II. Improving Processes

1. II. Improving Processes

2. II. Improving Processes • Quality Control • Inspection • SPC • Capability Analysis • Total Quality Management (TQM) or Continuous Quality Improvement (CQI) • Fishbone Diagrams • Pareto Analysis • Scatter Plots • Check Sheets • Business Process Reengineering (BPR)

3. Learning or Experience Curve Cost per Unit The cost of a unit after cumulative output doubles, compared to the prior cost per unit. E.g., 70% learning curve indicates the cost per unit decreases by 30% with each cumulative doubling. Px P2x x 2x 4x Cumulative Number of Units from Plant

4. Sources of Learning • Individual • The worker naturally gets better at a task • Plateau effect • Organizational • Developing better processes • Improving technology & equipment • Working with suppliers • Working with customers • Learning doesn’t “just happen”

5. Improving the “Factory” • Factory as Laboratory • Performing R&D in the Manufacturing Plant • Chaparral Steel • Leonard-Barton, Dorothy, “The Factory as a Learning Laboratory,” Sloan Management Review, Fall 1992, pp. 23-38. • The Service Factory • Incorporating Service Attributes into the Factory • Inviting Customer to the Factory • The Exchange of Ideas • Services learning efficiency from Manufacturing • Manufacturing learning effectiveness from Services

6. Science Stages of Knowledge of Process & Quality Control • None – ignorance • Know a good outcome from bad • Know the characteristics that describe a quality outcome • Prioritization of these quality characteristics • Know the variables that lead to these outcomes • Know the impact of individual variables • Know the interaction effects among variables • Able to measure the variables • Able to control process to achieve quality outcomes – repeatedly & consistently Art

7. Quality Assurance — When to Inspect? INPUT PROCESS OUTPUT RAW MATERIALS PURCHASED PARTS BEFORE A COSTLY OPERATION BEFORE A COVERING OR CLOSING OPERATION BEFORE AN IRREVERSIBLE PROCESS FINISHED GOODS

8. Achieved through Inspection 100% inspection, sampling inspection Process Control Quality Assurance Cost Total Cost Cost of Inspection Cost of passing Defects Optimum Amount of Inspection

9. Competing Quality Control Concepts • Inspect quality in • Acceptable Quality Levels (AQLs) • Sample from a Lot • Decision Rule: if X are good, accept the Lot • Used both for outgoing and incoming testing • Philosophy: It’s okay to ship s*** • Build quality in • Statistical Quality Control (SPC) • Inherent Capability Analysis

10. Inherent Capability Analysis • Determine the inherent capability of the process to produce goods at some quality level. • Gather historical data on a process • If most output (+/-3s) falls within Design Specs, then process is capable • Six-Sigma Quality Level: when 12s output (+/- 6s) falls within Design Specs

11. Six Sigma Philosophy • Goal: reduce variability in a process to the point where the resulting product becomes more • Robust in use (good for the customer) • Easier to design because parts can be “spec’d” to tighter tolerance • Less expensive to manufacture due to lower quality failures (also good for the customer!) • Quality Level at 6 sigma • 3.4 defects per million opportunities

12. Six Sigma • The Philosophy • Build to Customer Critical To Quality (CTO) criteria • Fact-driven, measurement-based • Structured problem solving approach • Define, Measure, Analyze, Improve, Control (DMAIC) • Improvement projects become part of everyone’s job • The Players • Champions: Manager in the project area • Master Black Belts: Mentors the project teams • Black Belts: Full time team leader, trainer, facilitator • Green Belts: Team members

13. Statistical Process Control • Capable processes also must be controlled • SPC distinguishes 2 types of variability • Normal (Random) variability • Abnormal (Structural) variability • How to apply SPC • Construct charts (and update occasionally!) • Collect data regularly – sampling plan • Observations outside of limits indicate the process potential is “out of control”- statistically • Find “assignable causes”

14. Identify the process you want to study Check whether the process is running OK Take sample outputs at some fixed intervals For each sample - calculate the Average and the Range After taking sufficient samples, Calculate the average of the sample averages, and of the ranges Calculate the Std. Dev.s for both. Set the UCL (Upper Control Limit) at Average + 3*Std.Dev. Set the LCL (Lower Control Limit) at Average - 3*Std. Dev. Developing Control Charts

15. Variable Control Chart (assumes normal distribution) Range Chart p - chart also known as fraction defective chart (assumes binomial distribution) s.d. = SQRT(f.d.*(1 - f.d.)/n) {f.d. = fraction defective} c - chart also known as defective chart (assumes Poisson distribution) s.d. = SQRT(mean) For any control chart: UCL (Upper Control Limit) = mean + z*s.d. LCL (Lower Control Limit) = mean - z*s.d. where z is set to reflect the assurance that the process is in control. Control Charts

16. Statistical Process Control Charts x x Upper Control Limit x x Center line x x x x Lower Control Limit 1 2 3 4 5 6 7 8 Observation Block

17. SPC – Types of Measures • Attributes • Physical measures: weight, height, size • Characteristics • Proportion defective

18. TQM Defined • American Society of Quality Control • Simply put, TQM is a management approach to long term success through customer satisfaction • TQM is based on the participation of all members of an organization in improving processes, products, services, and the culture they work in. • TQM benefits all organization members and society.

19. The Start of TQM... • Everything started by Walter Shewhart • Bell Labs in the 1920s • Developed the concept of Statistical Process Control • Two young scientists working with him: • W. Edwards Deming • Joseph Juran

20. W. Edwards Deming • Key Arguments • The basic cause of sickness in American industry and resulting unemployment is failure of top management to manage. • Everyone doing his[/her] best is not the answer. It is necessary that people know what to do. • Drastic change is required. The responsibility for change rests on management. The first step is in learning how to change. • Quality and productivity are not to be traded off against each other. • Productivity is a by-product of quality and of doing the job right the first time.

21. W. Edwards Deming’sFourteen Points 1. Create constancy of purpose 2. Adopt the new philosophy 3. Cease dependence on mass inspection 4. Don’t award business on price tag alone 5. Improve constantly the system of production and service 6. Institute training 7. Institute leadership

22. W. Edwards Deming’sFourteen Points 8. Drive out fear 9. Break down barriers between staff areas 10. Eliminate slogans, exhortations, and targets for the workforce 11. Eliminate numerical quotas 12. Remove barriers to pride of workmanship 13. Institute a vigorous program of education and retraining 14. Take action to accomplish the transformation

23. Deming’s Seven Deadly Diseases 1. Lack of constancy of purpose 2. Emphasis on short-term profits 3. Evaluation by performance rating, merit rating, or annual performance review 4. Mobility of management 5. Running a company on visible figures alone 6. Excessive medical costs 7. Excessive costs of warranty, fueled by lawyers that work on contingency

24. CONTINUOUS IMPROVEMENT - THE DEMING WHEEL PLAN IDENTIFY AND ANALYZE THE PROBLEM DATA COLLECTION PARETO ANALYSIS FLOW CHARTS CAUSE AND EFFECT DIAGRAMS CONTROL CHARTS ACT DO IMPLEMENT CHANGES ON A SMALL SCALE DOCUMENT CHANGES IMPLEMENT IN REST OF THE ORGANIZATION CHECK EVALUATE NEW DATA Quality Management

25. Joseph Juran • The users of a product or service should be able to count on it to do what it’s supposed to do! • Five dimensions of Fitness for Use • Quality of Design • Quality of Conformance • Availability • Safety • Field Use • Costs of Quality

26. Quality Dimensions • Design Quality • Characteristics of the product’s original design • Conformance Quality • Building products (or delivering services) to the specifications of the product designers

27. Costs of Quality • Prevention • Appraisal • Internal Failures • External Failures

28. More Gurus • Crosby - Quality is Free • Feigenbaum - Total Quality Control (1954) • Taguchi - Robust Manufacturing • Ishikawa - Total Quality Control the Japanese Way

29. Taguchi’s Quality Imperatives • Quality losses are mainly external product failure • Robustness results primarily from product design • Robust products have strong signal-to-noise ratio • Use experimental design to test component part interaction effects • Quality Loss Function: square of deviation from target value X cost of countermeasure • Just in spec = just out of spec • Trivial deviation from target will “stack up” • Reduction in field failures will reduce factory failures

30. Taguchi vs. Zero Defects • Consistent • Predictable • But not on target • On target • More variability Who’s the better shot?

31. Performance Features Reliability Conformance “Managing Quality: The Strategic and Competitive Edge,” David Garvin, 1988. Durability Serviceability Aesthetics Perception Garvin’s Dimensions of Quality

32. Tangible Goods Safety Durability Reliability Aesthetics Conformance Performance Serviceability Services Reliability Responsiveness Assurance Empathy Tangibility Quality Dimensions

33. Malcolm Baldrige National Quality Award • Created by Public Law 1987 • Named after a Secretary of Commerce • Three Purposes • 1. To encourage quality in American industry • 2. To promote quality awareness and continuous improvement • 3. To recognize companies that demonstrate successful quality strategies and quality achievement

34. Lean Production • A combination of multiple tool sets • JIT production (cellular manufacturing) • Safe workplace (5Ss) • Pursuit of perfection • Visual management • Empowered teams • Six sigma

35. Six Sigma Remove variation from processes to achieve uniform flow Problem/project focus Research projects with longer timeline (3-4 months) Higher complexity with root cause unknown Lean Remove waste, rework, inventory to reduce flow time Flow focused Remove bottlenecks Material velocity Immediate results(1-2 weeks) Low complexity with known solutions Six Sigma vs. Lean – Complementary

36. Lean Production • JIT production (cellular manufacturing) • Heijunka: Level workloading • Pursuit of perfection • Visual process management • Empowered teams • Kaizen: Continuous improvement involving everyone • Poka Yoke: mechanism to stop defects or make errors obvious

37. Lean Concepts • Kaizen: Continuing improvement involving everyone • Poka Yoke: mechanism to stop defects or make errors obvious • Heijunka: Level production loading across all product variations • Kanban: “Signboard” signal to authorize production • Andon: “Lantern” – board that signals quality issue • Jidoka: autonomation • 5 Ss • Sources: www.superfactory.com, www.tpmonline.com

38. Other Kaizen Tools: 5 Ss Source: http://www.kaizen-consulting.com/training_5s.htm

39. Mudas – 7 Wastes Source: www.Gemba.Com

40. The Six Sigma Way (ISBN 0-07-135806-4) by Pande, Neuman, and Cavanaugh The Power of Six Sigma (ISBN 0-7931-4434-5) by Subir Chowdhury Six Sigma (ISBN 0-385-49437-8) by Harry and Schroeder. The Six Sigma Handbook (ISBN 0-07-137233-4) by Pyzdek is more technical and becoming the 'handbook' for Black Belts. The Machine that Changed the World, James Womack www.6-sigma.com www.sixsigma.co.uk www.sixsigmasystems.com www.isixsigma.com www.shawresources.com/pdf/Choosing%20a%20Quality%20Improvement%20Methodology.pdf www.ge.com/en/commitment/quality/whatis.htm http://www.swmas.co.uk/Lean_Tools/The_7_Wastes.php http://www.kaizen-consulting.com/training_7w.htm Bibliography

41. More References • http://www.strategosinc.com/just_in_time.htm • A GREAT summary of manufacturing improvement concepts from Ford to lean. A MUST READ. • http://hbswk.hbs.edu/item.jhtml?id=2646&t=operations • http://www.kaizen-consulting.com/training_5s.htm • http://www.kaizen-consulting.com/training_7w.htm • This site from Gemba Research does a nice job of summarizing lots of the TPS tools and concepts.