Process Performance and
Quality
Chapter 5
Ch.5 Agenda
Definition of quality
Quality costs
TQM
Employee Involvement
Continuous improvement
Control Charts for Variables
Control Chart for Attributes
Six sigma Quality Philosophy
ISO 9000 and 14000 standards
Quality awards and standards
What is Quality?
Prior to 1980’s quality was not
a top priority
1980s –US manufacturers was
loosing market share
Mid-1980s—more attention
given to quality
Later total quality concept was
embraced
Benefits of
Quality
Increased market
share
Reduced production
costs
Increased price
Customer-Driven
Definitions of Quality





Conformance to Specifications
Value
Fitness for Use
Support
Psychological Impressions
The Costs of
Poor Quality
 Prevention Costs
 Appraisal Costs
 Internal Failure Costs
 External Failure Costs
Prevention Costs
 Re-design the process to remove
causes of defects
 Re-design the product to make it
simpler, easy to produce
 Train employees
 Train suppliers
Appraisal Costs
 Inspections
 Quality audits
 Statistical quality control program
Internal Failure Costs
 Scrap
 Rework
External Failure Costs
 Warranty service
 Litigation
 Loss of market share
 Increased regulation
What are the hidden costs of
internal and external failure
 More labor
 More machine capacity needed
 Increased wip
 Extended lead times
 Reduced employee morale
Costs of Detecting Defects
Cost of detection and correction
Costs of Detecting Defects
Process
Figure 6.2
Final testing
Customer
Where defect is detected
TQM
Wheel
Customer
satisfaction
Figure 5.2
Employee
Involvement
 Cultural

Change
Teams
Cultural Change
 Top management should facilitate
cultural change
 Everyone is supposed to participate
Team Building
 Common commitment
 Shared leadership roles
 Collective performance evaluation
 Open-ended Communication
Management’s role in Team
Building
 Assign meaningful projects, clear rules
 Set some immediate performance oriented


tasks and goals for early success
Facilitate team members to spend a lot of
time together
Have ways other than direct compensation to
give the team positive reinforcement
Three Approaches to
Teamwork
 Problem-solving teams
 Special-purpose teams
 Self-managing teams –highest level of
worker participation
Individual Development
 Education seminar
 University courses and degrees
 On the job training
 Cross training
 Web-based learning
Getting started with
Continuous Improvement
 SPC training
 Make SPC a normal aspect of Daily
Operations
 Build Work Teams and Employee
Involvement
 Utilize problem Solving Techniques
within the work teams
 Develop operator process ownership
Deming
Wheel
Plan
Act
Do
Check
Figure 5.3
Problem Solving process:
The Deming Wheel
 Plan –select a process needing



improvement, document process, analyse
data, set improvement goals, discuss
alternatives, assess benefits and costs,
develop a plan and performance measures.
Do – implement plan
Check – Analyse data and check the
performance
Act- document and disseminate the
improved process as standard
Control Chart Purposes
Show changes in data pattern
– e.g., trends
Make corrections before process is out of control
Show causes of changes in data
– Assignable causes
Data outside control limits or trend in data
– Natural causes
Random variations around average
Quality Characteristics
Variables
Characteristics that you
measure, e.g., weight,
length
May be in whole or in
fractional numbers
Continuous random
variables
Attributes
Characteristics for which
you focus on defects
Classify products as
either ‘good’ or ‘bad’, or
count # defects
– e.g., radio works or not
Categorical or discrete
random variables




Using Control Charts for
Process Improvement
Measure the process
When changes are indicated, find
the assignable cause
Eliminate problems, incorporate
improvements
Repeat the cycle
Control Chart Types
Continuous Numerical
Data
Control
Charts
Categorical or Discrete
Numerical Data
Variables
Charts
R
Chart
Attributes
Charts
X
Chart
P
Chart
C
Chart
X Chart
Type of variables control chart
– Interval or ratio scaled numerical data
Shows sample means over time
Monitors process average
Example: Weigh samples of coffee &
compute means of samples; Plot
R Chart
Type of variables control chart
– Interval or ratio scaled numerical data
Shows sample ranges over time
– Difference between smallest & largest
values in inspection sample
Monitors variability in process
Example: Weigh samples of coffee &
compute ranges of samples; Plot




Using Control Charts for
Process Improvement
Sample the process
When changes are indicated, find
the assignable cause
Eliminate problems, incorporate
improvements
Repeat the procedure
Control Charts
for Variables
Special Metal Screw
Sample
Number
1
2
3
4
5
Example 5.1
1
0.5014
0.5021
0.5018
0.5008
0.5041
Sample
2
3
0.5022 0.5009
0.5041 0.5024
0.5026 0.5035
0.5034 0.5024
0.5056 0.5034
4
0.5027
0.5020
0.5023
0.5015
0.5047
R
_
x
Control Charts
for Variables
Special Metal Screw
Sample
Number
1
2
3
4
5
Example 5.1
1
0.5014
0.5021
0.5018
0.5008
0.5041
Sample
2
3
0.5022 0.5009
0.5041 0.5024
0.5026 0.5035
0.5034 0.5024
0.5056 0.5034
4
R
0.5027 0.0018
0.5020 0.0021
0.5023 0.0017
0.5015 0.0026
0.5047 0.0022
R=
0.0021
=
x=
_
x
0.5018
0.5027
0.5026
0.5020
0.5045
0.5027
Control Charts
for Variables
Control Charts—Special Metal Screw
x-Charts
R = 0.0021
x= = 0.5027
A2 = 0.729
=
UCLx = x + A2R
LCL = x= - A R
x
2
UCLx = 0.5027 + 0.729 (0.0021) = 0.5042 in.
LCLx = 0.5027 – 0.729 (0.0021) = 0.5012 in.
Example 5.1
Control Charts
for Variables
Control Charts—Special Metal Screw
R-Charts
R = 0.0021
D4 = 2.282
D3 = 0
UCLR = D4R
LCLR = D3R
UCLR = 2.282 (0.0021) = 0.00479 in.
LCLR = 0 (0.0021) = 0 in.
Example 5.1
Factors for Computing Control
Chart Limits
Sample
Size, n
2
Mean
Upper
Lower
Factor, A2 Range, D4 Range, D3
1.880
3.268
0
3
1.023
2.574
0
4
0.729
2.282
0
5
0.577
2.115
0
6
0.483
2.004
0
7
0.419
1.924
0.076
8
0.373
1.864
0.136
9
0.337
1.816
0.184
10
0.308
1.777
0.223
0.184
x-Chart—
Special Metal Screw
Figure 5.9
Range Chart Special Metal Screw
Figure 5.8
Different Out of Control
Situations
p Chart
Type of attributes control chart
– Nominally scaled categorical data
e.g., good-bad
Shows % of nonconforming items
Example: Count # defective chairs &
divide by total chairs inspected; Plot
– Chair is either defective or not defective
Control Charts
for Attributes
Hometown Bank
UCLp = p + zp
LCLp = p – zp
p =
p(1 – p)/n
Example 5.3
c Chart
Type of attributes control chart
– Discrete quantitative data
Shows number of nonconformities
(defects) in a unit
– Unit may be chair, steel sheet, car etc.
– Size of unit must be constant
Example: Count # defects (scratches,
chips etc.) in each chair of a sample of
100 chairs; Plot
c Chart
Control Limits
UCLc  c  
c
LCLc  c  
c
k
 ci
c  i1
k
Use 3 for 99.7%
limits
# Defects in
Unit i
# Units Sampled
Six Sigma Improvement
Model
• Define the current process using
characteristics critical to customer
satisfaction and determine gaps
• Measure the work processes that affect
the gap
• Analyze the data focusing on process
analysis
• Improve the process
• Control the revised process to maintain
new performance levels
Six Sigma as a Goal

Defects per
Million
opportunities
2
308,537
3
66,807
4
5
6
6,210
233
3.4
Process
Capability
.
Sigma is a statistical unit of measure which
Reflects process capability.
Six Sigma -- Practical Meaning
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
• 20,000 lost articles of mail per
hour
• Seven articles lost per hour
• Unsafe drinking water for
almost 15 minutes each day
• One unsafe minute every seven
months
• 5,000 incorrect surgical
operations per week
• 1.7 incorrect operations per week
• Two short or long landings at
most major airports each day
• One short or long landing every
five years
• 200,000 wrong drug
prescriptions each year
• 68 wrong prescriptions per year
• No electricity for almost seven
hours each month
• One hour without electricity
every 34 years
Six Sigma
Implementation
ASQ 6 Sigma Forum
• Top Down Commitment
• Measurement Systems to Track
Progress
• Tough Goal Setting
• Education
• Communication
• Customer Priorities
International Quality
Documentation and
Environmental Management
System
ISO
9000
ISO
14000
What is ISO 9000 Certification
International quality standards
Consists of series ISO 9001-9004
Certified companies are listed in the
directory
Compliance with ISO 9000 standards
indicate that quality claims can be verified.
What is ISO 14000
An environmental management system
standard covering:
– Environmental management system
– Environmental performance evaluation
– Environmental leveling
– Life-cycle assessment
Quality Awards
Malcolm Baldrige –USA
Deming --Japan
Malcolm Baldrige national
Quality Award
Established in 1987
Named for Secretary of Commerce
Malcolm Baldrige
Focus then was to improve quality to
reduce trade deficit
Idea is to learn strengths and weaknesses
and find ways to improve
Seven major criteria
Criteria for
Performance
Excellence
 Category 1—Leadership
 Category 2—Strategic Planning
 Category 3—Customer and Market Focus
 Category 4—Information and Analysis
 Category 5—Human Resource Focus
 Category 6—Process Management
 Category 7—Business Results
120 points
85 points
85 points
90 points
85 points
85 points
450 points
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Leadership—Leadership system, values,
expectations, and public responsibilities
Strategic Planning—The effectiveness of
strategic and business planning and deployment
of plans, focusing on performance requirements
Customer and Market Focus—How the company
determines customer and market requirements and achieves
customers satisfaction
Information and Analysis—The effectiveness of
information systems to support customer driven performance
excellence and marketplace success
Human Resource Focus—The success of efforts to realize
the full potential of the work force to create a high-performance
organization
Process Management—The effectiveness of systems and
processes for assuring the quality of products and services
Business Results—Performance results and competitive
benchmarking in customer satisfaction, financials, human
resources, suppliers, and operations