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Intended Learning Outcomes

✔ Give an overview of problem solving.

✔ Give an overview of process improvement.
✔ Describe the Six Sigma methodology.
✔ Describe and use various quality tools.

As we start with this topic, contemplate on the scenario given below:

A computer repair shop had received a number of complaints on the length of time it took to make
repairs. The manager responded by increasing the repair staff by 10 percent. Complaints on
repair time quickly decreased, but then complaints on the cost of repairs suddenly increased.
Oddly enough, when repair costs were analyzed, the manager found that the average cost of
repair had actually decreased relative to what it was before the increase in staff. What are some
possible explanations for the complaints, and what actions might the manager contemplate?

Quality is the culmination of efforts of the entire organization and its supply chain. It begins with
careful assessment of what the customers want, then translating this information into technical
specifications to which goods or services must conform. The specifications guide product and
service design, process design, production of goods and delivery of services, and service after
the sale or delivery.

Total quality management is a never-ending pursuit of quality that involves everyone in an

organization. The driving force is customer satisfaction; a key philosophy is continuous
improvement. Training of managers and workers in quality concepts, tools, and procedures is an
important aspect of the approach. Teams are an integral part of TQM. Two major aspects of the
TQM approach are problem solving and process improvement. Six-Sigma programs are a form of
TQM. They emphasize the use of statistical and management science tools on selected projects
to achieve business results.
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Problem Solving and Process Improvement

Problem solving is one of the basic procedures of TQM. In order to be successful, problem-solving
efforts should follow a standard approach. Table 9.7 describes the basic steps in the TQM
problem-solving process.

An important aspect of problem solving in the TQM approach is eliminating the cause so that the
problem does not recur. This is why users of the TQM approach often like to think of problems as
“opportunities for improvement.”

The Plan-Do-Study-Act-Cycle

The plan-do-study-act (PDSA) cycle, also referred to as either the Shewhart cycle or the Deming
wheel, is the conceptual basis for problem-solving activities. The cycle is illustrated in Figure 9.1.
Representing the process with a circle underscores its continuing nature. There are four basic steps
in the cycle:

Plan. Begin by studying the current process. Document that process. Then collect data on the
process or problem. Next, analyze the data and develop a plan for improvement. Specify measures
for evaluating the plan.
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Do. Implement the plan, on a small scale if possible. Document any changes made during this phase.
Collect data systematically for evaluation.
Study. Evaluate the data collection during the do phase. Check how closely the results match the
original goals of the plan phase.
Act. If the results are successful, standardize the new method and communicate the new method to
all people associated with the process. Implement training for the new method. If the results are
unsuccessful, revise the plan and repeat the process or cease this project.

Employing this sequence of steps provides a systematic approach to continuous improvement.

Process improvement is a systematic approach to improving a process. It involves documentation,

measurement, and analysis for the purpose of improving the functioning of a process. Typical goals of
process improvement include increasing customer satisfaction, achieving higher quality, reducing
waste, reducing cost, increasing productivity, and reducing processing time.

Table 9.8 provides an overview of process improvement.

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Six Sigma

The term Six Sigma has several meanings. Statistically, Six Sigma means having no more than 3.4
defects per million opportunities in any process, product, or service. Conceptually, the term is much
broader, referring to a program designed to reduce the occurrence of defects to achieve lower costs
and improved customer satisfaction. It is based on the application of certain tools and techniques to
selected projects to achieve strategic business results. In the business world, Six-Sigma programs
have become a key way to improve quality, save time, cut costs, and improve customer satisfaction.
Six-Sigma programs can be employed in design, production, service, inventory management, and
delivery. It is important for Six-Sigma projects to be aligned with organization strategy. Motorola
pioneered the concept of a Six-Sigma program in the 1980s and actually trademarked the term.
Today, Six Sigma concepts are widely used by businesses, governments, consultants, and even the
military as a business performance methodology. There are management and technical components
of Six-Sigma programs. The management component involves providing strong leadership, defining
performance metrics, selecting projects likely to achieve business results, and selecting and training
appropriate people. The technical component involves improving process performance, reducing
variation, utilizing statistical methods, and designing a structured improvement strategy, which
involves definition, measurement, analysis, improvement, and control.
For Six Sigma to succeed in any organization, buy-in at the top is essential. Top management must
formulate and communicate the company’s overall objectives and lead the program for a successful
deployment. Other key players in Six-Sigma programs are program champions, “master black belts,”
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“black belts,” and “green belts.” Champions identify and rank potential projects, help select and
evaluate candidates, manage program resources, and serve as advocates for the program. Master
black belts have extensive training in statistics and use of quality tools. They are teachers and
mentors of black belts. Black belts are project team leaders responsible for implementing process
improvement projects. They have typically completed four weeks of Six-Sigma training and have
demonstrated mastery of the subject matter through an exam and successful completion of one or
more projects. Green belts are members of project teams.

Black belts play a pivotal role in the success of Six-Sigma programs. They influence change, facilitate
teamwork, provide leadership in applying tools and techniques, and convey knowledge and skills to
green belts. Black belt candidates generally have a proven strength in either a technical discipline
such as engineering or a business discipline. Candidates also must have strong “people skills” and be
able to facilitate change. And they must be proficient in applying continuous improvement and
statistical methods and tools. A black belt must understand the technical aspects of process
improvement as well as the expected business results (time, money, and quality improvement).

Six Sigma is based on these guiding principles:

1. Reduction of variation is an important goal.

2. The methodology is data driven; it requires valid measurements.
3. Outputs are determined by inputs; focus on modifying and/or controlling inputs to improve
outputs.
4. Only a critical few inputs have a significant impact on outputs (the Pareto effect); concentrate
on those.

DMAIC (define-measure-analyze-improve-control) is a formalized problem-solving process of Six

Sigma. It is composed of five steps that can be applied to any process to improve its effectiveness.
The steps are:
1. Define: Set the context and objectives for improvement.
2. Measure: Determine the baseline performance and capability of the process.
3. Analyze: Use data and tools to understand the cause-and-effect relationships of the process.
4. Improve: Develop the modifications that lead to a validated improvement in the process.
5. Control: Establish plans and procedures to ensure that improvements are sustained.

Quality Tools

There are a number of tools that an organization can use for problem solving and process
improvement. This section describes eight of these tools. The tools aid in data collection and
interpretation, and provide the basis for decision making.
The first seven tools are often referred to as the seven basic quality tools. Figure 9.2 provides a quick
overview of the seven tools.
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Flowcharts. A flowchart is a visual representation of a process. As a problem-solving tool, a

flowchart can help investigators in identifying possible points in a process where problems occur.
Figure 9.3 illustrates a flowchart for catalog telephone orders in which potential failure
points are highlighted.

The diamond shapes in the flowchart represent decision points in the process, and the rectangular
shapes represent procedures. The arrows show the direction of “flow” of the steps in the process.

To construct a simple flowchart, begin by listing the steps in a process. Then classify each step as
either a procedure or a decision (or check) point. Try to not make the flowchart too detailed or it may
be overwhelming but be careful not to omit any key steps.
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Check sheets. A check sheet is a simple tool frequently used for problem identification. Check
sheets provide a format that enables users to record and organize data in a way that facilitates
collection and analysis. This format might be one of simple checkmarks. Check sheets are designed
on the basis of what the users are attempting to learn by collecting data. Many different formats can
be used for a check sheet, and there are many different types of sheets. One frequently used form of
check sheet deals with type of defect, another with location of defects. These are illustrated in Figures
9.4 and 9.5

Figure 9.4 shows tallies that denote the type of defect and the time of day each occurred. Problems
with missing labels tend to occur early in the day and smeared print tends to occur late in the day,
whereas off-center labels are found throughout the day. Identifying types of defects and when they
occur can help in pinpointing causes of the defects.

Figure 9.5 makes it easy to see where defects on the product—in this case, a glove—are occurring.
Defects seem to be occurring on the tips of the thumb and first finger, in the finger valleys (especially
between the thumb and first finger), and in the center of the gloves. Again, this may help determine
why the defects occur and lead to a solution.
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Histograms. A histogram can be useful in getting a sense of the distribution of observed values.
Among other things, one can see if the distribution is symmetrical, what the range of values is, and if
there are any unusual values. Figure 9.6 illustrates a histogram. Note the two peaks. This suggests
the possibility of two distributions with different centers. Possible causes might be two workers or two
suppliers with different quality.

Pareto Analysis. Pareto analysis is a technique for focusing attention on the most important
problem areas. The Pareto concept, named after the 19th-century Italian economist Vilfredo Pareto,
is that a relatively few factors generally account for a large percentage of the total cases (e.g.,
complaints, defects, problems). The idea is to classify the cases according to degree of importance
and focus on resolving the most important, leaving the less important. Often referred to as the 80–20
rule, the Pareto concept states that approximately 80 percent of the problems come from 20 percent
of the items. For instance, 80 percent of machine breakdowns come from 20 percent of the machines,
and 80 percent of the product defects come from 20 percent of the causes of defects.

Often, it is useful to prepare a chart that shows the number of occurrences by category, arranged in
order of frequency. Figure 9.7 illustrates such a chart corresponding to the check sheet shown in
Figure 9.4. The dominance of the problem with off-center labels becomes apparent. Presumably, the
manager and employees would focus on trying to resolve this problem. Once they accomplished that,
they could address the remaining defects in similar fashion; “smeared print” would be the next major
category to be resolved, and so on. Additional check sheets would be used to collect data to verify
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that the defects in these categories have been eliminated or greatly reduced. Hence, in later Pareto
diagrams, categories such as “offcenter” may still appear but would be much less prominent.

Scatter Diagrams. A scatter diagram can be useful in deciding if there is a correlation between the
values of two variables. A correlation may point to a cause of a problem. Figure 9.8 shows an
example of a scatter diagram. In this particular diagram, there is a positive (upwardsloping)
relationship between the humidity and the number of errors per hour. High values of humidity
correspond to high numbers of errors, and vice versa. On the other hand, a negative
(downward-sloping) relationship would mean that when values of one variable are low, values of the
other variable are high, and vice versa.

The higher the correlation between the two variables, the less scatter in the points; the points will tend
to line up. Conversely, if there were little or no relationship between two variables, the points would be
completely scattered. In Figure 9.8, the correlation between humidity and errors seems strong
because the points appear to scatter along an imaginary line.
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Control Charts. A control chart can be used to monitor a process to see if the process output is
random. It can help detect the presence of correctable causes of variation. Figure 9.9 illustrates a
control chart. Control charts also can indicate when a problem occurred and give insight into what
caused the problem.

Cause-and-Effect Diagrams. A cause-and-effect diagram offers a structured approach to the search

for the possible cause(s) of a problem. It is also known as a fishbone diagram because of its shape,
or an Ishikawa diagram, after the Japanese professor who developed the approach to aid workers
overwhelmed by the number of possible sources of problems when problem solving. This tool helps
to organize problem-solving efforts by identifying categories of factors that might be causing
problems. Often this tool is used after brainstorming sessions to organize the ideas generated. Figure
9.10 illustrates one form of a cause-and-effect diagram.

Some errors are more likely causes than others, depending on the nature of the errors. If the cause is
still not obvious at this point, additional investigation into the root cause may be necessary, involving
a more in-depth analysis. Often, more detailed information can be obtained by asking who, what,
where, when, why, and how questions about factors that appear to be the most likely sources of
problems.
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Run Charts. A run chart can be used to track the values of a variable over time. This can aid in
identifying trends or other patterns that may be occurring. Figure 9.11provides an example of a run
chart showing a decreasing trend in accident frequency over time. Important advantages of run charts
are ease of construction and ease of interpretation.

Illustrations of the Use of Graphical Tools

This section presents some illustrations of the use of graphical tools in process or product
improvement.

Figure 9.12 begins with a check sheet that can be used to develop a Pareto chart of the types of
errors found. That leads to a more focused analysis of the most frequently occurring type of error
using a cause-and-effect diagram. Additional cause-and-effect diagrams, such as errors by location,
might also be used.
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Figure 9.13 shows how Pareto charts measure the amount of improvement achieved in a
before-and-after scenario of errors.

Figure 9.14 illustrates how control charts track two phases of improvement in a process that was
initially out of control.

Methods for Generating Ideas

Some additional tools that are useful for problem solving and/or for process improvement are
brainstorming, quality circles, and benchmarking.

Brainstorming. Brainstorming is a technique in which a group of people share thoughts and ideas on
problems in a relaxed atmosphere that encourages unrestrained collective thinking. The goal is to
generate a free flow of ideas on identifying problems, and finding causes, solutions, and ways to
implement solutions. In successful brainstorming, criticism is absent, no single member is allowed to
dominate sessions, and all ideas are welcomed. Structured brainstorming is an approach to assure
that everyone participates.

Quality Circles. One way companies have tapped employees for ideas concerning quality
improvement is through quality circles. The circles comprise a number of workers who get together
periodically to discuss ways of improving products and processes. Not only are quality circles a
valuable source of worker input, they also can motivate workers, if handled properly, by
demonstrating management interest in worker ideas. Quality circles are usually less structured and
more informal than teams involved in continuous improvement, but in some organization’s quality
circles have evolved into continuous improvement teams. Perhaps a major distinction between quality
circles and teams is the amount of authority given to the teams.

Benchmarking. Benchmarking is an approach that can inject new energy into improvement efforts.
Summarized in Table 9.9, benchmarking is the process of measuring an organization’s performance
on a key customer requirement against the best in the industry, or against the best in any industry. Its
purpose is to establish a standard against which performance is judged, and to identify a model for
learning how to improve. A benchmark demonstrates the degree to which customers of other
organizations are satisfied. Once a benchmark has been identified, the goal is to meet or exceed that
standard through improvements in appropriate processes. The benchmarking process usually
involves these steps:

1. Identify a critical process that needs improvement (e.g., order entry, distribution, service after
sale).
2. Identify an organization that excels in the process, preferably the best.
3. Contact the benchmark organization, visit it, and study the benchmark activity.
4. Analyze the data.
5. Improve the critical process at your own organization.
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Selecting an industry leader provides insight into what competitors are doing; but competitors may be
reluctant to share this information. Several organizations are responding to this difficulty by
conducting benchmarking studies and providing that information to other organizations without
revealing the sources of the data.

Selecting organizations that are world leaders in different industries is another alternative. For
example, the Xerox Corporation uses many benchmarks: For employee involvement, Procter &
Gamble; for quality process, Florida Power and Light and Toyota; for high-volume production, Canon;
for billing collection, American Express; for research and development, AT&T and Hewlett-Packard;
for distribution, L.L. Bean and Hershey Foods; and for daily scheduling, Cummins Engine.

A. Discussion

1. Select four tools and describe how they could be used in problem solving.
2. Select four tools and describe how they could be used for process improvement.
3. As a manager, how would you deal with the possibility that customer satisfaction
does not always lead to customer retention?
4. Suppose you are going to have a prescription filled at a local pharmacy. Referring to
the dimensions of service quality for each dimension, give an example of how you
would judge the quality of the service.
5. College students trying to register for a course sometimes find that the course has
been closed, or the section they want has been closed. Prepare a cause-and-effect
diagram for this problem.

***NOTHING FOLLOWS **
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