STATISTICAL THINKING

Failure
Week 11

achoy@esan.edu.pe

Prof. Augusto Choy

Design Failure Mode and Effects Analysis
DFMEA
 This process tries to identify all possible failures, estimate
their effect and their severity, and recommend design
corrective actions.

 It consists of:
◦ Failure Mode
◦ Failure Effect on the Client
◦ Severity, truthfulness and detection index
◦ Failure potential causes
◦ Corrective or control actions

Prof. Augusto Choy

 DFMEA EXAMPLE
 Failure Analysis for the electric plug of a regular lamp
◦ Failure Mode
Loose cables
◦ Failure Effect on the Client
Oscillation on the lamp’s light, insecure handling and spark generation
◦ Severity, truthfulness and detection index
No electricity is transferred, even heat and/or fire may be generated
◦ Failure potential causes
Molded plug, or reinforced plug
◦ Corrective or control actions
If not corrected, a fire or electric shock may happen – need to rewire or
replace

Prof. Augusto Choy

Prof. Augusto Choy
 DFMEA EXERCISE #1
 Get together and in 5 minutes provide an
example of an item or component and do the
DFMEA analysis as in the previous example

Prof. Augusto Choy

 RELIABILITY
 Generally defined as the ability of a product
to perform as expected over time

 Formally defined as the probability that a

product, piece of equipment, or system
perform as its intended function, for a stated
period of time under specified operating
conditions.

Prof. Augusto Choy

RELIABILITY
 Since it is a probability, it has a value of 0 to 1

 Saying 0.97 reliability means that 97 times out

of 100 the product or service will work as
expected. For simplicity we use percentage
rather than decimals, in the example 97%
would be used.

Prof. Augusto Choy

 MAINTAINABILITY
 The probability that a system or product can be
kept in operating condition, or one that has
failed can be restored to, operating condition in
a specified amount of time.

 Reliability is not a stable concept, because it

varies over time. Therefore, the maintainability
concept needs to be further qualified

 Saying that device A will have a reliability of 0.97

over 1000 hours of use, while device B has a
reliability over 5000 hours of use, means that B
has a better performance than A
Prof. Augusto Choy
 PERFORMANCE
 Two typical types of failure:
◦ Functional failure – failure that occurs at the
start of a product’s life due to manufacturing or
material defect
◦ Reliability failure – failure after some period of
use

Prof. Augusto Choy

PERFORMANCE
 Examples of Reliability Failures
◦ A device won’t work (a car does not start)
◦ A device is unstable (a car works with
problems)
◦ A device performance drops (a car has
problems with the gear box after some time)

 The nature of each failure is different,

therefore the definition of failure needs to
be properly specified

Prof. Augusto Choy

Types of Reliability
 Therefore, engineers need to clearly
identify two types of reliability
◦ Inherent reliability – predicted by product
design
◦ Achieved reliability – observed during use

 In real life, and depending on the

conditions of operation, the achieved
reliability may be less than the inherent
reliability.
Prof. Augusto Choy
Cumulative Failure Rate Curve
 Assume that a large group of articles are
tested or used until all fail.
 For every experiment, you register the
time in which the failure is achieved
 Graphing the percentage of failures over
time will lead to a graph such as the one
shown in the next slide

 The slope under the line is defined as the

instantaneous failure rate
Prof. Augusto Choy
Cumulative Failure Rate Curve

Prof. Augusto Choy

Failure Rate Curve
 Also known as the curve with the life characteristics of
the product, and corresponds to the slope of the
cumulative failure rate curve

“Infant mortality
period”

Prof. Augusto Choy

Average Failure Rate
 From the first graph, an average can be
achieved as it is shown below

Prof. Augusto Choy

EXERCISE #2 - Practice
 Livelong, Inc.’s computer monitors have a
failure rate of 0.00003 units per hour.
Assuming an exponential distribution,
what is the probability of failure within
15000 hours? What is the reliability
function?

Prof. Augusto Choy

Reliability Equations
 When not available, the following formulas
can be used:
◦ number of failures
◦ Failure Rate = l =
total number of operations per unit

◦ number of failures
◦ Failure Rate = l =
tested units x number of hours tested

Prof. Augusto Choy

EXERCISE #3 - Practice
 Compute the failure rate for six Massive
Corporation’s motors that were tested
for 600 hours each, three of which failed
after 100, 175, and 350 hours.

Prof. Augusto Choy

 Reliability Function
 Reliability is the probability that an article DOES
NOT fail during a determined period of time.

 Probability density function of failures

f(t) = le-lt for t > 0
 Probability of failure from (0, T)
F(T) = 1 – e-lT
 Reliability function
R(T) = 1 – F(T) = e-lT

Prof. Augusto Choy

 Reliability Function
 Example:
 Determine the failure rate l for a product that has a
reliability level of 0.97 during 100 hours of duration.
 From the formulas
◦ f(t) = le-lt for t > 0
◦ F(T) = 1 – e-lT
◦ R(T) = 1 – F(T) = e-lT
 From the problem statement
◦ R = 0.97 T = 100 hrs
◦ 0.97 = exp (-l 100)
◦ l = 0.0003 failures per hour

Prof. Augusto Choy

 Risk Function
◦ h(t) = l
 The reciprocal q = 1/l is defined as the mean
time to failure. So, for 0.0003 failures per hour,
the reciprocal will be:
q = 3,333 hours for the next failure to
happen

 So, another way to write these equations is:

◦ F(T) = 1 – e-T/q
◦ R(T) = 1 – F(T) = e-T/q

Prof. Augusto Choy

EXERCISE #4 - Practice
 An electronic component in a satellite
radio has a failure rate of l= .000025.
Find the mean time to failure (MTTF).
What is the probability that the
component will not have failed after
10,000 hours of operation?

Prof. Augusto Choy

 Risk Function
 We can find the probability for the device not
to fail in 15000 hours at a failure rate of
0.0001.

 q = 10,000 hours for the next failure to

happen

◦ R(15000) = 1 – F(15000) = e-15000/10000 = e-1.5 =

0.223

Prof. Augusto Choy

Reliability of Systems
 A lot of systems are composed of individual
components with known reliabilities.

 When all of the system components need to

work or else, the entire system will fail, then the
components are considered connected in series
RS = R1 R2 R3 … Rn = e-(Σλ).T

 Thus, the reliability is multiplied for all

components. For example,
RS = (0.997)(0.980)(0.975) = 0.953

Prof. Augusto Choy

Prof. Augusto Choy
Reliability of Systems
 A lot of systems are composed of
individual components with known
reliabilities.

 When some components are not so

critical if they fail, and even if the system
can work without them, then the
relationship between the components can
be considered in parallel

Prof. Augusto Choy

Prof. Augusto Choy
Prof. Augusto Choy
Example 1
 Component A in series with a parallel
system B1, B2, B3, followed by
components C and D in series.
 RA = 0.99
 RB1 = RB2 = RB3 = 0.9
 RC = 0.96
 RD = 0.98

Prof. Augusto Choy

Example 2
 RA = 0.95
 RB = 0.98
 RC = 0.99
 RD = 0.99
 RE = 0.97

 A, B, C in series, D and E in series, both

groups in parallel

Prof. Augusto Choy

EXERCISE #5 - Practice
 An electronic missile guidance system
consists of the following components:
Components A, B, C, and D have
reliabilities of 0.96, 0.98, 0.90, and 0.99,
respectively (see diagram, below). What is
the reliability of the entire system?

Prof. Augusto Choy

EXERCISE #6 - Practice
 A manufacturer of MP3 players purchases major electronic
components as modules. The reliabilities of components differ by
supplier (see diagram, below). Suppose that the configuration of the
major components is given by:

 The components that can be purchased from three different

suppliers. The reliabilities of the components are as follows:
Component Supplier 1 Supplier 2 Supplier 3
A .97 .92 .95
B .85 .90 .90
C .95 .93 .88
 Transportation and purchasing considerations require that only
one supplier be chosen. Which one should be selected if the MP3
player is to have the highest possible reliability?
Prof. Augusto Choy
Taguchi’s Loss Function
 This is a scientific approach to design the tolerance

 Taguchi states that there is not a rigid difference

between good or bad. However, he suggests that the
losses can be calculated through a quadratic function,
so that the major deviations from the mean provide
the biggest losses.

 Thus, he defined the loss function as

L(x) = k(x – T)2
where T is the goal or desired mean value, x is any
value gotten from the process and k is a constant. Thus
(x – T) is the deviation from the goal.
Prof. Augusto Choy
Taguchi’s Loss Function
 k is a constant that is calculated through the
cost associated with deviating from the mean.

 This will be better explained with the

following example:

Prof. Augusto Choy

 Taguchi’s Loss Function
 There is one quality feature that has the following specification:
0.500 ± 0.020
An analysis in the value of the feature revealed that any deviation higher
than the 0.02 tolerance will cost the company a repair of around $US
50.
Thus,
50 = k (0.020)2
k = 125,000
 Then, the function became
L(x) = 125000 (x – T)2
So the loss estimated for a deviation of half the tolerance will mean
L(0.010) = 125000 (0.010)2 = $US 12.50

Prof. Augusto Choy

Taguchi’s Loss Function
 The expected loss is then calculated with a simple formula
EL(x) = k (σ2 + D2)
where:
D2 = (x – T)2

 Therefore, for the previous example, assuming that the variance of

the process σ2 = 0.0002 then
D2 = 0 because the average of values is equal to the
expected value
EL(x) = 125000 (0.0002 + 0) = $25

 Under this method you can improve to reduce losses, rather than
just focusing on hitting the target within the specifications (e.g.
Product A compared to B)

Prof. Augusto Choy

Taguchi’s Loss Function
 Distribution A and B
 Under the same loss function, requirement and tolerance

A B
0.47 0% 2%
0.48 20% 3%
0.49 20% 15%
0.50 20% 60%
0.51 20% 15%
0.52 20% 3%
0.53 0% 2%

Prof. Augusto Choy

Taguchi’s Loss Function
 In some cases, a function is not acceptable in both sides of the
mean.

 In some cases LOWER IS BETTER and in others HIGHER IS

BETTER

 For those scenarios, the loss function is rewritten as follows:

L(x) = kx2 for LOWER IS BETTER
L(x) = k (1/x2) for HIGHER IS BETTER

Prof. Augusto Choy

Taguchi’s Loss Function
 A blueprint specification for the thickness of a dishwasher
part at PlataLimpia, Inc. is 0.325 ± 0.025 centimeters (cm). It
costs $15 to scrap a part that is outside the specifications.
Determine the Taguchi loss function for this situation.

The Taguchi Loss Function for PlataLimpia, Inc. part is:

L(x) = k (x - T)2
$15 = k (0.025)2
k = 24000
 L(x) = k (x - T)2 = 24000(x-0.325) 2 = 24000 (0.025)2

Prof. Augusto Choy

 Taguchi’s Loss Function
 A team was formed to study the dishwasher part at
PlataLimpia, Inc. described in the previous problem. While
continuing to work to find the root cause of scrap, they found
a way to reduce the scrap cost to $10 per part.
 a. Determine the Taguchi loss function for this situation.
 b. If the process deviation from target can be held at 0.015
cm, what is the Taguchi loss?

The Taguchi Loss Function is: L(x) = k (x - T)2

a) $10 = k (0.025)2 k = 16000
 L(x) = k (x - T)2 = 16000 (x - T)2
b) L(x-T) = 16000 (x - T)2
 L(0.015) = 16000 (0.015)2 = $3.60

Prof. Augusto Choy

 Taguchi’s Loss Function - Practice
 At Elektroparts Manufacturers’ integrated circuit
business, managers gathered data from a customer
focus group and found that any output voltage that
exceeds 120 ± 5 volts was unacceptable to the
customer. Exceeding these limits results in an
estimated loss of $200. However, the manufacturer
can still adjust the voltage in the plant by changing a
resistor that costs $2.00.

a. Determine the Taguchi loss function.

b. Suppose the nominal specification remains at
120 volts. At what tolerance should the integrated
circuit be manufactured, assuming that the amount of
loss is represented by the cost of the resistor?
Prof. Augusto Choy
Taguchi’s Loss Function - Practice
 Two processes, P and Q, are used by a supplier
to produce the same component, Z, which is a
critical part in the engine of the Air2Port 778
airplane. The specification for Z calls for a
dimension of 0.24 mm ± 0.03. The probabilities
of achieving the dimensions for each process
based on their inherent variability are shown
next. If k = 60,000, what is the expected loss for
each process? Which would be the best process
to use, based on minimizing the expected loss?

Prof. Augusto Choy

Process Capability - Practice
 From the data for
Kermit Theatrical
Products,
construct a
histogram and
estimate the
process capability.
If the
specifications are
24 ± 0.03,
compute Cp, Cpu,
and Cpl. Samples
for three parts
were taken as
shown next.

Prof. Augusto Choy

R&R - Practice
 A gauge repeatability and reproducibility
study at XYZ Inc collected the data found
below. Analyze these data. The part
specification is 0.75 ± 0.10 mm.

Prof. Augusto Choy

The Quality Workplace

Quality and people

Elements of quality workplaces
Teams
Workforce satisfaction
Team working
 People, Quality’s secret to success
“There’s no secret Toyota Quality Machine out there. The quality machine is
the workforce -- the team members on the paint line, the suppliers, the
engineers -- everybody who has a hand in production here takes the
attitude that we’re making world-class vehicles.”

• The human resource is the only one that competitors cannot copy, and the
only one that can synergize—that is, produce output whose value is greater
than the sum of its parts.
• Employee satisfaction has a strong correlation to customer satisfaction.
 Human Resource Paradigms
“We will win and you will lose. You cannot do anything because your failure is an internal
disease. Your companies are based on Taylor’s principles. Worse your heads are Taylorised
too. You firmly believe that sound management means that executives on the one side and
workers on the other, on the one side men who think and on the other side men who only
work.” Konosuke Matsushita, 1998.

Old Thinking New Thinking

People are part of the process People design and improve processes
Process requires external control Workers who run the process control it
Managers have command and control Managers must obtain commitment of
over what people do workers
 Differences
Traditional Workplaces
People are passive contributors, with little autonomy,
Role of people doing what they are told and nothing more.
Managers oversee departments or functions or
Management
collections of individuals, they are independent.
systems
Control is achieved by pre-established inflexible
Control responsive patterns laid down in the book of rules and
procedures.
Performance appraisal, recognition, and reward systems
Reward systems place people in an internally competitive environment.
Quality-based Workplaces
People take joy and pride through learning and
accomplishment, and enhance the capability of the enterprise to
succeed
Managers oversee interdependent systems and processes and
exercise managerial leadership through participative
management.
Control results from shared values and beliefs, as well as
knowledge of mission, purpose, and customer requirements.
Reward systems recognize individual as well as team
contributions and reinforce cooperation.

Maintain the status quo – the organization’s formula for To provide the leadership for continual improvement and
Management’s role
success by preventing change. innovation in processes and systems, products, and services.
The adversarial relationship between workers and The workers become a partner and a stakeholder in the success
Workforce relations
management is inevitable. of the enterprise
Hierarchical “chimney” organization structures Formal and informal mechanisms encourage and facilitate
Teamwork promote competition, conflict, and adversarial relations teamwork and team development across the entire enterprise
between functions
Motivation is achieved by aversive control. Managers provide leadership and are viewed as process
Motivation
managers rather than functional specialists
 Key elements of Quality Workplaces
WATCH: Quality Workplace - Ferguson Plarre Bakery https://www.youtube.com/watch?v=e-XrQUFEOJ4
• Jikoda
• Providing machines and operators the ability to detect when an abnormal condition has occurred
(Andon) and immediately stop work.
• This enables operations to build in quality at each process and to separate workers and their
machines for more efficient work.
• Visual Management
• The placement in plain view of all tools, parts, production activities, and
indicators of production system performance, so the status of the system can
be understood at a glance by everyone involved e.g.:
• Andon – error signals
• Kanban – inventory signals
• Dashboards – performance measures
• 5S – workplace organisation and order

Worker engagement and team-working

Team leadership
Training
Job variety and multi-skilled
 Visual Management
• The placement in plain view of all tools, parts, production activities, and
indicators of production system performance, so the status of the system
can be understood at a glance by everyone involved.
WATCH: Quality Workplace – Visual Management https://www.youtube.com/watch?v=I0FCrp28wbM

Andon Kanban Dashboard

A visual management tool A signalling device that gives A one-page
that highlights the status of authorization and measurement tool
operations and whenever an instructions to produce or comprising the critical
abnormality occurs (stop- use production or items – few process and
the-process). commonly used in inventory competition measures
management.
 Group Work
• Re-watch the video;
• How many “visual management” techniques can you identify?
• What training about visual work do the people identify as important?
Visual Management display
Direction signs Display boards Safety signs or warning
Information signs Shadow boards Workplace culture
Location signs Parts labels Work or process charts
Arrows Work stations Productivity charts or lists

• The people discussed the idea of training workers to have ideas and
translate them quickly into visual management tools to improve quality
and productivity. Communicating the idea is an important skill.
 5S
• Five related terms, beginning with an ‘S’, describing in Japanese and English
workplace practices supportive of visual control and work.
WATCH: The 5S Methodology https://www.youtube.com/watch?v=tU7c2USbnoo

Cleanliness and order Separate needed from

resulting from regular unneeded items—tools,
performance parts & materials—and
of the first three Ss. Standardise discard the unneeded.
Sort
(Seiketsu) (Sieri)

Discipline, to Sustain
perform the (Shitsuke)
first four Ss.
Shine Straighten
(Sieso) (Sieton)
Neatly arrange what is
Clean and wash. left—a place for
everything and everything
in its place.
 High Performance Work Systems
“Systematically pursue ever higher levels of overall organizational and human
performance”

Work and Job Design Flexibility Teamwork and Cooperation

Innovation
Health and safety Knowledge and skill Empowerment
sharing
Organizational
Training and Education Employee Involvement
alignment
Customer focus
Compensation and Rapid response Suggestion systems
recognition
 The Team

A small number of people with complementary

skills who are committed to a common purpose,
set of performance goals, and approach for
which they hold themselves mutually
accountable.

WATCH: PORSCHE RACING TEAM http://www.youtube.com/watch?v=hnoM6yPsBqs

 Teamwork
• Team members need the skills of cooperation, communication, and
group decision making.
• Teamwork helps to break down barriers within organisation, line and
staff functions.
• Teamwork allows for improve problems solving and team
participation can bring employee empowerment, satisfaction and to
have access to new skills and training opportunities.
• Teams should encourage free flowing participation and interaction
between its members and other teams
 Functions of Teams
Identify
Implement problems Select
solutions problem
Identify
Develop Collect
follow-up data
plan Solve Analyze
Focus
Pick best attention
solution Find
Develop causes
solutions
 Team Types
Team Type Characteristics
Leadership Steering committee or quality councils - where functional mangers coordinate
activities across the company providing direction and focus
Natural work Perform whole jobs from start to finish
Self-managing A group of highly trained employees who complete well defined work
controlling their own decisions
Virtual Team members in different locations communicate, exchange roles and
leaders to achieve tasks through online and electronic communications
Problem-solving Meet to solve problems and disband

Project Have a specific mission and length of time - underpin Six Sigma workplaces
Quality Circles Teams of workers and supervisors that meet regularly to correct production
and quality issues.
 Team development

• Building and developing successful teams requires solid

management support and good planning.
• Self-managed teams, in particular are challenging because of the
level of empowerment that they require.
• Teams develop in a predicable pattern and life cycle that enables
planning for team management and optimization
• Understanding what makes successful teams can help remove
obstacles to effective team development and smooth the
transitioning process.
 Team Development Processes
Stage 4
Stage 1 Stage 2 Stage 3
Self Direction /
Team Formation Team Building Empowerment
High performance

Amount of Empowerment at Team Level

 Plan team tasks
 Develop team communication
 Define measures
 Develop team milestones
 Improve quality, cost, and
cycle time
 Schedule and hold team
meetings
 Attack larger problems
 Review team measures
 Control inventory
 Schedule team training
 Perform equipment maintenance
 Manage team performance
 Continually improve quality, cost and
cycle time
 Identify own jobs
 Perform to team budget; track
costs and take accountability
 Select team members

Directs Team –
Builds Trust
 Identify goals, Coaches Team – Shares
outcomes, timelines Information
 Provide direction  Involve team in problem
solving Supports team –
 Lead in solving
 Control team budget Creates Autonomy
problems, making
 Provide support  Help in problem solving
decisions
 Work with team to define  Share budget responsibility Delegates Authority –
 Control budget and some
performance and how  Ask team to lead in solving Provides Support
scheduling
problems  Support multiple teams
 Give frequent measured
follow up
Transition from Manager to Leader

SHORT CASE: TEAM WORKING AT THE GOLDEN PLAZA HOTEL

 Feedback
1. Teams need planning, member selection and an
environment of support as the team develops.
2. The hotel is at stage 1. It must overcome past problems and
perceptions, so it must develop communication and clear
goals. Sandra needs to take a leading management role to
fix the problems that have occurred and set them right, she
will needs to provide strong initial support until members
develop more confidence.
3. Sandra will need to identify team members and their
capabilities. She will need to co-ordinate the team’s
resources and training for the team’s members. She may
begin to identify those suitable for leadership roles
 Teamwork challenges

• Issues for management and performance of teams occur due

to their variety and organisational settings.
• Team forming should be preceded with a period of
investigation selecting the correct model, analysing capabilities
and culture of the organization.
• Cross functional and intra-organizational environments have
“office politics” and “patch protection” issues to be overcome.
 Teamwork challenges
• Self managing teams provide the greatest challenge through
relinquishment of authority to the team and less hierarchical
control.
• Virtual teams present challenges of team members not knowing
each other, not learning from each others non verbal cues and
work standards.
• Quality based teams such as quality circles and problem solving
teams rely on a positive organizational culture and how
management uses them to support quality principles in the
organization.
 Workforce Satisfaction

“Organizations are learning that to

first satisfy the customer, they must
first satisfy the workforce”.
 Empowerment
Freely
• Empowerment is: shared
information

“Giving people the Few

authority to make restrictive “hands-off”
leadership
decisions on what they procedures
Employee
feel is right, have control empowerment
over their work, take
risks, learn from
mistakes and promote
change.” Atmosphere Education,
resources, and
of trust
encouragement
 Satisfaction
Workers feel they can do
the best everyday
Engagement .
People believe their
Involvement
opinions count
.
They sense that they and
Motivation their fellow workers are
committed to quality,
and can make a direct
connection to their work
and company’s mission.

Employee Satisfaction
These together contribute to employee satisfaction, by attending to the psychological
aspects of work resulting in:
• reduced staff turnover,
• reduced absenteeism,
• lower costs & less waste
 Engagement
• Workplaces with high levels of Less
adversarial
workforce engagement are mentalities
“characterized by high performance
work environments in which people
are motivated to do their utmost for + quality
+ leadership
and
the benefit of customers and for the productivity
skills
success of the organization”. Employee
engagement
• Occurs where workers needs are met
by developing pride and joy in their
work.
• Organizations that are characterized + problem
Improves
by high performing work solving &
creativity
morale
environments have meaningful work,
direction, accountability and trust.
WATCH EMPLOYEE ENGAGEMENT IN GE http://www.youtube.com/watch?v=wzAUJcgp2Cc
 Involvement
• An activity where employees are engaged in work related decisions.
• Range from sharing information, providing suggestions, and self directed operations,
such as setting goals, decisions, solving problems and cross-functional teams.
• Worker involvement before quality frameworks lacked the links to customers and top
management leadership, as an organization matures the levels of employee
involvement change.

Level of Involvement Actions Outcomes

Low Information sharing Managers decide Conformance
Dialogue Asking for input Acceptance
Special Problem solving One problem at a time Contribution
Intragroup Problem Solving Groups meet weekly Commitment
Intergroup Problem solving Cross functional groups Cooperation
Focused problem solving Deeper group work and specialist teams Concentration
Limited self direction Permanent teams Accountability
High Total self direction Facilitated self management Ownership
 Motivation
• Motivation is an individual’s response to a felt
need. Motivation
• Employees that are given tasks on the basis of factors
(improve satisfaction)
keeping their jobs are being motivated by fear.
• Motivating organizations are those that use Recognition,
coaching and facilitation rather than using Advancement,
command and control techniques. Achievement
• Herzberg considered there were two parts (factors)
to employee satisfaction;
• Maintenance factors that reduce worker Maintenance factors:
dissatisfaction and (reduce dissatisfaction)
• Motivation factors are less tangible but important safe environment, comfort, and job
for workplace engagement. security and workplace supervision

WATCH GE WATER HEATER FACTORY http://www.youtube.com/watch?v=hbZ7tALf3BU

 Designing High Performance Work Systems
• Work design - • Job design -
how employees are responsibilities and
organized in formal tasks assigned to
and informal units. individuals

• Employees need interesting work, recognition, feeling in, security and,

higher pay.
• Managers frequently believe higher pay is #1.
• Interest can be introduced by variety of tasks, multi skilling and
feedback for improvement.
Improving Work Design
Hackman/Oldham Model for Job Design

SHORT CASE: THE MBA CANDIDATE

Feedback
 Team success
• Use of
• Balanced scientific
• Improvement participation . approach (data
Beneficial
Clarity of plans • Clear Established driven)
team • Well defined
team goals • Clearly defined communication ground
behaviors
roles • Established rules decision
ground rules procedures

• Teams require leadership and management at various levels from the

senior executives, to team leaders, to the team members.
• The organization has a responsibility to provide an work environment
that supports team goals and provides safe and healthy conditions,
with suitable work practices to reduce injury and harm.
SHORT CASE: TEAM PROCESSES AT LANDMARK DINING
 Team work and Six Sigma
• Project teams are a vital part of Six Sigma due to the interdisciplinary nature
of the projects.
• They are comprised of key roles who each provide different levels of
knowledge and expertise in guiding a Six Sigma project.
• Champions – Senior level mangers who lead, set and defend projects securing
resources and select the team members.
• Master black belts – Six Sigma experts who are focussed on SS projects
permanently, expert in SS tools, methods and technical skills.
• Black belts – fully trained SS experts with more than 160 hours of training lead and
direct project operations, use SS tools, DMAIC, and can be team leaders.
• Green belts – Functional employees who are trained in SS techniques, work on SS
projects part time or for their site or production expertise.
• Other team members – from various functions that link to the SS project
 Six Sigma team positions
Position Responsibility Definition
Champion Advocate The person initiating a concept or idea for change or improvement
Sponsor Backer : Risk The person who supports a team’s plans, activities and outcomes
Taker
Team Leader Change agent: Person who selects the team members, responsible for team outcomes, is
Head of group trusted, has authority in and for the team, an active team member,
communicator and prepares and records team meeting and progress
Facilitator Trainer / Coach : Observes and monitors team processes, provides helpful intervention, provides
Adviser balance and health to the team, provides conflict management and resolution

Timekeeper Monitor To watch the use of allocated time, keep team members to schedule
Scribe Note taker Records and distributes the critical data of meetings
Team member Participant : Selected to work together for the teams goal, in an environment of mutual
subject expert respect, sharing of expertise, cooperation and support
 Key Skills
• Team leaders and members have to practice the skills required for productive team work
at every meeting and while performing their roles.
• Conflict management and leadership if exerted successfully will reduce disharmony and
keep work on schedule. Negotiation is a key skills to secure resources and allow
timeframes to be met.
Team Leaders Team members in meetings
Conflict management and resolution skills Use agendas
Team management Have a facilitator
Leadership skills Take minutes
Decision making Draft next agenda
Communication Evaluate the meeting
Negotiation Total commitment (100 Mile rule)
Cross-cultural training
 Engagement in process excellence
• People are key to process excellence and project success.
• Team members need to know how to do as much as what to do.
• Compared to the technical skills, the soft skills – those that involve
people – such as project management and team facilitation are more
difficult to teach and learn.
• This includes understanding the roles of shared visions and peoples
behavior and to take a process view of work and performance.
• These skills need knowledge and practice – the idea of study, learn and
psychology as part of Deming's view of quality.

SHORTCASE: YOU WANT US TO WORK WITH MARKETING???

 Assessing Workforce Engagement, Satisfaction and
Effectiveness
• Measures of employee engagement and satisfaction allow companies to predict
customer satisfaction, identify issues that have the greatest impact on business
performance, and provide a foundation for improvement.
• Uses hard data – team numbers, rates of growth, & of employees involved,
implementation time, # of suggestions responded to - and
• Soft measures such as, perceptions of team work, engagement satisfaction, and
empowerment.
– Satisfaction criteria may include:
• Quality of work-life, teamwork, communications, training, leadership, compensation, benefits, internal
suppliers and customers view and perceptions
– Effectiveness criteria may include:
• Team and individual behaviors; cost, quality, and productivity improvements; employee turnover;
suggestions; training effectiveness
• Data is gathered by surveys, focus groups and informal walk-arounds. These methods
allow the “voice of the employee” be heard, with results used for job design and
retention as well as improvement and planning activities.
 Summary
• The role of HR is important for in the quality environment of a high
performing company.
• Quality workplace practices challenge many traditional or Taylorist work
practices
• In quality workplaces collaboration, team work, and learning are key
elements of HR and performance strategies.
• These include practices such as empowerment, engagement,
involvement and motivation.
• High performance work systems use a number of practices to achieve
Flexibility, Innovation, Knowledge and skill sharing, Organizational
alignment and Customer focus.
 Summary
• Job enlargement, enrichment and rotation are strategies to improve job
design.
• System design takes into account task significance, variety, autonomy and
feedback, contributing to higher motivation, satisfaction and effectiveness
e.g. Hackman/Oldham Model for Job Design
• A focus on training, recognition and reward is also important.
• Performance appraisal becomes effectiveness based, with measurable
criteria and connections to customers, suppliers and behaviors.
• Improved data collection techniques provide appraisal data using surveys,
focus groups and “walking around” to gather the “voice of the employee”.
Performance Measurement
Data & Information
Selecting measures
Measuring performance
Managing performance
 Performance Measurement
• If you don’t measure results, you can’t tell success from failure
• If you can’t see success, you can’t reward it – and if you can’t
reward success, you are probably rewarding failure
• If you can’t recognize failure, you can’t correct it

“ the data will set you free”

 Measurement
• The supply of consistent accurate and timely data across all functional
areas of the business provides real-time information on the evaluation,
control and improvement of processes, products and services to meet
both business objectives and changing customer needs.

• Measurement: the act of quantifying the

performance or quality dimensions of products
• Data: representations of facts that come from the process
of measurement

• Analysis: an examination of facts and data to provide a

basis for effective decisions

• Information: derived form the analysis of the data

and measurements and expressed in the context of
the business
 Organizations need good measures to:
• Lead the entire organization in a particular direction to drive
strategies and organizational development
• To manage resources to that are used to meet strategic goals
and to evaluate achievement, and
• To operate the processes that make the organization work and
continually improve
Federal Express - “We measure everything. Ritz-Carlton Hotels - “We only measure what
Then…we prioritize what processes are key to we must. But, we make sure that what we
the company” by automated data collection measure is important to our customers” using
systems that use internal measures that are a mix of data 50% marketing and financial
predictors for external measures. data; 50% quality-related productivity data.
 Performance measurement in the organization

Sets company
Broad Strategic Overall Organizational
direction and
Measures Strategy
objectives

Functional Market Operational Financial

Measures Strategic Strategic Measures Strategic
Measures Measures

Operational Customer Quality Process Cost

Measures Satisfaction Improvement

Process Level • Customer • Defects per • Delivery time • Machine Frequently

Measures complaints unit • Cycle time efficiency measured and
• Scrap-waste • Transaction used for
levels costs improvement
Measures allow us to understand process performance
Process Performance Objective Measure
Process Quality • Defects per unit
• Customer complaints
• Warranty claims
• Customer satisfaction score
Process Speed • Order lead time
• Cycle time
• Delivery time
Process Dependability • % of late orders
• Proportion in stock
• Deviation from target arrival
Process Costs • Cost per production hour
• Budget variance
• Efficiency and Productivity measures
 Performance Tools: the Balanced Scorecard
• To make decisions that further the overall organizational goals of meeting or
exceeding customer expectations and making productive use of limited
resources, organizations need good data and information.
• This data includes information about customers and markets, human
resources effectiveness, supplier performance, product and service quality,
and other key factors, in addition to traditional financial performance and
accounting measures.
• A good scorecard uses Lagging (tell us what has happened – outcomes or
long-term results) and Leading (predicting what will happen - performance
drivers or indicators of the strategic long-term results) measures.

WATCH: QUALITY SYSTEMS, MODELS AND THEORIES - BALANCED SCORECARD METRICS

https://www.youtube.com/watch?v=LkxFd7PlSz0
 BSC Performance Measures
Financial
measures:
• Profitability,
• ROI,
• Revenue growth, and
• Shareholder value

Internal process Customer

measures: measures:
• Quality levels (defects, dpmo levels), Overall Strategic • Market share,
• Cycle times, Objectives • Service levels,
• Costs per unit, and • Satisfaction ratings, and
• Delivery times • Customer loyalty (returns)

Learning and Growth

measures;
• Staff turnover,
• Employee satisfaction, and
• Training and skills development
 Group Case Study
• In groups read the Wainwright - Baptist Hospital performance
measures case study.
• Discuss the business and identify their performance
measures.
• What are some of the indicators that are being used?
• Using the BSC diagram, arrange the indicators for each
organization into the diagram’s four categories.
• Which of these could be considered:
– Lagging (used to assess long term performance), or
– Leading (used to predict short-term performance).
 Feedback
Wainright (Products) Baptist Hospital (Services)
• Delivering products of unequaled quality • 2 hospitals and ambulatory care units with
with craftsmanship, teamwork & a focus on continuous improvement.
innovation is its • Determines customer needs through
• Customer critical factors = price, defects, surveys and customer value analysis in a
delivery and business performance. CRM database.
• 5 strategic indicators: • Integrates data from different systems:
• Safety, • Clinical,
• Internal customer satisfaction, external • Employees,
customer satisfaction
• Defect rate, and • Patients
• Complaints • Finances
• Indicators & goals: • Decision support and
– External Customers • Physicians
• Satisfaction index, • Uses CARE & BAR reports that aggregate
• Number of complaints and compare
– Business performance • Clinical quality improvement
• Sales, • Customer satisfaction
• Capital exp,
• Financial results
• Market share
• Trends
• Engaged workforce implantation of
improvement ideas • Reports support organizational
performance and learning, clinical
• Outward focused, uses comparative data outcomes, team activities and continuous
improvement.
 Feedback
Financial measures:

Internal process measures: Customer measures:

Overall Strategic
Objectives

Learning and Growth measures;

 Financial measures:
• Sales, Capital expenditures,
Market share data
• Financial results and trends

Internal process measures: Customer measures:

• Internal customer
• Safety, Defect rates
Overall Strategic satisfaction, external
• Clinical quality improvement Objectives customer satisfaction and
and outcomes Complaints
• Customer satisfaction
results
Learning and Growth measures;
• Satisfaction index, improvement
idea implementations
• Patient survey and improvement
data in reports
 Summary
• Performance measurement and the data it develops is crucial for optimizing
business strategy and meeting organizational goals.
• Managers use Information (contextualized and analyzed data) to make decisions,
support strategies and innovate to meet customers needs.
• Measures and indicators must be relevant to strategy and contain customer
requirements.
• Benefits include strong industry performance, successful change, employee
empowerment and innovation.
• Measures can consist of Customer satisfaction, Financial and market
performance, Human resource, Supplier and partner performance and company
specific measures.
• Measurement can be made at the individual level, process level and
organizational level
Designing Performance Measurement Systems
• Provide a perspective of past, present and future.
• Identify trends and progress.
• Facilitate the understanding of cause and effect relationships,
• Provide direction for continuous improvement, and
• Allow performance comparisons for benchmarking.
• Performance Systems must be Understandable, Supportive of learning and Define
appropriate measures.
• May use Quality Policy or Quality Manuals that contain details regarding:
• Contract management, design control and purchasing
• Process control, inspection and testing
• Corrective actions and continuous improvement
• Controlling inspection, measuring and test equipment (metrology, measurement system
analysis and calibration)
• Records, documentation and audits
Measures & their Indicators
 Selecting measures and indicators
• Organizations must consider how the measures will support senior executive
performance reviews and organization planning and how they support daily
operations and decision making.
• Regular review of measures and their contribution, particularly that are truly
useful, in particular;
• fewer is better,
• linked to factors for success,
• mix of past future and present,
• based on needs of customers, shareholders and stakeholders,
• start at top and flow through organization, and
• be able to be adjusted to reflect change
• Inappropriate measures lead to actions that undermine the organisation’s
strategy . If not linked to business drivers they are unlikely to support sound
business decision making.
SHORT CASE: MANAGING PERFORMANCE AT KENNETH W. MONFORT COLLEGE OF BUSINESS (MCB)
 Baldrige Measurement, Analysis and Improvement Criteria
Baldrige Measurement, Analysis and
MONFORT COLLEGE OF BUSINESS
Improvement criteria;
(a) How it gathers and integrates data and
information for daily operations and
decision making,
(b) How it selects and uses comparative
data and information
(c) How the performance measurement
system meets changing business needs
and directions
(d) How analysis results are translated
into the organization’s improvement
objectives.

Baldrige Measurement, Analysis and
Improvement criteria;
(a) How it gathers and integrates data and Mission-driven key success measures, collected by the Educational Testing
information for daily operations and
decision making,
(b) How it selects and uses comparative
data and information
(c) How the performance measurement
system meets changing business needs
and directions
(d) How analysis results are translated
into the organization’s improvement
objectives.
Feedback
MONFORT COLLEGE OF BUSINESS
Service and Educational Benchmarking, Inc. and survey feedback, on the
key measures of recruitment, curriculum, technology, financial resources,
program reputation, and faculty and student performance.
External comparisons of the AACSB accreditation process, student
satisfaction factors measured on the 2001 Business Exit Survey and student
scores on Field Achievement Test.
Has key partners in the community and views them as critical to providing a
quality education and commitment to continuous improvement.
Through a regular cycle of program review and evaluation and through a
framework of data monitoring that encourages development of a student-
centered process, the availability of emerging and existing technologies,
the encouragement and support from university leadership.
 Selecting process measures
• A systematic process of measure selection will contain:
• Identify all customers and be able to determine their expectations
• Define the work processes that provides product or services
• Define value adding activities and outputs that comprise the process
• Develop specific performance measures or indicators
• Evaluate the performance measures to ensure their effectiveness
• These measures can be presented in summary form by dashboards.
• Dashboards provide quick summaries of process performance using
charts, graphs and other visual aids, and are regularly reviewed at all
levels to check on performance progress and monitoring.
Performance Management

The use of performance

measures
 Analysis
• Effective analysis capabilities ensure that managers can understand the
meaning of data, particularly cause and effect linkages between
external lagging results and internal leading indicators.
• Simple or sophisticated tools may be used effectively to analyze data
and provide information for managers, such as;
• Trends and changes using charts and graphs
• Calculations such as means, proportions and std deviations
• Using sophisticated statistical analysis such as correlation and regression
• Comparing results with other business units or external benchmarks
• Excel spreadsheets provide the ability to make simple but effective
analysis on data groups.
• Other forms of graphic analysis use matrix or 2x2 charts
 Alignment
• Organizational information needs to be transformed and integrated into forms
that are meaningful to the different levels of managers.
• One powerful method of analysis is interlinking – the quantitative modeling of
cause-and-effect relationships between external and internal performance
measures e.g. 91% of contract renewals come from customers who rate their
satisfaction as high or very high – an outcome that links renewal targets with
customer satisfaction data.
• Data mining also provides a means of understanding relationships and patterns
in data.
• ERP – Enterprise Resource Planning – systems provide an infrastructure for
managing information across the enterprise. Software packages such as SAP,
Oracle and PeopleSoft provide integrated data management and quality
management modules.
 Performance Measurement Alignment
• Alignment of work
processes with longer
term goals is vital for
organizational
performance.

• Alignment is tied
to performance
goals that are
measured at
appropriate levels
using relevant data
and indicators.

• Production data
can be used for daily
control, but also used
at a higher level to
support process
improvement.
Importance-Performance Matrix
Improvement priorities:
• Appropriate – considered
to be satisfactory
performance
• Improve – below
expectations and should be
improved
• Urgent action – important
to customers so should be
acted on immediately
• Excess – high performance,
but not considered
important by customer.
SHORT CASE: RAYDALE CONFERENCE CENTER
Feedback
Alan needs to address:
1. Flexibility (7:1) Urgent
2. Billing errors (6:5) Improve

And review;
1. Price (4:3) low Appropriate
2. Discounts (8:6) Low
appropriate
3. Size of menu (2:8) Excess
 Managing service performance problems
• Effective customer relation processes assist to change
dissatisfaction to loyalty. The service a customer receives
throughout their interactions with the company is key to
maintaining strong customer relationships and performance.
• Complaints are an opportunity to learn about the service and
customer.
• Service recovery is the process of listening, empathizing and
then describing the corrective action to win back customer
loyalty.
WATCH: SERVICE RECOVERY EXAMPLE
 Service recovery is a 4 step process
We’re sorry
you had a
Acknowledge problem
the problem Thanks for
letting us We’re sorry you had a
know about problem
it
Accept the Here’s what
complaint we’re going to
do about it

Describe corrective
We’d appreciate
action clearly
you giving us
another chance
Appeal to
loyalty

WATCH: SERVICE RECOVERY STORY

 Actions in the service recovery process
Step Actions
Acknowledge Listen carefully
Respond empathetically
Apologize for inconvenience
Accept Accept problem has occurred
Ask clarifying questions
Describe Describe solutions
Solve problem quickly in partnership with customer
Appeal Keep the promise
Follow-up

SHORT CASE: BETTER LATE AND HAPPY THAN JUST LATE

 Feedback
Step Actions
Acknowledge  As soon as the problem was known, passengers were informed and efforts made to make
them comfortable during the wait.
 Passengers were kept on the plane to avoid discomfort and stress.
 When longer delay occurred passengers were informed and moved to waiting lounge.
Accept  Staff answered passenger queries and problems.
 Airline kept people informed throughout the delay period.
Describe  Waiting was described to be better for passengers in airport lounge.
 Individual passenger problems were resolved as they occurred.
 Group solutions, such as meal vouchers and making sure people had food and comfort.
 Airline announced departure as soon as they knew.
 Solutions at arrival were given solutions that met their needs and circumstances.
Appeal  Cabin crew answered questions on delays and other flights the passengers may have.
 Captain personally thanked people for their patience and apologised.
 Some people were given hotels to stay in and cars for transport.
 The airline focussed on keeping the customers loyal as part of their procedures.
 Summary
• Performance measurement data is critical for optimizing business strategy and
meeting organizational goals.
• Measurement systems must be related to cause and effect so improvement can
be monitored and corrective actions taken.
• Measures and indicators must be relevant to the organization’s strategy and meet
customer requirements.
• Management of the data requires the selection of relevant measures that are key
to the processes and also which support monitoring strategic improvements.
• Measures can be used to indicate performance or competitive gaps and allows
managers to address these problems.
• Measures can be taken at the individual level, process level and organizational
level, but it is the decisions that are taken from them that drive organizational
performance.
• Complaints data and measures will assist to identify key measures and to design
service recovery procedures and processes.