Quality Systems and

Quality Systems Auditing

Dr. Yahya Saleh

Quality Systems & Quality
Systems Auditing

A system is any set of interdependent

parts that perform a function or set of
functions.
Quality Management Systems include:
Plans
Activities
Events
Quality Systems & Quality
Systems Auditing

Quality Audits
Are a part of the evaluation and assessment
process
Should be systematic and independent to
identify the activities and results
Are a form of performance audit
Need the desired state documented
Quality Management Systems

Planning
Elements of a Performance
Quality
Management Measurement
System (feedback)
Improvement
 Quality Systems

A quality system is “the collective plans, activities and events

that are provided to ensure that a product, process, or service
will satisfy given needs.”

The best evidence for the

existence of a quality system
is the quality manual.
Quality Manual
The quality manual provides
evidence that:

a process has been

defined

the procedures are

approved

the procedures have

control mechanisms
Quality Manual
The quality manual provides
NO evidence that:

the system has

been implemented

Implementation is verified through

quality audit
 Formal Guidelines (Approaches)
to Quality Control

ISO 9001 MBNQA

ISO/TS 16949 QS-9000

ISO 9001

ISO 9000 is a series of standards, developed

and published by the International
Organization for Standardization (ISO), that
define, establish, and maintain an effective
quality assurance system for manufacturing
and service industries
ISO/TS 16949

Aims to the development of a quality management

system that provides for continual improvement,
emphasizing defect prevention and the reduction of
variation and waste in the supply chain. It is based
on the ISO 9001 and the first edition was published
in March 2002 as ISO/TS 16949:2002.
QS-9000

QS9000 is a quality standard developed by a joint

effort of the "Big Three" automakers, General
Motors, Chrysler and Ford. It was introduced to
the industry in 1994. It has been adopted by
several heavy truck manufacturers in the U.S. as
well. Essentially all suppliers to the domestic
automakers need to implement a QS9000 system.
Quality Management System

Each approach has the goal of providing a

framework through which a quality control
program can be:
Identified
Designed
Developed
Implemented
Enhanced
Quality Management
Systems

ISO 9000
 ISO 9000 Family
There are many standards in the ISO 9000 family,
including:
 ISO 9000:2005 - covers the basic concepts and
language of how to build a quality system.
 ISO 9001:2008 - sets out the requirements of a quality
management system
 ISO 9002: same as 9001 but it does not cover product
realization requirements (now obsolete).
 ISO 9004:2009 - focuses on how to make a quality
management system for long term success. Not meant
for certification rather how to build strategy of quality.
 ISO 19011:2011 - sets out guidance on internal and
external audits of quality management systems.
Popular Standards
ISO 14000 Environmental management
ISO 3166 Country codes
ISO 26000 Social responsibility
ISO 50001 Energy management
ISO 31000 Risk management
ISO 22000 Food safety management
ISO 27001 Information security
management
ISO 20121 Sustainable events
Quality Management Systems

Eight Quality Management Principles that

are the basis for ISO 9000 standards:
1. Customer focus
2. Leadership
3. Involvement of people
4. Process approach
5. Systems approach to management
6. Continual improvement
7. Factual approach to decision making
8. Mutually beneficial supplier relationships
ISO 9000 Process approach
Quality Management Systems
Eight Steps for ISO 9000 Included in
development and implementation:
Determine the needs and expectations of customers and other
constituents

Establish quality policy and quality objectives for the

organization

Determine the processes and responsibilities necessary to attain

the quality objectives

Determination and provision of the resources necessary to

attain the quality objectives
Quality Management Systems

Eight Steps for ISO 9000 continued

Establish measures for the effectiveness and efficiency of each
process

Application of these measures to determine the effectiveness

and efficiency of each process

Determination of means of preventing nonconformities and

eliminating their causes

Establishment and application of a process for continual

improvement of the quality management system
Example on Quality Policy

Nestlé
At Nestlé, our commitment is to never
compromise on the safety, compliance and
quality of our products and services. This
requires everybody to be engaged, to
understand their responsibility and to be
empowered to take action in order to
protect individuals and families, our
customers and our brands.
Quality Management Systems

Self-Assessment and Improvement Path

for ISO 9000

Comprehensive self-assessment to review actual processes and

result of the quality policies and objectives

Identification of areas for improvement based on the results of

the internal audit
Quality Management Systems

Self-Assessment and Improvement Path

for ISO 9000
Establishment of objectives for the improvement efforts

Development of improvement plans

Implementation of the improvement plan

Re-audit to assure the improvement plans achieved the desired

results
Self-Assessment tool
Quality Management Systems

Quick Reminder of most famous QMS:

QS-9000
QS-9000-specialized standard for U.S.
Automotive suppliers.

ISO/TS 16949:2000(E)
An international quality management system
specification for the supply chain.
Quality Management Systems

Malcolm Baldrige National Quality Award

(MBNQA)

Created in 1987

Highest recognition a U.S. organization can

receive
Quality Management Systems

MBNQA continued
Six categories for organizations
Manufacturing
Service
Small business
Education
Health care
Nonprofit
Quality Management Systems

Seven Categories of Criteria for MBNQA

Category Business Education Health Care
Number
1 Leadership Leadership Leadership
2 Strategic Planning Strategic Planning Strategic Planning
3 Customer and Market Student, Stakeholder, and Focus on Patients, other
Focus Market Focus Customers, and Markets
4 Measurement, Analysis, Measurement, Analysis, Measurement, Analysis,
and Knowledge and Knowledge and Knowledge
Management Management Management
5 Human Resource Focus Faculty and Staff Focus Staff Focus
6 Process Management Process Management Process Management
7 Business Results Organizational Organizational
Performance Results Performance Results
 Quality Auditing

A quality audit compares what is available to what is supposed to be.

Therefore a quality audit cannot be performed unless what
is supposed to be is properly documented. It is impossible
to determine the degree of compliance with an undefined
state. For a quality system audit, the quality manual is
the definition of what is supposed to be.

Quality Audit can be internal or external

 Specific Types of Quality Audits
Tunner’s Generic Types (1990)
Policy Audit
SOP
compares written policies and procedures
with standards and specifications

Practice Audit SOP

compares actual practices with established
procedures.

Product Audit
compares performance of a product with
its specifications.
Specific Types of Quality
Audits..cont.

Four Dimensions of Audits (Mills, 1989)

The purpose of the audit-why?

The object of the audit-what?
The nature of the audit-who? int. vs. ext.
The method of the audit-how? On site/report
 Audit Types
Arter’s Classification

First-Party Audit
Quality auditor in your organization
audits your quality system.

Second-Party Audit
Quality auditor in your organization
audits your supplier’s quality system.

Third-Party Audit
MBNQA audit team audits your
organization’s quality system.
Performing a Quality Audit
(ANSI/ASQC Q1-1986)

The above systems list the responsibilities

of:

Audit Client Responsibilities: the organization

who conduct the audit (such as government,
ISO, MBNQA organisation).
Auditee Responsibilities

Auditor Responsibilities
Audit Client Responsibilities

Initiate audit
Define reference standards
Receive audit report
Abstain from any undue interference with audit
activities
Determine follow up activities
Auditee Responsibilities

 Appoint someone to accompany auditor

 Provide access to facilities and evidential materials
 Provide adequate working facilities
 Cooperate with the auditors
 Attend meetings
 Review findings
 Take corrective action
 Abstain from any undue interference with the audit
Auditor Responsibilities

 Comply with applicable audit standards

 Clarify and articulate the audit objectives
 Effectively and efficiently plan and implement the audit
 Report the audit results
 Audit results of corrective actions
 Retain and safeguard audit working papers
 Maintain independence from organization being audited
Quality Information Systems

Information Systems are designed to:

Collect

Process

Store
And
Transmit data & information
Quality Information Systems

Quality Information Systems (QIS) can

be:
Entirely electronic
Entirely manual
A combination of electronic and manual
Quality Information Systems

3 key components

Data

Data Flows

Processing Logic
 Problem Identification, Analysis,
Reporting, & Corrective Action System

Information
Flows
Quality Information System

Data Accuracy and Security

Check and verify on a regular basis

Improve accuracy by using automatic data

entry approaches such as:
Barcodes
RFID
Automated measurement systems
 Quality Information System
(QIS)

An information system designed to meet the needs of the

quality system. Data accuracy and integrity are musts.

QIS

IN OUT
 Six Sigma
Dr. Yahya Saleh

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2–1
 Six Sigma
 Six-Sigma is a business strategy that seeks to improve business
performance by identifying and removing the causes of defects
and errors

 Motorola developed the Six-Sigma program in the late 1980s as a

response to the demand for their products.

 The focus of six-sigma is reducing variability in key product quality

characteristics to the level at which failure or defects are
extremely unlikely.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2–2
 Six Sigma
 Probability of producing a product
within these specifications is 0.9973,
which corresponds to 2700 parts per
million (ppm) defective.

 This is referred to as three-sigma

quality performance which sounds
pretty good

 Now suppose we have a product that

consists of an assembly of 100
independent components and all 100
parts must be non defective for the
product to function satisfactorily.

 The probability that any specific unit of

product is non defective is

0.9973 * 0.9973 *. . .* 0.9973 = 0.7631

 23.7% of products are defective.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2–3
  The Motorola six-sigma concept
is to reduce the variability in the
process so that the specification
limits are at least six standard
deviations from the mean.
 Generally, we can only make
predictions about process
performance when the process
is stable.
 If the mean is drifting around,
and ends up as much as 1.5
standard deviations off target, a
prediction of 3.4 ppm defective
may not be very reliable,
because the mean might shift
by more than the “allowed” 1.5
standard deviations.
© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2–4
 Six Sigma Quality
 Process performance is not predictable unless the process
behavior is stable.

 However, no process or system is ever truly stable, and even in

the best of situations, disturbances occur.

 These disturbances can result in the process mean shifting off-

target, an increase in the process standard deviation, or both.

 The concept of a six-sigma process is one way to model this

behavior.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2–5
 Six Sigma
 Typical six-sigma projects are
four to six months in duration
and are selected for their
potential impact in the
business.

 Six-sigma uses a specific five-

step problem solving
approach: Define, Measure,
Analyze, Improve, and
Control (DMAIC).

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2–6
 Six Sigma (Example)
 Consider the visit to a fast-food restaurant. The customer orders a
typical meal: a hamburger bun, meat, special sauce, cheese, pickle,
onion, lettuce, and tomato, fries, and a soft drink.
 This product has ten components (independent). Is 99% good quality
satisfactory?
P(Single meal good) = (0.99)^10 = 0.9044
 Now suppose that the customer is a family of four.
P{All meal good} = (0.9044)^4 = 0.6690
 Now suppose that this hypothetical family of four visits this restaurant
once a month
P{All visits during the year good} = (0.6690)^12 = 0.0080

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2–7
 Generations of Six Sigma
 Since its origins, there have been three generations of six-sigma
implementations.
 Generation I six-sigma focused on defect elimination and basic variability
reduction. - Motorola
 In Generation II six-sigma the emphasis on variability and defect reduction
remained, but now there was a strong effort to tie these efforts to projects
and activities that improved business performance through cost reduction.
– General Electric
 In Generation III, six-sigma has the additional focus of creating value
throughout the organization and for its stakeholders. - Caterpillar and Bank
of America

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2–8
 Where can Six Sigma be applied?
 Some examples of situations where a six-sigma program can be
applied to reduce variability, eliminate defects, and improve
business performance include:
 Meeting delivery schedule and delivery accuracy targets
 Eliminating rework in preparing budgets and other financial documents
 Proportion of repeat visitors to an e-commerce Web site, or proportion of
visitors that make a purchase
 Minimizing cycle time or reducing customer waiting time in any service
system
 Reducing average and variability in days outstanding of accounts receivable
 Optimizing payment of outstanding accounts
 Minimizing stock-out or lost sales in supply chain management

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2–9
 Where can Six Sigma be applied?
 Minimizing costs of public accountants, legal services, and other
consultants
 Improving inventory management (both finished goods and work in-
process)
 Improving forecasting accuracy and timing
 Improving audit processes
 Closing financial books, improving accuracy of journal entry and posting
(a 3 to 4% error rate is fairly typical)
 Reducing variability in cash flow
 Improving payroll accuracy
 Improving purchase order accuracy and reducing rework of purchase
orders
© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 10
 Six Sigma Organization Structure

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 11
 Beyond Six-Sigma—DFSS and Lean
 In recent years, two other tool sets have become identified with
six sigma, lean systems, and design for six-sigma (DFSS).

 Design for Six-Sigma seeks to take customer requirements and

process capabilities into consideration to design products and
services that increase product and service effectiveness as
perceived by the customer.

 DFSS spans the entire development process from the

identification of customer needs to the final launch of the new
product or service.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 12
 DFSS
 Traditionally, six-sigma is used to achieve operational excellence,
while DFSS is focused on improving business results by increasing
the sales revenue generated from new products and services and
finding new applications or opportunities for existing ones.

 An important gain from DFSS is the reduction of development

lead time

 The DMAIC process is also applicable, although some

organizations and practitioners have slightly different approaches
(DMADV, or Define, Measure, Analyze, Design, and Verify, is a
popular variation).

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 13
 DFSS
 An important step in the DFSS process is obtaining customer
input.

 Customer input is obtained through voice of the customer (VOC)

activities designed to determine what the customer really
wants, to set priorities based on actual customer wants, and to
determine if the business can meet those needs at a competitive
price that will enable it to make a profit.

 Some organizations use Quality Function Deployment or QFD to

focus the voice of the customer directly on the design of a
product, service, or process.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 14
 QFD
 Quality Function Deployment is a technique to transform customer
requirements into design quality, down to component level and specific
elements of the manufacturing system.
 QFD was developed in Japan in the 1970s (@ Mitsubishi Heavy
Industries).
 An essential component of QFD is the house of quality.
 This is essentially a matrix with rows corresponding to customer
requirements and columns representing the technical response to
these requirements.
 Information about the importance of each requirement and about how
well the company’s products or services compare to the competition is
obtained.
 Analysis of this information leads to directions of improvement in the
design of the product or service.
© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 15
 QFD
 It is fairly typical to step this process down from a high level that begins
with the voice of the customer data all the way down to individual
process steps and the critical-to-process variables that must be
controlled to achieve these results.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 16
 DFSS

 DFSS makes specific the recognition that every design decision is a

business decision, and that the cost, manufacturability, and
performance of the product are determined during design.
 Specifically, matching the capability of the production system and
the requirements at each stage or level of the design process
(refer to Figure 2.8) is essential.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 17
 DFSS
 Throughout the DFSS process, it is important that the following
points be kept in mind:
 Is the product concept well identified?
 Are customers real?
 Will customers buy this product?
 Can the company make this product at competitive cost?
 Are the financial returns acceptable?
 Does this product fit with the overall business strategy?
 Is the risk assessment acceptable?
 Can the company make this product better than the competition?
 Can product reliability and maintainability goals be met?
 Has a plan for transfer to manufacturing been developed and verified?

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 18
 Lean
 Lean is a series of practices that focus on the systematic
elimination of waste and the promotion of efficiency.

 Waste can also include rework of doing something over again to

eliminate defects introduced the first time) or scrap.

 Rework and scrap are often the result of excess variability, so

there is an obvious connection between six-sigma and lean. An
important metric in lean is the process cycle efficiency PCE),
defined as

Process cycle efficiency = Value-add time/Process cycle time

 In a lean process, the PCE will exceed 25%

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 19
 Lean
 Process cycle time is also related to the amount of work that is in-
process through Little’s Law

Process cycle time = Work-in-process / Average completion rate

 Example:
 Consider a mortgage refinance operation at a bank.
 If the average completion rate for submitted applications is 100
completions per day, then there are 1,500 applications waiting for
processing.
 The process cycle time = 1500/100 = 15 days

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 20
 How they fit together?

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 21
 Six Sigma, DFSS, Lean
 Six-sigma (often combined with DFSS and lean) has been much
more successful than its predecessors, notably TQM.

 The project-by-project approach and the focus on obtaining

improvement in bottomline business results has been
instrumental in obtaining management commitment to six-sigma.

 Another major component in obtaining success is driving the

proper deployment of statistical methods into the right places in
the organization.

 The DMAIC problem-solving framework is an important part of

this.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 22
 DMAIC Process
 DMAIC (typically pronounced “doh-MAY-iclc”) is a structured five
step problem-solving procedure widely used in quality and
process improvement.

 The letters DMAIC form an acronym for the five steps: Define,
Measure, Analyze, Improve, and Control.

 There are “tollgates” between each of the major steps in DMAIC.

At a tollgate, a project team presents its work to managers and
“owners” of the process.

 Tollgates are where the project is reviewed to ensure that it is on

track; they provide a continuing opportunity to evaluate whether
the team can successfully complete the project on schedule.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 23
 DMAIC Process

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 24
 Lean tools by DMAIC phase

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 25
 Importance of Financial Results
 A project should represent a potential breakthrough in the sense that it
will result in a major improvement in the product or service.
 Project impact should be evaluated in terms of its financial benefit to
the business, as measured and evaluated by the finance or accounting
unit.
 This financial systems integration is standard practice in six-sigma and
should be a part of any DMAIC project, even if the organization isn’t
currently engaged in a six-sigma
 The value opportunity of projects must be clearly identified and
projects must be well aligned with corporate business objectives at all
levels.
 Aligning projects with both business-unit goals and corporate-level
metrics helps ensure that the best projects are considered for selection.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 26
 Project Definition and Selection
 Approaches to Project Definition and Selection:
 Opportunistic
 They typically are not the basis for long-term success; most easy
opportunities soon are exhausted.
 Tied to strategic business objectives
 Based on strategic business objectives.

 Ideally, projects are strategic and well aligned with corporate

metrics and are not local (tactical).

 Some companies use a dashboard system—which graphically

tracks trends and results—to effectively facilitate the project
selection and management process.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 27
 Example 2.1 What should be considered
when evaluating proposed projects?
 Suppose that a company is operating at the 4s level (that is,
about 6,210 ppm defective, assuming the 1.5s shift in the mean
that is customary with six-sigma applications). This is actually
reasonably good performance, and many of today’s organizations
have achieved the 4–4.5s level of performance for many of their
key business processes. The objective is to achieve the 6s
performance level (3.4 ppm). What implications does this have
for project selection criteria? Suppose that the criterion is a 25%
annual improvement in quality level. Then to reach the six-sigma
performance level, it will take x years, where x is the solution to

3.4 = 6210(1 - 0.25)x

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 28
 Example 2.1 What should be considered
when evaluating proposed projects?
 It turns out that x is about 26.1 years. Clearly, a goal of improving
performance by 25% annually isn’t going to work—no
organization will wait for 26 years to achieve its goal. Quality
improvement is a never-ending process, but no management
team that understands how to do the above arithmetic will
support such a program.

 Raising the annual project goal to 50% helps a lot, reducing x to

about 11 years, a much more realistic time frame. If the business
objective is to be a six-sigma organization in five years, then the
annual project improvement goal should be about 75%.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 29
 Example 2.1 What should be considered
when evaluating proposed projects?
 These calculations are the reasons why many quality-
improvement authorities urge organizations to concentrate their
efforts on projects that have real impact and high payback to the
organization. By that they usually mean projects that achieve at
least a 50% annual return in terms of quality improvement.

 Is this level of improvement possible? The answer is yes, and

many companies have achieved this rate of improvement. For
example, Motorola’s annual improvement rate exceeded 65%
during the first few years of their six-sigma initiative. To do this
consistently, however, companies most devote considerable
effort to project definition, management, execution, and
implementation. It’s also why the best possible people in the
organization should be involved in these activities.
© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 30
 Project Charter - Example

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 31
 The Define Step
 Project Charter - One of the first items that must be completed in
the define step is a project charter.

 The charter should also identify the customer’s critical-to-quality

characteristics (CTQs) that are impacted by the project.

 Graphic aids are also useful in the define step; the most common
ones used include process maps and flow charts, value stream
maps (see Chapter 3), and the SIPOC diagram.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 32
 SIPOC
 SIPOC is an acronym for Suppliers, Input, Process, Output, and
Customers, defined thus:
 The suppliers are those who provide the information, material, or other
items that are worked on in the process.
 The input is the information or material provided.
 The process is the set of steps actually required to do the work.
 The output is the product, service, or information sent to the customer.
 The customer is either the external customer or the next step in the
internal business.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 33
 SIPOC

 SIPOC diagrams give a simple overview of a process and are useful

for understanding and visualizing basic process elements.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 34
 Define Tollgate

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 35
 The Measure Step
 The purpose of the measure step is to evaluate and understand
the current state of the process.
 This involves collecting data on measures of quality, cost, and
throughput/cycle time.
 It is important to develop a list of all of the key process input
variables (sometimes abbreviated KPIV) and the key process
output variables (KPOV).
 Data may be collected by examining historical records, but this
may not always be satisfactory, as the history may be incomplete,
the methods of record keeping may have changed over time, and,
in many cases, the desired information never may have been
retained.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 36
 The Measure Step
 The data that are collected are used as the basis for determining
the current state or baseline performance of the process.

 The capability of the measurement system should be evaluated.

 This may be done using a formal gauge capability study (called

gauge repeatability and reproducibility, or gauge R & R).

 The data collected during the measure step may be displayed in

various ways such as histograms, stem-and-leaf diagrams, run
charts, scatter diagrams, and Pareto charts.

 At the end of the measure step, the team should update the
project charter (if necessary), re-examine the project goals and
scope, and re-evaluate team makeup.
© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 37
 Measure Tollgate

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 38
 The Analyze Step
 In the analyze step, the objective is to use the data from the
measure step to begin to determine the cause-and-effect
relationships in the process and to understand the different
sources of variability.

 It is important to separate the sources of variability into common

causes and assignable causes.

 Commonly used Analyze Step tools are

 Control Charts
 Hypothesis Testing
 Confidence Interval
 Regression Analysis
 Discrete Event Computer Simulation

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 39
 FMEA
 Failure modes and effects analysis (FMEA) is another useful tool
during the analyze stage.

 FMEA is used to prioritize the different potential sources of

variability, failures, errors, or defects in a product or process
relative to three criteria:
 The likelihood that something will go wrong (ranked on a 1 to 10 scale where 1 =
not likely and 10 = almost certain).
 The ability to detect a failure, defect, or error (ranked on a 1 to 10 scale where 1 =
very likely to be detected and 10 = very unlikely to be detected).
 The severity of a failure, defect, or error (ranked on a 1 to 10 scale where 1 = little
impact and 10 = extreme impact).

 The three scores for each potential source of variability, failure,

error, or defect are multiplied to obtain a risk priority number
(RPN).
© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 40
 Analyze Tollgate

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 41
 The Improve Step
 In the improve step, they turn to creative thinking about the
specific changes that can be made in the process and other things
that can be done to have the desired impact on process
performance.

 A broad range of tools can be used in the improve step.

 Redesigning the process to improve work flow and reduce bottlenecks and
work-in process will make extensive use of flow charts and/or value stream
maps.
 Mistake-proofing (designing an operation so that it can be done only one
way—the right way) an operation will be useful.
 Designed experiments are probably the most important statistical tool in
the improve step.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 42
 Improve Tollgate

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 43
 The Control Step
 The objectives of the control step are to complete all remaining work
on the project and to hand off the improved process to the process
owner along with a process control plan and other necessary
procedures to ensure that the gains from the project will be
institutionalized.
 The process owner should be provided with before and after data on
key process metrics, operations and training documents, and updated
current process maps.
 The process control plan should be a system for monitoring the solution
that has been implemented, including methods and metrics for periodic
auditing.
 Control charts are an important statistical tool used in the control step
of DMAIC

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 44
 Control Step
 The transition plan for the process owner should include a
validation check several months after project completion.

 It is important to ensure that the original results are still in place

and stable so that the positive financial impact will be sustained.

 It is not unusual to find that something has gone wrong in the

transition to the improved process.

 The ability to respond rapidly to unanticipated failures should be

factored into the plan.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 45
 Control Tollgate

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 46
 Example 2.2 Litigation Documents
Litigation usually creates a very large number of documents. These can be
internal work papers, consultants’ reports, affidavits, court filings,
documents obtained via subpoena, and papers from many other sources.
In some cases, there can be hundreds of thousands of documents and
millions of pages. DMAIC was applied in the corporate legal department of
DuPont, led by DuPont lawyer, Julie Mazza, who spoke about the project at
an American Society for Quality meeting [Mazza (2000)]. The case is also
discussed in Snee and Hoerl (2005). The objective was to develop an
efficient process to allow timely access to needed documents with
minimal errors. Document management is extremely important in
litigation; it also can be time-consuming and expensive. The process was
usually manual, so it was subject to human error, with lost or incorrect
documents fairly common problems. In the specific case presented by
Mazza, there was an electronic data base that listed and classified all of
the documents, but the documents themselves were in hard copy form.
© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 47
 Example 2.2 Litigation Documents
DEFINE
The DuPont legal function and the specific legal team involved in this
specific litigation were the customers for this process. Rapid and error-free
access to needed documents was essential. For example, if a request for a
document could not be answered in 30 days, the legal team would have to
file a request for an extension with the court. Such extensions add cost,
time, and detract from the credibility of the legal team. A project team
consisting of process owners, legal subject-matter experts, clerks, an
information systems specialist, and Mazza (who was also a black belt in
Dupont’s six-sigma program) was formed. The team decided to focus on
CTQs involving reduction of cycle time, reduction of errors, elimination of
non-value-added process activities, and reduction of costs. They began by
mapping the entire document-production process, including defining the
steps performed by DuPont legal, outside counsel, and the outside
documents-management company. This process map was instrumental in
identifying non-value-added activities.
© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 48
 Example 2.2 Litigation Documents
MEASURE
In the measure step, the team formally measured the degree to which the
CTQs were being met by reviewing data in the electronic data base;
obtaining actual invoices; reviewing copying and other labor charges, the
costs of data entry, and the charges for shipping, court fees for filing for
extensions; and studying how frequently individual documents in the data
base were being handled. It was difficult to accurately measure the
frequency of handling. Many of the cost categories contained non-value-
added costs because of errors, such as having to copy a different
document because the wrong document had been pulled and copied.
Another error was allowing a confidential document to be copied.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 49
 Example 2.2 Litigation Documents
ANALYZE
The team worked with the data obtained during the measure step and the
knowledge of team members to identify many of the underlying causes
and cost exposures. A failure modes and effects analysis highlighted many
of the most important issues that needed to be addressed to improve the
system. The team also interviewed many of the people who worked in the
process to better understand how they actually did the work and the
problems they encountered. This is often very important in
nonmanufacturing and service organizations because these types of
operations can have a much greater human factor.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 50
 Example 2.2 Litigation Documents
ANALYZE
Some of the root causes of problems they uncovered were:

1. A high turnover rate for the contractor’s clerks

2. Inadequate training

3. Inattention to the job, caused by clerks feeling they had no ownership

in the process

4. The large volume of documents

The team concluded that many of the problems in the system were the
result of a manual document-handling system.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 51
 Example 2.2 Litigation Documents
IMPROVE
To improve the process, the team proposed a digital scanning system for
the documents. This solution had been considered previously but always
had been discarded because of cost. However, the team had done a very
thorough job of identifying the real costs of the manual system and the
inability of a manual system to ever really improve the situation. The
better information produced during the measure and analyze steps
allowed the team to successfully propose a digital scanning system that
the company accepted.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 52
 Example 2.2 Litigation Documents
IMPROVE

The team worked with DuPont’s information technology group to identify

an appropriate system, get the system in place, and scan all of the
documents. They remapped the new process and, on the basis of a pilot
study, estimated that the unit cost of processing a page of a document
would be reduced by about 50%, which would result in about $1.13 million
in savings. About 70% of the non-value-added activities in the process
were eliminated. After the new system was implemented, it was proposed
for use in all of the DuPont legal functions; the total savings were
estimated at about $10 million.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 53
 Example 2.2 Litigation Documents
CONTROL
The control plan involved designing the new system to automatically track
and report the estimated costs per document. The system also tracked
performance on other critical CTQs and reported the information to users
of the process. Invoices from contactors were also forwarded to the
process owners as a mechanism for monitoring ongoing costs.
Explanations about how the new system worked and necessary training
were provided for all those who used the system. Extremely successful,
the new system provided significant cost savings, improvement in cycle
time, and reduction of many frequently occurring errors.

© John Wiley & Sons, Inc. Managing, Controlling & Improving Quality by Montgomery, Jennings & Pfund 2 – 54
Designing Quality into
Products and Services

Dr. Yahya Saleh

1
Designing Quality into
Products and Services

Must be designed to satisfy and delight

the customer
Design begins with input from the
customer
Two approaches:
Seven management tools
Quality function deployment (QFD).
Reliability
2
 The Seven Management Tools

• Affinity Diagram
• Tree Diagram
• Process Decision Program Chart (PDPC)
• Matrix Diagram
• Interrelationship Digraph
• Prioritization Matrix
• Activity Network Diagram

3
Affinity Diagram

Similar to a cause and effect diagram

Organizes ideas and facts into categories

Ideas with affinities for each other are

placed in the same category

4
 Affinity Diagram

Affinity Diagram for Roger’s Take-Out Pizza

Product Service Cost Features

Extra Value 30 Min. Max. Wait Lower Price More Topping Variety

Delivered Hot Friendly Drivers No Delivery Charge More Crust Variety

Courteous Order Takers Coupons with Order

Affinity Diagrams help to organize ideas and facts which

have an affinity for each other into categories. In this example,
Lower Price and No Delivery Charge have an affinity and
are placed into the Cost category.
5
 Tree Diagram
Partial Tree Diagram for Roger’s Take-Out Pizza

Category Objective Strategy

Extra Meat
Extra Value
More Cheese

Product Fresh Vegetables

Heated Compartments
in Delivery Vans
Delivered Hot
Insulated Boxes

Optimum Routing
30 Min. Max. Wait
Batch Delivery
Employee Training
Service Friendly Drivers
Driver Rotation
Employee Training
Courteous Order Takers
Secret Shoppers

Tree Diagrams facilitate planning actions shown on the

affinity diagram. 6
Process Decision Program
Chart (PDPC)

A framework for developing contingency

plans
Starts with a tree diagram
Negative outcomes are considered for
each branch
Contingency plans are listed

7
Process Decision Program
Chart

Partial Process Decision Program Chart for Roger’s Take-Out Pizza

Possible Contingency
Category Objective Strategy Outcomes Plan

30 Min. Max. Wait Computer-Based

Continued Training
Employee Training High Turnover
Service Friendly Drivers
Driver Rotation Longevity
Raises
Courteous Order Takers

Job
Enrichment

8
Matrix Diagram

Graphically depicts relationships between

concepts
Shows relationship between desired
objectives and possible actions
Strength of relationship is indicated by
shading

9
 Matrix Diagram
Partial Matrix Program Chart for Roger’s Take-Out Pizza

Improved Improved Improved Improved

Action Employee Kitchen Delivery Controls
Objective Training Process Process

30 Min. Max. Wait

Friendly Drivers

Courteous Order Takers

KEY: Strong relationship

Moderate relationship

Weak relationship

10
Interrelationship Digraph

Depicts causal relationships among the

categories in the affinity diagram

Arrows indicate which factors are drivers

of other categories

11
Interrelationship Digraph

Interrelationship Digraph for Roger’s Take-Out Pizza

Service

Product Cost

Features

12
Prioritization Matrix

Allows the comparison of quantitative and

qualitative data in the same analysis
Dimensions are the categories for the
affinity diagram
Dimension must be assigned a weight
Each company is rated for the dimension
on a scale of 1-10 with 10 being best

13
 Prioritization Matrix

Prioritization Matrix for Roger’s Take-Out Pizza

Category Weight Roger’s Roger’s X-O’s X-O’s Difference

Raw Score Wtd. Score Raw Score Wtd. Score Wtd. Score

Product 0.30 7 2.10 8 2.40 +0.30

Service 0.25 6 1.50 7 1.75 +0.25

Cost 0.25 8 2.00 6 1.50 -0.50

Features 0.20 9 1.80 7 1.40 -0.40

TOTAL 1.00 7.40 7.05

14
Activity Network Diagram

Also known as PERT and CPM

Program Evaluation & Review Technique
(PERT)
Critical Path Method (CPM)

A project planning and control tool

15
Activity Network Diagram

Activity Network for Evaluation of Heated Compartments in Delivery Vans

Roger’s Take-Out Pizza

3
Prepare Order Heaters Install in Prototype Train
Design 2 3 Evaluate Prototype Drivers
1 2 5 6 7
4 2 4

Order Hi-Capacity 1 1 Install in

Battery & Alternator Prototype
4

16
Quality Function Deployment
(QFD)

Developed in Japan by Professor Yoji

Akao
Quality is defined by the customer
Customer’s definition of quality is
considered in the product/service design
process and production process

17
 QFD from the Japanese -

= QFD
HIN SHITSU KI NO TEN KAI

Quality Deployment
Features Function Diffusion
Attributes Mechanization Development
Qualities Evolution

Quality Function Deployment - “Customer Driven

Product / Process Development”

18
Definition of Quality Function
Deployment :
There is no single, right definition for QFD; this one captures its
essential meaning:

A system for translating customer requirements into appropriate

company requirements at each stage from research and product
development to engineering and manufacturing to marketing/sales
and distribution

Prerequisites to QFD are ‘Market Research’ and ‘VOC gathering’.

As QFD is the process of building capability to meet or exceed customer demands, understanding the
market, knowing the various customer segments. what each customer segment wants, how important
these benefits are, and how well different providers of products address these benefits are some of the
key precursors to a successful QFD. These are prerequisites because it is impossible to consistently
provide products / services which will attract customers unless you have a very good understanding of
what they want.

19
Where does QFD fit? • UNEXPECTED,
PLEASANT SURPRISES PROF. Noriaki Kano
KANO MODEL
• 3M CALLS THEM
Satisfied CUSTOMER DELIGHTS
Customer (Of Quality/Features)


 Spoken
Measurable
Range of Fulfillment
Excitement
Needs
QFD focuses on
Performance
Don’t Have Included
Don’t Do Do Well
Needs and unmet
Basic Needs
Unspoken
Performance Taken For granted
Basic
Needs Spoken If Not Met

Basic
Needs Dissatisfied
Customer

RECOGNIZE 1) The Impact of Needs on the Customer

2) That Customer Needs Change With Time
3) The impact of Communication of Customer Wants Throughout
the Organization
20
Quality Function Deployment
(QFD)

West Wing-customer requirements

Second Floor-translates customer
requirements into design requirements
Main Floor- correlation of design
requirements with customer requirements
Attic-interrelationship of the design
requirements (what are the tradeoffs)

21
Quality Function Deployment
(QFD)

Basement-contains target values or

specifications for the design requirements

East Wing-comparison of the product or

service under design with leading
competitors

22
Competitive Advantages of QFD

 Fewer and Earlier Changes

 Shorter Development Time
 Fewer Start-up Problems
 Lower Start-up Cost
 Warranty Reduction
 Knowledge Transfer
 Customer Satisfaction

The bottom line of QFD is higher quality, lower cost, shorter

timing and a substantial marketing advantage.
23
Applying QFD House of Quality
Example….Climbing Suit

24
25
26
27
 QFD Example

In the following example, the customer requirement of

value is operationalized for a pizza in terms of meat, cheese,
vegetables, and price. As the quantities of meat and cheese
increase, customer value strongly increases. As the
quantity of vegetables increases, customer value increases.
As price increases, customer value decreases.

28
 The House of Quality
Correlations
++ Strong Positive
+ Positive
0 Negative 00
00 Strong Negative 00
0
0

Design Requirements R = Roger’s Pizza

X = Competitor X-O

Vegetables
A = Competitor Ace
Customer

Cheese
Requirements (5 is best)
1 2 3 4 5

A R X
Value ++ ++ + 00

Taste ++ ++ ++ 0 + A R X

00 ++ R X A
Delivered Hot
30 min. maximum
20 gms./sq. in.

$2.99 for Large

Insulated box
Fresh daily

Target
Values

29
QFD-Four-phased Approach

Uses a series of stages to translate

customer requirements into:

Parts characteristics
Key process operations
Production equipment settings

30
QFD-Four-phased Approach
Figure 3.9. Four-Phase QFD Model

31
Reliability

Key part of design process

Definition: The probability the product or
service will perform without failure for a
specified period of time.
3 dimensions of reliability
Probability
Will perform on a given trial (successful trials)
Will last for a given length of time
Definition of failure
Prescribed operating conditions 32
Types of reliability systems

A serial system is one which consists of

multiple parts or subassemblies, each of which
must function in order for the system to
function.
Ps = P1×P2×P3×...× Pn
Ps is the probability of the system working when
called upon, and Pn is the probability of
component n working when called upon.
As the number of components increases, the
reliability decreases.
33
Example

A manufacturing system consists of four

subsystems with the following reliabilities:
P1 = 0.970, P2 = 0.997, P3 = 0.985, P4 =
0.990.

What is the overall reliability of the

systems?
34
Parallel redundancy
 To further increase the reliability, we can use
redundancy .
Parallel redundancy means we add additional
backup components or an additional backup
system to the existing system.

35
Example
 What is the overall reliability of the system shown below
if the backup having the same reliability as the main
component?

 And also the overall reliability of the following system:

36
Example
Calculate the reliability of this system that
consists of a main component with a
reliability of 0.99 and three identical
backup components?

37
Reliability Life Characteristic
Concepts

Failure rate is the number of failures per

unit of time
Graphically depicted failure is usually the
bathtub curve
Early stage failure
Occurs early in the product/services life
These are usually the result of design,
manufacturing or use error.

38
Reliability Life Characteristic
Concepts

Expected Normal Life

A pattern of constant and relatively low failure rates
Usually result of design limitations, changes in the
environment and damage from day-to-day use or
maintenance
End-of-Life Failure
Product exceeds the intended life expectancy
Usually results from daily wear and stress

39
Bathtub curve

40
Mean Time Between Failures

The average time between failures

Can be modeled by a negative
exponential distribution
Exponential distribution can determine:
Probability of failure before a certain time
Probability of a product lasting at least until a
certain time

41
Mean Time Between Failures

To determine the probability that failure

will not occur before a certain time:
P(no failure before T) = e -T/MTBF

Where:
e = natural logarithm, 2.7183….
T = time in service before failure
MTBF = mean time between failures

42
Example

A computer power supply has a MTBF of

10,000 hours. What is the probability that
there will be no failure in this power
supply before 15,000 hours?

P(no failure before T) = e -T/MTBF

43
Risk Assessment Tools and
Risk Prevention

Failure Mode and Effects Analysis (FMEA)

Used to examine a product at the system or
subsystem levels
Can be expanded to include:
Safety
Effect on downtime
Access
Repair planning
Design changes
44
FMEA Worksheet

45
Detection Rate

46
Failure Rate

47
Severity Ranking

48
Risk Priority Number
 An alternative to the risk matrix is to use the ranking of:

O = the rank of the occurrence (failure rate) of the failure mode

S = the rank of the severity of the failure mode
D = the rank of the likelihood the failure will be detected before the system
reaches the end-user/customer.

 All ranks are given on a scale from 1 to 10. The risk priority number (RPN)
is defined as
RPN = S × O × D

 The smaller the RPN the better – and – the larger the worse.

49
Benchmarking

Dr. Yahya Saleh

1
 Benchmarking
 Benchmarking is the process of continually searching for the best
methods, practices and processes, and either adopting or adapting
their good features and implementing them to become the “best of
the best.”
 Measuring your performance against that of the best-in-class
companies, determining how the best-in-class achieve those
performance levels, and using the information as a basis for your own
company’s targets, strategies, and implementation.
• Compare performance of an existing process against other
companies’ best-in-class practices
• Determine how those companies achieve their performance
levels
• Improve internal performance levels
2
Why Benchmark?
 To Obtain an External Perspective of What Is Possible
 To Assist in Setting Strategic Targets
 To Promote Improvements in Performance
 To Establish a Competitive Edge
 To Enhance Customer Satisfaction
 To Reduce Costs
 To Improve Employee Morale
 To Achieve Quality Awards
 To Survive

3
Benchmarking in the Context of TQM

TQM Key principles include:

 Comparisons with best practice
 A Strong emphasis on meeting the needs of
the customer (internal and external)
 The importance of efficient, effective
business processes
 The need for continuous improvement
 Enhances a TQM program

4
 Benchmarking Methodology
Best Practice
Overlap Competitive
• Industry leaders
• Top performers with
similar operating
characteristics

Functional Internal
• Top performers • Top performers
regardless of industry within company
• Aggressive innovators • Top facilities
utilizing new within company
technology

5
 Benchmarking Framework

Change

Measurement Review

Benchmarking Framework

6
Benchmarking processes or activities, which do not support any of these
statements, should be disregarded, as the benefits will be limited compared to
those that could be achieved by deploying resources to other areas.

Mission

Benchmarking
Critical
Processes

Critical Success
Factors

7
Types of Benchmarking

 Comparison: (Partner Selection)

 Internal – Best in Firm
 Competitive – Best in Industry
 Functional
 Generic
 Form:
 Performance Benchmarking
 Process Benchmarking
 Strategic Benchmarking

8
 Selecting Benchmarking Partners

Benchmarking
Type
Potential Benchmarking Partners

Comparable sites, branches, sections, departments

Internal within the business

Competitor Within the same industry sector

Functional Same function across all industry fields

Generic All industry fields

9
 Performance Benchmarking

• Performance benchmarking enables managers to assess

their competitive positions through product and service
comparisons.
• Performance benchmarking usually focuses on elements
of price, technical quality, product or service features, speed,
reliability, and other performance characteristics.
• Reverse engineering, direct product or service comparisons,
and analysis of operating statistics are the primary techniques
applied during performance benchmarking.

10
 Process Benchmarking

• Process benchmarking focuses on discrete work processes

and operating systems, such as the customer complaint
process, the order-and-fulfillment process, or the strategic
planning process.
• Process benchmarking seeks to identify the most effective
operating practices from many companies that perform
similar work functions.
• Its power lies in its ability to produce bottom-line results. If
an organization improves a core process, for instance, it can
then quickly deliver process improvement

11
Critical Success Factors

Critical Success Factors (CSFs) Are the Key Indicators

That Inform Us That a Particular Task, Activity, Process,
Event, Function, Service or Endeavour Is Successful

CSF’s Are a Feature of All Levels of Business Activity;

From the Company As a Whole Down to the Activities of
Individuals in It

How Will Success Feel?

15
Benchmarking Critical Success Factors

Adopt, Adapt, and Advance: A well-designed

performance measurement and benchmark system is
essential, but there are other critical success factors:
 Senior management support;
 Benchmarking training for the project team;
 Useful information technology systems;
 Cultural practices that encourage learning;
 Resource dedication - especially in the form of time,
funding, and useful equipment.

16
 Strategic Benchmarking

• Strategic benchmarking examines how

companies compete and is seldom industry-
focused. It roves across industries seeking to
identify the winning strategies that have enable
high-performing companies to be successful in their
marketplaces.
• Strategic benchmarking influences the longer-
term competitive patterns of a company.
Consequently, the benefits may accrue slowly.

17
Planning a Benchmarking Exercise

Principal Requirements for Success

 Strong Commitment From Senior Management
 Willingness to Act on Any Major Opportunities for
Improvement Revealed by Benchmarking
 Resources
 Staff Capable of Running a Benchmarking Project
 Time for Employees to Spend on Benchmarking
Activities

18
THE BENEFITS OF BENCHMARKING

Cultural Change
Benchmarking allows organizations to set
realistic, rigorous new performance targets,
and this process helps convince people of
the credibility of these targets.

This tends to overcome the “not invented

here” syndrome and the “we’re different”
justification for the status quo.

19
THE BENEFITS OF BENCHMARKING

Performance Improvement
 Benchmarking allows the organization to define
specific gaps in performance and to select the
processes to improve.
 It provides a vehicle whereby products and services
are redesigned to achieve outcomes that meet or
exceed customer expectations.
 The gaps in performance that are discovered can
provide objectives and action plans for improvement
at all levels of the organization and promote
improved performance for individual and group
participants.

20
THE BENEFITS OF BENCHMARKING

Human Resources
 Benchmarking provides a basis for training.
Employees begin to see the gap between what they
are doing and what best-in-class are doing.

 Closing the gap points out the need for personnel

to be involved in techniques of problem solving and
process improvement.

 Moreover, the synergy between organization

activities is improved through cross-functional
cooperation.

21
AT&T Benchmarking Process

22
Xerox 12-Step Benchmarking Process

 Phase 1: Planning
 1. Identify what to benchmark;
 2. Identify comparative companies;
 3. Determine data collection method & collect data.
 Phase 2: Analysis
 4. Determine current performance gap;
 5. Project future performance levels.
 Phase 3: Integration
 6. Communicate finding and gain acceptance;
 7. Establish functional goals.
23
The Xerox 12-Step Benchmarking Process
(continued)

Phase 4: Action
 8. Develop action plans;
 9. Implement specific actions & monitor progress;
10. Recalibrate benchmarks.

Phase 5: Maturity
11. Attain leadership position ;
12. Fully integrate practices into processes.

24
 Attributes of Benchmarking Studies:
Success vs. Failure

Success Failure
Process Owner Involvement Sponsorship Uncertain
Customer Driven Objectives Amorphous Objectives
Linked to Strategic Plan No Strategic Integration
Best Practices & Enablers Performance Metrics Only
Consider Cultural Attributes “Hard” Data Only
Disciplined Methodology Arbitrary / Casual Approach
Quantum Change Incremental / No Change
Clear Project Life Cycle Keep Going and Going and …..
Integrated with Existing A la carte Program
Quality Efforts

25
Management’s Benchmarking Challenge
Commit required resources to key projects;
Provide focused training / facilitation to project
participants;
Proactively manage the direction and momentum of
benchmarking within the organization;
Create visibility of the benchmarking process;
Recognize benchmarking team efforts.
26
Business Process Reengineering
(BPR)

Dr. Yahya Saleh

TQM_Summer 2019 1
Business Processes

 Process : A specific ordering of work

activities across time and space, with a
beginning, an end, and clearly identified
inputs and outputs: a structure for action.

 Business Process: A group of logically

related tasks that use the firm's resources
to provide customer-oriented results in
support of the organization's objectives

TQM_Summer 2019 2
Business Processes

 A process is a series of activities or steps used

to transform input(s) into output(s).
 An input or output may exist or occur in the
form of data, information, raw material,
partially finished units, purchased parts, a
product or service, or the environment.
 It is the steps used by an individual or a group
to perform work or complete a task.
 It is sometimes referred to as a technique,
method, or procedure.

TQM_Summer 2019 3
Business Processes

TQM_Summer 2019 4
 PROCESS APPROACH TO MANAGEMENT

Men

Materials
Output
Methods
PROCESS
Machines
Scrap

Environment

Feedback Corrective Action

TQM_Summer 2019 5
 The Key Roles of Process Management
Effective Process Management requires 4 Key Roles:


“The Process Sponsor” is the person who provides direction and ensures that there is
sufficient resource available to improve process. He or She is normally at a senior
level in an organization.

“The Process Owner” usually sits outside the process, and is directly and personally
accountable for the end-to-end process. He or She is the final arbiter for the process
and should drive any process improvement initiatives and activities.

“The Process Manager” works inside the process and is responsible for discrete parts
of it. He or She ensures day-to-day production performance, directly manages
process workers and suppliers relationships and provides the process owner with
metrics, reports and improvement ideas.

“The Process Worker” works inside the process with responsibility for specific delivery
to agreed standards. He or She may manage small teams of less experienced
workers and provide the process manager with metrics, reports6 and improvement
TQM_Summer 2019
ideas.
Types of Processes

There are three types of processes, as

follows:
1. Management process — This entails the
method(s) used by management in executing
its management functions. Three key
functional areas used by management are
planning, organizing, and controlling.

2. Functional process — A functional process

consists of the methods used to achieve
functional objectives within a group or by an
individual.
TQM_Summer 2019 7
Types of Processes

3. Cross -functional process — This includes

the method(s) used to achieve objectives
that require participation or input from
more than one group or individual. For
example, the problem of an adverse drug
reaction in a hospital may require the
involvement of the pharmacist, the
ordering physician, a registered nurse,
and a unit secretary. Each group or
individual controls one or more of the
sub-processes affecting the problem.
TQM_Summer 2019 8
Process States

 State 1 is the unknown state. In

this state, the process
performance has not been
measured. There is no target.

 State 2 shows the process out

of control. There is a target,
but the performance cannot be
predicted. In this state, the
process performance is an
element of chance.
TQM_Summer 2019 9
Contd..

♣ State 3 displays a process in

control, but the process is
not capable. Performance can
be predicted, but it will not
always hit the target. In this
state, the process is not
within limits.

♣ State 4 is a process in control

and capable. Process
performance can be
predicted within the target.
TQM_Summer 2019 10
 Contd..

► State 5 is process improvement. In

this state, the process is improved
to reduce variability to the target
value. The aim is to consistently
hit the bull’s-eye or center of the
target.

► State 6 is continuous
improvement. In this state, the
process is constantly improved to
its best possible performance. The
target keeps getting smaller and
smaller while still continuously
hitting the bull’s-eye.

TQM_Summer 2019 11
 Process Measurement

♦ All process performance can be

measured through process indicators.
The major process indicators focus on
quality, cost, quantity, time, accuracy,
reliability, flexibility, effectiveness,
efficiency, and customer satisfaction.

♦ Each organization and process owner

must determine their own process
performance indicators.

TQM_Summer 2019 12
Process Chart Symbols

Operation (a task or work activity)

Inspection (an inspection of the product for

quantity or quality)

Transportation (a movement of material from

one point to another)

Storage (an inventory or storage of materials

awaiting the next operation)

Delay (a delay in the sequence of operations)

TQM_Summer 2019 13
Flow Charts
Flow charts are nothing but graphical representation of steps involved in a
process. Flow charts give in detail the sequence involved in the material, machine
and operation that are involved in the completion of the process. Thus, they are
the excellent means of documenting the steps that are carried out in a process.

Start/
Finish Operation Operation Decision Operation

Operation Operation

Decision Start/
Finish

TQM_Summer 2019 14
Silo (Functional) Perspective
 The silo perspective views the business as discrete
functions (accounting, sales, production, etc.).
Next figure shows a traditional org chart which is
how a functional business is organized.
 Each functional area determines its core
competencies and focuses on what it does best.
 Advantages:
 Allows optimization of expertise.
 Group like functions together for learning.
 Disadvantages:
 Significant sub-optimization.
 Tend to lose sight of overall organizational objectives.

TQM_Summer 2019 15
 Process Perspective

TQM_Summer 2019 16
Process Perspective
 Keeps the big picture in view.
 Focuses on work being done to create optimal value for the
business.
 Advantages:
 Helps avoid or reduce duplicate work.
 Facilitate cross-functional communication.
 Optimize business processes.

 When managers gain the process perspective they begin to lead

their organizations to change.
 Question status quo (current situation).
 Don’t accept “because we have always done it that way” as an
answer to why business is done in a particular way.
 Allows managers to analyze business’s processes in light of larger
goals.
TQM_Summer 2019 17
 Cross-functional nature of business processes

TQM_Summer 2019 18
Concept of BPR

TQM_Summer 2019 19
Business Process
Reengineering (BPR)

Definition:
 Fundamental Rethinking and radical redesign of business processes to
achieve dramatic improvements in critical contemporary measures of
performance such as cost, quality service, job satisfaction, and speed.

 BPR takes a process view of organization, and focuses on how work is

accomplished.

 BPR is a methodological process that uses information technology to

radically overhaul business process and thereby attain major business
goals.

 BPR is the reconfiguration of business using IT as a central lever.

 Overhauling the business processes and organization structure that limit

the competitiveness, effectiveness, and efficiency of the organization.

TQM_Summer 2019 20
Business Process
Reengineering (BPR)

Critical issues that define BPR:

 BPR consists of radical or at least
significant change.
 BPR focuses on process not on
department or functional areas.
 BPR tries to achieve major goals or
dramatic performance improvement.
 IT is a critical enabler of BPR.
 Organizational changes are critical to
BPR.
TQM_Summer 2019 21
“Fundamental”

 Must ask “Why do we do what we do?

(steps)
 Question the tacit rules and assumptions
underlying the organization’s culture.
 Begin with logical specification of what a
company must do. (Again goals and steps)
 Then specify the physical design of how to
perform these activities better and simpler

TQM_Summer 2019 22
“Radical”

 Must examine the “root” of business processes,

structures, and policies.
 Don’t fiddle with the old; cast it away and begin anew.
(rethink rather than only change)
 Reengineering is reinvention, not modification or
enhancement.

TQM_Summer 2019 23
“Dramatic”

 Not small, incremental improvements; BPR seeks order

of magnitude improvements in cost, quality, service,
and speed. Use of IT to assist in these.
 Redecorating v. demolition and reconstruction!(an
analogy)

TQM_Summer 2019 24
Business Process Reengineering
(BPR)

Characteristics of BPR:
Process Orientation An organization should be viewed and organized as a portfolio

of processes, not as a functional hierarchy.

Radical and discontinuous Look only for dramatic returns and don’t use the present as a
Improvement basis for the redesigned solution.
Customer Orientation Process activities are evaluated in terms of the value they create

to the external/internal customer.

Empowerment Shift authority and accountability to the front line worker.

Top Down Top management initiates, controls, and monitors the exercise,
due to the broad cross-functional scope.

IT enabled Creative use of IT to enable process innovation, not just

automate current activities.

TQM_Summer 2019 25
 Comparison of radical and incremental improvement

TQM_Summer 2019 26
The Process for Radical Redesign
 The different approaches for radical redesign all
include:
 Begin with a vision of which performance metrics best reflect
the success of overall business strategy.
 Make changes to the existing process.
 Measure the results using the predetermined metrics.
 Tool used to understand a business process is a
workflow diagram.

TQM_Summer 2019 27
Business Process
Reengineering (BPR)

Dimensions of BPR:

TQM_Summer 2019 28
 BPR Implementation
BPR is therefore an approach and takes the form of
a project, typically having seven phases:-

1. Discover
2. Analyze and Document the redesigned
Process(es)
3. Involve and rebuild
4. Reorganize and re-train
5. Establish the redesigned process(es) & redesign
the work teams.
6. Measure Performance
7. Continuous redesign and improvement
TQM_Summer 2019 29
1. Discover Phase:-
 A problem or unacceptable outcome is identified and desired
outcome determined. This includes:-

a) Business Needs
b) Processes Involved
c) And Effectiveness of Monitoring & measurement Plans.

TQM_Summer 2019 30
2. Analyze the Existing Process(es) and Document the Redesigned
Process(es):-

 Analyze the current business process(es) & determine new & re-designed
Process(es).

 Establish Process Flow Charting for Redesigned Process(es).

 Measure, Test, Analyze, and Finalize the Redesigned Process(es).

 Use Benchmarking Information, where required.

TQM_Summer 2019 31
3. Involve and Rebuild Phase:-
 Redesign & Rebuild the Work Teams.
 The teams must rethink and fully understand the
redesigned or new Process(es).
 Everybody should be involved for the agreed
Action Plan.
4. Reorganize and Retrain:-
 For New Technology and New or Redesigned
Processes.
 BPR may involve Substantial Investment in
Training and Top Management’s Commitment /
Support.
TQM_Summer 2019 32
5. Establish the Re-designed Process(es) With Re-designed Work Teams:-

 It is critical for the success of BPR and

depends on the scope of the Business
Process(es). It therefore includes:-
 Establish & Implement the Re-designed
process(es) with Re-designed work teams (where
required)
 Overall Process Sponsor or Champion (Effective
Managerial Skills)
 Process Owner (Resolver of Process Bottlenecks)
 Team Leader or Process Manager (Motivator &
Resource Provider)
 Facilitator (Coordinator & Support Services)
 Team Members (Knowledge, Skills, Attitudes)
TQM_Summer 2019 33
Business Process
Reengineering (BPR)

Measurement of BPR outcomes:

 There are no consistent reliable
measures available
 BPR could be measured during the
evaluation stage in terms of:
 Process performance: cycle time, cost,
customer satisfaction.
 IT performance: downtime, system use.
 Productivity indices: orders processed per
hour.

TQM_Summer 2019 34
Business Process
Reengineering (BPR)

Indicators for success:

 Work units change from functional
departments to process teams.
 Task-oriented jobs become multi-
dimensional, process oriented roles.
 Employees are empowered with authority
and responsibility for a process and its
outcome.
 Comprehensive employee education
replaces skill training.
 Organizational culture shifts from
protective to productive.

TQM_Summer 2019 35
Business Process
Reengineering (BPR)

 Results-oriented performance management and

compensation systems are established.
 Managers become coaches rather than supervisors.
 Hierarchy flattens as a result of empowered process
teams.
 Executives become leaders rather than scorekeepers.

TQM_Summer 2019 36
Business Process
Reengineering (BPR)

Addressing people issues:

 Intervention for overcoming organizational

resistance and political pressure.
 Intervention for culture change and
 Dealing with the 'survivor syndrome' of the
change receptionist.
Survivor syndrome appears after firing some
employees when implementing BPR, other
employees show decreased motivation and
morale, guilt, anger, and skepticism.
TQM_Summer 2019 37
Business Process
Reengineering (BPR)

Challenges associated with BPR:

 Poor Leadership
 Poor or inconsistent communication
 Exclusion of current employees

TQM_Summer 2019 38
Business Process
Reengineering (BPR)

Information Technology and BPR:

 Practically, IT is a key enabler of process change.

 Successful reengineering efforts require a
partnership between business and IT professionals.
 IT is accompanied by other organizational changes
like structure, culture, and role.
 Information sharing across an organization.
 Great demand among employees to learn new
processes.

TQM_Summer 2019 39
Business Process
Reengineering (BPR)

IT opportunities for process reengineering:

 Automation: eliminating human labor from a

process.
 Informational: capturing process information for the
purpose of understanding.
 Tracking: monitoring process status and objects.
 Analytic: improving analysis of information and
decision making.
 Geographical: coordinating process across distances.
 Integrative: coordination between tasks and
processes.
TQM_Summer 2019 40
Business Process Reengineering
(BPR)
Differences between traditional IT implementations and BPR:
Basis for Traditional IT Implementations BPR implementations
comparison
Essence Problem solving Reinventing work

Approach Incremental improvement Radical change

Style Analytical Creative &innovative

Perspective Micro perspective Macro perspective

Goal Enhancement Paradigm-break

Change Limited Wholistic scope

Domain Functional area Entire business system

TQM_Summer 2019 41
Business Process
Reengineering (BPR)

Total Quality Management (TQM):

 It emphasizes the role of quality in

meeting the needs of its customers.

 TQM stresses customer satisfaction ,

continuous improvement and to be the
best in all functions.

 TQM focuses on incremental change and

gradual improvement of processes.
TQM_Summer 2019 42
Comparison between TQM &
BPR
TQM BPR
Change Incremental Quantum leap
Focus Current Practice Start again
Frequency Continuous One shot
Participation Bottom-up Top-down
Risk & Rewards Low & Moderate High
Type of Change Work design Structure, culture roles

Role of IT Incidental Key enabler

TQM_Summer 2019 43
Business Process
Reengineering (BPR)

Critics to BPR:
 BPR assumes that the factor that limits organization's
performance is the ineffectiveness of its processes. This
may or may not always be true. Also BPR offers no means
to validate this assumption.
 BPR assumes the need to start the process of performance
improvement with a "clean slate", i.e. totally disregard the
status quo.
 BPR does not provide an effective way to focus the
improvement efforts on the organization's constraints.
 Sometimes, or maybe quite often, a gradual and
incremental change may be a better approach.
 BPR is culturally biased towards the US way of thinking.
TQM_Summer 2019 44
Business Process
Reengineering (BPR)

Reengineering Recommendations:
 BPR must be accompanied by strategic planning,
which addresses leveraging IT as a competitive
tool.

 Place the customer at the center of the

reengineering effort -- concentrate on
reengineering fragmented processes that lead to
delays or other negative impacts on customer
service.

 BPR must be "owned" throughout the organization,

not driven by a group of outside consultants.

 Case teams must be comprised of both managers

as well as those will actually do the work.

TQM_Summer 2019 45
Business Process
Reengineering (BPR)

 The IT group should be an integral part of the

reengineering team from the start.

 BPR must be sponsored by top executives,

who are not about to leave or retire.

 BPR projects must have a timetable, ideally

between three to six months.

 BPR must not ignore corporate culture and

must emphasize constant communication and
feedback.
TQM_Summer 2019 46
BPR is Not?

 BPR may sometimes be mistaken for the following

five tools:

1. Automation is an automatic, as opposed to human,

operation or control of a process, equipment or a
system; or the techniques and equipment used to
achieve this. Automation is most often applied to
computer (or at least electronic) control of a
manufacturing process.

2. Downsizing is the reduction of expenditures in order to

become financial stable. Those expenditures could
include but are not limited to: the total number of
employees at a company, retirements, or spin-off
companies.

TQM_Summer 2019 47
BPR is Not?

3. Outsourcing involves paying another company

to provide the services a company might
otherwise have employed its own staff to
perform. Outsourcing is readily seen in the
software development sector.

4. Continuous improvement emphasizes small and

measurable refinements to an organization's
current processes and systems. Continuous
improvements’ origins were derived from
total quality management (TQM) and Six
Sigma.
TQM_Summer 2019 48
Human Factors in Quality

1
Human Factors in Quality

People naturally resist change. In an environment of

continuous improvement, change is the norm not the
exception. Effective management of the continuous
improvement process requires leaders to assist employees
to not only tolerate change but to take actions to create
change.

Teams are frequently used in continuous improvement

environments. Team members must have a knowledge of
group dynamics in order to deal with inevitable conflict.

2
 Barriers to Quality
Improvement Efforts

Common barriers include:

Failure to correctly understand customers’
requirements
Failure to understand the capability of the
production system
Failure to track defects
Failure to repair sub-optimized processes
Failure to track quality costs

3
 Barriers to Quality
Improvement Efforts

Deming assigns most of the blame for

barriers to management.
Lack of communication is often the
problem.
Commit and direction of quality efforts
must be clearly communicated throughout
the organization.

4
 Human Resource Management

“Human resource management refers to

the practices and policies you need to
carry out the people or personnel aspects
of your management job.” (Dessler, 1997,
2)

5
 Motivation Theories

Classic theories of motivation:

Maslow’s Hierarchy of Needs
McGregor’s Theory X and Theory Y
McClelland’s Acquired Needs Theory
Herzberg’s Two Factor Theory

6
Maslow’s theory
Takeaway 2: of human
Behavioral needs
Management Approaches
A need is a physiological or psychological
deficiency a person feels compelled to satisfy
Need levels:
Physiological
Safety
Social
Esteem
Self-actualization
Maslow’s hierarchy of human needs
Takeaway
Maslow’s2: theory of human
Behavioral needsApproaches
Management
Deficit principle
A satisfied need is not a motivator of behavior
Progression principle
A need becomes a motivator once the preceding
lower-level need is satisfied
Both principles cease to operate at self-
actualization level
 Takeaway 2: Behavioral Management
Approaches
McGregor’s Theory Y assumes that
workers are:
Willing to work
Capable of self control
Willing to accept responsibility
Imaginative and creative
Capable of self-direction
 Takeaway 2: Behavioral Management
Approaches
McGregor’s Theory X assumes that
workers:
Dislike work
Lack ambition
Are irresponsible
Resist change
Prefer to be led
 Takeaway 2: Behavioral Management Approaches

Implications of Theory X and Theory Y:

Managers create self-fulfilling prophecies
Theory X managers create situations where
workers become dependent and reluctant
Theory Y managers create situations where
workers respond with initiative and high
performance
Central to notions of empowerment and self-
management
 Takeaway 2: Behavioral Management Approaches

Argyris’s theory of adult personality

Classical management principles and
practices inhibit worker maturation and are
inconsistent with the mature adult
personality
Psychological success occurs when people
define own goals
 Takeaway 2: Behavioral Management Approaches

Argyris’s theory of adult personality

Management practices should accommodate
the mature personality by:
Increasing task responsibility
Increasing task variety
Using participative decision making
15
 Integration of the Classic
Motivational Theories

Herzberg’s dissatisfiers are similar to

Maslow’s first two levels of need plus
some small increment in each of the top
three needs in his hierarchy.
These dissatisfiers tend to be related to
the autocratic structured management
style of Taylor or McGregor’s Theory X.

16
 Integration of the Classic
Motivational Theories

Morse and Lorsch have identified this

autocratic style as more effective for
routine tasks.
Herzberg’s satisfiers are similar to
Maslow’s top three levels of need.
McClelland’s achievement, power and
affiliation needs are a different mix of
Maslow’s top three levels of need.
17
 Integration of the Classic
Motivational Theories

[Herzberg’s] satisfiers are related to the

participative management style described
by McGregor as Theory Y.
McGregor’s Theory Y] style, according to
Morse and Lorsch, appears more effective
for tasks with high levels of complexity.

18
 Integration of the Classic
Motivational Theories

The nature of the people and of the tasks

being performed causes higher and higher
levels of dependency, diversity,
uncertainty, complexity, education, and
professionalism. Therefore, the greater
the observed difference between reactive
and proactive behavior, and the greater
the applicability of Multiple Influences.

19
 Process Theories of Motivation

Process theories of motivation attempt to

explain how behavior is influenced.
Vroom’s Expectancy Theory defines the 4
primary variables of motivation as choice,
expectancy, instrumentality, and valance.

Motivation = f(expectancy x instrumentality x valence)

20
21
 Employee Involvement and
Teams

Employee involvement develops naturally

from the classic motivation theories and
is a key tenet of total quality
management.
The use of formal groups or teams is a
frequent manifestation of employee
involvement in organizations

22
 Different Types of Groups or
Teams Utilized in Organizations

Temporary teams form for a particular,

limited purpose and disband when that
purpose is achieved.
Examples include:
Problem solving teams
Product design teams
Systems integration teams

23
 Different Types of Groups or
Teams Utilized in Organizations

Permanent Groups include:

Quality circles
Management teams
Self-managed teams

24
 Different Types of Groups or
Teams Utilized in Organizations

Group cohesiveness is the “degree to

which group members form a strong
collective unit reflecting a feeling of
oneness.” (Bedelan, 1993, 507)
Group norms are the standards for group
behavior and develop over time

25
Organization and Implementation
of Quality Teams

Characteristics of Quality Teams

•Number of members is 5 to 8
•Work from a Team Charter that clearly
defines the problem, mission, and
evaluation criteria
•Have a specific focus as identified in the
Team Charter
•May be self-directed or have a team leader

26
 What is a team?

“Wearing the same shirts doesn’t

make you a team.”
Vince Lombardi
27
 What is a team?

A team is a group of people

assembled to focus their
knowledge, experience, and
skills on a specific task. 28
 Who Makes Up a Team?

A team is made up of a team leader, team

members and a facilitator.
Each member plays a unique role in
helping the team achieve its goals.

29
Roles and Responsibilities of the
Team Leader

Coach
Mentor
Active Participant

The role of the team leader is to take a

group of individuals assembled at the first
meeting and turn them into a successful
team.
30
Roles and Responsibilities of the
Team Leader

Attributes of High Performance Teams include:

Mission alignment
Participative leadership
Shared responsibility
Open communication
Focus on problem elimination
Dedication to change
Welcome diversity

31
 Selecting Team Members

People Skills
Personal Characteristics
Readiness

32
 People Skills

Open communicator
Good listener
Self motivated

33
 Personal Characteristics
Participative
Enthusiastic
Cooperative
Sense of humor
Meets commitments
Team player
Experienced in subject area
Constructively challenges the status quo
34
 Readiness

Available to attend meetings

Available to do research/collect data
Willing to make a contribution

35
Roles and Responsibilities of the
Team Members

Team members are responsible for:

Developing the team’s work plan including:
Establishing the action items
Follow-up responsibilities
Establishing the meeting schedule based on:
Magnitude of the assignment
Time limit
Assigning a recorder
Executing the work plan.
36
Roles and Responsibilities of the
Facilitator

Facilitator
is there to aid the Team Leader.
will keep the team focused on the
assignment as defined in the charter by the
customer.

37
Roles and Responsibilities of the
Facilitator

Roles and responsibilities include:

Availability to answer questions and provide guidance
Attending the kick-off meeting for the team
Attending meetings of first-time team leaders
Helping the team leader to develop the agenda for
the first meeting including develop the work plan
Develop the meeting schedule, identify the target
date for presenting the deliverable
Keeping the team focused on the assignment,
discouraging digression
38
Roles and Responsibilities of the
Facilitator

Roles and responsibilities include:

Serving as a liaison between the team and the client
Aiding in the technical review of reports
Helping in assembling and distributing the report to
management
Helping the team prepare to do its briefing
Preparing management to receive report from the
team
Providing help in politically sensitive situations

39
Critical Action Items in the Team
Life Cycle

 Preliminary Action Items

 Identify the problem or area to be addressed
 Select team members with the facilitator's assistance
Look for volunteers
 Obtain the support and commitment from the team member's
manager and the team members
 Schedule the first meeting
Make introductions and brainstorm the teams guidelines
Work with the team to prepare a charter

40
Critical Action Items in the Team
Life Cycle

On-Going Action Items

Handle meeting room logistics
Prepare and distribute the meeting minutes
and agenda for the next meeting
Provide the customer with periodic status
reports

41
Critical Action Items in the Team
Life Cycle

 Final Action Items

Present initial briefing to Management on possible solutions
include lessons learned by the team
Get feedback from Management on which solution to implement
written response to the team leader
Implement solution
Provide Management with a final briefing on performance of
solution
Incorporate management comments into final briefing
Distribute final draft to all upper management

42
 What is a Team Charter?

 Source of charter
 The team's charter will narrowly define a problem or function to be
studied, analyzed or assessed.
 The charter will identify the deliverable and its time frame
 The charter defines the "what and why" not the "how to“
 The charter includes the:
 Name of the team
 Statement of the problem
 Scope of the assignment
 Deliverable to be produced
 Time limit for the assignment

43
 Stages of Team
Development

Forming
Storming
Norming
Performing

44
 Forming
Characteristics of the Team

Reluctant participation (quiet group)

Suspicion and fear
Anxiety about the new situation
Testing of leader and other members
Minimal work accomplished

45
 Storming
Characteristics of the Team

Resistance to the task

Increased tension
Concern about individual roles and status; i.e.
What’s in it for me?
Minimal work accomplished
Conflict over control among the group’s
members and with the leader

46
 Norming
Characteristics of the Team

Group formation and solidarity

Sense of team cohesiveness
Sharing among the group (open discussion)
Attempt to achieve maximum harmony
Constructively expressed emotions
Moderate work accomplished

47
 Performing
Characteristics of the Team

Constructive self-change occurs

Team tends to check its own behavior
Maximum work is accomplished
Differentiation and productivity

48
 Creating a Win-Win
Situation
Effective decision making within the team is a key to good
team performance. It is far better to make team decisions
through a process of consensus than through a process of
voting. Voting creates winners and losers. Consensus
creates only winners.

Active discussion of the issues with a focus on the quality of

the decision alternatives and the ease with which they will
be accepted by the affected group can facilitate reaching
consensus.

49
WARRANTY COST
ANALYSIS

Dr. Yahya Saleh

1
 WARRANTY MODELING

• Reasons for modeling

• Marketing (Sales)
• Economic (Cost)
• Engineering (Design)
• Operational (Servicing)
• Many disciplines involved

2
 COST MODELS

Costs depend on:

• Type of warranty
• Failure pattern of items
• Repairability
• Failure pattern of replaced or repaired
items
• Incidental costs

3
 FAILURES
• Occur randomly
• Depend on
• Product characteristics
• Usage rate
• Age
• Maintenance
• Environmental factors

4
FAILURES UNDER WARRANTY

ITEM FAILURE UNDER WARRANTY

ITEM FAILURE OUTSIDE WARRANTY

W W W

TIME

5
FAILURES UNDER WARRANTY

U
USAGE

ITEM FAILURE UNDER WARRANTY

TIME W

6
 COST CALCULATION BASIS
• Per item sold
• Item plus replacements under warranty
• Life cycle
• of item
• over fixed time horizon
• Per unit of time (when sales occur over
time)

7
ANALYSIS OF SELLER’S COSTS
Costs also depend on
• proportion of legitimate claims made
• proportion of bogus claims
• servicing policy
• administrative costs
• incidental costs (e.g., shipping)

8
MODELLING PROCESS
SYSTEM
CHARACTERISATION

MATHEMATICAL
DATA MATHEMATICAL MODEL
FORMULATIONS

ANALYSIS TECHNIQUES

EXPECTED WARRANTY
COSTS

MANAGERIAL
IMPLICATIONS

9
 SIMPLE MODEL

MANUFACTURER CONSUMER

WARRANTY PRODUCT
PRODUCT USAGE
POLICY RELIABILITY

PRODUCT
PERFORMANCE

WARRANTY COSTS

10
 DETAILED MODEL
PRODUCTION MARKETING
D&E MODULE POST-SALE SERVICING MODULE
MODULE MODULE

DESIGNED PRODUCTION USAGE CLAIM

SALES
RELIABILITY QUALITY RATE EXECUTION

REPAIR WARRANTY
PRODUCT PERFORMANCE QUALITY TERMS
CHARACTERISTICS

NUMBER OF FAILURES
PER ITEM

NUMBER OF CLAIMS
PER ITEM

WARRANTY COST
COST PER CLAIM
PER ITEM

TOTAL
WARRANTY COST
11
 MODEL ASSUMPTIONS

• All claims made

• All claims are legitimate
• Claims are made instantaneously
• Instantaneous repair or replacement
• Fixed cost per claim

12
 MODEL ASSUMPTIONS

• Identical items
• Independence (statistical)
• No brand switching
• All parameters known

13
 PROBABILITY

Involves life distribution of the items

X = time to failure (lifetime) of the item
F(x) = P(X < x)

Most common distribution: exponential

F(x) = 1 - e-lx x > 0.

14
 EXPONENTIAL DISTRIBUTION
• Mean Time to Failure (MTTF):
m = 1/l
• Median Time to Failure:
.6931/l
• Constant failure rate, l
Example: If the failure rate is known to be
l = 1.25 per year, then MTTF = 0.8 yr.

15
Weibull Distribution

16
 WEIBULL DISTRIBUTION

MTTF and standard deviation depend of

b and l.
Example: l = 1.25, as before.
If b = 1 (exponential), m = 0.8 and s = 0.8.
If b = .5 (Decreasing Failure Rate), m = 1.6
and s = 4.
If b = 2 (Increasing Failure Rate), m = 0.71
and s = 0.37. 17
 SOME NOTATION

mT = Average time to failure of all items

that fail with lifetimes less than T

M(T) = Expected number of failures in the

interval from 0 to T

cs = seller’s average cost per item

cr = average repair cost 18
Free-Replacement Warranty
(FRW)

19
 NONRENEWING Free
Replacement Warranty (FRW)
NONREPAIRABLE ITEMS

Basis: Seller’s total cost per unit sold

Ave. cost = cs[1 + M(W)]

(W = length of warranty period)

20
 NONRENEWING FRW

NONREPAIRABLE ITEMS

Example: TV picture tube, exponential

time to failure with MTTF = 6.5 years

l = 1/6.5 = .1538. Take W = 6 months

and 1 year, and cs = $67.20.

21
 NONRENEWING FRW

NONREPAIRABLE ITEMS [Cont.]

For the exponential, M(t) = lt. Thus:
Six-month warranty:
Ave. cost = $67.20[1+.1538(.5)] = $72.37
One-year warranty:
Ave. cost = $67.20[1+.1538] = $77.54

22
 NONRENEWING FRW

REPAIRABLE ITEMS

Additional assumption: repaired items

are “good-as-new” (i.e., have same
failure distribution as new items).
Ave. cost = cs + crM(W)

23
Pro-Rata Warranty (PRW) or Partial Warranty or Rebate Warranty

24
 NONRENEWING Pro-Rata
Warranty

• Equivalent to rebate form

• Non-repairable items
• cb = buyer’s cost of item (selling price)

Ave. cost to seller = cs + cb[F(W) - mW/W]

Formulas for mW are needed.
25
Exponential Distribution

26
Weibull Distribution

27
 NONRENEWING PRW

Example: Same as previously, with cb =

$105.00. One-year warranty.
From formula given before, for W = 1, mW =
.0694.
Ave. cost = $67.20 + 105[1 - e-.1538 - .0674]
= $74.88.
Comments: (1) This is less than for FRW
(2) Cost is less for renewing PRW.
28
 INFORMATION NEEDS

• Form of distribution
• Parameter values
• Type of warranty
• Rectification policy
• Other cost information

29
 DATA MAY INCLUDE
• Test data
• Claims data
• Data on similar products
• Part and component data
• Vendor data
• Subjective information

30
 OTHER COST MODELS
• Many other warranties
• Distributions other than exponential
• Two- and higher-dimensional versions
• Life-cycle cost models
• Other cost bases
• Discounting to present value
• Indifference pricing

31
REDUCING WARRANTY COSTS
• Improve reliability
• Better quality control
• Optimal servicing strategy (e.g., repair
versus replace)
• Monitoring warranty claims – prevention
of fraud
• Effective management of warranty
logistics
32