chap 1 A

chap 1 B
chap 2
chap 3 six sigma
COPQ
numericals chap 1-3
Chapter - 1
Concept of Quality and TQM
Dr. Shyamal Gomes

Part – A:

“Quality is not an art, it is a habit” - Aristotle

Introduction:

Till 300 years ago, people used the power of their own muscles, animals or the force of
wind and flowing water to do all works. With the invention of the ‘steam engine’ they got
a powerful method of running their machines. This provided a tremendous boost to
Industry. Goods started getting produced in larger quantities using machines. This led to
the beginning of the factory system. The significant change from hand-made goods to
machine-made goods, which began in Britain in 18th century, is known as the Industrial
Revolution. Why it was called Revolution? Because of the large scale changes it brought
about our economy, society and culture. IR soon spread to other nation like Germany,
France, Portugal. As these countries became industrialised, they needed two things:

1. Raw materials for manufacturing and

2. New markets to sell the goods they made.

They found both raw materials as well as new markets to sell their goods in the non-
industrialised countries of Asia and Africa. So they started annexing to meet the needs of
their new factories. Soon they became jealous of each other, and wanted their own
empires to grow. They started fighting among themselves. This finally led to a great war in
which several nations of the world were involved. It came to be known as World War- I
(August 1914-1918). Millions of soldiers and other people were killed or wounded. Cities
were destroyed and there was shortage of food and everything else. In 1939, there was
another war, called World War II. It lasted for 6 years and ended in 1945 after USA
dropped atomic bombs over two Japanese cities – Hiroshima and Nagasaki. After world
war – II, most Japanese companies had to start literally from Scratch. Everyday brought
new challenges to managers and workers alike, and everyday meant progress. They
observed hard working ability and bringing new-new technologies are not enough need a
culture change towards “TOTAL COMMITMENT and TOTAL IMPROVEMENT”. They also
felled that human resource of Japan is highest important and precious but they need more
training for continuous development. Fortunately Japan called / invited American Experts
like Edward Deming, Joseph M. Juran and others in 1950s and early 1960s.

Therefore, Japanese learnt from the seed courses of Dr. E. Deming's on statistical methods
for quality control and Dr. J. Juran's courses on Quality Management. With zeal for
learning and self- sufficiency, they vigorously promoted quality education by local experts
across their country. It began with massive education of engineers, and then top and
middle managers, supervisory levels.

In 1960, The concept of ‘Zero – defects’ gained favour. Philip Crosby, who was the
champion of Zero – defects concept focused on employee’s motivation and awareness.
The first quality control circles were formed in Japan for the purpose of quality
improvement by Dr. Kaoru Ishikawa in 1961.

In early 70s and 80s U.S Managers were frequent troops to Japan to learn the Japanese
miracles. A quality success began to occur in U.S products and services. In 1980, the
concept of TQM was being publicized.

Massaki Imai, the chairman of the Cambridge Corporation, an international management

consultancy firm based in Tokyo, propound the useful and vibrant technique “Kaizen”
(Continuous Improvement) in 1986.

The great Economic Liberalization – world wide in 1991, bound to think every business
organization for the first time that the best option is “QUALITY” for survive and sustain in
highly competitive environment.

Basically the quality aspects were first emphasized in the auto industries. Saturn
Automobile ranked first in customer satisfaction, in 1996. In addition, ISO – 9000 ( a series
of standards) became the model for a quality management system world wide, ISO –
14000 was approved as the world wide model for Environment Management system, this
time. Quality assurance begins as a priority for engineers and managers.

In quality movement world wide the Globalization took an important role in 2000. Due to
transmission to open economy, a domestic and international competition starts. Gradually
TQM considered as the ultimatum for continuous improvement and sustainable growth in
present day business.

However, in 21st century, high growth of economy- the new millennium brought about
increased emphasis on world wide quality and the Internet. Japanese and other worlds
business organization started not only for quality product and services for External
customer satisfaction but started satisfying them by trying to achieve the highest business
excellence model – Deming Award, Malcolm Baldrige National Quality Award, CII – EXIM
Award and TPM Award and others. Thanks – QUALITY.

What is this Quality then?

Quality is an attribute of a product or service that fulfills or exceeds the human

expectations. These expectations are based on the intended use and selling / service price.
It is somewhat of an intangible based on perception. That is why quality is a relative term
and each person has his or her own definition.

As per ISO – 9000:2000: Quality means “The degree to which a set of inherent
characteristics fulfills requirements”. Here, Degree – quality such as poor, good, and
excellent, Inherent – Permanent attribute, Requirement – need based or expectation.

According to the oxford dictionary for the business world, “quality is defined as the degree
of excellence”. The father of Total Quality Management, Dr. William Edward Deming
defined Quality should be aimed at the needs of the customer, present and future
(continuous Improvement)

Quality Guru, J.M. Juran defined quality as: “Fitness for use / Purpose”

Quality Guru Philip Crosby defined quality as: “Conformance to specifications”

Quality guru Dr. Kaoru Ishikawa defined quality as: Most economical, useful and always
satisfactory to the customer / audience.

Eminent Japanese Scientist Armand V. Feigenbaum defined: Quality is the total composite
of product and services characteristics of marketing, engineering, manufacturing and
maintenance through which the product and service in use will meet the expectations of
the customer.

Broh: Quality is the degree of excellence at an acceptance price and control of variability
at an acceptable cost.

IBM: Quality meets the requirements of customers, both internal and external, the
organization for defect-free product, services and business processes.

Therefore, from its definitions we can assume what QUALITY stands for:

Q Quest for Standard

U Understand the requirements of customer
A Action to achieve Customer’s appreciation
L Lead to participate in training or education
I Involving all People for innovation
T Togetherness to achieve common goal and
Y Yardstick to measure continual Improvement

However, there is an international definition of quality: ‘Totality of characteristics of an

entity that bears on its ability to satisfy stated and implied needs’ (BS EN ISO 8402,
1995)
Now, Quality can be quantified as follows: Q=P/E Where, Q = Quality, P= Performance
and E = Expectations. If Q is greater than 1.0 then the customer has a good feeling about
the product or service.

Types of Quality: Kano breaks down quality into four categories to understand its
relationship to competition. These types or categories of quality are: indifferent quality,
expected quality, one dimensional quality and exciting quality.

1. Indifferent Quality (Fine but who cares?) For example a garnish on a dinner plate
or finger bowl, while nice, would probably not seen very important.
2. Expected Quality: is the quality that the customer expects and demands. For
example, people expect cars to be safe and reliable, hotel rooms to be clean and
quiet and coffee to be hot. People notice expected quality only when it is missing.
3. One-dimensional Quality: Is the quality that the customer expects, but that does
not necessarily results in lots of order or displeased customer, when lacking. For
example, a restaurant server who is rude and slow may not cause customers to
leave, though they might leave smaller tips. However, customers would leave if if
they found an insect in the food served to them.
4. Exciting Quality: is the quality that exceeds the customer’s expectations, attracting
favourable attention of customers. For example, quality experienced by owners of
Mercedes-Benz and BMW cars while driving these cars.

Importance of Quality:

• Good quality of goods and services can provide an organization with competitive
edge.
• Good quality reduces costs due to product returns, rework and scrap.
• Good quality increases productivity, profits and other measures of success such as
brand image, product image and company goodwill.
• Most importantly, good quality generates satisfied customers today and
tomorrow.
• Good quality creates an atmosphere for high employee morale, which improves
productivity.

Dimensions of Quality:

Quality has different dimensions; these dimensions are somewhat – Independence.

Therefore a product can be excellent in one dimension and average or poor in another.
Very few, if any, products excel in all dimensions now- a -days. In his Book - Managing
quality: The strategic and competitive edge (1988), David A.Garvin has developed a list of
nine dimensions of product quality:
1. Conformance: Meeting the specifications of the customer.
2. Performance: Primary product functions such as clarity of voice received in Mobile
phone, Radio.
 3. Features: Added functions (secondary functions) to a product such as recording
system in a television set.
4. Durability: Lifetime of the products, which include repairs.
5. Reliability: The probability of a product performing its intended duty under stated
conditions without failure for a given period of time.
6. Serviceability: The speed, Cost and convenience or ease of repair and
maintenance
7. Aesthetics: The external finish given to a product to attract the customer.
8. Perceived Quality: Reputation and other indirect measures of quality.

There are 5 important dimensions of Service Sector are: Reliability, Assurance,

Responsiveness, Empathy, and Tangibility. However, these dimensions again can be
classified in the following:

Determinants Means
1. Reliability Consistency of performance and dependability – the firms
performs the service right the first time.

2. Responsiveness The willingness or readiness of employees to provide

service
3. Competence Possession of the required skills and knowledge to perform
the service.
4. Access The service is easily accessible by telephone, convenient
time of operations

5. Courtesy Politeness, respect, consideration, and friendliness of

contact personnel.

6. Communication Keeping customers informed in the simple language they

can understand and listen to them

7. Credibility Trustworthiness, believability and honesty

8. Security Freedom from danger, risk, or doubt

9. Tangibility Physical evidences of the services

10. Understanding / KYC - 10 Understand the needs of the customers

Table -1.1: Dimension of Service Quality

These dimensions (Product or services) were proposed to facilitate strategic quality
analysis by breaking down the word quality into manageable parts so that the
management can define the quality niches in which to complete.
Quality Culture:
Quality culture can be defined as ‘the configuration of the learned behavior and result of
the behavior whose component elements are transmitted / shared by the member of an
organization. The quality culture differs from company to company. Somewhere, it is
developed somewhere it is rudimentary. According to Sandholm (1999), 5 stages of
Quality culture can be identified:
Maturity Stage
Action Stage

Groping Stage

Awakening Stage

Dormant Stage

Fig – 1.1 Stages of Quality Culture

Dormant Stage: No evident interest in becoming involvement in quality. Things are as

usual profitability is acceptable and there are no fillings of external threats.

Awakening Stage: Stiff competition, as usual thinkers / manufacturers started to lose

market shares and incurring losses. Crisis started.

Groping Stage: Where a crisis occurs, some thing has to be done. The question is what? As
a general tendency Top Management invites meeting, seminars on trendy methods and
approaches to identify the solutions. This is actually not wrong method or practices but
the application is wrong.
Generally, the management use strategies of improving the performance of the
organization in the quality field, rather studying the situation properly.

Action Stage: As a result, the organization generates marginal outputs, which is not safe
enough; therefore, the management realizes the important of strategic plan for the
development of activities, followed by their implementation.

Maturity Stage: Therefore, actual quality culture is born in an organization. Quality

development and a clear focus on customers need wants and satisfaction is a natural part
of this stage.

According to Madu (1997) quality is a major factor in achieving competitiveness. With the
increased globalization of markets and liberalization of local economics, it has become
necessary for any business all over the world to develop competitive strategies for
Quality.

The Universal Process for managing quality (Juran’s Trilogy)

Juran’s Trilogy is constitutes by three steps: quality planning, quality controlling and
quality Improvement.

QUALITY QUALITY
PLANNING CONTROL

QUALITY
IMPROVE
MENT
Fig. 1.2 Juran Trilogy
Quality Planning consists the following steps: Establish quality Goal, Identify customer &
their needs, develop product features, Develop process features, Establish process
controls and Transfer to operation

Quality Controlling: Choose control subjects, Choose units to measure, Set goals, Create a
sensor, Measure actual Performance, Interpret the difference, Take action on the
difference

Quality Improvement: Prove the need, Identify projects, Organize project teams,
Diagnose the causes, Provide remedies, Deal with the resistance, Change and control,
Hold the gains.
The main logic here – in planning phase the producer of the product has to determine the
customer’s requirements and design accordingly, once the operation begin, usually 20%
percent work has to redone due to quality deficiencies. It is not possible to get rid of this
chronic waste; therefore they perform quality control to prevent the situation. That time
the process may go up to 40% rework and has brought back within control limit by taking
appropriate measures. Over a period of time by employing quality improvement the
chronic waste can be reduced even up to zero level. (Juran 1999)
Fig.1. 3: Chronic Waste Reduction in Quality Problem

Cost of quality is a handy tool for drawing the attention and focuses of the top
management towards quality – related issues as it understands the language of bottom
line. Actually, the costs of quality are often called as cost of poor quality or COPQ which
are the certain costs associated with product and service quality. Some costs are
associated with preventing poor quality and some costs occur after poor quality occurs.
Most experts on the cost of poor quality estimate losses in the range of 20-30% of gross
sales for defective or unsatisfactory products.

Joseph M. Juran (Quality Guru) has observed that the cost of the product related to fixed
costs and variable costs. Fixed cost like cost of raw material, machinery or manpower
costs are standard for everyone but the variable costs like training costs, electricity costs,
rework cost, appraisal costs etc. varies from one organization to another organization and
one culture to another. Company can give maximum dimensions (as per requirements of
the customers) in a single product within an affordable price when they can give
maximum attention of prevention and control the variable costs or cost of poor quality as
much as possible. Finally, Juran classified these costs of poor quality under 4 major heads:
Prevention Cost Associated with preventing defects before they happen.
They include – the cost of redesigning the product , redesigning the
process to remove causes of poor quality, training employees in the
method of continuous improvement, charting of quality
Appraisal Cost Assessing the level of quality attained by the operating system.
They include the cost of detecting defects i.e. cost of inspection,
testing and other quality control activities like measuring,
evaluating and auditing cost.
A preventive measures improve quality, appraisal costs decrease,
because fewer resources are needed for quality inspections and the
subsequent search for the causes of any problems that are
detected.
Internal Failure Cost Relate to the failure of the products to meet customer
specifications prior to its dispatch to the customer. This costs
include the cost of producing the items that are scrapped, the cost
of repairing, reworking and re testing defective products
External Failure Costs incurred by the company after the product has been
delivered to the customers and failures of the product take place at
the customer’s end. The costs include warranty, product liability
suits or resettlements, the cost of product returns or recalls and
lost business and customer goodwill.
Table – 1.2: Cost of quality in 4 major heads

How to reduce the cost of quality? Organizations especially in India have been paying more
attention towards reducing the internal and external failure costs by way of inspection
because costs incurred here give more tangible results by way of reduction in the number of
defects. But as per Juran observation if the organization keep on give priority on prevention
cost (even up to double the prevention cost in the first quarter) from second quarter, the
other costs of poor quality like appraisal costs, internal failure costs and external failure costs
will come down gradually (1:10:100 Rule) and the COPQ could be below 10% or almost zero at
the fourth quarter.
Say for an example: ABC Company in Kolkata, reported the following costs for a quarter:
Design Review cost = 40,000/-; Inspection & Testing = 60,000/-; Excess Inventory = 30,000/-;
In house Scrap = 55,000/-; Customer Return = 40,000/- and the approx revenue per quarter
is Rs. 5,25,000 ; Through Juran process how that organization will reduce the COPQ or make
quality as almost free?

Here we can consider:

 Prevention cost = 40,000/-
 Appraisal Cost = 60,000/-
 Internal failure cost = 85,000/-
 External Failure cost =40,000/-
 Total = 2,25,000/- i.e 42.85% (3 Sigma Level)
Now as per Juran process if the organization give highest priority on Prevention measures
during the second quarter (controlling stage) the cost size could be the following:

Details of the 1ST Quarter 2nd Quarter 3rd Quarter 4th Quarter
COPQ (Rs.) (Rs.) – 2: 1/2 (Rs.) – 1/4 (Rs.) – 1/8
Prevention cost 40,000 80,000 10,000 5,000
Appraisal Cost 60,000 30,000 15,000 7.500
Failure Cost 1,25,000 62,000 31,250 15,625

Total 2,25,000 1,72,000 56,250 28,125

% 42.85 31.76 10.71 5.35
Table 1.3: Juran Process (COPQ)

This is simply we can consider as continual improvement cycle. If the company can follow this
process at the end of the third year the COPQ may reach up to Zero level. Many scholars in
TQM noticed that large nos. of organization in the Western world such as GE, Motorola, and
Ford etc. invested huge amounts money in their SIX SIGMA initiatives (Define, Measure,
Analysis, Improve and Control) which is relatively the prevention costs and received
astronomical benefits as a return of those investments. They also feel that it is high time that
Indian Organizations also focus upon changes their accounting practices to include systems
like Activity Based Costing (ABC) so that a clear picture may be made available to their top
management regarding the several of costs of Quality.

Therefore, the total cost of quality can be minimized by observing the relationship between
cost of quality and the degree of conformance to customer requirements. When the degree
of conformance is very high (low defects), the costs of failures are low but the costs of control
are quite high. When the degree of conformance is low (high defects), the opposite situation
exists. Thus there is, between the two extremes, an optimal level of conformance where total
quality costs are minimized.

Now refer to Fig. 1.3 that illustrates the quality hierarchy. The concept of quality started with
inspection followed by Quality Control (QC), Quality Assurance (QA) and then Quality
Improvement or Total Quality Management (TQM).
Fig.1. 4: The Quality Hierarchy (Evaluation)

Total Quality Management

Total – Made up of the Whole; Quality – Degree of Excellence a product or service provides;
Management – Act, art or manner of handling, controlling, directing.

Therefore, TQM is the art of managing the whole to achieve excellence. It is the application of
quantitative methods and human resources to improve all the processes with in an
organization and exceeds customer needs now and in the future ( Besterfield)

In the book Essential of Strategic management J.David Hunger and T.L Weeler mentioned that
“Total Quality Management (TQM) is an operational philosophy that stresses commitment
to customer satisfaction and continuous improvement”.

Table – 1.4: Conceptual development of TQM (In Indian Scenario)

Step – 1 The year 1991 (economic liberalization) brought about a lot of changes
in the Indian Economy and over all business environment in our
country.
Step – 2 Lots of Foreign MNCs started operations in India in the form of Joint
ventures (JV) like – Hero Honda, Maruti Sujuki, etc.
Step – 3 Professor Yasutosi Washio, has predicted that the quality of Indian man
will overtake that of Japan in 2013.
Step – 4 Mahindra’s Tractor unit is the first tractor unit in the world to win
DEMNG Award.
Step – 5 Indian industries even small industries interested to involve themselves
under total quality management process by using the tools and
techniques like TPM (Total Productive Maintenance) and other
techniques for moving towards business excellence model.

The Japanese Union of scientists and Engineers (JUSE) define that TQM is a set of
systematic activities carried out by the entire organization to effectively and efficiently
achieve company objectives so as to provide product’s and services with a level of
quality that satisfies customers at the appropriate time and price.

Therefore, from the above definitions we can easily understand what TQM is:

 Intense focus on the customer – both external and internal

 Concern for continuous improvement – quality can always be improved
 Improvement in the quality of everything the organization does – not only
related to final product, but also to services, response to complaints and the
like.
 Accurate measurement of every critical performance variable in the company’s
operations.
 Empowerment of employees – TQM involves the people on the line in the
improvement process. Teams are empowered for finding and solving problems

Goal, objective, strategy and methods of TQM

Goal: : Total Customer Satisfaction

Objectives : To create a Culture of “Continuous Improvement” for zero defects,
zero loss and zero accident.

Strategy : “Do the Right Things, right the first time, and every time.”

Methodology : Review,Plan, Train, Empower, Team, Learn from Document,

Standardize the Process, Reduce Variation, Auditing the
performance, Reward & Recognition

TQM has 4 Targets:

1. Better, less variable quality of the product and service
2. Quicker, less variable response in processes to customer needs
3. Greater flexibility in adjusting to customer’s shifting requirements
4. Lower cost through quality improvement and eliminating of non value adding
work.
Therefore, to fulfill those targets, TQM requires six basic concepts:

1. Management must participate in the quality programme in the following manner:

 Establishing a quality council to develop a clear vision, mission and objectives,
the business plan.
 An annual quality improvement programme
 Implementing plan by building the capacity of entire workforce as a team.

2. The key to an effective TQM Programme is its focus on the customer.

3. TQM is an organization wide challenge that is everyone’s responsibility. All personnel

must be trained in TQM, so they can effectively participate on project teams. Changing
behaviors is the goal. People must come to work not only to do their jobs, but also to
think about how to improve their jobs. People must be empowered at the lowest
possible level to perform processes in an optimum manner.
4. There must be a continual striving to improve all business and production
processes like –
 On time delivery
 Order entry efficiency
 Building the error rate
 Cycle time
 Scarp reduction
 Supplier management
 Bench Marking
 Quality function development etc.

5. The focus should be on quality and life cycle costs rather that price. Suppliers should
be few in number so that true pertaining can occur.
6. Performance measures such as up time, percent of non-conforming, absenteeism and
customer satisfaction should be determined for each functional area.

Therefore, TQM is a culture Change. This change is substantial and will not be accomplished in
a short period of time. Small organizations will be able to make the transformation much
faster than large organizations.
Table – 1.5: New and old Cultures – TQM Environment

Quality Element/ Previous State or before After TQM

Culture TQM (Small ‘q’) (Big ‘Q’)
Business Focus Product Oriented Customer Oriented
Quality Definition Product Oriented Process Oriented
Priorities Second to service and cost First among equals of service and costs
Decisions Short term Long term
Emphasis Detection Prevention
Errors Operations System
Responsibility Q.C. / Q.A. Department Every one
Prob. Solving Manager’s part Team’s part
Procurement Price Life – cycle costs, Partnership
Managers Role Plan, assign, control and Delegate, coach, facilitate and Mentor
enforce
Benchmarking Others Self

Benefits of TQM:

Before explain the benefits, once again we have to realise the importance of 100% quality.
Here, the things had done right 99.9 % of the time means:

• One hour of unsafe drinking water per month

• Two unsafe landings at O’Hare Airport each day.
• 16,000 lost pieces of mail per hour
• 20,000 incorrect drug prescriptions per year
• 500 incorrect surgical operations per week
• 50 newborn babies dropped each day by doctors

So we don’t need 99.98% but we need 100% quality environment. This quality of
goods and services can impart a competitive edge to an organization. The importance
of quality is stated in the sentence – No quality no sales, no sale no profit, no profit no
jobs. Today, ‘quality’ is the watchword for the survival and growth of any organization
in the global business environment. Quality increases profits in addition to enhancing
the image of the company:

1. TQM is providing a holistic development of an organization, the quality product

and / or service to customers.
2. Helps to increasing productivity in lowest cost.
3. With a higher quality product and lower price, TQM helps to the organization to
build competitive position in the market place.
4. Allow the organization to achieve the objectives of profit and growth with greater
ease.
 5. TQM creates a satisfactory work environment and job security for entire
workforce. Therefore attrition rate goes down and a healthy HR Practiced
enhanced.
6. Makes company a leader / Brand Image and reduce resistance to change
7. Through training TQM helps to empowerment people in terms of knowledge /
skills, recognize their efficiencies and build a sense of ownership.
8. Assure better customer care and fewer problems with the products / services.

Obstacles of TQM – Implementation:

Many organizations, especially small ones with a niche, are comfortable with their current
state. They are satisfied with the amount of work being performed, the profits realized,
and the perception that the customers are satisfied. Organizations with this culture will
see the little need for TQM until they begin to lose market share. For survival, these
organizations starts initiative for TQM but few are of them succeeded. Question is why?
Prof. Robert J. Masters observed the most important 8 obstacles for this failure and
ultimate reason is – “LACK OF MANAGEMENT COMMITMENT”, which are:
1. Lack of attention to Internal and External Customers
2. Lack of Information / Data
3. Improper Planning
4. Lack of continuous Training and Education
5. Incompatible organizational structure and Isolation
6. Inadequate use of empowerment and Team work
7. Failure to continuous improvement
8. Inability to change organizational culture

Therefore, the Road – Map to obtain Total Quality is: the implementation process
Steps for achieving Total Quality Management:

 Top management commitment and involvement

 Customer involvement
 Design products for quality
 Design production processes for quality
 Control production processes for quality
 Develop supplier partnerships
 Customer service, distribution and installation
 Building teams of empowered employees
 Benchmarking and continuous improvement by using the effective tools like TPM,
SIX SIGMA,
 Team Action through PDCA
 Quality Audit

Therefore, TQM companies need SQM (Strategic Quality Management) today. SQM is to
ensure a process or method by which a continuous assessment of internal and external
changes with regard to quality; and an adjustment of the competitive approach based on
that assessment. Moreover, SQM is the process of establishing long range goals and
defining the approaches to meeting those goals. Though the top level management is
ultimate responsible for the planning of SQM, but for implementing and review, everyone
is involved. The researchers have observed that there are 8 important steps in SQM:
1. Identify the customers and their needs
2. Customer positioning
3. Predicting the future
4. GAP analysis
5. Bridging the GAP.
6. Alignment with Vision – Mission and core values of the organization.
7. Prepare quality statement / Quality Policy
8. Implement and Review.

Five phases of SQM:

Based on the concept of SQM, Aravidan et.al (1996) have identified five phases involved in
SQM, as depicted in Fig. 1.5. As shown, phase – I marks the beginning of SQM, during
which the quality mission of the firm is established with the involvement of the
manufacturer. Phase – II passes through the development of a quality profile with the
considerations of quality mission and external environment comprising competitors’ and
customers’ perceptions. The end of phase II is marked by the declaration of a quality
policy. Phase – III is devoted to listing or modifying long term and annual quality objectives
(targets / goals). During phase IV, efforts are made to infuse quality at the design stage.
Phase – V constitutes the development of SQM system, which signifies the whole process
of SQM. The results obtained after phase V are compared with the desired results / Global
performance.
 The outcome of this comparison determines the need for further refinement of the SQM
process presently being followed. Actually, ‘Quality Policy’ is a broad guideline to maintain
quality in action. It is a statement of principles, which would be in line with the company
mission and values.
I
Establishing Quality Mission

External Environment
Developing Quality • Competitor
Profile
• Customer demands & Feedback
Declaring Quality Policy II

III
Long Term Quality Objectives
IV
Designing for Quality

Quality Planning Q. Evaluation V

cs
Quality Controlling Q. Improvement

Needs Improvement
Total requirements
Performance in Global Market Observed

Fig. 1.5: Five phases of SQM

Thus, it can be conclude that TQM is an operational philosophy based on some tools and
techniques such as QFD (Quality Function Deployment), Benchmarking, Kaizen
(Improvement), Quality Circle, Total Productive maintenance (TPM) and 5S (Sort, Sort in
Order, Shine, Standardize and self discipline), Six Sigma and Zero Quality Control etc.
where the ultimate focus is customer and their satisfaction. To fulfill the customer’s need and
wants as well as for business growth; all the quality gurus suggested that to develop a culture
for continuous improvement. They also explained that continuous improvement is a process
to build a system that can consistently produce a quality product / services. Here, both
management and the workers role are crucial because they must identify and eliminate waste
and variability through-out system; take the equal responsibility for proper tools and
knowledge uses and team leadership and empowerment for entire organization or centre for
excellence. This is not so easy task but it is possible with the help of Quality Management
System (ISO 9000) which is generic and Business Excellence Model like CII –EXIM Bank award,
MBNQA award, Deming award etc. Finally if any organization really wants to develop a culture
for continuous improvement, the top management must develop and follow some strategic
steps for long term achievement. So, the thematic overview of TQM could be depicted by the
following fig.

Objective:
To create a Culture of
TQM – Operational Philosophy “Continuous Improvement”
(Continues Improvement Process)
for zero defect
zero accident and zero loss.

Contribution from
Tools quality GURUS (Techniques)

Benchmarking, QFD, BPR, TPM, Six

PDSA, PDCA, 7 Management Sigma, ZQC – Poka Yoke, Kaizen and
tools (Statistical and Non – Quality Circle
Statistical), 5S

B. Excellence

Business Q.M.S
Excellence Models (ISO 9000)

Fig. 1.6: TQM overview (tools and techniques in TQM)

References:

1. Bedi, Kanishka. (2006). Quality Management. New Delhi: Oxford University Press.
2. Bhat, K.Shridhara (2018). Total Quality Management: Text and Cases. (First
Edition). New Delhi : Himalaya Publishing House.
3. Besterfield, D.H (2008). Total Quality Management. (Third Edition). New Delhi:
Pearson Education.
4. Juran, J. M. Gryna, F.M & Frank M Jr. (1970). Quality Planning and Analysis. New
Delhi: Tata McGraw Hill.
5. Gopalkrishnan, N (2012). Simplified Six Sigma: methodologies, tools and
implementation. New Delhi: PHI private Limited.
6. Charantimath, P. (2011). Total Quality Management (Second Edition) New Delhi:
Pearson Publication.
7. Rose J.E (2006). TQM: Text and Cases. New Delhi: Deep and Deep Publication
limited.
Thanks: Dr. Shyamal Gomes
Chapter – 1 B

Quality Management Philosophies: The Gurus and their

contributions
Dr. Shyamal Gomes
Introduction:

When we are trying to understand TQM movement fully, we must look the
philosophical concepts of the masters who have shaped the evolution of TQM in
management discipline. Although their qualitative and quantitative philosophies are
different and critical in the emergence and development of contemporary
knowledge regarding quality, but no one can understand the entire gamut of Total
Quality without master’s contribution.

From the concept of quality we have understood, TQM stands on tools and
techniques which are considered as quality principle’s or philosophies by quality
Guru’s in different times / situation. There are many individuals have made
substantial contribution to the theory and practices of quality management but the
‘Mahagurus’ of quality evolution in the world are three:
1. Dr. William Edward Deming
2. Dr. Joseph M. Juran
3. Dr. Philip B. Crosby
Other individuals who have helped to shape current thinking in quality management
include, Walter Shewhart, Massaki Imai, Armand, Feigenbaum, Kaoru Ishikawa,
Genichi Taguchi, Shigeo Shingo etc.

Key contribution from quality Gurus:

Gurus Contribution
Walter Shewhart - Statistical control chart
- PDSA to manage the effects the variations
Edward Deming - 14 points for quality management,
- 7 deadly sins and diseases,
- the theory of variance,
- PDCA cycle
J.M Juran - Wrote Quality control hand book, called ‘Bible of quality’
- Habit of quality, Quality Triology.
- Define ‘quality’ as ‘Fitness of use’
- Categorised the cost of the quality
Philip B. Crosby - 14 steps for quality improvement
- Concept of ‘ Zero defects’
- Written book ‘ Quality is free’
Massaki Imai - Kaizen
Kaoru Ishikawa - Cause and effect diagram
- Quality circle
Genechi Taguchi - Loss Function
Feigenbaum - Quality defines by the customers
William Shewhart - PDSA, Statistical Control Chart

A. Walter Shewhart : Founder of the Statistical Control Chart, Originator of the

PDSA Cycle. Perhaps the first to successfully integrate statistics, engineering and
economics
Books:
1. Economic Control of Quality of Manufactured Product (1931).
2. Statistical Method from the Viewpoint of Quality Control (1939)

PDSA a planning tool by which a manager plan carefully what is to be done ,carry out
the plan (do it), Study the results ( did the plan work as intended, or were the results
different?) and finally, act on the results by identifying what worked as planned and
what didn’t.

B. Edward Deming ( 1891 – 1967) / Deming Philosophy:

Edward Deming first envisioned quality management as an organization wide activity

rather than a technical task for inspectors or a special quality assurance group. He
identified quality as a management responsibility, observing that managers must
create the systems and processes that generate quality. A quality product combines
a good design with effective production methods only by meeting both these
conditions could a firm assure quality.

Deming stressed that the top management has higher responsibility for quality
improvement that senior or middle level management. Deming advocated a never
ending cycle, of product design, manufacture, test and sales followed by market
survey and then redesign and so forth. He claimed that higher quality, leads to
higher productivity, which in turn leads to long term competitive strength. This is
called Deming’s ‘Chain Reaction Theory.” This theory states that ‘ improvements in
quality lead to lower costs because they result in less rework, forward mistakes
fewer delays and snags, and better quality and lower prices, a firm can achieve a
higher market share and this stay in business, providing more and more jobs.
 IMPROVED
QUALITY

COST DECREASES
Chain Reaction
LESS REWORK Model
PRODUCTIVITY
IMPROVES

CAPTURE THE
MARKET BY
LOWERE PRICE

STAY IN
BUSINESS

PROVIDE JOBS
AND JOBS MORE

Deming’s 14 Points for Management:

Points Explore to
1. Create constancy of purpose for Any successful organization must clear its V-M-
continual improvement of product and V to provide long term direction for its
services management and employees
2. Adopt the new philosophy for eco In today’s competitive environment,
stability ( Taylor’s old principle like work companies must take a customer driven
measurement and work adversarial work approach.
relationship not work in present global
environment) based on mutual
cooperation between labour and
management and a never ending cycle of
improvement
3. Cease dependency on inspection to Work ownership – workers must take
achieve quality responsibility for their work rather than leave
the problems for the inspectors.
4. End the practice of awarding business A total cost assessment of any purchase is
on price tag alone essential by loyalty and opportunities for
mutual improvement with good suppliers

5. Improve constantly and forever the Improvement means reducing variation by

system of production constantly and eliminating special causes and reducing the
forever the system of production and effects of common causes. This improves
services quality which is turn improves of productivity
and decrease the costs.
6. Institute training on the job Continuous improvement of organisation’s
must valuable resources
7. Adopt and institute modern methods Leadership rather supervision helps managers /
of supervision and leadership supervisors to eliminate the elements of fear
from the job and encourage team work.
8. Breakdown barriers between Interdisciplinary ‘ TEAMS’ and teamwork helps
departments and individuals to breakdown barriers between department
and individual and build quality product
compared with strictly functionally oriented
process.
9. Eliminate the use of slogans, posters Motivation can be better achieved from trust
and exhortations. and leadership than from slogans and goals.
10. Eliminate work standards and Un realistic quotas course fear and frustration
numerical quotas: and leave room for improvement.
11. Remove barriers that rob the hourly Deming believed that TQM sets one of the
worker of tight to pride in workmanship highest barriers to pride in workmanship in
performance appraisal. P.A destroys team
work by promoting for limited resources,
focuses on short term and discourages risk
taking.
12. Institute a vigorous project of Continual training keeps the workforce up to
education and retraining date with information about new
development, changes in product designs and
machinery, new tools and procedures and
innovative techniques.
13. Drive out fear: Fear as a major obstacles to improve efficiency
 Fear of reprisal, fear of failure and effectiveness and a major barrier to
 Fear of weakness, fear of loosing change and survival
control, fear of change
14. Define top management Top management must publicly demonstrate
commitment to ever – improving quality their vigorous commitments to ensure
and productivity continuous quality improvement and
innovation.

Deming used his 14 points for the management to emphasise the critical role of
managers in TQM. He saw managers rather than workers on equipments as the real
obstacles to TQM. In his opinion 85% of quality problems could be traced to the
management while workers are responsible for the repairing 15%.

Deming’s theory of variance:

Deming categorised variance in two phases:

 Controlled variance – variance from standard processes that a worker can
control.
 Uncontrolled variance - variance from standard processes that a worker can
not control due to impact of some factors.
 According to Deming, Variance can be corrected by workers or managers by either
changing its common cause or removing its special causes.

VARIANCE

CONTROLLED VARIANCE UNCONTROLLED VARIANCE

Can be corrected either

Long term
Lack of knowledge Changing operating
or skill, workers Common Cause Process
negligence

or
Weakness in product
Removing its design, equipments,
Short term process special cause malfunctions, poor
maintenance

Deming’s 7 deadly diseases:

For successful implementation of 14 points for management, managers first eliminate the
bad practices known as seven deadly diseases and sins.

1. Lack of consistency of purpose – short term quality program

2. Emphasis on short term profits – firms seeking only to increase the quarterly
divided undermine quality.
3. Over reliance on performance appraisal encourage revelry, fear and short term
thinking. It can also undermine teamwork and mutual respect.
4. Mobility of management: excessive job hopping encourages short term thinking
and habits the ability of the manager to understand the long term implicating of
actions.
5. Overemphasis on visible figures: Due to over emphasis of easily capture data for
evaluating the performance, managers may be unknown / or often unknowable
such as the effect of a satisfied customer.
6. Excessive medical cost for employee health care that increases the final cost of
goods and services. The long term effect has been a determination in
competitiveness.
7. Examining costs of warranty and legal costs: professional cots – medical, laws

PDCA Cycle:

Deming’s wheel / PDCA cycle is a problem solving tools adopted by firms engaged in
continuous improvements. This cycle consists following steps:
P : Plan- The team select a process that need improvement, documents the selected
processes sets qualitative goals. After assessing the benefits and the costs of the
alternatives, the team develops a plan with quantifiable measures for improvement.

D : Do – Implement the plan – monitor the progress. Data are collected continuously
to measure improvement in the process.

C : Check – Analyse the data collected in do step, find out how closely the results
cover ponds to the goals in the plan step.

A : Act – It result is successful, the team documents the revised process for standard.

PDCA – Cycle : Never ending improvement

J.M.Juran ( 1904-2008) / Juran’s philosophy:

After Deming, Dr. Joseph Juran has had the greatest impact on the theory and
practices of quality management. Juran’s contribution to TQM centres on 4 themes:

1. Compelling definition of quality and the cost of quality

2. Quality Habit
3. Quality trilogy
4. Universal break through sequences.

Dr. Juran defines quality as ‘ fitness for use’ that results from 5 major product traits :
 Quality of design – specification
 Quality of conformance
 Availability – absence of problem
 Safety and threat of harm
 Field use – packing, stage, maintenance etc.
 Cost of quality: According to Juran, costs associated with defective products
includes costs of making, finding, repairing and avoiding defects. Juran
categorised the cost of quality into 4 categories:
1. Internal Failure cost
2. External failure cost
3. Appraisal cost
4. Prevention cost

Quality Habit: According to Juran, the ultimate goal for a TQM program for the firm
as a whole has to be set on a process of continuous improvement rather than slogan
and exhortations Thus focus should be develop into a habit of quality. Juran
advocated a four steps process t o develop quality habit:
1. Establish the specific goals
2. Establishing planning to achieve those Goals
3. Assign clear responsibility to achieve that plan
4. Base rewards on Results

Quality Trilogy: Juran broke down the requirements for successful TQM into 3 major
activities: Quality Planning, Quality controlling and Quality Improvement.

QP QC

QI

1. Quality Planning: Quality Planning begins with identifying customers both

external n internal, determining their needs and developing product features
that respond to those needs.
2. Quality Controlling: Process involved with –determining what to control,
establish units of measurement to evaluate data objectively establish
standards of performance, measuring actual performance, interpreting the
different between actual performance and the standard and finally corrective
action on the difference.
3. Quality Improvement: focuses on long term goal seeking to achieve quality
break through that move the firm to a new level of performance.

In trilogy, according to plan once, the operation begins, usually 20% of the work has
to be redo due to quality deficiencies as depicted in figure. It is not possible for the
procedures to get rid of this chronic waste ( a result of deficient quality planning).
Therefore, they perform the quality control (the second process of quality trilogy) to
prevent the situation from getting worse. Here the process may go out of control
(say resulting in 40% re work) and has to be brought back within the control limits by
taking appropriate measures. Over a period of time, by employing quality
improvement (the second step of trilogy), the chronic waste can be reduce to a
much lower level. (Juran 1999).

Philip B. Crosby ( 1926-2001) / Crosby Philosophy:

Philip B.Crosby, the third major influence on the management tools of TQM, was a
management consultant and the director of Crosby’s quality college. He was
contributed 3 major ideas to TQM:
1. Absolutes of quality management
2. 14 steps for quality improvement
3. Quality vaccine.

Crosby’s 4 absolutes of Quality:

 Quality is defined as ‘conformance to requirements’ not ‘goodness’.

 The system for achieving quality is prevention not appraisal.
 The performance standard is ‘ Zero defects’ not that is close enough.
 The measurement of quality is the price of non conformance, not index.

Crosby’s 14 steps for quality Improvement:

1. Establish management commitment

2. Form a quality improvement team
3. Est. quality measures for each activity through out the company.
4. Evaluate the cost of quality
5. Est. quality awareness of employees
6. Integrated corrective actions
7. Zero defect planning
8. Employee education
9. Hold a zero defect day to establish the new attitude.
10. Employee goal setting should take place usually on a 30, 60, 90 day basis.
11. Error cause removal should follow the identification of problems that
prevent error free work environment.
12. Est. recognition for those who meet goals.
13. Est. and hold regular meetings of quality councils composed of quality
professionals and team chair person.
14. Do it all over again – continuous improvement.

Quality Vaccine:
Crosby advocated that TQM an integral part of an organization the quality vaccine
describes a corporate quality management regimen that improves the overall health
of the firm and corrects communication / system operations many of its pressing
problems.
Masaki Imai:
The chairman of the ‘Cambridge Corporation’ an international management
consulting firm, based in Tokyo, brought together the man philosophy theories, and
tools as a single concept – Kaizen. ‘Kaizen’ – is a Japanese word means continuous
improvement. Three guiding principle he pointed out in Kaizen:

1. Process view of the system

2. Stress comes from people
3. Constant sense of urgency

He wrote two important books: Kaizen – The key to Japan’s competitive success; and
Gemba Kaizen: A common sense, low cost approach to management.

Kaoru Ishikawa (1915 – 1989) :

Dr. K.Ishikawa was a Japanese quality guru, developed the concept of deployment of
quality control circle – small groups of people that meet regularly to plan and carry
out process changes to improve quality, productivity and the work environment. He
also developed Ishikawa’s cause and effect charts or fish bone diagram and pro-
pounded 7 management tools for quality control. His quality concept based on three
important principles: 1. quality is company wide activity, 2. remove the root cause
not the symptoms and finally 3. everyone responsibility through quality circle.

Cause – 1:Method Cause – 2:Machinery

Reason

Effect –
Outcome/
Problem

Reason Cause – 4: Materials

Cause – 3: People

There are two sets of general categories of main causes used in the fish bone
diagrams. 3 Ms and 1P - Method, Machinery, Materials and People
4Ps – Policies, Procedures, People and Plant
Some key elements of his philosophy are:
1. Quality begins with education and ends with education
2. The first step in quality is to know the requirement of customers
3. The ideal state of Q.C occurs when inspection is no longer necessary.
4. Remove the root causes, not the symptoms
5. Quality control is the responsibility of all workers and all divisions.
6. Do not confuse means with the objectives
7. Put quality first and set your sights long term profits
8. Market is the entrance and exist of quality
9. Top management must not show anger when facts are presented by
subordinates
 10. 95% problem can solve with problem solving tool.
11. Data without dispersion information (variability) are false data.

Shigeo Shingo:

According to Shigeo Shingo, statistical methods detect errors too late in the
manufacturing process, what is needed is to identify errors as they happen and
to correct or deal with them right away. Shingo proposed his own version of
‘zero – defects’. This is called ‘POKA YOKA’ in Japanese which means “FOOL
PROOFING”. The idea is to handle errors as they occur. Poka Yoka emphasises
dealing with second logical issues with a relevant technical feedback and control
system. His concept was control quality at source rather than through sampling
inspections.

Shingo’s ideas have nothing to say about human beings in terms of them as social
cultural or political beings.

Genechi Taguchi:

Japanese quality Guru, Genichi Taguchi, Ph.D, believes that:

 To improve quality, one must look up stream at the design stage because
that is where quality begins.
 Quality must be designed in, it cannot be inspected later.

Taguchi oriented ‘quality engineering’ which is an approach that involves combining

engineers and statistical methods to reduce costs and improve quality by optimising
product design and manufacturing processes.

Taguchi methods helps product designers estimate the true cost of quality and then
cost effectively improve quality.

He developed his loss function concept that combines cost, target and variation into
one metric. According to him quality in terms of the social loss, loss to producers
and consumers from the time a product is conceived. The smaller the value of this
social loss, the more desirable is the product.

LOSS can be occurred

By the CUSTOMERS (eg. By the COMPANY (eg. Increased

Short product life, increased scrap, rework and warranty cost Or by SOCIETY in general (eg.
damaged to company reputation the Pollution / safety)
maintenance and repair costs loss of market share
Taguchi quality loss function is a statement that:

‘Any deviation from the target value of quality characteristic result in extra costs to
some segment of the society’.

Upper Specification Lower Sp. Limit

limit
Loss, L = K(Y-T)²
where

K= loss coefficient;

Y = Measurement of
requirement

T= Target Value

Target Value - T

In 1960 Taguchi had shown that if the design intent of the target value was the value
at which the design, whether product or process, functioned best, then any
deviation from the value meant an incremental deterioration of performance and
incurred a loss.
This loss was passed on to the next customer, whether internal or external, so that
ultimately both the company and society would experience that loss in some way.
Close to the target value, the loss is minimal.
Moreover, loss increases parabolically as the deviation increases to a point where
the customer would find the product no longer acceptable and go for sourcing
elsewhere.

Taguchi’s Seven Points: (off line quality control)

Conventionally, quality control activities centre on final inspection sampling or on

control charts and process control. This is known as ‘ on line quality control ‘ Taguchi
pushed the process upstream to focus on product and process design. This is known
as “off line quality control”.

Taguchi’s 7 points are as follows:

1. Product quality is measured by the total loss to society created by the

product
 2. Continuous quality improvement and cost reduction care necessary to
survive in world competition.
3. Quality improvement requires continual and repeated reduction of variation.
4. Quality loss is frequently proportional to the square of the deviation of the
performance from the nominal value.
5. Product and process design can have an important impact on a product
quality and cost.
6. Performance variation can be reduced by suitable adjustment of the products
parameters and /or the process parameters.
7. The appropriate parameter settings that reduce variation can be identifying
with the appropriate statistically designed experiments.

Philosophical Comparison of Gurus in TQM:

GURU Definitions of Emphasis Dominant factor

Quality
Deming Customer – led Process Control of Variation,

Juran Customer –led People & Process Fitness for purpose / use

Crosby Supply – led Performance & Conformance to

process requirements

Ishikawa Value – led People & process Company wide quality

control
Taguchi Supply – led Process / Design Quality loss function

People and Continuous Improvement

Ishikawa Value - led process

Thus, TQM is an operational philosophy where the ultimate focus is customer and
their satisfaction. To fulfil the customer’s need and wants as well as for business
growth; all the quality gurus suggested that to develop a culture for continuous
improvement. They also explained that continuous improvement is a process to
build a system that can consistently produce a quality product / services. Here, both
management and the workers role are crucial because they must identify and
eliminate waste and variability through-out system; take the equal responsibility for
proper tools and knowledge uses and team leadership and empowerment for entire
organization. This is not so easy task but it is possible and generic. If any organization
really wants to develop a culture for continuous improvement, the top management
must develop and follow some strategic steps for long term achievement.
Reference:

1. Bedi, Kanishka. (2006). Quality Management. New Delhi: Oxford University

Press.
2. Bhat, K.Shridhara (2002). Total Quality Management: Text and Cases. (First
Edition). Himalaya Publishing House: New Delhi.
3. Besterfield, D.H (2008). Total Quality Management. (Third Edition). New
Delhi: Pearson Education.
4. Juran, J.M and Gryna F.M (1987). Quality Planning and Analysis. New Delhi:
Tata McGraw Hill.
5. Gopalkrishnan, N (2012). Simplified Six Sigma: methodologies, tools and
implementation. New Delhi: PHI private Limited.
6. Schuler, Randall S. & Harris, Drew L. (1990). Managing Quality: The Primer
for Middle Managers. Massachusetts: Addison-Wesley Publishing Company.
7. Oakland John. S (2005). TQM – Text and Cases (Third Edition). New Delhi:
Elsevier Publication.
8. Charantimath, P. (2011). Total Quality Management (Second Edition) New
Delhi: Pearson Publication.
9. Rose J.E (2006). TQM: Text and Cases. New Delhi: Deep and Deep
Publication limited.

Dr. Shyamal Gomes / XISS

 Chapter – 2:

Statistical Process Control and Quality Improvement

(Problem solving) tools.
Dr. Shyamal Gomes
Introduction:

When the Production consists of large batches of goods, sampling inspection is

proffered. Carrying out 100% inspection is costlier and time consuming in that case.
However, be the sampling technique used, the producers has to accept a certain
amount of risk that some defective products will slip through the quality control net.
This is against the principle of Total Quality. The companies committed to TQM concept
are increasing their efforts to evolve and apply alternative methods of quality control
which will give a higher degree of precision and reliability to their products. One such
method used by the company is the SPC. Therefore, Statistical Process Control is an
alternative method of quality control which gives a higher degree of precision and
reliability to their products; reduces risk & opportunity of defective products that slip
through Quality Control net.

 It is an on-line quality control tool.

 SPC focuses on the process rather than on the Product.
 SPC is used to evaluate the output of a process to determine its acceptability.

To do this periodic samples are taken from the process and they are compared with a
predetermined standard. If the sample results are not acceptable, the process is
stopped and corrective measures are taken. If the sample results are acceptable, the
process is allowed to continue.

The control process consists of the following steps for continuous Process
improvement:
1. Define what is to be controlled / Problem situation
2. Measure the current status
3. Comparing with a standard
4. Evaluation of the sample for its acceptability
5. Corrective action if necessary.
6. Evaluate corrective action.

Continuous process improvement is designed to utilize the resources of the

organization to achieve a quality driven culture – where the individual think, act and
speak about quality for customer satisfaction and standardization in competitive
environment. Deming and Juran observed that while majority of the quality problems
are associated with processes, few are caused by workers themselves. Therefore, No
purpose is served by blaming individual workers for something over which they do not
have any control. It is the management who should share the responsibility with the
work force – to continuously improve the PROCESSES with which human beings are
works.
Now the question comes what is process and what is process improvement?

1. A process is a systematic series of actions directed to the achievement of a

goal”.

2. A process is a unique combination of people, materials, equipments, method,

measurement, and the environment or causes that collectively produces a
given outcome such as a product, a service, or an input to another process.

FEEDBACK

INPUT PROCESS
Materials People
Equipment OUTPUT OUT
Money Information
Method COMES
Information Procedures Data
Data etc. Environment Product
Materials Service etc.

CONDITION

Fig. 3.1: Input and output process model

The components of a process may be classified as 7Ms:

 Materials : Raw materials

 Manpower : People and Power
 Method: Product design, process design and operation procedures
 Machines : Tools & equipments used in process
 Maintenances: are for process components including Training of people.
 Management: Policy work rules and environment

What is process Improvement?

Understanding existing processes and introducing process changes to improve

product quality reduce costs or accelerate schedules. Most process improvement
work so far has focused on defect reduction. This reflects the increasing attention
paid by industry to quality. However, other process attributes can also be the focus of
improvement. Now process could be improve in the following manners:

 Identify and define the problem

  Study the existing situation: collect necessary data.
 Generate possible solution alternatives
 Evaluate alternatives and choose the preferred one.
 Develop the Action Plan by using 5W2H (asking questions that includes
– what , why, where, when, who, how and how much)
 Implement the plan and improvement and measure the results.
 Other wise return to step one and start again with a new problem.

Category 5W2H Typical question Goal

Subject What? What is being done Identify the focus of
analysis
Purpose Why ? Why is this necessary Eliminate unnecessary
tasks
Location Where? Where is it being done Improve the location,
Why is it done there?
Would it be better to
do it some where else?
Sequence When? When is it done Improve the sequence.
Would it be better to
do it at another time?
People Who? Who is doing it Improve the sequence
or output. Could some
one else do it better?
Method How? How is it being done Simplify tasks, improve
output.
Is there a better way?
Cost How much? How much does it cost now Select an improve
method
What would be the
cost?
Table -3.1 Seven Brothers (5W2H) for problem solving

Problem Solving Methods & Tools:

A problem is a deviation between what should be happening and what actually is

happening. It is an unwanted situation that affects the normal way of life or product
life cycle. Problem can be defined in several ways:
 Felt difficulty
 Gap or obstacle to be circumvented
 Something that fails to bring about a desired effect or result
 Undesirable / unwanted situation
 Persuade variance or gap between present conditions and some desired
state of affairs.
Therefore, problem is an unwanted situation/ UN DESIRABLE situation that affects
the normal way of life or product life cycle. Problem Solving is a highly creative effort
at the heart of quality improvement that encompasses:
 Problem redefinition and analysis,
 Idea generation,
 Evaluation and selection of ideas
 Implementation
 Review the result and
 Standardize

The most identified and Popular Problem solving methods are:

PDSA : (Plan-Do-Study-Act)
PDCA : (Plan-Do-Check-Act)
DMAIC (Define-Measure-Analysis-Improve – Control)
DMADV (Define- Measure- Analysis – Design – Verify)

There are two different approaches to Problem solving-related areas. The first
approach is used when data are available and the job is to analyse the data to solve a
particular problem. Most of the problems that occur in production related areas fall
into this category. The Seven Quality Control / statistical tools used for such analytical
problem solving are:

1. Process flow Diagram/ flow chart

2. Check sheets
3. Histogram
4. Pareto diagram
5. Cause and effect diagram
6. Scattered diagram
7. Control charts

The second approach is during the new product development process, not all data
needed for the problem are evident. In such cases, where all the data are not
available, the new seven management and planning tools are useful like
1. Relations Diagram
2. Affinity Diagram
3. Tree Diagram
4. Matrix Diagram
5. Matrix data analysis Diagram
6. Process Decision Program Charts (PDPC)
7. Arrow Diagram

However, the new Seven Management and Planning tools in TQM developed by the
JUSE Research Committee chaired by YOSLINOBU NAYATANI in 1996. These are also
called as New seven management and planning tools provide the means for
understanding complex situations and making appropriate plans. But these tools are
not a replacement to the old seven tools or quality control tools.
Since, the most of the problems are from shopfloor or worksite, and completely data
based the Seven QC tools are appropriate for PDCA and the new seven management
tools are useful in PDSA. Let us discuss the 7 QC tools first:

1. Flow Chart: A flowchart is simply a graphical representation of steps. It

shows steps in sequential order and is widely used in presenting the flow of
algorithms, workflow or processes. Typically, a flowchart shows the steps as
boxes of various kinds, and their order by connecting them with arrows.
Different flow chart symbols have different meanings. The most common flow chart
symbols are:

 Terminator: An oval flow chart shape indicating the start or end of the process.
 Process: A rectangular flow chart shape indicating a normal process flow step.
 Decision: A diamond flow chart shape indication a branch in the process flow.
 Connector: A small, labeled, circular flow chart shape used to indicate a jump in the
process flow. (Shown as the circle with the letter "A", below.)
 Data: A parallelogram that indicates data input or output (I/O) for a process.
 Document: Used to indicate a document or report (see image in sample flow chart
below).

2. Check sheet: Check sheets provide a systematic means of collecting and analysing
data. Check sheets are special types of data collection forms in which the results may
be integrated on the form directly without additional processing. Check sheets
facilitate systematic record keeping or data collection.
3. Histogram: Histogram display large amount of data that are difficult to interpret in
their raw form. By providing a visual summary of the data, histograms reveal whether
the process is cantered around a target value, the degree of variation in the data and
whether the data meet specifications. Thus histogram could help in identifying
process capability relative to customer requirements. Histogram present graphic
pictures that quickly summarise the variation.

100

80

60 Xavier

40 Ram
Rahim
20

0
1st year 2nd year 3rd year 4th year

4. Pareto Chart:
Pareto chart have been named after Alfredo Pareto (1848-1923). This chart is based
on the 80:20 principles of Pareto as applied in quality management. It means that
quality problems are the result of only a few problems e.g. 80% of the problems
usually stem from 20% of causes. In the preparation of this chart, various causes
resulting in quality problems are identified and arranged in the descending order of
the magnitude of defects the produce Dr. Joseph Juran coined the phases “vital few
and trivial many”. A Pareto diagram is a bar chart that illustrates the frequency of
recurrence or the cost of a set of items. Here we see one example “Causes for late
arrival”

A Pareto Chart is a graph that classifications in descending order from left to right.
Displays the degree of importance for each element Often called the 80-20 Rule
Principle is that Bad Qualities are the result of only a few problems e.g. 80% of the
problems usually stem from 20% of causes. Pareto charts are used to display the
Pareto Principle in action, arranging data so that the few vital factors that cause most
of the problems reveals themselves. Concentrating improvement efforts on these few
will have a greater impact and be more cost-effective.

Application Steps:

 Step 1. Develop a list of problems,

 Step 2. Select a standard unit of measurement and the time period to be
studied for comparing the items.
  Step 3. Collect and summarise the data. Create a three-column table under
the heading of ‘error category’, ‘frequency’ and ‘percent of total’.
 Step 4. Create the framework for the horizontal and vertical axes of the
Pareto chart.
 Step – 5: Plot the bars on the Pareto chart. Using a bar graph format, draw
the corresponding bars in decreasing height from left to right using the
frequency scale on the left vertical axis.
 Steps – 6: Interpret the Pareto chart. Look for the break-point on the
cumulative percent graph. It can be identified by a marked change in the
slope of the graph. This separates the significant few from the trivial many.
Remember here the standard rule is 80:20 Rules.

Example: Late arrival in the office/factory.

Phase 1: Putting Percentage beside the number of Occations

Causes for late arrival Number of occasions Percentage

1. Transportation 25 15%
2. Child care 42 26%
3. Oversteps 10 6%
4. Traffic 59 36%
5. Emergency 08 05%
6. Bad Weather 20 12%
Total 73 100%

Phase – 2: Arranging number of occasions in descending order and in cumulative

Percentage

Causes for late arrival Number of occasions Percentage Cumulative Percentage

(Decreasing order),
59 36% 36%
4. Traffic
2 Child Care 42 26% 62%
1. Public 25 15% 77%
Transport
6.Bad Weather 20 12% 89%
3.Oversteps 10 06% 95%
5.Emergency 08 05% 100%
Total 164 100% 100%
 C
U
M
U
F L
R Vital Few A
E T
Q Trivial Many I
U V
E E
N
C P
Y E
R
C
E
N
T

ERROR CATEGORIES

Fig. 3.5: Pareto Chart with solution

5. Cause and effect Diagram: A problem can be due to a variety of reasons or causes.
The goal of problem solving is to identify the causes of problems in order to correct
them. The cause and effect diagram is an important tool in this task, as it assists the
generation of ideas for problem causes and in tern, serve as a basis for solution
findings. Cause and effect diagram was introduced by Dr. K. Ishikawa of Japan. It is a
simple, graphical method for presenting a chain of causes and effects and for sorting
out causes and organising relationships between variable. Because of its structure, it
is often called fish – bone diagram. There are two sets of general categories of main
causes used in the fish bone diagram:

1. 3 Ms and 1P (Method, Machinery, Materials, and People)

2. 4Ps ( Polices, Procedures, People and Plant)

Application Steps:

Step - 1: Prepare a flip chart or an overhead transparency of the fish bone template.

Step - 2: Write the issue (Problem or process condition) on the right side of the cause
and effect diagram.
Step -3: Identify the major cause categories and write them in four boxes on the
cause and effect diagram. You may summarize the causes under 3M1P or 4Ps or 4Ss
(surrounding, suppliers, system and skills) categories.

Step – 3: Brainstorming the potential causes of the problem. As the possible causes
are provided, decide as a group where to place them on the Cause and Effect
diagram.

Step - 4: Review each major cause category, and ask everyone ‘why is this cause?

Step - 5: Analyse all the main causes by seeing how many sub causes are related with
this main cause and how they are responsible for effect part

Step -6: Reach an agreement on the most agreeable on the most probable root
causes.
Example: Potential Causes of excess scrap

People Material
Lack of supervision Lower quality
Wrong specification
Lack of training Wrong selection of
Inadequate skill vendors / suppliers Lack of Inspection

Substitute workers
Excess
Scrap
Machine
Erroneous Design Improper assembly
instructions Poor Maintenance
Poor Wrong set up
Communicatio
Wrong bill of materials

Method Machinery

Fig. 3.6Cause and effect diagram: an example

Before, arranging this diagram, Why-Why analysis is very important. Cause, cause of
the cause and root cause analysis may helps to identify the cause, sub cause and
reasons of that cause.
Situation

Cause

Results Cause of Cause Because of

Cause of cause of cause

Root cause

Fig. 3.7 Why-Why Analysis

6. Scattered Diagram:

Scattered diagram is used to find the kind and level of relationship between a cause
and effect. Ishikawa’s fishbone diagrams helps in finding the root causes of an
effective or a problem, scattered diagram helps to quantify the kind and level of
relationship.

 SD is used to study possible relationship between two variables. Although

these diagram cannot prove that one variable causes the other, they do
include the existence of a relationship, as well as the strength of that
relationship .
 A SD is composed of a horizontal axis containing the measured values of
one variable and a vertical axis representing the measurement of the
other variable.
 The purpose of the SD is to display what happens to one variable when
another variable is changed. The diagram is used to test a theory the two
variables are related
 Ishikawa’s cause and effect diagram help in finding the root cause of and
effect or a problem, it helps to quantify the kind and level of relationship.

7. Control Chart: A control chart is simply a tool of Statistical Quality Control

(SQC) which is developed by Walter Shewhart of Bell Telephone Labs in 1920s.
It is a statistical approach to study the manufacturing Process variations for the
purpose of improving the economic effectiveness of the process. This tool is
based on continuous monitoring of process variations.

A control chart is a graphical display of a quality characteristic that has been

measured or computed from a sample versus the sample number or time. It
contains a centre line that represents the average value of the quality
characteristic corresponding to the in-control state.
 Two other horizontal lines , called the UCL and LCL are also drawn. These control
limits are chosen so that if the process is in control, nearly all of the sample points
will fall between them. As long as the points plotted are within the control
limits, the process is assumed to be in control, and no action is necessary.

However a point that plots outside the control limits is interpreted as evidence
that the process is out of control, and investigation and corrective action is
required to find and eliminate the assignable cause responsible for this.

Fig. 3.8: A typical Control Chart

Types of Control Charts: There are two types of Control Charts:

1. Control charts for attributes: p chart, c chart etc.
2. Control charts for Variables: x - bar chart (mean chart) and r - chart (Range
chart)
p-chart : is an attribute control chart. It is designed to control the percentage or
proportion of defectives per sample. p charts can be used when the sub groups are
not of equal size.
c-chart: the c chart , which is used to control the total number of defects per unit,
when the sub group size is constant.

x-bar chart: A mean chart generally referred to as ¯X - chart is used to monitor the
central tendency of a process. This chart can be constructed in two ways:
1. Upper Control Limit (UCL) = ̿X + 3σx and Lower Control Limit (LCL) = ̿X
- 3 σx.
2. Upper control limit UCL = ̿X + A2¯R ; lower control limit - LCL = ̿X - A2
¯R
r –chart: are used to monitor process dispersion. They are sensitive to changes in
process dispersion. Control limits for range charts are found using the formulas: UCLR
= D4R; LCLR = D3R (where D4 AND D3 are taken from Table value). However, to
implement a solution to a problem, changes are made in how things are done. A new
producer must be used, a new piece of equipment must be installed and debugged,
or people must start paying attention to some aspects of quality that had been
ignored previously. The implementation step would be easier if problem – solving
teams have been properly organized.
By observing the patterns on the chart, the supervisor can determine what
adjustments need to be made to bring the process ‘in control’. Control chart
information can be used to locate and investigate the causes of the abnormalities in
the production process. During daily production runs, the operator can make the
required adjustments by looking at the chart pattern.

Now very briefly let us understand the Seven management and planning tools:

1. Affinity Diagram (KJ Method, developed by Kawakita Jiro) – answer ‘WHAT’

in a complex situation.
2. Relations Diagram – answer ‘ WHY’ in a too complex situation.
3. Matrix Diagram – answer ‘ WHICH’ in multiple alternatives.
4. Tree Diagram – answer ‘ HOW’ in critical situation.
5. Process Decision Program Chart (PDPC) – answer ‘ WHAT IF ‘
6. Arrow Diagram- is a simplified PERT chart, used for scheduling events and
identifying bottlenecks (Critical Path Methodology). It “when” questions. E.g.
‘when do we have to do the things we have chosen to do?’
7. Matrix Data Analysis: is the tool based on numerical data. It answers ‘where’
question e.g. ‘where’ in the data do we find various patterns?

It is true that the New Seven Tools are very useful for top and middle managements
for strategic planning, goal setting and problem Solving. But these tools are not a
replacement to the old seven tools. However, the basic utilizations are:
1. Used to organize abstract thinking about a problem
2. Used for determining causalities among parts of a problem
3. Planning tool
4. Used to organize knowledge in a matrix format
5. Principal components technique is performed on matrix data
6. Determining which processes to use by evaluating events and prospective
outcomes
7. Used to do ‘what – fifing’ on flow of process.

1. Affinity Diagram:

1. Relations Diagram:
 2. Tree Diagram:

3. Matrix Diagram:

O =1 O O =4 Principal
O =2 O X =5 O Subsidiary
=3very important
Seven QC Tools (old or new) are X in =6continuous improvement. They are
primarily associated with the steps in PDSA / PDCA cycle:
Evaluation Responsibilities
QC circle supporter
Site QC circle

Remarks
Section/Plant

Section/Plant
Practicability

Manager
Efficacy

Member
Leader
Rank

4th level means

from Tree diagram O O 1 O
4th level means
from Tree diagram O O 1 O Hold 4 times/month
4th level means
from Tree diagram O 3 O At every meeting
4th level means
from Tree diagram O 2 O
4th level means
from Tree diagram O X 5 O At least 3 times/year/person
4th level means
from Tree diagram O O 1 O O
4th level means
from Tree diagram 4 O
 4. Arrow Diagram:

5. Process Decisions Programme Chart:

6. Matrix Data Analysis:

Criteria Customer Acceptance Strength Importance Option
(most important) Cost Reliability (least important) Sum Score Ranking
Options
Design A
Percentage weight .40 .30 .20 .10
Rank 4 3 3 1
Importance score 1.6 .90 .60 .10 3.2 1 (tie)
Design B
Percentage weight .30 .40 .10 .20
Rank 3 4 1 2
Importance score .90 1.6 .10 .40 3.0 2
Design C
Percentage weight .25 .25 .25 .25
Rank 1 2 4 3
Importance score .25 .50 1 .75 2.5 3
Design D
Percentage weight 0.3 .10 .20 .40
Rank 3 1 3 4
Importance score .90 .10 .60 1.6 3.2 1 (tie)
Sum of weights 1.25 1.05 .75 .95
Average weight .31 .26 .19 .24
Criterion Ranking 1 2 4 3
 The applications of 7 management tools in PDCA and PDSA:

PDCA 8 steps solution 7 QC TOOLS 7 Management &

planning tools
PLAN 1. Perception of the Check sheet, Graph, Pareto KJ Method, Relations
problem Diagram, Process flow, diagram,
2. Select the theme histogram, scatter diagram, Matrix Diagram
3. Collect and analyze Cause and effect diagram
the data
4. Analyze the Causes

DO 5. Plan and implement the Tree Diagram,

solution Matrix Diagram
Arrowed Diagram
PDPC Diagram

CHECK 6. Evaluate the effects Check sheet, Graph, Pareto

Diagram, Process flow,
histogram, scatter diagram,
Cause and effect diagram

ACT 7. Standardize the solution Arrow diagram,

8. Reflection the process PDPC diagram,
KJ method

In competitive environment the task of any management level is very vast and complex.
To remain competitive and versatile an effective and efficient manager must have a
complete knowledge about Seven Management Tools (Old or New). By using these tools in
a group / team they can easily develop time bound continual improvement for long term
continuous improvement in an organization.
References:

1. Bedi, Kanishka. (2006). Quality Management. New Delhi: Oxford University Press.
2. Bhat, K.Shridhara (2002). Total Quality Management: Text and Cases. (First Edition).
Himalaya Publishing House: New Delhi.
3. Besterfield, D.H (2008). Total Quality Management. (Third Edition). New Delhi: Pearson
Education.
4. Juran, J.M and Gryna F.M (1987). Quality Planning and Analysis. New Delhi: Tata McGraw
Hill.
5. Juran, J. M. Gryna, F.M & Frank M Jr. (1970). Quality Planning and Analysis. New Delhi:
Tata McGraw Hill.
6. Gopalkrishnan, N (2012). Simplified Six Sigma: methodologies, tools and implementation. New
Delhi: PHI private Limited.
7. Schuler, Randall S. & Harris, Drew L. (1990). Managing Quality: The Primer for Middle
Managers. Massachusetts: Addison-Wesley Publishing Company.
8. Walton, Mary (1990). Deming Management at Work: London: Mercury Business Books.
9. Oakland John. S (2005). TQM – Text and Cases (Third Edition). New Delhi: Elsevier
Publication.
10. Charantimath, P. (2011). Total Quality Management (Second Edition) New Delhi: Pearson
Publication.
11. Rose J.E (2006). TQM: Text and Cases. New Delhi: Deep and Deep Publication limited.

Prepared by: PROF. DR. SHYAMAL GOMES // XISS, Ranchi, Jharkhand

Chapter – 3

Six Sigma and Poka Yoke

Dr. Shyamal Gomes

Introduction:

Sigma is a Greek alphabet denoted ‘Standard Deviation’, in statistics Sigma is the measuring
unit for variation. Variation is universal and different between expected and achieved values.
Variation is the cause of defect. ‘Zero defect, zero loss and zero accident’ is the objective of
TQM and goal is Total Customer satisfaction. To fulfill the objective and goal and produce the
world class product, reduce variation is the only productive concept in Industries. Six Sigma
focuses on improving quality (i.e. reducing waste) by helping organizations produce products
and services better, faster and cheaper. Six Sigma focuses on defect prevention, cycle – time
reduction and cost savings. Unlike cost cutting programmes that reduce value and quality, Six
Sigma identifies and eliminates costs which provide no value to customers. The cost of poor
quality (COPQ) is directly proportional to the sigma level. In the other words, the COPQ is
directly connected to the number of defects per million opportunities. For example, if an
organization possessing Sigma level four, the standard COPQ is 15%. It may goes on decreasing
with the increase in the sigma level till it becomes equal to six. At six sigma level, the same
organization can maintain COPQ less than 5%. This means the organization reduced the number
of defects from around 60,000 to 3.4 per million opportunities. For non- six sigma companies,
these costs are often extremely high. Companies operating at 3-4 sigma level typically spend
between 25-40% of their revenues fixing problems.

The pioneer of Six Sigma, Motorola, initiated its quality programme on 1987. It took the
company five full years to experience significant results from Six Sigma. Six Sigma has been
adopted as a quality philosophy by companies such as Texas Instruments, Allied Signal, Eastman
Kodak and ICICI in India.

What is Six Sigma?

Six Sigma is a statistical term that measures how far a given process deviates from perfection. It
is named after the process that has six standard deviations on each side of the specification
window. It is a disciplined, data – driven approach and methodology for eliminating defects.

Six Sigma is a management mandated and directed improvement program focused on

breakthroughs in financial performance and customer satisfaction. It is focus on core business
and customer needs. Six Sigma is a systematic method for process and product improvement
and for measuring performance variation. It is also a metric for evaluating performance quality
and a standard of excellence (3.4 defects per million opportunities).

Sis Sigma is the business strategy and a philosophy of one working smarter not harder. One
sigma gives a precision of 68.27%, two sigma of 95.45% and three sigma of 99.73% whereas six
sigma gives a precision of 99.9998%. Although 99.73% sounded very good, it slowly dawned on
companies that there was a tremendous difference between 99.73% and 99.9998%. For
example, for every million articles of mail, the difference was between 66,807 lost items and
3.4 lost items.

Therefore, what is Six Sigma exactly means:

• Six sigma is six standard deviation from the mean – break through strategy for reduce
variation as zero.

• Six sigma is a way of thinking and the results of the approach can yield a spectrum of
improvement choices based on the balance of values and risk.

• Six sigma is an internationally recognized management process focused on producing

high quality products or services to meet the customer’s need and satisfaction.

• Motorola describe Six Sigma as a standard methodology "for driving and achieving
transformational change within an organization. It is a business improvement process
that focuses an organization on customer requirements, process alignment, analytical
rigor, and timely execution."

Objectives of Six Sigma:

• To reduce variation (3.4 defects per million opportunities).

• To solving the problems in scientific manner. Six Sigma places an emphasis on the
DMAIC approach (define, measure, analyze, improve, and control) to problem solving.

• To develop the bottom line responsibilities towards continuous improvement.

Organizations using Six Sigma often utilize teams that are assigned well-defined projects
with a direct impact on the bottom line.

• To create importance on Business level strategy, upper management typically supports

Six Sigma as a key of business strategy.
Key Six Sigma Concepts:

At its core, Six Sigma revolves around the following key concepts:

1. Critical to quality (CTQ): Attributes most crucial for the customer.

2. Defect: Failing to deliver what the customer wants.
3. Process Capability: What one’s process can deliver.
4. Variation: What the customer sees and feels.
5. Stable operations: Ensuring consistent, predictable processes to improve what the
customer sees and feels.
6. Design for Six Sigma: Designing to meet customer needs and process capability.

The Six Sigma Quality Level:

According to Harry and Schroeder, Six sigma quality fundamentally means a breakthrough
strategy that can be interpreted as “a disciplined method of using extremely rigorous data
gathering and statistical analysis to identify the sources of errors and ways of eliminating
them”. Sigma is a letter in the Greek alphabet used by statisticians to measure the variability in
any process. Most commonly, it represents standard deviation, a statistic for measurement of
dispersion, i.e. spread about a mean or target value. A sample comparison of this dispersion is
given in table 1. Six sigma is about 1800 times better than three sigma. An important aspect of
the six sigma programme is total process characterization, which involves optimizing all
processes to a very high Cp and Cpk value. In fact six sigma represents a near defect free
situation or precisely 3.4 defects per million opportunities (Cp = 2.0, Cpk = 1.5).

Fig. 1.1 six sigma represents a near defect free situation or precisely 3.4 defects per million
opportunities (Cp = 2.0, Cpk = 1.5).
Table -1.1: Non conformance Rate & Process Capability when the process is centered (±2σ ) and
is off-centric ±1.5σ.

Sigma Specification Percent Non conformance Cp

Limit Conformance rate (ppm)
1σ ±1σ 68.7 317400 0.33
2σ ±2σ 95.45 45400 0.67
3σ ±3σ 99.73 2700 1.00
4σ ±4σ 99.9937 63 1.33
5σ ±5σ 99.999943 0.57 1.67
6σ ±6σ 99.9999998 .002 2.00

Table -1.2: Non conformance Rate & Process Capability when the process is off-centric ±1.5σ.

Sigma Specification Percent Non Cp Quality COPQ

Limit Conformance conformance Level
rate (ppm)
1σ ±1σ 30.23 6,97,700 - 0.169 Non 40-70%
2σ ±2σ 69.13 3,08,537 0.167 competitive 30-40%
3σ ±3σ 93.32 66,807 0.500 20-30%
4σ ±4σ 99.40 6,210 0.834 Industry 15-20%
5σ ±5σ 99.98 2330 1.167 average 10-15%
6σ ±6σ 99.9996600 3.4 1.500 World Class ˂10%

Above Fig. 1.1 shows a process that is normally distributed and cantered with the LSL & USL
established at ± 6 σ. For this situation 99.9999998% of the product or services will be between
specification and the non conformance rate will be 0.002 (ppm) represent process capability
index 2.0. But 6 σ philosophies the process rarely stays cantered. The centre tends to shift
above & below the target i.e. the Table - 1.2 shows a process that is normally distributed but
has sifted with a range of 1.5σ.

What is DPMO? A defect is defined as any part of a product or service that does not meet
customer requirements or causes dissatisfaction.

Opportunities are the total number of chances per unit to have a defect.

Hence , DPMO is calculated as:

Total number of defects detected

DPMO = ---------------------------------------------------------------------- x 1,000,000

Number of units produced × Opportunities of defects per unit

Example: Receptionist attending phone calls for a company. Customer Complaint: ‘I have
generally wait too long to speak to a representative; Opportunities of defects per unit: 1 per call
and total no. of defects: 99 telephone calls; total no. of units in the duration: 1,482 calls

99 X 1,000,000

DPMO = ------------------ = 66,802 ( this DPMO corresponds to what sigma level?)

1,482 X 1

DMAIC & DMADV

The six sigma methodologies essentially have two elements, which comprise the voice of the
customer (VOC) and voice of the process (VOP). There are many ways to explain how six sigma
works. However, the most common approaches are: 1. DMAIC (Define, Measure, Analysis,
Improve and Control) and DMADV (Define, Measure, Analysis, Design and Verify).

Both the methods have a lot of commonality, but their disparity also means that one cannot be
used for the other. Both methodologies are used to decrease the number of defects to 3.4 for
every one million opportunities. In order to achieve this, both methodologies use facts and
statistical tools for finding solutions to common problems – problems which are always related
to Quality.

DMAIC can be described as follows:

Define. The key to the first step is for your team to ask: What is important? What are the areas
that you see as a chance to make an improvement that will reach the organization's objectives
and grant the greatest outcome? To do this, use a SIPOC diagram. On a white board, write at
the top Suppliers, Inputs, Processes, Outcomes and Customers and under each heading define
that aspect of the process. Breaking down a process and its parts so everyone can see them
offers a good first step for gaining an objective appreciation of the process you wish to
improve.

Measure: Often we brainstorm on a process and make adjustments with the hope of improving
it before we've ever taken the time to measure how the process is doing in the first place. The
second step involves measuring the process you hope to improve. This allows the
establishment of a benchmark of current performance and the ability to differentiate between
variations in the process that are common and those that are of a special cause.

Analyze. Now, we get to finally ask what's wrong. Step three is traditionally where most folks
begin their improvement efforts. In this improvement effort, however, we enter this phase with
a clearly defined process and objective data to help us investigate the root cause of its issues.
This helps us avoid focusing attention on what we perceive to be the problem and aligns us
toward accurately targeted solutions.

Improve. The first three steps of the DMAIC process form the foundation for asking what needs
to be done. What are the possible solutions and how do we execute the best one? Now that
you have an informed perspective on the process and potential problems, you are in a good
position to assess various solutions, evaluate their potential success and develop a sound
implementation plan.

Control. The final phase of the process involves an often forgotten and misunderstood step in a
change process. Once a solution has been implemented and the data shows you are achieving
the desired improvement, how do you sustain the new level of performance? With
confirmation in hand that your improvement is effective, verifiable and reproducible, it's time
to mesh the new process into day-to-day operating practices. Doing so ensures that that the
new and improved process replaces its troubled predecessor. Only then will the process truly
be improved and the initial problem remains fixed.

There are some differences in the two methodologies: DMADV helps clarify client needs as it
relates to services or products. It also assists in matching the requests of the clients by creating
business models. DMAIC is utilized to clarify the work processes and how they fit with the
organizational goals. In addition, it creates work process enhancement to lessen or completely
eliminate defects.

The contrast shows that DMADV generally comes into the picture when the product is in the
initial stages and requires a maturing process in order to develop into what the customer
desires. Finally, DMAIC is useful when there is a service or commodity already established but
not rising to customer demands.

Six Sigma Deployments:

The core elements of implementing Six Sigma – training for Black Belts, Green Belts, Yellow
Belts, Ground School, Master Black Belt, Leading Six Sigma, RADD and Senior Executive Six
Sigma – to deliver Six Sigma skills throughout your organization.

Green belt Training:

This course is designed to enhance technical problem solving skills in line managers.
Participants will successfully complete a project while completing the classroom portion of the
training. Green Belt Certification takes candidates through a proven, step-by-step training
course based on the transfer of knowledge and process skills that leads to improved project
results through support of Black Belt initiatives and enhanced technical problem solving skills.
Courses are designed to include sophisticated adult learning theory and no-nonsense
evaluation of learning success, while supporting the framework for true cultural change within
an organization.

Manufacturing Green Belt Certification is a 6-8 week course involving 11 days of classroom
training. Classroom training consists of 3 modules, each followed by 2-3 week periods of “real
world” project-driven applications in the workplace.

Black belt Training:

The Black Belt is a key change agent for the Six Sigma process. Typically the "best of the best,"
these individuals lead teams working on chronic issues that are negatively impacting the
company’s performance. Black Belt Certification takes candidates through a proven, step-by-
step training course based on the transfer of knowledge and process skills that lead to
improved customer satisfaction, increased profit margins, shortened cycle times and reduced
costs. Courses are designed to include sophisticated adult learning theory and no-nonsense
evaluation of learning success, while constructing the framework for true cultural change within
an organization.

Typically, the entire Black Belt training investment can be justified by results from the first
project. The median return on each trained Black Belt is in and around $100,000 per project.

Master Black Belt (MBB):

As a leader, the MBB will have responsibility for overseeing projects with multiple Black Belt
and Green Belt participation that will significantly change the way the organization does
business.
MBB program delivers:
 Project Management skills to ensure project completion.
 Advanced tools and capabilities useful in daily activities.
 Mentoring skills to achieve results, transfer knowledge more effectively.

Lean and Lean Six Sigma:

"Lean," is a production practice that considers the expenditure of resources for any goal
other than the creation of VALUE for the end customer to be wasteful, and thus a target for
elimination. Working from the perspective of the customer who consumes a product or service,
"value" is defined as any action or process that a customer would be willing to pay for.
Essentially, lean is centered on preserving value with less work.
 Lean manufacturing is a management philosophy derived mostly from the Toyota
Production System (TPS) (hence the term ‘Toyotism’ is also prevalent) and identified as "Lean"
only in the 1990s

Therefore, Lean Six Sigma is a synergized managerial concept of LEAN and SIX SIGMA that
results in the elimination of the seven kinds of wastes/ muda (classified as Defects,
Overproduction, Transportation, Waiting, Inventory, Motion and Over-Processing) and
provision of goods and service at a rate of 3.4 defects per million opportunities (DPMO) .

The Lean Six Sigma concepts were first published in the book titled "Lean Six Sigma:
Combining Six Sigma with Lean Speed" authored by Michael George in the year 2002. Lean Six
Sigma utilises the DMAIC phases similar to that of Six Sigma.

Conclusion: Six Sigma is a comprehensive and flexible system for achieving, sustaining, and
maximizing business success. Close understanding of customer needs, disciplined use of facts,
data and statistical analysis, and an unending quest to improve and reinvent the business
processes drives this philosophy in terms of cost reduction, productivity improvement, market
share growth, cycle time reduction, zero defect process and culture change.

Now, the fundamental difference is the intent. TQM is for incremental and continual change,
and Six Sigma represents rapid, radical and dramatic change through innovation. It's not about
behavioral or cultural change; it's about intellectual engagement. The question is, how do you
get people intellectually involved to drive dramatic improvement? Tom Peters said that it's not
difficult to learn new things; what's difficult is forgetting old things. If you're having difficulty
forgetting the old method of TQM, then move beyond TQM to Six Sigma.

To summarize, Six Sigma is a TQM baseline system powered by a new approach. Six Sigma has
been the most successful methodology to date in introducing corporate improvement. Six
Sigma provides focused, real-world results. Therefore, the main contrast between Six Sigma and
TQM are as follows:

SIX SIGMA TQM

• Executive Ownership • Self directed work teams
• Business Strategy execution system • Quality Initiative
• Truly cross functional • Largely within a single function
• Focused training with verifiable return • Mass training with no quantified return on
on investment investment
• Business result oriented • Quality oriented
• Breakthrough Strategy • Continuous Improvement strategy
 Poka Yoke

"The causes of defects lie in worker errors, and defects are the results of neglecting those errors” – Shigeo Shingo.

Introduction:

Zero Defect is a performance standard, it means that no defect should allowed to occur in the
production / services, that even 99.999% six sigma quality confidence level norm is not acceptable.
Research observed that .002 or 3.4 defects occurs because of human error or repetitive mistakes.
Moreover, any mechanical hazard or error, it is because of human negligence or error. There are many
human errors like Forgetfulness, Misunderstanding Wrong identification etc. which are directly linked or
responsible for mechanical error and the most correlated one is inadvertent error (Careless attitude, not
alert and unwillingness. To stop these human and mechanical errors organization must develop a
culture of change (CoC) and maintained it forever.

The Field of quality management has been blessed with a no. of Gurus who have changed the way of
thinking in organization and almost displaced the existing body of knowledge in their time. The Japanese
Guru Shigeo Shingo, one of the industrial engineers at Toyota is one of them. He propounded the
concept of “Zero Quality Control” using “Poka Yoke” devices leading to Zero Defects. The Japanese word
– ‘poka-yoke’ has been derived from ‘yokeru’ (to avoid) and ‘poka’ (in advertent errors). Poka-yoke is
Japanese for mistake-proofing. These devices are used either to prevent the special causes that result in
defects, or to inexpensively inspect each item that is produced to determine whether it is acceptable or
defective.

A poka-yoke device is any mechanism that either prevents a mistake from being made or makes the
mistake obvious at a glance. The ability to find mistakes at a glance is essential because, as Shingo
writes, "Thecauses of defects lie in worker errors, and defects are the
results of neglecting those errors. It follows that mistakes will not turn
into defects if worker errors are discovered and eliminated
beforehand"[Shingo 1986, p.50]. He later continues that "Defects arise because errors
are made; the two have a cause-and-effect relationship. ... Yet errors will not turn into defects if
feedback and action take place at the error stage"[Shingo, 1986, p. 82]. We suspect that Shingo and
Deming would have a protracted discussion about whether workers or management are responsible for
defects. No resolution of that issue is undertaken here.

An example cited by Shingo early in the development of poka-yoke shows how finding mistakes at a
glance helps to avoid defects. Suppose a worker must assemble a device that has two push-buttons. A
spring must be put under each button. Sometimes a worker will forget to put the spring under the
button and a defect occurs. A simple poka-yoke device to eliminate this problem was developed. The
worker counts out two springs from a bin and places them in a small dish. After assembly is complete, if
a spring remains in the dish, an error has occurred. The operator knows a spring has been omitted and
can correct the omission immediately. The cost of this inspection (looking at the dish) is minimal, yet it
effectively functions as a form of inspection. The cost of rework at this point is also minimal, although
the preferred outcome is still to find the dish empty at the end of assembly and to avoid rework even
when its cost is small. This example also demonstrates that poka-yoke performs well when corrective
action involves trying to eliminate oversights and omissions. In such cases, poka-yoke devices are often
an effective alternative to demands for greater worker diligence and exhortations to "be more careful."

An example of a poka-yoke device at General Motors (GM) was described by Ricard [ Ricard, L.J., "GM's
just-in-time operating philosophy", in: Y.K. Shetty and V.M. Buehler, (Eds.)., Quality, Productivity and
Innovation. Elsevier Science Publishing, New York, 1987, pp. 315-329.]: "We have an operation which
involves welding nuts into a sheet metal panel. These weld nuts will be used to attach parts to the car
later in the process. When the panel is loaded by the operator, the weld nuts are fed automatically
underneath the panel, the machine cycles, and the weld nuts are welded to the panel. You must
remember these nuts are fed automatically and out of sight of the operator, so if the equipment jams or
misfeeds and there is no part loaded, the machine will still cycle. Therefore, we have some probability of
failure of the process. An error of this nature is sometimes not detected until we actually have the car
welded together and are about to attach a part where there is not a nut for the bolt to fit into. This
sometimes results in a major repair or rework activity."

"To correct this problem, we simply drilled a hole through the electrode that holds the nut that is
attached to the panel in the welding operation. We put a wire through the hole in the electrode,
insulating it away from the electrode so as it passes through it will only make contact with the weld nut.
Since the weld nut is metal, it conducts electricity and with the nut present, current will flow through,
allowing the machine to complete its cycle. If a nut is not present, there will be no current flow. We try
to control the process so that the machine will actually remain idle unless there is a nut in place." There
are two important approaches in Poka Yoke :

1. Control Approach

- Shuts down the process when an error occurs (automatic machine shut down.

- Keeps the “suspect” part in place when an operation is incomplete.

2. Warning Approach

- Signals the operator to stop the process and correct the problem (blinking light, alarm etc.).
The Concept:

According to Shigeo Shingo there are three different types of inspection methods in quality control:
judgment inspection, informative inspection, and source inspection.

Judgment inspection involves sorting the defects out of the acceptable product, sometimes referred to
as "inspecting in quality." Shingo agreed with the consensus in modern quality control that "inspecting
in quality" is not an effective quality management approach, and cautioned against it.

Informative inspection uses data gained from inspection to control the process and prevent defects.
Traditional SPC is a type of informative inspection. Both successive checks and self-checks in ZQC are
also a type of informative inspection. Successive checks were Shingo's response to the insight that
improvements are more rapid when quality feedback is more rapid [1986, pp. 67-69]. Work-in-process
undergoes many operating steps as it is moved through a manufacturing facility. Often inspections are
conducted at intermediate stages in the process. Shingo's concern was that the inspections may not
occur soon enough after production to give the best information necessary to determine the cause of
the quality problem so that it can be prevented in the future. By having each operation inspect the work
of the prior operation, quality feedback can be given on a much more timely basis. Successive checks are
having the nearest downstream operation check the work of the prior operation. Each operation
performs both production and quality inspection. Effective poka-yoke devices make such an inspection
system possible by reducing the time and cost of inspection to near zero. Because inspections entail
minimal cost, every item may be inspected. Provided that work-in-process inventories are low, quality
feedback used to improve the process can be provided very rapidly.

While successive checks provide rapid feedback, having the person who performs the production
operation check their own work provides even faster feedback. Self-checks use poka-yoke devices to
allow workers to assess the quality of their own work. Because they check every unit produced,
operators may be able to recognize what conditions changed that caused the last unit to be defective.
This insight is used to prevent further defects. Self-checks are preferred to successive checks whenever
possible.

Since the main difference between successive checks and self-checks is which work station performs the
inspection, in this research we do not distinguish between the two types of informative inspection. Both
successive and self-checks provide information "after the fact."

Source inspection determines "before the fact" whether the conditions necessary for high quality
production exist. (Note that Shingo's use of the term source inspection is not the practice of having the
buyer's representative inspect the quality of work-in-progress at the supplier's facility, which is also
called source inspection.) Shingo writes, "It had dawned on me that the occurrence of a defect was the
result of some condition or action, and that it would be possible to eliminate defects entirely by
pursuing the cause" [Shingo, 1986, p.50]. He further writes that "I realized that the idea of checking
operating conditions before the operations rather than after them was precisely the same as my
concept of source inspection" [Shingo,1986, p.51].

With source inspection, poka-yoke devices ensure that proper operating conditions exist prior to actual
production. Often these devices are also designed to prevent production from occurring until the
necessary conditions are satisfied. Norman [1988] refers to this type of device as a "forcing function."
The example from GM that "forces" the nut to be present before welding can occur is an example of
source inspection.

Source inspection, self-checks, and successive checks are inspection techniques used to understand and
manage the production process more effectively. Each involves inspecting 100 percent of the process
output. In this sense, zero quality control is a misnomer. These inspection techniques are intended to
increase the speed with which quality feedback is received. And although every item is inspected, Shingo
was emphatic that the purpose of the inspection is to improve the process and prevent defects, and
therefore is not intended to sort out defects (although in some cases that may also be an outcome)
[Shingo,1986, p. 57]. Shingo believed that source inspection is the ideal method of quality control since
quality feedback about conditions for quality production is obtained before the process step is
performed. Source inspection is intended to keep defects from occurring. Self-checks and successive
checks provide feedback about the outcomes of the process. Self-checks and successive checks should
be used when source inspection cannot be done or when the process is not yet well enough understood
to develop source inspection techniques.

In Shingo's seminal book on ZQC [1986], he criticized SPC and suggested that ZQC should supplant SPC
as the pre-eminent tool for defect elimination in quality control. His main argument against SPC was
that it is by nature an intermittent form of inspection, and therefore allows for some number of defects
to occur. He further argued that SPC is designed to maintain the current level of defects, rather than to
aggressively seek to eliminate them. In addition, Shingo claimed that "...a look at SQC methods as they
are actually applied shows that feedback and corrective action - the crucial aspects of informative
inspections - are too slow to be fully effective." [Shingo, 1986, p.68]

Given the fact that applications of SPC generally have substantial intervals between the taking of
samples, it seems reasonable to argue that feedback will be faster with source inspection and
informative inspection in ZQC. However, it is not clear that ZQC should be systematically faster than SPC
at insuring corrective actions. Indeed, according to Shingo [Shingo, 1986, p.71], "Defects will never be
reduced if the workers involved do not modify operating methods when defects occur." The willingness
to take corrective action is a function of the attitude and commitment of both managers and workers,
not an intrinsic attribute of a particular approach to quality management. Shingo's complaint about the
actual implementation of SPC may also apply to ZQC.

A detailed, academic treatment of the relationship between SPC and ZQC is presented in working papers
by Grout and Downs (1995). The essence of their conclusions is when used for informative inspection,
  ZQC is not as effective as SPC for defects that result from variance in measurement data
 ZQC is a special case of SPC for defects that result from variance in attribute data.
 ZQC's source inspection can be used effectively to eliminate mistakes and in conjunction with
SPC to eliminate the recurrence of special causes.

Therefore, Shigeo Shingo explained that for ZQC, the following three components have to be followed:

1. Source Inspection: In this form of inspection, factors causing defects are inspected rather than
the resulting defects.
2. 100% Inspection: Inexpensive poka yoka are used for automatic 100% inspection of items and
defective operating conditions.
3. Immediate action: where ever a mistake is detected, operations are stopped immediately and
resumed only upon corrective action.

However, Shigeo Shingo attaches importance of 60%, 30% and 10% respectively to the above three
components of ZQC.

Zero Defect Planning:

1. Explaining the concept and program to all the supervisors and preparing them to explain it to
their people.
2. Determination of the material required and assuring its preparation.
3. Deciding what method of launching a program will be the best for any particular operation.
4. Spelling out the functions that will be accomplished.
5. Examining the recognition policy of the industry and determining what type of recognition
should be used in praising improved performance.
6. Setting up the time schedules, and making the participants rehearse.
7. Identifying the error – cause program and making plans for its execution.

Now the question comes how we can implement Poka Yoke in our organization. Step by step processes
in applying Poka – Yoke are as follows:

1. Identify the operation or process based on a Pareto Analysis.

2. Analyse the five whys and understand the ways a process can fail.
3. Decide on the right poka-yoke approach such as using a shut out type (preventing an error from
being made) or an attention type (highlighting that an error has been made.)
4. Use the method of creating a checklist to ensure that all process steps have been completed
appropriately.
5. Try the method and see if it works.
6. Train the operator, review performance and measure success

But Poka Yoke works on 5 pillars as suggested by S. Shingo

1. Use Source Inspection. The application of control function s at the stages where errors,
mistakes may get converted into defects or accidents. That is, use control / warning
function at the origin of the defect.
 2. Always use 100% source inspection at least for attributes. It is better than sampling
inspection.

3. Minimize the time to carry out corrective actions when abnormalities appear or try to
speed up the feedback corrective actions.

4. Set up mistakes proofing devices (called poka yokes) i.e sensors, and transducers; limit
switches, metal detectors according to products and process requirements.

5. Respect workers and operators. They are human beings and not robots or
programmable machines.

Conclusion:

Six Sigma is a quality philosophy propounded by Motorola. It means making the processes so
capable that there are only 3.4 defects per million opportunities. Dr. Shigeo Shingo Propounded
(1986) the concept ZQC- using ‘Poka-Yoke’ devices leading to DEFECT = ZERO ( No defects). Poka -
yoke devices which are simple and directly linked with human behavior or habit (Quality is Just
ATTITUDE helps to develop good habits). It could be electrical, mechanical, procedural, visual,
human or any other term that prevents in correct execution of a process step. People makes
mistakes. Poka Yoke is about people. Therefore “Preventing the act of forgetting what you’ve
forgotten.”

Moreover, though Poka Yoka devices are simple and inexpensive, and used for 100% inspection of
all the items produced so that zero defects can be achieved, but this is not applicable for every
organization until and unless they able to develop the organization as a centre of excellence ( Total
Culture Change for continual improvement). Finally Poka Yoke follows three important rules:

1) Don’t accept defect (supplier point of view)

2) Don’t do defect – self.
3) Don’t pass defect - customer

List of References:
1. Bedi, Kanishka. (2006). Quality Management. New Delhi: Oxford University Press.
2. Bhat, K.Shridhara (2002). Total Quality Management: Text and Cases. (First Edition). Himalaya
Publishing House: New Delhi.
3. Besterfield, D.H (2008). Total Quality Management. (Third Edition). New Delhi: Pearson
Education.
4. Juran, J.M and Gryna F.M (1987). Quality Planning and Analysis. New Delhi: Tata McGraw Hill.
5. Juran, J. M. Gryna, F.M & Frank M Jr. (1970). Quality Planning and Analysis. New Delhi: Tata
McGraw Hill.
6. Gopalkrishnan, N (2012). Simplified Six Sigma: methodologies, tools and implementation. New
Delhi: PHI private Limited.
7. Singhal, Divya & Singhal K.R (2008). Implementing ISO 9001: 2000; Quality Management System.
New Delhi: PHI private limited.
8. Schuler, Randall S. & Harris, Drew L. (1990). Managing Quality: The Primer for Middle Managers.
Massachusetts: Addison-Wesley Publishing Company.
9. Walton, Mary (1990). Deming Management at Work: London: Mercury Business Books.
10. Oakland John. S (2005). TQM – Text and Cases (Third Edition). New Delhi: Elsevier Publication.
11. Charantimath, P. (2011). Total Quality Management (Second Edition) New Delhi: Pearson
Publication.
12. Rose J.E (2006). TQM: Text and Cases. New Delhi: Deep and Deep Publication limited.

-----------------------------xxxxxxxxxxxxxx------------------------------
Using the Cost of Poor Quality to
Drive Process Improvement
March , 2006

Presented by:
Dan Olivier, Certified Software Solutions, Inc.
([email protected])

Javad Seyedzadeh, Bayer Healthcare Diagnostic Division

([email protected])

Page - 1
Objectives: To Understand COPQ
1. What is COPQ
2. Elements of the model
3. Calculating COPQ
3. Real World Applications
4. Implementing Improvement actions

Page - 2
1.
1. COPQ
COPQ Introduction
Introduction

Page - 3
 The Cost of Poor Quality
(COPQ)
• Represents the difference between
– The actual cost of production or service

– What the cost would be if the process were

effective in manufacturing products that
• met customer needs and
• were defect free.

Page - 4
 COPQ Equation
COPQ = Costs (external failures + internal
failures + appraisal + preventive action)

Many times white collar poor quality costs are not

included in COPQ calculations (out of
conformance purchases, excess inventory, ...)
(Atkinson)

Page - 5
 Why Cost of Poor Quality?
• Speaks in the language of management, $$$
• Shows how profit is affected by quality
• Can prioritize quality improvement actions
• Serves as the impetus for actions

In the US about a third of what we

do consists of redoing work
previously “done”. (Juran)

Page - 6
 Related Quality Initiatives
• Six Sigma uses defect costs to quantify
savings
• Lean Manufacturing focuses on reducing
appraisal costs
• Design Controls focuses on early review
and test activities to find defects early
Defects are not free. Somebody makes them and
gets paid for making them. (Deming)

Page - 7
2.
2. Elements
Elements of
of the
the Model
Model

Page - 8
 Cost of External Failures
• Costs for defects found by the customer:
– MDRs,
– Reports of corrections and removals,
– Field service corrections,
– Field service bulletins, and
– Software patches.

Page - 9
 Cost for Internal Failures
Cost for defects found by R&D or Mfg
• Unclear requirements
• Improper design and implementation
• Improper design and implementation
• Incorrect test documentation
• Incoming inspection defects
• In-process testing defects
• Final acceptance testing defects
• Rework Page - 10
 Cost for Appraisal
Costs for checking defects including:
• Review of system specifications (R&D),
• Review & inspection during manufacturing
processes,
• Review of quality records, and
• Audits

Page - 11
 Cost for Preventive Action
Cost for initiatives to improve processes:
• Use techniques to better understand requirements
• Employ programs to reduce design defects
• Implement tools to reduce manufacturing defects
• Institute quality improvement programs

Page - 12
3.
3. Calculating
Calculating COPQ
COPQ

Page - 13
 Estimating the Numbers
Calculate full time personnel
– $200,000/year for full time personnel
– Assume 2000 hours per year
• 50 weeks x 40 hours
• $100/hour

Page - 14
 Sample Spreadsheet Worksheets
Labor Rates
Defect Costs (External and Internal)
1. Estimate the number of defects
2. Estimate the hours to address each defect
3. Estimate the cost per defect including various labor rates
4. Estimate any additional costs that may be incurred for defects
5. Estimate the total cost per defect category
6. Estimate the total cost for all defects for a year period
Appraisal Costs
1. Estimate appraisal labor costs
2. Estimate appraisal capital costs
3. Estimate appraisal total costs
Preventive Action Costs
1. Estimate total preventive action costs
Total COPQ Page - 15
4.
4. Real
Real World
World Applications
Applications

Page - 16
 Implementing COPQ
• With little or no financial system changes Medical Device
Manufacturers can
– Identify their external failure costs
– break these costs out by product, complaint symptom, part usage,
serial number, customer and region
– Pareto these costs and prioritize corrective actions
• Through appropriate statistical analysis we can;
– Identify any changes in rate for a particular issue and tie down the
timeline.
– Determine if differences exist in either serial numbers / lot numbers
or regions
• This additional information can dramatically reduce the time
spent investigating the root cause.

Page - 17
 Internal Failure: Safety Accidents
• Bayer considers the costs of work related accidents to be a cost of poor quality.
• Bayer has estimated that indirect costs are 6-8 times direct costs (replacement
workers, missed shipments/sales/development schedules, administrative costs,
OT).
• To improve in this area we initiated the Bayer Structured Safety & Health
program (BSSHP).
• One of the key elements within this program is a employee close call system
which encourages the identification and correction of potential hazards and
raises employee awareness and participation in safety.
Bayer Healthcare Safety performance

100
80 Performance in 2005
60 represents a 73% reduction
40
over year 2000
20
0 performance with estimated
2000 2001 2002 2003 2004 2005 YTD
savings of over $2 Million.
Global Injuries

Page - 18
 Customer Complaint Reduction
I Chart of Error Rate by Tool In this case Bayer has
2-Cavity 4-Cavity 4-Cavity-R
0.0014
48.5% reduction in reduced customer
complaints asociated with the
0.0012 new 4-cavity tool. A
reduction of approximately
complaints associated
0.0010 1,000 customer complaints
with this issue by
Individual Value

per year.
X= 0.000869
0.0008
over 48%. This
0.0006 UCL=0.000574
_
correction also had
0.0004
X=0.000448

LCL=0.000322
hard cost savings in
0.0002
2 4 6 8 10 12 14 16 18 20 22 24
excess of
Observation
$275,000.00
By utilizing our external failure data Bayer has been able to identify
high impact (cost and customer) issues and drive improvements in
these areas.

Page - 19
 Field Corrective Actions
• Field Corrective Action: A correction or removal for product no
longer under Bayer’s control.
• The costs associated with an individual FCA can range from
$20K to up to $30 Million for a full product recall.
• We have consistently reduced the number of FCAs every year
since 1999, and 2004 represented an 83% reduction in FCAs
over 1999.Bayer Healthcare FCAs
With an average cost of
70
60 $250,000 this equates to
50
40 over $13,000,000 in
30
20 savings through FCA
10
0
1999 2000 2001 2002 2003 2004
prevention.
FCAs

Page - 20
 COPQ: Data
• By analyzing the data already collected through our
quality system we have been able to determine that
– Worldwide part replacement costs = 3.4% of sales
– Worldwide complaint handling costs = 0.8% of sales
– Worldwide field service visit costs = 4.8% of sales
• Direct External failure costs total = 9% of sales.
• We have used this information to begin the process of
addressing our COPQ.

Page - 21
 Industry Example
COPQ as a percent of total costs Before After
• Failure cost 6.3% 4.0%
• Appraisal cost 2.8% 2.2%
• Preventive action cost 0.2% 0.6%
• Total 9.3% 6.8%
Savings
• Appraisal costs reduced $430,000
• Scrap and rework reduced $2,068,000
• Complaint costs reduced $536,000
Reference: Total Quality Control, Armand V. Feigenbaum, p.131
For many companies quality costs are 20% of sales (Juran)
Page - 22
5.
5. Driving
Driving Process
Process Improvement
Improvement

Page - 23
 Four Assumptions in the Model
1. There is a root cause for each defect
2. Defects are preventable
3. It is better to prevent than correct defects
4. Inspection/testing can be reduced for capable
processes

Investment in Preventive Actions can yield

significant savings!
Page - 24
 Trend Chart using COPQ Model
External Failures Costs
Internal Failures Costs
Appraisal Costs
$100K $300K
$90K Preventive Action Costs $270K
$80K $240K
$70K $210K
$60K $180K
$50K $150K
$40K $120K
$30K $90K
$20K $60K
$10K $30K

01/04 04/04 07/04 10/04 1/05 4/05 7/05

Cost Of Poor Quality = (cost of external failures) + (cost of internal failures) +

(cost of appraisal) + (cost of preventive actions)

Page - 25
 Improvement Activities:
Manufacturing
• Reduce errors with process design changes (poka-yoke)
• Addition of test fixtures to simplify manual processes
• Capability studies to define optimum parameter settings
• Enhance supplier controls to refine part specifications
• Redesign of device for improved manufacturability
• Addition of automated manufacturing equipment
• Enhanced automated test equipment
• Refinement of acceptance test criteria
• Real time automated test data trending
• Refinement of work instructions/formulations

Page - 26
 Improvement Activities:
Research and Development
• Redesign to reduce parts to improve reliability
• More system integration testing for design changes
• Closer participation of R&D in definition of manufacturing
processes
• Conduct early parallel design and test activities
• Use focused checklists to enhance review effectiveness
• Employ focus groups to better understand customer needs
• Use project post-mortems to identify root cause for historical
failures
• Redesign to facilitate future changes
• Implement a culture of defect prevention

Page - 27
 Quality Improvement Evolution

Level III Quality System:

Effectiveness of Quality System

Continuous improvement
emphasis

Level II Quality System:

Measures implemented to
track effectiveness

Level I Quality System:

Procedures established

Level 0 Quality System:

Ad hoc processes

Phases/ Time
Page - 28
 Summary: Why COPQ
• Add to the “toolbox” of the quality professional
• Shows that investment in quality yields dividends
• Defines priorities for improvement actions
• Facilitates a culture of continuous improvement

Page - 29
 For Further Information
Dan Olivier at Certified Software Solutions, Inc. (CSS)
[email protected]
(858) 675-8200

Javad Seyedzadeh at Bayer Diagnostics

[email protected]
(914) 524-2682
CSS specializes in providing quality system and validation
services for medical device and pharmaceutical
manufacturers.

Page - 30
 Numerical for Home work and solutions

Chapter – 1

1. ABC company in Kolkata, having quarterly turnover (sales) Rs. 10,000,00 reported the following
costs for first quarter:
a. Design Reviews costs : Rs. 60,000/-
b. Inspection & Tests : Rs. 40,000/-
c. Excess Inventory : Rs. 30,000/-
d. In-House Scrap : Rs. 20,000/-
e. Customer – Return : Rs. 10,000/-

Identify the Prevention cost, Appraisal Cost, Internal Failure Cost and External Failure cost of
that company. Through Juran-process organize the costs of Poor Quality for the year. Imagine
Total Sales turnover per quarter is = Rs. 10,000,00/-

Solution:

 Prevention Cost : Rs. 60,000/- ( Design Reviews Costs)

 Appraisal Cost : Rs. 40.000/- ( Inspection & Tests Costs)
 Internal Failure Costs: Rs. 50,000/- ( Excess Inventory + In-house Scrap)
 External Failure Costs: Rs. 10,000/- ( Custer – Return)

Now as per the Juran Process (Rule - 1:10:100) if the ABC company give much more attention on
prevention cost (make it double) the COPQ come down like ½, ¼, 1/8 as follows:

Cost Criteria 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Yearly Costs
Prevention Cost 60,000/- 1,20,000/- 15,000/- 7,500/-
Appraisal Cost 40,000/- 20,000/- 10,000/- 5,000/-
Internal Failure Costs 50,000/- 25,000/- 12,500/- 6,250/-
External Failure Costs 10,000/- 5,000/- 2,500/- 1,250/-
Total 1,60,000/- 1,70,000/- 40,000/- 20,000/- 3,90,000/-

Total Sales turnover per quarter = 10,000,00/- , so yearly sales turnover is 4x10,000,00 = Rs. 40,000,00/-

After following the 1:10:100 Rule, the company achieved COPQ = 3,90,000/- which is 9.75% exactly <
10% and supporting Six Sigma quality.

Impression: Continuous Prevention is the gate way of Quality.

 Chapter - 2

1. A restaurant conducts a survey to find the reasons for dissatisfaction of their customers. The
following results were obtained:
 Misbehaviour on part of waiter = 214
 Delay in processing the bill = 163
 Order mixed up = 92
 Taste of dishes not up to the mark = 71
 Unaesthetic ambiance of the restaurant = 58
Construct a Pareto diagram (with detail steps) and show the vital few and trivial many.
Solution:
SL Error categories Frequency Percentage Cumulative Remarks
percentage
1. Misbehaviour on part of waiter 214 36% 36 DATA is
2. Delay in processing the bill 163 27% 63 arranged
3. Taste of dishes not up to the mark 92 15% 78 in
4. Order Mixed up 71 12% 90 descending
5. Unaesthetic ambiance of the 58 10% 100 order
restaurant
Total 598 100% 100

600
100%
500
Cumulative Curve 90%
450
80%
400
70%
350
VITAL TRIVIAL 60%
300 FIEW MANY
50%
200
40%
150
30%
100
20%
50
10%

0 0
1 2 3 4 5
(ERROR CATEGORIES)
 Note : the diagram is just an example and not to the scale, You have to make it in graph paper and
give the detail steps to construct of Pareto Chart and its importance

Impression: If the restaurant takes action on those vital few the trivial many will be automatically
corrected and the customer will be satisfied.

2. “Cyber Crimes soar 350% in three years in India, but laws remain inadequate” - Draw the cause
and effect diagram (through why-why analysis) of Cyber Crimes and find out the possible
remedies that can do by the Corporates.
Solution:

Note: you have to elaborate about cause and effect diagram and how to construct the diagram (The
steps and importance for problem solving)

3. A production manager for a tire company has inspected the number of defective tires in five
random samples with 20 tires in each sample. The table below shows the number of defective
tires in each sample of 20 tires. Calculate the control limits and draw the p-chart.
Sample Number of Defective Tires Number of Tires in each Sample Proportion Defective

1 3 20 .15

2 2 20 .10

3 1 20 .05

4 2 20 .10

5 1 20 .05

Total 9 100 .09

#Defectives 9
CL p    .09
TotalInspected 100
p(1 p) (.09)(.91)
σp    0.64
n 20
UCLp  p  zσ  .09 3(.064) .282
LCLp  p  zσ  .09 3(.064) .102 0
4. A quality supervisor took five samples, each with four observations. All values are in mm. Use
this information to obtain three sigma control limits for the process. Draw the mean chart. ( It is
known from the past experience that the standard deviation of the process (σ) is 0.02 mm.)

1 2 3 4 5

1 12.00 12.12 12.08 12.12 12.00

2 12.10 12.13 12.08 12.16 12.14
3 12.08 12.10 12.14 12.00 12.12
4 12.08 12.11 12.15 12.16 12.12

Mean 12.065 12.115 12.1125 12.11 12.095

Solution X˭ = 12.065 + 12.115 + 12.1125 + 12.11 + 12.095 = 12.0995

5
Process Standard Deviation (Given) σ = 0.02

So, Sample SD ( σx ) = σ 0.02 = 0.02 = 0.01

√n √4 2

According to fomula : UCLx = X˭ + 3 σx (A2 ¯R) = 12.0995 + 3(0.01) = 12.1295

LCLx = X˭ - 3 σx (A2 ¯R) = 12.0995 - 3(0.01) = 12.0695
5) An inspector counted the no. of defective bearing magnets in each of 20 samples. Using
the following information, construct a control chart that will describe 99.73% of the chance
variation in the process when the process is in control. Each sample contained 100 magnets.
Sample No. of defectives Sample No. of defectives
1 14 11 8
2 10 12 12
3 12 13 9
4 13 14 20
5 9 15 11
6 11 16 10
7 20 17 8
8 12 18 12
9 13 19 10
10 20 20 16

Solution: Total number of defectives

P = ------------------------------------- x 100; p = 250/20 (100) = 0.125
Total Number of Observation

σp = √ p (1-p) / n

= √ 0.125 (1-0.125) / 100 = 0.033

UCL = p + 3 σp = 0.125 + 3 (0.033) = 0.224

LCL = p - 3 σp = 0.125 - 3 (0.033) = 0.026

0.224 UCL
0.20   
0.18 
0.16 
0.14   
0.125
0.12   
0.10    
0.08   
0.06 
0.04
LCL
0.026

2 4 6 8 10 12 14 16 18 20
Sample Number
 Chapter – 3:
Statistical Fundamentals

What is data, Information, Population & Sample?

 Data : means raw facts
 Information Means: Processed data
 Population : the whole set of data (from which observations are taken)
 Sample: A portion of the population taken to estimate the characteristics of the population
is called Sample.

What is Measure of Central Tendency?

 Measure of Central tendency of a distribution describes the central position of the data. The
commonly used measures are:
 Mean (X) : Average (for sample)
 Median (Md): The middle value in an ordered series (Ascending order);
 Mode: (Mo): The most frequently occurring number in a group

What are measures of Dispersion?

 The measures of dispersion describe how the data are spread out or scattered on each side
of the central line / value. The two commonly measures of dispersion are:
 Range (R) – In a series, the nos. or difference between largest & smallest value
(R=Xh-Xl).
 Standard Deviation (s) : is a numerical value that denotes the spread of the data
from the central value or mean value. Standard Deviation can be calculated by using
the following formula:

Where, s – standard deviation; ∑ - Summation; Xi – observed Value; X¯ - Mean Value;

n – Number of observed value

N
 Population Standard Deviation:

Where, σ - Population SD, μ – the population mean , N – Size of the Population

 Example: Determine the mean, median, mode, Range, Standard Deviation for the marks obtained
by seven students of class XII: 30, 35, 40, 40, 50, 50, 50.

Solution: X¯ = ( 30+35+40+40+50+50+50) = 295 = 42.1

7 7
Md = 40
Mo = 50
Range (R) = (50-30) = 20

SD (s) = (30-42)² + (35-42)²+ (40-42)² + (40-42)² + (50-42)² +(50-42)² + (50-42)² = 10.27

---------------------------------------------------------------------------------------------
7-1
What is Normal Curve / Distribution?

Normal Curve is one type of Population distribution. Normal Curve is a symmetrical, unimodal, bell
shaped distribution. For normal curve, the Mean , Median, Median & Mode will be the same value
and the figure can be display in the following (in 3 σ level)

Fig. 1.1: Standard Normal Curve (3 Sigma level)

Fig. 1.2 Normal Curves with same Mean but different Standard deviation (3 Sigma and 6 sigma level)
Now as per empirical rule, a normal distribution curve has the following properties:

 Mean ± 1σ will cover 68.27% values in data set

 Mean ± 2σ will cover 95.45% values in data set
 Mean ± 3σ will cover 99.73% values in data set
 Mean ± 4σ will cover 99.80% values in data set
 Mean ± 5σ will cover 99.98% values in data set
 Mean ± 6σ will cover 99.9998% values in data set

Fig. 1.3: Value of different standard deviation as per Empirical rule

Six Sigma Conversion Table: Non conformance Rate & Process Capability
when the process is centered (± 2σ ) :
Sigma Specific Percent Non Cp
ation Conformance conformance (Process
Limit rate (ppm) Capability)

1σ ±1σ 68.7 317300.0 0.33

2σ ±2σ 95.45 48500.0 0.67

3σ ±3σ 99.73 2700.0 1.00

4σ ±4σ 99.9937 63.0 1.33

5σ ±5σ 99.999943 0.57 1.67

6σ ±6σ 99.9999998 .002 2.00

(ppm – Product per million)

Six Sigma Conversion Table: Non conformance Rate & Process Capability
when the process is Off-centered by (± 1.5σ ) :
Sigma Specif Percent Non Cpi COPQ Quality
ication conforma conforma Level
limit nce nce Rate

1σ ±1σ 30.23 697700.0 -0.169 40 - Non

70% competit
ive
2σ ±2σ 69.13 308700.0 0.0167 30 -
40%

3σ ±3σ 93.32 66810.0 0.500 20 - Industry

30% Average

4σ ±4σ 99.3790 6210.0 0.834 15-

20%

5σ ±5σ 99.97670 2330.0 1.167 10 -

15%

World
6σ ±6σ 99.9996600 3.4 1.50 < 10% Class

Important Notes:
1. Six Sigma standards are about 1800 times (I,e , 6210/3.4) demanding than the old standard
of 4 sigma level.
2. The higher the Sigma level, creates an exponential reduction in defects. As sigma level
increases, product quality improves, the need for testing and inspection diminishes, costs go
down, cycle time decreases and customer satisfaction goes up.
3. It is important to understand that Six Sigma is a performance target that applies to a single
“Critical to Quality” (CTQ) characteristics, not to the total product. When an automobile
company described as “ Six Sigma” product, does not mean that only 3.4 automobiles out of
one million will be defective. Six Sigma means that within a single automobile, the average
opportunity for a defect of a CTQ is only 3-4 defects per million.
4. Critical to Quality, or CTQ, is a very important tool when designing a new product or service
for your business. CTQs are the measurable data that is needed on a product or service that
your customers have specified as being a very important requirement. CTQs will dictate the
processes involved, the risks, and just about everything that goes into the designing and
manufacturing of the product or creating the service. The need to establish CTQs is at the
core of why you are in business. In other words, it is extremely important. This information
will make sure your business will stay at the top, because what your customer deems as
important key requirements are being met. One tool that is crucial in defining the CTQs that
 are important is the QFD (Quality Function Deployment). This tool is a template that helps
prioritize the processes of the product or service to best meet the customer’s needs.

What is Process Capability?

Process capability is a production process’ ability to produce products within the desired
expectations of customers. The variability of a process can severely affect the quality of the
manufactured components. Now a days companies are aiming at ‘ Zero Defect’ in the
components manufactured. It is possible when the process capability of machines is increased.
The following 3 terms are very useful for understanding of the Process Capability:

 Tolerance or specifications: Tolerances indicate a range of values within which

individual units of output must fall in order to be acceptable. Design team
decides tolerances based on the customer requirements.

 Control Limits: are statistical limits up to which sample statistics such as means
and ranges can vary due to randomness of the process.

 Process Variability: Process variability is a measure that indicates the natural or

inherent, i.e random variability in a process. It is measured in terms of the
process standard deviation.

Process Capability Analysis:

The purpose of capability analysis is to determine whether the random variability of a process
output falls thee acceptable range of variability allowed by the design specification or not. If the
variability is within the allowed design specifications, the process is said to be capable. If
otherwise, the quality engineer must decide how to correct the situation.

To determine the process capability, the ±3 Sigma value of the process is compared to the
specifications that are expressed as an allowance deviation from the target value / mean).

LSL USL
Note: a stable process need not always produce an acceptable output. Before starting the
production, an engineer must ensure that the process is ‘in control’ (Stable) and can
produce within specification (Capable).

Process variability is an important factor in process capability analysis. It is measured in

terms of the process standard deviations. To determine the process is compared to the
specifications that are expressed as an allowance deviation from the target value. For
example, the ideal length of time to produce a component is 20 minutes, and an acceptable
range of variation around this time is ± 2 minutes. If the process has a standard deviation of
1.5 minutes, the process would not be capable because ± 3 standard deviation would be ±
4.5 minutes, which exceeds the specifications of ± 2 minutes.

Process Capability Calculation (Cp) :

specificat ion width USL  LSL
Cp  
process width 6σ
Example:

Calculate the process capability of the following machines using the data given in the table.
Determine which machines are capable if the specification is 1.00 mm to 1.2 mm (i.e USL =
1.2 mm, LSL = 1.0 mm).

Machine Standard Deviation (mm)

X 0.02
Y 0.07
Z 0.1

Process Capability of Machine – A

CpA = 1.2 – 1.0 / 6 ( 0.02) = 0.2 / 0.12 = 1.66

Process Capability of Machine – B

CpB = 1.2 – 1.0 / 6 ( 0.07) = 0.47

Process Capability of Machine – C

CpC = 1.2 – 1.0 / 6 ( 0.01) = 0.33

For a process to be capable, it must have a capability ratio (Cp) of at least 1.00 (Cp = 1.33) is
considered as better). Greater Capability ratio ensures that the output of a machine or
process will fall within design specifications. In the above example only machine A is
capable and the other two machines (B,C) are not capable of meeting the specifications.
 Cp and Cpk Index:

The Cp index is the ratio of the tolerance width to 6 Sigma.

specificat ion width USL  LSL
Cp  
process width 6σ
Cp can range between zero and infinity. Larger value of Cp indicates that the process
capability is better. If the process mean is centered between the specification limits, then a
Cp index of 1.0 indicates that 99.73% of the output will be within specifications limits.

The Cp index will be misleading if the process mean is not centered between the
specification limits; in such situations, the Cpk index should be used. Both the process
spread and location are taken care by the index Cpk.

 USL  μ μ  LSL 
Cpk  min  , 
 3σ 3σ 

Therefore, process capability index (Cpi) is a way of measuring that ability.

Cpi > 1.00 Process is capable of meeting customer

expectations.

Cpi < 1.00 Process is not capable.

◦ Cp assumes that the process is centered in the specification range but Cp index
will mislead the process mean which is not centered between the specification
limits always, in such cases the Cpk index should be used.

◦ Cpk helps to address a possible lack of centering of the process

Here we have to remember some important points:

1. When the process mean is centered , the Cpk value will be equal to Cp (Cpk = Cp)
2. When the process mean is actually outside the specification limits, the Cpk index will be
negative
3. Cpk value zero indicates that the process average is equal to one of the specification
limits.
4. Cpk value is always less than or equal to Cp.
 Numerical

1. A pen manufacturing company has identified three opportunities for a pen to be

defective: a blunt nib, leakage in the ink tube, and crack in the plastic shield of the pen.
In a batch of 100000 pens, the company has found 105 defects. Calculate the defects
per million opportunities.

Solution - 1
Opportunities = 3
Total no. of product produced = 100000 pens
Total Defect Detected = 105

So, DPMO = Total number of defects detected X 1000000

Number of units produced × Opportunities of defects per unit

= 105 X 1000000 = 350

100000 X 3
Impression: The process comes under 4.75 – 5.00 Sigma Level, need improvement.

2. An airline wants to compare two processes, landing and take-off against the baggage
handling. If average no. of bags per customer is 1.5 and the airline recorded 3 lost bags for
9000 passengers in one month, calculate the DPMO and the related Sigma quality level.

Prepared by Dr. Shyamal Gomes