Chapter 1 Fundamentals of Quality Gitlow, Oppenheim, Oppenheim and Levine Chapter 1 Fundamentals of Quality Learning Objectives – Understand the definition of a process – Understand variation and its causes in a process • Special causes of variation • Common causes of variation – Understand the two definitions of quality • Goal post view • Continuous improvement view – Understand the quality environment Chapter 1 Fundamentals of Quality Learning Objectives – Understand the three types of quality • Quality of design or redesign • Quality of conformance • Quality of performance – Understand the relationship between Quality and Cost • Features and price • Uniformity and dependability – Understand the relationship between Quality and Productivity – Understand the benefits of improving quality – Know how to apply take-away knowledge Process Basics • Definition of a process – A process is a collection of interacting components that transform inputs into outputs toward a common aim called a mission statement. Inputs Manpower Equipment Materials/Goods Process Transformation of inputs, value (time, place, form) is added or created Outputs Manpower Equipment Materials/Goods Methods Methods Environment Environment Definition of a process – It is management’s job to optimize the entire process toward its aim. – This may require the sub-optimization of selected components of the process. Definition of a Process – Processes exist in all facets of organizations and our understanding of them is crucial – – – – – – Administration Sales and service Human resources Maintenance Communication Production – Relationships between people are processes – All processes can be studied, documented, defined, improved, and innovated Definition of a process – An organization is a multiplicity of micro subprocesses, all synergistically building to the macro process of that firm. – All processes have customers and suppliers; these customers and suppliers can be internal or external to the organization. Variation in a Process – The outputs from all processes and their component parts vary over time. Number of Accidents Actual Values (Variation among actual values) Variation between Ideal and Actual Values Ideal Value = 0 Time Variation in a process – Special causes of variation are due to events external to the usual functioning of a system. – Examples could include (if they are not part of the system): • New raw materials • A drunk employee • A new operator Variation in a process – Common causes of variation are due to the process itself. – Process capability is determined by inherent common causes of variation. – Examples of common causes of variation include: • • • • • • Hiring, training and supervisory practices Lighting Stress Management style Policies and procedures Design of products or services Variation in a process – Employees cannot control a common cause of variation and should not be held accountable for, or penalized for, its outcomes. – Managers must realize that unless a change is made in the process (which only they can make) the process’s capability will remain the same. Process Basics Workshop: The Drunk Employee More About the Feedback Loop – A feedback loop relates information about outputs from any stage or stages back to another stage or stages so that an analysis of the process can be made. Input Process Feedback Loop Output More About the Feedback Loop – There are three feedback loop situations • no feedback loop • special cause only feedback loop • special and common cause feedback loop DEFINITION OF QUALITY • Goal Post View • Continuous Improvement View Goal post view – Conformance to valid customer requirements, that is, as long as an output fell within acceptable limits, called specification limits, around a desired value, called the nominal value (denoted by “m”), or target value, it was deemed conforming, good, or acceptable. Definition of Quality No No Good, Good, Good, Loss Loss Loss No Loss LSL Nominal m USL Quality Characteristic • Goal post view (example) – The desired diameter of stainless steel ball bearings is 25 mm (the nominal value). – A tolerance of 5 mm above or below 25 mm is acceptable to purchasers. – Thus, if a ball bearing diameter measures between 20 mm and 30 mm (inclusive), it is deemed conforming to specifications. – If a ball bearing diameter measures less than 20 mm or more than 30 mm, it is deemed not conforming to specifications, and is scrapped at a cost of $1.00 per ball bearing. Continuous Improvement View – Quality is a predictable degree of uniformity and dependability, at low cost and suited to the market. – Losses begin to accrue as soon as a quality characteristic of a product or service deviates from the nominal value. – As with the “goal post” view of quality, once the specification limits are reached the loss suddenly becomes positive and constant, regardless of the deviation from the nominal value beyond the specification limits. • Continuous improvement view – L(y) = k(y-m)2 = loss of deviating (y-m) units from the nominal value of “m” – y= the value of the quality characteristic for a particular item of product or service – m = the nominal value for the quality characteristic – k = a constant, A/d2 – A = the loss (cost) of exceeding specification limits (e.g., the cost to scrap a unit of output) – d = the allowable tolerance from “m” that is used to determine specification limits. • Continuous improvement view – Under the Taguchi Loss Function the continuous reduction of unit-to-unit variation around the nominal value is the most economical course of action, absent capital investment • Continuous improvement view (example) – Returning to the production of stainless steel ball bearings. Every millimeter higher or lower than 25 mm causes a loss that can be expressed by the following Taguchi loss function: L(y) = k(y-m)2 = (A/d2)(y-m)2 = ($1.00/5mm2)(y-25mm)2 = (.04)(y-25mm)2 Diameter of Ball Bearing (y) Value of Taguchi Loss Function L(y) 18 1.00 19 1.00 20 1.00 21 0.64 22 0.36 23 0.16 24 0.04 25 0.00 26 0.16 27 0.36 28 0.64 29 1.00 30 1.00 31 1.00 32 1.00 The Quality Environment • The pursuit of quality requires that organizations globally optimize their system of interdependent stakeholders. • This system includes employees, customers, investors, suppliers and subcontractors, regulators, the environment, and the community. • Employees are the most critical stakeholders of an organization. • According to quality expert Kaoru Ishikawa: “In management, the first concern of the company is the happiness of people who are connected with it. If the people do not feel happy and cannot be made happy, that company does not deserve to exist. . . The first order of business is to let the employees have adequate income. Their humanity must be respected, and they must be given an opportunity to enjoy their work and lead a happy life.” Types of Quality • There are three types of quality: – Quality of design / redesign – Quality of conformance – Quality of performance • The above types of quality create the never ending spiral of continuous improvement of products, services or processes • Quality of design – Quality of design / redesign focuses on determining the quality characteristics of products that are suited to the needs and wants of a market, at a given cost; that is, quality of design develops products from a customer orientation. • Quality of design / redesign – Quality of design studies begin with consumer research, service call analysis, and sales call analysis, and lead to the determination of a product concept that meets the consumer’s needs and wants. – Next, specifications are prepared for the product concept. • Quality of conformance – Quality of conformance is the extent to which a firm and its suppliers can produce products with a predictable degree of uniformity and dependability, at a cost that is in keeping with the quality characteristics determined in a quality-of-design study. – The ultimate goal of process improvement and innovation efforts is to create products and services whose quality is so high that consumers (both external and internal) extol them. • Quality-of-performance – Quality of performance studies focus on determining how the quality characteristics determined in quality-of-design studies, and improved and innovated in quality-of-conformance studies, are performing in the marketplace. – The major tools of quality-of-performance studies are consumer research and sales/service call analysis. – These tools are used to study after-sales service, maintenance, reliability, and logistical support, as well as to determine why consumers do not purchase the company’s products. Relationship between Quality and Cost • Features and Price – Features and price determine whether a consumer will initially enter a market segment; hence features and price determine market size. – Dependability and uniformity determine a product’s success, and therefore its market share, within a market segment. – Generally, products or services with more features or fancier features have higher costs to the manufacturer and higher prices to the consumer than products or services with fewer or simpler features. • Dependability and Uniformity – Uniformity and dependability create an inverse relationship between quality and cost. When the degree of uniformity and dependability of a product is high, the quality of the product is high, and the overall cost to both the manufacture and the consumer is less. – This relationship is explained by the Taguchi Loss Function. 1.5 Relationship between Quality and Cost • Conclusion – Managers must balance the cost of having many market segments with the benefits of high consumer satisfaction caused by small deviations between an individual consumer’s needs and the product characteristic package for his market segment. Also, managers must continually strive to reduce variation in product characteristics for all market segments. • Stressing productivity often has the opposite effect of what management desires • Management’s ability to improve the process results in a decrease in defectives, yielding an increase in good units, quality, and productivity Benefits of Improving Quality • Several benefits result from improving a process: – – – – – – rework decreases productivity rises quality improves cost per good unit is decreased price can be cut workers’ morale goes up because they are not seen as the problem. This last aspect leads to further benefits: • • • • less employee absenteeism less burnout, more interest in the job increased motivation to improve work. • This is called the chain reaction of quality