Chapter 12

SIX SIGMA QUALITY

Power Point Slides

prepared by
Muslim E. Harahap

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 Learning Objectives

 LO12–01: Explain the scope of total quality

management in a firm.

 LO12–02: Understand the Six Sigma approach

to improving quality and productivity.

 LO12–03: Illustrate globally recognized quality

benchmarks (Quality Awards).

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Managing Quality Provides a Competitive
Advantage

• Quality is one of the most important challenges facing a

business
• Markets are more competitive: customers are more
– Knowledgeable
– Demanding
– Prepared to complain about poor quality
– Able to share information about poor quality (e.g. via
email & social networking)
• If a business can develop a reputation for high quality, then
it may be able to create an advantage over its competitors

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 Ways Quality Improves Productivity

Sales Gains
 Improved response
 Higher Prices
 Improved reputation

Improved Increased
Quality Reduced Costs Profits

 Increased productivity
 Lower rework and scrap costs
 Lower warranty costs

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 Definition of Quality

Definition:

The totality of features and characteristics of a product or

service that bears on its ability to satisfy stated or implied
needs (American Society for Quality)

The quality of a product or service is a customer’s

perception of the degree to which the product or service
meets his or her expectations (Gaither & Frazier, 2002)

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 Implications of Quality

1. Company reputation
 Perception of new products
 Employment practices
 Supplier relations

2. Product liability
 Reduce risk

3. Global implications
 Improved ability to compete
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 Examples of Poor Quality

• Product fails – e.g. a breakdown or unexpected wear

and tear
• Product does not perform as promised
• Product is delivered late
• Poor instructions/directions for use
• Unresponsive customer service

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 Quality Specifications and
Quality Costs

 Two major stages of any product creation – intellectual

creation and physical creation.

 The term quality involves two complementary aspects,

quality of design and quality of conformance.

 So, good quality can be attained only when both of them

are controlled satisfactorily.

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 Quality Specifications and
Quality Costs

 Design quality:
the quality which
the producer or Performance Features
supplier is
intending to offer
to the customers
Reliability/
Serviceability
 Conformance Durability
quality: degree to
which the product
or service design Perceived
specifications are Aesthetics
met to the design Quality

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 Dimensions of Quality in Manufacturing Sector

DIMENSION MEANING

Performance Primary product characteristics, such as the brightness of the picture

Features Secondary characteristics, added features, such as remote control

Conformance Meeting specifications or industry standards

Reliability Consistency of performance over time

Durability Useful life, includes repair

Resolution of problems and complaints, ease of repair, speed & competence
Serviceability
of repair

Responsiveness Human-to-human interface, such as meet the dealer with good manners

Aesthetics Sensory characteristics (which means it appeals you) , such as exterior finish

Reputation Past performance and other intangibles, such as being ranked first 10
Dimensions of Quality in Service Sector

1. Time
2. Timelines
3. Completeness
4. Consistency
5. Accessibility
6. Accuracy
7. Responsiveness
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 Costs of Quality

Appraisal costs – costs of

Prevention costs – sum of
the inspection and testing
all the costs to prevent
to ensure that the product
defects
or process is acceptable

Quality
Costs

Internal failure costs – External failure costs –

costs for defects incurred costs for defects that pass
within the system through the system

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 Total Quality Management (TQM)
Definition

• A set of systematic activities carried out by the entire

organization to effectively and efficiently achieve the
organization’s objectives so as to provide products and
services with a level of quality that satisfies customers, at
the appropriate time and price (Union of Japan of
Scientists & Engineers / JUSE)

• Managing the entire organization so that it can excels on

all dimensions of products and services that are
important to the customer (Jacobs & Chase, 2013)

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 Pillars of TQM

T. Q. M.

Customer Process Employee Training

Focus Management & Empowerment

Continuous Improvement
(through measurement & analysis)

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Kano’s House of TQM

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TQM Methodology

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 Six Sigma Quality

• Business improvement approach that seeks to find and

eliminate causes of defects and errors in processes by
focusing on outputs that are critical to customers.
• Seeks to reduce variation in the processes that lead to
product defects
• The term Six Sigma is based on a statistical measure that
equates 3.4 or fewer errors or defects per million
opportunities (DPMO).

• Motorola pioneered the concept of Six Sigma.

• GE (Jack Welch) extensively promoted it.
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 Six Sigma Concept
Histogram of a 3-Sigma
Process

Histogram of a 6-Sigma
Process

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 Six Sigma Methodology

Developed by General
Define, measure, analyze, Electric as a means of
improve, and control focusing effort on quality
(DMAIC) using a methodological
approach

Overall focus of the

methodology is to Seeks to reduce the
understand and achieve variation in the processes
what the customer that lead to these defects
wants

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 Defect Per Million Opportunity (DPMO)

Number of defects
DPMO  1,000,000
Number of opportunit ies for error per unit  Number of units

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 DMAIC Cycle

Define - identify customers and their

priorities

Measure - determine how to measure

the process and how it is performing

Analyze - determine the most likely

causes of defects

Improve - identify means to remove

the causes of defects

Control - determine how to maintain

the improvements
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 Six Sigma vs. TQM

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Basic TQM / Six Sigma Analytical Tools

Flowchart - a Pareto chart - help

Run chart - depict
diagram of the to break down a
trends in data over
sequence of problem into
time
operations components

Cause-and-effect Opportunity flow

Check-sheet -
diagram - show diagram - used to
basic form to
relationships separate value-
standardize data
between causes added from non-
collection
and problems value-added

Process control
chart - used to
assure that
processes are in
statistical control
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Flowchart

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Run Chart

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Checksheet

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Cause-and-Effect Diagram
(Fishbone Diagram)

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Opportunity Flow Diagram

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Process Control Chart

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 Additional Six Sigma Tools

 Failure mode and effect analysis (FMEA): 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

methodology to determine cause-and-effect
relationships between process variables and output
 Permits experimentation with many variables
simultaneously

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 Six Sigma Roles and Responsibilities

1. Executive leaders must champion the process of

improvement
2. Corporation-wide training in Six Sigma concepts and
tools
3. Set stretch objectives for improvement
4. Continuous reinforcement and rewards

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 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.

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 Quality Certification & Awards

 ISO 9000 series (Europe/EC)

 Common quality standards for products sold in Europe
(even if made in U.S.)
 2000 update places greater emphasis on leadership and
customer satisfaction

 Deming Prize
 Malcom Balridge National Quality Award
 European Quality Award

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