Chapter 1 Making Economic Decisions

Chapter 7 Quality Tools Which tool is best? Tools can serve as the backbone for virtually any type of quality improvement effort (Six Sigma, TQM, 8D) Graphical representations of data help us understand the true importance of data. There is no single one-size fits all solution. Every project and problem is different. Diagnostic Tools Graphical Tools: Histogram Boxplots

Probability distribution plots Main-effects plots Pareto charts Run charts Multi-Vari charts Time-series plots Scatter plots Analytical Tools: Cause-Effect (CE) diagram Failure mode-effects Analysis (FMEA) XY matrix Affinity diagram Fault tree analysis (FTA) Diagnostic Tools Graphical Rep. of Process: Process flow charts Process mapping Cross-functional mapping Deployment diagram Supplier-input-processoutput-customer (SIPOC) diagram Input-process-output (IPO)

diagram Force-field analysis Other Tools: Checksheets Scorecards Problem Definition A good problem definition will include quantified information about the problem, the magnitude of the problem, the baseline, and the gap remaining to reach a benchmark or desired state Be Specific Use declarative format Quantify Be factual

Example of poor problem definition: Reduce restorable time for severity 1 telephone banking problems, focusing on human errors as root cause Example of good problem definition: Reduce restorable time from 51% per month for severity 1 telephone banking problems to 30% or less per month by the third quarter of this year, resulting in annual savings of $4.5M Y = f (x) x1 The transfer equation of Y=f(x) where X =x1, x2, x3,,xn recognizes that a causal relationship exits in any process of action performed. Y is a function of one or many xs where Y is the dependent variable and the xs are independent variables. X can equal quality, delivery time, cost of the product. Therefore Critical to Satisfaction refers to any variable that has significant influence on one of more of the determinants of customer satisfaction. x2 x3 . . . . xn Inputs

Pareto principal suggests that 80% of the of the total error or variance will be caused by 20% of the variables. These are the vital few, while the remaining are the trivial many. The key is to identify these vital few. Process Process ... Uncontrollable variables or factors (noise) Critical-to (CT) Definitions Critical-to-Satisfaction (CTS) characteristics expression of the customers vital needs. Critical-to-Quality (CTQ) characteristics- the product, service and/or transactional characteristics that significantly influence one or more CTS in terms of quality. Critical-to-Delivery (CTD) characteristics- in terms of delivery. Critical-to-Cost (CTC) characteristics

in terms of cost. Critical to Satisfaction Delivery CTD Variables (X) CTD Quality CTD Price CTQ CTQ CTQ CTP

CTP CTP CTC CTC CTC Critical-to-Process (CTP) characteristics- Process parameters that significantly influence a CTQ, CTD, and/or CTC. The Leverage Principle Not all X variable affect the outcome (Y) equally. In Six Sigma process: Identify the variables that exert strong influence (Vital Few). Then we must focus on controlling these variables. Design of Experiments (DOE) is used to achieve this objective. Y X (x1, x2, x3,,xn )

Dependent Independent Output Input-process Effect Cause Symptom Problem Monitor Control The Leverage Principle (Variation Reduction Strategies) Strategy 1 2 3 4 5 6 Total Red. Efforts

Total % Impr. Baseline 4 11 3 2 1 1 -- 12.33 Reduce each by 1 3 10 2

1 0 0 6 10.68 13.4% Eliminate all but one 0 11 0 0 0 0 11

11.00 10.8% Reduce the vital one 4 3 2 1 1 3 9.75 20.9% 6 Total

2 j j 1 8 What does measurement mean? Concept of measurement: seek to compare or contrast a physical attribute of something to a rational and invariant standard performance gap Seek to quantify such gaps for purposes of communications, verification, and analysis. Measure subjective matter (customer satisfaction) through surveys, questionnaires Measure physical characteristics, time characteristics, defect rates. How do we know if customers are happy? Goal is to understand how to better satisfy the customer Survey design considerations:

Types of question formats: Closed-ended (yes/no) Rating scales Open-ended questions / probes Other considerations: Length (not too long) Appearance (simple, not busy) Types of questions (statements of fact or measures of performance or importance)

Focus on one theme Usually best to include a midpoint in rating scales (i.e. odd number) Try to solicit feelings toward your competitors. Identify specific target control groups: At least 10% of customer base Follow up with a friendly collection strategy Stratify various customer segments Develop action plans that are based on Give prior notice, before delivering survey results Personalize the survey and cover letter Communicate results to customers Address confidentiality Follow up with repeat surveys to monitor changes over time Offer an incentive or token of appreciation for completion Likert scale

A subjective scoring system that allows a person being surveyed to quantify likes and preferences on a 5-point scale, with 1 being the least important, relevant, interesting, or other, and 5 being most excellent, important, etc Strongly Agree / Agree / Undecided / Disagree / Strongly Disagree Very Frequently /Frequently /Occasionally /Rarely /Very Rarely /Never Very Important / Important / Moderately Important / Of Little Importance / Unimportant Excellent / Above Average / Average / Below Average /Extremely Poor Almost Always True / Usually True / Often True / Occasionally True / Sometimes But Infrequently True / Usually Not True / Almost Never True Continuous Scales Linear Scale: A scale with equal divisions for equal values 7000 6000 5000 4000 3000 2000 1000 0 0 10

20 30 40 Forecast Period (in Months) 50 60 If the data are nonlinear (i.e., with a very wide range of values), then a logarithmic scale (in this case base 10) may be more appropriate. Analytical Tool: Cause-Effect (CE) Analysis CE diagram (fishbone diagram) uses collective knowledge to identify the main causes (x) of the effect (y) under study. Manufacturing diagrams (Six Ms: measurement, manpower, machines, materials, methods, and mother nature).

Transactional diagrams (4 Ps :Policies, procedures, personnel, environment). Graphical way to show relationships between inputs and outputs. Label each cause with a C (fixed variable), N (Noise) or X (experimental independent variable.) CE Diagrams can be constructed using MINITAB (page 156-157) Cause-Effect (CE) Analysis www.syncfusion.com/.../img/Fishbone_larger.png Analytical Tool: Failure Mode Effects Analysis (FMEA) Used to assess risks from potential product , service, transaction or process failure modes. Widely used in the Analyze and Improve phase, can also be used in Control phase. Helpful to assist in: Improving or designing more robust products, services & processes Designing safer products and processes Designing safer delivery systems Receiving fewer complaints and reducing the organizations guarantee costs

Creating fewer problems or minimizing them in everyday business processes Provide improvement teams with prioritized causes and identifying which causes need to be eliminated urgently. How does FMEA work? Focus on Severity, Occurrence and Detectability of each process. Then calculate the the Risk Priority number (RPN) Each organization can define their own scale (1-10, 1-5 )as long as they are consistent across the organization. Example of FMEA analysis for Auto manufacturer Start with a grid to define the potential failures PRPN Product or Process

Failure Mode Failure Effects Engine Overheat Engine Damage Battery Doesn't retain charge Car doesn't start Brakes Brake failure Can't STOP car SE V Causes

OC C Controls DE RP T N Actions Plans PS PO PD FMEA Severity, Occurrence & Detectability Rating 1 2 3 4 5 6 7 8 9 10 Criteria

Is not noticed by anybody, has no effect Is not noticed, has only an insignificant effect Causes only small irritations Modest loss of performance Fall in performance level; consequence is customer's complaints Fall in performance level that disturbs the capacity to function Disturbed capacity function that leads to an increase in customer dissatisfaction Product or service becomes useless Product or service is illegal Customer or employee is injured or killed. SEVERITY Product or Process Failure Mode Failure Effects

Engine Overheat Engine Damage Battery Doesn't retain charge Car doesn't start Brakes Brake failure Can't STOP car SE V Causes OC C C

FMEA Severity, Occurrence & Detectability Rating Criteria Probability 1 Once every 6-100 yrs <2/1,000,000,000 2 Once every 3-6 yrs <3/10,000,000 3 Once every 1-3 yrs <6/1,000,000

4 Once a year <6/100,000 Product or Failure 5 Once every 6 months Process Mode <1/10,000 6 Once every 3 months Engine <0.33% 7 Once a month

<1% 8 Once a week Batte ry <5% 9 Every 3 to 4 days Brakes <30% 10 More than once a day >30% Overheat Doesn't retain charge

OCCURANCE Failure Effe cts Engine Damage Car doesn't start Can't STOP Brake failure car S E V Causes Radiator 8 hose worn Dry/dead 8 batte ry worn 10 brakepads O D R C

E P C Controls T N Actions Check 5 frequently Service 4 History Replace 2 worn pads FMEA Severity, Occurrence & Detectability Rating 1 Criteria The cause of the failure is obvious and can be hindered simply 2 All units are to be inspected automatically 3 Statistical process controls with a systematic

failure cause test and corresponding Actions 4 Statistical process controls are to be conducted with a systematic failure cause test. 5 6 7 8 9 10 Statistical process controls are to be conducted Product or Failure All units are to be inspected manually and Process Mode avoidance actions installed All units are to be inspectedEngine manuallyOverheat Doesn't retain Manual inspections are to be conducted

Batte ry charge frequently Manual inspections are to be conducted Brakes Brake failure occasionally. The defect caused by the failure is not detectable PROBABILITY OF DETECTION Risk Priority number (RPN) is calculated by multiplying Severity x Occurrence x Detectabillity Failure Effe cts Engine Damage S E V Causes Radiator 8 hose worn

Car doesn't start Can't STOP car Dry/dead 8 batte ry worn 10 brakepads O D C E C Controls T Check 5 frequently 1 Service 4 History Replace 2 worn pads 1 8

R P N Actions Replace 40 Radiator Hose 32 Change Battery Revise Brakes 160 frequently Analytical Tool: XY Matrix XY matrix allows everyone involved with a process to agree on output (ys) critical to the survey, transaction and/or customer. Matrix allows the team to assign the level of importance of each variable (x) to the output (y). EXAMPLE of XY matrix as relates to a coffee house. INPUT VARIABLES (X) OUTPUT VARIABLES (Y) Flavor Aroma Price Acidity RANK

Rankings 10 10 10 2 Coffe e Type Coffe e Amount Grind Time Water Temp Cup Type Cup Size Brew Time 10 9 9 9 2 2 9 10 7 6 3 4

4 6 10 10 2 2 4 5 2 10 10 3 2 2 1 2 320 280 176 144 104 112 174

1310 %RANK 24.4% 21.4% 13.4% 11.0% 7.9% 8.5% 13.3% If the results/ranking were generated during a brainstorm session than they should be verified based on actual data. Graphical Tool: Pareto Charts Pareto charts help identify the top factors (vital few) Order X in descending order.

Add a line showing cumulative % of total. Based on this which inputs would you focus on to insure customer satisfaction? Coffee Pareto Chart 1400 100.0% 90.0% 1200 RANK 80.0% 1000 70.0% 800

60.0% 50.0% 600 40.0% 400 30.0% 20.0% 200 0 10.0% Coffe e Type Coffe e Amount Grind Time

Brew Time Water Temp Cup Size Cup Type 320 280 176 174 144 112 104 Percentage

24.4% 21.4% 13.4% 13.3% 11.0% 8.5% 7.9% Cumulative % 24.4% 45.8% 59.2% 72.5% 83.5%

92.1% 100.0% Count 0.0% Graphical Tool: Histogram with Normal Curve university-software.com/NormalHist.jpg Graphical Tool: Histogram with Normal Curve Minitab: Calc Random Data Integer Stat Basic Statistics Graphical Summary Graphical Tool: Boxplot

Minimum Maximum Median First Quartile Third Quartile Minitab: Stat Basic Statistics Display Descriptive.. Boxplot Graphical Tool: Probability Plot Minitab: Graph Probability Plot Single Graphical Tool: Main-Effects Plot Main-effects plot graphically compares the level of a process output variable at various states of process factors Lines with steeper slopes have larger impact on the output compared to those lines with little or no slope Used to present result from analysis of variance

(ANOVA) Use to examine the level means for each factor, compare the level means for several factors and compare the relative strength of the effects across factors Graphical Tool: Main-Effects Plot MINITAB STAT ANOVA Main Effect Plot Input X1 0 1 X2 0 1 X3 0 1 Output 60

83 72 71 74 69 Graphical Tool: Run Chart A line graph of data points plotted in chronological order that helps detect special causes of variation Understand process variation Analyze data for patterns Monitor process performance Communicate process performance Graphical Tool: Run Chart www.pqsystems.com/.../chart_BasicRunChart.png Graphical Tool:

Time-Series Plot A time series plot is a graph showing a set of observations taken at different points in time and charted in a time series. Outliers: values that do not appear to be consistent with the rest of the data Discontinuities: a break or gap in a process that would normally be continuous Trends: a general tendency in movement or direction Periodicities: any recurrence at regular intervals Graphical Tool: Time-Series Plot cookbooks.opengrads.org/images/3/3b/Precip_ti.. Graphical Tool: Multi-Vari Charts Show patterns of variation from several possible causes on a single chart, or set of charts Obtains a first look at the process stability over time. Can be constructed in various ways to get the best view. Positional: variation within a part or process Cyclical: variation between consecutive parts or process steps Temporal: Time variability

Graphical Tool: Multi-Vari Charts Cus. Size Product Cus. Type Satis. 1 1 2 3.54 2 1 3 3.16

Cus. Size: 1 = small 2 = large 1 2 2 2.42 Product: 2 2 2 2.70 1 1

3 3.31 2 1 2 4.12 2 2 1 3.24 2 2 2

4.47 2 1 2 3.83 1 1 1 2.94 http://www.qimacros.com/qiwizard/multivari-chart.html 1 = Consumer 2 = Manuf. Cus. Type: 1 = Govt 2 = Commercial 3 = Education

Graphical Tool: Multi-Vari Charts Minitab: Stat Quality Tools Multi Vari Chart Graphical Tool: Scatter Plot Show patterns of variation from several possible causes on a single chart, or set of charts Obtains a first look at the process stability over time. Can be constructed in various ways to get the best view. Positional: variation within a part or process Cyclical: variation between consecutive parts or process steps Temporal: Time variability Graphical Tool: Scatter Plot http://mste.illinois.edu/courses/ci330ms/youtsey/scatterinfo.html Graphical Tool: Scatter Plot

http://mste.illinois.edu/courses/ci330ms/youtsey/scatterinfo.html Graphical Tool: Scatter Plot http://mste.illinois.edu/courses/ci330ms/youtsey/scatterinfo.html Graphical Tool: Scatter Plot http://mste.illinois.edu/courses/ci330ms/youtsey/scatterinfo.html Graphical Tools for Process Rep.: Process Flowcharts Visual representation of the major process steps. Useful to compare as is with should be process. 1. 2. 3. 4. 5. Determine the limits of the process. Clearly define where it begins & ends. Determine the steps in the process Put the steps into sequence

Draw the flow using standard symbols. Add arrows to show flow direction. Verify the flow is complete. Is every feedback loop complete? Standard symbols: Graphical Tools for Process Rep.: Process Flowcharts www.breezetree.com/.../ 8D-process-flowchart.png Graphical Tools for Process Rep.: Process Mapping Process mapping is a workflow diagram to bring forth a clearer understanding of a process or series of parallel processes Cross-Functional Mapping As-is vs. To-be Graphical Tools for Process Rep.: Process Mapping www.oregon.gov/.../ images/ iGrafx_Process_Map.JPG

Graphical Tools for Process Rep.: SIPOC Diagram Supplier-Input-Process-Output-Customer diagram. A high-level picture of the process that depicts how the given process is servicing the customer. Useful to discover customer pain points Identify key Ys an Xs with project team. Suppliers Inputs Machine manufacturer Bean supplier Filter supplier Cup supplier Coffee beans Water Filter Cup Brewing machine Process

Outputs Customers Insert simple flow-chart here Coffee Espresso Repeat (daily) New Graphical Tools for Process Rep.: SIPOC Diagram http://www.ptm-consulting.it/immagini/sipoc.jpg Graphical Tools for Process Rep.: IPO Diagram Input-Process-Output diagram is another visual rep. of a process activity. Based on the transfer equation y=f(x) iron me nt

AVL A c Shi ppi curacy ng Env ma nd Process Process Program Program Management Management ppl ier Noise Variables(N) from t de

x1=Forecast x2=Buyer X3 =AVL x4=BOM x5=LT x6=Market Dollar Value Unf ore cas Process Xs SO Ps Su pp ly Ch ain Fixed Variables (C) Y=Lack of materials supplies Graphical Tools for Process Rep.:

SIPOC Diagram http://www.variancereduction.com/newsletters/images/9.6.16.jpg Other Tools: Force-Field Analysis Force-Field Analysis was developed by Lewin (1951) and is widely used to inform decision-making, particularly in planning and implementing change management programs in organizations. It is a powerful method for gaining a comprehensive overview of the different forces acting on a potential policy issue, and for assessing their source and strength. Force -Field Analysis Other Tools: Matrix Analysis Technique for finding new combinations of products or services. List the attributes of the product, service or strategy Draw up a table using these attributes as column headings Write down as many variations of the attribute as possible

within these columns. Select one entry from each column. By mixing one item from each column, you will create a new mixture of components. This is a new product, service or strategy. Finally, evaluate and improve that mixture to see if you can imagine a profitable market for it. Other Tools: Matrix Analysis http://www.mindtools.com/pages/article/newCT_03.htm Other Tools: Checksheets A check sheet is a structured, prepared form for collecting and analyzing data Decide what event or problem will be observed. Develop operational definitions. Decide when data will be collected and for how long. Design the form. Set it up so that data can be recorded simply by making check marks or Xs or similar symbols and so that data do not have to be recopied for analysis. Label all spaces on the form. Test the check sheet for a short trial period to be sure it collects the appropriate data and is easy to use. Each time the targeted event or problem occurs, record data on the

check sheet. Other Tools: Checksheets http://www.asq.org/learn-about-quality/data-collectio n-analysis-tools/overview/check-sheet.html Other Tools: Scorecards A balanced scorecard is a central list of numbers, which show each key part of an organization's success, such as financials, people, operations, suppliers, customers, and support systems. The numbers should measure not just important outcomes, but also the factors which influence, or drive, those outcomes. Other Tools: Scorecards www.jiscinfonet.ac .uk/.../scorecard Other Tools: Affinity Diagram

The affinity diagram organizes a large number of ideas into their natural relationships Record each idea with a marking pen on a separate sticky note or card. Randomly spread notes on a large work surface so all notes are visible to everyone. Look for ideas that seem to be related in some way. Place them side by side. Repeat until all notes are grouped. Participants can discuss the shape of the chart, any surprising patterns, and especially reasons for moving controversial notes. When ideas are grouped, select a heading for each group. Combine groups into supergroups if appropriate. Other Tools: Affinity Diagram http://www.asq.org/learn-a bout-quality/idea-creation-t ools/overview/affinity.html Affinity Diagram http://www.asq.org/learn-a bout-quality/idea-creation-t ools/overview/affinity.html

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