Operations Management II (ORM2BJ[D]22-3)

Session 18 → Quality Management and Control

(Continued)
Cost Of Poor Quality (COPQ) – Types

◼ External failure costs Cost

◼ Internal failure costs Investment
◼ Appraisal costs
◼ Prevention costs Combined
◼ Hidden quality costs
Time/Effort

◼ Controversy over optimal COPQ level

◼ Juran → Optimal COPQ
◼ Crosby → Preventive COPQ
◼ Proposes Zero defect

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External Failure Costs

◼ Responding and resolving customer complaints

◼ Investigating quality problems
◼ Recalling products
◼ Warranty claims
◼ Liability claims
◼ Penalties for not conforming to rules/contracts

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Hidden Costs

◼ Sales opportunity loss

◼ Loss of customer goodwill
◼ Costs included in standards – tolerance stack up
◼ Extra indirect costs due to defects/errors
◼ Scraps/errors not reported
◼ Cost of poor quality within supplier company
◼ And many more

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Quality Management System

◼ Quality Management System (QMS)

◼ The mechanism through which an organization directs
and controls
◼ All the business activities
◼ Which have an impact on the quality
◼ Product quality standard vs. QMS standard
◼ International Organization for Standardization (ISO)
◼ ISO 9000 series of standards for QMS
◼ ISO is a “Documented quality management system”
◼ Not a “system of documents”
◼ What is the Goal – Improvement or Certification?

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ISO 9001:2008 – No longer valid
from September, 2018

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The ISO 9000 Series of Standards
◼ ISO 9000: 2015
◼ Fundamentals and Vocabulary (Normative references)

◼ ISO 9001: 2015

◼ Requirements
◼ Focuses on effectiveness and certifiable

◼ ISO 9004: 2018

◼ Guidelines to achieve sustained success
◼ Focuses on efficiency

◼ ISO 19011 : 2018

◼ Guidelines for quality and environmental auditing
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ISO 9001:2015 QMS – 7 Quality
Management Principles
◼ Customer Focus
◼ Leadership
◼ Engagement of people
◼ Process Approach
◼ Improvement
◼ Evidence Based Decision Making
◼ Relationship Management

◼ Removed (Present in 9001:2008)

◼ System Approach to Management
◼ Continual Improvement
◼ Mutually Beneficial Supplier Relationships
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Seven Basic Quality Tools – Ishikawa
Tool Pictorial Presentation Purpose
Type
Check Sheet Range Data Collection
Makes Process Steps
Flow Chart
Visible
Histogram Frequency Distribution

Pareto Diagram Trivial Many/Vital Few

Cause & Effect Root Cause Analysis

Scatter Diagram Correlation

Control Charts Controllability

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Six Sigma Process – Some Calculations

◼ Defect → Outside
◼ Lower/Upper Specification Limits (USL/LSL)
◼ Different from Control Limits (UCL/LCL)

◼ Defects Per Million Opportunities (DPMO)

= ((Total Defects) / (Total Opportunities)) × 1,000,000
◼ Defects (%)
= ((Total Defects) / (Total Opportunities)) × 100
◼ Yield (%)
= 100 – (Defects Percentage)
◼ Process Sigma (with allowable mean shift)
= NORM.S.INV(1 – Defects Fraction) + 1.5
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DPMO-Sigma Level Table

Process capability Process capability

DPMO DPMO
(Sigma level) (Sigma level)
1.0 691,000 5.2 108
2.0 308,200 5.4 48
4.0 6,210 5.5 32
4.2 3,470 5.6 21
4.4 1,870 5.7 13
4.6 968 5.8 9
4.8 483 5.9 5
5.0 233 6.0 3.4

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 Six Sigma Level – Without and With
Process Mean Shift

Improved
Current

Old

–6 +6

1.5 Shift
Standard deviation line

Short-term

Long-term

–6 +6
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Six Sigma Project

◼ Different from Six Sigma Process

◼ Objective
◼ Improve the process by removing long term problems
◼ Reach a lower DPMO
◼ Not necessarily → Getting Six Sigma standard

◼ Roles for Project Managers and Team Members

◼ Implementation leader
◼ Champion/Sponsor
◼ Master black belt
◼ Black belt
◼ Green belt
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Six Sigma Project Steps – DMAIC

◼ Define
◼ From potential problem identification to team
formation for selected project
◼ Measure
◼ From identification of key product parameter/process
characteristics to measurement of current state
◼ Analyze
◼ Identifies causes of variation by analyzing past/present
data
◼ Improve
◼ Remedy/ effectiveness of remedy/ implementation plan
◼ Control
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Six Sigma – Failure Factors

◼ Top management participation is missing

◼ Champion is not interested in a particular six sigma

project

◼ Impatience of Management / Employees

◼ Selection of wrong persons for the black belt’s role

◼ Resistance to change – not handled adequately

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Statistical Process Control

◼ Based on statistical theory of variation (dispersion)

◼ Defines process capability
◼ Establishes process control limits
◼ Controls process bases on periodic sampling

◼ Common variation
◼ Inherent in the production process
◼ Candidates for → Six Sigma Projects
◼ Assignable variation
◼ Caused by factors that can be clearly identified and
possibly managed

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