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Quality Management
Part 1: TQM and Six Sigma
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OBJECTIVES

What is Quality?
Costs of Quality

Total Quality Management

Six Sigma

Six Sigma Tools

ISO 9000 Series

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What is Quality?

Quality is a term that describes the level of

customer satisfaction with a product or
service
Quality of design is related with the characteristics
of a product intended by the product designer
Performance, features, reliability, aesthetics
Quality of conformance is the degree to which a
product conforms to its design specifications
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Costs of Quality

Appraisal Costs

Costs of Internal Failure

Prevention Costs
Quality Costs

External Failure
Costs
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Costs of Quality (Contd)

Appraisal costs
Incurred when the firm inspects/tests the quality
of materials and products or assesses the
performance of processes
Prevention costs
Associated with preventing defects before they
happen
Preventive maintenance of machines,
training workers, redesigning processes to
remove the causes of poor quality
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Costs of Quality (Contd)

Internal failure costs

Incurred when defects are discovered before
the customer receives the product
Rework, disposal
External failure costs
Incurred when defects are discovered after
the customer receives the product
Repair or replacement, loss of goodwill
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Evolution of Quality Management

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Total Quality Management (TQM)

Total quality management (TQM) is a

philosophy of quality management that
emphasizes three principles for achieving
high levels of process performance and
quality:
Customer focus

Employee involvement

Continuous improvement
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Customer Focus

Understand internal and external customer

needs and strive to exceed them
All the improvement projects focus on
customer satisfaction
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Employee Involvement

All members of an organization are expected to

participate in improving processes, products,
services, and the culture in which they work
Quality at the source (also known as jidoka)
A philosophy that defects should be caught and
corrected at the source where they are created
Stop the entire production line until the causes of the
problem are identified and removed.
Quality circles (or problem-solving teams)
Small groups of employees who meet to identify,
analyze, and solve quality problems
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Continuous Improvement

Continuous improvement is a philosophy of

continually seeking ways to improve
processes
Ongoing process of never-ending improvement
Kaizen is the Japanese term for continuous
improvement
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Six Sigma

Six Sigma is a philosophy and a set of tools

and methodologies to minimize defects and
variability in processes
Six Sigma relies heavily on the principles of
TQM, but has a different focus:
Reduce variability in process outputs by the
disciplined use of facts, data, and statistical
analysis
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Six Sigma (Contd)

Six Sigma was first developed by Motorola

to improve its manufacturing processes,
and extended by General Electric to non-
manufacturing processes such as sales,
customer service, and financial services
The name, Six Sigma, refers to the mean
plus/minus six sigma of the process output
being within the acceptable range
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Six Sigma (Contd)

Distribution of process output (e.g., weight of a cereal box)

= standard deviation

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Mean
Acceptable range
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Six Sigma (Contd)

Suppose that the output of a process is acceptable

if it is between 19.2 and 20.8.

= 0.2

Mean=20
Acceptable Range 20.8
19.2

Does this process have six-sigma quality?

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Six Sigma (Contd)

= 0.1

Mean=20

19.2 Acceptable Range 20.8

Does this process have six-sigma quality?

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Six Sigma (Contd)

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Mean
Acceptable range

Theoretically, six-sigma quality means

no more than 2 defects per billion opportunities!!!
In practice, six-sigma quality represents no more than 3.4 defects per
million opportunities, because research has shown that the process
mean can shift as much as 1.5 standard deviations from the target
without notice
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Six Sigma Improvement Model:

DMAIC

DMAIC is a five-step procedure for Six

Sigma projects
Define, Measure, Analyze, Improve, and
Control (DMAIC)
Overall focus of the methodology is to
understand and achieve what the customer
wants
Developed by General Electric as a means
of focusing effort on quality using a
methodological approach
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DMAIC Steps

Step Definition

Define Define the problem and project

objectives
Measure Measure current level of performance

Analyze Determine causes of current

problems
Improve Identify how the process can be
improved to eliminate the causes
Control Develop mechanisms for controlling
the improved process
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Six Sigma Tools: Control Chart

1020
UCL
1010
1000
990
980
LCL

970
0 1 2 3 4 5 6 7 8 9 10 11 12 13

Samples over time

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Six Sigma Tools: Run Chart

0.58
0.56
0.54
0.52
0.5
0.48
0.46
0.44
1 2 3 4 5 6 7 8 9 10 11 12
Time
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Six Sigma Tools: Pareto Chart

Frequency

Design Assy. Purch. Training Other

Instruct.
Causes of quality problems
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Six-Sigma Tools:
Cause-and-Effect (or Fishbone) Diagram

Possible causes Problem

Equipment Personnel
Aircraft late to gate Late cabin cleaners
Mechanical failures Late cabin crew Delayed
flight
Delayed check-in Late food service departure
Contractor not provided
with updated schedule

Procedures Materials
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Six Sigma Tools:

Root Cause Analysis

Root cause analysis is a collective term that

describes a wide range of approaches, tools,
and techniques used to uncover root causes
of problems
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Root Cause Analysis Example:

Thomas Jefferson Memorial Building
Video

Decayed
stones
Bird droppings
Fat spiders
Midges
Spot light for monument
Frequent washing

Solution: Delay spot lighting to one hour after sunset

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ISO 9000 Series

The ISO 9000 Series is a set of international

standards for quality management and quality
assurance
ISO 9000:2005 (definitions)
ISO 9001:2015 (requirements)
ISO 9004:2009 (continuous improvement)
Established by the International Organization for
Standardization (ISO)
Document what you do and do what you
documented
Implemented by more than 1 million organizations
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ISO Certification

To get ISO certification, a firm must be audited by

external auditors
Completing the certification process is costly
The certification process takes 12 ~ 18 months
The cost of certification can exceed $1 million for large
companies
Benefits of ISO certification
External benefits: Increased sales opportunities
ISO certification is preferred or required by many corporate
buyers
Internal benefits: Improved quality, reduced costs,
improved processes