Chapter 12: Total Quality Management (Six Sigma Quality)
-Ensuring that the organization’s systems can consistently produce the quality of “Build-In Quality”
-The average customer who has a problem tells 9 others
-attracting a new customer costs 5-6 times as much as keeping the current customer.
-65% of the average organization’s business comes from current customers.
-fitness of use
-value for price paid
Cost of achieving good quality: appraisal costs and prevention costs
Cost of achieving bad quality: internal failure costs and external failure costs
-Prevention Costs: cost of making it right the first time. Quality planning in product design and in production process. Training workforce.
-External failure costs: Cost of poor quality after receipt by customer. customer complaints, returned products, warranty claims, liability costs, lost sales, loss of reputation, lost market share.
-Defects- any characteristic/component of the product that fails to satisfy the customers specifications
-To eliminate defects also means to eliminate variation but completely eliminating defects/variation isn’t possible.
-Method telling you how good your process is.
-Provides a metric to compare processes
-goal is to reduce defects to no more than 4 defects per million units.
-4000 defects per billion units
(# of defects/ # of opportunities for error per unit*#of units)*1,000,000
ex. out of 1500 parts, 1477 were produced free from defects. Based on six sigma theory, how would you rate this performance?
There are 15,333 defects per million units therefore not efficient according to six sigma theory.
-Based on Deming’s PDCA cycle to continually improve the process: Plan, Do, Check, Act. Don’t stop once you have control, then begin the process again to eliminate more defects
-DMAIC: Define, Measure, Analyze, Improve, Control
-Measure: run charts, Pareto charts, Checksheets
-Analyze: cause and effect diagrams (fishbone diagrams)
-Improve: opportunity flow diagrams
-Control: control charts
-certification involved documenting and implementing systems for quality management followed by verification of compliance by an independent accredited third-party
-Deming Price: international quality award
-External Benchmarking: incorporate best practices from industry leaders. Typically looking to benchmark qualities from best leaders.
Returned Products: 175,000
Cost of Training: 120,000
Inspection cost: 20,000
Lost sales: 16,000
Testing cost: 12,500
Cost of rework: 10,000
cost of inspection of rework: 5,000
-Prevention Costs:120,000(cost of training)=120,000
-Internal failure costs: 10,000 (cost of rework)+5,000 (cost of inspection of rework)=15,000
-External Failure costs: 175,000(returned products)+16,000 (lost sales)=191,000
A- to attract new customers
B- to avoid losing existing customers
C-to increase profits
D- to win the Baldridge Award
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