OM Six Sigma MH ENEMBA 7 For Student

QUALITY MANAGEMENT
Six SIGMA Quality

OPERATION MANAGEMENT
L E C T U R E R /F A C I L I TA T OR
.
Dr. MUHAMMAD HANAFI, ST, MBA, IPM
Institut Teknologi Bandung

Table of
Content
Quality
Process Capability
Quality definition
Capability Ratio
Quality Gurus
Capability Index
Cost of Quality
Exercise
Quality competing demand
Process Capability
Control Chart Control Chart
SixSIGMA Run chart
Lean, Coffe kaizen SPC
DMAIC , Tools, Infrastruture Western electric rules
Dr. Muhammad Hanafi, ST, IPM, MBA

Cut Cost for Faster
Dr. Muhammad Hanafi, ST, IPM, MBA Sources : Heizer

Leaders in Quality
W. Edwards Deming 14 Points for

Management
Joseph M. Juran Top management
commitment,
fitness for use
Armand Feigenbaum Total Quality
Control
Philip B. Crosby Quality is Free
Defining Quality
The totality of features and

characteristics of a product or service
that bears on its ability to satisfy stated
or implied needs
American Society for Quality

Ways Quality
Improves Productivity
Sales Gains
 Improved response
 Higher Prices
 Improved reputation
Improved Increased
Quality Profits
Reduced Costs
 Increased productivity
 Lower rework and scrap costs
 Lower warranty costs
Figure 6.1

Implications of
Quality
Company reputation
 Perception of new products
 Employment practices
 Supplier relations
Global implications
 Improved ability to
compete
Product liability
 Reduce risk

Different Views
 User-based – better performance,

more features
 Manufacturing-based –
conformance to standards, making it
right the first time
 Product-based – specific and
measurable attributes of the product

Competing Demand
of Quality
 Performance  Durability
 Serviceability
 Features
 Aesthetics
 Reliability
 Perceived quality
 Conformance
 Value

Cost is more important
than quality but quality is
Costs of Quality the best way to reduce
cost
-Genici Taguchi-
Total Total Cost  Appraisal costs - evaluating

Cost
products, parts, and services
External Failure
 Prevention costs - reducing the
potential for defects
Internal Failure  Internal failure - producing
defective parts or service before
delivery
Prevention  External costs - defects
Appraisal discovered after delivery
Quality Improvement

Ex. Tractor Clutch

DR.IR MUHAMMAD HANAFI MBA IPM Sources : ALCAN
Seven Concepts of
TQM TQM
 Continuous improvement
Encompasses entire organization,
from supplier to customer  Six Sigma
 Employee empowerment
Stresses a commitment by
management to have a continuing,  Benchmarking
companywide drive toward  Just-in-time (JIT)
excellence in all aspects of  Taguchi concepts
products and services that are  Knowledge of TQM tools
important to the customer

Lean History
It begins from Toyota ( to improve what is started by Ford)
Adopted by others Japanese company
Developed and introduced further by USA’s company
Popular with names :
Toyota Production Systems (TPS)

◦ Just in Time Production
◦ Flow Production
◦ Focus on waste
Courtesy : SSCX
DR.IR MUHAMMAD HANAFI MBA IPM
What is Lean?
Lean is a methodology that
evaluates processes with a
focus on Cut Waste &
Remove Non-Value
◦ Speed
Added activities
◦ Efficiency
What you Believe it is... What it Actually is... What you Want it to be..

DR.IR MUHAMMAD HANAFI MBA IPM Courtesy : SSCX
MEASURE: Do What is Considered
Important
(Value) by Customer
Fact: 70-80% of business activities in organization is Waste
All waste activities is NOT PAID by CUSTOMER → Meaning, it only add operational cost
Dr.Ir Muhammad Hanafi MBA IPM

Value added vs. Waste
Value Added Activity => paid by the customer
Non Value Added Activity => not needed and not paid by the
customer
Value Enabler /Business non Value added => not paid by the
customer, but is needed by next process or standards

Waste
Every Activity that doesn’t have value addition
There are 7 wastes

Coffee Kaizen

Group Task
Coffee Kaizen
Identify Waste? (5’)

Lean Koffee Kaizen
Transportation
Inventory
Motion
Waiting
Over Production
Over Processing
Defect/Rework

Identify MUDA, MURA, MURI in
Your Process
MUDA (Non Added Value)
MURA (Irregularity)
MURI (Overburdens)

8 Deadly Wastes in Business:
DOWNTIME
Non Utilized Talent
▪ Limited Authority
▪ Unavailable
business tools
▪ Management
Command
People

Lean Methods

6 Sigma Quality Quotes
“Gone today
Here Tomorrow”
Without a -John D Sterman-
standard there is We fail more often because
no logical basis for we solve the wrong
making a decision problem than because we
or taking action get the wrong solution to
-Joseph M Juran- the right problem
Without data you -Russell Ackoff-
are only an
opinion
-Deming-

Why Use Lean Six Sigma?
US DoD
•LSS is the CPI industry standard Fannie Mae Wells Fargo
Bank Of America Robert Half
✓ Increase throughput Intuit Fifth Third Bank
CitiGroup
✓ Shorten cycle times AXA Equitable
United Health Group
✓ Reduce defects Cardinal Health
Maytag Blue Cross
✓ Lower costs Praxair Providence Health
Ford Home Depot
Air Products
Siemens Honeywell
Siebe Foxboro Compaq Johnson Controls
Lockheed Martin Seagate Johnson & Johnson
Motorola Bombardier PACCAR
ABB John Deere Toshiba
TI Whirlpool DuPont
IBM GenCorp Dow Chemical
DEC Nokia
Kodak Sony
AlliedSignal
GE
1992 1995 2000 Today

What is Six Sigma Quality?
A measure of process capability (Cpk)
A set of tools: tools for improvement
A disciplined methodology: follow the metodology DMAIC
A vision : A philosophy: to achieve sustainable improvement
A strategy :use a data-driven approach to attack defects to
improve the sigma level of your products , process, and
services.
Benchmark of our product and process capability for
comparison to ‘best in class’
A Business scorecard : performance measurement lead to
continuous improvement

SIX SIGMA TERM
The term “Sigma” is a Greek letter () used to describe

variability and is an indicator of how likely errors are to
occur
Centered Normal Distribution +/-6 Sigma Limits
LSL Normal Distribution Centered USL  DPMO* Yield
6 3.4 99.9997%
5 233 99.977%
4 6,210 99.379%
3 66,807 93.32%
2 308,537 69.2%
1 690,000 31%
* Defects Per Million Opportunities

-6 -3 -2 -1 x +1 +2 +3 +6
Courtesy : SSCX
DPMO - example
An office manager is considering revising some of her documentation systems.
She wishes to compare the system described below with other dissimilar
processes in the office. She decided to determine the capability of the process to
be compared.
A finished document contains a total of 4 critical entries. A critical entry is an

opportunity for a defect, mistake or error. An inspection of 3,000 documents
revealed a total of 195 errors and 94% of the documents were defect free.
total# ofdefect
dpmo = 1,000,000
total# opportunities
195
dpmo = 1,000,000 = 16,250  3.6 ( cap )
12,000
How good is good enough?
99.9% is already VERY GOOD

But what could happen at a quality level of 99.9% (i.e., 1000 ppm),
in our everyday lives (about 4.6)?
• 4000 wrong medical prescriptions each year
•More than 3000 newborns accidentally falling

from the hands of nurses or doctors each year
• Two long or short landings at American airports each day
• 400 letters per hour which never arrive at their destination
Courtesy : SSCX

Variation of Process
The length of queuing in BANK SIX While, The length of queuing in BANK
during last 5 days: SIGMA during last 5 days:
32 minutes 21 minutes
14 minutes, and 20 minutes, and
The queuing time means is The queuing time means is

(32+12+40+14+7)/5= 21 Minutes (21+19+23+20+22)/5= 21 Minutes
Which one is preferred?

Courtesy : SSCX
Variation is evil
Courtesy : SSCX
Variation and Mean
Shifting process Reduce process

mean Variation

Courtesy : SSCX
What is Six Sigma?
Six Sigma evaluates a process in terms of performance, accuracy, and consistency
LSL USL
6
 Standard
deviation
Time
Pain Points in performance are targeted for improvement

Dr. Muhammad
DPMO
100
1
10000
1000000
1000
100000
0
10
0
fall between 3 - 4 sigma

1
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S
Experts think most businesses
an
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Hanafi, ST, IPM, MBA

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Where Are Businesses Today?
ra
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Lean Six Sigma Is the Integration of Two
Powerful Business Improvement Approaches...
Lean Six Sigma

Speed + Waste Elimination + Quality, Cost +
Implicit Infrastructure Explicit Infrastructure
Goal – Reduce waste and increase Goal – Improve performance on Customer CTQs
process speed
Focus – Use DMAIC with TQM tools to eliminate
Focus – Bias for action/ Implementing variation
Toyota tools
Method – Management engagement, 1%
Method – Kaizen event bias, Value dedicated as Champions and Black Belts
Stream Mapping
Lean Speed Enables Six Sigma Quality Enables

Six Sigma Quality Lean Speed
(Faster Cycles of (Fewer Defects Means
Experimentation/learning) Less Time Spent on Rework)

Courtesy : ALCAN
Methodology-DMAIC Concept Focus
Define “Many Potential Projects”

Single Project Selected
“Where are we now?”

Measure Project Baseline Measured
“Many Potential
Root Causes”
Analyze Root Causes Identified
And Verified
“What is the solution?”

Improvements Tested
Improve and Measured
“How do we sustain
the gains”
Control Self-Sustaining
Institutionalized
Process

A Program of Process
Improvement

A Program of Process
Improvement
•Define project scope
Practical
Define
•Determine primary metric
Problem •Determine secondary metric(s)
•Validate the Y measurement system
M easure
•Determine initial capability
Statistical •Subjective exploration of potential Xs
Problem •Characterize the XY relationships
Analyze
•Use graphical and quantitative analyses to
separate trivial many from critical few.
Statistical •Confirm critical Xs
Improve
Solution •Reduce variation
•Shift the mean
•Confirm results
•Assess new process capability

Practical •Mistake-proof the process
Co ntrol
Solution •Place controls on process

•Document and share the results
Fundamental Principle of LSS
We know we must change Xs to create a change in Y…
 But how do we know which Xs to change
and how to change them?
key process and input factors

process output is a function of
that cause variation in the output
y = f (x1, x2, …)

LSS INFRASTRUCTURE

Courtesy : SSCX
LSS Training
Time on
Consulting/ Related
Task Mentoring
Projects
Training
Utilize
Green Statistical/
Find one
2%~5% new green 2 / year
Belt Quality
technique
belt
Lead use
of
Black technique
and 5%~10%
Two green
4 / year
belts
Belt communic-
ate new
ones
Master Consulting/
Five Black
Black Mentoring/ 80~100%
Belts
10 / year
Training
Belt
Lean Six Sigma Project
in Mining Company
THE PROJECTS SUMMARY
Courtesy : PT FREEPORT

DMAIC Process OVERALL
JKMA Hang
Project Start/define Archiving data trial
Analyze problem
Assay
delay
measure Improve Re-analyze Run Automatic

transfer PI tag
Courtesy : PT FREEPORT

Flowchart-SIPOC Flow Diagram
Courtesy : Jacobs & Chase

Dr. Muhammad Hanafi, ST, IPM, MBA 12-44
Run Chart Control Chart

Cause-and-Effect Diagram
(Fishbone Diagram)

Additional Six Sigma Tools
Failure mode and effect analysis (FMEA): is a
structured approach to identify, estimate, prioritize,
and evaluate risk of possible failures at each stage in
the process
Design of experiments (DOE): a statistical

methodology to determine cause-and-effect
relationships between process variables and output
◦ Permits experimentation with many variables simultaneously

SIGMA STATION
TizerCo.
Courtesy : SSCX
SIGMA STATION

SIX SIGMA & CHANGE
Dr. Muhammad Hanafi, ST, IPM, MBA Courtesy : SSCX

Wrapped UP
From this slide and below please learn
and if you find difficulty let us discuss
later on in the next class
Process Capability, and Control Chart
Variability
Central Tendency
Central Tendency is
Variability is the
the measure of the
measures of data
group of data
spreading( How spread
position how close to
is the data), range,
the centre: mean,
variants, SD
median, modus

Accuracy and Precision
Accurate but not precise - On Precise but not accurate - The

average, the shots are in the average is not on the center,
center of the target but there but the variability is small
is a lot of variability
Dr. Muhammad Hanafi, ST, IPM, MBA OSSS LSS Black Belt v 9.0 - Measure Phase 54
Accuracy vs. Precision
ACCURATE PRECISE BOTH
+ =
Accuracy relates to how close

the average of the shots are to
the Master or bull's-eye.
Precision relates to the spread

of the shots or Variance.
NEITHER
Dr. Muhammad
55
Hanafi, ST, IPM, MBA OSSS LSS Black Belt v 9.0 - Measure Phase
Process Capability

Process Capability and 6
Tolerance Limits identify the
range of values acceptable to
the end customer
LTL = Lower tolerance limit
UTL = Upper tolerance limit
A “capable” process has UTL
and LTL 3 standard
deviations away from the
mean, or 3σ.

Process Capability
Capable Not Capable
In control
LTL UTL LTL UTL
Out of
control
LTL UTL
LTL UTL
Capability Ratio

Level-Level CP

Process Capability
Specs: 1.5 +/- 0.005

Mean: 1.490 Std. Dev. =
0.002
Are we in trouble?

Process Capability
USL − LSL
Specs: 1.5 +/- 0.005 Cp =
6
Mean: 1.490 Std. Dev. = 0.002 CP?
LCL = 1.49 - 3*0.002 = 1.484 1.505 − 1.495
Cp =
UCL = 1.49 + 0.006 = 1.496 6 * 0.002
CP = 0.833
CP < 1
Process
Specs
1.484 1.495 1.496 1.505

Capability Index
Capability Index (Cpk) will tell the position of
the control limits relative to the design
specifications.
Cpk 1.0, process is capable
Cpk < 1.0, process is not capable
Formal Definition
Cp = 2.0
Cpk = 1.5

Process Capability-Cpk
Specs: 1.5 +/- 0.005

Mean: 1.490 Std. Dev. = 0.002
Are we in trouble? Cpk?

Capability Index
Tells how well parts produced fit into specs
 X − LSL USL − X 
C pk = min  or 
 3 3 
For our example:
Cpk = min[ -0.833, 2.5] We’re in big trouble.

1.49 − 1.495 1.505 − 1.49 
C pk = min  or 
 0.006 0.006 

Ex. Case 2. Camshaft

Ex case 2 Camshaft

Ex Case 2 Camshaft

Ex. case 2 Camshaft

Statistical Basis of the Control
Chart
Basic Principles
A typical control chart has control limits set at
values such that if the process is in control,
nearly all points will lie between the upper
control limit (UCL) and the lower control limit
(LCL).

Statistical Basis of the Control
Chart
Basic Principles
X
70
60
50 UCL
40
30
20
10
LCL
0
1 2 3 4 5 6 7 8 9 10 11 12
Time

Statistical Methods for
Quality Control & Improvement
Statistical process control is a collection
of tools that when used together can
result in process stability and variability
reduction
Statistical Process Control (SPC)

Control charts are used for process monitoring
and variability reduction. SPC is an on-line
quality control tool.
Analysis of Patterns on Control Charts
Western Electric Handbook Rules (Should be used
carefully because of the increased risk of false
alarms)
A process is considered out of control if any of the

following occur:
1) One point plots outside the 3-sigma control limits.
2) Two out of three consecutive points plot beyond the 2-
sigma warning limits.
3) Four out of five consecutive points plot at a distance of 1-
sigma or beyond from the center line.
4) Eight consecutive points plot on one side of the center
line.

Chance and Assignable Causes of
Quality Variation

Statistical Basis of the Control Chart
Relationship between hypothesis testing and control charts

We have a process that we assume the true process mean is  = 74 and the
process standard deviation is  = 0.01. Samples of size 5 are taken giving a
standard deviation of the sample average,
x
 0.01
x = = = 0.0045
n 5

Statistical Basis of the
Control Chart
Relationship between hypothesis testing and control charts
Control limits can be set at 3 standard deviations from the mean.
This results in “3-Sigma Control Limits”

UCL = 74 + 3(0.0045) = 74.0135
CL = 74
LCL = 74 - 3(0.0045) = 73.9865
Statistical Basis of the Control Chart
Relationship between the process and the control chart

Control Chart- X- Bar Chart & R-Chart

Control Chart Calculation

Constanta Shewhart

Examples

Answer

Constanta Table Appendix A
Shewhart

Output Control Chart

Exercise 1 Temperature

Exercise Bolt(2)
The result of bolt samples measurement
have discrepancy in millimetres as follows
Determine the central line and

control limit for X and R and then
plot to the control chart
indicates the out of control by
using WE rules

FOR YOUR
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QUALITY MANAGEMENT

Six SIGMA Quality

Dr. MUHAMMAD HANAFI, ST, MBA, IPM

Institut Teknologi Bandung

SixSIGMA Run chart

Lean, Coffe kaizen SPC

DMAIC , Tools, Infrastruture Western electric rules

Dr. Muhammad Hanafi, ST, IPM, MBA

Dr. Muhammad Hanafi, ST, IPM, MBA Sources : Heizer

W. Edwards Deming 14 Points for

The totality of features and

American Society for Quality

Dr. Muhammad Hanafi, ST, IPM, MBA Sources : Heizer

Dr. Muhammad Hanafi, ST, IPM, MBA Sources : Heizer

Dr. Muhammad Hanafi, ST, IPM, MBA Sources : Heizer

 User-based – better performance,

Dr. Muhammad Hanafi, ST, IPM, MBA Sources : Heizer

Dr. Muhammad Hanafi, ST, IPM, MBA Sources : Heizer

Total Total Cost  Appraisal costs - evaluating

Dr. Muhammad Hanafi, ST, IPM, MBA Sources : Heizer

Dr. Muhammad Hanafi, ST, IPM, MBA

Dr. Muhammad Hanafi, ST, IPM, MBA Sources : Heizer

Developed and introduced further by USA’s company

Popular with names :

Toyota Production Systems (TPS)

Dr. Muhammad Hanafi, ST, IPM, MBA

Fact: 70-80% of business activities in organization is Waste

Dr.Ir Muhammad Hanafi MBA IPM

Dr. Muhammad Hanafi, ST, IPM, MBA

There are 7 wastes

Dr. Muhammad Hanafi, ST, IPM, MBA

Dr. Muhammad Hanafi, ST, IPM, MBA

Identify Waste? (5’)

Dr. Muhammad Hanafi, ST, IPM, MBA

DR.IR MUHAMMAD HANAFI MBA IPM

DR.IR MUHAMMAD HANAFI MBA IPM Courtesy : SSCX

DR.IR MUHAMMAD HANAFI MBA IPM

Dr. Muhammad Hanafi, ST, IPM, MBA

Dr. Muhammad Hanafi, ST, IPM, MBA

1992 1995 2000 Today

Dr. Muhammad Hanafi, ST, IPM, MBA

The term “Sigma” is a Greek letter () used to describe

* Defects Per Million Opportunities

A finished document contains a total of 4 critical entries. A critical entry is an

99.9% is already VERY GOOD

in our everyday lives (about 4.6)?

• 4000 wrong medical prescriptions each year

•More than 3000 newborns accidentally falling

• 400 letters per hour which never arrive at their destination

Dr. Muhammad Hanafi, ST, IPM, MBA

The queuing time means is The queuing time means is

Which one is preferred?

Dr. Muhammad Hanafi, ST, IPM, MBA

Shifting process Reduce process

Dr. Muhammad Hanafi, ST, IPM, MBA

Pain Points in performance are targeted for improvement

Dr. Muhammad Hanafi, ST, IPM, MBA

DR.IR MUHAMMAD HANAFI MBA IPM

Hanafi, ST, IPM, MBA

Lean Six Sigma

Lean Speed Enables Six Sigma Quality Enables

Dr. Muhammad Hanafi, ST, IPM, MBA