OPERATIONS & TECHNOLOGY MANAGEMENT (JMP

5023)

MANAGING QUALITY &

SIX SIGMA
 Managing Quality and Six Sigma

 Quality management refers to systematic

policies, methods, and procedures used to
ensure that goods and services are produced
with appropriate levels of quality to meet the
needs of customers.

 Organizations today integrate quality

principles into their management systems,
using tools such as Total Quality Management
(TQM), Six Sigma, and Lean Operating
Systems.
Understanding Quality

 Quality can be a confusing concept, partly

because people view quality in relation to differing
criteria based on their individual roles in the value
chain such as:
perfection,
doing it right the first time, and/or
consistency.
 Fitness for use is the ability of a good or service to
meet customer needs.
 The GAP Model
The GAP model recognizes that there are
several ways to mis-specify and mismanage
the creation and delivery of high levels of
quality.

Gap 1 is the discrepancy between customer

expectations and management perceptions of
those expectations.

Gap 2 is the discrepancy between management

perceptions of what features constitute a target
level of quality and the task of translating these
perceptions into executable specifications.
 The GAP Model
 Gap 3 is the discrepancy between quality
specifications documented in operating and
training manuals and plans, and their
implementation.

 Gap 4 is the discrepancy between actual

manufacturing and service delivery system
performance and external communications to
the customers.

 Gap 5 is the difference between the customer's

expectations and perceptions. The fifth gap
depends on the other four.
Gap Model of Quality
Quality in Operations
• Fitness for Use: the ability of a good
or service to meet customer needs.
• Quality of Conformance: extent to
which a process is able to deliver
output that confirms to design
specifications.
• Specifications: targets and tolerances
determined by designers of goods and
services.
Quality in Operations

• Quality Control: means of ensuring

consistency in processes to achieve
conformance.

• Service Quality: consistently

meeting or exceeding customer
expectations and service delivery
system performance criteria during all
service encounters.
Quality in Operations

Principles of Total Quality

1. A focus on customers and

stakeholders.
2. A process focus supported by
continuous improvement and
learning.
3. Participation and teamwork by
everyone in the organization.
Quality and Business Results

Investment in Quality Yields Business

Results
 Increased employee participation
 Improved product and service quality
 Improved customer satisfaction
 Improved productivity
 Improved employee skills
 Improved financial performance
W. Edwards Deming

Bringing about improvements

in product and service quality
by reducing uncertainty and
variability in goods and services
design and associated
processes
(the beginning of his ideas
in 1920s and 1930s).
W. Edwards Deming

 Higher quality leads to higher productivity and

lower costs.

 Deming’s “Chain Reaction” theory

 “14 Points” management philosophy.

 Deming Cycle – Plan, Do, Study, and Act.

The Deming
Chain
Reaction
Joseph Juran
• Wrote Quality Control Handbook
in 1951, a comprehensive
quality manual.

• Defined quality as
“fitness for use.”

• Advocated use of
quality cost measurement.

• Quality Trilogy: quality planning, quality control, and

quality improvement.
Philip B. Crosby

• Wrote Quality is Free in 1979, which brought quality to

the attention of top corporate managers.

• Quality means conformance to requirements, not

elegance.
Philip B. Crosby
• There is no such thing as the economics of
quality; doing the job right the first time is
always cheaper.

• The only performance measurement is the

cost of quality which is the expense of
nonconformance.

• The only performance standard is Zero Defects

(ZD).
ISO 9000:2000
• Quality standards were created in 1987 and
revised in 1994 and 2000 to improve product
quality, improve the quality of operation’s
processes, and provide confidence to
organizations and customers that quality
system requirements are fulfilled.
• Internationally recognized (and sometimes
required to do business in certain countries).
• Standardizes key terms in quality and
provides a set of basic principles for initiating
quality management systems.
Designing Quality Management and Control
Systems
• Contract management, design control, and
purchasing.

• Process control: ensure that a process performs as

it should and take corrective action when it does
not.

• Corrective action and continual improvement

• Controlling inspection, measuring, and test

equipment.
Designing Quality Management and
Control Systems

• Metrology is the collection of people,

equipment, facilities, methods, and
procedures used to assure the
correctness or adequacy of
measurements.
Designing Quality Management and
Control Systems
Repeatability, or equipment variation, is the
variation in multiple measurements by an individual
using the same instrument. This is a measure of
how precise and accurate the equipment is.

Reproducibility, or operator variation, is the

variation in the same measuring instrument when it
is used by different individuals to measure the same
parts. This indicates how robust the measuring
process is to the operator and environmental
conditions.
Designing Quality Management and Control
Systems

Records, documentation, and audits

• All the elements required for a quality system,

such as control processes, measuring and test
equipment, and other resources needed to
achieve the required quality of conformance,
should be documented in a quality manual,
which serves as a permanent reference for
implementing and maintaining the system.
Six Sigma
• Six Sigma is a business improvement approach
that seeks to find and eliminate causes of
defects and errors in manufacturing and service
processes by focusing on outputs that are
critical to customers and results in a clear
financial return for the organization.

• Used by companies including Motorola, Allied

Signal, Texas Instruments, and General Electric.
Six Sigma’s DMAIC Process
Define: identify customer and priorities, identify
and define a suitable project, identify CTQs
(critical to quality characteristics).
Measure: determine how to measure the
process, identify key internal processes that
influence CTQs.
Analyze: determine likely causes of defects and
understand why defects are generated by
identifying key variables that cause process
variation.
Six Sigma’s DMAIC Process
Improve: identify means to remove defects,
confirm key variables, modify the process to
stay within acceptable range.

Control: determine how to maintain

improvements, put tools in place to ensure
that key variables remain within acceptance
ranges under the modified process.
Implementing Six Sigma
Six Sigma teams are comprised of
 Champions - senior-level managers who promote and lead
the deployment of Six Sigma in a significant area of the
business.
 Master Black Belts - full-time Six Sigma experts who are
responsible for Six Sigma strategy, training, mentoring,
deployment, and results.
 Black Belts - fully-trained Six Sigma experts with up to 160
hours of training who perform much of the technical
analyses required of Six Sigma projects, usually on a full-
time basis.
Implementing Six Sigma
Six Sigma teams are comprised of
 Green Belts – functional employees who are trained in
introductory Six Sigma tools and methodology and work on
projects on a part-time basis, assisting Black Belts while
developing their own knowledge and expertise.

 Team Members are individuals from various functional areas

who support specific projects.
Cost of Quality Measurements

• Cost of quality: costs associated with avoiding

poor quality or those incurred as a result of poor
quality.
• Prevention costs: expended to keep
nonconforming goods and services from being
made and reaching the customer.
• Appraisal costs: expended on ascertaining
quality levels through measurement and analysis
of data to detect and correct problems.
Cost of Quality Measurements

• Internal-failure costs: costs incurred as a

result of unsatisfactory quality that is found
before delivery of good or service to the
customer.

• External-failure costs: incurred after poor-

quality goods or services reach the customer.
The “Seven QC Tools”

1. Flowcharts: process mapping to identify the

sequence of activities or flow of
materials/information in a process.
2. Run Charts and Control Charts: line graph
with data plotted over time; control charts
include control limits.
3. Checksheets: simple tools for data collection,
ensure completeness.
4. Histograms: graphically represents frequency
of values within a specified group.
The Structure of a Control Chart
Defective Item Checksheet
The “Seven QC Tools”

5. Pareto Analysis: separates vital few from

the trivial many causes; provides direction for
selecting project improvement.
6. Cause-and-Effect Diagrams: represents
chain of relationships; often called a fishbone
diagram.
7. Scatter Diagrams: graphical component of
regression analysis.
Use of Pareto
Diagrams for
Progressive
Analysis
Cause-and-Effect (Fishbone) Diagram for
Hospital Emergency Admission
Application of the Seven QC Tools in Six Sigma
 Seven Tools of Quality Management
1. Flowcharts: process mapping to identify the sequence
of activities or flow of materials/information in a
process.
2. Run Charts and Control Charts: line graph with data
plotted over time; control charts include control limits.
3. Checksheets: simple tools for data collection, ensure
completeness.
4. Histograms: graphically represents frequency of
values within a specified group.
5. Pareto Analysis: separates vital few from the trivial
many causes; provides direction for selecting project
improvement.
6. Cause-and-Effect Diagrams: represents chain of
relationships; often called a fishbone diagram.
7. Scatter Diagrams: graphical component of regression
analysis.
 The Deming Cycle

•Plan: study current situation

•Do: Implement plan on trial basis
•Study: determines if trial is working correctly
•Act: standardize improvements
 Managing Quality and Six Sigma
Kaizen: focuses on small, gradual, and
frequent improvements over the long term
with minimum financial investment and
with participation by everyone in the
organization.

Poka-Yoke (Mistake-Proofing): an
approach for mistake-proofing processes
using automatic devices or methods to
avoid simple human error.
 Managing Quality and Six Sigma

Process Simulation: an approach for

building a logical model of a real process,
and experimenting with the model to
obtain insight about the behavior of the
process or to evaluate the impact of
changes in assumptions or potential
improvements to it.
 Process simulation should be used when the
process is very complex and difficult to
visualize, involves many decision points, or
when the goal is to optimize the use of
resources for a process.

 Building, maintaining and using a simulation

model can be expensive.