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9. The Basics of Six Sigma - Customer Requirements

Customer Needs Customers' needs change continuously. A product or service that meets one need may create new ones for the customer. Maslow's hierarchy of needs would be a good illustration of the advancement of needs. physical safety, love, esteem, and self awareness.As an individual's needs are fulfilled, he or she advances up the hierarchy. As the customer obtains a suitable product or service or their basic needs are fulfilled, they will look for new attributes. Customer needs could be as follows stated For example, a car dealership needs what the customer really wants, i.e., transportation's perceived needs What the customer thinks is desired is a new car's cultural needs status of the product, such as a BMW, unintended needs The customer uses the product in an unintended manner, such as when a BMW is used to haul concrete blocks. There are customer needs related to the use of a product. Convenience technology in today's world can bring about new products and services that were never dreamed of before. Safety-related products or services become available that customers need. The thinning of the ozone layer is creating a greater need for sun protection products product simplification Features in new products can be complicated to use. Products or services should help ease the conversion to their use. Communication, the need to be informed and to be given access to rightful information, and an open-door policy are a must for many situations. service for products Failures: When a product fails, what recourse is there, such as warranties, returns, exchanges, etc.? Does the customer have newly purchased cracks in their tennis racket cracks?What is the replacement policy? Customer Service Customers are expecting companies to have properly trained personnel on hand to handle complaints. The agent of the company should be empowered to satisfy the customer. At that point, customer needs are changing at a more rapid rate than ever before. They require new products or services to take the place of existing or inadequate ones. Voice of the Customer: Business and Employee Feedback The customer will have priorities as to which of their many expectations and needs will be met. Thus, a supplier has a problem determining how to know what their customers want and what the company's priorities should become. Services or products that are of high priority today may be unimportant five years later. This could be related to the sale of newspapers. They are high in importance at the moment of publication but not as high in value in five years unless that particular issue features something outstanding. Companies can make use of customer interviews, surveys, focus groups, phone surveys, mail surveys, audits, sales reports, or other data gathering tools to identify customer needs and expectations. Those same tools can be used by the customer to assign priorities to the quality attributes of the company's product or service. The tools do not have to be complicated but should ask the right questions. What attributes are of value? How desirable is each attribute? Using some form of rating? How do we compare with competitors' products? What other features or services would be of value? The use of priorities for customer needs and expectations can enable the company to respond in a more timely manner. Voice of the Customer: Business and Employee Customers Requirements voice of the customer and understanding of the needs of the customer are critical to the survival of most companies. The pace of change in today's economy mandates that a company cannot rely on their past knowledge of the customer. A detailed plan to gather and collect customer needs and perceptions can be described as listening to the voice of the customer, or VOC. This enables the organisation to make decisions on products or services. Identify product features and specifications Focus on improvementplans Develop baseline metrics on customer satisfaction identifycustomer satisfaction drivers An interesting concept to consider in this technique is to determine which reactive approaches are being used and then replace them with proactive approaches. We can use the following process for collecting VOC data: identify customers and their needs Collect and analyse reactive data such as complaints and service calls, and then consider proactive approaches such as interviews or surveys. Convert the collected data into customer needs. Sort out the most important attributes—that is, the critical characteristics. Obtain specifications based on the critical quality characteristics. Not only can VOC input be useful in product and process design, it can also be critical in Six Sigma teams, project selection, and measurement. Critical to Quality, or CTQ tree. One technique that is useful in the Six Sigma Problem Definition stage is the construction of a critical-to-quality tree. This tool focuses on the key metrics of customer satisfaction. A CTQ tree will translate the initialcustomer requirements to numerical or quantified requirementsfor the product or service. These are the detailed, critical requirements that the organisation must satisfy. These can be regarded as key results of the process. The development of a CTQ tree would go from the general requirement to the specific one, or from hard to measure to easy to measure. In general, moving from need to drivers to CTQs will require two or three levels. The creation of the CTQ tree involves the followingsteps Identify the customer, for example, a customer at a fast food restaurant. Identify the customer's need. For example, a hungry customer orders a meal. Identify the first set of basic requirements of the customer as measures of effectiveness and efficiency. The measures could be promptness of delivery, price, and good taste. Progress further with more levels as needed. Determine if anything additional is needed for the breakdown of the measures. Validate the requirements with the customer The CTT is reviewed with the customer to ensure that critical requirements are understood. The Cano model is also referred to as Canoanalysis. It is used to analyse customer requirements. Noiyaki Kano is a Japanese engineering consultant whose work is being used by a growing number of Japanese and American companies. The model is based on three categories of customerneeds dissatisfiers or basic requirements or must BES. The customer expects these basic requirements as part of the total package. If the basic requirements are not present, the customer will be unhappy. For American tourists travelling to a foreign country, say, China, the expectations are that the travel facilities there are as good as in the United States. When the customer's requirements are met, satisfying or variable requirements or more is better. The sooner it is met, the better. The tourist taking a Caribbean cruise expects a weekof entertainment and food at a reasonable price. Delighters or Latent Requirements These are features or services that go beyond the expectations of the customer. for the tennis fan who purchases a ticket to the US. Open, the basic requirements would at least be to see some players in competition and not get sunburned. Imagine meeting these expectations and then being able to have lunch or dinner with some players as part of the experience. This would be a delight. Competition in today's environment raises the basic expectations of all customers. The standards of a happy customer continue to rise. What was once considered a delightor mayin time, turn into a basic Satisfyer. The organisation has to be aware of the customers' changing needs and move to improve their own performance. Improvement projects can often be selected from among the satisfying and lighter categories. Most companies in a competitive environment would not be around long enough to tackle the issue of basic requirement issue.quality, function, deployment quality Function Deployment, or QFD, is a tool that is sometimes referred to as the voice of the customer or as the house of quality. Quality function Deployment has been described as a process to ensure that the customer's wants and needs are heard and translated into technical characteristics. QFD is a tool for the entire organisation to use. It is flexible and customised for each case and works well for manufactured products and in the service industry. Various United States companies, mostly automotive, have applied the principles of QFD to their product design process. The collection of customer wants and expectations is expressed through the methods available to almost any organization: surveys, focus groups, interviews, trade shows, hotlines, etc. The House of Quality is one technique to organise the data. The possible benefits of using the QFD process are that it creates a customer-driven environment, reduces the cycle time for new products, uses concurrent engineering methods, reduces design to manufacturing costs with fewer changes, increases communications through cross-functional teams, creates data for proper documentation of engineering knowledge, establishes priority requirements, and improves quality. The House of Quality is flexible and customised for each situation. Each organisation will develop its own guidelines. However, the basics of QFD will remain the same: hearing the voice of the customer and being proactive in the design of products to meet customer needs. Simplified Approaches The Quality Function Deployment, or QFD, approach is a rigorous process that requires considerable time and effort to implement. Some situations do not require all of the outputs of a formal QFD. Time pressures may force a quick resolution in these cases, but a simplified approach using a cause and effect matrix or perceptual map can be effective. Cause and Effects Matrix A cause-and-effects matrix can help prioritise the importance of key process input variables, or Kpivs. To construct a cause and effect matrix, list the key process output variables, or Kpovs, for the process. Assign a priority number for customer importance to each KPOV, from one, which is low, to ten, which is high. Place this number with the KPOV identifier in the cells across the top of the matrix. List the kPIVs that may cause variability or nonconformance in the process in the cells down the column on the left side of the matrix. Assign by team consensus a number from one for low to ten for high for the effect each KPIV has on each KPOV in the appropriate cells in the matrix. Multiply the KPOVprocess priority value from the top row by the Kpiveffect value in each cell and sum across the row to compute a total for the Kpiv and reach agreement on which Kpivs should be prioritized. Results from a cause-and-effect matrix can direct efforts toward listing and evaluating Kpovs in a capability summary. listing and evaluating Kpis's control plan summary. Listing and investigating Kpis'in An, FMEA. This simple matrix can provide a rapid overview of the most important KPOV-KPI relationships and help determine critical customer requirements through perceptual maps. The following steps describe how to determine the appropriate questions to help quantify and prioritise the needs of the customer. Conduct brainstorming sessions to identify a wishlist of features and/or problem resolutions. Rank the brainstorming session items and consider the highest-ranking items for possible customer survey questions. Construct the set of questions, being careful not to bias responses on customer satisfaction or customer importance with the wording, and collect a numerical ranking.

10. The Basics of Six Sigma - Roles and Responsibilites

Six Sigma Roles and Responsibilities six SigmaRoles Many organisations have implemented the following roles in their Six Sigma programs: blackbelts, executive sponsors, master black belts, champion green belts, and process owners. Descriptions of each role are provided in later slides in this session. Six Sigma Roles and Responsibilities Six Sigma black belts are most effective in full-time process improvement positions. The term "black belt" is borrowed from the martial arts, where the black belt is the expert who coaches and trains others as well as demonstrates a mastery of the art. In a similar way, Six Sigma blackbelts are individuals who have studied and demonstrated skill in the implementation of the principles, practices, and techniques of Six Sigma for maximum cost reduction and profit improvement. Black belts typically demonstrate their skills through significant financial improvement and customer benefits on multiple projects. Black belts may be utilised as team leaders responsible for measuring, analyzing, improving, and controlling key processes that influence customer satisfaction and/or productivity growth. Black belts may also operate as internal consultants, working with a number of teams at once. They may also be utilised as instructors for problem-solving and statistics classes. Black belts are encouraged to mentor green belts and black belt candidates. Potential black belts often undertake four weeks of instruction over a three- or four-month period. A set of software packages can be used to aid in the presentation of projects, including Excel or Minitab. For the statistical portions, specific elements will differ, but all stress and understanding of variation, reduction, training, and project management apply. Black belts often receive coaching from a master black belt to guide them through projects. Black belts have the following duties in their company: mentors have a network of Six Sigma individuals in the company: teachers train local personnel, coaches provide support to personnel, and local projects Identifier: discover opportunities for improvement. Influencer: be an advocate of Six Sigma tools and strategy. Master Black Belts in Six Sigma Master black belts are typically in full-time process improvement positions. They are first and foremost teachers who mentor black belts and review their projects. Selection criteria for master black belts includes both quantitative skills and the ability to teach and mentor. For master black belt recognition, an individual must be an active black belt who continues to demonstrate skill through significant positive financial impact and customer benefits on projects. The ability to teach and mentor is evaluated by reviewing the number and calibre of people they have developed. Teaching may also be exhibited in classroom environments. Six Sigma green belts are not usually in a full-time process improvement position. The term "green belt" is also borrowed from the martial arts, referring to an individual who has mastered the basics but has less experience than black belts. Green Belts must demonstrate proficiency with statistical tools by using them for positive financial impact and customer benefits. Individuals may remain green belts or, with experience, they may become black belts. Green belts operate under the supervision and guidance of a black belt or master black Beltexecutive Sponsors' executive sponsorship is a key element of an effective black belt program. Executive leadership sets the direction and priorities for the organization. The executive team is comprised of the leaders that will communicate, lead, and direct the company's overall objectives towards successful and profitable Six Sigma deployment. Executives typically receive training that includes a Six Sigma programme overview, examples of successful deployment, strategies, and tools and methods for definition, measurement, analysis, improvement, and control. Champions and Process Owners Six Sigma champions are typically upper-level managers that control and allocate resources to promote process improvements and black belt development. Champions are trained in the core concepts of Six Sigma and deployment strategies used by their organization. With this training, Six Sigma champions lead the implementation of the Six Sigma program. Champions also work with black belts to ensure that senior management is aware of the status of Six Sigma deployment. Champions ensure that resources are available for training and project completion. Process Owners Key processes should have a process owner. A process owner coordinates process improvement activities and monitors progress on a regular basis. Process owners work with black belts to improve the processes for which they are responsible. Process owners should have basic training in the core statistical tools but will typically only gain proficiency with those techniques used to improve their individual processes. In some organizations, process owners may be Six Sigma Champions. Summary: Basics of Six Sigma In this session, you learned about the following What do the terms Six Sigma mean? What is the general history of Six Sigma and continuous improvement? What are the deliverables of a Lean Six Sigma project? What is the problem-solving strategy y equals? What are the voices of the customer, business, and employee? What are the different SixSigma roles and responsibilities? Now, you should know the details of what Six Sigma is, how it originated, its deliverables, its strategy, the voice of customers and stakeholders, and roles and responsibilities.

11. The Fundamentals of Six Sigma - Overview and Objectives

The Fundamentals of Six Sigma Section Overview and Objectives By the end of this phase, you will understand what a process is and what critical to quality characteristics, or Ctqs, are. What is the cost of poor quality or CoP Q what is a predominantlysis or the 82 20rule, which are basic six sigma metrics. The fundamentals of six processes are definable portions of a system or subsystem that consists of a number of individual elements, actions, or steps. A process has a set of interrelated resources and activities that transform inputs into outputs with the objective of adding value. Business Processes A brief description of common business functional processes includes the following HumanResources The human resources, or HR, department is responsible for an analysis of the needs and training of the workforce, employee turnover analysis, absenteeism analysis, and attitude surveys. In addition, the HR department may recruit, select, and hire people for the organization. Engineering as a Support Service Production Engineering is the problem-solving arm of the company. The engineering department should be proactiveor always searching in their problemsolving. Activities the planning of new equipment orprocesses is a must for this department. Sales and Marketing It is up to sales and marketing to develop effective plans to identify customers and markets for the company's current products and services and to identify wants and needs for new products. They should work with engineering in order to pass along customer ideas or desires. The development of a marketing plan helps guide the production plan. Finance In many plants, the financial department includes the accounting department. The accounting function compiles monthly statements and the profit or loss statements for the company. A standard cost system should be in place so that data can be collected and based against it. Budget forecasts, capital project requests andexternal funding can also be coordinatedby the finance department. Product Liability In the manufacture of certain products, there are numerous legal ramifications. The theories based upon breach of warranty have a statutory basis in the Uniform Commercial Code. Product safety requirements and labelling laws not only protect the consumer but also should reduce the company's liability risk to the company.Manufacturing is an activity associated with companies that manufacture a product or products. Manufacturing takes designs from engineering, schedules from planning, and assembles and tests the company's products. For a service organization, this function is replaced by the personnel performing the service. Safety and Health The safety and health department aids the company in complying with local, state, federal, and industry regulations. The best known safety agencies include OSHA, state safety agencies, NFPA, etc. These agencies impact the establishment of a safety program, safety committee, and special safety task forces for the company. Legal and Regulatory A legal department or attorneys on retainer may be necessary to handle legal matters, especially in the very litigious society of today. A review of purchase agreements, land contracts, leases, right-of-ways, tax abatements, economic impact grants, et cetera are examples. Research and Development or R amp Dresearch and development activities are critical forthe future of the company. The customer is satisfied for a certain time span with the existing product or service, but eventually the customer will want a new and improved product. Interaction with the marketing function and customers is needed to generate new ideas and products. Purchasing and securing new, proper raw materials at the right time is a basic requirement of the purchasing department. They must find ways to reduce the number of corporate suppliers without increasing the risk of shutting down lines due to a lack of product. The forming of alliances and partnerships among suppliers and customers should always be of concern. It or Mis the information technology or Itor management information systems or misfunction is akey ingredient in the factory of the future. Many companies have already exploited information technology. Some of the benefits of It or Mis include electronic data interchange with customers and suppliers, electronic email for communications, bar coding for all products, data collection for analysis, use of personal computers or PCs, online order status, and real-time inventory. Production Planning and Scheduling Production Planning and Scheduling is a department that helps to coordinate the flow of materials throughout the plant. It tracks the levels of materials and inventory schedules. The product tracks the product and informs customers and suppliers of progress. Quality. The quality department has but one function in the corporation, which is to coordinate the total quality effort of the company and direct the quality assurance activities. An environmental department separate from safety and health is desirable. The proliferation of new regulations makes this a very volatile and difficult field. What was permissible in the past can be deemed a violation today. The impact of the Clean Air Act is presently a concern. as is effluent water. The Environmental Protection Agency, or EPA, has jurisdiction over many of the emissions from a company. A technology department is a luxury that many large companies can afford. This department is capable of scanning magazines, journals, trade shows, conferences, patent applications, and libraries looking for new products and technology. Such an arrangement offers a competitive advantage. Servicing: Servicing relates to either manufactured or sold products or the servicing of client accounts. For nonmanufacturing companies, servicing is responsible for fixing problems with the product and ensuring that customers are satisfied. Business process management, or BPM, is a fundamental concept of Six Sigma. Efforts to improve individual or local process components are replaced by systematic methods to understand, control, and improve—or even optimize—overall business results. These methods have evolved from the basic tenets of quality and continuous improvement to address specific business objectives. Quality, in general terms, is defined as a product or service that provides value and enjoys a sustainable market. In order to help us understand, control andimprove the business process, he described the familiarsupplier process customer model with several key concepts. Process inputs, controls, and outputs are interdependent. Statistical methods can improve process control and guide improvements. Process feedback can be used to redesign products and processes and improve overall business results. BPM is focused on understanding, controlling, and improving business processes to create value for all stakeholders. Six Sigma builds on classic concepts to ensure results. The three principal dimensions for measuring the quality of this process are effectiveness: how well the output meets customer needs efficiency adaptability to be effective while spending the least amount of money the ability to remain effective and efficient in the face of change. This clearly addresses the need for business processes to provide value to both the customer and shareholders through efficiency now and in the future through adaptability, and Six Sigma initiatives strive to manage the entire business process to maximise these goals for the overall business. Most businesses are structured as functional organisations or vertical units or silos based on functional groupings such as RND, product development, engineering, production, distribution, marketing, sales, finance, administration, information technology, etc. Each vertical function also has several vertical levels from the top executive down. Products, goods, or services are produced across many functional boundaries and business levels. Business process management represents a major advance in quality improvement thinking by managing the entire process, including those areas between functional responsibilities. Business process management includes steps to plan, organize, control, analyze, and improve the process to maximise overall business results. Six Sigma black belts serve in the critical role of cross-functional project managers to ensure overall business improvement. The figure shows a traditional business process. Traditional management structures are built around functional organisations or vertical silos like sales and marketing, engineering, admin, finance, operations, human resources, information technology, etc. Horizontally, the organisation is divided into layers such as executives, staff, managers, engineers, supervisors, operators, etc. Decisions are made at business level,operations level and process level. Process inputs and outputs are largely governed by factors such as functions, organization, time, language, distance, etc. The obvious objective is to control and improve each individual function with respect to its own local goals and objectives, for example, throughput, production costs, quality, and so on. For example, an information technology department should be responsible for managing and improving IT services. It becomes very difficult to optimise the overall production process when a product path crosses many functional boundaries, as shown by the process input and output paths. In the figure here, production starts with the process inputs and flows across many vertical functions and horizontal business levels to produce process outputs such as products, goods, or services. Managing across these transitions between functional elements is difficult because, often, no one is in charge. Differences in function, organisational structure,time, vocabulary and location aresources of confusion and defects. When functional relationships are not clearly understood, business processes can become more expensive or fail.

12. The Fundamentals of Six Sigma - Defining a process

Define phase The Fundamentals of Six Sigma: Defining a Process Business process management addresses this problem by taking a matrix organisation and project management approach to production. This approach became popular in the military and industrial sector almost 30 years ago as a way to ensure that quality, cost, and delivery targets could be met. Sometimes, this may mean the intentional suboptimization of a local function in order to improve the overall business outcome. For example, an extra setup or changeover in one operation may increase local costs for cycle times but reduce overall WIP inventory and provide much higher customer value. Clearly, the business process management role is critical to overall business success. In the mid 1990s, project management became very popular, and project management training courses became available from many sources. In a natural extension, the Six Sigma Black Belt role effectively serves as a project manager for overall business improvement projects. working to bridge the gaps, eliminate confusion, and identify global business improvement opportunities versus local functional ones. When process flow charts are used for the SIPOC model, business process monitoring, control, understanding, and improvement are greatly enhanced. To complete the picture, however, it is helpful to consider one additional factor. the levels of the business process. Processes can be viewed as being both composed of smaller "micro" or "sub" processes and constituents of larger "macro" processes. It is often convenient to think of at least three levels of the overall process because Six Sigma methods and procedures change somewhat from level to level. Process problems are hierarchical and interconnected to operational issues, which, in turn, are tied to support systems and ultimately linked to business issues such as customer satisfaction, profitability, and shareholder value. The three main levels may be described as "business operations and process." Business-level problems often relate to the enterprise, information, and financial systems used to steer the business. These represent strategic Sigma projects. Some examples include systems that measure customer feedback and supplier quality systems. Michael Harry's 6th Sigma breakthrough strategy at the business level is to recognise the true state of your business. Define what plans must be in place to realise improvement in each state. Measure the business systems that support the plans. Analyze the gaps in system performance benchmarks. Improve system elements to achieve performance goals. Control system-level characteristics that are critical for value standardise the systems that prove to be the best in class. Integrate "best in class" systems into the strategic planning framework. The Operations Level The issues of managing operations and making products or producing services are the focus. At this level, it is important to recognise operational issues that link to key business systems. Issues of product cost, quality, inventory throughput, and availability are often important at this level. Six Sigma projects at this level maytake a year or more to complete. Because of the complex combination of factors involved, required improvements at this level may be derived from business-level needs. Michael Harry's Six Sigma breakthrough strategy at the operational level is to recognise operational issues that link to key business systems. define Six Sigma projects to resolve operational issues measure the performance of the Six Sigma projects. Analyze project performance in relation to operational goals. Improve Six Sigma project management system control inputs to project management system standards and best-in-class management system practices. Integrate standardised Six Sigma practises into policies andprocedures the process level The process level deals with process elements that may be contributing locally to the cost of poor quality, or COPQ. The objective is to recognise process problems that link to important operational issues. Michael Harry's Six Sigma breakthrough strategy at the process level is to recognise functional problems that link to operational issues. Define the processes that contribute to the functional problems. Measure the capability of each process that offers operational leverage. Analyze the data to assess prevalent patterns and trends improve the key product-service characteristics created by key processes. Control the process variables that exert an important influence. Standardize the methods and processes producing best-in-class performance. Integrate standard methods and processes into the design cycle. The Six Sigma Business Improvement Process moves up and down the vertical levels of the organisation as well as across the functional elements. Using the SIPOC process model and understanding the differences in process levels will make it easier to manage the process of business improvement. Businesses have many stakeholders, including stockholders, customers, suppliers, company management, employees and their families, the community, and society. Each stakeholder has a unique relationship with the business. The SI POC model explains the classic supplier-process customer relationship, but this is only one of the relationships that must be addressed by business process management. The following figure illustrates some typical business stakeholder relationships. Six Sigma identifies a process owner as a senior manager in charge of a process. The Black Belt serves as a business process improvement project manager working across multiple processes to identify the process stakeholders, understand the requirements and process interdependencies, and improve the individual process configurations and settings to improve the overall outcome for all stakeholders. This involves all stakeholders in a variety of ways. In the figure, each stakeholder is both a supplier and a customer, forming many closed loop processes that must be managed, controlled, balanced, and optimised if the business is to thrive. Communication within the entire stakeholder community is channelled through internal company processes. Some examples of how the process shown in the given figure can impact the health of the business are to follow Stockholders choose to invest based on expected returns in the near term, that is, dividends or increased stock price, or in the longer term, that is, growth. If the business produces the revenues and profits expected, they may choose to invest further in the business. If not, they may sell and reduce the company's financial resources. When customers choose to purchase goods or services, they provide financial resources for the process. If the delivered goods or services provide the desired value, the customer may be motivated to provide reinforcing feedback in the form of additional orders, positive word of mouth, new product ideas, referrals, etc. that help build the business. However, if the perceived value is not up to par, negative feedback on the process can retard the business. In each case, the supplier or customer determines whether value is received. In each case, the supplier's customer determines whether value was received. In this way, the customer sets the final specifications for each transaction. Perceived value is a function of the cost, quality, features, and availability of the total product, that is, goods and services. For example, a car may have a reasonable cost, quality, and availability, but if the service is inadequate, the customer may choose to buy from another source next time. Even worse, the customers may tell others about their bad experience. Activities that fail to meet their stated objectives have negative effects on their stakeholders. For the stockholders, the net worth of the company will be reduced. Suppliers may have payments delayed or never received in full. Management and employees may see wage levels frozen or diminished, and the number of employees may be reduced. Customers may respond to unsuccessful activities by looking for other companies with which to do business, or they may impose contractual penalties and seek restitution through legal action, as shown in the diagram. The supplier stockholder provides inputs as investment, which is processed, and the output is profit growth, which is received by the stockholder. Again, the customer makes the order, which gets processed, and the customer receives goods and services. The supplier provides materials and machines which are used by the business, and additional orders are sent to the supplier. The employees show commitment to their work. They continue to work and receive pay for all they have done. The managers provide leadership, which leads to career growth. The community provides tax incentives, which they in turn earn as tax revenues. The society provides infrastructure, which in turn gives them quality of life. All of the above is managed by balancing and reinforcing feedback. Organizational performance and the related strategic goals and objectives may be determined for short- or long-term emphasis on profit cycle times, resources, and marketplace response goals may be set foreither short term or longterm results.American executives educated in business, education, and finance have emphasised ever-increasing quarterly stockholder dividends. Because of that, American managers have been criticised for their short-term outlook. The Japanese and European managers have been willing to take smaller short-term profits to ensure the long-term growth of their companies. The profit margin required to operate a business should be optimised for all stakeholder requirements. Projects and programmes initiated by the company usually require a return on investment, or ROI. The maximum profits are usually not taken because of internal stakeholder interests. If stockholder returns are maximized, then items such as reinvestment in the company, purchases of new machinery and equipment, and wages and salary increases must be turned down. An optimal level of stockholder dividends, investments, personnel costs, and such must be maintained for maintaining competitiveness. A reduced product cycle time must be emphasized. This applies to both new product development and existing product lines. Reduced cycle times will affect such things as the company's inventory WIP, waste, and operational efficiency. The marketplace response is an organisational performance measure. The ability to respond quickly to the competition with regard to quality technology, product designs, safety features, or field service is collectively very important. As a performance measure, proper resource utilisation will result in reduced waste, reduced costs, and a more effective organization.

13. The Fundamentals of Six Sigma - Critical Requriments

Critical Requirements Six Sigma projects can be directed at a number of CTX, or critical tox, requirements as given below. critical to quality CTQ Cost of Quality coq critical to delivery CTD is critical to price CTP: Critical tosafety CTS Let us look at a few examples for each of the CTX requirements. critical to quality Simplifying product designs, aligning product designs with customer requirements, meeting current marketplace quality levels, exceeding reliability and maintainability requirements, exceeding product appearance expectations, meeting technical requirements, and providing products that are more durable at a lower cost of quality are all critical to Quality Improvement Projects. Or The COQ cost of quality improvement projects may include reducing internal rejections and reducing externalrejections minimising salvage and sorting operations reducingwarranty claims reducing product variation, reducing process variation, reducing various forms of waste, and eliminating unnecessary inspections are critical Delivery is critical to Delivery improvement projects may include providing exact amounts of product and providing service within a specific time interval, ensuring immediate responses to customer questions providing a product or service on the proper day and time; providing more rapid field service; providing cost-effective delivery methods; meeting customer packaging requirements Minimizing shipping damage is critical to Price is critical to Process improvement projects may include designing products that are easier to assemble minimising changeovertime reducing in-process inventories minimising product touch times optimising workflow design streamlining internalworkflows reducing process flow variations enhancing processvelocity eliminating redundant operations. maximising product yields. speeding up operations. Reducing cycle times minimising equipment downtime maximizingpreventative maintenance performing value stream mapping critical to safety, or CGS critical to Safety improvements may include simplifying tasks, mistake-proofing operations, and providing operator visual prompts providing safetycutoff devices using warning alarms providing adequate employee training and providing clear written instructions protecting both operators and equipment from damage; making products that are user-friendly; providing constraints to prevent incorrect product use providing backup redundancies for critical processes, conducting safety reviews, expanding prototype testing, and providing protective devices when applicable by eliminating failure-prone elements and meeting product disposal requirements critical to quality characteristics Benchmarking a process-focused business means constantly realigning processes to remain capable of meeting changing market demands. Only by gaining predictability can an enterprise truly maintain capable processes to meet changing customer demands. Three key terms that help us define process capability are: process Baseline process Baseline is the average long-term performance level of a process when all the input variables in the process are running in an unconstrained fashion. Process Entitlement Process entitlement is the best-case short-term performance level of a process when all the input variables in the process are centred and under control. Process Benchmark A process benchmark is the performance level of the process that is deemed to be the best process possible by comparison. It takes us to the best that anyone has ever done. In practical terms, this means researching and finding the best that has ever been done in the industry. Six Sigma makes it easier to understand variation in our business processes. The Fundamentals of Six Sigma cost of Quality Using the traditional cost concept of COPQ, most companies utilise financial reports that compare actual costs with budgeted costs. The difference is called a variance and, if significant, may prompt management action. Departmental budgets may also be established, with the results reported on a monthly or quarterly basis. These costs are necessary to carry out the functions of each department, including the control of product and process quality. The responsibility for financial control usually rests at the department or plant level. Until the 1950s, few if any companies focused any attention on the costs of poor quality. These results were hidden among various labour materials and miscellaneous expense categories. Only the most obvious quality department charges were identified. Origin of Quality-Cost Measurements In the 1950s and 1960s, some enlightened companies began to evaluate and report quality costs for the following reasons: products became increasingly complex. The customer's expectations of products became more sophisticated. Customers demanded service after the sale and expected a remedy for failure. Both supplier and customer costs expanded due to labour and maintenance. Technical specialists were added to make improvements. Management alternatives needed to be in monetary terms. What resulted was a method of defining and measuring quality costs and reporting them on a regular basis, either monthly or quarterly. Quality cost reports became a vehicle to determine the status of cost control efforts and identify opportunities for reducing costs through systematic improvements. Since the cost of poor quality is high, some authoritiessay 15% to 25% of the total cost of sales. The opportunity for improvement should easily capture the attention of management and Six Sigma improvement teams. If a company has historically reported the cost of poor quality, then identifying improvement projects with a meaningful business return should be easy. If not, an improvement team, with the help of accounting, may need to accumulate pertinent data. The costs of poor quality (or COPQ) are those costs associated with providing poor-quality products or services. There are four categories of costs Internal failure Costs. These are costs associated with defects found before the customer receives the product or service. External d with providiThese are costs associated with defects found after the customer receives the product or service. Appraisal costs are expenses incurred to determine the degree of conformance to quality requirements and to prevent errors. Costs. These are costs incurred to keep failure and appraisal costs to a minimum. As shown in the pyramid, failure costs contribute significantly to expenses, whereas appraisal costs rank second in terms of expenses, and prevention costs rank last. Prevention Costs The costs of activities specifically designed to prevent poor quality in products or services The following checklists indicate elements that may be included in the four major cost categories applicant screening capability studies; controlled storage design reviews Education of quality or SPC equipment maintenance, equipment repair, field testing, fixture design, and fabrication forecasting housekeeping jobdescriptions market analysis personnel reviews pilot projects planning procedure reviews Procedure writing. Prototype testing, quality design, safety reviews Surveys. time and motion studies training. Vendor evaluation and vendor Surveys appraisal Costs the costs associated with measuring. evaluating or auditing products or services to ensure conformance to quality standards and performance requirements. These include Audits and document checking Drawing checkingequipment Final calibration inspection in process inspection examination and testing examination and testing reporting laboratory testing, other expense reviews Personnel Testingprocedure checking Prototype inspection receiving inspection Failure to maintain shipping inspection test equipment Costs The costs resulting from products or services not conforming to requirements or customer needs That is, the cost incurred as a result of poor quality. Failure costs are divided into internal and external categories. Internal failure costs are failure costs that occur prior to the delivery or shipping of the product or the furnishing of a service to the customer. External failure costs are failure costs that occur after a shipment of the product or during or after furnishing a service to the customer. These include Accidental accounting error corrections, designchanges employee turnover, engineering changes equipment downtime excess interest; expenses; excess inventory Excess materialhandling excess travel expense failure reviews latetime cards obsolescence, overpayments Premium freight redesign Reinspection, repair, and retesting; retyping letters Reworking scrap and sorting external Failure Costs Note that many of the costs related to internal failure also appear on this aterialhaDebts, overpayments, and customer complaint visits Penalties Customer dissatisfaction Premium Flight Engineering Change Notices Price Concessions Equipment downtime Pricing errors excessinstallation Costs Recalls Redesign of excess interest expense Excess inventory renovation Excess material handling Repaircosts Excess travel expenses Restocking stomer complaint visiRetesting es Customer diTraining costs Liability suits rework viability and reduce the loss of market share. Obsolescence or Design Changes warranty expenses at optimum Quality Costs Some authorities contend that every dollar spent on prevention will save approximately $7 in failure costs. Whether this figure can be defended or not, most companies initially find that they spend an inadequate amount on prevention activities. Initially, managers discovered that prevention costs are too low and both internal and external failure costs are too high. Often, failure costs will exceed appraisal costs as well. Even the relationship between internal and external failure costs may point to needed changes in planning or product design. The interrelationship of quality cost categories varies widely depending on the nature of product lines and processes utilised by a company. In this arena, there are few absolutes. However, listed below are some typical ratios for American companies. Note that there is considerable overlap between the category ranges. As per the table, prevention costs range from zero to 5%, whereas appraisal costs range from ten to 50%. Internal and external failure costs, in other words, range from 20% to 40% of total costs. The implementation of preventative measures to control quality often takes a great deal of time. Appraisal measures are initially undertaken, which cause internal failures to increase but external failures and therefore total failures to decrease. Quality and cost improvement Sequence define the company's quality goals and objectives the relative position desired among competitors and the type of long-term quality reputation desired Translate the quality goals into quality requirements for outgoing quality levels. Specific types of controls require specialtests required estimate capabilities Estimate the capabilities of current processes, machines, systems, etc. develop realistic programmes and projects Develop realistic programmes and projects consistent with the company's goals. Determine the resource requirements Determine the resource requirements for approved programmes and projects. Set up quality cost categories. Set up quality cost categories of prevention, appraisal, and failure. Arrange for accounting arranged for accounting to collect and present quality istic programmeAccurate figures To ensure accurate figures, make reasonable estimates by category. analyse the quality-cost data. Analyze the quality cost datafor major improvement candidates. Utilize the Parrito Principle utilising the Pareto principle to isolate specific vital areas for investigation. Quality Cost Comparison Bases: Quality costs should be related to as many different volume bases as practical. Two or three comparisons are normal. The basis selected varies depending on product, company, etc. E. Some examples are labor-base total direct labour, which is what's worked, and standard labour, which is what's planned. Manufacturing cost of output: direct labor, direct material, and indirect costs manufacturing cost of output, including the total shop cost of output that is above or plus production engineering costs and expenses and provision for complaints. Packing and shipping sales basis: net sales minus direct material units based on quality Costs Dollars per unit of production quality costs and expenses related to production quality costs are normally summarised monthly on a report form. Typical Quality Cost Report: Advantages of a Quality system provides a manageable entity and a single overview of quality. Aligns quality and company goals provides a problemprioritization system and a means of measuring change. provides a way to distribute controllable quality costs for maximum profit, improves the effective use of resources, places emphasis on doing the job right every time, and helps establish new product processes. Limitations of a Quality Cost System Quality cost measurement does not solve quality problems. Quality cost reports do not suggest specific actions. Quality costs are susceptibleto shortterm mismanagement. It is often difficult to compare effort and accomplishments. Important costs may be omittedfrom quality cost reports. Inappropriate costs may be included in quality cost reports. Many quality costs are susceptible to measurement errors. Quality Cost Pitfalls Perfectionism in the Numbers lengthydebates can occur in some companies over theneed for precision in the quality cost figures. This delay may cost the company the initiativeto move forward with considerable total savings. Other data pitfalls should be presented to managers in such a way that discussion is focused on the merits of improvement proposals and not on data validity. Inclusion of non-quality costs The management group should agree on a waste definition, such as whether only pure product quality waste will be included. Implications of Reducing Quality Costs to Zero A quality cost presentation should recognise that it may not be realistic or economically sound to reduce quality costs to zero. Reducing quality costs by increasing total company costs may be necessary to ensure that a reduction in quality costs will not increase total costs. Understatement of Quality Costs there are manyways to understate the cost of quality. One of the most common is to only deal with quality costs in excess of some normal standard. In the prevention approach, the emphasis should be tochallenge whether the standard level can be improved.

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