ie 3265 quality management in pom. topics managing a quality system total quality management...

IE 3265 IE 3265

Quality Management in POMQuality Management in POM

TopicsTopics Managing a Quality SystemManaging a Quality System

• Total Quality Management (TQM)Total Quality Management (TQM) Achieving Quality in a SystemAchieving Quality in a System

• Look early and oftenLook early and often• Make it a part of the processMake it a part of the process

The Customers Voice in Total The Customers Voice in Total Quality ManagementQuality Management

Quality Engineering – Taguchi’s Quality Engineering – Taguchi’s MethodsMethods• Loss FunctionLoss Function• Quality StudiesQuality Studies• Experimental ApproachesExperimental Approaches• ““Quality is Free” when we meet the Quality is Free” when we meet the

System NeedsSystem Needs

1. Maynard's Industrial Engineering Handb1. Maynard's Industrial Engineering Handbook, 5th ed., McGraw-Hill, 2001.ook, 5th ed., McGraw-Hill, 2001.

Total Quality Management Total Quality Management – consider this:– consider this:

TQM as a philosophy states that Quality is a TOP TQM as a philosophy states that Quality is a TOP Management responsibility with Customer Satisfaction Management responsibility with Customer Satisfaction as the primary target, continuous improvement as the as the primary target, continuous improvement as the credo, the way of action being based on FACTS and credo, the way of action being based on FACTS and not opinions, while every employee must be involved.not opinions, while every employee must be involved.1 1

The strategy is to concentrate on simplification and The strategy is to concentrate on simplification and improvement of processes and organizing action improvement of processes and organizing action around supplier-customer relations (internal as well as around supplier-customer relations (internal as well as external). Use of inter-disciplinary teams for external). Use of inter-disciplinary teams for improvement and problem solving, to monitor and improvement and problem solving, to monitor and ACT on internal and external quality information is ACT on internal and external quality information is critical. Each organization should continuously critical. Each organization should continuously benchmark themselves against their competition and benchmark themselves against their competition and train all employees in the philosophy of TQM!train all employees in the philosophy of TQM!

Total Quality ManagementTotal Quality ManagementAccording to FeigenbaumAccording to Feigenbaum

““Total quality control is an effective system for Total quality control is an effective system for integrating the quality development, quality-integrating the quality development, quality-maintenance, and quality improvement maintenance, and quality improvement efforts of the various groups in an efforts of the various groups in an organization so as to enable marketing, organization so as to enable marketing, engineering, production, and service at the engineering, production, and service at the most economical levels which allow for full most economical levels which allow for full customer satisfaction.”customer satisfaction.”

Deming's 14 points for Quality Deming's 14 points for Quality AchievementAchievement

1.1. Create consistence of purpose Create consistence of purpose toward improvement of product toward improvement of product or service, with the aim to or service, with the aim to become cometitive, stay in become cometitive, stay in business and provide jobs.business and provide jobs.

2.2. Adopt the new philosophy. We Adopt the new philosophy. We are in a new economic age. Live are in a new economic age. Live no longer with defective no longer with defective methods and poor workmanship.methods and poor workmanship.

3.3. Cease dependence on Cease dependence on inspection. Require statistical inspection. Require statistical evidence of process control from evidence of process control from suppliers.suppliers.


4.4. End the practice of rewarding End the practice of rewarding business on the basis of price. business on the basis of price. Reduce the number of suppliers.Reduce the number of suppliers.

5.5. Improve Constantly and forever. Improve Constantly and forever. Use statistical methods to detect Use statistical methods to detect the sources of problemsthe sources of problems

6.6. Institute modern aids for training Institute modern aids for training on the job.on the job.

7.7. Institute leadership. Improve Institute leadership. Improve supervisionsupervision


8.8. Drive out the fear to express ideas Drive out the fear to express ideas and report problemsand report problems

9.9. Break down barriers between Break down barriers between departmentsdepartments

10.10. Eliminate production quotas, Eliminate production quotas, slogans and exhortationsslogans and exhortations

11.11. Create work standards that Create work standards that account for qualityaccount for quality


12.12. Institute a training program Institute a training program in statistical methodsin statistical methods

13.13. Institute a program for Institute a program for retraining people in new retraining people in new skillsskills

14.14. Put everybody in the Put everybody in the company to work to company to work to accomplish the accomplish the transformation. The transformation. The transformation is transformation is everybody's job. everybody's job. Emphasize the 13 Emphasize the 13 proceeding points every proceeding points every day.day.

Make Quality An Integral Part Of Make Quality An Integral Part Of Manufacturing And ServiceManufacturing And Service

Develop and document good habits and Develop and document good habits and processesprocesses

Design Quality assurance (inspecting for Design Quality assurance (inspecting for acceptability) into the system so as to acceptability) into the system so as to put it close to the possible source of any put it close to the possible source of any problemsproblems

Check Quality Early and Often Check Quality Early and Often Maintain Quality Performance recordsMaintain Quality Performance records

• Identify & Correct problem processesIdentify & Correct problem processes• Develop (and nurture) highly reliable Develop (and nurture) highly reliable

product sources and suppliersproduct sources and suppliers• As quality improves reduce quality As quality improves reduce quality

inspections!!!inspections!!!

Summarizing:Summarizing:

Defects found early Defects found early are much less are much less costly that those costly that those found later in the found later in the product life cycleproduct life cycle

““Make it right the Make it right the First Time”First Time”

7 Tools of Quality Improvement7 Tools of Quality Improvement

Check sheets used to gather information on Check sheets used to gather information on problem under investigation – where and how problem under investigation – where and how muchmuch

Pareto Diagram – the so called 80-20 chart used Pareto Diagram – the so called 80-20 chart used to identify the “vital few” that cause the most to identify the “vital few” that cause the most problems – helps to focus the improvement problems – helps to focus the improvement studiesstudies

Histogram – shows stratification in productionHistogram – shows stratification in production

Scatter Diagram – used to identify relationships Scatter Diagram – used to identify relationships between variablesbetween variables

7 Tools of Quality Improvement7 Tools of Quality Improvement

Flow Charts – describes, visually, the Flow Charts – describes, visually, the process under study. Allows teams to process under study. Allows teams to focus on problem areas and structural focus on problem areas and structural issuesissues

Cause-and-effect diagrams – also called Cause-and-effect diagrams – also called fishbone diagrams relates relationships fishbone diagrams relates relationships between various factors influencing the between various factors influencing the problem under study.problem under study.

Control Chart – charts of SPC to that Control Chart – charts of SPC to that assess status of the problem under study.assess status of the problem under study.

An Aside – Quality and Process An Aside – Quality and Process Control in FoundryControl in Foundry

Lets look again at last week Economics Lets look again at last week Economics ProblemProblem

Your Homework saw only part of the Your Homework saw only part of the whole problemwhole problem

Those “separated” parts that didn’t Those “separated” parts that didn’t justify saving the machinejustify saving the machine

Total Quality Management suggest that Total Quality Management suggest that we strive for continuous improvement we strive for continuous improvement and delight our customers by exceeding and delight our customers by exceeding their expectationstheir expectations

Lets see what fixing quality and getting Lets see what fixing quality and getting smaller lots through in less time can do smaller lots through in less time can do for us.for us.

Machine Replacement analysis – After Tax Machine Replacement analysis – After Tax Basis with added QuickChange ToolingBasis with added QuickChange Tooling

When purchased, average “Lot Size” was When purchased, average “Lot Size” was 7500 molds and patterns took 45 minutes 7500 molds and patterns took 45 minutes to changeto change

Currently, production lot size has fallen to Currently, production lot size has fallen to 375 molds but with significant investment 375 molds but with significant investment pattern change is now 5 minutespattern change is now 5 minutes• Indicates 375/310 = 1.21 hr/pattern ‘run’ or Indicates 375/310 = 1.21 hr/pattern ‘run’ or

375 molds every 1.21+0.083 (1.29) hours with 375 molds every 1.21+0.083 (1.29) hours with pattern changepattern change

• Real Production rate is: 290 molds/hr (580 Real Production rate is: 290 molds/hr (580 parts/hr)! (fixing the horrors of JIT!)parts/hr)! (fixing the horrors of JIT!)

Machine Replacement analysis – Machine Replacement analysis – After Tax BasisAfter Tax Basis

““Product Issues”Product Issues”• Prod Costs (labor/mat’l/etc.) Prod Costs (labor/mat’l/etc.) = 7.00= 7.00• Avg. Sale PriceAvg. Sale Price = 8.00= 8.00• NOTE: in most JIT systems cost must drop 5 NOTE: in most JIT systems cost must drop 5

– 10% annually to customer!!!!– 10% annually to customer!!!! Annual Income Defender (Rev – Costs)Annual Income Defender (Rev – Costs)

• Costs: Pr. Cost (All Castings) + Q. Costs + M. CostsCosts: Pr. Cost (All Castings) + Q. Costs + M. Costs7*(580*18*250) + 63000 + 12000 = $18,345,0007*(580*18*250) + 63000 + 12000 = $18,345,000

• Revenue: Price * #Good Parts = Revenue: Price * #Good Parts = 8*(580*18*.971*250) = $20,274,4808*(580*18*.971*250) = $20,274,480

• Income: 20,274,480 - $ 18,345,000 = $1,923,460Income: 20,274,480 - $ 18,345,000 = $1,923,460

ATCF for this case w/ Quick ATCF for this case w/ Quick Change tooling added on:Change tooling added on:

YRYR BTCFBTCF DeprecDeprec Tax. IncTax. Inc TaxesTaxes ATCFATCF NPV at 12%NPV at 12%

00 -650000-650000 nana -103750-103750 3942539425 -610575-610575 -610,575.00-610,575.00

11 19294801929480 156250156250 17732301773230 -673827-673827 12556531255653 1,121,172.211,121,172.21

22 19294801929480 111250111250 18182301818230 -690927-690927 12385531238553 987,374.13987,374.13

33 19294801929480 111250111250 18182301818230 -690927-690927 12385531238553 881,601.74881,601.74

44 19294801929480 111250111250 18182301818230 -690927-690927 12385531238553 787,100.18787,100.18

55 19294801929480 5625056250 18732301873230 -711827-711827 12176531217653 690,896.09690,896.09

55 220000220000 220000220000 -83600-83600 136400136400 77,393.3677,393.36

PV@12%PV@12% $3,934,962.70$3,934,962.70

Present Worth Comparison -- NowPresent Worth Comparison -- Now

We are much closer to the We are much closer to the Challengers NPW of $4,422,000 Challengers NPW of $4,422,000 but still we still “make the but still we still “make the purchase”purchase”

Lets see the effect of fixing the Lets see the effect of fixing the Quality IssuesQuality Issues• Now we work 20 hour/dayNow we work 20 hour/day• Quality Iceberg costs fall to $7000 Quality Iceberg costs fall to $7000

to do spot inspections and pay to do spot inspections and pay warranty claimswarranty claims

• Production Quality increases to Production Quality increases to 99.5% good!99.5% good!

Machine Replacement analysis – After Tax Machine Replacement analysis – After Tax Basis with Quality Issuss ‘Fixed’Basis with Quality Issuss ‘Fixed’


Currently, production lot size has fallen to Currently, production lot size has fallen to 375 molds but without significant 375 molds but without significant investment pattern change is still 45 investment pattern change is still 45 minutesminutes• Indicates 375/310 = 1.21 hr/pattern ‘run’ or Indicates 375/310 = 1.21 hr/pattern ‘run’ or

375 molds every 1.21+.75 (1.96) hours with 375 molds every 1.21+.75 (1.96) hours with pattern changepattern change

• Real Production rate is: 190 molds/hr (380 Real Production rate is: 190 molds/hr (380 parts/hr)! (still experiencing the horrors of JIT!)parts/hr)! (still experiencing the horrors of JIT!)


““Product Issues”Product Issues”• Prod Costs (labor/mat’l/etc.) Prod Costs (labor/mat’l/etc.) = 7.00= 7.00• Avg. Sale PriceAvg. Sale Price = 8.00= 8.00

Annual Income Defender (Rev – Costs)Annual Income Defender (Rev – Costs)• Costs: Pr. Cost (All Castings) + Q. Costs + M. CostsCosts: Pr. Cost (All Castings) + Q. Costs + M. Costs

= 7*(380*20*250) + 7000 = $13,307,000= 7*(380*20*250) + 7000 = $13,307,000• Revenue: Price * #Good Parts = 8*(380*20*.995*250) Revenue: Price * #Good Parts = 8*(380*20*.995*250)

= $15,124,000= $15,124,000• Income: $15,124,000 20,274,480 - $13,307,000 = Income: $15,124,000 20,274,480 - $13,307,000 =

$1,817,000$1,817,000

ATCF for this case w/ Quality ATCF for this case w/ Quality Issues ‘Repaired’:Issues ‘Repaired’:


00 -650000-650000 nana -103750-103750 3942539425 -610575-610575 -610,575.00-610,575.00

11 18170001817000 156250156250 16607501660750 -631085-631085 11859151185915 1,058,903.501,058,903.50

22 18170001817000 111250111250 17057501705750 -648185-648185 11688151168815 931,779.32931,779.32

33 18170001817000 111250111250 17057501705750 -648185-648185 11688151168815 831,962.52831,962.52

44 18170001817000 111250111250 17057501705750 -648185-648185 11688151168815 742,781.93742,781.93

55 18170001817000 5625056250 17607501760750 -669085-669085 11479151147915 651,326.97651,326.97

55 220000220000 220000220000 -83600-83600 136400136400 77,393.3677,393.36

PV@12%PV@12% $3,683,572.60$3,683,572.60

Present Worth Comparison -- NowPresent Worth Comparison -- Now

We are close to the Challenger’s NPW of We are close to the Challenger’s NPW of $4,422,000 but still we “make the $4,422,000 but still we “make the purchase”purchase”

But, as a rational organization, why But, as a rational organization, why wouldn’t we consider doing both? Then:wouldn’t we consider doing both? Then:• We can work 20 productive hour/dayWe can work 20 productive hour/day• Quality Iceberg costs fall to $7000 doing spot Quality Iceberg costs fall to $7000 doing spot

inspections and to pay (a few) warranty claimsinspections and to pay (a few) warranty claims• Production Quality increases to 99.5% good!Production Quality increases to 99.5% good!• And our hourly production rate increases to an And our hourly production rate increases to an

average of 580 castings an houraverage of 580 castings an hour

Machine Replacement analysis – After Tax Machine Replacement analysis – After Tax Basis with added Q.Change ToolingBasis with added Q.Change Tooling


Currently, production lot size has fallen to Currently, production lot size has fallen to 375 molds but with significant investment 375 molds but with significant investment pattern change is now 5 minutespattern change is now 5 minutes• Indicates 375/310 = 1.21 hr/pattern ‘run’ or Indicates 375/310 = 1.21 hr/pattern ‘run’ or

375 molds every 1.21+0.083 (1.29) hours with 375 molds every 1.21+0.083 (1.29) hours with pattern changepattern change

• Real Production rate is: 290 molds/hr (580 Real Production rate is: 290 molds/hr (580 parts/hr)! (fixing the horrors of JIT!)parts/hr)! (fixing the horrors of JIT!)


““Product Issues”Product Issues”• Prod Costs (labor/mat’l/etc.) Prod Costs (labor/mat’l/etc.) = 7.00= 7.00• Avg. Sale PriceAvg. Sale Price = 8.00= 8.00

Annual Income Defender (Rev – Costs)Annual Income Defender (Rev – Costs)• Costs: Pr. Cost (All Castings) + Q. Costs + M. Costs Costs: Pr. Cost (All Castings) + Q. Costs + M. Costs

= 7*(580*20*250) + 7000 = $20,307,000= 7*(580*20*250) + 7000 = $20,307,000• Revenue: Price * #Good Parts = Revenue: Price * #Good Parts =

8*(580*20*.995*250) = $23,084,0008*(580*20*.995*250) = $23,084,000• Income: $23,084,000 - $20,307,000 = $2,777,000Income: $23,084,000 - $20,307,000 = $2,777,000

ATCF for this case w/ Fixed Quality ATCF for this case w/ Fixed Quality & Q. Change Investment& Q. Change Investment


00 -650000-650000 nana -103750-103750 3942539425 -610575-610575 -610,575.00-610,575.00

11 27700002770000 156250156250 26137502613750 -993225-993225 17767751776775 1,586,482.401,586,482.40

22 27700002770000 111250111250 26587502658750 -1E+06-1E+06 17596751759675 1,402,812.911,402,812.91

33 27700002770000 111250111250 26587502658750 -1E+06-1E+06 17596751759675 1,252,536.671,252,536.67

44 27700002770000 111250111250 26587502658750 -1E+06-1E+06 17596751759675 1,118,273.461,118,273.46

55 27700002770000 5625056250 27137502713750 -1E+06-1E+06 17387751738775 986,580.94986,580.94

55 220000220000 220000220000 -83600-83600 136400136400 77,393.3677,393.36

PV@12%PV@12% $5,813,504.73$5,813,504.73

Now we have final identified the Now we have final identified the capital source to achieve our goals!capital source to achieve our goals!

NPW of (totally) Fixed NPW of (totally) Fixed Defender is nearly $1.4M Defender is nearly $1.4M greater than the Challengergreater than the Challenger

Really, if I was investigating Really, if I was investigating expenditures, why wouldn’t I expenditures, why wouldn’t I focus on doing both?focus on doing both?

A RATIONAL ORGANIZATION A RATIONAL ORGANIZATION would investigate solving all would investigate solving all their problems before their problems before investing in expensive new investing in expensive new technologiestechnologies

Lets consider the issue of Productivity Lets consider the issue of Productivity Considering QualityConsidering Quality

We can define a processes Yield:We can define a processes Yield:• YYldld = I(%G) + I(1-%G)(%R) = I(%G) + I(1-%G)(%R)

I = #units startedI = #units started %G is good product %%G is good product % %R is %of defects that can be re-worked at added cost%R is %of defects that can be re-worked at added cost

• Per Station in a SystemPer Station in a System

Example:Example:• YYldld = 500(.94) + 500(1-.94).75 = 492.5 units on average = 500(.94) + 500(1-.94).75 = 492.5 units on average

• Given that direct Mfg costs are $57/unit and rework is ½ of this Given that direct Mfg costs are $57/unit and rework is ½ of this or $28.5or $28.5

• Unit cost of each product shipped is Unit cost of each product shipped is {K{KddI + KI + Krr(I(1-%G)(%R))}/Yield(I(1-%G)(%R))}/Yield

• Here: {57*500 + 28.5*22.5}/492.5 = $59.17/shipped unitHere: {57*500 + 28.5*22.5}/492.5 = $59.17/shipped unit

Product Yield in a “Multi-Stage” System Product Yield in a “Multi-Stage” System (we will neglect Rework for now)(we will neglect Rework for now)

YYldld = I(%g = I(%g11)(%g)(%g22)(%g)(%g33) … (%g) … (%gnn)) Looking at a 4 station line with the following Looking at a 4 station line with the following

quality achievements: quality achievements: St1: 94%St1: 94% St2: 78%St2: 78% St3: 92%St3: 92% St4: 87%St4: 87%

Starting with 500 pieces we only see:Starting with 500 pieces we only see: 500*.94*.78*.92*.87 = 293 pieces of good 500*.94*.78*.92*.87 = 293 pieces of good

through the system!through the system! But if I need 500 to ship?But if I need 500 to ship? Start with YStart with Yldld/{(%g/{(%g11)(%g)(%g22)(%g)(%g33) … (%g) … (%gnn)} = I)} = I Here I = 852 unitsHere I = 852 units


Given that a raw materials cost $100 here. Given that a raw materials cost $100 here. A Quality Team may ask how much they A Quality Team may ask how much they could invest in quality improvement along could invest in quality improvement along this line? – say to improve quality this line? – say to improve quality performance by ¾performance by ¾

After Improvement:After Improvement:• St1: %gSt1: %g11’ = 100-.06*.25 = .985 (98.5%)’ = 100-.06*.25 = .985 (98.5%)• St2: %gSt2: %g22’ = 100-.22*.25 = .945 (94.5%)’ = 100-.22*.25 = .945 (94.5%)• St3: %gSt3: %g33’ = 100-.08*.25 = .98 (98%)’ = 100-.08*.25 = .98 (98%)• St4: %gSt4: %g44’ = 100-.13*.25 = .9675 (96.75%)’ = 100-.13*.25 = .9675 (96.75%)

Compute a new I’ valueCompute a new I’ value


New I’ = New I’ = 500/(.985*.945*.98*.9675) = 500/(.985*.945*.98*.9675) = 566.53566.53

Still many defects (so we should Still many defects (so we should keep trying to improve) but this is keep trying to improve) but this is a raw mat’l savings of 285 unit a raw mat’l savings of 285 unit started/day compared to the started/day compared to the starting pointstarting point

Or a savings of about $28550 each Or a savings of about $28550 each day thusday thus

$28550*250 = $7.1M a year saved $28550*250 = $7.1M a year saved herehere

This is a big bunch of $’s saved This is a big bunch of $’s saved that can be invested in fixing the that can be invested in fixing the quality problems!quality problems!

Achieving Higher Quality LevelsAchieving Higher Quality Levels-- focusing on the Production System-- focusing on the Production System

Many times companies are tempted to Many times companies are tempted to spend more for higher qualityspend more for higher quality

However, Rarely can quality be However, Rarely can quality be bought or inspected in – it must flow bought or inspected in – it must flow from a good process where quality is from a good process where quality is made a part of everyone’s Jobmade a part of everyone’s Job

We must understand that tighter We must understand that tighter tolerances are a last resort that lead tolerances are a last resort that lead to non-linear extra costs and quality to non-linear extra costs and quality can be achieved through other meanscan be achieved through other means

We must analyze our products and We must analyze our products and processes to determine what factors processes to determine what factors actually lead to producing quality in actually lead to producing quality in the processes and get control of themthe processes and get control of them

Achieving QualityAchieving Quality Inspect EARLY and often – Inspect EARLY and often –

make it part of each make it part of each operators Dutiesoperators Duties

An operator is both a An operator is both a Customer of incoming Customer of incoming quality as well as a quality as well as a supplier of down-stream supplier of down-stream quality – they have a quality – they have a vested interest in a better vested interest in a better quality levelquality level

Never rest until its perfect! Never rest until its perfect! – which it can never be – which it can never be since the targets keep since the targets keep moving.moving.

Examining this Production Flow ChartExamining this Production Flow Chart

A total of 81 steps are documentedA total of 81 steps are documented Of this number, 50 include Of this number, 50 include

inspection (about 62%!)inspection (about 62%!) 22 of the 50 inspections are 22 of the 50 inspections are

performed during a processing performed during a processing operation (45%) so they add no (or operation (45%) so they add no (or little) cost to the processlittle) cost to the process

The ‘topmost’ step is incoming The ‘topmost’ step is incoming inspectioninspection

The last steps are inspection during The last steps are inspection during packing and analyzing Returned packing and analyzing Returned ItemsItems

Listening to the CustomerListening to the CustomerAn important part of TQM is determining what An important part of TQM is determining what

the customer wants. This is done viathe customer wants. This is done via Focus groupsFocus groups Customer interviewsCustomer interviews Customer surveysCustomer surveys

Downsides: customers are not in a position to Downsides: customers are not in a position to think of new possibilities, or customers think of new possibilities, or customers desires are technically impossible to achieve. desires are technically impossible to achieve. Also, surveys can lead to bias depending on Also, surveys can lead to bias depending on the manner in which questions are worded.the manner in which questions are worded.

The House of Quality is The House of Quality is used to match up used to match up customers desires with customers desires with capabilities during capabilities during product and process product and process designdesign

The Matrix allows a The Matrix allows a company to examine company to examine • Whats vs Hows Whats vs Hows

(relationship matrix)(relationship matrix)• Whats vs Whys Whats vs Whys

(Customer competitive (Customer competitive assessment)assessment)

• Hows vs Hows Hows vs Hows (Correlation Matrix)(Correlation Matrix)

• How Much vs Hows How Much vs Hows (Engineering (Engineering Competitive Competitive Assessment)Assessment)

QFD and the Customer’s voice: Using the QFD and the Customer’s voice: Using the House of QualityHouse of Quality

What about a Paper Maker?What about a Paper Maker? List Customer DesiresList Customer Desires Shows how well they Shows how well they

are met by us and are met by us and competitorscompetitors

Compares Customers Compares Customers desires to technical desires to technical Requirements (as Requirements (as defined)defined)

Weighs importance Weighs importance and technically and technically evaluates how well we evaluates how well we are doing are doing

Following from the customer to the Following from the customer to the ProductProduct

To employ the To employ the approach, approach, companies start by companies start by assessing needs of assessing needs of the customerthe customer

Then they feed the Then they feed the ideas forward to:ideas forward to:• Product DesignProduct Design• Process DesignProcess Design• Production DesignProduction Design

From Marketing all From Marketing all the way to the the way to the worker on the floorworker on the floor

Organizing for QualityOrganizing for Quality The quality function The quality function

should not be relegated should not be relegated to a single department, to a single department, but should permeate the but should permeate the entire organizationentire organization

The quality function must The quality function must have an ongoing contact have an ongoing contact with customers.with customers.

Must transcend functional Must transcend functional organizational boundariesorganizational boundaries

Must be overseen from a Must be overseen from a high level of the firm. high level of the firm.

Recognizing QualityRecognizing Quality Deming Prize. Established in Japan in Deming Prize. Established in Japan in

1951 by quality guru W. Edwards 1951 by quality guru W. Edwards Deming. The prestigious prize has been Deming. The prestigious prize has been awarded to Japanese companies almost awarded to Japanese companies almost every year since inception in several every year since inception in several categories.categories.

Malcolm Baldrige National Quality Malcolm Baldrige National Quality Award established by the U.S. Dept of Award established by the U.S. Dept of Commerce in 1987 recognizes Commerce in 1987 recognizes excellence in a) manufacturing excellence in a) manufacturing companies b) service companies and companies b) service companies and subsidiaries, and c) small businesses. subsidiaries, and c) small businesses.

ISO 9000. A certification program ISO 9000. A certification program established by the International established by the International Organization for Standards based in Organization for Standards based in Switzerland. Certification can cost Switzerland. Certification can cost upwards of $1 million for large upwards of $1 million for large companies.companies.

Designing for QualityDesigning for Quality

While much of quality control While much of quality control

deals with monitoring a deals with monitoring a

process or inspecting items process or inspecting items

after production, there is a after production, there is a

substantial literature on substantial literature on

means of designing quality means of designing quality

into the product directly. into the product directly.

Taguchi methods focus on: Taguchi methods focus on:

System DesignSystem Design

Parameter DesignParameter Design

Tolerance DesignTolerance Design..

Taguchi’s Loss FunctionTaguchi’s Loss Function Taguchi defines Quality Level Taguchi defines Quality Level

of a product as the Total Loss of a product as the Total Loss incurred by society due to incurred by society due to failure of a product to perform failure of a product to perform as desired when it deviates as desired when it deviates from the delivered target from the delivered target performance levels.performance levels.

This includes costs associated This includes costs associated with poor performance, with poor performance, operating costs (which operating costs (which changes as a product ages) changes as a product ages) and any added expenses due and any added expenses due to harmful side effects of the to harmful side effects of the product in useproduct in use

Exploring the Taguchi MethodExploring the Taguchi Method

Considering the Loss Considering the Loss Function it is Function it is quantifiablequantifiable• Larger is Better:Larger is Better:

• Smaller is Better:Smaller is Better:

• Nominal is Best:Nominal is Best:

21( )L y ky

2( )L y ky

2( )

:

m is the target of the

process specification

L y k y m

where

Considering the Cost of LossConsidering the Cost of Loss

k in the L(y) equation is k in the L(y) equation is found from:found from: 0

20

0

0

is cost of repair or replace

a product and must include

loss due to unavailability

during repair

is the functional limit on

y of a product where it would

fail to perform its function

half the

Ak

A

time

Loss Function Example: Loss Function Example: (nominal is (nominal is best)best)

We can define a processes We can define a processes average loss as:average loss as:

S is process (product) Standard S is process (product) Standard DeviationDeviation

YYbarbar is process (product) mean is process (product) mean

22L k s y m

Example cont. Example cont.

AA00 is $2 (a very cheap out) found by is $2 (a very cheap out) found by estimating that the loss is 10% of the estimating that the loss is 10% of the $20 product cost when a part is $20 product cost when a part is exactly 8.55 or 8.45 unitsexactly 8.55 or 8.45 units

Process specification is: 8.5Process specification is: 8.5++.05 .05 unitsunits

Historically: yHistorically: ybarbar = 8.492 and S = = 8.492 and S = 0.0160.016

Example Cont.Example Cont.

Average Loss:Average Loss:

If we make If we make 250,000 units a 250,000 units a yearyear

Annual Loss is Annual Loss is $64,000$64,000

2 22 0.016 8.492 8.500.05

800 .00032 $0.256

L

L

Fixing itFixing it

Shift the Mean Shift the Mean to nominalto nominal

Reduce Reduce variation (s = variation (s = 0.01)0.01)

Fix Both!Fix Both!

22800 .016 0 $0.2048

Annual Loss is $51200 about 20% reduction

L

22800 .010 .008 $0.1312


L

22800 .010 0 $0.08


L

Taguchi MethodsTaguchi Methods

Help companies to perform the Help companies to perform the Fixing!Fixing!

Conduct extensive Problem AnalysesConduct extensive Problem Analyses Based on Inter-disciplinary TeamsBased on Inter-disciplinary Teams Perform Designed Experimental Perform Designed Experimental

AnalysesAnalyses Evaluate Experiments using ANOVA Evaluate Experiments using ANOVA

and Signal-to noise techniquesand Signal-to noise techniques

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