Six Sigma: SPC and TQM in Manufacturing and Services

Geoff Tennant

• Publisher: Routledge
• Year: 2017
• Print ISBN:
  9780566083747
• eBook ISBN:
  9781351899802
• Topic: Negocios y empresa
• Subtopic: Negocios en general

This book comprehensively explores all of the underlying issues and elements which, together, constitute one of the most successful quality and management programmes upon which companies such as Motorola and GE base their success - Six Sigma. The author was directly involved in implementing Six Sigma quality principles and practices into a European division of GE Capital, deploying this initiative in an entirely service-oriented business for the first time. Drawing from and reflecting on his experience, Geoff Tennant develops a reasoned exploration of the benefits that Six Sigma offers to any organization and what can be expected from start to finish. He investigates the relationship between Six Sigma and quality, customer satisfaction, business processes and organizational structure, statistics and analysis and process improvement methodologies. Aimed at quality professionals, senior management and directors, as well as practitioners and students of Six Sigma, Six Sigma: SPC and TQM in Manufacturing and Services provides an in-depth but highly readable insight into the quality initiative that is certain to sweep European companies as it has large and global American corporations.

Chapter One
The Development of Quality

Quality is a concept that is very difficult to define. In practice, everyone understands what quality means, and can easily recognize products or services that are either of 'good' quality or of 'bad' quality. The problem comes when trying to gauge quality on an absolute scale, rather than just relating one quality standard to another. One dictionary definition of quality is 'grade of goodness', which prompts the question of exactly what 'goodness' is, and how to measure it. The definition of 'goodness', in turn, is 'excellence', and of 'excellence', 'any excellent quality', which leads right back to where we started.

The importance of quality today is as great as it has ever been, if not more so. No company or organization wishes to be associated with poor quality, however it is measured. The gap between one organization and another, between one product and another or between one service and another is generally perceived to relate to the quality of the product or service. Certainly, quality is used by organizations as an essential differentiator, and everyone strives to achieve good or excellent quality at all levels. Even the low-priced end of the marketplace aims for tangible quality perhaps even more so. The slogan 'quality at low prices' is a well-worn one.

Therefore, what is quality, how does it benefit an organization, how can it be measured, and more importantly, how can it be improved? Perhaps the best way to answer this is to start by looking back in history at how the concept and practice of quality have developed, and the role quality has played within commerce and trade in general.

A basic ground rule that will be applied throughout this book is that 'quality' means 'perceived level of satisfaction as applied to either products or services'. 'Quality' is also a term that can be applied to people and less tangible items such as upbringing or breeding, but that is certainly outside the scope of this book.

Quality Before Consultants

If 'quality' is to be applied only to services and products, then consideration must start with early trade. From prehistoric times, groups of people have exchanged goods to obtain items they themselves cannot make. Early regular trade in the British Isles involved such things as salt, iron nails and millstones. These usually came from the coast and the near Continent, and were exchanged for food and other items of value. Such goods either were not available locally or were of such poor quality as to be of little use. Millstones, used for grinding corn, have to be made from a certain grade and quality of granite, such as is to be found in France, or they wear down too quickly.

Here we have our first hint as to the real meaning of 'quality': fitness for use. This can apply to many aspects of a product. To obtain millstones from the Continent required greater initial effort and cost than using local stone, and maintaining a high-quality granite millstone is hard work. The end product for a miller is high-grade flour, but probably more important is the ability to grind without a break in continuity. A miller without a working stone went unused and unpaid, and the local community might starve.

A great deal of early trade took place between Western Europe and the Far East. Incoming goods were numerous, and included spices and fine items like silk. In most cases, these are things that simply cannot be produced locally, so quality is not an issue, it is simply a matter of obtaining the product. Silk and fine cloths were of better quality than homespun cloth, but if 'fitness for use' is the best definition of 'quality', it is inadequate in this instance. At that time, cloth was used to cover, protect, keep warm, and it needed to be hard-wearing. Silk from the Orient will neither wear as well nor perform most practical tasks better than locally produced cloth, but more often than not it is described as a quality product.

Most modern concepts of quality are allied to 'fitness for use', a term used by Joseph Juran and quality consultants since, so where have we gone wrong? The difficulty here is that quality is often falsely associated with luxury, and we may have missed the real purpose for which a product is used. Fine silk is a luxury product, used to convey wealth as much as for practical purposes, and the better 'fitness for use' of silk must surely be that it is nicer to wear and look at, even if it is less practical.

As craftsmanship and trade developed during the Middle Ages, elaborate structures grew to control and protect both producers and consumers alike. Craft guilds were established to oversee young people beginning to learn a trade as apprentices, and jobbers or improvers developing their skills by moving from job to job. Once a craftsman felt that he had learnt his trade, he applied to the guild to be recognized as a master of his craft. This required the presentation of a masterpiece: the best-quality item the craftsman could make using all his skill and talent. This was never intended for sale or use, so as an item it was free from any perceptions of 'fitness for use' or 'luxury', but instead had to convey a deep sense of quality in the purest sense of the term. Quality here must surely be in the eye of the beholder: seen by only the master craftsmen of the guild, it was the final proof of the quality of a man's craftsmanship, which in turn implied the quality of what he would produce. Only once the guild were satisfied with the quality of workmanship would a man be elevated to master craftsman status and allowed to take on apprentices himself.

If we further consider services in the past, we again encounter difficulties in defining 'quality'. Probably the earliest service rendered by one individual to another was slavery, and services of a more personal kind. Not wishing to dwell on such subjects, other examples that are more recent would include early forms of transport. Moving someone or something from A to Β has no product, so it is entirely a service rendered. In many cities in the eighteenth century, sedan chairs or bath chairs were a popular form of transport (as they still are in many parts of the world), and quality and luxury are both terms that can be applied to this service. To travel first class rather than second or standard class implies luxury rather than quality, and at first glance it may be difficult to see how quality can be applied to this situation at all. The British invented the tip, initially associated with the transport of goods, and now applied to almost any service. A tip (which some have taken to stand for 'To Insure Promptness') was originally a sum of money paid in advance to improve or guarantee the quality of a service. To travel by sedan chair is luxury compared with walking or riding a horse, but once a passenger had chosen to travel this way, to arrive quicker than usual was seen as a quality service. Again quality - here equated with speed - is measured in the eye of the beholder. The differentiation is that to travel with an experience of comfort is a measure of luxury, to arrive satisfied with the outcome is a measure of quality.

To attempt to separate the concept of luxury from quality, it is proposed that people choose in advance the level of luxury they require from a service or product, and that they experience quality as a level of satisfaction with the service or product. The phrase 'you only get what you pay for' is generally taken to imply that quality (satisfaction with the outcome) is related to cost (the input). This is simply not so, as it is luxury that is related to cost; we buy luxury, and the more we pay, the more we get in terms of materials, goods, durability, time and service, and so on. Quality and luxury may apply to the same thing, in that a customer may pay for a more luxurious service or product and therefore expect better quality. However, quality is totally independent, as a concept, to both cost and luxury. Quality is related to the satisfaction experienced from a product or service, and certainly satisfaction has roots deep in such considerations as fitness for use, but also more ethereal and intangible concepts. 'Satisfaction' has many dictionary definitions, but one is 'to give content', which matches quite well with 'goodness', and it is the author's belief that quality is best defined as satisfaction experienced. Is it possible to buy quality, and thus relate cost and quality? At first sight it may seem so, but in looking deeper we will see that this is not the case.

In times past, producing goods for sale and providing services were, before the Industrial Revolution, very much a local affair. With very close customer contact, organizations were brought into being with a strong customer service ethic, and it was the customer who ultimately controlled quality. In the past, to increase the revenue obtained from a product or service meant increasing the level of luxury offered. To stay in business meant maintaining the high level of quality customers expected. Following the Industrial Revolution, when workers moved to factories and items began to be mass-produced and marketed at a distance, organizations grew in size and came into being for more financial reasons. With this, financial controls became more important, and it was possible to increase revenue by adjusting quality as well as luxury. In the distant past, more money was made by leaving more cream in the milk and charging more. During the nineteenth and twentieth centuries, more money was made by adding water to the milk or by investing in a machine to cut out the milkmaid.

American Quality Discovered

During the Victorian period, manufacturers did everything possible to improve profits without regard for quality. Strange and dangerous substances were added to food products that would, literally, make hair curl, all in pursuit of delivering a 'better' product at a certain price. Competing railway companies cut services and facilities to the point where it was unpleasant to travel. Numerous manufacturing industries turned out products in any way possible and with disregard for employee safety, as long as there was a satisfactory return on investment. During this period, some of the greatest legislative changes ever seen in the UK were introduced to force organizations to meet acceptable standards in health, education, welfare, commerce and trade.

Running right through to the present day, it has become the duty of public officers, rather than organizations themselves, to devise, legislate and monitor standards of quality in all fields of life In direct contrast to the earlier rush for free trade, state ownership of such areas as railways slowly began to redress standards to ensure a level of quality in products and services. This has been most notable in areas of public safety and health. Organizations that are run for fiscal reasons only, and with little regard for customers and employees, naturally tend to compromise on all aspects of quality unless and until such actions begin to visibly hurt the bottom-line profit.

Eventually a balance is arrived at, where organizations provide products and services to a level of quality that meets publicly accepted and enforced standards, and yet still return a handsome profit. Over time, public satisfaction with such standards may change, thus driving a move towards new legislation and a slight shift in the balance, until the status quo returns. Concerns over safety aspects of recently privatized railways in the UK have shown that this is still much the case.

Against this background of 'accept unless pushed', the beginning of the twentieth century found one or two individuals conducting statistical research in the UK into improved methods of agriculture. In particular, Ronald Fisher was working at Rothamsted Experimental Station during the 1920s. The use of statistics as a mathematical tool had developed relatively late in the nineteenth century, and was now further developed to help optimize crop rotation and planting techniques. With so many variations in soil, fertilizer, planting, watering and weather and so on, it required statistical hypothesis-testing to identify whether crop A had really produced better than crop B. This practical use of statistics to identify 'best practice' inspired Walter Shewhart at Bell Laboratories in the USA. Shewhart developed the use of statistical methods to monitor and thus control processes during the 1930s. His work has evolved over the years into what is now the widely accepted use of 'control charts', and was adopted by manufacturing industries in America long before 1950. This was pioneering work, attempting to identify what defined a successful process, and then monitoring and controlling the process to ensure continued acceptable quality.

From this early beginning, W. Edwards Deming and Joseph Juran, now both father figures of the American quality movement, developed a deep understanding of quality and the pursuit of perfection by applying quality principles and techniques to processes, and also to the management of organizations. Indeed, the work of Deming is as much to do with management practice as it is to do with producing and making things. A great believer in the value of the individual, Deming devised 14 points for management, more than half of which are concerned with employees. He is often quoted as remarking that 'eighty-five percent of the reasons for failure ... are related to deficiencies in systems and processes ... rather than the employee'. Against this, however, America was gearing up for a mass consumer market as never before. The golden age of manufacturing in the USA was dawning, and there was money to be made, just from making things. Deming and others working towards a better understanding of quality practices and methods found their ideas not overtly welcomed. They were working in an America that was dominating world manufacturing, and had almost no rivals. With almost no practical interest in their work at home, they were invited to lecture on quality in Japan.

Quality Goes Japanese

Japanese culture is poles apart to that of America. For the Japanese, concepts of the work ethic, business 'fair play', respect for authority and social structure are almost diametrically opposed to what we are accustomed to in the West. Japan had sprung onto the world arena, from an isolated but advanced culture, during the latter part of the nineteenth century. With a technology base that was culturally frozen in time and a burning desire to adopt anything alien from the West, it was not long before centuries of Western development were being consumed, analysed and adopted. When first exposed to the West, Japan had no modern ship-designing skills, unlike the UK, which had many large shipyards. Without the British sense of 'cricket and fair play', Japanese companies asked for plans of ships they 'intended to buy'. Once obtained, plans were copied and returned, and negotiations ceased. The Japanese then built the ships themselves, much to the shock and horror of the British. Fair play was restored when the Japanese tried this again - plans were subtly adjusted so that the ships sank when built. The Japanese then started to design ships themselves, and ultimately to do it better, cheaper and to a higher level of quality than anyone else.

In a culture where the guest or customer is treated with utmost respect, where employees have a life-long association with the company, and where it is second nature to observe, copy and improve, the concept of quality introduced by Deming spread rapidly. It is interesting to note that the uptake of such ideas was probably very much to do with the employees themselves. In America, as in the UK, trade union resistance to measuring production and resulting quality (time and motion studies) prevented supervisory staff using already known quality practices. In Japan, everyone generally did what the boss wanted almost without question, so quality circles became the second item on the agenda, just after the company work-out and song first thing in the morning.

The result is now legendary. From a standing start, by the 1970s manufacturing industry in Japan was producing cars, motorcycles and domestic goods cheaper than anyone else. Added to that, such items were becoming much nicer to use, and of a better quality. Cars were more reliable, easier to service, ran better, and incorporated more user facilities. During that period, Japan came to dominate the world market by delivering better-quality goods, and then to begin to develop new areas of excellence. Rank Xerox developed photographic reproduction in the early 1960s, and held the world market during the life of the xerography patent. Traditionally, optical lenses made in Japan had been of poor quality, but once the patent expired, Japan began to produce photocopiers which were smaller, cheaper and gave improved performance. As the technology involved began to advance, it was not the innovative West that held the lead, but the methodical and rigorous Eastern countries that steadily advanced the performance of electrical goods through applied quality control. This is where quality really matters. The secret that the Japanese had stumbled onto was that by controlling quality, manufacturing could also reduce defects and wasted costs. Make a component work first time, and there is no expensive repair and fix. The corollary to this is also simple but revolutionary: customers prefer goods that do not break, and really like goods that do what they want them to do.

The West was busy still adding luxury to everything, to be able to charge more and increase profits. The East was busy adding quality to everything, to be able to produce items better and cheaper. Luxury, as a purchase in itself, tends to be socially driven. By 1980, the stigma of Far East imports had begun to wane and there was almost no reason to buy anything but the cheap, good-quality and very appealing goods flooding the world markets.

Quality Returns to America

Cars and refrigerators are one thing, electrical consumer goods are another. Large, luxurious and locally manufactured cars can compete with smaller imported versions. Even if someone else can make it cheaper, by the time it is imported the added value of the luxury element can sway the customer. However, when manufacturing microelectronics for commerce, it is quality and not luxury that has the final say. Make a million microprocessors, and every one that fails costs money. This is a manufacturing process where the final product either works or it does not, where the costs associated with manufacture are fully expended on every chip, whether it works or not, and where failure after manufacture is hugely expensive. If you make a car and the windscreen wipers fail, the customer will generally have it fixed at their own expense. The cost of the fix is small compared to the revenue generated by the sale of the car. The customer may be annoyed, but the car still works. Make a computer, and if the microprocessor fails, the computer is useless. The cost of the fix is vast compared to the revenue from the initial sale, and may even outweigh die original profit margin.

In Silicon Valley, microelectronic chips were being made with what was felt to be an acceptable failure rate, but in Japan, firms started to produce components with a failure rate 10, 100, even 1000 times smaller. Large computer manufacturers had a choice: buy a million chips from America, and watch 50 000 computers fail during the first year, or buy a million chips from Japan, and watch 500 computers fail. Not a difficult choice to make, and soon American manufacturers were in some difficulty. Traditional quality methods implied that to reduce the defects shipped, every chip had to be tested after it was made. Testing each chip adds considerably to the cost, and for complex computer chips, out of every 10 made, only 2 or 3 may actually work. The Japanese manufacturers, on the other hand, were producing final chips that were more reliable, and the successful production yield was better. Testing is not...

Table of contents

• Cover
• Half Title
• Dedication
• Title
• Copyright
• Contents
• List of figures and tables
• Acknowledgements
• Introduction
• 1 The development of quality
• 2 What is Six Sigma?
• 3 Understanding an organization
• 4 Understanding the customer
• 5 The vision and benefit of Six Sigma
• 6 Implementing Six Sigma in practice
• 7 Looking to the future
• Appendix
• Index