Chapter 3

Controlling Processes

Copyright 2013 John Wiley & Sons, Inc.

Overview

3-2

Introduction
Each year the Columbus air mail processing
center (AMC) processes in excess of 50
million letters
Unfortunately, 8.7 percent did not meet ontime delivery commitments
A Six Sigma improvement project was
initiated
Late deliveries were reduced by 14.3 percent
and $15,000 was saved annually
On time delivery is monitored using a p-chart
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Monitoring and Control

Monitoring system is a direct connection
between planning and control
Monitor processes, output, and
environment to make sure that strategy is
appropriate to achieve goals
First, identify the key factors to be
controlled
Second, identify the relevant information to
be collected
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Process Monitoring
There are a wide variety of elements to
potentially monitor
Too much data can be worse than too
little data
It can obscure important information

Want to monitor our various processes

Also need to monitor the environment
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Stages of Operational
Effectiveness
1. Internally neutral

Minimize manufacturings negative potential

2. Externally neutral

Industry practice is followed

3. Internally supportive

Manufacturing investment support the business

strategy

4. Externally supportive

Manufacturing is involved up front in strategic

decision
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Measures for Operational

Effectiveness

Table 3.1

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Balanced Scorecard
In the past, it was common to rely on financial
measures
When inadequacies discovered, managers
either tried to improve or switched to
operational measures
Many organizations now realize no one type of
measurement is best
The purpose of the balanced scorecard it to
provide a comprehensive view
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Benefits of Balanced
Scorecard
An effective way to clarify and gain consensus
of the strategy
A mechanism for communicating the strategy
throughout the entire organization
A mechanism for aligning departmental and
personal goals to the strategy
A way to ensure that strategic objectives are
linked to annual budgets
Timely feedback related to improving the
strategy
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Areas Measured by Balanced

Scorecard
1.
2.
3.
4.

Financial performance
Customer performance
Internal business process performance
Organizational learning and growth

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The Strategy Map

Used to illustrate and monitor the causeand-effect relationships identified by a
balanced scorecard
Provide a tool to better monitor
important details about their strategic
business processes
Maps same four perspectives as the
balanced scorecard
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Sample Strategy Map

Figure 3.1

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ISO 9000
ISO 9000 was developed by International
Organization for Standardization
ISO 9000 was developed as a guideline for
designing, manufacturing, selling, and
servicing products
It is a checklist of good business practices
Selecting an ISO 9000 certified supplier
provides some assurance that supplier follows
accepted business practices in areas covered
by the standard
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ISO 14000 and 14001

Series of standards covering environmental
management systems, environmental auditing,
evaluation of environmental performance,
environmental labeling, and life-cycle
assessment
Focus of ISO 14001 is on an organizations
environment management system
A standard on which organizations can become
certified
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Failure Mode and Effect Analysis

(FMEA)
Developed as a structured approach to
identify and prioritize for close
monitoring
Uses a scoring model approach set up in
six steps
One way to identify items for inclusion
is by evaluating their process capability
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FMEA Steps
1.
2.
3.
4.

List ways a production system might fail

Evaluate the severity (S) of each failure
Estimate the likelihood (L) of each failure
Estimate the ability to detect (D) for each
cause
5. Find risk priority number RPN=S L D
6. Consider ways to reduce S, L, and D where
RPN is high
3-16

Process Control
Process control is the act of reducing
difference between plan and reality for each
process
To no avail if corrections not made

Control is one of the managers most difficult

tasks involving mechanistic and human
elements
Control brings performance back in line with
the plan
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Characteristics of a Good Control

System

Flexible
Cost effective
Simple
Timely
Sufficiently precise
Easy to maintain
Signal if out of order

Capable of being
extended
Fully documented
Ethical

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Statistical Process Control

1. Inspection for variables

Measuring a variable that can be scaled

such as weight, length, temperature, and
diameter

2. Inspection of characteristic (attribute)

Determining the existence of a

characteristic such as acceptabledefective, timely-late, and right-wrong
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Chance Versus Assignable

Variation
Chance variation is variability built into
the system
Assignable variation occurs because
some element of the system or some
operating condition is out of control
Quality control seeks to identify when
assignable variation is present so that
corrective action can be taken
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Control Charts
Developed to distinguish between chance
variation and assignable variation
Measurements from the continued repetition of
some process are a population
Normally distributed with some mean and standard
deviation

As long as distribution stays the same, the

process is in control
If it changes, the process is out of control
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Control Chart with Limits Set

at Three Standard Deviations

Figure 3.2

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Two Control Charts for Variables

1. Sample Means Chart
2. Range Chart

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Sample Data of Process Times

Table 3.3

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Sample Calculations
Scenario 1
Sample 1: mean = 5, range = 2
Sample 2: mean = 7, range = 2
Sample 3: mean = 8, range = 2

Scenario 2
Sample 1: mean = 5, range = 2
Sample 2: mean = 5, range = 4
Sample 3: mean = 5, range = 6
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Patterns of Change in Process

Distributions

Figure 3.3

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Control Limits for Sample Means

and Range Charts

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Constructing Control Charts

A bank has 10 branches
Wishes to monitor the age of
applications for home mortgages
Branches selected at random and ages of
the applications noted
Sample size of four out of the 10
branches each day
Data summary on next slide
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Mean and Range of Ages of

Mortgage Applications

Table 3.5

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Finding Control Limits

3-30

Mean Mortgage Application Age

Figure 3.4

3-31

Range in Mortgage Application

Age

Figure 3.4

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Fraction-Defective () Charts
total number of defects
p
total number of units sampled

p (1 p )
n

UCL p p z p
LCL p p z p
3-33

Number-of-Defects (c) Charts

number of incidents observed
c
number of units sampled

c c
UCL c c z c
LCL c c z c
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Controlling Service Quality

Process control, strategy maps, and control
charts can also be used for quality control in
services
Measuring service quality is more difficult
Service is abstract, transient, and psychological

Can cope using customer satisfaction surveys

Training employees in standard procedures can
improve quality
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Service Defections
Feedback from defecting customers can
be used to identify problem areas
Can determine what is needed to win
them back
Changes in defection rate can be used as
early warning signal

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