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Application of Statistical Quality Control (SQC) for Enhancing Market Share

Technical Report · June 2013

DOI: 10.13140/RG.2.2.21781.01763

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 SQC Application

Application of Statistical Quality Control (SQC) for Enhancing

Market Share: The case of Yekatit Paper Converting PLC.

By:- Haftu Hailu

A Project Submitted to AAiT – The School of Mechanical and Industrial

Engineering for the completion of the Requirement for the course of Statistical
Quality Control

Advisor: Professor Daniel Kitaw

Co-Advisors: Dr. Shewit Weldegebriel

Addis Ababa University, Addis Ababa Institute of Technology (AAiT)

Post Graduate Program in Industrial Engineering

June 15, 2013

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Contents
Chapter One: Introduction ........................................................................................................... 4
1.1. Background to the study................................................................................................... 4
1.2. Problem formulation and identification ........................................................................... 4
1.3. Objective of the study ...................................................................................................... 5
1.3.1. General objective .......................................................................................................... 5
1.3.2. Specific objectives ........................................................................................................ 5
1.4. Methodology .................................................................................................................... 5
1.5. Scope ................................................................................................................................ 6
1.6. Organization of the paper ................................................................................................. 6
Chapter two - Literature review .................................................................................................. 7
2.1. Introduction-the History of Quality Control .................................................................... 7
2.2. The History of Statistical Quality Control ....................................................................... 8
2.3. Aim of Statistical Quality Control ................................................................................... 9
2.4. Types of statistical quality control tools .......................................................................... 9
2.5. Statistical Process Control Charts .................................................................................. 15
2.5.1. Control charts by variables ......................................................................................... 15
2.5.2. Control charts by attributes......................................................................................... 16
Chapter Three: Company Profile .............................................................................................. 18
3.1. Background .................................................................................................................... 18
3.2. Establishment ................................................................................................................. 18
3.3. Organization & Management ......................................................................................... 18
3.4. Resource & Capabilities ................................................................................................. 20
3.5. Products Mix – the company’s distinctive values!......................................................... 21
3.6. Some of the YPC valued institutional customers ........................................................... 21
3.7. Suppliers ......................................................................................................................... 22
3.8. Competitors .................................................................................................................... 22
3.9. Market share ................................................................................................................... 22
3.10. Membership ................................................................................................................ 23
3.11. Bankers ....................................................................................................................... 23
3.12. Insurer ......................................................................................................................... 23

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3.13. Problems and challenges in the YPC for growth and competitiveness ...................... 23
3.14. Ongoing new projects financed by YPC .................................................................... 23
Chapter four: Use of literature to a real YPC problem solving ................................................. 24
4.1. Problem solving and solution to the case YPC’s problem ............................................. 24
4.2. Analysis based on the collected data on the case company ........................................... 37
Chapter five: Conclusion and recommendation ........................................................................ 38
5.1. Conclusion...................................................................................................................... 38
5.2. Recommendation ............................................................................................................ 38
References ................................................................................................................................. 39

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Chapter One: Introduction

1.1. Background to the study

The field of quality has its roots in agriculture In the early twenty century a British researcher
R.A. Fisher, conducted a study to assist farmers in understanding how to optimally plant and
rotate crops. This work subsequently inspired Walter Shewhart at Bell Laboratories, whose work
subsequently motivated W. Edward Deming to devote his life to the teaching and improvement
of quality methods.[1]

Statistical quality control underlines a basic philosophy that prevention is better than cure and a
stitch in time saves nine. Statistical quality control prevents the occurrence of defectives by
exercising control over the process rather than inspecting goods for conformance after they had
been produced.

The first contribution to statistical quality control was made by W.A .Shewhart which is
shewhart control chart introduced in 1931.The control charts evaluates whether the process is in
the state of statistical control.

This method statistically analyses and controls quality of products to diminish variation. The
SQC approach was applied to control of defective products : personnel, materials, machines, and
methods, in the manufacturing process.SQC triggered the advancement of quality control in
Japan characterized by employee participation and QC circle activities. Statistical quality
control is the process of inspecting enough products from given lots to probabilistically ensure a
specified quality level. The underlying concept of statistical quality control is to ensure, in a cost
efficient manner, that the product shipped to customers meets their specifications. Inspecting
every product is costly and inefficient, but the consequences of shipping non-conforming product
can be significant in terms of customer dissatisfaction.[1]

This paper is concerned with the assessment of the existing the quality control tools used in
Yekatit Paper Converting P.L.C. , identification and analysis of existing quality problems, and to
propose a better quality control method that will improve overall performance of the factory.

1.2. Problem formulation and identification

It is stated that the estimated market share of Yekatit Paper Converting P.L.C is about 25 % of
the total printing goods, paper products and exercise books supply of the country due to

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frequently existing printing problems. Prolonged idle time of printing machines due to
inadequate maintenance and unskilled workers (frequently in 10%),employees complaints and
the quality control system the company follows which focuses only on off-line inspection are
critical factors for limited market share of YPC. These causes have reduced the overall
performance of the factory. Therefore, it is reasonable to take preventive action which enables to
provide solutions for existing printing problems and results in maximize the productivity,
improves quality, cost minimization and on time delivered in turn brought customer satisfaction
of the factory.

1.3. Objective of the study

1.3.1. General objective

To know the existing critical factors that limits the market share and providing counter measures
by diminishing which results in the company to have a big market share.

1.3.2. Specific objectives

 To assess the existing quality related problems in the company
 To have thorough understanding the basics of statistical quality control and its
effective application in the company
 To propose a better solution and to take a counter measure for achieving
quality improvement

1.4. Methodology
In assessing how the statistical quality control tools used in Yekatit Paper Converting
P.L.C, the following methodology will be used:
 The first step in this assessment is to review literatures in depth concerning statistical
quality control and critical wet blanket lists for the techniques to be used.
 The second step will be to see the general background and existing conditions of the
company under consideration.
 The third step is data collection by interviewing, questionnaires, visiting and personal
contact.
 The forth step is analyzing and evaluating the collected data using the problem solving
tools.

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1.5. Scope
As mentioned in the introduction part of this study, there are different statistical quality control
techniques which are used for analyzing the quality problems .Each of these techniques are
applicable as per the manufacturing process that the factory produces. Also, as discussed
previously, it is well known that there are seven problem solving statistical quality control
techniques. And these techniques have their own advantages. Thus, the study does not try to use
all statistical quality control techniques for problem solving. Furthermore, to show the help of
problem solving techniques in statistical quality control, the case taken is only in using seven
problem solving tools , other factories also recommended to use these tools as per the situation
that exists.

1.6. Organization of the paper

This paper has five chapters. The first chapter has covered background to the study , problem
formulation and identification, the major and specific objectives of the study, the methodology
followed for assessing, scope and delimitation of the study and finally the organization of the
study that the paper covers .The second chapter will cover the related literature review about
basics of the subject matter ( like aim of statistical quality control, what are process control
techniques , why process control techniques and types of process control techniques ) , state of
the art and theoretical problems in the body of knowledge. The third chapter will cover the case
company profile like vision, mission, core values and goals; the establishment and development;
the company’s main products, customer’s suppliers, competitors, market share and etc…; the
company’s problems and challenges in the organization for growth and competitiveness. The
fourth chapter will cover the application or use of the literature to a real industrial problem
solving like using process control techniques for problem solving and taking counter measure for
solution to the company’s problem; based on the case company theory will be formulated on the
body of knowledge. The fifth chapter will cover the conclusion, recommendation and future
research area to be studied. Finally the paper will contain the references from where notes are
taken and appendix that required tables and figures are available.

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Chapter two - Literature review

2.1. Introduction-the History of Quality Control

The norm of quality has been defined in different ways by various authors. Garum (1984) divides
the definition of quality in to five categories-namely; transcendent, product-based, user-based,
manufacturing-based and value-based. Furthermore he identified a framework of the following
eight attributes that may be used to define quality: performance, features reliability,
conformance, durability, service aesthetics and perceived quality. Definition proposed Crosby
(1979): Quality is conformance to requirements or specify.
Definition proposed by Juran (1974): Quality is fitness for use. Thus it May be defined as: The
quality of a product or a service is the fitness of that product or service for meeting or exceeding
its intended use as required by the customer.
In response to the question “What is quality? “, the American dictionary defines quality as
“Degree or level of excellence”. The official definition of quality by America National standards
institute (ANSI) and American society for quality control (ASQC) is “the totality of features and
characteristics of a product or service that bears on its ability to satisfy given needs”. It is
obvious that quality can be defined in many ways depending on who is defining if and what
product or service it is related to.
Quality from consumer’s point
Customers now perceive that certain companies produce better quality products than others, and
they make decisions about which products to purchase accordingly. An important consideration,
then, in producing quality products is row constitutes good quality i.e. how does the consumer
define quality? The consumer can be a manufacturer purchasing raw materials or parts, as for
owner or retailer purchasing products to sell or someone who purchase retail products.
W. Edward Deming made the frequent observation that “the consumer is the most important part
of the production line. Quality should be aimed at the needs of the consumer present and future.”
From this perspective product quality is determined by what is the consumer want and is willing
to pay for. Since individual consumers have different product needs and requirements they will
have different quality expectations.[2]
This results in a commonly used definition of quality as a products fitness for its intended use. In
other words how well does the product do what the consumer or user thinks it is supposed to do

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and wants it to do. If customers feel like they are retting what they paid for, they tend to be sat is
tied with the quality of the product.
Quality from the producer’s viewpoint
A second point of view regarding quality derives from the producer’s viewpoint. Product
development is a function of what level of quality characteristics (i.e. the producers fit hers for
use), the consumers wants, needs and can afford. Product design results in specification that, it is
hoped, will achieve the desired quality characteristics now ever once the product design has been
determined the producer receives quality to be row effectively the production process is able to
conform to the specifications required by the design. This is referred to as quality of
conformance put another may, quality during the production process focuses on making sure that
the product meets the specification required by the design.
As an example of quality of conformance, if a soft drink bottle does not hold the volume of
liquid it is designed to, it doesn’t conform to the specification.
The ability to achieve quality of conformance is a function of a number of factors in the
production process. [2]
These factors include:-
 The design of production process
 The performance level of machinery and equipment
 The materials used
 Training and supervision of operators
 The tool which statistical quality control techniques are used. When machines fail or are
maladjusted, When operators make mistakes., When design specification are generally
not met, When materials and parts are defective.

2.2. The History of Statistical Quality Control

The first contribution to SQC was made by Dr. Walter.A. Shewhart in 1920s. Statistical Quality
Control refers to a method of quality control introduced to Japan from US in 1950. Statistical
Quality Control under lines a basic philosophy that prevention is better than cure and a stitch in
time saves nine. Statistical Quality Control is a method which statistically analyses and controls
quality of products to diminish variation. The Statistical Quality Control approach was applied to
control factors of defective products (i.e. the 5M’s: Man power , Materials, Machines, Method
and atmosphere/surrounding ) in the manufacturing process. Statistical Quality Control prevents

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the occurrence of defectives by exercising control over the process rather than inspecting for
conformance after they been produced. Statistical Quality Control triggered the advancement of
quality control in Japan characterized by employee participation and QC circle activities.

2.3. Aim of Statistical Quality Control

The seven quality control tools are simple statistical tools used for:- problem solving, collecting
data, analyzing data, identifying root causes, measuring the results. The primary main function
of statistical quality control tools is to effectively collect quality data like various product quality
including defect data, retry rate of machines, operating rate. Compute the fraction defective
based on data collected to create a chart with plotting such fraction defective in time sequence,
so that the chart may be used as a poster in the office space. The above mentioned chart must
contain the mangeable range disccussed by workers. Further, it is important for them to confirm
that product quality is remaining within a manageable range. If the quality would be out of the
range, every workers should discuss about any possible countermeasures. These data should
be analyzed by certain method to examine countermeasure. For example:stratify défet cause to
find the défection fracture by each phono menon, take countermeasure toward defect caused by
A group with high defection fracture in order to decrease it below the manageable range. If the
fraction defective improved to that level, narrow down the manageable range to repeat the
procedure. [5]

2.4. Types of statistical quality control tools

The seven quality control tools are the following:- 1. Check sheets , 2. Pareto Charts , 3. Cause
& Effect Diagrams, 4. Histograms, 5. Flow Charts, 6. Control Charts and 7. Scatter Diagrams

Check sheet: A check sheet is a form specially prepared to enable data to be collected simply
by making check marks. It is used for tallying the occurrences of the defects or causes being
addressed by graphing or charting them directly. Check sheet is a powerful data recording tool.
The main purposes of check sheet

 To make data-gathering easy. Simplifying data collection and ensuring that no items are
omitted when inspecting.
 To classify data exactly at the time of their collection.
 To arrange data automatically so that they can be used easily later on.

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 To ensure that the data are collected carefully and accurately by operating personnel for
process control and problem solving
 The form of the check sheet is individualized for each situation and is designed by the
project team
 Check sheets are designed to show location Creates easy-to-understand data
 Builds, with each observation, a clearer picture of the facts
 Forces agreement on the definition of each condition or event of interest
Types of check sheet
1. For production process distribution
2. Defect item check sheet
3. Defect location check sheet
4. Defect cause check sheet

Fig-1.Defect item check sheet

Pareto Charts: First developed in 1906, by Italian economist, Vilfredo Pareto, then Joseph
M. Juran applied it in classifying problems of quality. The Pareto Principle also known as the
80/20 rule states that only a “vital few” 20% causes are responsible for producing most of the
80% problems (trivial many). It is used to detected problems by classifying them, showing their
frequency in the process and set their priority. Pareto Charts allows the user to focus attention on
a few important problems in a process and makes it easy to see which of many problems have the
most serious effect on quality, productivity, cost, safety, morale, delivery time, surrounding etc.
together with their relative proportions process and set their priority.

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Fig-2 .Pareto diagram

Cause and Effect Diagram:- It is sometimes called Ishikawa Diagram because it was
invented by Dr.Karou Ishikawa in the 1943. It is also called fish-bone diagram because it looks
like fish bone. Cause and effect diagram is a tool that identifies, sort and display possible cause
of a specific problem or effect. Its main use is to pick up and arrange all possible causes without
any omissions. And it allows many factors to be seen at the same time, and can be used by
everyone from beginners to experienced workers.Picture composed of lines and symbols
designed to represent a meaningful relationship between an effect and its causes and Effect
(characteristics that need improvement) on the right and causes on the left

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Fig-3.cause and effect diagram

Histograms: Histograms or frequency Distribution Diagrams are the most commonly used
graphs to show frequency distributions in convenient class intervals and arranged in order of
magnitude. They are useful in studying patterns of distribution or shape of a distribution
and comparing it with specifications or standard values. It organizes bulk data in an easy
manner to understand the population or data. Histograms Can Be Used to determine distribution
of sales and Say for instance a company wanted to measure the revenues of other companies and
wanted to compare numbers.
To determine how many intervals (or bars) on the bar graph, see the following alternatives

If you have Less than 50 numbers of data, use 5 to 7 intervals

If you have 50 to 99 number of data, use 6 to 10 intervals

If you have 100 to 250 number of data, use 7 to 12 intervals

If you have more than 250 number of data , use 10 to 20 intervals

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Fig-4.Hhistogram
Flow Charts: It is a diagram showing the development of something through different stages
or processes. Flow chart is a pictorial representation showing all of the steps of a process.
Benefits of flow chart:

Graphically display processes to identify redundancies and other wasted effort

Used for planning new processes or examining existing one.
Helps to Understand the process
Helps to identify process improvements.
Shows duplicated effort and other non-value-added steps
Toolbox

Fig-5.Example of flow chart

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Control charts: The control chart is a graph used to study how a process changes over time.
It is used to analyze a process and to determine whether a process will process a product or
service with consistent measurable properties.
A control chart always has a central line for the average, an upper line for the upper control limit
and a lower line for the lower control limit. These lines are determined from historical data. By
comparing current data to these lines, you can draw conclusions about whether a process is in-
control or is unpredictable (out of control, affected by special causes of variation).

If your process is in control, then

99.73% of all the data points will be inside those lines or no sample points outside limits
most points near process average
about equal number of points above and below center line
points appear randomly distributed

Fig-6.Control chart
Scatter Diagrams: A scatter diagram shows the correlation between two variables in a
process. Also called scatter plot, X–Y graph.
Its purpose is to find if there is correlation between paired sets of data to identify the correlations
that might exist between a quality characteristic and a factor that might be affecting it.Example,
relationship between temperature of a steel material and its tensile strengths; relationship
between visit made by a salesman and volume of sales.
If the variables are correlated, the points will fall along a line or curve. The better the correlation,
the tighter the points will hug the line.

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Fig-7.Scatter diagram

2.5. Statistical Process Control Charts

Statistical process control (SPC) is a statistical procedure using control charts to check a
production process to see if any part of it is in some way not functioning properly, which could
lead to poor quality. A control chart is a graphical method for displaying control results and
evaluating whether a measurement procedure is in control or out of control. Control results are
plotted versus time or sequential run number; lines are generally drawn from point to point to
accent any trends, systematic shifts, and random excursions. The chart contains a center line that
represents the average value of the quality characteristic corresponding to the in control state.
Two other horizontal lines, called the upper control limit (UCL) and the lower control limit
(LCL) are also drawn.
Types of control charts
a) Control charts by variables
b) Control charts by attributes

2.5.1. Control charts by variables

Those capable of being measured. And the product can be classified good or bad , acceptable or
non-acceptable based on quantitative measurements of their properties. Typical examples of
variables are diameter, length, thickness, weight, temperature, humidity, voltage, hardness,
viscosity etc.…Control charts for variables are the following:-
a) The average chart (X-chart), which measures the central tendency of the process.
Calculate control limit of X chart

Center line: CL ＝X = summation of X divided by N

Upper control limit UCL＝X＋A2 R

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Lower control limit LCL＝X －A2 R

b) The range chart(R-chart), which measures the spread of the process.

Calculate control limit of R chart

Center line CL= R

Upper control limit UCL=D4 R

Lower control limit LCL=D3 R (Unnecessary ）

Since average chart and range charts are usually used to get her, they are commonly
known as X - R charts.
2.5.2. Control charts by attributes
Properties which are difficult to measure quantitatively.
These properties are usually measured by comparison and any sample taken is classified
either good or bad, (ok or defective) by quality characteristics.
Typical examples of attributes are surface appearance, color, texture, cracks,
imperfections, burns etc.
Control charts for attributes are basically the following:-
a) The fraction defective chart (P-chart) which records the proportion of defective items in a
sample.
P = total no. of reject items divided by total no. of inspected items
Calculate the control limit
Control limit = P
Upper control limit UCL = P ＋ 3 * sq.root of P (1-P) / n
Lower control limit LCL = P － 3 * sq. root of P (1-P) / n
b) The number defective chart ( nP - chart )which records the number of defective items in a
sample.
The control limit CL = Average of rejected No. = No. of reject divided by Size of group
Upper control limit UCL = n*P + 3* sq. root of n * p (1-P)
Lower control limit LCL = n*P - 3* sq. root of n*p (1-P)
c) The defects chart(C-chart) which records the number of defects in a component/product
The control limit CL = Average of defects No. = C
Upper control limit UCL = C + 3 * sq.root of C

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Lower control limit LCL = C – 3* sq. root of C

d) Control chart for defects per unit ( U - chart )
Control limit = The average number of defects per unit = U
Upper control limit UCL = U + 3* sq. root of U divided by n
Lower control limit UCL = U + 3* sq. root of U divided by n
Summarize the literature survey
Six Problem Solving Steps are there in the statistical quality control tools ,
1. Identify :-Recognize the symptoms
2. .Define :-Agree on the problem and set boundaries
3. Investigate:-Collect data
4. Analyze:-Use quality tools to aid
5. Solve:-Develop the solution and implement
6. Confirm:-Follow up to ensure that the solution is effective

Control charts are important statistical tool for quality control. They display the results of
inspecting a continuous process and separate random variations due to real assignable causes
from normal variations due to chance causes. Such a running commentary as to what is
happening in the process provides a convenient and rapid feedback suggesting when
adjustments, corrections or overhauls may be needed. Control charts are basically of two types
(1) control charts by variables (e.g. X-R charts) , and control charts by attributes (P-chart, nP-
chart,C-chart and U-chart)

The concept of quality in the case company

The company has only one quality assurance and control department staff. The inspection system
that the company follows is raw material inspection during purchased materials are supplied
from the customer; pre-printing inspection before printing action is taking place and when final
printing product is finished and ready to deliver to the customer or the store. The concept of
quality in the company employees is rarely known because most of the employees are not quality
oriented .The production and technique employees are only targeted on manufacturing the
printing products for fulfillment of the targets per hour and per day. And the company did not
concern on providing training regarding to quality to employees.

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Chapter Three: Company Profile

3.1. Background
Vision: By 2022 YPC will become the leading paper converting and printing company in East
Africa.

Mission: To satisfy the growing need for paper converting and printing nationally and
regionally by becoming supplier of choice to its customers, employer of choice to its employees
and an investment choice to its owners.

Goals: Exceeding customer’s expectations, Deliver superior performance and Maximize profit

Core values: We strongly believe that our customers are the raison d’ѐtre of the company, We
value the human capital as the most important resource of the company, We value team work
and accountability, We value integrity, professionalism and ethical practices, We exercise
Corporate Social Responsibility/CRS in every business we do, We recognize change as a driving
force for continuous growth and development and We abide by the rules of the law.

Motto: Proudly indigenous solutions!

3.2. Establishment
Yekatit paper converting was initially established by four business men in 1966 and nationalized
by the Ethiopian government in 1975.During its operation under the previous regime, it had
undergone major expansion and reestablished as Yekatit Paper Converting Enterprise. However,
in line with the present government policy of free market economy and directives for
privatization of public enterprises, the enterprise was acquired by its current owner in 2010.
After acquisition, it was merged with TECHNO PRINTERS that was also property of the owner
founded on June 2004; leading to the formation of YEKATIT PAPER CONVERTING P.L.C on
September 2012.The company is mainly engaged on paper converting, commercial printing,
packaging and labeling as well as exercise books manufacturing.

3.3. Organization & Management

Simply responsible & flexible for better change.The Managing Director, who also represents the
shareholders of the company, is the highest authority of YPC P.L.C. He is mandated to the set

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the vision, mission, policies and strategic direction of the company, as well as to approve its
financial and operation plans. The MD is the also the ultimate decision maker for financing new
undertakings on investment & business diversifications. In order to attain & sustain the
company’s objectives successfully, the GM works closely with the management team who are in
charge of the following major functional units: Human Resource & Administration, Finance,
Commercial, Production and Technique, Quality Assurance and Planning & MIS. The
organization & management of the company backed by adequate structure & systems is a
valuable intangible asset that guarantees the company to attain & sustain its business objectives
successfully. General Organizational Structure of YPC

Managing
Director

General
Manager

Quality Planning &

Assurance MIS

Production &Technique Commercial Human Resource Finance

Maintenance Sales Personnel

General
Accounts
Production Marketing
General
Planning &
Service
Control
Supply &
Procurement Cost &
Cleaner
Budget
Production
Material
works
Management Guards

Fig.8 YPC organizational structure

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3.4. Resource & Capabilities

Reliable sources of our competitive advantages by excellence.

Building & Infrastructure: The company owns vast land & buildings with adequate
facilities accommodating several functions, including offices & factory. These assets have an
estimated value of over Birr 300 million & are located at three very convenient places in the
centre of the capital city, Addis Ababa. The first is an 8000 sq.mt of ample land with a built up
area of 3000 sq.mt. It is strategically located near the Addis Ababa Exhibition Centre, and
according to the Master plan of the city, two new main asphalt roads will be constructed adjacent
to the location at the back & in front of the company. The second plant which is located just
along the main asphalt road close to the ring road at Gerji, opposite to the electric power
substation commonly known as Gerji Me brat Hail, has a total area of 20,000 sq.mt with a built
up area of 4500 sq.mt, including factory & head office buildings. Similarly, the third facility with
a total area of 12,000 sq.mt & a built up area of 7200 sq.mt is conveniently located at Akaki-
Kality Subcity. The strategic location the company interms of easy access to customers, supply
& distribution of raw materials & finished goods , as well as availability of wide land for further
expansion, is a prove that the company possesses reliable assets that provide the company with
valuable opportunity in acquiring sound competitive advantages & serving better its customers.

Technology & Machinery: YPC is equipped with latest technology & machinery, one of
which is possessed only by a single company other than ours, like the Speed Master with a
capacity of printing five colors at a time, and many others totaling over 100 in number.
Similarly, the exercise books manufacturing machinery has a unique capacity to produce varied
products like inner & outer straps with incomparable quality & volume as compared to any other
local suppliers.

These state of the art technology & machinery are employed in all the production lines, i.e.
exercise books & paper products, packaging, printing & graphic arts, etc enabling the company
to provide its esteemed customers with products & services that match & exceed their
expectations. Our technological capability has also enabled us to be No.1 market leaders in most
of our product offerings.

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Annual Revenue: YPC has a huge capacity to generate over Birr 300 million sales turnovers
annually which indicates the company a sound potential in ensuring strong market presence.
This, undoubtedly enables the company to diversify & intensify its business operation with better
confidence & in a sustainable manner.

Human Resource: The company is managed by a team of highly qualified & experienced
senior staff that is committed to make a difference in achieving & sustaining the company’s
business objectives by enhancing operational efficiency & ensuring business excellence for the
absolute satisfaction of customers. Technical expertise of its over 600 employees with proven
track record in delivering quality goods & services to customers has guaranteed the company to
acquire a considerable number of loyal customers throughout the country.

3.5. Products Mix – the company’s distinctive values!

Printing goods: Books & Magazines, Financial reports & prospectus, Letter heads & office
stationary, Invitation cards and post cards, Catalogues, brochures, posters and flyers, Manuals
and booklets, Pads, invoices, vouchers, calendars and diaries, etc

Paper products: Packaging (for food, detergent, drugs & other FMCG), Paper boxes of
different design & size, Inner & outer straps, Box files, Cake trays, Tissue papers & kitchen
towels, Thermal paper cash register rolls and Paper tubes

Exercise books: Exercise books with unique design & appearance, Different size note books,
Ruled & square papers

3.6. Some of the YPC valued institutional customers

Financial institutional: Ethiopian Insurance Corporation, National Bank of Ethiopia, NBE,
Commercial Bank of Ethiopia, CBE, Wogagen Bank, United Bank, Awash International Bank,
Lion Bank, Nib International Bank

Pharmaceutical Manufacturers: Epharm / Ethiopian Pharmaceuticals, Addis

Pharmaceuticals, East Africa Pharmaceuticals, Rx Africa Pharmaceuticals, Ethio dan
Pharmaceuticals

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Beverage industries: Meta Brewery, Bedele Brewery, Harar Brewery, Dashen Brewery,
National Alcohol & Liquor Factory

NGO’s: PSI Ethiopia, UNICEF, ICPA Ethiopia, MERLIN, DKT Ethiopia

Soap, Detergent & candle Manufacturers: Repi Soap & Detergent, Star Soap &
Detergent, VIVI Soap & Detergent, Ethio-Asia Soap & Detergent, Anbessa Candle, Habesha

Candle, UDITCO.

Other Manufacturing Industries: Anbessa Shoe, Nifas Silk Paint Factory, MAA
Garment/Kebira Enterprize, ATG Joy Confectionery, MAMCO paper, Educational Materials

Production & Distribution Enterprise, EMPDE, Alem Genet Paper, Sheba Leather, Ethio-Agri

Ceft, Almeda Textile, King Tonner Assembly, Merona Industry, ANM Swiss Industries.

Service Industries: Ethiopian Airlines, Ethiopian Shipping lines, Ethiopia Postal Service,
Sheraton Addis Hotel, A.A.Hilton Hotel, Global Hotel, Crown Hotel, Ethiopia Hotel, Harmony

Hotel, Kaldis Cafѐ, Belos Pasrty, Ayka Cafѐ, Denver Café, Empire Café, Yani Pizza, Chicken

Hut, DHL World Wide Express.

Many other customers: Wholesalers, Retailers, and Consumers

3.7. Suppliers
 From foreign

3.8. Competitors
 Burayu carton printing company, Artistic printing enterprise, Birhanena selam printing
enterprise, Niged printing house, Mega printing enterprise

3.9. Market share

The estimated market share of Yekatit Paper Converting P.L.C is about 25 % of the total
printing goods, paper products and exercise books supply of the country due to frequently
existing printing problems. Prolonged idle time of printing machines due to inadequate
maintenance and unskilled workers (frequently in 10%), and employees complains are critical

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factors for limited market share of YPC. But when we take specifically paper box printing
products like Addis tea, DOPAMET, OMECAP, etc. the estimated market share is above
65%.which makes the company more profitable.

3.10. Membership
 Addis Ababa Chamber of Commerce & Sect oral Association, AACCSA
 Ethiopian Paper & Paper Products Manufacturers Sector Association, EPPPMSA

3.11. Bankers
 Nib International Bank, NIB

3.12. Insurer
 Ethiopian Insurance Company, EIC
3.13. Problems and challenges in the YPC for growth and competitiveness in
translating vision in to action ፡ Building on indigenous human resource capability,
in order to be equipped by highly qualified and skilled manpower, Provision of
products/services that exceed our customer’s expectations to maximize benefit to
stakeholders and enhance profitability & growth, Establish partnership with prospective
national and foreign investors to enhance company’s business & investment to overseas,
whenever required, Integration of business activities with sister companies to ensure
synergy & enhance competitive advantages, Exploit the comparative advantages that are
available in the neighboring countries, both for investment & export trade, Introduce new
technology, ICT & modern business improvement tools in all its business activities so as
to maximize its capacity utilization and enhance operational efficiency &
competitiveness, Consistent use of appropriate marketing tools to enhance market share,
enhance sales volume & ensure customers loyalty, Outsourcing of some non-core
activities, Rely on research & development to identify new business/market
opportunities, Promote public-private partnership, Discharge Corporate Social
Responsibility.

3.14. Ongoing new projects financed by YPC

 Hotel business
 A4 paper making plant and Waste paper recycling plant/grey board manufacture.

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Chapter four: Use of literature to a real YPC problem solving

4.1. Problem solving and solution to the case YPC’s problem

The company has only one quality control staff. YPC inspection system focuses on in-line and
off-line inspection system. The inspection activity is taking place when the production inputs are
purchased, before printing is taking place, during processing of printing production is going on,
when finished printing products are ready to ship from production, when a number of finished
products are put in store and during the arrangement of raw materials in store. In YPC, defect is
making during the printing production flow is going on. After using the methodologies like
interviewing, visiting and personal contact, the following the 3rd quarter report real data has been
identified from the quality and assurance department of the company starting from Jan 2013 till
mar 2013 has been recorded. It is known that this data has already presented in the management
session and discussed seriously almost two months ago.

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Table-1. The current company’s third quarter quality control report starting from
January to March 2013.Source of data from quality assurance and control
department.
No. Order Institutional Defect product price per Total qty Defect Total
no. Customers piece ordered ed qty price
1. 4391 Bole rock Pizza box 12.00 1000 1000 12000

2. 4335 Addis Phar. Factory Ampicilin 100 mg 8.25 10000 1000 8250

3. 4126 Addis Phar. Factory Clocks 500 mg 1.85 20000 5000 9250

4. 4129 Addis Phar. Factory Flockcine 20 mg 1.85 20000 20000 37000

5. 4438 Addis Phar. Factory OMECAP 1.82 40000 3950 7189

6. 4423 Addis Phar. Factory DOPAMET 0.983 35000 10350 10174.05

7. 3907 Dashen birra Label export order 0.11 9200 ⃰ 257600 28336

8. 4386 Addis Phar. Factory Tetracine 250 mg 7.87 15000 1478 11631.86

9. 4125 Addis Phar. Factory Benzalik 0.65 85000 2550 1657.50

10. 4344 Dashen birra Body label 0.09498 190000 190000 18046.20

11. 4344 Dashen birra Label 0.11 41000 No 4,500

saved
12. 4451 Ethio. Pha. Factory Lemlem box 1.80 42000 No 75,600
saved
13. 4334 Addis Phar. Factory Para mol 0.75 755 No 566.25
saved
14. 4204 East Africa Zansol 2400 2.80 10000 7000 19600

15. 4246 Ethio Agriceft Tea hard box 0.55 421600 7200 3960

16. 4120 Ethio Agriceft Wush wush 100g 0.513 258397 6397 3281.66

17. 4283 Addis Phar. Factory Box 0.983 12147 1147 1127.50

Total Waste or Defect in birr excluding order no. 4344,4451 and 4334 160,703.77

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As shown from the table, the company losses birr 160.703.77 only in January, febreuary and
march.But the company took corrective actions with the respected institutional customers. For
example,the whole ordered quantity of the pizza box, flockcine 20 mg and dashen birra body
lebel are defected. But these defected products are not discarded. Rather the respected
Institutional customers are taking these products by making agreement to take with discount.
And the quality assurance and control department has saved birr 80,666.25 from dashen birra
label,lemlem box and para mol products during inspection the pailot sample that issues to the
production in the preprinting section.
From the above table, the types of defectes which appear frequently during printing are as
follows
 Printing designs are unfit
 Printing products color variation
 Incorrect squadron pulling
 Printing continuously out of standard
 Front and backside of gripper is working out of procedure
 Printing is done reverse side
 Fossella is cutting reverse side
 Wrong consequent printing is done
 Raw materials providing for printing purpose are cutting out of standard
 Dusty Printing products
Since the type of defects are already known, it is better to know the main root causes for the
company to make loss during production. So that the statistical quality control tools are
mandatory to identify the major problem that must be solved. For this case, from the seven
statistical quality control tools the check sheet , pare to diagram ,fishbone diagram/cause and
effect diagram/ ishikawa diagram are used.

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Solving problems of YPC using statistical quality control tools

Application of Check sheet
As shown in the table below in the final inspection of ampicillin 100 mg printed carton product.
The institutional customer Addis pharmaceutical factory orders 10000 pieces of ampicillin
100mg carton box to be printed by order number 4335.Unfortunatley 1000 pieces of the product
is defected. But 105 piece of ampicillin 100 mg were defected only in the month of march. The
following types of defect types like color variation, reverse side print, irregular cutting, design
error, miss spelling, and dusty are appeared.
From the literature, the defective Item Check Sheet counts and classifies defects by type, so that
the above defect types of ampicillin 100 mg carton box printed product can be recorded as:-
Table-2-defective item check sheet
Type of defect Check Sub total
Color variation 36
Reverse side print 24
Irregular cutting 20
Design error 13
Miss spelling 8
Dusty 4
Total 105

Application of pare to diagram

Since the defects are recorded using the check sheet, know it is easy to construct the pare to
diagram in order to give attention to the most critical factor that makes influences in contributing
to the problem.
Draw the pare to diagram
Step-1. Decide on problem, type of data, and causes
Problem:- ampicillin 100mg paper carton printed product inspection rejects
Type of data:- number of rejections at state inspection station order number 4335 during the
month of January up to march.
Defect categories:-

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Table-3-reasons for rejection

Reasons for rejection
Color variation
Reverse side print
Irregular cutting
Design error
Miss spelling
Dust

Step-2: Collect the data in descending order

Table-4data in descending order

Reasons for rejection No. of rejects

Color variation 36

Reverse side print 24

Irregular cutting 20
Design error 13

Miss spelling 8

Dust 4

Total= 105
Step-3: calculate the cumulative totals
Table-5cumulative number of defects
Cumulative No. of % of Cumulative No.
Types of Defects No. of defects defects of defects
Color variation 36 36 + 0 = 36 36/105 = 34.28
Reverse side print 24 36 + 24 = 60 60/105 = 57.14
Irregular cutting 20 60 + 20 = 80 80/105 = 76.19
Design error 13 80 + 13 = 93 93/105 = 88.57
Miss spelling 8 93 + 8 = 101 101/105 = 96.19
Dusty 4 101 + 4 = 105 105/105 = 100
Total = 105
Step-4: Draw and label the horizontal & vertical axis; bars and cumulative
total lines

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40 120

35 100
F
30
r
80
e 25
q 20 60
u
e 15 40
n 10
c 20
5
y
0 0
Color Reverse Irregular Design Miss Dusty
variation side print cutting error spelling
Reasons for reiection

Fig.9-pareto diagram
Step-5: Interpret the pare to chart
From the chart it can be analyzed that a great majority of problems of the company are produced
by a few key causes like color variation, reverse side print and irregular print. If the company
corrects these few key causes, it will have a greater probability of success.

Application the cause and effect diagram

Draw the cause and effect diagram
Step-1: Develop problem statement
 Defected ampicillin 100 mg paper carton printing product
Step-2: Brainstorm causes
List possible causes
 No quality manuals
 No maintenance manuals
 Availability of Unskilled operators
 Adequate training are not given

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 SQC Application

 Skilled operators are not engaged

 No quality checkers
 Availability of old machineries
 No Latest machineries
 No maintenance schedule
 Shortage of spare parts
 Un Skilled mechanics
 Limited communication between departments
 No Team work
 No continuous improvement tools
 Defected raw materials
 No quality in station
 Employees turn over
 No operation standardization
 No workplace standardization
Step-3: Determine the major cause categories
Manpower ……………MP Machineries …………..MC
Raw materials…………RM Communication………COM
Procedure………………PR
Step-4: Determine the category for each listed possible causes
Table – 6.possible causes and their categories
No. Possible causes Categories
1. No quality manuals PR
2. Availability of Unskilled operators MP
3. Adequate training are not given MP
4. Skilled operators are not engaged MP
5. No quality checkers MP
6. Availability of old machineries MC
7. No Latest machineries MC
8. No maintenance schedule MC

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9. Shortage of spare parts RM

10. Un Skilled mechanics MP
11. Limited communication between departments COM
12. No Team work COM
13. No continuous improvement tools PR
14. Defected raw materials RM
15. No quality in station PR
16. Employees turn over PR
17. No operation standardization PR
18. No workplace standardization PR
19. Dusty workplace ENV
20. Not cleaning schedule ENV

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Step-5: Draw and Put categories and causes on the fish bone diagram

Manpower
Raw material Machineries
Unskilled
operators
Old
No experienced
machineries Inadequate
employees
Defected
training
material No maintenance
schedule
Unskilled
No quality mechanics
Shortage of
No checkers
spare parts
technolog Defected
y ampicillin
100 mg
Rough Employees
Dusty turn over
communicatio
workplace No quality
n b/n
departments manual
No quality
Not in station No continuous
cleaning No team Improvement tools
schedule work No workplace
standardization
No operation
standardization

Environment Communication Procedure

Fig-10.cause and effect diagram

Step–6: Identifying the most likely causes

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 SQC Application

Unskilled operators ( new employees/operators did not take theoretical and practical
training before assigned to the work)
Old machineries (all machineries are not latest technology)
Not scheduled maintenance (the company did not implement the total productive
maintenance to follow either preventive , periodic , corrective or breakdown
maintenance)
Procedure (the company working principle is not revised)

After the most likely causes have been identified, the company top management took counter
measures to tackle the causes for the last three months. The most preventive actions that have
been taken to cease up appearing the most likely defects on the company are training
operators; changing old machineries by latest; implementing total productive maintenance
and revising the company working procedures. So that it is must to take a verity sample lots
of a pizza box printed product during final inspection in order to know whether the counter
measure taken by the top managements makes the process with in control or not.

The company quality assurance and control department final inspection section takes 25
consecutive lots of ampicillin 100 mg printed products received from a production section
were inspected using sampling process .The sample size was varied as per variations in the
lot size. The no. of defectives of each sample was recorded as under: So analysis the process
by constructing a control chart for fraction defectives and number of defectives.

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Table-7-varied sample size with varied lot size

Sample no. Lot size Sample size Number of defectives

1. 2850 125 10
2. 1860 125 5
3. 4385 200 12
4. 970 80 3
5. 2568 125 8
6. 480 125 1
7. 2850 125 9
8. 1860 125 5
9. 4385 200 10
10. 970 80 1
11. 2568 125 9
12. 480 125 1
13. 2850 125 7
14. 1860 125 3
15. 4385 200 13
16. 970 80 1
17. 2568 125 9
18. 480 125 3
19. 2850 125 10
20. 1860 125 5
21. 4385 200 10
22. 970 80
3
23. 2568 125
7
24. 480 125
2
25. 2850 125
11
Total 55,302 2945
158

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 SQC Application

Solution:-

• Fraction defective (p) = total no. of defective items divided by total no. of items
inspected
= 158/2945
= 0.054 and
• The average no. of pieces inspected per lot (n) = total no. of pieces inspected divided by
no. of lots inspected
= /25
= 117.8

Now, control charts of the p-chart (fraction defective):

i. Central line ( CLp ) = P = 0.054

ii. Upper control limit (UCLp) = P + 3*sq.root of P (1-P)/ n
= 0.054 + 3*sq. Root of 0.054(1-0.054)/117.8
= 0.054+ 0.062
= 0.1164
iii. Lower control limit (LCLp) = p - 3*sq. root of p(1-p)/n
= 0.054 - 0.062
= - 0.008
=0
And, the control parameters of np-chart (no. of fraction defective)
i. Central line ( CLnp ) = np = 0.054*117.8 = 6.36
ii. Upper control limit (UCLnp) = np + 3*sq. root of np(1-p)
= 6.36 + 3*sq. root of 0.054*117.5(1-0.054)
= 6.36 + 7.34
= 13.72
iii. Lower control limit (LCLnp) = np-3*sq. root of np (1-p)
= 6.36 - 7.34
= -0.98
=0

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 SQC Application

From the above calculation, it is already known that :-

The central limit CL = 6.36

The upper control limit UCL = 13.72

The lower control limit LCL = 0

14

12

10

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Fig-11. The calculated constructed nP-control chart

From the above control chart, it can be concluded that since all the number of defective points
are within the upper and lower control limits, the printing production process for pizza box is
under control.

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 SQC Application

4.2. Analysis based on the collected data on the case company

From the check sheet, pareto and cause and effect diagram, it is already known that the color
variation ,reverse side print and irregular cutting are making the product ampicillin 100 mg
defected. These defected product is caused by the most critical factors which are unskilled
operators, old machineries, not scheduled maintenance and procedure even are the main root
causes for the defect making. The company top managements with the help of production &
technique and quality assurance & control department must work together to solve all the
possible causes and results in making good quality printing products continuously .The
preventive action taken to solve all the most likely causes by the top managements for the
unskilled operators giving adequate training; old printing machines replaced with the new latest
technology printing machines currently available in the market; the maintenance department
followed preventive action , corrective action or scheduled maintenance for the old machineries
to maintain ; revising the company procedures like improving the employee’s salary and
assigning additional quality control workers ; the commitment of the company senior
managements ,and finally the existing sense of ownership on employees makes the process of
the product to be within control .Finally, before this case the company did not use the statistical
quality control tools to solve the companies problem rather only visual inspection to decide
whether the product is accepted or rejected. This is not professional but traditional. So that the
company must use statistical quality control tools to for problem solving.

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Chapter five: Conclusion and recommendation

5.1. Conclusion
Nevertheless the company is competing with other printing companies; it has sufficient market
share 25% relative to all printing products and more market share round 65% on carton paper
printing products. The company has committed managers and employees that always try to be
the company competent with other companies and to have a great market share with reasonable
growth.The products of the company are still wanted by the institutional customers.However
institutional customers are satisfied, the company employees and management members are not
applying statistical quality control techniques for solving problems.The quality assurance and
control department of Yekatit Paper Converting P.L.C is advisable to use the techniques which
are more familiar with the process that the factory follows

5.2. Recommendation
The company employees must take training continuously on the printing technology, and the
SQC technique training must be given to the company quality assurance and control staffs .This
capacity building program must be taken periodically. The old printing machineries must be
replaced by the new technology printing machines and quality & ample spare parts must be
available in the company store. The company must follow the preventive maintenance like
periodic, predictive or corrective maintenance rather than breakdown maintenance. The quality
assurance and control department of the company should inspect purchased materials, sample
products, work in process materials, and finished printing products. The respective departments
of the company should create attractive workplace so that quality in stations must be there to
solve problems of the company. The company should assign quality control checkers that works
on raw material, work in progress/preparation and finished printing products inspection.

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 SQC Application

References
1. Daniel kitaw “Industrial Management and Engineering Economy-An Introduction to
Industrial Engineering” Addis Ababa University Press, 2009
2. Katsuyoshi Ishihara, Implementing Quality on The Shop Floor, A Practical Guide,
Quality Resources, New York, 1992.
3. A. V. Feigenbaum, Total Quality Control, Third Edition, McGraw–Hill Book Company,
USA, 1983.
4. Joseph M. Juran, " Juran's Quality Hand book", 5th edition, R.R Donnelly &Sons
company, 1999
5. Hansen B.L & Gahare P.M (1987).Quality Control and its Application, 6 th edition,
Prentice Hall of India
6. J.R.Taylor, Quality Control Systems, procedures for planning Quality Programs,
McGraw-Hill Book Company,Singapore,1989
7. Douglas C. Montgomery “Introduction to Statistical quality control” New Delhi, 1997.
8. Histoshi Kume ‘’ Statistical methods for quality improvement ‘’, seventh edition, 3A
corporation, Japan, 1992.
9. Peters Mears, “ Quality improvement tools and techniques” Mc Graw-Hill, Inc, 1995.
10. Kaoru Ishikawa,” Introduction to quality control “ Chapman &Hall , 1994.

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