CH1 Quality Improvement in The Modern Business Environment

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery.
1
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
Quality Improvement in the
Modern Business Environment
1-1. The Meaning of Quality and
Quality Improvement
1-1.1 Dimensions of Quality
1-1.2 Quality Engineering Technology

• Performance
• Aesthetics
• Reliability
• Features
• Durability
• Perceived Quality
• Serviceability
• Conformance to
standards
Performance
• Will the product perform its intended job?
Reliability
• How often does the product fail?
– How often does this car require repair?
Durability
• How long does the product last?
– The product should perform satisfactorily over a
long period of life
Serviceability
• How easy is it to repair the product?
– If amazon.com sends the wrong book, how hard is
it to get this error corrected?
– How long did it take a credit card company to
correct an error in your bill?
Aesthetics
• What does the product look like?
– Do you like the box in which Shoes are packaged?
Features
• What will the product do beyond the basics?
– Added features
– Spreadsheet software package that has built in
statistical analysis features
Perceived quality
• What is the reputation of the company selling
this product?
– Prefer to use a particular airline in which the flight
almost always arrive on time and does not lose or
damage the luggage
Conformance to standards
• Is the product made exactly as the designer
intended?
– How well does the hood fit on a new car?
• Definitions of Quality
Quality means fitness for use

- quality of design
- quality of conformance
Quality is inversely proportional to
variability.
Quality of design
• Automobile differences
– Materials used in construction
– Specifications of the components
– Reliability of drive train components
– Reliability of accessories
Quality of conformance
• How well does the product conform to the
specifications required by the design?
• Quality of conformance is influenced by
– Choice of manufacturing processes
– Training of the workers
– Supervision of the workers
– Motivation of the workers
– Quality-assurance procedures that were used
Quality is inversely proportional to variability
• Toyota versus Ford

– That transmission noise (or lack of it) is wasted
energy caused by components that don’t fit
precisely
– Imprecise components lead to wear and tear
1-1.1 Dimensions of Quality –
Transmission Example
Your customer does not see the mean of your process, he only sees the
variability around that target that you have not removed
• Quality Improvement
Quality improvement is the reduction of
variability in processes and products.
Alternatively, quality improvement is also

seen as “waste reduction.”
1-1.2 Quality Engineering
Terminology
Quality Characteristics
• Physical - length, weight, voltage, viscosity

• Sensory - taste, appearance, color
• Time Orientation - reliability, durability,
serviceability
Terminology
Quality engineering is the set of operational,

managerial, and engineering activities that a
company uses to ensure that the quality
characteristics of a product are at the
nominal or required levels.
Inherent variability
• No two products are ever identical
– Slight differences in materials
– Slight differences in machine settings
– Slight differences in operators
– Slight differences in ambient temperature during
production
Terminology
Two types of data:
Attributes Data - discrete data, often in the

form of counts
Variables Data - continuous measurements
such as length, weight
Both types will be discussed in the course
Terminology
Specifications
Quality characteristics being measured are often
compared to standards or specifications.
Desired measure for the quality characteristic
Example: Shaft and bearing
Too loose the assembly will wobble causing
wear
Too tight, and the assembly can not be made,
no clearance
Terminology
Specifications
• Nominal or target value
– Desired value for a quality characteristic
Terminology
Specifications
• Upper Specification Limit (USL)
• Lower Specification Limit (LSL)
– Largest and smallest allowable values
Terminology
Specifications
• Upper Specification Limit (USL)
• Lower Specification Limit (LSL)
– One-sided
• The compression strength of a Coke bottle must be
greater than a given psi value
– Two-sided
• The weight of potato chips in the bag can be
between 7.8 and 8.3 ounces
Design specifications
• Over the wall
– From design to manufacturing
• Cooperatively
– Between design and manufacturing
Terminology
• When a component or product does not

meet specifications, it is considered to be
nonconforming.
• A nonconforming product is considered
defective if it has one or more
nonconformities that may seriously affect
the safe or effective use of the product.
Terminology
• A new car is purchased

• A bubble in the paint on the door is noticed
– Nonconformity – yes
– Defective car - no
Terminology
• Concurrent Engineering
Team approach to design. Specialists from
manufacturing, quality engineering,
management, etc. work together for product
or process improvement.
1-2. A Brief History of Quality
Control and Improvement
(Refer to Table 1-1)
• Frederick Taylor (1875) introduces the
principles of scientific management;
dividing work into tasks with standardized
procedures
• The Gilbreths developed standard times and
motions (1920s)
• Walter Shewhart (1924) introduced statistical
control chart concepts and QC begins
• Dodge and Romig (1928), Bell Labs, develop
acceptance sampling as an alternate to 100%
inspection
• During WW II the shells didn’t fit the howitzers
leading to development of MIL-STDs
• The American Society for Quality Control
formed in 1946 [now known as the
American Society for Quality (ASQ)]
• 1950s and 1960s saw an increase in
reliability engineering, experimental design,
and statistical quality control

• Competition from foreign industries (Japan)
increases during the 1970s and 1980s.
• Statistical methods for quality improvement use
increases in the United States during the 1980s
1.3 Statistical Methods for Quality
Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 34

Statistical Methods
• Statistical process control (SPC)
– Control charts, plus other problem-solving tools
– Useful in monitoring processes, reducing variability
through elimination of assignable causes
– On-line technique

Designed experiments (DOX)
– Experimental design is an approach to systematically
varying the controllable input factors in the process then
determining the effect these factors have on the output
responses.
– Discovering the key factors that influence process
performance
– Process optimization
– Off-line technique

Acceptance Sampling
• Acceptance sampling is the inspection and
classification of a sample of the product
selected at random from a larger batch or lot
and the ultimate decision about disposition of
the lot.

Walter A. Shewart (1891-1967)
• Trained in engineering and physics
• Long career at Bell Labs
• Developed the first control chart
about 1924

1.4 Management Aspects of Quality
Improvement
Effective management of quality requires the
execution of three activities:
1. Quality Planning
2. Quality Assurance
3. Quality Control and Improvement

1-4.1 Quality Philosophy and
Management Strategies
Three Important Leaders

• W. Edwards Deming
- Emphasis on statistical methods in quality
improvement
• Joseph Juran
- Emphasis on managerial role in quality
implementation
• Armand V. Feigenbaum
- Emphasis on organizational structure
1.4.1 Quality Philosophy and Management Strategy
W. Edwards Deming
• Taught engineering, physics in the

1920s, finished PhD in 1928
• Met Walter Shewhart at Western
Electric
• Long career in government
statistics, USDA, Bureau of the
Census
• During WWII, he worked with
US defense contractors, deploying
statistical methods
• Sent to Japan after WWII to work
on the census

1. Create a constancy of purpose
• Plan for quality in the long term.
• Resist reacting with short-term solutions.
• Don't just do the same things better – find
better things to do.
• Invest in R&D
• Innovate
2. Adopt a new philosophy
• Eliminate defective products
– It costs as much to produce a defective unit as a
good one
• Put your customers' needs first, rather than
react to competitive pressure – and design
products and services to meet those needs.
3. Don’t rely on inspection
• Inspection only sorts out defectives
– Already have paid to produce them
• Inspection is too late in the process
• It’s also ineffective
• Prevent defectives through process
improvement
4. Don’t award business on price alone
• Consider supplier quality as well

– Give preference to those suppliers that demonstrate
process control and process capability
– Use a single supplier for any one item
– Look at suppliers as your partners in quality
5. Focus on continuous improvement
• Involve the workforce
• Use statistical techniques
6. Invest in training
• Everyone should be trained in the technical
aspects of their job, QC, and process
improvement
• Workers should be encouraged to put this
training to use
7. Practice modern supervision methods
• Help the employees improve the system in

which they work
• Don't simply supervise – provide support and
resources so that each staff member can do his
or her best. Be a coach instead of a policeman
8. Drive out fear
• Create an environment where the workers will
ask questions, report problems, or point out
conditions that are barriers to quality
9. Break down the barriers
• Break down the barriers between the
functional areas of the business
• Build a shared vision.
• Use cross-functional teamwork to build
understanding and reduce adversarial
relationships.
10. Eliminate targets and slogans
• Useless having a plan for the achievement of
the target or goal
• Let people know exactly what you want –
don't make them guess. "Excellence in service"
is short and memorable, but what does it
mean? How is it achieved?
11. Eliminate quotas
• Numerical quotas and work standards often
conflict with quality control
12. Encourage employees to do their job
• Remove the barriers

• Listen to the workers
• The person doing the job knows more about it
than anyone else
13. Have ongoing education and training
• Teach them simple yet powerful statistical

techniques
• Use the basic SPC tools, particularly the
control chart
14. Involve top management
• Management should be advocates for these
points
Deming’s Deadly Diseases
1. Lack of constancy of purpose
2. Emphasis on short-term profits
3. Performance evaluation, merit rating, annual
reviews
4. Mobility of management
5. Running a company on visible figures alone
6. Excessive medical costs for employee health care
7. Excessive costs of warrantees

Joseph M. Juran
• Born in Romania (1904-
2008), immigrated to the US
• Worked at Western Electric,
influenced by Walter
Shewhart
• Juran Institute is still an
active organization
promoting the Juran
philosophy and quality
improvement practices

Dr. Joseph Juran
• A founder of SQC
• Co-author of QC Handbook (1957)
• His philosophy is based on management of the
quality function
The Juran Trilogy
1. Planning
2. Control
3. Improvement
• These three processes are interrelated

• Control versus breakthrough
• Project-by-project improvement

Armand Feigenbaum
– Author of Total Quality Control, promoted overall
organizational involvement in quality,
– Three-step approach emphasized quality leadership, quality
technology, and organizational commitment
– Says that QC should be concentrated in a specialized

department
• Conflicts with Deming on this point

1-4.1 Quality Philosophy and
Management Strategies
• Total Quality Management (TQM)

• Quality Standards and Registration
– ISO 9000
• Six Sigma
• Just-In-Time, Lean Manufacturing, etc.
TQM
• It is a strategy for implementing and managing
quality improvement activities on an
organization-wide basis
• Began in the early 80s based on the
philosophies of Deming and Juran
• Evolved into wide spectrum of ideas
– Participation in quality groups
– Work culture
– Customer focus
– Supplier quality improvement
– Cross-functional teams concerned with quality
TQM
• A success?
– Moderately
• Why not?
– Not enough concern for reduction of variability
– Ineffective training conducted by HR people
• No knowledge of what is important
– Management not committed
General Reasons for the lack of conspicuous
success of TQM
1. lack of top down, high level of management
commitment and involvement.
2. inadequate use of statistical methods and
insufficient recognition of variability
reduction as a prime objective
3. General as opposed to specific business-
results-oriented objectives
4. Too much emphasis on widespread training
as opposed to focused technical education
More reasons for lack of success
– Zero defects, value engineering, quality is free
• Programs with no emphasis on reducing variability

Quality Systems and Standards

• The ISO certification process focuses heavily on quality
assurance, without sufficient weight given to quality planning and
quality control and improvement

ISO 9000
• Quality system oriented
• Say what you do, do what you say
– Much effort devoted to paperwork and
bookkeeping
– Not much to reducing variability and improving
processes
ISO 9000
• US$40 billion annual business worldwide
– Registrars, auditors, consultants
• Plus, 1000s of hours of internal costs
• Effective?
– Does it reduce variability?
The Malcolm Baldrige National
Quality Award
• The MBNQA process is a valuable assessment tool

• See Table 1-3 for Performance Excellence Criteria and point
values

Six Sigma
• Use of statistics & other analytical tools has grown
steadily for over 80 years
– Statistical quality control (origins in 1920, explosive
growth during WW II, 1950s)
– Operations research (1940s)
– FDA (Food and Drug Administration), EPA
(Environmental Protection Agency)in the 1970’s
– TQM (Total Quality Management) movement in the 1980’s
– Reengineering of business processes (late 1980’s)
– Six-Sigma (origins at Motorola in 1987, expanded impact
during 1990s to present)
Focus of Six Sigma is on Process Improvement
with an Emphasis on Achieving Significant
Business Impact
• A process is an organized sequence of activities that
produces an output that adds value to the organization
• All work is performed in (interconnected) processes
– Easy to see in some situations (manufacturing)
– Harder in others
• Any process can be improved
• An organized approach to improvement is necessary
• The process focus is essential to Six Sigma

Why “Quality Improvement” is Important:
A Simple Example
• A visit to a fast-food store: Hamburger (bun, meat, special sauce,
cheese, pickle, onion, lettuce, tomato), fries, and drink.
• This product has 10 components - is 99% good okay?
P{Single meal good}  (0.99)10  0.9044

Family of four, once a month: P{All meals good}  (0.9044) 4  0.6690
P{All visits during the year good}  (0.6690)12  0.0080
P{single meal good}  (0.999)10  0.9900, P{Monthly visit good}  (0.99)4  0.9607
P{All visits in the year good}  (0.9607)12  0.6186

Six Sigma Focus
• Initially in manufacturing
• Commercial applications
– Banking
– Finance
– Public sector
– Services
• DFSS – Design for Six Sigma
– New process design
– New product design (engineering)

Six Sigma
• A disciplined and analytical approach to process and product
improvement
• Specialized roles for people; Champions, Master Black belts,
Black Belts, Green Belts
• BBs and MBBs have responsibility (project definition,
leadership, training/mentoring, team facilitation)
• Involves a five-step process (DMAIC) :
– Define
– Measure
– Analyze
– Improve
– Control

What Makes it Work?
• Successful implementations characterized by:
– Committed leadership
– Use of top talent
– Supporting infrastructure
• Formal project selection process
• Formal project review process
• Dedicated resources
• Financial system integration
• Project-by-project improvement strategy
(borrowed from Juran)
Design for Six Sigma (DFSS)
Taking variability reduction upstream from manufacturing (or
operational six sigma) into product design and development
Every design decision is a business decision

DFSS Matches Customer Needs
with Capability
• Mean and variability affects product performance and cost
– Designers can predict costs and yields in the design phase
• Consider mean and variability in the design phase
– Establish top level mean, variability and failure rate targets for
a design
– Rationally allocate mean, variability, and failure rate targets to
subsystem and component levels
– Match requirements against process capability and identify gaps
– Close gaps to optimize a producible design
– Identify variability drivers and optimize designs or make designs robust
to variability
• Process capability impact design decisions
DFSS enhances product design methods.

DMAIC Solves Problems by Using
Six Sigma Tools
• DMAIC is a problem solving methodology
• Closely related to the Shewhart (Plan-Do-
Check-Act) Cycle
• Use this method to solve problems:
– Define problems in processes
– Measure performance
– Analyze causes of problems
– Improve processes  remove variations and non-
value-added activities
– Control processes so problems do not recur
Copyright (c) 2009 John Wiley & Sons, Inc. 11
Lean Systems
• Focuses on elimination of waste
– Long cycle times
– Long queues – in-process inventory
– Inadequate throughput
– Rework
– Non-value-added work activities
• Makes use of many of the tools of operations
research and industrial engineering

Little’s Law

Lean Focuses on Waste Elimination
Definition
• A set of methods and tools used to eliminate waste in
a process
• Lean helps identify anything not absolutely required
to deliver a quality product on time.
Benefits of using Lean

• Lean methods help reduce inventory, lead time, and
cost
• Lean methods increase productivity, quality, on time
delivery, capacity, and sales

1-4.2 The Link Between Quality
and Productivity
• Effective quality improvement can be

instrumental in increasing productivity and
reducing cost.
• The cost of achieving quality improvements
and increased productivity is often
negligible.
Introduction to Statistical
Quality Control, 4th Edition
Quality Costs
Legal Aspects of Quality
• Product liability exposure
– As the production volume increases, the liability
exposure increases.
• Concept of strict liability
1. Responsibility of both manufacturer and
seller/distributor
2. Advertising must be supported by valid data
Implementing Quality Improvement
•A strategic management process, focused along the
eight dimension of quality
•Suppliers and supply chain management must be

involved
•Must focus on all three components: Quality Planning,
Quality Assurance, and Quality Control and Improvement

CH1 Quality Improvement in The Modern Business Environment

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Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery.

1-1.1 Dimensions of Quality

1-1.2 Quality Engineering Technology

Quality means fitness for use

• Toyota versus Ford

Alternatively, quality improvement is also

• Physical - length, weight, voltage, viscosity

Quality engineering is the set of operational,

Two types of data:

Attributes Data - discrete data, often in the

• When a component or product does not

• A new car is purchased

(Refer to Table 1-1)

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 34

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 35

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 36

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 37

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 38

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 42

Three Important Leaders

• Taught engineering, physics in the

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 47

• Consider supplier quality as well

• Help the employees improve the system in

• Remove the barriers

• Teach them simple yet powerful statistical

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 63

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 67

• These three processes are interrelated

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 69

– Says that QC should be concentrated in a specialized

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 70

• Total Quality Management (TQM)

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 75

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 76

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 77

• The MBNQA process is a valuable assessment tool

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 81

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 85

• This product has 10 components - is 99% good okay?

P{Single meal good}  (0.99)10  0.9044

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 87

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 88

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 89

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 92

DFSS enhances product design methods.

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 96

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 98

Benefits of using Lean

Chapter 1 Introduction to Statistical Quality Control, 6th Edition by Douglas C. Montgomery. 99

• Effective quality improvement can be

•Suppliers and supply chain management must be

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