Quality Management

It costs a lot to produce a bad product.

Norman Augustine

Cost of quality

1. Prevention costs
2. Appraisal costs
3. Internal failure costs
4. External failure costs
5. Opportunity costs

What is quality management all about?

Try to manage all aspects of the organization
in order to excel in all dimensions that are
important to customers

Two aspects of quality:

features: more features that meet customer needs
= higher quality
freedom from trouble: fewer defects = higher
quality

The Quality Gurus Edward Deming

Quality is
uniformity and
dependability
Focus on SPC
and statistical
tools
14 Points for
management
1986

PDCA method

1900-1993

The Quality Gurus Joseph Juran

Quality is
fitness for use
Pareto Principle
Cost of Quality
General
management
approach as well
as statistics
1951

1904 - 2008

History: how did we get here

Deming and Juran outlined the principles of Quality
Management.
Tai-ichi Ohno applies them in Toyota Motors Corp.
Japan has its National Quality Award (1951).

U.S. and European firms begin to implement Quality

Management programs (1980s).
U.S. establishes the Malcolm Baldridge National
Quality Award (1987).
Today, quality is an imperative for any business.

What does Total Quality Management encompass?

TQM is a management philosophy:
continuous improvement
leadership development
partnership development

Cultural
Alignment

Customer

Technical
Tools
(Process
Analysis, SPC,
QFD)

Developing quality specifications

Input

Design

Design quality

Process

Output

Dimensions of quality
Conformance quality

Six Sigma Quality

6

A philosophy and set of methods companies use to

eliminate defects in their products and processes
Seeks to reduce variation in the processes that lead to
product defects
The name six sigma refers to the variation that
exists within plus or minus six standard deviations of
the process outputs

Six Sigma Quality

Six Sigma Roadmap (DMAIC)

Next Project
Celebrate
Project $

Define
Customers, Value, Problem Statement
Scope, Timeline, Team
Primary/Secondary & OpEx Metrics
Current Value Stream Map
Voice Of Customer (QFD)

Control

Validate
Project $

Measure
Assess specification / Demand
Measurement Capability (Gage R&R)
Correct the measurement system
Process map, Spaghetti, Time obs.
Measure OVs & IVs / Queues

Document process (WIs, Std Work)

Mistake proof, TT sheet, CI List
Analyze change in metrics
Value Stream Review
Prepare final report

Validate
Project $
Validate
Project $

Improve
Optimize KPOVs & test the KPIVs
Redesign process, set pacemaker
5S, Cell design, MRS
Visual controls
Value Stream Plan

Analyze (and fix the obvious)

Validate
Project $

Root Cause (Pareto, C&E, brainstorm)

Find all KPOVs & KPIVs
FMEA, DOE, critical Xs, VA/NVA
Graphical Analysis, ANOVA
Future Value Stream Map

Six Sigma Organization

Quality

Quality Improvement

Traditional

Time

Continuous improvement philosophy

1. Kaizen: Japanese term for continuous improvement.
A step-by-step improvement of business processes.
2. PDCA: Plan-do-check-act as defined by Deming.

Plan

Do

Act

Check

3. Benchmarking : what do top performers do?

Tools used for continuous improvement

1. Process flowchart

Tools used for continuous improvement

2. Run Chart
Performance

Time

Tools used for continuous improvement

3. Control Charts
Performance Metric

Time

Tools used for continuous improvement

4. Cause and effect diagram (fishbone)

Machine

Man

Environment

Method

Material

Tools used for continuous improvement

5. Check sheet

Item
-------------------

Tools used for continuous improvement

6. Histogram

Frequency

Tools used for continuous improvement

7. Pareto Analysis
100%

75%

50

40

50%

30
20
10

25%
0%
A

Percentage

Frequency

60

Summary of Tools
1. Process flow chart
2. Run diagram
3. Control charts
4. Fishbone

5. Check sheet
6. Histogram
7. Pareto analysis

Case: shortening telephone waiting time

A bank is employing a call answering service

The main goal in terms of quality is zero waiting time
- customers get a bad impression
- company vision to be friendly and easy access
The question is how to analyze the situation and improve quality

The current process

Custome
rA

Custome
rB

Operator

Receiving
Party

How can we reduce

waiting time?

Fishbone diagram analysis

Absent receiving
party

Working system of
operators
Absent

Too many phone calls

Lunchtime

Out of office
Not at desk

Not giving receiving

partys coordinates

Complaining

Absent

Lengthy talk
Does not know
organization well

Takes too much time to

explain

Leaving a
message

Customer

Does not
understand
customer

Operator

Makes
custome
r wait

Reasons why customers have to wait

(12-day analysis with check sheet)
Daily
average

Total
number

One operator (partner out of office)

14.3

172

Receiving party not present

6.1

73

No one present in the section receiving call

5.1

61

Section and name of the party not given

1.6

19

Inquiry about branch office locations

1.3

16

Other reasons

0.8

10

29.2

351

Pareto Analysis: reasons why customers have to wait

Frequency

Percentage

300

87.1%

250

71.2%

200
49%
150
100

0%
A

Ideas for improvement

1. Taking lunches on three different shifts

2. Ask all employees to leave messages when leaving desks
3. Compiling a directory where next to personnels name
appears her/his title

Results of implementing the recommendations

After

Before
Percentage

Frequency

Percentage

Frequency

100%
87.1%

300

300

71.2%
200

Improvement
200

49%

100

100

100%

0%
A

0%
B

In general, how can we monitor quality?

By observing
variation in
output measures!

1. Assignable variation: we can assess the cause

2. Common variation: variation that may not be possible to

correct (random variation, random noise)

Statistical Process Control (SPC)

Every output measure has a target value and a level of
acceptable variation (upper and lower tolerance limits)
SPC uses samples from output measures to estimate the
mean and the variation (standard deviation)
Example
We want beer bottles to be filled with 12 FL OZ 0.05 FL OZ
Question:
How do we define the output measures?

In order to measure variation we need

The average (mean) of the observations:

1
X
N

x
i 1

The standard deviation of the observations:

N

2
(
x

X
)
i
i 1

Average & Variation example

Number of pepperonis per pizza: 25, 25, 26, 25, 23, 24, 25, 27

Average:
Standard Deviation:

Number of pepperonis per pizza: 25, 22, 28, 30, 27, 20, 25, 23

Average:
Standard Deviation:

Which pizza would you rather have?

When is a product good enough?

High
a.k.a
Upper/Lower Design Limits
(UDL, LDL)
Upper/Lower Spec Limits
(USL, LSL)
Upper/Lower Tolerance Limits
(UTL, LTL)

Incremental
Cost of
Variability

Zero
Lower Target
Tolerance Spec

Upper
Tolerance

Traditional View
The Goalpost Mentality

But are all good products equal?

High
Incremental
Cost of
Variability

Taguchis View
Quality Loss Function
(QLF)

Zero
Lower
Spec

Target
Spec

Upper
Spec

LESS VARIABILITY implies BETTER PERFORMANCE !

Capability Index (Cpk)

It shows how well the performance measure
fits the design specification based on a given
tolerance level
A process is k capable if

X k UTL

UTL X
1
k

and

X k LTL

and

X LTL
1
k

Capability Index (Cpk)

Another way of writing this is to calculate the capability index:

X LTL UTL X
C pk min
,

k
k

Cpk < 1 means process is not capable at the k level

Cpk >= 1 means process is capable at the k level

Accuracy and Consistency

We say that a process is accurate if its mean
the target T.

X is close to

We say that a process is consistent if its standard deviation

is low.

Example 1: Capability Index (Cpk)

X = 10 and = 0.5
LTL = 9
UTL = 11

LTL

UTL

11 10
10 9
C pk min
or
0.667

3 0.5
3 0.5

Example 2: Capability Index (Cpk)

X = 9.5 and = 0.5
LTL = 9
UTL = 11

LTL

UTL

Example 3: Capability Index (Cpk)

X = 10 and = 2
LTL = 9
UTL = 11

LTL

UTL

Example
Consider the capability of a process that puts
pressurized grease in an aerosol can. The design
specs call for an average of 60 pounds per square
inch (psi) of pressure in each can with an upper
tolerance limit of 65psi and a lower tolerance limit
of 55psi. A sample is taken from production and it
is found that the cans average 61psi with a standard
deviation of 2psi.
1. Is the process capable at the 3 level?
2. What is the probability of producing a defect?

Solution
LTL = 55 UTL = 65 X 61

C pk
C pk

=2

X LTL UTL X
min(
,
)
3
3
61 55 65 61
min(
,
) min(1,0.6667) 0.6667
6
6

No, the process is not capable at the 3 level.

Solution
P(defect) = P(X<55) + P(X>65)
=P(X<55) + 1 P(X<65)
=P(Z<(55-61)/2) + 1 P(Z<(65-61)/2)
=P(Z<-3) + 1 P(Z<2)
=G(-3)+1-G(2)
=0.00135 + 1 0.97725 (from standard normal table)
= 0.0241

2.4% of the cans are defective.

Example (contd)
Suppose another process has a sample mean of 60.5 and
a standard deviation of 3.

Which process is more accurate? This one.

Which process is more consistent? The other one.

Control Charts

Upper Control Limit

Central Line
Lower Control Limit

Control charts tell you when a process measure is

exhibiting abnormal behavior.

Two Types of Control Charts

X/R Chart
This is a plot of averages and ranges over time
(used for performance measures that are variables)

p Chart
This is a plot of proportions over time (used for
performance measures that are yes/no attributes)

Statistical Process Control with p Charts

When should we use p charts?
1. When decisions are simple yes or no by inspection
2. When the sample sizes are large enough (>50)
Sample (day)

Items

Defective

Percentage

200

10

0.050

200

0.040

200

0.045

200

13

0.065

200

15

0.075

200

25

0.125

200

16

0.080

Statistical Process Control with p Charts

Lets assume that we take t samples of size n

total number of "defects"

p
(number of samples) (sample size)

sp

p (1 p )
n

UCL p zs p
LCL p zs p

Statistical Process Control with p Charts

80
1
p
0.066
6 200 15
0.066 (1 0.066 )
sp
0.017
200

UCL 0.066 3 0.017 0.117

LCL 0.066 3 0.017 0.015

Statistical Process Control with p Charts

UCL = 0.117

p = 0.066

LCL = 0.015

Statistical Process Control with X/R Charts

When should we use X/R charts?

1. It is not possible to label good or bad

2. If we have relatively smaller sample sizes (<20)

Statistical Process Control with X/R Charts

Take t samples of size n (sample size should be 5 or more)

1 n
X xi
n i 1
X is the mean for each sample

R max{xi } min{xi }
R is the range between the highest and the lowest for each sample

Statistical Process Control with X/R Charts

1 t
X Xj
t j 1
X is the average of the averages.

1 t
R Rj
t j 1
R is the average of the ranges

Statistical Process Control with X/R Charts

define the upper and lower control limits

UCLX X A2 R
LCLX X A2 R
UCLR D4 R
LCLR D3 R

Read A2, D3, D4 from

Table TN 8.7

Example: SPC for bottle filling

Sample

Observation (xi)

Average

11.90

11.92

12.09

11.91

12.01

12.03

12.03

11.92

11.97

12.07

11.92

12.02

11.93

12.01

12.07

11.96

12.06

12.00

11.91

11.98

11.95

12.10

12.03

12.07

12.00

11.99

11.98

11.94

12.06

12.06

12.00

12.04

11.92

12.00

12.07

12.02

12.06

11.94

12.07

12.00

12.01

12.06

11.94

11.91

11.94

10

11.92

12.05

11.92

12.09

12.07

Range (R)

Example: SPC for bottle filling

Calculate the average and the range for each sample
Sample

Observation (xi)

Average

Range (R)

11.90

11.92

12.09

11.91

12.01

11.97

0.19

12.03

12.03

11.92

11.97

12.07

12.00

0.15

11.92

12.02

11.93

12.01

12.07

11.99

0.15

11.96

12.06

12.00

11.91

11.98

11.98

0.15

11.95

12.10

12.03

12.07

12.00

12.03

0.15

11.99

11.98

11.94

12.06

12.06

12.01

0.12

12.00

12.04

11.92

12.00

12.07

12.01

0.15

12.02

12.06

11.94

12.07

12.00

12.02

0.13

12.01

12.06

11.94

11.91

11.94

11.97

0.15

10

11.92

12.05

11.92

12.09

12.07

12.01

0.17

Then
X 12 .00
is the average of the averages

R 0.15
is the average of the ranges

Finally
Calculate the upper and lower control limits

UCLX 12.00 0.58 0.15 12.09

LCLX 12.00 0.58 0.15 11.91
UCLR 2.11 0.15 1.22
LCLR 0 0.15 0

The X Chart

UCL = 12.10

X = 12.00

LCL = 11.90

The R Chart
UCL = 0.32

R = 0.15

LCL = 0.00

The X/R Chart

UCL

LCL

What can you

conclude?
UCL

LCL