MGSC 346 - Chp. 5 Quality Management and Six Sigma

Quality Decisions Required by Every Firm

the reputation that they want to have as far as delivered quality and relative price in industry

Quality Reputation

Higher delivered quality, higher relative price

Good Value = Q/P

Higher delivered quality, lower relative price

Cheap; economical

Lower delivered quality, lower relative price

Rip off; not sustainable

lower delivered quality, higher relative price

Quality Target

TQM 100% Quality, or Six Sigma 99.999% Quality, 99% target still allows for profits

Quality Standards for research and development

using to cater to what consumers want, ex. apple designers sought simplicity not complexity in the design of iMac, iPod, iPhone, and iPad.

Quality Standards for Consistency

Ensuring that customers are able to maintain an experience throughout different locations, ex. Motel 6, or fast food restaurants like McDonalds.

Quality Standards for Accountants

to determine what % defects can we have and still remain profitable?

Quality Standards for Lawyers

to determine what % defects we can have without too much legal risk?

Total Quality Management (TQM)

managing the entire organization so that it excels on all dimensions of products and services that are important to the customer

Goal is 100% quality

Costs of Quality (COQ)

Pay now or later

Appraisal Costs

costs of inspection, testing, and other tasks to ensure that the product or process is acceptable

Prevention Costs

sum of all the costs to prevent defects

Internal Failure Costs

to save $ here, results in higher external$

Costs for defects incurred within the system: scrap, rework, repair

External Failure Costs

to reduce this, have to increase internal $

Costs for defects that pass through the system. After item in marketplace

ISO 9000

Quality Management principles: (TQM, Six Sigma)

• Customer focus

• Leadership

• Involvement of people

• Process Approach

• Continual Improvement

• Factual approach to decision making

• Mutually beneficial supplier relationships

ISO 14000

environment management standards

• more than 350 standards for monitoring the quality of air, water, and the soil

• strategic approach - requirements of an environmental management system

• Development of profitable environment-friendly products and services; reduce waste assembly and packaging. reverse logics.

Six Sigma Quality

the quality goal of no more than 3.4 defects out of every million units

• the philosophy and set of methods companies use to eliminate defects in their products and processes

DMAIC Methodology (Define)

Identify customers and their priorities, a project suitable for Six Sigma efforts and CTQ’s (Critical-to-quality Characteristics)

DMAIC Methodology (Measure)

Determine ow to measure the process and how it is performing and identify the key internal processes that influence CTQ’s

DMAIC Methodology (Analyze)

determine the most likely causes of defects and identify the key variables

DMAIC Methodology (Improve)

Identify means to remove the causes of defects, confirm the key variables, identify the maximum acceptance ranges of the key variables

DMAIC Methodology (Control)

Determine how to maintain the improvements and put tools in place to ensure they they key variables remain within maximum acceptance ranges

Pareto Chart

80/20 rule 20% defects from 20% of causes

Cause-and-effect diagram (fishbone diagram)

can add $ to fix causes and % of defects by cause

Process Control Chart

Stds ± Tolerances UCL LCL

Producer’s risk

rejecting a good lot

Consumer’s Risk

Accepting a bad lot