Slide 1Six-Sigma QualitySlide 3Total Quality Management (TQM)Quality SpecificationsCosts of QualitySix Sigma QualitySix Sigma Quality (Continued)Slide 9Six Sigma Quality: DMAIC CycleSix Sigma Quality: DMAIC Cycle (Continued)Example to illustrate the process…Step 1 - Define2 - Measure2 – Measure (continued)2 – Measure (continued)Slide 17Step 3 - Analyze - How can we improve the capability of our cereal box filling process?Step 4 – Improve – How good is good enough? Motorola’s “Six Sigma”Motorola’s “Six Sigma”Step 5 – ControlAnalytical Tools for Six Sigma and Continuous Improvement: Flow ChartAnalytical Tools for Six Sigma and Continuous Improvement: Run ChartAnalytical Tools for Six Sigma and Continuous Improvement: Pareto AnalysisAnalytical Tools for Six Sigma and Continuous Improvement: ChecksheetAnalytical Tools for Six Sigma and Continuous Improvement: HistogramAnalytical Tools for Six Sigma and Continuous Improvement: Cause & Effect DiagramAnalytical Tools for Six Sigma and Continuous Improvement: Control ChartsOther Six Sigma ToolsSix Sigma Roles and ResponsibilitiesThe Shingo System: Fail-Safe DesignISO 9000 and ISO 14000Three Forms of ISO CertificationExternal Benchmarking StepsQuestion BowlSlide 36Slide 37Slide 38Slide 39Slide 40Slide 41End of Chapter 9McGraw-Hill/IrwinCopyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter 9Six-Sigma Quality•Total Quality Management Defined•Quality Specifications and Costs•Six Sigma Quality and Tools•External Benchmarking•ISO 9000•Service Quality MeasurementOBJECTIVES 9-3Total Quality Management (TQM)•Total quality management is defined as managing the entire organization so that it excels on all dimensions of products and services that are important to the customer9-4Quality Specifications•Design quality: Inherent value of the product in the marketplace–Dimensions include: Performance, Features, Reliability/Durability, Serviceability, Aesthetics, and Perceived Quality.•Conformance quality: Degree to which the product or service design specifications are met 9-5Costs of Quality External Failure Costs Appraisal CostsPrevention CostsInternal FailureCostsCosts ofQuality9-6Six Sigma Quality•A philosophy and set of methods companies use to eliminate defects in their products and processes•Seeks to reduce variation in the processes that lead to product defects9-7Six Sigma Quality (Continued)•Six Sigma allows managers to readily describe process performance using a common metric: Defects Per Million Opportunities (DPMO)1,000,000 x units of No. x unit per error for iesopportunit ofNumber defects ofNumber DPMO1,000,000 x units of No. x unit per error for iesopportunit ofNumber defects ofNumber DPMO9-8Six Sigma Quality (Continued)Example of Defects Per Million Opportunities (DPMO) calculation. Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered. What is the DPMO in this situation?Example of Defects Per Million Opportunities (DPMO) calculation. Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered. What is the DPMO in this situation? 000,1 1,000,000 x 200,000 x 1 200DPMO 000,1 1,000,000 x 200,000 x 1 200DPMOSo, for every one million letters delivered this city’s postal managers can expect to have 1,000 letters incorrectly sent to the wrong address.So, for every one million letters delivered this city’s postal managers can expect to have 1,000 letters incorrectly sent to the wrong address.Cost of Quality: What might that DPMO mean in terms of over-time employment to correct the errors?Cost of Quality: What might that DPMO mean in terms of over-time employment to correct the errors?9-9Six Sigma Quality: DMAIC Cycle•Define, Measure, Analyze, Improve, and Control (DMAIC) •Developed by General Electric as a means of focusing effort on quality using a methodological approach•Overall focus of the methodology is to understand and achieve what the customer wants•A 6-sigma program seeks to reduce the variation in the processes that lead to these defects•DMAIC consists of five steps….9-10Six Sigma Quality: DMAIC Cycle (Continued) 1. Define (D)2. Measure (M)3. Analyze (A)4. Improve (I)5. Control (C)Customers and their prioritiesProcess and its performanceCauses of defectsRemove causes of defectsMaintain quality9-11Example to illustrate the process…•We are the maker of this cereal. Consumer reports has just published an article that shows that we frequently have less than 16 ounces of cereal in a box.•What should we do?9-12Step 1 - Define•What is the critical-to-quality characteristic?•The CTQ (critical-to-quality) characteristic in this case is the weight of the cereal in the box.9-132 - Measure•How would we measure to evaluate the extent of the problem?•What are acceptable limits on this measure?9-142 – Measure (continued)•Let’s assume that the government says that we must be within ± 5 percent of the weight advertised on the box.•Upper Tolerance Limit = 16 + .05(16) = 16.8 ounces•Lower Tolerance Limit = 16 – .05(16) = 15.2 ounces9-152 – Measure (continued) •We go out and buy 1,000 boxes of cereal and find that they weight an average of 15.875 ounces with a standard deviation of .529 ounces.•What percentage of boxes are outside the tolerance limits?9-16Upper Tolerance = 16.8Lower Tolerance = 15.2ProcessMean = 15.875Std. Dev. = .529What percentage of boxes are defective (i.e. less than 15.2 oz)?Z = (x – Mean)/Std. Dev. = (15.2 – 15.875)/.529 = -1.276NORMSDIST(Z) = NORMSDIST(-1.276) = .100978Approximately, 10 percent of the boxes have less than 15.2 Ounces of cereal in them!9-17Step 3 - Analyze - How can we improve the capability of our cereal box filling process?–Decrease Variation–Center Process–Increase Specifications9-18Step 4 – Improve – How good is good enough? Motorola’s “Six Sigma”–6 minimum from process center to nearest spec1 231 02 31269-19Motorola’s “Six Sigma”•Implies 2 ppB “bad” with no process shift.•With 1.5 shift in either direction from center (process will move), implies 3.4 ppm “bad”.1 231 02 3129-20Step 5 – Control•Statistical Process Control