Chapter 10

Lean Systems andLean Systems and

Six-Sigma Quality

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Lecture Outline

What is Lean?

Lean Production

Respect for People

10-2

Respect for People

Total Quality Management (TQM)

Statistical Quality Control (SQC)

Six-Sigma Quality

Lean Six-Sigma Supply Chain

What is Lean?

Lean is a management approach forcreating value for the end customerthrough the most efficient utilizationresources possible

10-3

Standard in many industries

Often results in:

large cost reductions

improved quality

increased customer service

Lean Six Sigma

Combines the approaches of Lean and Six Sigma

Six Sigma methodology to identify and eliminate causes of

quality problems

10-4

Tenets of Lean

There are six tenets of the Lean Philosophy:

1.Elimination of Waste

eliminate all non-value adding activities

2.A Broad View2.A Broad View decisions made for the success of the

entire supply chain all supply chain members responsible for

adding value

3.Simplicity the simpler the solution the better

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Tenets of Lean Continued

4. Continuous Improvement emphasis on quality and continuous

improvement called kaizen

5. Visibility visible problems are identified and solved

6. Flexibility easily switch from one product type to

another, using flexible workers thatperform many different tasks

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Elements of Lean

Lean is composed of three elements thatwork in unison:

Lean Production

Total Quality Management (TQM)

Respect for People

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Elements of Lean

10-8

Lean Production

Coordinated system for producing theexact products desired, delivered in rightquantities to where needed Just-in-Time

The Pull System

Visual Signals

Small Lot Production

Uniform Plant Loading

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The Pull System

Traditional approach

supply chains work as push systems

inventory carried to cover up problems

Pull approach

each stage in supply chain requestsquantities needed from the previous stage

no excess inventory generated

reduced inventory exposes problems

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Visual Signals

Communication between workstations

Kanban signal or card in Japanese

contains information passed between stations contains information passed between stations

authorizes production

10-11

Visual Signals

10-12

Small Lot Production

The amount of products produced at anyone time is small

reduces inventory and excess processing reduces inventory and excess processing

increases flexibility

shortens manufacturing lead time

responds to customer demands morequickly

setup time must be low

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Uniform Plant Loading

Problem

demand changes are magnified throughout thesupply chain

contributes to inefficiency and waste

Uniform Plant Loading

production schedule is frozen for the month

also called leveling

helps suppliers better plan own production

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Respect for People

Respect for all people must exist for anorganization to be its best

flatter hierarchy than traditional organizations

ordinary workers given great responsibilityordinary workers given great responsibility

supply chain members work together in crossfunctional teams

Look at Role of:workers, management, and suppliers

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Role of Workers

Workers have the ability to perform manydifferent tasks and are actively engaged inpursuing company goals

Worker DutiesWorker Duties

improve production process

monitor quality

correct quality problems

Work in Teams

quality circles

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Role of Management

Create the cultural change in theorganization needed for Lean to succeed

provide atmosphere of cooperation provide atmosphere of cooperation

Empower workers to take action based ontheir ideas

develop incentive system for lean behaviors

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Role of Suppliers

Lean builds long-term supplier relationships

companies partner with suppliers

improve process quality

information sharing

goal to have single-source suppliers

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Total Quality Management (TQM)

TQM is an integrated organizational effortdesigned to improve quality at every level

Look at:Quality GurusQuality Gurus

Voice of the Customer

Costs of Quality

Quality Tools

ISO 9000

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Quality Gurus

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Voice of the Customer

Quality is defined as meeting or exceedingcustomer expectations

Determine customer wants: Determine customer wants:

focus groups

market surveys

customer interviews

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Costs of Quality

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Quality Tools

Lean requires workers to identify andcorrect quality problems

Seven Tools of Quality Control:

Cause and Effect Diagrams Cause and Effect Diagrams

Flowcharts

Checklists

Control Charts

Scatter Diagrams

Pareto Analysis

Histograms

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Cause and Effect Diagrams

Identify causes of a quality problem

sometimes called fishbone diagrams

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Flowchart

Diagrams the sequence of steps in anoperation or process

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Checklist

Lists common defects and number ofoccurrences of the defects

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Control Chart

Determines whether a process is operatingwithin expectations

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Scatter Diagram

Graph that visually shows how twovariables are related to one another

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Pareto Analysis

Based on the premise that a small number ofcauses create the majority of problems

identifies problems based on degree of importance

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Histogram

Chart that shows the frequency distribution ofobserved values of a variable

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ISO 9000

Family of standards for quality management

increased international trade developed a need

published by International Organization for Standards(ISO) in 1987

concerns measuring and documenting the qualityprocess

ISO provides a certification process

ISO 14000 standards for environmental management

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Statistical Quality Control (SQC)

SQC is the use of statistical tools to measureproduct and process quality

Three categories:

Descriptive StatisticsDescriptive Statistics describe quality characteristics

Statistical Process Control (SPC) a random sample of output is used to

determine if characteristics are acceptable

Acceptance Sampling sample determines if whole batch is acceptable

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Sources of Variation

All processes have variation

Assignable Variation

caused by factors that can be clearly caused by factors that can be clearlyidentified and managed

Common Variation

inherent in the process

also called random variation

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Process Capability

Process Capability evaluates the variation ofthe process relative to product specifications

Product Specifications

ranges of acceptable quality characteristics ranges of acceptable quality characteristics

also called tolerances

Process Variation

all processes have natural variation

defects are produced when variation exceedsproduct specifications

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Process Variation Equal toSpecification Range

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Process Variation ExceedsSpecification Range

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Process Variation Narrower thanSpecification Range

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Process Capability Index

where: USL = upper specification limit

6

LSLUSL

rangeiationvarprocess

rangeionspecificatproductCp

LSL = lower specification limit

Cp Values:

Cp = 1: process is minimally capable

Cp 1: process is not capable of producingproducts within specification

Cp 1: process exceeds minimum capability10-38

Cp Example

Given a process with three separate machinesthat are used to fill jars with pasta sauce.

specification range is between 30 and 34 ounces

process mean, , is 31 ounces process mean, , is 31 ounces

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Machine

A 0.6

B 0.7

C 1.2

Calculate the Cp foreach machine todetermine capabilities

Cp Example Continued

A:

6

LSLUSLCp

11.1)6.0(6

3034Cp

Machine A has a A:

B:

C:

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11.1)6.0(6

Cp

95.0)7.0(6

3034Cp

55.0)2.1(6

3034Cp

Machine A has aCp > 1, howeverthe process meanis not centered

Cpk Example

Cpk addresses the lack of centering of theprocess over the specification range

3

LSL,

3

USLminCpk

Machine A:

Cpk = min (1.66, 0.55) = 0.55

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33

)6.0(3

3031,

)6.0(3

3134minCpk

Process Control Charts

Graph that shows whether a sample of datafalls within the common range of variation

1.sample process output

2.plot result on the control chart2.plot result on the control chart

3.use to determine if process is in control

can monitor: variables

characteristics that can be measured