Friday, February 24, 2017

7 QC Tools Video Tutorials

Process Flow Chart

Process flow chart is the pictorial presentation of the actual process. A chart showcasing the flow of the product or service in an actual process. Standard symbols showcase the different activities of the process connecting by means arrows on a process flow chart.

Check Sheet

Check Sheet is a paper tool used for data collection. Defects and defectives or anything else with predetermined headings can be counted using tally marks on the Check Sheet.
Histogram is an SPC technique. It is a graphical tool that represents the data values with the help of vertical rectangular bars. Height of the bars is corresponding to frequency of the data values.
Pareto chart is the combination of bar chart and line graph. It is a graphical tool that represents the actual data in descending order using bar chart and cumulative data in ascending order using line graph.
Cause and Effect diagram is a root cause finding technique and very important quality tool. It is also known by two other names; Fishbone diagram and Ishikawa diagram.

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Scatter Chart

Scatter Chart is a graphical tool, correlates two variables, one is independent and other is dependent. It is dot plot corresponding to independent vs dependent variable. The tutorial explains why does a Scatter Chart use as a qc tool? How does a Scatter Chart identify and analyse the relationship between two variables?

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Control Charts

Control chart signifies the process variation, when data goes beyond control limits, and inspires the process owner to identify the assignable causes of variation in the process to take immediate corrective action to control the process. This tutorial explains; Why does the control chart use as qc tool?, What are the types of control charts?, How do the different control charts for variables and attributes like; Mean Chart, Range Chart, P-Chart and C-Chart, analyse the data and help to control the process?

Monday, January 16, 2017

Transitional roadblocks in Six Sigma deployment

Six Sigma is not a completely new way to manage an enterprise, but it is a very different way. In essence, Six Sigma forces change to occur in a systematic way.

Change Resistance

Despite the change imperative, most enterprises resist change until there are obvious signs that current systems are failing one or more stakeholder groups. Perhaps declining market share makes it clear that your products or services are not as competitive as they once were. Or may be your customers are still loyal, but customer complaints have reached epidemic proportions. Or your share price may be trending ominously downward. Traditional organizations watch  for such signs and react to them. Change occurs, as it must, but it does so in an atmosphere of crises and confusion. Substantial loss may result before the needed redesign is complete. People may loss their jobs even
their careers. Many organizations that employ these reactionary tactics don't survive the shock.

How to overcome change resistance?

Embracing Change

The Six Sigma enterprises  proactively embraces change by explicitly incorporating change into their management systems. 

Employ Change Agent

Full and part time change agent positions are created and a complete infrastructure is created. As contradictory as it sounds, the infrastructure is designed to make change part of the routine. 

Integrating New Techniques with Business Process

New techniques are used to monitor changing customer, shareholder, and employee inputs, and to integrate the new information by changing business processes. The approach employs sophisticated computer modeling, mathematics, and statistical  analysis to minimize unneeded tampering by separating signal from noise. These analytical techniques are applied to stakeholder inputs and to enterprise and process metrics at all levels.

Six Sigma Training

As a consequence of deploying Six Sigma, people require a great deal of training. Communication systems are among the first things that need to be changed so people know what to make of the new way of doing things. 

Consider only Meaningful data

When Six Sigma is deployed, the old reports are no longer used. Six Sigma requires that internal data be presented only if there is a  direct linkage to  a stakeholder. 

Walk the Talk

Six Sigma demands that you constantly look for ways to improve your systems. This often means that systems are eliminated entirely. In the face of this insecurity, employees watch like a hawk for sight of leadership in consistency. Trust is essential. Leaders who don't communicate a clear and consistent message and walk the talk will  be faced with stiff resistance to Six Sigma. 

The need for a well-designed approach to making the transition from a traditional organization to a  Six Sigma organization is clear.  If the approach is not right then the DMAIC and all the tools and techniques will be of little use.

Thursday, January 5, 2017

Six Sigma-An Application of scientific methods to business processes

Six Sigma is an application of the scientific method to the design and operation of management systems and business processes which enables employees to deliver greatest value to customers and

The scientific method works as follows:

  1. Observe some important aspect of the market place or your business
  2. Develop a tentative explanation or hypothesis consistent with your business
  3. Based on your hypothesis make predictions
  4. Test your predictions by conducting experiments or making further careful observations. Record your observations. Modify your hypothesis based on new facts. If variation exist, use statistical tools to help you separate signal from noise.
  5. Repeat steps 3 and 4 until there are no discrepancies between hypothesis and the results from expectations or observations. 
By applying the scientific method over a period of years you will develop a deep understanding of what makes your customer and your business tick.

The Six Sigma philosophy focuses the attention of everyone on the stakeholders for whom the enterprise exists. It is a cause-and-effect mentality. Well-designed management systems and business processes operated by happy employees cause customers and owners to be satisfied or delighted. Of course, none of is what they already do. What distinguishes the traditional approach from Six Sigma is the degree of rigor.

Action oriented approach

Six Sigma organizations are not academic institutions. They compete in the fast-paced world of business and they don't have the luxury of taking years to study all aspects of a problem before deciding on a course of action. A valuable skill for the leader of a Six Sigma enterprise, or for the sponsor of a Six Sigma  project, is to decide when enough information has been obtained to warrant taking a particular course of action and moving on. Six Sigma leadership is very hard-nosed when it comes to spending the shareholder's money and project research tends to be tightly focused on delivering information useful for management decision-making. Once a level of confidence is achieved, management must direct the Black Belt to move the project from the Analyze phase to the Improve phase, or from the  Improve phase to the Control phase. Projects are closed and resources moved to new projects as quickly as possible.
    Six Sigma organizations are not infallible, they  make their share of mistakes and miss some opportunities they might have found had they taken time to explore more possibilities. Still, they make fewer mistakes that their traditional counterparts and scholarly research has shown that they perform significantly better in long run.

Focus on a few things that matter most

Six Sigma activities focus on the few things that matter most to three key constituencies:
  • Customers, 
  • Shareholders, and 
  • Employees
The primary focus is on customers, but shareholder interests are not far behind. The requirements of these two groups are determined using scientific methods, of course. But the science of identifying what people want is not fully mature, so the data are supplemented with a great deal of personal contact at all levels of the organization. Employees requirements are also aggressively sought. Well-treated employees stay longer and do a better job.

Wednesday, January 4, 2017

What is Six Sigma?

Six Sigma is a rigorous, focused and highly effective implementation of proven quality principles and techniques. Incorporating elements from the work of many quality pioneers, Six Sigma aims for virtually error free business performance.
Sigma, (σ), is a letter in Greek alphabet used by statisticians to measure the variability in any process. A company's performance is measured by the sigma level of their business processes. Traditionally companies accepted three or four sigma performance levels as the norm, despite the fact that these processes created between 6,200 and 67000 problems per million opportunities! The Six Sigma standard of 3.4 problems per million opportunities is a response to the increasing expectations of customers and the increased complexity of modern products and processes.

Fig. 1 Six Sigma DMAIC
Six Sigma's magic is not in statistical or high tech razzle-dazzle. Six Sigma relies on tried and true methods that have been around for decades. In fact, Six Sigma discards a great deal of the complexity that characterized Total Quality Management (TQM). Six Sigma takes a handful of proven methods and trains a small cadre of in-house technical leaders, known as Six Sigma Black Belts, to a high levels of proficiency in the application of these techniques. To be  sure, some of the methods Black Belts use are highly advanced, including up-to-date computer technology. But the tools are applied within a simple performance improvement model known as Define-Measure-Analyze-Improve-Control.

This is know as DMAIC and described as
D-Define the goals of the improvement activity.
M-Measure the exiting system
A-Analyze the system to identify ways to eliminate the gap between the current performance of the system or process and the desired goal
I-Improve the system
C-Control the new system

Why  Six Sigma?

It would be a mistake to think that Six Sigma is about quality in the traditional sense. Quality, defined traditionally as conformance to internal requirements, has little to do with Six Sigma. Six Sigma is about helping the organization make more money by improving customer value and efficiency. To link this objective of Six Sigma with quality requires a new definition of quality; 
"Quality is the value addition through a productive endeavor."

Quality comes in two flavors:
  1. Potential quality: It is known as the maximum possible value added per unit of input 
  2. Actual Quality: It is the current value added per unit of input.
Fig. 2 COPQ Vs Sigma Level
The difference between the potential and actual quality is waste. Six Sigma focuses on improving quality (i.e. reducing waste) by helping organizations produce products and services better, faster, and cheaper. There is a direct correspondence between quality levels and "sigma levels" of performance.
For example; a process operating at Six Sigma will fail to meet requirements about 3 times per million transactions. The typical company operates at roughly four sigma, which means they produce roughly 6,210 failures per million transactions. Six Sigma focuses on customer requirements, defect prevention, cycle time reduction, and cost savings. Thus the benefits from Six Sigma go straight to the bottom line. Unlike mindless cost-cutting programs, Six Sigma identifies and eliminates costs which provide no value to customers and waste costs.

For non-Six Sigma companies, these costs are often extremely high. Companies operating at 3 or 4
Fig. 3 Error Rate Vs Sigma Level
sigma typically spend between 25 and 40 percent of their revenues fixing problems. This is known as the cost of poor quality. Companies operating at Six Sigma typically spend less than 5 percent of their revenues to fix problems. Fig. 2 shows the cost of poor quality vs sigma level.The dollar cost of this gap can be huge. General Electric estimated that the gap between three and four sigma and Six Sigma was costing them between $8 billion and $12 billion per year. 
One reason why costs are directly related to sigma levels is very simple: Sigma levels are a measure of error rates, and it costs money to correct errors. Fig.3 shows the relationship between errors and sigma levels. Note that the error rate drops exponentially as the sigma level goes up, and that this correlates well to the empirical cost data shown in fig.2  Also note that the errors are shown as errors per million opportunities, not as percentages. This is another convention introduced by Six Sigma. In the past we could tolerate percentage error rates, today we cannot.

Tuesday, January 3, 2017

Concept of Utility in Demand Analysis


The concept of utility can be looked upon two angles--
  1. From the commodity angle
  2. From the consumer's angle

Commodity Angle

Utility is the want-satisfying property of a commodity.

Consumer's Angle

Utility is the psychological feeling of satisfaction, pleasure, happiness or well-being which a consumer derives from the consumption, possession or the use of a commodity.

Absolute concept of want satisfying property

The concept of want-satisfying property of a commodity is 'absolute' in the sense that this property is ingrained in the commodity irrespective of whether one needs it or not. For example; a pen has its own utility irrespective of whether a person is literate or illiterate.

Absolute concept of utility is 'ethically neutral' because a commodity may satisfy a frivolous or socially immoral need. For example; alcohol, drugs or prostitution.

Relative or subjective concept of consumer's angle of utility

From a consumer's point of view, utility is a post consumption phenomenon as one derives satisfaction from a commodity only when one consumes or uses it. Utility in the sense of satisfaction is a subjective or relative concept because--
  1. A commodity need not be useful for all; cigarettes do not have any utility for non-smokers and meat has no utility for strict vegetarians.
  2. Utility of a commodity varies from person to person and from time to time; and
  3. A commodity need not have the same utility for the consumer at different points of times, at different levels of consumption and at different moods of a consumer.
In consumer analysis only the subjective concept of utility is used.

Total Utility (TU)

Total utility may be defined as the sum of the utilities derived by a consumer from the various units of goods and services he consumes. Suppose a consumer consumes four units of a commodity X, at a time and derives utility as U1, U2, U3, and U4. His total utility (TUx) from  commodity X can be measured as follows
TUx = U1+U2+U3+U4
If a consumer consumes 'n' number of commodities, his total utility, TUn, will be the sum of total utilities derived from each commodity.
For instance, if the consumption goods are X, Y, and Z and their total respective utilities are Ux, Uy, and Uz then 
TUn = Ux +Uy +Uz

Marginal Utility (MU)

Marginal utility is another most important concept used in economic analysis. Marginal utility may be  defined in a number of ways. 
It is defined as the utility derived from the marginal unit consumed. 
It may also be defined as the addition to the total utility resulting from the consumption (or accumulation) of one additional unit.

Marginal utility (MU) thus refers to the change in the total utility(i.e. ΔTU) obtained from the consumption of an additional unit of a commodity.
It may be expressed as
Where ΔTU = Change in Total Utility and ΔQ = Change in quantity consumed by one unit

Another way of expressing marginal utility (MU), when the number of units consumed is 'n' can be as follows
MU of nth unit = TUn - TU(n-1)