Chapter 8

Process Improvement

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 Learning Objectives

1. Use quality tools for process analysis and problem-solving.

2. Describe and contrast corporate quality improvement programs.
3. Lead a team in a process improvement initiative.
4. Measure the capability of a process.
5. Describe the philosophy of lean service.
6. Conduct a data envelopment analysis (DEA).

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 Quality and Productivity Improvement Process

• The foundations of Deming’s teachings consisted of three principles:

 Customer satisfaction.
 Management by facts.
 Respect for people.

• Deming’s approach to quality recognises that checking or inspecting for

quality is too late, and instead, one should focus on the process.
• DeDeming’s approach, represented by a wheel, consists of four steps:
plan, select and analyse the problem; do, implement the solution; check
the results of the change; and act to standardise the solution and reflect on
the learning.

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 Quality Tools for Analysis and Problem Solving

• The quality tools to solve problems are as follows:

 Check Sheet
 Run Chart
 Histogram
 Pareto Chart
 Flowchart
 Cause-and-Effect Diagram
 Scatter Diagram
 Control Chart

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 Benchmarking

• The quality of a firm’s performance can be measured by comparing it with

the performance of other companies known for being “best in class,” a
process known as benchmarking.
• The benchmarking process involves five steps: (1) select a critical process
that needs improvement, (2) identify an organisation that excels in the
process, (3) contact the benchmark firm, make a visit, and study the
process, (4) analyse the findings, and (5) improve your process
accordingly.

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 Improvement Programs

• Personnel programs for quality assurance are as follows:

 Individual development.
 Management training.
 Human resources planning.
 Standards of performance.
 Career progression.
 Opinion surveys.
 Fair treatment.
 Profit sharing.

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• Deming’s 14-Point Program are as follows:
1. Create constancy of purpose for improvements of product and service.
2. Adopt the new philosophy.
3. Cease dependence on mass inspection.
4. End the practice of awarding business on price tag alone.
5. Constantly and forever improve the system of production and service.
6. Institute modern methods of training on the job.
7. Institute modern methods of supervising.
8. Drive out fear.
9. Break down barriers between departments.
10.Eliminate numerical goals for the workforce.
11.Eliminate work standards and numerical quotas.
12.Remove barriers that hinder hourly workers.
13.Institute a vigorous program of education and training.
14.Create a structure in top management that will push daily on the above 13 points.
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• The ISO 9000 series of quality management system standards is fast
becoming a de facto requirement for doing business in many industries,
although it is a voluntary standard.
• Certification to an ISO 9000 standard signals that the firm has a quality
management system that ensures consistency of output quality.
• ISO 9000 requires that businesses implement a three-component cycle:
 Planning.
 Control.
 Documentation.

• Six Sigma is a rigorous and disciplined methodology that uses data and
statistical analysis to measure and improve a company’s operational
performance by identifying and eliminating defects to enhance customer
satisfaction.
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• Six Sigma has become more than a quality system; it is a way of doing
business.
• Six Sigma is project-oriented, emphasising top-down support and
leadership that identifies targets of opportunity to maximise financial
benefits.
• Lean service is an extension of the lean principles pioneered by the Toyota
Production System (TPS). It focuses on waste elimination, continuous flow,
and customer demand pull. In manufacturing, it is also referred to as Just-
in-Time production.
• Lean service is an approach to achieving the perfect process. It has three
goals: the right purpose (value), the best method (process), and the
highest sense of accomplishment (people).

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• The following steps provide a guide to achieving a lean service:
1. Identify the key processes in your organisation.
2. Select the most important processes and order them by importance.
3. Analyse how the process can be changed to move toward perfection.
4. Ask what changes will be needed to sustain the “future state” process.
5. Implement the necessary changes to create the “future state” process.
6. Determine what you will do with excess people and assets.
7. Start the cycle again.

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