Quality Management, Process Capability and Six Sigma MGMT 311

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Quality Management, Process Capability and Six
SigmaMGMT 311
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Quality Control

• Statistical Process Control or SQC
• Even if a process is in control, it may not be
  as capable as it could be
• For example, the defect rate could be high, and
  this may be acceptable, but it may cost too much
• Which leads us to Gryna

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Quality Management

• Quality Planning
• Quality Control
• Quality Improvement ?
• Juran

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Quality Improvement Types

• Continuous
• Incremental improvement small steps
• If done continually, major improvements occur
  over the long run
• Breakthrough
• Major improvement at one time
• Can allow leap-frog of competitors

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Quality Improvement

• 1930s and 40s - Quality Control (QC)
• Post-WW II - Total Quality (TQ) and Toyota
  Production system (TPS)
• Total Quality Control (TQC)
• Total Quality Management (TQM) 1980s and
  90s
• 6 Sigma 1985 to present

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W. Edwards Deming

• Major source of poor quality is variation
• Quality improvement is the responsibility of
  management
• All employees should be trained in use of
  problem solving tools and statistical techniques.

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W. Edwards Deming

• Invited to Japan after WWII to assist in
  reconstruction of industry
• Emphasized quality and variation reduction
• The rest is history!
• Deming Prize introduced in Japan in 1951

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6 Sigma

• Utilizes tools and techniques that span the
  range of all of quality management
• Systematic improvement process
• Project driven
• Training
• Certification Green Belt, Black Belt, Master
  Black Belt

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What is 6 Sigma?

• A statistical measure standard deviation
• A measure of process capability
• A method of quality improvement
• Generation I variation reduction 1980s
• Generation II cost reduction 1990s
• Generation III customer focus now
• A method to design quality in recent
• DFSS

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Companies using 6 sigma

• Motorola inventor, mid 1980s
• GE
• Texas Instruments
• Bank of American
• Citibank
• Boeing
• Home Depot
• and many more

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Six Sigma Defined

• a comprehensive and flexible system for
  achieving, sustaining, and maximizing business
  success.
• driven by understanding of customer needs,
  use of facts, data, and statistical analysis,
  and attention to managing, improving and
  reinventing business processes.
• The Six Sigma Way Pande, et al., p. xi

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GE

• 1997 6000 projects, 320 million in savings.
• 1998 - 750 million in savings
• 1999 1.5 billion in savings
• 1996 to 1999 claimed a total of 4.5 billion
  in savings 1.2 of revenue

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Citibank

• Reduced credit processing time by 50
• Reduced cycle times of processing statements
  from 28 days to 15 days

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Bank of America

• Started using six sigma in 2001
• Claimed 2 billion in benefits by 2003
• Many key customer processes near or at the 6
  sigma level.
• Customer delight indicators up 25
• Deposit processing improved by 47

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Standard Deviation

• Normal probability distribution
• Measure of dispersion of the data
• Calculations

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Measure of Process Capability

• Capability is the measure of how well the
  process performs
• Upper and lower specification limits USL and
  LSL
• Product is good within USL and LSL
• Product is defective if outside the USL or LSL
• The sigma level will be calculated using defects
  outside the USL and LSL

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6 Sigma Levels and Defects
Sigma Level Defects per million opportunities DPMO
2 308,537
3 66,807
4 6210
5 233
6 3.4

• Assumes a 1.5 Z shift.

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A Method of Quality Improvement

• Customer focus
• Data and fact driven
• Process focus, management and improvement
• Proactive
• Boundary-less collaboration
• Drive for perfection, tolerate failure

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Key Concepts of Six Sigma

• Critical to Quality Attributes most important
  to customers.
• Defect Failing to deliver what the customer
  wants.
• Process capability What the process can
  deliver.
• Variation What the customer sees and feels.
• Stable operations Ensuring consistent,
  predictable processes to improve what the
  customer sees and feels.
• GE

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5 Step Process - DMAIC

• Define the process and what customers require
• Measure the defects and the process
• Analyze the data and discover causes of defects
• Improve the process to remove causes of defects
• Control the process to prevent loss of the
  improvements

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Improving the Process

• To reach desired sigma capability level, change
  the spec limits! Or
• Reduce variation
• Calculate the USL and LSL
• Calculate the std dev, sigma, to reach the
  desired sigma capability level.

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Calculating Sigma Levels

• Variables any value
• Discrete (Attributes) good/bad, count of
  defects

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Variable Measures

• Normal Distribution
• USL and LSL
• Use Normal table to find defects
• Find the Defects Per Million Opportunities
  (DPMO)
• Use Table to Find Sigma Capability Level

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Discrete

• TDU total defects per unit
• TDU total number of defects divided by total
  number of units sampled
• DPMO defects per million opportunities
• Opportunities per unit number of different
  possible defects
• DPMO TDU x 1,000,000 divided by opportunities
  per unit
• Use table to find Sigma capability level

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Design for Six Sigma - DFSS

• Designing a new process
• Or a major redesign of an existing process
• 5 step process DMADV
• Define
• Measure
• Analyze
• Design
• Verify

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