Production Management &TQM

By Jan'2012

Total Quality Management

Course Outline :
Total Quality Management
Nature and Scope
Introduction to quality, quality cost Tools & Techniques for quality management SQC Tools

Total Quality and Business Organization

Quality Management Systems Framework for Organization Quality Quality in Customer, Supplier & Employee relationship

Quality :
In current Global scenario, for most companies, Superior Quality is at the core of their Business Strategy It is well accepted that, You may loose business to lower priced products, but you win it back with superior Product Quality What is Quality ?

As per ISO 9000, Quality is Conformance to Requirements,

As per IEEE, Quality is Meeting Customer's expectations, (Defined + Implied)

Hence, the Quality of a Product or Service is Customer's perception of, the degree to which the Product or Service meets his expectations. 4

Quality & Customer expectations ?

Meeting Customers expectations :
Quality to be looked from customer angle always.

Quality is meeting or exceeding expectations of stake holders, by

understanding their expectations (Stake holders : Customers, Employees and Business partners)

Quantification of Quality ?
As seen earlier, Quality is some what intangible, based on perception. However Quality in the angle of quantification can be looked as

follows : Q = P/E P : Performance (Defined by Organization) E : Expectations (Determined by customer)

Note :
If Q > 1, then customer has a good feeling about the Quality of Product or Service. However again, determination of P & E is most likely be based on perception ?

Quality where ?
Quality to be at all areas : Design Quality Process Quality Product Quality Service Quality Organization Quality

Manufacturing Quality Which areas ?

INCOMING MATERIALS
(INSPECTIONS) (INSPECTION/TESTING)

IN PROCESS

At Supplier / Vendor

QUALITYWHERE ? ? QUALITY WHERE

FEED BACK FROM CUSTOMERS

FINISHED PRODUCTS
(TESTING)

Quality & Customer Satisfaction

Increasingly many Mfg. & Service Org. are using CSAT as the measure of Quality The better companies have established even a link between CSAT & Financial performance (Eg., ACSI) Customer feedback to be got continuously , since customers & their requirements continuously change Customer feedbacks are used for improvements Customer complaints can be also used as opportunity to analyze & improve

Quality & Customer relation

Customer retention to be monitored. Retaining of existing customers is less expensive than getting new ones.

Also Customer referrals plays an important role

It is also better to capture the loyalty of customer by checking their opinions on competitor's products

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Different dimensions of Quality :

Quality has 9 different dimensions: (eg, For a Product = TV)
Performance Features
Primary product characteristics, such as the brightness of picture

Secondary characteristics, added features, such as remote control

Conformance Meeting specs or industry standards, workmanship Reliability

Consistency of performance over time, average time for the unit to fail

Durability
Service

Useful life, includes repairs

Resolution of problems & complaints, ease of repair Human-to- human interface, such as the courtesy of the dealer Sensory characteristics, such as exterior finish Past performance and other intangibles, such as being ranked first

Response Aesthetics

Reputation

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Cost of Quality & Quality improvement strategy

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Cost of Quality...
To be competitive, Customers must be offered the Product/Service with high Quality and at the same time 'lowest possible price'. It is a myth that, these two requirements are contradictory. In fact, they actually go together, in long term. Cost of Quality ? As per Philips Crosby, Cost Of Quality is the expenses of non conformance i.e., the cost of doing things wrong, plus efforts required for doing things right, at all applicable stages.

Eg.,..
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Cost Of Quality which areas ?

Costs related to : Scrap Rework Defects at Customer end + Liabilities Efforts required for Detecting and Preventing Defects : Design, Process, Training, Supplier development,

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Cost of Quality
Like an Iceberg, we see only approx. 10% of the

Quality cost (Defects, scrap, rework, Inspection, Returns,..)

The other approx. 90% of Quality cost are below the

water (hidden things).

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Measurement of Cost of Quality:

The four primary categories of Quality cost :

Prevention Cost (COP) Appraisal Cost (COA) Failure Cost (COF)

Internal failure External failures

COQ = (COP+COA+COF)

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Prevention Cost :
Cost of analyzing existing failures and putting a system to avoid or

repeating of the problem

Example of prevention activities :

Defect Prevention trainings Zero Defect Program Quality Planning & Quality Audit trainings Process Control Preventive Maintenance Supplier evaluation & training

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Appraisal Cost :
Cost of Quality activities throughout the Manufacturing & Delivery process

(Purchase > Design > Production > Delivery), to ensure that non conformance products not passed to next stage
Example of Appraisal activities :
Inspection &Testing at materials receiving (IQC) Reviews (Specs reviews, Design reviews,....) In process testing Final Product Acceptance testing

Audits
......

How much of Appraisal cost, towards Inspection/Testing ?

The level of control/inspection can be decided based on tradeoff between cost of activities & the benefits of early discovery of defects. Traditional view of how much to inspect ? - Refer graph. 18

ANALYSIS OF QUALITY COSTS :

Optimal level of Inspection

Traditional view of how much to inspect ?

Total Quality Control Cost Cost of detecting Defects,

ANNUAL Annual COST Cost

% Products Inspected % PRODUCTS INSPECTED

Cost of defective products to Customers

Failure Costs Internal failures :

Internal failure cost categories :

Cost of repair, rework, scrap,.. Other related failure costs : Re inspection Engineering changes Machine Down time

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External failure Cost :

External failure costs :

After delivery, all costs of not meeting customer requirements, and also the field failures. The category are : Delivery delay Complaint investigation Failure fixing Returned goods Recall cost Warranty claims Liability cost

Apart from the above, cost can be due to customer goodwill lost & lost sales/ market share
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Example of Quality Cost Matrix at different activities

Prevention Design Purchasing Design Review Vendor evaluations Appraisal Qualification test, Incoming inspections Failure Redesign Vendor rejects

Manufacture Planning
Production

Process Capability
Training of Operators

Calibration

Tooling work

Production inspection & testing

Scrap rework & Warranty

Optimum Quality Cost:

In economy of scale, to what extent the Quality conformance

can be driven ?
Optimum quality cost graph- as proposed by Juran, the Quality

guru.....
Total
Quality Cost

Failure Cost Prev. & Appraisal cost Quality Of Conformance 23

Quality Cost Vs. Sales/ Product cost :

As seen, Cost Of Quality (COQ) is the expense of non conformance the cost of doing things wrong, at all levels.
Inspection, Repair, Rework, failure, cost associated with lost sales, customer goodwill,...

It is estimated that, total COQ is approx. 25-30% of sales, in an average company ? (Could be less in best companies)

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Quality improvement strategies

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Quality Improvement Programs :

It is estimated that, 50% or more of the activities are cost added rather

than value added (Activity is value added or non value added, based on customer requirements/payments). Research also reveals that, there is widespread failure to compile many of the Prevention, Appraisal, & Failure costs that are hidden. Only the visible costs (eg., rework, scrap & repair/service costs) are compiled by many.
Hence, to initiate Organization wide Quality improvent programs,

followings are required to be in place : Activity Based Costing , Collection of Correct data at various places, and Top management commitment

However, it is recommended,

to avoid big bang approach of improvement,

but start Quality improvement programs in a simple way say only

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Quality Improvement Strategies :

1:10:100 Rule.

It is well known that, failure detected at beginning of operations are less costly than failure detected in next stage

At each subsequent stage, cost of correction gets multiplied with factor of 10. (Eg.,.Design > Production > Field failure )
Also applies to stages of Prevention > Appraisal > Failure Hence recommended to focus on prevention (Through Q
improvement programs at various stages -Design, Verification, Supplier,..)

1
Prevention Appraisal (correction)

10 100

Failure

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Quality Control Methods/Tools

Quality Control Tools :

There are many simple & popular Quality Control Tools, called the 7 QC Tool

Stratification Check-sheet / Tally Sheet

Scatter diagram
Pareto diagram (80-20 rule, Separating vital few from trivial many, to generate focus
actions)

Cause and effect diagram (Fish bone/ Ishikawa diagram, to find Causes of the
problem, Brainstorming & categorizing under 4M, Identify root causes & then action plans )

SQC/SPC Tools :

Histogram (Shows variation of the process, central tendency & dispertion, Mostly normal
curve distribution with Mean, Median & Mode having same value)

Control Charts (Variations wrt to limits, types of variations,....)

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Pareto Diagram

Pareto diagram is a powerful Quality improvement tool. Pareto analysis is used when a team is faced with many occurrences of problems. Pareto Analysis is a technique that separates out the Vital few from the 'Trivial many'. It is used to identify the most important problems, using 80-20 rule.

Note : Items should be at least 5-10 and also 'others' category should be < 20% of total. An Example -

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An example of Pareto diagram (Defects in SW modules)

Module no M1 M2 M3 M4 M5 M6 M7 M8 Defects 21 20 16 13 8 8 7 6 Cumulative 20.19 39.42 54.81 67.31 75.00 82.69 89.42 95.19
25 120.00 100.00

20

80.00
Defects

15 60.00 10 40.00 5 20.00 0.00 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 Module #

80-20 rule, ; Vital few & Trivial many.

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Causes for Starting Late to Office

100% 140

78%
120 100

60% 80 60 40 20% 20 0 Newspa per Ba th room Dela y Overslept Ga ra ge Door Iron Cloth es Oth ers 0% 40%

Ca u s e s

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Cu m u la tiv e P e rce n ta g e

80%

Fre q u e n cy

Pareto Diagram - Summary :

Technique for separation of Vital few from Trivial many. 80/20 rule, for identification of vital problems, to have focused actions. Usually 80% of the outputs, results from 20% of the vital few input items.

Benefits:

- Analysis is totally data based. Separating vital few is not left to subjective analysis. - During resource limitation, focus on areas with increase probability of success.
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Cause-and-Effect Diagram

Also called RCA/ Fishbone/ Ishikawa diagram

It shows relationship between Effects (Problem/Defect) & all causes influencing the effects.
Each major cause category is represented by a bone.
Work methods, Materials, Measurement, People, Equipment & Environment,.... 4M are generally the main causes

Sub causes under each category are depicted under each bone. Further sub sub causes are identified, as next level bone, until root causes. Hence Cause & Effect diagram is used to determine the actual cause of a defect (root cause).
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Structure of C & E Diagram

Causes (Big Bones) 4M (Men, Material, Method, Machine)
Big Bone

Back Bone
Sub-sub Cause

Effect (Characteristic)
Small Bone
(Sub-cause)

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Cause-and-Effect Diagram

Effect

Causes & Root causes Fish bone diagram / Ishikawa diagram 4Ms Men, Material, Method, Machines

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Cause-Effect Diagram Example of a Cause Effect Diagram

Through Brain storming, allow team members to specify where ideas fit into the diagram Clarify the meaning of each idea using the group, and refine the ideas. For example:
Materials Incorrect Quantity Incorrect BOL
Wrong Destination

Methods Late Dispatch Shipping Delay Spillage

Traffic Delays

Environment Weather Breakdown Wrong Equipment Dispatcher Dirty Equipment

Wrong Directions

Driver
Attitude

Shipping Problems

Equipment

People

Cause-and-Effect Diagram - Summary

Steps for Implementation :

Define the problem/Defect clearly.

Defining the problem clearly, is half solved ? Most common major causes for Quality effects could be, 4M (Men,Method, Machines and Materials) At the end of the brain storming session, group will identify all sub causes and then reach an agreement on what are the most probable causes (root causes), by voting Group can then identify the action plans for each root cause, for implementation..
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SQC/SPC Techniques & Tools

Statistical Quality Control (SQC) Tools

Statistics :
Is defined as Science, that deals with the Collection, Tabulation, Analysis, Interpretaion & Presentation of quantitative data. It helps to analyze data properly, and draw meaningful conclusions.

SQC and its companion SPC (Statistical Process control) were developed

in the US, way back in 1940, by Quality Gurus Shewhart, Deming, Juran & Others.
The main SQC Tools are :
Histogram Process Control Charts Acceptance Sampling Plans

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Histogram :

To think of a set of numbers as having some type of distribution is fundamental, to solving quality control problem. The first simple Statistical technique/tool is 'Histogram' Histogram can give sufficient info. about Variation in the process, leading to Quality problem Histogram is a graphical form of Frequency distribution table and is like a snapshot of the process, showing the variation. Histogram is a graphical representation of voluminous data collected, to show at what value the data tend to cluster about, and how the data are dispersed or spread out. Further, Histograms can also determine the Process capability and 41 compare this, in relation with required Specifications.

Steps to construct Histogram

Gather data on a Check sheet. Find min.,max. values and the Range. Determine the optimum no. of intervals (5 to 20), depends on the spread of data points available Find width of interval = (Range/intervals) Find starting point (Min.value - width/2) Construct a Frequency table, for each interval Draw bars with interval as width & frequency as height. Fit a smooth curve

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Histogram for Delay of Project deliveries

30 25 11,15 16,20 21,25 26,30 31,35 36,40 41,45 46,50 Delay days

No. of Projects

20 15 10 5 0

Imp. Characteristics are : Central tendency (Mean), Dispertion 43 (Standard deviation), Generally it is Normal distribution.

Histogram

Histogram can take different shapes/curves like, Normal distribution (Gaussian distribution) , Rayleigh distribution,.. etc. Most of the variation in nature & in industry, normally follows Normal curve distribution The normal curve is symmetrical, bell shaped distribution with the mean, median & mode having the same value. (Refer graph) Hence Normal distribution has become the basis for many quality control techniques Further, Histograms help to identify reasons for variation and decide on steps to be taken to reduce the variations to a target level.
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Control Charts

Statistics, Central tendency & Dispersion

Before discussing the SPC Tool, the Control chart, it is necessary to have a background in simple statistical fundamentals
Central tendancy, Dispertion, Normal distribution,..

Measure of Central Tendancy : Numerical value that describe the central position of the data. Three measures in common use.

Mean (X bar)
Median (Md) Mode (Mo)

Measure of Dispertion :

Range (R=Xh-Xl) Standard Deviation (S= )

Normal Distribution Bell shaped curve Mean, Median & Mode are same value 46

Variability & Process control

Variability :

The concept of Variation states that, no two parts produced are exactly the same, no matter how carefully they are made.
Variability is the enemy to Quality High Quality will be achieved by tracking the variation and identifying/controlling the causes, to reduce variation. The two types of variations, in any process are : - Common cause variation - Random variation

Common cause variation - are inherent in the system/process and are due to common causes like Design, Process environment, Skill level.. Random variations are due to Special causes or Assignable causes 47

Control Charts :
The Central Limit Theorem : States that, Sampling distributions are normal distributed, even though the Population distribution are not normal However the sample size should not be extremely small for this. Population distribution :
Mean = X bar Std. Deviation = Sigma

Sampling distribution : Sample Mean = X bar

Std. Deviation = Sigma x / n
'n' = Sample size

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SPC and Control Charts :

The use of Control charts is often referred to as SPC

The control chart is a means of visualizing the variations that occur in the Central tendency & the amount of dispertion for a set of Observations
It shows whether or not the process is in a stable state, by adding statistically determined control limits, to the chart. Control charts are used for Quality control, throughout the production systems They act as instrument, for monitoring a process in real time, and controlling the process characteristics, to make it stable 49

Drawing of Control Charts :

Form the framework of chart by determining Mean, Upper Control Limit, & Lower control Limits

Plot the data obtained during inspection of a lot, or sample, in the Framework Based on the graph, decide whether the lot/sample is stable & acceptable and whether the Process is under control.

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Establishing of Control Limits :

Control limits are not fixed or laid down in advance. It is the process, prescribes them.

In a typical control chart, control limits are established at 3 Std. deviation from central line (Due to the probability that, the sample data lie within 3sigma is 99.7% for a normal distribution) : UCL = X bar+3S &
LCL = X bar -3S ; 'X bar' is mean, and S being the std. deviation of the process The variations within control limits : -- will be due to Common Causes - (Under Management control) Variations outside limits : -- will be due to Special Causes - (Under team control) 51

Parts of a Control Chart

Y Axis Variable Data
26.25

Central Line
UCLx X LCLx

Diameter (mm)

26.00 25.75 25.50 25.25 25.00 24.75 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

Sub-Group

Control Limits

Data Points
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Example of a Control Chart (For Defects)

I Chart for Defects
30 1

UCL
3.0SL=24.00

Individual Value

20

e Mean
10 X=11.17

LCL
0 10 20

-3.0SL=-1.662

Observation Number

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Interpreting Control Charts

Interpretation is intended to detect signs of unstability in the process, and to adopt appropriate measures If all points are within control limits, then variations are only due to common causes, and Process is Stable. If any points outside control limits, then Special Cause --- Analyze to eliminate causes Even when all points are within control limits, check for particular arrangements, to know the tendency for instability. --- ( Control chart usage in Preventive role ? )

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Control Limits revision & Continuous improvements :

It is known that, in any normal distribution, 99.73% of population will fall within 3 sigma control limits. Hence, if all points are within the control limits, then Process is considered to be stable & in a state of Statistical control, with only common causes and no special causes.

Revised Central Lines & Control Limits, and Continuous improvements :

During initial capability study, eliminate extremes (out-of-control points having special causes) & recalculate the central line & control limits. Then check all the points wrt. Revised control limits, for stability Further Quality improvement can be done continuously, by reducing the control limits. If points are within lesser control limits, indicates process variations are small with high stability.

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Data types and their respective Control Charts :

Data Types :

Variable or continuous data (Eg., weight, height, temperature,..) Attribute data (Two state data, Eg., defective-nondefective, Within spec-out of spec,..)
Different charts are used for Attribute and Variable data. Control Charts for Variable Data : X bar Chart : Average value of sample lots R Chart : Variations within sample lots

Control Charts for Attribute Data : P Chart : % defectives in sample lots 56

CONTROL CHARTS X CHART : (With Sample lots)

X & R Charts , for Variable data

X Chart : Mean = x UCL = x + A R LCL = x - A R

R Chart : Mean = R UCL = D2 R LCL = D1 R A, D1, D2 are constant values, based on sample size (Tables are available to find the values, for different sample sizes)

CONTROL CHARTS P CHART :

P Chart for Attribute data

P = % defectives in a sample n = sample size P = Average % defectives across many samples UCL = P + 3 P( 100-P)/ n LCL = P - 3 P( 100-P)/ n Mean = P

Process Capability study :

Stable Process : All points are within the control limit 6Sigma, and no special causes exist. Capable Process : This is a stable process, and 6Sigma is lower than Specification limits (USL-LSL), i.e. meeting specifications also. Process capability : This is process's ability to produce products within the Specification limits (desired expectations of customers). Process Capability Index, PCI = (USL-LSL)/6S

If PCI > 1.0, process is considered Capable, and if PCI < 1.0, it is not suitable for the required specification limits. Generally PCI = 1.33 is defacto standard for capable process.

If PCI > 2.0, it is considered highly capable and is called a Six Sigma process

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Control chart usage For achieving Stable & Capable Process

The 3 steps required to make the process stable and capable are :
First characterize the situation of process, with the help of control chart.
Stabilize process by eliminating the special causes. Further bring down the Control limits within the desired Specifications limits, to make it also a Capable Process.

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Acceptance Sampling Plans :

Sampling is necessary due to difficulty in inspection/ testing the entire population, like : Expensive & high time consuming In some cases, need destructive testing Too dangerous to test entire population (eg. New medical drug) Measuring entire population not accurate (due to long hours & fatigue of operators)

(However note that, certain products are required to be tested / inspected 100%).

How successfully the sample represents the population is, function of

Sample size (Typically 4 20) Frequency of Samples being drawn, & Should be truely random sampling 61

Sampling Plans & Lot acceptance :

Sampling Plans & Lot acceptance : Materials received / produced in lots Raw material, Sub assemblies, or FG items

Sampling plan to be defined as (N, n, c)

Random sampling done Samples are fully inspected against standards Decision to accept / reject entire lot taken, based on sample inspection results

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Single & Double Sampling Plans :

Single sampling Plan :
Sampling plan is normally represented by a set (N, n, c)

Acceptance or rejection decision based on one sample quantity (n) from the total lot size (N).
If the defects in the sample lot do not exceed an acceptance criteria (c), then lot is accepted

Double sampling plan :

In the first sample, if the defectives < lower limit (c1), lot accepted & if defectives > upper limit (c2), lot is rejected If it is between c1 & c2, a second larger sample is drawn Then lot is accepted or rejected based on cumulative defects from both of the samples, and comparing with c1 & c2. Double sample plan normally require greater inspection load, but more accurate. 63

Sampling Plans Producer risk & Consumer risk :

With any sampling plan, there is always a certain risk associated, which are :
Good shipment lots might be rejected : Called Producer risk (alpha) Called Consumer risk (beta)

Bad shipment lots might be accepted :

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Operating Characteristics Curve (OC curve), & Performance of Sampling Plan :

OC Curve : Refer graph in next slide...
Relation between % of defective in lots coming into inspection, and the probability of acceptance of the lots, for a given sampling plan. Graph is constructed using poisson's probability distribution. The graph shows the performance of a sampling plan, and shows how well the plan discriminates between good and bad lots.

Acceptance Quality Level (AQL) : Is used to define good lots. If defectives in lots is < AQL % defects, they are considered good lots. And the Probability of rejecting a good lot at AQL, is the Producer's risk (Alpha) Lot Tolerance Percentage Defective (LTPD) : Is used to define bad lots. If defectives in lots is > LTPD % defects, they are considered bad lots. And the probability of accepting a bad lot at LTPD, is the Consumer's risk (Beta)

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100 100 91

Operating Characteristics OPERATING Curve (OC CHARACTERISTIC Curve ) CURVE (O.C)

= 9% Alpha = 9%
n=50, C=1 AQL = 1% LTPD = 8%

91

PROB OF ACCEPTING LOT

9.2 0
0 1 AQL

10

9.2 9.2% BetaB% =

1
% DEFECTIVES IN LOTS 8

8 (LTPD)

Sample size & Accuracy of acceptance Plans :

For Acceptance plan to be a realistic representation of the lots, it is recommended that,
Samples taken should be truely random Sample size should be normally high. The ability of acceptance plans to discriminate between good & bad lots is enhanced by increasing the sample size. Eg., refer the graph. Ideal condition is Sample size= Lot size

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Average Outgoing Quality Curve (AOQ curve), for a particular Sampling Plan
This is relation between Incoming defective lots and outgoing defective lots (after inspection). Refer graph in next slide. As % of defectives in lots coming into inspection increases, the % of defectives in lots leaving inspection increases in the beginning, peaks at AOQL, and then starts decreasing. AOQL = Average Outgoing Quality Limit Given a particular sampling plan, the AOQL is the maximum value of AOQ that can occur, as the defectives % of input lots increases. Sampling plan ensures that, % defectives actually leaving an inspection station will not exceed a certain limit (=AOQL)

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AVERAGE OUTGOING Average Outgoing Quality QUALITY CURVE :

Curve :

AOQ AOQ % % 1.5 DEFEC- 1.5 Defecti TIVES

AOQL

FOR N = 50, C=1

ves

1.0

1.0

1 1

22

33

. % DEFECTIVES IN 44 ..... % Defectives incomingLOTS Lots

How to estimate Acceptance Sampling Plans ?

Normally the values of AQL, Alpha, LTPD, and Beta are negotiated between producers & consumers, for accepting/rejecting the lots. Then Dodge-romig tables (also called QC tables) are used to find the acceptance sampling plan, the set (n, c), using the above values. Further the table also gives the % of AOQL for this sampling plan.

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Use of Quality Control Tools (SQC Tools) in Production System :

Inputs
Raw materials, Parts & Supplies

Conversion
Production Process

Outputs
Products and Services

Sampling Plans, Control Charts & Acceptance tests Quality of Inputs

Control Charts at Sub assemblies

Control Charts & Acceptance tests

Quality of Partially completed products

Quality of Outputs

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Process & Quality Control What world class companies do :

They will have comprehensive & proactive Quality improvement Programs, with specific program of improving Product Quality.

Quality control is aimed at Process control, which controls the ultimate product quality.

Quality control Tools/Charts are used at various stages for feedbacks, and also workers prepare them
Wherever inspection is not possible or impracticle, Acceptance plans are used, to determine if lots of products are meeting customer expectations of acceptance. Note : However for final products, many are moving towards 100% inspection & testing, which is now becoming possible, due to the availability of automated inspection & testing equipments at 72 economical rates