M2 EPM: Best Practices

Module 7:
Quality Management: Total Quality Management
(TQM), Lean Six Sigma, Process Improvement &
Statistical Process Control (SPC)
Adjunct Lecturer: Chamnab Nhel
Academic Year: 2022-2023
 Today’s Agenda

• Quality Management Overview

• SIPOC Analysis

• Six Sigma DMAIC Methodology

• Measuring with SPC and Process Capability

• Process Improvement and Six Sigma

• Lean Thinking and Lean Systems

 Leaders in the Quality Revolution

• Walter Shewhart
• W. Edwards Deming
• Joseph M. Juran
• Philip B. Crosby
• Armand V. Feigenbaum
• Kaoru Ishikawa
• Genichi Taguchi
Watch the ASQTV Video
https://videos.asq.org/quality-gurus
Applications in Services
 What is Quality? (Theorists)

• Study: “How Firms Define & Measure Quality”. Production & Inventory Management
Journal, 1996), n = 86 firms

Perfection Fast delivery

Providing a good, usable product
Consistency
Eliminating waste
Doing it right the first time

Delighting or pleasing customers

Total customer service and satisfaction
Compliance with policies and procedures
 Why Quality Management (Reflectors)
Business Results from Lean Six Sigma

Length of time to resolve a customer complaint 2.8 days ➔.8 days. (Sunny Fresh Foods)

Annual growth rate in revenues: 4.2% vs. Industry Average <1% (Clarke American)

Billing defects reduced from 3.65% to 1%, on-time delivery increased from 95% to 98%
(Texas Nameplate Co.)

Revenues increased 72% vs. flat industry average (The Bama Companies)

Customer quality scores averaged 95.8% vs. 84.1% for best competitor
 Quality and Profitability

Improved quality of Improved quality of

design conformance

Higher perceived value Higher prices Lower manufacturing and

by customer service costs

Increased market share Increased

revenues

Higher profitability
 Quality Management
Systems Focus Teamwork

Continuous Improvement Customer

…all consistent and compatible with one another and supported supported by an integrated
organizational infrastructure, a set of management practices, and a set of tools and techniques
 Key Idea

Process - sequence of activities intended to

achieve some result

KeyTools
Cross-functional process flow chart
Value Stream Map
 Process View vs. Functional View

• Who Manages the White Spaces on the Organizational Chart?

10
 Deming’s View of a Production System
SIPOC (High-level process map)

Inputs Process Outputs

Suppliers of Design and Consumer

Material and redesign research
Equipment Consumers
Receipt and
A test of
materials Distribution
B Production, assembly, inspection

D Tests of processes,
machines,
methods, costs

Figure 2.2 Deming's Flow Diagram Showing the Enterprise as a System. (Reprinted from Out of C risis by W.
Edwards Deming by permis sion of MIT and W. Edwards Deming. Publis hed by MIT, Center for Advanced
Engineering Study, Cambridge, MA 02139. Copyright 1986 by W. Edwards Deming.)
 SIPOC Example:

SIPOC Diagram ---- M&M’s

•Sugar Inc •Sugar •Blue M&M’s •Distributors •3.4 ounce

•Fortified •Corn syrup •Green •Wholesalers weight +/-
Corp •Flour M&M’s •Retailers 0.05
•Artificial •Chocolate •Orange •Online •Proportion
Flavors M&M’s blue 0.20 +/-
•Artificial color •Personalized 0.03
Amalgamated •Yellow
•Molasses •Defect free
•Wax Co M&M’s
•Thiamin < 0.02
•Cochineal •Brown
Co •Riboflavin M&M’s defects
•Folic acid •Red M&M’s
•Crushed •Packaging
insects Modes
Chocolate Cooling and Candy coating - Consolidation Packaging
Buttons segmentation Colors
Major Sources of Variation
 Six Sigma Model
S I P O C
Existing Manufacturing
Business Suppliers Inputs and service Outputs Customers
Processes processes

Define
Measure

Six Sigma
Methodology DMAIC
Control

Analyze

Improve

Improved
Business Quality Productivity Cost Profitability
Performance
 Quality Management Principles

• Customer Focus
• Leadership
• Involvement of People
• Process Approach
• System Approach to Management
• Continual Improvement
• Factual Approach to Decision Making
• Mutually Beneficial Supplier Relationships
 Six Sigma

Six Sigma can be described as 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 a clear financial return for the organization.
• Based on a statistical measure that equates to 3.4
or fewer errors or defects per million opportunities
• Pioneered by Motorola in the mid-1980s and
popularized by the success of General Electric
 Business Case for Six Sigma
• Improved process flows
• Reduced total defects
• Reduced cycle times
• Improved customer and employee satisfaction
• Decreased WIP
• Lower inventory levels
• Decreased costs
• Faster time to market
• Improved productivity
• Increased quality and reliability
• Common language – improved communication
*Six Sigma for Green Belts and Champions. Gitlow & Levin, pg 7
 Partial list of Six Sigma Adopters

• General Electric • Motorola • Optum Health

• Citigroup • American Express • St. Jude Medical
• Dupont • Eastman Kodak • Boston Scientific
• • Allied Signal
Bombardier • Amazon.com
• Seagate Technology
• Ceridian • Honeywell
• Navistar
• Johnson & Johnson • Dow Chemical
• Raytheon
• Polaroid • Ford Motor • Lockheed Martin
• Carlson Companies • Cargill • U.S. Bank
• Sony Electronics • Unisys • Eaton
• IBM • LG Electronics • Mayo Health Care
Six Sigma: Metric, Method, Management System
 Key Elements of Six Sigma Success
Top Management Leadership

Customer Driven

Focus on Business and Financial Results

Structured Method

Use of Special Metrics

Improvement Specialists
 Six Sigma Methodology
DMAIC: Define/Measure/Analyze/Improve/Control

Project Selection / Hopper

Define – describe the problem statement and its impact on stakeholders –
customer, employees, profitability
Measure – describe the measurements of the processes. Baseline and
opportunities for improvement

Analyze – Rigorous analysis of “root causes”. The ‘X’s

Improve – Develop solutions for best results

Control – Sustain the improvements

 Where did Six Sigma come from?
1970s – Japanese firm took over a Motorola TV factory producing TV sets in the U.S.➔Quasar TVs
• Under new management – TV sets were produced with 1/20th the number of defects with essentially the same
workers
1981- Motorola CEO Bob Galvin established goal of tenfold reduction in manufacturing defects in
5 years

1987 – Motorola met tenfold goal, but not fast enough. Raised bar to tenfold improvement in 2
years, 100-fold every 4 years

1987 – Bill Smith – Motorola engineer introduced quality measured at the target of 3.4 defects
per million opportunities (six sigma quality)

1988 – Motorola awarded Malcolm Baldrige Quality Award

Six Sigma pioneered by Motorola and popularized by the success of Jack Welch and General
Electric
• GE University, Croton Mass. Chief Learning Officer (CLO)
 Process Sigma

Six Sigma is a philosophy, measure, and methodology.

The philosophy is continuous improvement. The process sigma
measure is determined using a formula called DPMO (defects
per million opportunities) and the normal distribution. The methodology is DMAIC.

Process Sigma DPMO Process Yield

6.0 3.4 99.99966%
5.0 233 99.97670%
4.0 6,210 99.37900%
3.0 66,810 93.33190%
2.0 308,770 69.12300%
1.0 697,672 30.23280%
 PDSA, DMAIC, & Seven Step Methods
Draw Establish
Conclusions the Focus

Examine
the Current
Define Situation
Standardize
Control Measure
the
Changes Analyze
Act Plan the
Analyze
Causes

Study
Do
(Check)

Improve
Study Act on
the the Causes
Results

18
 Business Process Improvement
Plan-Do-Study-Act – Shewhart/Deming Cycle
• Plan
• 1. Define the process
• 2. Describe the process, key tasks, sequence, people involved,
equipment used, environment, methods, materials
• 3. Describe the people – external/internal customers, suppliers
• 4. Define customer expectations (VoC)
• 5. Determine data requirements
• 6. Describe perceived problems, gaps
• 7. Identify key causal factors
• 8. Develop potential solutions, evaluation criteria for solutions
• 9. Select most promising solution
 Business Process Improvement
Plan-Do-Study-Act – Shewhart/Deming Cycle
• Do
• 1. Conduct a pilot study or experiment
• 2. Identify key performance indicators (KPI)
• Study
• 1. Examine results of a pilot
• 2. Determine improvements made
• 3. Identify further experimentation
• Act
• 1. Select the best solution
• 2. Develop implementation plan
• 3. Develop new procedures to standardize the solution
• 4. Establish a process for monitoring and control
 The “Seven Quality Control (QC) Tools”
Flowcharts
Check sheets
Histograms
Cause-and-effect diagrams
Pareto diagrams
Scatter diagrams
Control charts
 Lean Tools
Relentless elimination of waste
Flow chart – Value Stream Mapping
Kaizen – continuous improvement
Poka yoke – mistake proofing
Pull system vs. push system
Strive towards a batch size of 1
5S Checklist
• Sort/segregate – identify non-value items and remove
• Simplify/straighten – organize with visual displays
• Shine/sweep – eliminate clutter
• Standardize – remove variability
• Sustain/self-discipline – review periodically and motivate improvements
 The Language of Lean
Muda Poka-yoke
Kanban Takt time
5S A3 thinking
5 Whys Hoshin planning
Kaizen, Kaizen blitz Theory of Constraints
Gemba Hidden factory
Heijunka SMED
Jidoka Keiretsu
Andon JIT
 Tools of Lean Production
The 5S’s: seiri (sort), seiton (set in order), seiso (shine), seiketsu
(standardize), and shitsuke (sustain).
Visual controls.
Efficient layout and standardized work.
Pull production.
Single minute exchange of dies (SMED).
Total productive maintenance.
Source inspection.
Kaizen - continuous improvement.
 Six Sigma Metrics in Services
Accuracy
Cycle time
Efficiency
Productivity
Effectiveness
Consistency
Cost
Customer satisfaction
 Tools of DMAIC – K.C.’s Pizza Delivery
• You are the owner of a pizza delivery company
• Hot pizza in 20 minutes or its free!
• Customer satisfaction has been stable but lags behind the
industry average
Define - Describe the problem in operational terms
• Drill down to a specific problem statement (project scoping)
• Identify customers and CTQs, performance metrics, and
cost/revenue implications
• SIPOC Analysis–Suppliers, Inputs, Processes, Outputs, Customers
• CTQ Tree – Critical to Quality Measures
• Focus on cycle time reduction – improve customer satisfaction
 Tools of DMAIC – K.C.’s Pizza Delivery
Measure – Cycle time
• From order input – a customer phone call to the collection at the
door
• Data collection plan
• By process – order-taking, production, boxing & packaging, delivery,
collection
• Descriptive statistics show skewed right distribution with a
median of 18.0 minutes mean of 18.8 minutes
• Significant proportion of distribution is above 20 minutes
 Tools of DMAIC – K.C.’s Pizza Delivery
• Measure – Descriptive Statistics, Box Plot & Histogram
• 1) Location, 2) Variability
 Tools of DMAIC – K.C.’s Pizza Delivery
• Measure – 3) Shape
 Tools of DMAIC – K.C.’s Pizza Delivery
• Measure – 4) Trend
 Tools of DMAIC – K.C.’s Pizza Delivery
• Measure – Pareto Analysis
 Tools of DMAIC – K.C.’s Pizza Delivery
• Analyze – Special Cause / Common Cause
 Tools of DMAIC – K.C.’s Pizza Delivery

Analyze excess variation

• Why are cycle times beyond 20 minutes?
• Inconsistency in the dough
• Delivery problems
• Collection problems
• Run out of ingredients
• Oven problems – not heating properly
• Insufficient capacity - Super Bowl Sunday
 Tools of DMAIC – K.C.’s Pizza Delivery
• Analyze – Cause-and-Effect Diagram

• Recommended Management Actions?

 Tools of DMAIC – K.C.’s Pizza Delivery

Improve – Generate Solutions / Management Actions

• Training
• Computer-generated printing of address label
• Address verification
• Online navigation
• Online traffic reports
• No Yugos
• Cloud seeding program over North Dakota to reduce snowfall
 Tools of DMAIC – K.C.’s Pizza Delivery
• Evidence of Improvement?
 Tools of DMAIC – K.C.’s Pizza Delivery
• Control – Control charts – AFTER Six Sigma Improvement
 Tools of DMAIC – K.C.’s Pizza Delivery
• Control – Process Capability AFTER Process Improvement

• Mission Accomplished! Are We Done?

 The Seven (+1) Wastes (Muda)
Overproduction: Producing more than the demand for customers resulting in unnecessary inventory,
handling, paperwork, and warehouse space.

Waiting Time: Operators and machines waiting for parts or work to arrive from suppliers or other
operations.

Transportation: Double or triple movement of materials due to poor layouts, lack of coordination and
workplace organization.

Processing: Poor design or inadequate maintenance or processes requiring additional labor or machine
time.

Inventory: Excess inventory due to large lot sizes, obsolete items, poor forecasts or improper production
planning.

Motion: Wasted movements of people or extra walking to get materials.

Defects: Use of materials, labor and capacity for production of defects, sorting our bad parts or warranty
costs with customers.

Underutilization of Employees: Failure to capitalize on employee’s knowledge and creativity.

Next class: Module 8
Thanks