Product Lifecycle Management
Cost of Quality
Pasi Kaipainen, Mika Huhta
Cost of Quality Management
is an approach to reducing the Cost of
Quality (COQ), the sum of all costs incurred
throughout the product lifecycle due to poor
quality
Cost of Quality Management
COQ is made up of 4 types of quality costs:
1. internal failure costs
2. external failure costs
3. appraisal costs
4. prevention costs
Internal failure costs

Failures such as rework, scrap and poor
design that customer does not see
External failure costs

Failures which occur after the product has
been delivered to the customer. Includes
warranty claims, product liability claims
and field returns
Appraisal costs

Costs coming from measuring quality and
maintaining conformance by such activities
as inspection, testing, process monitoring
and equipment calibration
Prevention costs

Costs coming from reducing the failure and
appraisal costs and to achieve first-time
quality. E.g. education, training and supplier
certification
Six Sigma


Six Sigma is a set of practices originally
developed by Motorola to systematically
improve processes by eliminating defects
Six Sigma has two key methodologies:



DMAIC (Define-Measure-Analyze-Improve-Control)
DMADV (Define-Measure-Analyze-Design-Verify)
DMAIC is used to improve an existing
business process, and DMADV is used to create
new product or process designs for predictable,
defect-free performance.
Six Sigma

DMADV has several variations (DMEDI,
DMADOV and so on …)
Six Sigma-DMAIC





Define the process improvement goals that are
consistent with customer demands and enterprise
strategy.
Measure the current process and collect relevant data
for future comparison.
Analyze to verify relationship and causality of factors.
Determine what the relationship is, and attempt to
ensure that all factors have been considered.
Improve or optimize the process based upon the
analysis using techniques like Design of Experiments.
Control to ensure that any variances are corrected
before they result in defects. Set up pilot runs to
establish process capability, transition to production
and thereafter continuously measure the process and
institute control mechanisms.
Six Sigma-DMADV





Define the goals of the design activity that are
consistent with customer demands and enterprise
strategy.
Measure and identify CTQs (critical to qualities),
product capabilities, production process capability, and
risk assessments.
Analyze to develop and design alternatives, create
high-level design and evaluate design capability to
select the best design.
Design details, optimize the design, and plan for
design verification. This phase may require
simulations.
Verify the design, set up pilot runs, implement
production process and handover to process owners.
DMAIC cycle
http://quality.dlsu.edu.ph/tools/DMAIC_cycle.pdf
Sigma
LSL
USL
s1
The value of the process standard deviation for a given
characteristic. Sigma is used to quantify the spread (around a
mean) of some process or product characteristic.
Sigma
X
6s
99.9999998% of the data falls
within  6 sigmas from the mean.
Sigma Level Defects per million opportunities
1
690,000
2
308,537
3
66,807
4
6,210
5
233
6
3.4
68.26%
99.73%
99.9999998%
DFSS
DFSS:Design For Six Sigma
 Six sigma tools were initially deployed for the
improvement of existing manufacturing or
service processes.
 When new designs were introduced similar Six
Sigma solutions were found to be deployed to
similar problems again and again.
six sigma problem-solving techniques needed to
be incorporated into the design process.

% of Total Cost
DFSS
1
0.9
0.8
0.7
0.6
Costs Committed
0.5
0.4
0.3
0.2
0.1
0
Money Spent
Process Engineering
Design
Procurement Construction/
Build
Project Activities
DFSS-Definition
TM/SM
Initiate Design Execute andSustain
Initiate
•Define and quantify customer requirements.
•Examine the project fit with business operating and
strategic plan.
•Perform a business and technical risk assessment.
•Perform a marketing and competitive assessment.
•Perform a financial assessment —sensitivity analysis.
•Create a cross-functional team.
•Determine the timeline.
Design
•Develop transfer functions.
•Perform a tolerance analysis.
•Design for manufacturability/ reliability.
•Pilot and prototype.
•Perform an intellectual property review.
•Perform a risk analysis.
•Perform a cost/investment review.
•Review the timeline.
•Develop a part/raw material procurement plan.
Execute
•Procure needed equipment and software.
•Set up manufacturing for production.
•Execute a commercialization plan.
•Start up production.
•Initiate a control plan.
•Demonstrate short-term manufacturing capability.
•Verify the short-term risk
Sustain
•Maintain the control plan.
•Implement the quality management system.
•Review actual vs. estimated results.
•Use MAIC projects as needed to close gaps.
•Demonstrate long-term performance capability.
•Close the project.
Process Control
•Cp (and Cpk) is the short-term capability index
•It is the potential, inherent process capability, or
the best the process could ever hope to perform in
short-term
•Pp (and Ppk ) is the long-term performance index
•It is also called Process Performance
•It is the actual, long-term performance of the
process in real life
Process
capability index Cp
Process
Control
Specificat ion width (or design tol erance)
Process capability (or total process variation )
USL - LSL

6s
cp 
Voice of the Customer
Cp = ------------------------------------Voice of the Process
LSL
LCL
UCL
Voice of the Process
Voice of the Customer
- 3s
Mean value
= Nominal value or
Target
+ 3s
USL
Process capability index Cpk
• Cpk takes into account any difference betw een the design
nominal and the actual process mean value x
c pk  min (
LSL
USL - x
,
3s
x - LSL
)
3s
USL
Process Capability Index Cpk
LSL
LCL
Mean
- 3 sST Nominal
value value
x
1.33
1.33 << C
Cpp << 2.00,
2.00, but
but
1.00
< 1.33
1.00 << C
Cpk
pk < 1.33
UCL
USL
+ 3 sST
Process Capability example
•PPAP (Production Part Approval Process, Automotive Industry
Action Group (AIAG), 1995 states:
PLM and Six Sigma

Combine PLM and Six Sigma initiatives
together could help to reach targets more
effectively since business investments are quite
similar for both PLM and Six Sigma.
PLM and Six Sigma
Proven Benefits of Six Sigma








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Productivity increases
Cycle time reduction
Higher throughput
Reduced defects
High levels of outgoing quality
Standardized improvement methodology
across the organization
A set of techniques and tools to simplify
improvement efforts
Greater customer satisfaction and dramatic
improvement to the "bottom-line".
Improve/reengineered processes
Proven Benefits of PLM













Productivity increases
Cycle time reduction
Higher throughput
Reduced defects
High levels of outgoing quality
Fast easy access to information
100% BOM accuracy
Controlled access
Improved collaboration with customer
Improved Reuse
Technology to simplify and control
improvement efforts
Greater customer satisfaction and
improvement to the "bottom-line"
Effective and efficient process control not
possible otherwise