD F. HADLOC, MBA, CFMA
ILOCOS SUR POLYTECHNIC STATE COLLEGE
Main Campus
MODULE 7
Learning Outcomes:
At the end of the module, the students should be able to:
1. To explain the elements of control process
2. To discuss how control charts are used to monitor process and the concepts that
underline their use
3. To demonstrate awareness about the different elements of control charts
4. To use and interpret control charts
5. To discuss different steps in the implementation of statistical process control.
MODULE 7: QUALITY CONTROL
Introduction
The purpose of quality control is to give an assurance that the processes are performing
or the projects are implementing in an acceptable manner. Companies are using
different statistical techniques to monitor and control the processes and its performance.
Quality Control is the process that measures output relative to a standard and takes
corrective action when output does not meet standards. If the result is acceptable, the
organization has no reason to take further actions.
When the company most preferably in manufacturing is conducting quality assurance
and rely this process primarily on inspection of more produced items, the process is so
called acceptance sampling. Following figure shows the phase of quality assurance.
Course Code: STRAT 102
Descriptive Title: Operations Management (TQM)
Instructor: MICHAEL JERROLD F. HADLOC, MBA, CFMA
ILOCOS SUR POLYTECHNIC STATE COLLEGE
Main Campus
MODULE 7
The best companies emphasize designing quality into the process thereby greatly reducing
the need for inspection or control effort. As you might expect, different business
organizations are in different stages of this evolutionary process: The least progressive rely
heavily on inspection. Man occupy the middle ground that that involves some inspection
and a great deal of process control. The most progressive have achieved an inherent level
of quality that is sufficiently high that they can avoid wholesale Inspection activities and
process control activities by mistake prevention. That is the ultimate goal (Stevenson,
2010).
Inspection
Inspection is an appraisal activity that compares goods or services to a standard. Inspection
is very essential however it is often unappreciated aspect of quality control. Inspection can
occur at three points (1) before production, (2) during production and (3) after production.
The logic of checking conformance during production is to make sure that inputs are
acceptable. The essence of checking conformance during production is to make sure that
the transformation of input to outputs is arranged in an acceptable manner. The logic of
checking conformance after the production is to make final verification of conformance
before the delivery of produced products to customers.
Quality inspection is measures aimed at checking, measuring, or testing of one or more
product characteristics and to compare the produced to the determined standards of the
organization.
Origins of Quality Inspection
Quality inspection is the first stage of evolution of quality approach. The origins of quality
inspection back to the late nineteenth and early twentieth century. In days of fact growing
industry, Frederick Taylor developed the rules of scientific management. Quality wasn't up
to speed with rapidly increasing labor productivity. Frequently, the customer is had to
calculate with defective products. To alleviate the dissatisfaction or frustration of customers,
replacement of the defective product to a new one was made. However, this kind of
alternative solutions resulted to accumulated costs. To avoid these accumulated costs
experiencing by the organization, they came up to the introduction of controller position.
The designated employee, through carried out inspection, made sure that the greatest
possible m=number of good products leave the gate of the factory. This initial form of
quality inspection based on the principle of quality by sorting.
Figure 8.1 The development of quality approach
Course Code: Fin
STRAT157102
Descriptive Title: Capital Markets
Operations Management (TQM) Instructor:
Instructor: Mary JERROLD
MICHAEL Rose Supsup Abaniz
F. HADLOC, MBA, CFMA
ILOCOS SUR POLYTECHNIC STATE COLLEGE
Main Campus
MODULE 7
The Scope of Quality Inspection
Quality inspection serves three main purposes:
1. Identification of quality problem
2. Provision of information to managers
3. Elimination of the problem by managers
Quality inspection can be performed at the end of the production process out of the
intermediate inspection. However, as what is mentioned on the part of this chapter, to
eliminate so much cost, inspection can be done before, during and after the production
process.
The purpose of inspection is to provide information on the degree to which items conforms
to a standard. The basic issues are:
1. How much to inspect and how often.
2. At what points in the process inspection should occur.
3. Whether to inspect in a centralized or on site location.
4. Whether to inspect attributes.
Statistical Process Control (SPC)
Statistical process control, one of the major quality techniques being emphasized as part of
the growing focus on quality in the Philippines, has gained wide acceptance among quality
control experts. The long-term: benefits of this technique are increased communications
among all department, better insight into cost reduction, continuous quality improvement,
and a more effective design and fabrication interface (APL I Technical Digest, 1992).
Statistical process control can be used by the control experts when a large number of
similar items were being produced. Every process is subject to variability. Variability is the
extent to which data points in a statistical distribution or data set diverge from the average
value as well as the extent to which these data points differ from each other. In financial
terms this is most often applied to variability of investment returns. The variability present
when the process is running well is called short term or inherent variability. It is usually
measured by standard deviation.
The goals of SPC are as follows:
1. To achieve consistency by reducing overall variation in the process by implementing
corrective action.
2. To simplify procedures, methods, and tools.
3. To measure the long-term performance level after the process has been brought under
control.
4. To obtain the best performance from current equipment without major capital
expenditure.
5. To provide information for better cost estimation, feedback, a common language for
discussing process performance, and reliable permanent records and reports of actual
performance.
Course Code: Fin
STRAT157102
Descriptive Title: Capital Markets
Operations Management (TQM) Instructor:
Instructor: Mary JERROLD
MICHAEL Rose Supsup Abaniz
F. HADLOC, MBA, CFMA
ILOCOS SUR POLYTECHNIC STATE COLLEGE
Main Campus
MODULE 7
Control Charts
A control chart is a statistical tool used to distinguish between variation in a process
resulting from common causes and variation resulting from special causes. It presents a
graphic display of process stability or instability over time.
Data are plotted in time order. A control chart always has a central line for the average, an
upper line for the upper control limit, and a lower line for the lower control limit. These lines
are determined from historical data. By comparing current data to these lines, you can draw
conclusions about whether the process variation is consistent (in control) or is unpredictable
(out of control, affected by special causes of variation). This versatile data collection and
analysis tool can be used by a variety of industries and is considered one of the seven
basic quality tools.
Figure8.2 Sample of Control Chart
Every process has variation. Some variation may be the result of causes which are not
normally present in the process. This could be special cause variation. Some variation is
simply the result of numerous ever present differences in the process. This is common
cause variation. Control Charts differentiate between these two types of variation. One goal
of using a Control Chart is to achieve and maintain process stability. Process stability is
defined as a state in which a process has displayed a certain degree of consistency in the
past and is expected to continue to do so in the future.
The Benefits of Using Control Charts
The following are the benefits of using control charts to the organization that continuously
take effort to identify variations and monitor the quality of the produced products of the
company:
1. Monitor process variation over time.
2. Differentiate between special cause and common cause variant
3. Assess the effectiveness of changes to improve a process.
4. Communicate how a process performed during a specific period
Course Code: Fin
STRAT157102
Descriptive Title: Capital Markets
Operations Management (TQM) Instructor:
Instructor: Mary JERROLD
MICHAEL Rose Supsup Abaniz
F. HADLOC, MBA, CFMA
ILOCOS SUR POLYTECHNIC STATE COLLEGE
Main Campus
MODULE 7
Types of Control Charts
There are two main categories of Control Charts, those that display attribute data, and
those that display variables data.
• Attribute Data. This category of Control Chart displays data that result from counting the
number of occurrences or items in a single category of similar items or occurrences. These
"count" data may be expressed as pass/fail, yes/no, or presence/absence of a defect.
• Variables Data. This category of Control Chart displays values resulting from the
measurement of a continuous variable. Examples of variables data are elapsed time,
temperature, and radiation dose.
When to Use Control Charts
Control Charts are beneficial to the following occurrences:
• When controlling ongoing processes by finding and correcting problems as they occur
• When predicting the expected range of outcomes from a process
• When determining whether a process is stable (in statistical control)
• When analyzing patterns of process variation from special causes (non-routine events) or
common causes (built into the process)
• When determining whether your quality improvement project should aim to prevent
specific problems or to make fundamental changes to the process.
Elements of Control Charts
Each Control Chart actually consists of two graphs, an upper and a lower, which are
described below under plotting areas. A Control Chart is made up of eight elements.
1. Title. The title briefly describes the information which is displayed.
2. Legend. This is information on how and when the data were collected.
3. Data Collection Section. The counts or measurements are recorded in the data
collection section of the Control Chart prior to being graphed.
4. Plotting Areas. A Control Chart has two areas—an upper graph and a lower graph—
where the data is plotted.
• The upper graph plots either the individual values, in the case of an Individual X and
Moving Range chart, or the average (mean value) of the sample or subgroup in the case of
an X-Bar and R chart.
• The lower graph plots the moving range for Individual X and Moving Range charts, or the
range of values found in the subgroups for X-Bar and R charts.
5. Vertical or Y-Axis. This axis reflects the magnitude of the data collected. The Y-axis
shows the scale of the measurement for variables data, or the count (frequency) or
percentage of occurrence of an event for attribute data.
6. Horizontal or X-Axis. This axis displays the chronological order in which the data were
collected.
Course Code: Fin
STRAT157102
Descriptive Title: Capital Markets
Operations Management (TQM) Instructor:
Instructor: Mary JERROLD
MICHAEL Rose Supsup Abaniz
F. HADLOC, MBA, CFMA
ILOCOS SUR POLYTECHNIC STATE COLLEGE
Main Campus
MODULE 7
7. Control Limits. Control limits are set at a distance of 3 sigma above and 3 sigma below
the centerline they indicate variation from the centerline and are calculated by using the
actual values plotted on the Control Chart graphs.
8. Centerline. This line is drawn at the average or mean value of all the plotted data. The
upper and lower graphs each have a separate centerline.
Elements of Control Chart
Course Code: Fin
STRAT157102
Descriptive Title: Capital Markets
Operations Management (TQM) Instructor:
Instructor: Mary JERROLD
MICHAEL Rose Supsup Abaniz
F. HADLOC, MBA, CFMA
ILOCOS SUR POLYTECHNIC STATE COLLEGE
Main Campus
MODULE 7
Implementation of Statistical Process Control
Successful implementation of ongoing, effective SPC requires realistic and practical
approach. With proper planning, it should be able to be implemented in a real world
organization comprising various groups with competing problem and priorities. One of the
conditions deemed necessary for SPC to work is continuous education and training. An
overall strategy including an evaluation of need, a clear description of pertinent concept
meaningful application opportunities, and follow-up to ensure effective use of concepts, is
an absolute requirement for success. The checklist for SPC implementation is broken into
four phases:
Phase One
The first phase of SPC implementation is the most important. It require three actions:
1. Defining the project.
2. Assigning responsibilities.
3. Scheduling implementation.
An implementation plan to achieve the objectives should be provided in detail. Successful
completion of this phase will require the serious commitment of resources and active
involvement of all team members.
Phase Two
The second phase of implementation consists of five steps:
1. Collection of data.
2. Review of historical process and product data.
3. Review of equipment maintenance records.
4. Review of fabrication procedures.
5. Conduct of a process capability study.
The process capability study is a systematic procedure for determining the natural or
inherent variation in a process and is used to measure and evaluate the true capability of a
process. Process capability studies demonstrate whether or not the process is actually
capable of meeting specifications. Data collection and process capability studies establish
the necessary context for SPC (i.e., reviewing process history and equipment maintenance)
In addition to using the data collected to control the process, the team members study how
to improve the process. They also analyze the data by using the SPC methods taught in the
training sessions. Establishing and setting priorities for the specific, quantifiable measures
of improvement ensure that SPC is more than just the introduction of some statistical tools;
the tools are those from which constructive decisions can be made.
Phase Three
The third phase of SPC implementation focuses on the effective use of data, i and also
consists of five steps:
1. Determination of the most effective sampling scheme.
Course Code: Fin
STRAT157102
Descriptive Title: Capital Markets
Operations Management (TQM) Instructor:
Instructor: Mary JERROLD
MICHAEL Rose Supsup Abaniz
F. HADLOC, MBA, CFMA
ILOCOS SUR POLYTECHNIC STATE COLLEGE
Main Campus
MODULE 7
2. Elimination of unnecessary data collection.
3. Preparation of control charts.
4. Initiation of a control feedback scheme for corrective action.
5. Documentation of changes to the current procedure.
A strong emphasis is placed on eliminating unnecessary data collection during this phase, a
key to earning the endorsement of employees and management and allowing them to focus
their efforts on the significant aspects of the problem. Feedback schemes and documented
corrective procedures are strongly emphasized.
Phase Four
The fourth phase of implementation consists of four parts:
1. Introducing SPC across all areas for continuous improvement.
2. Monitoring effectiveness so the control scheme can be updated.
3. Performing continuous auditing of the process.
4. Maintaining the SPC record.
In this phase, specific objectives must be focused upon immediately and responsible
corrective action is needed to retain SPC for the long term Continuous process audit and
SPC documentation are needed to ensure reinforcement of the corrective action efforts.
Some caution must be exercised when implementing SPC in any process. Two kinds of
error must be avoided:
(1) Taking unnecessary actions on a stable process (i.e., tampering over adjusting), or
treating common cause sources as if they were special causes; and
(2) Failing to respond to process variations, or responding to special causes as if they were
common causes.
Some pitfalls to successful implementation of SPC include the following:
1. Making a short-term commitment (failure to stay on course).
2. Using a haphazard approach (a little of this, a little of that, with no meaningful change in
the system)
3. Failing to solicit worker input.
4. Measuring success and guiding a program on the basis of short-term profit.
5. Putting emphasis only on the production of control charts (charting for show only).
6. Charting with inadequate data that do not lead to corrective action (data are useless
unless they initiate action to eliminate defects).
Although conditions vary among organizations, the nature of the challenges is common to
almost every organization considering SPC implementation. The four phase implementation
checklist provides a framework for ensuring that SPC will actually be used on the shop
floor, and each phase is designed to deal with one or more of the challenge that design and
fabrication environments routinely pose to SPC implementation.
Course Code: Fin
STRAT157102
Descriptive Title: Capital Markets
Operations Management (TQM) Instructor:
Instructor: Mary JERROLD
MICHAEL Rose Supsup Abaniz
F. HADLOC, MBA, CFMA
ILOCOS SUR POLYTECHNIC STATE COLLEGE
Main Campus
MODULE 7
You may now proceed to the next module of this course. I hope you have
learned some information if not a lot in the
lessons discussed earlier.
Course Code: Fin
STRAT157102
Descriptive Title: Capital Markets
Operations Management (TQM) Instructor:
Instructor: Mary JERROLD
MICHAEL Rose Supsup Abaniz
F. HADLOC, MBA, CFMA
