Total Quality Management: Focus on Six Sigma - Review Notes

Main Sections

• 1. Total Quality Management (TQM)
• 2. Quality Specification and Quality Costs
• 3. Six Sigma Quality
• 4. The Shingo System: Fail-Safe Design
• 5. ISO 9000
• 6. External Benchmarking for Quality Improvement
• 7. Service Quality Measurement: SERVQUAL

Total quality management is managing the entire organization so it excels on all dimensions of products and services that are important to the customer. In today's competitive marketplace, the production and delivery of high-quality goods and services is a key element of any organization's success. Quality can be used as a competitive advantage or a strategic weapon for an organization. TQM, or total quality management is the advanced stage of quality programs, not only in Japan, but also in Europe and North America. 

The critical elements of a successful TQM program include leadership, employee involvement, excellence in products or processes, and customer focus.

The Malcolm Baldrige National Quality Award is a quality award sponsored by the U.S. Commerce Department to recognize organizations that have achieved excellence in their total quality management program. The Award was created in 1987 to recognize total quality management in American industry and represents the government's endorsement of quality as an essential component of a successful business strategy. The award seeks to improve quality and productivity.

The award consists of comprehensive criteria for evaluating total quality in organizations. A Board of Examiners reviews applicants. The Baldrige is designed to be flexible and it evaluates quality in various business categories including health care, educational institutions as well as manufacturing and service companies and small businesses.

The quality criteria focus on seven broad topical areas that are integrally and dynamically related. 

The seven areas are: Leadership, Strategic planning, Customer and Market Focus, Information and Analytics, Human Resource Focus, Process Management and Business Results. Customer satisfaction is the ultimate goal of the quality program.

The categories addressed in the award were selected because of their importance to all businesses. Companies not applying for the award can use the criteria to assess their current operations, design a total quality system, evaluate internal relationships, and to assess customer satisfaction. Participation in the award program is declining but many state-sponsored quality programs and awards are growing. The Deming Prize recognizes quality excellence in Japanese companies. A European Quality Award exists as well and is similar to the Baldrige Award.

Leaders in the quality revolution include Deming, Juran, and Crosby. These three gurus researched and advanced the role of quality. When considering quality, the concept has many dimensions. One is the performance of a product. Another dimension is the features of a product. Still other important quality variables include reliability, conformity, durability, serviceability, aesthetics, and finally perceived quality. The customer perceives quality. That is why a customer-focus is critical to any quality implementation.

Operation managers have to evaluate their designs for quality output. Do the specification of the product satisfy the customers? Is the design capable of providing satisfaction to the users? Is the production system capable of producing the specification. The operations managers are responsible for the design of processes and they have to certify that processes are capable of producing the designed specification. Even though processes are designed with the ability to produce the desired quality, there has to be control during the execution phase so that machines are reset whenever the performance deteriorates. Similarly operators must take adequate care in operating the machine. Management should not force operators to work when they are exhausted as the probability of making errors increases whenever operators feel fatigued or bored.

A key to a successful quality initiative is the use of planning and management tools and procedures to track quality progress. Both quantitative and non-quantitative measures are used to track initial quality and quantity improvements over time. An important quantitative method for monitoring a process is statistical process control. SPC allows employees to distinguish between random fluctuations in machines and processes and to determine when variations signal that corrective action is needed. Some of recent ideas that emerged in quality improvement or management field are the process of developing quality specifications by understanding customer requirements,  understanding the cost of quality concept, conformance quality concept, quality at the source, and the goal of zero defects.

Continuous improvement has its own tools and procedures including the concept of Kaizen borrowed from the Japanese, the PDCA Cycle, and benchmarking both internally and externally in the industry.

An alternative to the statistically based approach is the Shingo system, developed in Japan. It focuses on self-checks, source inspections, and successive checks to ensure quality. Key features of the Shingo system include fail safe or poka-yoke systems that prevent defects.

ISO 9000 is a series of standards agreed upon by the International Organization for Standards. Adopted in 1987 these standards consist of five primary parts and more than 100 countries now recognize the 9000 series for quality standards and certification for international trade. ISO 14000 standards cover environmental compliance by manufacturing companies. ISO 9000 standards are compared to the Baldrige Criteria in this section.

SERVQUAL is a questionnaire used to poll customers about service quality. It is an important tool for customer satisfaction. Many methods are available to production practitioners to measure quality. However, quality is a strategic issue and the internal capabilities and  the external environment requirements have to be taken into consideration in decisions related to quality. Internal capability needs to be developed as required and also external commitments must be based on internal capability at any point in time.  Quality programs are valuable in all organizations -- both service and manufacturing.

Total quality management may be defined as "managing the entire organization so that it excels on all dimensions of products and services that are important to the customer."

It has three important stages or steps.

1. Design of the product or service taking into consideration the customer expectations.
2. Designing a production system capable of delivering to design specifications and maintaining and improving the process capability on a continuous basis.
3. Controlling the production system during the execution phase so that it function according to design and any problems are highlighted so that they can be rectified or eliminated from the production system.

Cost of Quality Framework

Costs associated with quality are categorized and reported as;

1. Prevention costs
2. Appraisal costs
3. Internal failure costs
4. External failure costs

While the traditional quality systems concentrated on appraisal, the Japanese quality movement focused on prevention level. Now it is understood that prevention is economical. :Philip Crosby gave a benchmark that total quality related costs can be brought down to 2.5 percent of every sales dollar from the estimated 15 to 20 percent of sales dollar.(Crosby, 1979)

Six Sigma Quality

A process that is in Six-Sigm control will produce no more than two defects out of every billion units. In practice it is stated as four defects per million units, as the process mean may be somewhere within one sigma of the target specification. This notation provides a common metric to compare processes - defects per million opportunties (DPMO)

Six Sigma methodology advocated DMAIC cycle

Define
Measure
Analyze
Improve
Control

The tools used for measuring and analyzing data on defects are flowcharts, run charts, pareto charts, checksheets, cause-and-effect diagrams, opportunity flow charts, control charts. Failure mode and effect analysis (FMEA) and design of experiments (DOE) are also used. DOE is used test the relationship between process inputs and outputs. Six Sigma emphasizes the scientific method like operations research and optimizes variance of the processes that minimizes variance of the process by developing various conjectures about the levels of input variables and variability of the process and the conjectures are converted into hypotheses that are tested using design of experiments (DOE) methods. Modern statistical software specially developed to support process analysis has reduced the drudgery of displaying and analyzing data.

Six Sigma has large number of successful applications in various companies and companies like GE claim billions of dollars of saving. Hence it is a very popular technique now in the world and more and more companies are training their employees in Six Sigma methods. 

IE Six Sigma Optimization Module of Industrial Engineering Online Course Notes

Quality Management - Important Points

Total Quality Management Defined

Quality Specifications and Costs

Six Sigma Quality and Tools

External Benchmarking

ISO 9000

Service Quality Measurement

Total 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 customer

Quality 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 

Costs of Quality 

Six 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 defects.

The name, “six sigma” refers to the variation that exists within plus or minus three standard deviations of the process outputs

Six Sigma allows managers to readily describe process performance using a common metric: Defects Per Million Opportunities (DPMO)

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?

Six 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

Example 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 15 ounces of cereal in a box.

What should we do?

Step 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.

2 - Measure

How would we measure to evaluate the extent of the problem?

What are acceptable limits on this measure?

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 ounces

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?

Step 3 - Analyze - How can we improve the capability of our cereal box filling process?

Decrease Variation

Center Process

Increase Specifications

Step 4 – Improve – How good is good enough? Motorola’s “Six Sigma”

6s minimum from process center to nearest spec

Motorola’s “Six Sigma”

Implies 2 ppB “bad” with no process shift

With 1.5s shift in either direction from center (process will move), implies 3.4 ppm “bad”.

Step 5 – Control

Statistical Process Control (SPC)

Use data from the actual process

Estimate distributions

Look at capability - is good quality possible

Statistically monitor the process over time

Analytical Tools for Six Sigma and Continuous Improvement: 

Flow Chart 

Run Chart

Pareto Analysis

Checksheet

Histogram

Cause & Effect Diagram

Control Charts

Other Six Sigma Tools

Failure Mode and Effect Analysis (DMEA) 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 test to determine cause-and-effect relationships between process variables and output

Six Sigma Roles and Responsibilities

Executive leaders must champion the process of improvement

Corporation-wide training in Six Sigma concepts and tools

Setting stretch objectives for improvement

Continuous reinforcement and rewards

The Shingo System: Fail-Safe Design

Shingo’s argument:

SQC methods do not prevent defects

Defects arise when people make errors

Defects can be prevented by providing workers with feedback on errors

Poka-Yoke includes:

Checklists

Special tooling that prevents workers from making errors

ISO 9000

Series of standards agreed upon by the International Organization for Standardization (ISO)

Adopted in 1987

More than 100 countries

A prerequisite for global competition?

ISO 9000 directs you to "document what you do and then do as you documented" 

     

Three Forms of ISO Certification

1. First party: A firm audits itself against ISO 9000 standards

2. Second party: A customer audits its supplier

3. Third party: A "qualified" national or international standards or certifying agency serves as auditor

External Benchmarking Steps

1. Identify those processes needing improvement 

2. Identify a firm that is the world leader in performing the process

3. Contact the managers of that company and make a personal visit to interview managers and workers

4. Analyze data

Service Quality Measurement: Servqual

A perceived service quality questionnaire survey methodology

 

Examines “Dimensions of Service Quality” including: Reliability, Responsiveness, Assurance, Empathy, and Tangibles (e.g., appearance of physical facilities, equipment, etc.)

New version of this methodology is called “e-Service Quality” dealing service on the Internet

Dimensions of Service Quality on the e-Service methodology include: Reliability, Responsiveness, Access, Flexibility, Ease of Navigation, Efficiency, Assurance/Trust, Security/Privacy, Price Knowledge, Site Aesthetics, and Customization/Personalization

Chapter Outline (Chase et al. Book)

Total Quality Management
Total Quality Management Defined
Malcolm Baldrige National Quality Award Defined

Quality Specification and Quality Costs
Developing Quality Specifications
Design Quality Defined
Conformance Quality Defined
Quality at the Source Defined
Zero Defects Defined
Dimensions of Quality Defined
Cost of Quality
Cost of Quality Defined
Functions of the QC Department

Six Sigma Quality
Six Sigma Defined
DPMO Defined
Six Sigma Methodology
DMAIC Defined
PDCA Cycle Defined
Continuous Improvement Defined
Kaizen Defined
Analytical Tools of Six Sigma and Continuous Improvement
Six Sigma Roles and Responsibilities

The Shingo System: Fail-Safe Design
Fail-Safe Procedures (Poka-Yoke) Defined

ISO 9000
ISO 9000 Defined
ISO 14000 Defined
The ISO 9000 Series
ISO 9000 Certification

External Benchmarking for Quality Improvement
External Benchmarking Defined

Service Quality Measurement: SERVQUAL
SERVQUAL defined

Conclusion

Case: Hank Kolb, Director of Quality Assurance

Case: Shortening Customers' Telephone Waiting Time

Case: "Hey, Is Anybody There? " An Example of DMAIC at American Express

Source:
http://highered.mcgraw-hill.com/sites/0072983906/student_view0/chapter8/


Updated 12.5.2022,  22.3.2022, 7.12.2014, 10.12.2011

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