Quantifying the benefits from operations improvement projects is simplified when Quality Cost is one of the key performance measures of an organization’s balanced scorecard.  Quality Cost is actually a financial accounting activity that is often overlooked or goes undone.  The question for your organization is "Why are Quality Costs Not Managed"?

Quality Cost accounting comprises four general categories, namely Prevention, Appraisal, Internal Failure, and External Failure.  To capture details in all four categories is often a daunting task.  Prevention and Appraisal activities are generally percentages of some departments’ overall activities, but not necessarily a specific function, which makes quantification inexact.  Internal and external failures are generally easier to quantify.

Quality Cost management is most effective when it is kept as simple as possible.  Quantify what is generally easy to capture and have the information come directly out of the general ledger.  If the measurement can be simplified the organization gains a powerful performance metric.  How can this be done?

First, focus on just the internal and external failure categories. Examples of internal failure are the following:

• Overtime, or extra labor
• Scrap, or waste
• Rework, or doing things a second time
• Supplier failures
• Process losses
• Downgrades

These costs disappear if the process, or service delivery output is defect free.

Examples of external failure are the following:

• Warranty charges
• Complaint adjustments
• Returned materials
• Customer allowances

These costs disappear if the process, or service delivery output is defect free after the customer receives it.

The next step is tedious, but only needs to be done one time.  Obtain the general ledger and review the definitions for all line item entries.  The general ledger often contains thousands of entries which makes this a tedious exercise, but one that is eye awakening.  Now use the definitions to identify and classify the ledger line items that fit the categories of internal and external failure.

The final step is to track the internal and external failure ledger line items in a monthly Quality Cost Management report.  Successfully completed improvement projects drive the Quality Costs down.  When the performance measurement tracking is simplified then there is no reason for an organization not to manage their Quality Cost.

 When teams are formed to tackle issues and implement change everyone outside of the inner core team becomes curious. Why are they getting together? What are they doing behind those closed doors? How will this affect me? The rumor mill will fill the curiosity void with answers to all of these questions. Proactively getting out ahead of the rumor mill through communication is the key to successful implementation of change. If we haven’t communicated proactively even the best technical solutions will be difficult to implement and sustain.

 A study was conducted by John P. Kotter and published in the Harvard Business Review entitled “Why Transformation Efforts Fail.”  The following are the key points from the article.

• Not Establishing A Sufficient Sense Of Urgency
• Not Creating A Powerful Enough Leadership Coalition
• Not Creating A Vision
• Under Communicating By A Factor Of 10
• Not Removing Obstacles To The Vision
• Not Systematically Planning For And Creating Short-term Wins
• Declaring Victory Too Soon
• Not Anchoring Changes In The Culture

It is clear from this list that communication that was proactive, easily understood, and delivered in a timely manner would circumvent all of the above. Even though we often think of communication as a soft skill it is the key for implementing change.

In every case, the improvement team defined the issues that were getting in the way of satisfying customer requirements. Measurements were used to establish a baseline of the current state of performance. Analysis was conducted on the measurement information to isolate the root causes of the issues. Creative solutions were then developed to improve performance beyond the current state. To assure that the issues resolved remained resolved controls were implemented. The preceding illustrated the Lean Six Sigma process of Define, Measure, Analyze, Improve, and Control. The following are examples from numerous organizations.

• Sales and Marketing
  • Order cycle time reduction
  • Promotional marketing effectiveness
  • Sales support efficiency
• Healthcare
  • Discharge cycle time and cost reduction
  • Medication dispensing efficiency
  • Reduction in non-reimbursed claims
  • Bio-Hazardous waste reduction
• Supply Chain Management
  • Supply chain cycle time and inventory reduction
  • Tactical corrective action process effectiveness
  • Enhanced supplier communications
  • Specification and revision control management
• Education
  • School bussing system optimization
  • Athletic field water management
  • Curriculum effectiveness
• Hotel and Hospitality
  • Purchasing and logistics for cruise ship consumables
  • Hotel supplies inventory management
  • Restaurant supplies inventory management
• Defense Systems and Military
  • Light vehicle armor kit quality, delivery, and cost improvement
  • Gun and guided missile system cost reduction
  • Capture and disseminate field lessons learned cycle time reduction
  • Training material update and global distribution cycle time reduction
• Manufacturing
  • Inventory management and control
  • Assembly operations cycle time, cost, and inventory reduction
  • Production yield improvement and cost reduction
  • Furniture finishing quality and consistancy

Lean Six Sigma is applicable for any organization’s operating processes, delivery of services, or their production of products.

During the define phase of the DMAIC improvement process we study our customer requirements.

• What is it the end user requires? What is it that each step in our process requires?
• What is it that our vendors need from us so they can meet our supply chain requirements?

These are the multiple voices of the customer and the requirements we must define.

The CTQ Tree provides a graphic to tie the progression of the requirements together. The progression starts with the Want or Need, which leads to the Drivers within the Process we must control, and then to the Critical to Quality Characteristics (CTQs) that we measure to control the Drivers.

Once we know what to measure we must define what means good or bad, which is also called the specification. Typically our multiple levels of customers let us know what they want or need, but rarely do they define the CTQs and the specifications.

View an example of the CTQ Tree In the measure phase of DMAIC we will measure our current state performance to establish the baseline.

We measure our improvements from this baseline. The CTQ Tree not only defines what to measure but also whether or not the performance is good or bad.

We offer online courses that will help your organization improve. To review our course selections visit EducateVirtually.com

Kaizen means “continuous improvement” which is defined as small, incremental improvements, where if we spend any money it is minimal, and the improvement results are measured in hard cost savings, higher quality, and better productivity. There are three cornerstones that support the Gemba Kaizen philosophy of continuous improvement.

1. Eliminate Waste

2. Housekeeping

3. Standardization

Eliminate waste is based upon the seven wastes as defined by Taichi Ohno, the father of the Lean Philosophy, which was originally known as “Just in Time”.

1. Overproduction – minimize producing more than is necessary to meet customer demand.

2. Inventory – minimize the quantity of raw materials, components, semi-finished, and finished goods on hand at any time.

3. Scrap, Rejects, and Repairs – minimize the time and cost associated with evaluation, disposition, repair and materials, scrap disposal, material handling, storage, expedited shipping, overtime, and non standard labor

4. Motion – minimize the motion and wear and tear on the employees through workplace design, ergonomics, and safety

5. Processing – minimize processing steps, travel distance, cycle time, and inventory levels

6. Waiting – minimize the downtime of equipment, changeover and set-up time, lack of parts, and synchronization between process steps and processes.

7. Transport – minimize transportation of materials and components on trucks, forklifts, and conveyors

Housekeeping is based upon the philosophy that order, organization, and cleanliness fosters pride and efficiency in the workplace.

1. Sort the Tools and Objects that are Used from those Not Used

2. Straighten the needed items so they are easy to find, use, and put away

3. Scrub and clean the work area, which includes shelves and cabinets

4. Systematize the times and frequency for cleaning and putting all items back in order

5. Standardize your efforts and report progress on the work group’s Visual Management System

Standardization is based upon repeatability and reproducibility of the best, easiest, and safest way to do a job or provide a service. Repeatability means that I will be consistent time after time and reproducibility means that the entire work group will be consistent time after time. To drive small incremental improvements every day, every week, and every month is best accomplished following a simple four step cycle. This cycle, often referred to as PDCA, was originated by Walter Shewhart and promoted in Japan by W. Edwards Deming. PDCA is the acronym for Plan, Do, Check, and Act.

The following is the continuous cycle.

1. Study the Process (Check)

2. Determine Corrective Actions (Act)

3. Plan and Prioritize the Actions (Plan)

4. Implement the Improvements (Do)

It all adds up to significant benefits at the end of the year, but are we patient enough?

Gemba Kaizen training is available at EducateVirtually.com complete with all the tools needed for the continuous improvement journey.

Dr.Genichi Taguchi has been one of the primary contributors to upgrading these experimental design methods for use in industry and design applications. Dr.Taguchi, an engineer, has developed a very powerful way to help improve the quality of products while simultaneously lowering costs. Between 1950 and 1970 Dr. Taguchi's methods of experimental design were developed at the Electrical Communication Laboratories (E.C.L.), the Japanese counterpart of Bell Laboratories. A notable application of these techniques was the development of a switch relay device. In 1971, the E.C.L. beat Bell Labs to market with this device, completing the project with one- fifth of Bell's personnel and one-fiftieth of its budget. Bell Labs invited Dr.Taguchi to explain his methods in 1972. A few years after the switch relay's introduction, Western Electric stopped production of the device and now imports them solely from Nippon Telephone and Telegraph.1 Ford Motor Company embraced Dr.Taguchi's methods in 1980 and formed the American Supplier Institute, where Dr.Taguchi is based, in 1981. Since that time, companies in many different industries, including ITT, Hewlett Packard, 3M, AT&T, Texas Instruments, and Sheller Globe, have begun to use these methods. Dr.Taguchi is considered to be one of the leading engineers of this century. He has received four Deming Prizes for his contributions to Japanese Quality. As a consultant to industry, he was awarded the Willard F. Rockwell, Jr. Medal at the 1986 International Congress on Technology and Technology Exchange. This prestigious award is given to only two individuals each year, with no more than one award per continent.

Among the explanations suggested for Japan's post-war industrial success are Japanese methods of management, the use of statistical process control, and the application of Just-In-Time manufacturing techniques. However, the real key to their success has been designing the quality into the product using Dr.Taguchi's System of Experimental Design.2 The method is best described as an engineering tool with a statistical base. This approach is concerned with gains in productivity. Cost effectiveness is stressed, rather than statistical rigor. In the world of manufacturing, the classical assumptions of a detailed hypothesis, normality, or homogeneity of variance are generally impractical.

In manufacturing, cost savings are realized by the reduction of scrap, lowering of inspection costs, and minimizing rework losses. These savings are achieved through process improvements and variation reduction. Design cost savings are realized by reducing the delivery cycle and minimizing engineering design changes. Reducing total Product cost is the ultimate goal.

Industrial experiments consist of three different groups of key elements. First are factors such as time, temperature, and speed. Second are the levels for these factors, such as one minute versus two minutes, or 100 degrees versus 200 degrees. Third, is the outcome or quality characteristic being measured, or evaluated, like surface finish or cost. Selection of each of these elements is an important step in developing a well-designed experiment.

The experimental design process flows through the following steps:
• 1. Define the problem
• 2. Determine the objective
• 3. Brainstorm
• 4. Design the experiment
• 5. Conduct the experiment and collect the data
• 6. Analyze the data
• 7. Interpret the results
• 8. Verify the predicted results

These steps do not guarantee a successful experiment, but they do force the experimenter to proceed in a logical manner. All experiments conducted in this manner provide useful information, although some of them require a second experiment to achieve the desired improvement. Designing a successful experiment often requires a team of people familiar with the process or design. The members of the team contribute "a priori" knowledge, which helps to facilitate a well-designed experiment.

Dr.Taguchi's methods provide a means for minimizing the effect of factors that can't be controlled, by controlling the factors that are controllable. Thus, the process or product is made robust in the face of uncontrollable factors. Dr.Taguchi calls these uncontrollables noise factors. A noise factor causes definite variation, but can't be eliminated from the design or the manufacturing process.

Dr.Taguchi's experimental methods provide required information in a cost-effective manner for sound engineering decisions. Also, factors are identified which do not impact the quality of the process or product but can provide additional cost savings. Reproducible results are the key strength of Dr.Taguchi's methods. These techniques can improve quality without incurring capital and material cost increases. An important benefit is the separation of the vital few from the trivial many.

Industrial experiments have too many variables with different characteristics for the cost-effective use of the classical experiment methods. Dr.Taguchi modified these experiment methods for manufacturing and design applications for cost effectiveness and efficiency. By doing so, he has provided the engineering community with a powerful, applicable, and useful tool for making sound engineering decisions.

Process Predictability Management and EducateVirtually.com have assisted numerous companies over the past 26 years in the design and successful application of design of experiment methods. We have been directly involved in more than 450 experiments. These experiments ranged from new product development to solving product and process issues that were deemed impossible to resolve.

The course comprises 4 weeks of training in a workshop format over a 4 month period of time spanning 13 weeks.

Four Lean Six Sigma projects were completed during this time and 15 students achieved their Green Belt Certifications and have already begun their second projects to achieve their Black Belt Certifications.

The total savings for the completed projects exceeded $750,000.

We congratulate our students for their excellent project work and the successful application of what they learned.

• The Federal Bureau of Prisons Medical System certified 9 Green Belts with two team projects.
• Watts Radient certified 5 Green Belts with one team project.
• Lennox certified 1 Green Belt.

Three additional projects from other students are nearing completion. Your project teams can achieve similar results at the upcoming MSU MDI Lean Six Sigma Course offered this Spring on campus.

The Black Belt training covers the full 4 weeks and the Green Belt training is the first two weeks of the course. The Spring dates are 2/22 to 2/25, 3/29 to 4/1, 4/26 to 4/29, and 5/24 to 5/27.

4 Week Black Belt Certification Training: $4995

2 Week Green Belt Certification Training: $2995

Ask about team discounts

Contact the MDI Course Manager with any questions or to Bulk Register a Team Click here for Belinda Davis

The Define Phase is best described as the Development Project Definition. Where the keys to success are:

• Development Project Charter
• Business Case
• Deliverables based Project Plan with defined gate review requirements
• Risk management plan based upon FMEA results
• Organizational change management plan

The Measure Phase is best described as the Requirements Definition. Where the keys to success are:

• Voice of the Customer Requirements that include internal and external customers and suppliers to the process
• Functional requirements for the process to mitigate risks
• QFD analysis to prioritize VOC requirements and Functional Requirements
• Staffing skill sets based upon functional requirements
• Defined performance metrics (KPMs) and tracking requirements for the process

The Analyze Phase is best described as the Conceptual Design. Where the keys to success are:

• Detailed descriptions of the processes needed to satisfy prioritized functional requirements
• SIPOC process maps for each of the processes and IT supporting systems
• Roles, responsibilities, and staffing requirements to execute the processes
• Evaluation of process design’s capability to meet KPMs and VOC requirements

The Design Phase is best described as the Detailed Design. Where the keys to success are:

• QFD analysis of Functional Requirements versus Process Components and Systems
• Detailed future state deployment (swim lane) process maps
• Management and Control Plans
• Job descriptions for required staffing
• Pilot test plans for processes and IT supporting systems

The Validate Phase is best described as Test, Validate, and Implement. Where the keys to success are:

• Develop policies, procedures, and work instructions to execute all future state processes
• Pilot test future state processes with the policies, procedures, and work instructions
• Train process personnel and implement the future state processes on a full scale
• Implement the Management and Control Plans

Process Design for Six Sigma requires collaboration among the process stakeholders. Often being face to face for the collaborative meetings is not possible from a logistics, or cost standpoint, which is where on-line Webinars provide the solution.

At EducateVirtually.com we provide the facilitation and coaching required for extremely productive Webinars that accelerate the DFSS process. We have found that communication is enhanced and documentation is more complete using internet based meetings. New processes have been developed and implemented in as little as 12 weeks starting from a clean sheet of paper.

For additional information, or to contact us visit EducateVirtually.com

The question becomes, “Just how do you do that?” The DFSS process has the acronym of DMADV, which stands for Define, Measure, Analyze, Design, and Validate. Let’s clarify these terms and make them understandable.

• Define: Development Project Definition
• Measure: Requirements Definition
• Analyze: Conceptual Design
• Design: Detailed Design
• Validate: Test, Validate, and Implement

Process DFSS is a development project that should follow the typical development phases as named previously. During the requirements definition phase the voice of the customer and the business are defined. Potential failure modes are identified and the process functions that mitigate the risks are developed.

The tricky transition is coming up with the conceptual design following the completion of the requirements definition. Here is where the SIPOC process mapping method comes into play. SIPOC stands for Suppliers, Inputs, Process, Outputs, and Customers.

The conceptual process design is at a high level. To begin, identify who supplies inputs into the process and what those inputs are. Next, where does the process start and where does the process end. The process steps from the beginning to the end are limited to five steps. Then the outputs from each step, 1 thru 5, are defined along with the customers both internal and external who receive those outputs.

The SIPOC process map becomes the conceptual design of the new process. The suppliers who provide inputs into the process are defined. The beginning and ending points are defined. The process outputs and their customers are defined.

The next questions to answer are what volume will flow through the process and how often does the process cycle. These answers lead to the staffing requirements. Information technology solutions are identified at this point as well. The SIPOC process map facilitates timely completion of the new process conceptual design.

At EducateVirtually.com we offer Webinar on Demand to coach and facilitate Process Design for Six Sigma. Visit us today.

• Have you run into stumbling blocks in your continuous improvement efforts?
• Is Lean and Six Sigma getting a little confusing?
• Do you want to try some methods and techniques and you aren't quite sure how to apply them?
• Are you having trouble with statistics, minitab statistical software, quality function deployment, business case development, or design of experiments?
• These are just a few of the topics that can be covered Live with Webinar On Demand.

If you answered “Yes” to any, or many, of the above questions then EducateVirtually.com can help. We provide Webinar On Demand Live Training and Coaching sessions where
You Pick the Topic and the Schedule.

There is no limit to the number of attendees.

Up to 30 computer connections at a time!.

Visit EducateVirtually.com for Details, Pricing, and Topics Supported

We begin with capturing the Voice of the Customer requirements for the process being designed. Often, the VOC comprises External Customers, Internal Customers, and the suppliers to the process. A series of criteria are applied to collaboratively weight and rank the requirements.

The first QFD matrix defines the functional requirements for the process. Just what is it that the process is supposed to do? Each function is then evaluated for its relationship to the delivery of each customer requirement. They are scored only where relationships exist. The outcome is the list of prioritized functions that drive meeting VOC requirements.

The second QFD matrix designs the process. To meet the functional requirements we need processes and IT support systems. These are input into the QFD and compared against the prioritized list of functions. We then assess if our process design can deliver the functions that will satisfy the Voice of the Customer. During this iterative QFD analysis the outcome is the new process design, with a ranking of processes and systems that are critical to success.

The last QFD matrix designs the organization that is required to run the processes. Roles, responsibilities, skill sets, structure, and staffing are determined.

The results from the QFD roadmap are:

• A comprehensive design of the processes and IT support systems
• A completed organization design that will manage and execute the processes
• And it all ties back to the Voice of the Customer Requirements

That’s the Quality Function Deployment Process Design Roadmap click here to Take the Free Nano Course

At educatevirtually.com we offer e-learning, on demand webinars, and on site training, coaching, and facilitation to support your operations improvement needs.

Contact us for training, coaching, or facilitation support at EducateVirtually.com

If you are in this situation then finding the root causes in your processes is the answer. Lean Root Cause Analysis begins with mapping of the current state, which is where you are now. All it takes is a walk through review of your current process, a digital camera to capture actual evidence, some sticky notes, sharpies, and a roll of brown paper.

Depicting the current state of your process on a Process Map, whether it is a Value Stream Map or a Deployment Process Map, gives you a visual representation from the beginning to the end of your process. You will be able to take a step back and review what’s actually going on objectively.

Photographs provide reminders of what is actually taking place. Sometimes the photos show some pretty scary things taking place in the process.

Information that should also be captured are cycle times, processing times, lead times, quantities of good and bad process outputs, travel distances, and inventory. The list is not all encompassing, but a good start.

The next step is to classify and quantify the Value Adding activities and the Non Value Adding Activities. We define Value Adding activities as ones that

(1) the customer considers to be important and would be willing to pay for them,

(2) the “THING” that travels through the process is physically changed, and

(3) the process activity is done correctly the first time through the process.

All three requirements must be met or the process activity is considered to be Non Value Adding.

To reduce or eliminate the Non Value Adding activities in the process requires an understanding of the root causes that created the need for them. We use Cause and Effect Diagrams, Failure Mode Effects Analysis, and 5 Why Brainstorming to uncover the root causes.

Devise your corrective actions and implement the improvements. Sounds pretty easy and it can be. Just follow the 5 step DMAIC improvement process. Define your current state, measure what is actually happening, analyze the information to uncover the root causes, develop creative solutions to improve the process, and then implement the solutions and install controls to maintain your gains.

If you need some help getting started then take our course Lean Root Cause Analysis

The Lean Root Cause Analysis course teaches practical application tools for uncovering the root causes in your processes. Lean concepts are demonstrated with a simulation. You will then learn how to define your current state and uncover the root causes that are the impediments to your future state success. Budget friendly at only $69.95

Register for a Course Today at EducateVirtually.com

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There are seven key principles in the Lean philosophy.

1. Eliminate Waste, where waste is defined as anything other than the minimum amount of equipment, materials, parts, space, and time which are absolutely essential to add value to the product or service in the eyes of the customer.
2. Simplify production flow
3. Achieve quality by managing the process, not the product
4. Produce to demand, not to stock
5. Produce one at a time
6. Continuous improvement
7. Respect for people and teamwork Six Sigma is a structured method that drives continual improvement of products, processes, and service delivery that meet or exceed customer requirements.

The Six Sigma philosophy has four key principles:

1. Customer Performance Metrics are measured on a common scale, namely the Process Sigma Level.
2. Use a structured continual improvement process that follows five phases, namely Define, Measure, Analyze, Improve and Control (DMAIC).
3. Implementation should be as “Fast as You Can, but as Slow as You Must” using a project completion strategy.
4. Use the “Best Practice Tools” for improvement from Total Quality Management, Business Process Engineering, Balanced Scorecard, Applied Statistics, Just-In-Time, Continuous Flow Manufacturing, Lean Enterprise, and Design for Excellence. Integration of these two philosophies for improvement is the key to making it work.

The glue that holds it together is the DMAIC Improvement Process. The duration of a project is driven by the scope of the issue that must be resolved.

The Lean Six Sigma philosophy can be applied in a day, a week, or multiple months. It just depends on the depth and breadth of the issue.

See Lean Six Sigma in action with The Sailboat Company Simulation!

The programs were considered to be separate, but complimetary. So when the Six Sigma bandwagon started up in the 1980s and Lean started its rebirth in the 1990s we once again had two separate initiatives. This generally put a strain on resources. There was also a misconception that Lean was easier than Six Sigma and we better start with Lean first. Once we clean up our act maybe we will be ready for Six Sigma.

Once again, organizations were missing the point. Six Sigma is only two things (the zealots may disagree, but hear me out)

1. Structured problem solving process DMAIC or DMADV (for DFSS)
2. Universal performance metric called the Process Sigma Level.

The tools to support the problem solving process come from many other disciplines and previous improvement programs and initiatives.

Six Sigma did not invent Statistics, SPC, DOE, Process Mapping, Brainstorming, Kano Modeling, Voice of the Customer Analysis, Benchmarking, and so on.

Lean has a toolkit that comes from the Toyota Production System, JIT, Continuous Flow, SMED, 5s, Value Stream Mapping, Kanban inventory management, and so on.

• So what is the quandary?
• Wouldn't it make sense to focus the resources to tackle the most important issues facing an organization?
• Why have two separate initiatives?
• Integrating Six Sigma and Lean only makes sense. We have always kept them integrated. Why, you might ask?

It gets back to my earlier premis that Six Sigma has a structured improvement process and a universal performance measure and uses tools to tackle issues from many resources. So, add the Lean Toolkit as well.

We should always utilize the "Best Practice Tools" that are required to tackle the issues we are facing! Who cares what discipline they came from. Integration is the key to success and Lean Six Sigma is the new buzzword.