CONCEPT OF QUALITY

HISTORY OF QUALITY MOVEMENT PHILOSOPHIES

Introduction

Quality basically defines what is required, and how it can be achieved. It also
implies complying with the necessities, and suitability of being used. The realm of
quality has been changing rapidly from just manufacture, to numerous other disciplines
like finance, information technology, and human resources. The benefits of
implementing a quality management system are numerous, including creation of quality
products, and quality systems.

Learning Objectives
1. Discuss the history of quality management.
2. Discuss the philosophies of quality gurus.
3. Define the term quality as it relates to products and as it relates to services
4. Identify the determinants of quality.
5. Explain why quality is important and the consequences of poor quality.

The Concept of Quality

What Is A Quality Management System?

A quality management system can be defined as the implementation of

dedicated activities in a project to obtain continuous improvement and enhance the
organization efficiency. The foremost effort of this system is to correctly and
precisely define the procedure that will cause creation of quality products and quality
services. The aim is to prevent the errors while within the project, and not after a
product has been delivered to the user. There are many benefits to a quality
management system, due to which the organizations are devoting more efforts to
improve quality management.

Quality Defined

Broadly defined, quality refers to the ability of a product or service to

consistently meet or exceed customer requirements or expectations. However,
different customers will have different requirements, so a working definition of quality
is customer-dependent.

Good quality performance has always been a key strategic factor for business
success, but it is now more than ever required to compete successfully in the global
markets of the twenty-first century. Many organizations have adopted a range of

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improvement approaches in response to these forces. We have seen the growing
adoption of a range of quality and management systems standards, the emergence
of total quality management (TQM), business process re-engineering (BPR),
business excellence, performance excellence, Lean thinking, Six Sigma, statistical
process control, etc. The battle weary could be excused from taking a rather
jaundiced view of this ever-lengthening list of ‘quality’ offers but, by and large, they
share many of the principles and elements that are found in TQM.

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 Whatever type of organization you work in these days – a bank, a hospital, a
university, an airline, an insurance company, local government, a factory –
competition is rife: competition for customers, for students, for patients, for
resources, for funds. Any organization basically competes on its reputation – for
quality, reliability, price, and delivery – and most people now recognize that quality is
the key to achieving sustained competitive advantage. If you doubt that, just look at
the way some organizations, even whole industries in certain countries, have used
quality strategically to win customers, obtain business resources or funding and be
competitive. Moreover, this sort of attention to quality improves performance in
reliability, delivery, and price.

Reputations for poor quality last for a long time and good or bad reputations
can become national or international. Yet the management of quality can be learned
and used to improve reputation. For any organization, there are several aspects of
reputation which are important:

1. It is built upon the competitive elements of being ‘On-Quality; On-Time; On-

Cost’.

2. Once an organization acquires a poor reputation for product or service quality

or reliability, it takes a very long time to change it.

3. Reputations, good or bad, can quickly become national reputations.

4. The management of the competitive weapons, such as quality, can be

learned like any other skill and used to turn round a poor reputation.

Defining Quality: The Dimensions of Quality

One way to think about quality is the degree to which performance of a

product or service meets or exceeds customer expectations. The difference between
these two, that is Performance — Expectations, is of great interest.

Customer expectations can be broken down into several categories, or

dimensions, that customers use to judge the quality of a product or service.
Understanding these helps organizations in their efforts to meet or exceed customer
expectations. The dimensions used for goods are somewhat different from those
used for services.

Product Quality. Product quality is often judged on nine dimensions of quality:

1. Performance—main characteristics of the product

2. Aesthetics—appearance, feel, smell, taste
3. Special features—extra characteristics
4. Conformance—how well a product corresponds to design specifications
5. Reliability—dependable performance

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6. Durability—ability to perform over time
7. Perceived quality—indirect evaluation of quality (e.g., reputation)
8. Serviceability—handling of complaints or repairs
9. Consistency—quality does not vary

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Service Quality. The dimensions of product quality do not adequately describe
service quality. Instead, service quality is often described using the following
dimensions:

1. Convenience—the availability and accessibility of the service

2. Reliability—the ability to perform a service dependably, consistently, and

accurately

3. Responsiveness—the willingness of service providers to help customers in

unusual situations and to deal with problems
4. Time—the speed with which service is delivered

5. Assurance—the knowledge exhibited by personnel who encounter a

customer and their ability to convey trust and confidence

6. Courtesy—the way customers are treated by employees who encounter them

7. Tangibles—the physical appearance of facilities, equipment, personnel, and

communication materials

8. Consistency—the ability to provide the same level of good quality repeatedly

9. Expectations—meet (or exceed) customer expectations

The Determinants of Quality

The degree to which a product or a service successfully satisfies its intended

purpose has four primary determinants:

1. Design
2. How well the product or service conforms to the design
3. Ease of use
4. Service after delivery

Meeting the requirements

If quality is meeting the customer requirements, then this has wide

implications. The requirements may include availability, delivery, reliability,
maintainability, and cost effectiveness, among many other features. The first item on
the list of things to do is find out what the requirements are. If we are dealing with
customer-supplier relationship crossing two organizations, then the supplier must
establish a ‘marketing’ activity or process charged with this task.

To understand how quality may be built into a product or service, at any

stage, it is necessary to examine the two distinct, but interrelated aspects of quality:

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 • Quality of design

• Quality of conformance to design.

Quality of design

Quality of design is a measure of how well the product or service is

designed to achieve the agreed requirements. The beautifully presented gourmet
meal will not necessarily please the recipient if he or she is travelling on the
motorway and has topped for a quick bite to eat. The most important feature of
the design, regarding achieving quality, is the specification. Specifications must
also exist at the internal supplier-customer interfaces if one is to achieve a total
quality performance.

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 Quality of conformance to design

This is the extent to which the product or service achieves the quality of
design. What the customer receives should conform to the design, and operating
costs are tied firmly to the level of conformance achieved. Quality cannot be
inspected into products or services; the customer satisfaction must be designed
into the whole system. The conformance check then makes sure that things go
according to plan. A high level of inspection or checking at the end is often
indicative of attempts to inspect in quality. This may well result in spiraling costs
and decreasing viability. The area of conformance to design is concerned largely
with the quality performance of the actual operations.

Responsibility for Quality

It is true that all members of an organization have some responsibility for

quality, but certain parts of the organization are key areas of responsibility:

Top management. Top management has the ultimate responsibility for quality. While
establishing strategies for quality, top management must institute programs to improve
quality; guide, direct, and motivate managers and workers; and set an example by
being involved in quality initiatives. Examples include taking training in quality, issuing
periodic reports on quality, and attending meetings on quality.

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Design. Quality products and services begin with design. This includes not only
features of the product or service; it also includes attention to the processes that will be
required to produce the products and/or the services that will be required to deliver the
service to customers.

Procurement. The procurement department has responsibility for obtaining goods and
services that will not detract from the quality of the organization’s goods and services.

Production/operations. Production/operations has responsibility to ensure that

processes yield products and services that conform to design specifications.
Monitoring processes and finding and correcting root causes of problems are important
aspects of this responsibility.

Quality assurance. Quality assurance is responsible for gathering and analyzing data
on problems and working with operations to solve problems.

Packaging and shipping. This department must ensure that goods are not damaged
in transit, that packages are clearly labeled, that instructions are included, that all parts
are included, and that shipping occurs in a timely manner.

Marketing and sales. This department has the responsibility to determine customer
needs and to communicate them to appropriate areas of the organization. In addition, it
has the responsibility to report any problems with products or services.

Customer service. Customer service is often the first department to learn of

problems. It has the responsibility to communicate that information to appropriate
departments, deal in a reasonable manner with customers, work to resolve problems,
and follow up to confirm that the situation has been effectively remedied. Poor quality
increases certain costs incurred by the organization. The following section provides
further detail on costs associated with quality.

Benefits of Good Quality

Business organizations with good or excellent quality typically benefit in a

variety of ways: an enhanced reputation for quality, the ability to command premium
prices, an increased market share, greater customer loyalty, lower liability costs, and
fewer production or service problems—which yields higher productivity, fewer
complaints from customers, lower production costs, and higher profits. Annual studies
by the National Institute of Standards indicate that winners of the Baldrige quality
award, described later in the chapter, outperform the S&P 500 Index by a significant
amount.

The Consequences of Poor Quality

It is important for management to recognize the different ways in which the

quality of a firm’s products or services can affect the organization and to take these
into account in developing and maintaining a quality assurance program. Some of the
major areas affected by quality are:

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 1. Loss of business
2. Liability
3. Productivity
4. Costs

THE HISTORY OF QUALITY

The History of Quality

QUALITY IN THE MEDIEVAL GUILDS OF EUROPE

The quality movement can trace its roots back to medieval Europe, where
craftsmen began organizing into unions called guilds in the late 13th century. These
guilds were responsible for developing strict rules for product and service quality.
Inspection committees enforced the rules by marking flawless goods with a special
mark or symbol.

Craftsmen themselves often placed a second mark on the goods they produced.
At first this mark was used to track the origin of faulty items. But over time the mark
came to represent a craftsman’s good reputation. Inspection marks and master
craftsmen marks served as proof of quality for customers throughout medieval Europe.
This approach to manufacturing quality was dominant until the Industrial Revolution in
the early 19th century.

QUALITY IN THE INDUSTRIAL REVOLUTION

Until the early 19th century, manufacturing in the industrialized world tended to
follow this craftsmanship model. The factory system, with its emphasis on product
inspection, started in Great Britain in the mid-1750s and grew into the Industrial
Revolution in the early 1800s. American quality practices evolved in the 1800s as they
were shaped by changes in predominant production methods.

Craftsmanship

In the early 19th century, manufacturing in the United States tended to follow
the craftsmanship model used in the European countries. Since most craftsmen sold
their goods locally, each had a tremendous personal stake in meeting customers’
needs for quality. If quality needs weren’t met, the craftsman ran the risk of losing

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customers not easily replaced. Therefore, masters maintained a form of quality control
by inspecting goods before sale.

The Factory System

The factory system, a product of the Industrial Revolution in Europe, began to

divide the craftsmen’s trades into specialized tasks. This forced craftsmen to become
factory workers and forced shop owners to become production supervisors, and
marked an initial decline in employees’ sense of empowerment and autonomy in the
workplace. Quality in the factory system was ensured through the skill of laborers
supplemented by audits and/or inspections. Defective products were either reworked
or scrapped.

The Taylor System

Late in the 19th century the United States broke further from European tradition
and adopted a new management approach developed by Frederick W. Taylor, whose
goal was to increase productivity without increasing the number of skilled craftsmen.
He achieved this by assigning factory planning to specialized engineers and by using
craftsmen and supervisors as inspectors and managers who executed the engineers’
plans.

Taylor’s approach led to remarkable rises in productivity, but the new emphasis
on productivity had a negative effect on quality. To remedy the quality decline, factory
managers created inspection departments to keep defective products from reaching
customers.

QUALITY IN WORLD WAR II

After entering World War II, the United States enacted legislation to help gear
the civilian economy to military production. During this period, quality became a critical
component of the war effort and an important safety issue. Unsafe military equipment
was clearly unacceptable, and the U.S. armed forces inspected virtually every unit
produced to ensure that it was safe for operation. This practice required huge
inspection forces and caused problems in recruiting and retaining competent
inspection personnel.

To ease the problems without compromising product safety, the armed forces
began to use sampling inspection to replace unit-by-unit inspection. With the aid of
industry consultants, particularly from Bell Laboratories, they adapted sampling tables
and published them in a military standard, known as Mil-Std-105. These tables were
incorporated into the military contracts so suppliers clearly understood what they were
expected to produce.

The armed forces also helped suppliers improve quality by sponsoring training
courses in Walter Shewhart’s statistical quality control (SQC) techniques.

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QUALITY IN THE EARLY 20TH CENTURY

The beginning of the 20th century marked the inclusion of "processes" in quality
practices. A "process" is defined as a group of activities that takes an input, adds value
to it, and provides an output. Walter Shewhart began to focus on controlling processes
in the mid-1920s, making quality relevant not only for the finished product but for the
processes that created it.

Shewhart recognized that industrial processes yield data. Shewhart determined

this data could be analyzed using statistical techniques to see whether a process is
stable and in control, or if it is being affected by special causes that should be fixed. In
doing so, Shewhart laid the foundation for control charts, a modern-day quality tool.

W. Edwards Deming, a statistician with the U.S. Department of Agriculture and

Census Bureau, became a proponent of Shewhart’s SQC methods and later became a
leader of the quality movement in both Japan and the United States.

THE HISTORY OF TOTAL QUALITY IN AMERICA

The birth of total quality in the United States was in direct response to a quality
revolution in Japan following World War II, as major Japanese manufacturers
converted from producing military goods for internal use to producing civilian goods for
trade.

At first, Japan had a widely held reputation for shoddy exports, and their goods were
shunned by international markets. This led Japanese organizations to explore new
ways of thinking about quality.

Deming, Juran, and Japan

The Japanese welcomed input from foreign companies and lecturers, including
two American quality experts:

W. Edwards Deming, who had become frustrated with American managers when most
programs for statistical quality control were terminated once the war and government
contracts came to and end.

Joseph M. Juran, who predicted the quality of Japanese goods would overtake the
quality of goods produced in the United States by the mid-1970s because of Japan’s
revolutionary rate of quality improvement.

Japan’s strategies represented the new "total quality" approach. Rather than relying
purely on product inspection, Japanese manufacturers focused on improving all
organizational processes through the people who used them. As a result, Japan was
able to produce higher-quality exports at lower prices, benefiting consumers
throughout the world.

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The American Total Quality Management Response

At first, U.S. manufacturers held onto to their assumption that Japanese

success was price-related, and thus responded to Japanese competition with
strategies aimed at reducing domestic production costs and restricting imports. This, of
course, did nothing to improve American competitiveness in quality.

As years passed, price competition declined while quality competition continued

to increase. The chief executive officers of major U.S. corporations stepped forward to
provide personal leadership in the quality movement. The U.S. response, emphasizing
not only statistics but approaches that embraced the entire organization, became
known as Total Quality Management (TQM).

Several other quality initiatives followed. The ISO 9000 series of quality-
management standards, for example, were published in 1987. The Baldrige National
Quality Program and Malcolm Baldrige National Quality Award were established by
the U.S. Congress the same year. American companies were at first slow to adopt the
standards but eventually came on board.

BEYOND TOTAL QUALITY MANAGEMENT

As the 21st century begins, the quality movement has matured. New quality
systems have evolved beyond the foundations laid by Deming, Juran, and the early
Japanese practitioners of quality.

Some examples of this maturation in quality management include:

• Most recently in 2015, the ISO 9001 standard was revised to increase
emphasis on risk management.

• In 2000, the ISO 9000 series of quality management standards was revised to
increase emphasis on customer satisfaction.

• Beginning in 1995, the Malcolm Baldrige National Quality Award added a

business results criterion to its measures of applicant success.

• Six Sigma, a methodology developed by Motorola to improve its business

processes by minimizing defects, evolved into an organizational approach that
achieved breakthroughs and significant bottom-line results.

• Quality function deployment was developed by Dr. Yoji Akao as a process for
focusing on customer wants or needs in the design or redesign of a product or
service.

• Sector-specific versions of the ISO 9000 series of quality management

standards were developed for such industries as automotive (QS-9000 and

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 ISO/TS 16949), aerospace (AS9000) and telecommunications (TL 9000) and
for environmental management (ISO 14000).

• Quality has moved beyond the manufacturing sector into such areas as service,
healthcare, education, and government.

• The Malcolm Baldrige National Quality Award has added education and
healthcare to its original categories: manufacturing, small business, and
service. Many advocates are pressing for the adoption of a "nonprofit
organization" category as well.

THE FOUNDATIONS OF MODERN QUALITY MANAGEMENT: THE GURUS

A core of quality pioneers shaped current thinking and practice. This section
describes some of their key contributions to the field.

Walter Shewhart. Walter Shewhart was a genuine pioneer in the field of quality
control, and he became known as the “father of statistical quality control.” He
developed control charts for analyzing the output of processes to determine when
corrective action was necessary. Shewhart had a strong influence on the thinking of
two other gurus, W. Edwards Deming and Joseph Juran.
W. Edwards Deming. Deming, a statistics professor at New York University in the 1940s,
went to Japan after World War II to assist the Japanese in improving quality and
productivity. The Union of Japanese Scientists, who had invited Deming, were so
impressed that in 1951, after a series of lectures presented by Deming, they
established the Deming Prize, which is awarded annually to firms that distinguish
themselves with quality management programs. Although the Japanese revered
Deming, he was largely unknown to business leaders in the United States. In fact, he
worked with the Japanese for almost 30 years before he gained recognition in his own
country. Before his death in 1993, U.S. companies turned their attention to Deming,
embraced his philosophy, and requested his assistance in setting up quality
improvement programs.

Deming compiled a famous list of 14 points he believed were the prescription needed
to achieve quality in an organization (see Table 9.1). His message was that the cause
of inefficiency and poor quality is the system, not the employees. Deming felt that it
was management’s responsibility to correct the system to achieve the desired results.
In addition to the 14 points, Deming stressed the need to reduce variation in output
(deviation from a standard), which can be accomplished by distinguishing between
special causes of variation (i.e., correctable) and common causes of variation (i.e.,
random). Deming’s concept of profound knowledge incorporates the beliefs and values
about learning that guided Japan’s rise to a world economic power.

1. Create constancy of purpose toward improvement of product and service.

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 2. Reduce levels of delays, mistakes, defective materials, and defective
workmanship.

3. Cease dependence on mass inspection. (Prevent defects rather than detect

defects.)
4. Eliminate suppliers that cannot qualify with statistical evidence of quality.

5. Find problems. It is management’s job to work continually on system

improvement.
6. Institute modern methods of training on the job.

7. Emphasize quality instead of volume alone. Management must prepare to take

immediate action on

1. reports from foremen concerning barriers such as inherent defects, machines

not maintained, poor
2. tools, and fuzzy operational definitions.
8. Drive out fear, so that everyone may work effectively for the company.

9. Break down barriers between departments. People in research, design, sales,

and production must

3. work as a team.

10. Eliminate goals and slogans asking for new levels of productivity without
providing methods.
11. Eliminate work standards that prescribe numerical quotas.

12. Remove barriers that stand between the hourly worker and his right to pride of
workmanship.
13. Institute a vigorous program of education and retraining.

14. Create a structure in top management that will push every day on the above 13
points.

Joseph M. Juran. Juran, like Deming, taught Japanese manufacturers how to improve
the quality of their goods, and he, too, can be regarded as a major force in Japan’s
success in quality. Juran viewed quality as fitness-for-use. He also believed that
roughly 80 percent of quality defects are management controllable; thus, management
has the responsibility to correct this deficiency. He described quality management in
terms of a trilogy consisting of quality planning, quality control, and quality
improvement. According to Juran, quality planning is necessary to establish processes
that are capable of meeting quality standards; quality control is necessary in order to
know when corrective action is needed; and quality improvement will help to find better
ways of doing things. A key element of Juran’s philosophy is the commitment of
management to continual improvement. Juran is credited as one of the first to measure

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the cost of quality, and he demonstrated the potential for increased profits that would
result if the costs of poor quality could be reduced.

Armand Feigenbaum. Feigenbaum was instrumental in advancing the “cost of

nonconformance” approach as a reason for management to commit to quality. He
recognized that quality was not simply a collection of tools and techniques, but a “total
field.” According to Feigenbaum, it is the customer who defines quality.

Philip B. Crosby. Crosby developed the concept of zero defects and popularized the
phrase “Do it right the first time.” He stressed prevention, and he argued against the
idea that “there will always be some level of defectives.” The quality-is-free concept
presented in his book, Quality Is Free, is that the costs of poor quality are much
greater than traditionally defined. According to Crosby, these costs are so great that
rather than viewing quality efforts as costs, organizations should view them to reduce
costs, because the improvements generated by quality efforts will more than pay for
themselves. Crosby believes that any level of defects is too high, and that achieving
quality can be relatively easy, as explained in his book Quality Without Tears: The Art
of Hassle-Free Management.

Kaoru Ishikawa. The late Japanese expert on quality was strongly influenced by both
Deming and Juran, although he made significant contributions of his own to quality
management. Among his key contributions were the development of the cause-and-
effect diagram (also known as a fishbone diagram) for problem solving and the
implementation of quality circles, which involve workers in quality improvement. He
was the first quality expert to call attention to the internal customer—the next person in
the process, the next operation, within the organization.

Genichi Taguchi. Taguchi is best known for the Taguchi loss function, which involves
a formula for determining the cost of poor quality. The idea is that the deviation of apart
from a standard causes a loss, and the combined effect of deviations of all parts from
their standards can be large, even though each individual deviation is small. An
important part of his philosophy is the cost to society of poor quality.

Taiichi Ohno and Shigeo Shingo. Taiichi Ohno and Shigeo Shingo both developed
the philosophy and methods of kaizen, a Japanese term for continuous improvement
(defined more fully later in this chapter), at Toyota. Continuous improvement is one of
the hallmarks of successful quality management.

Before anyone will buy the idea that quality is an important consideration, they
would have to know what was meant by it.

Quality then is simply meeting the customer requirements, and this has been
expressed in many ways by other authors:

• ‘Fitness for purpose or use’ – Juran, an early doyen of quality management.

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• ‘The totality of features and characteristics of a product or service that bear on
its ability to satisfy stated or implied needs’ – BS 4778. 1987 (ISO 8402, 1986)
Quality Vocabulary; Part 1, International Terms.

• ‘Quality should be aimed at the needs of the consumer, present and future’ –
Deming, another early doyen of quality management.

• ‘The total composite product and service characteristics of marketing,

engineering, manufacture and maintenance through which the product and
service in use will meet the expectation by the customer’ – Feigenbaum, the first
man to publish a book with ‘Total Quality’ in the title.

• ‘Conformance to requirements’ – Crosby, an American consultant famous in the

1980s.

• ‘Degree to which a set of inherent characteristics fulfils requirements’ – ISO

(EN) 9000:2000 Quality Management Systems – Fundamentals and
Vocabulary.

Summary of Key Contributors to Quality Management

Contributor Key Contributions

Shewhart Control charts; variance reduction

14 points; special versus common causes of variation

Deming

Quality is fitness-for-use; quality trilogy

Juran

Feigenbaum Quality is a total field; the customer defines quality

Quality is free; zero defects

Crosby

Cause-and-effect diagrams; quality circles

Ishikawa

Taguchi loss function

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 Taguchi

Continuous improvement
Ohno and Shingo

Classwork

Use the dimensions of quality to describe typical characteristics

of these products and services:
A television set
A restaurant meal (product)
A restaurant meal (service)
Surgery and post-surgery care
Many product reviews are available on the Internet. Two
examples are reviews on electronics products such as cellular/mobile
phones, and laptop computers. There are often both positive and
negative reviews.
Do such reviews (positive and negative) influence your
purchasing decisions? Why or why not?
Why do you suppose consumers take the time and effort
to write such reviews?
There is often a feedback button asking if you found the
review helpful. Do you usually respond? Why or why not?
As a manager, how would you deal with the possibility that
customer satisfaction does not always lead to customer retention?
Construct a framework or diagram that depicts the meaning of
quality encompassing both the producer’s perspective and consumers’
perspective, with the inclusion of the role of production and marketing
on quality.

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 COSTS OF QUALITY

Introduction

According to legendary quality guru Armand Feigenbaum, “quality costs are

the foundation for quality systems economics.” Quality costs have traditionally
served as the basis for evaluating investments in quality programs. The costs of
quality are those incurred to achieve good quality and to satisfy the customer, as
well as costs incurred when quality fails to satisfy the customer. Thus, quality costs
fall into two categories: the cost of achieving good quality, also known as the cost of
quality assurance, and the cost associated with poor-quality products, also referred
to as the cost of not conforming to specifications.

Learning Objectives
1. State the different costs of quality.
2. Compare and contrast the prevention and appraisal cost.
3. Differentiate internal failure and external failure costs.
4. Describe and provide examples of the costs associated with quality.

The Cost of Achieving Good Quality

Any serious attempt to deal with quality issues must take into account the costs
associated with quality. These costs can be classified into appraisal and prevention.

Appraisal costs relate to inspection, testing, and other activities intended to uncover
defective products or services, or to assure that there are none. They include the cost of
inspectors, testing, test equipment, labs, quality audits, and field testing.

Examples of appraisal costs include:

Inspection and testing: The costs of testing and inspecting materials, parts,
and the product at various stages and at the end of the process.

Test equipment costs: The costs of maintaining equipment used in testing the
quality characteristics of products.

Operator costs: The costs of the time spent by operators to gather data for
testing product quality, to make equipment adjustments to maintain quality,
and to stop work to assess quality.

Prevention costs relate to attempts to prevent defects from occurring. They include
costs such as planning and administration systems, working with vendors, training,
quality control procedures, and extra attention in both the design and production
phases to decrease the probability of defective workmanship.

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 Prevention reflects the quality philosophy of “do it right the first time,” the goal
of a quality management program.

Examples of prevention costs include:

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 Quality planning costs: The costs of developing and implementing the quality
management program.

Product-design costs: The costs of designing products with quality

characteristics.

Process costs: The costs expended to make sure the productive process
conforms to quality specifications.

Training costs: The costs of developing and putting on quality training

programs for employees and management.

Information costs: The costs of acquiring and maintaining (typically on

computers) data related to quality, and the development and analysis of
reports on quality performance.

Appraisal costs tend to be higher in a service organization than in a

manufacturing company and, therefore, are a greater proportion of total quality
costs. Quality in services is related primarily to the interaction between an employee
and a customer, which makes the cost of appraising quality more difficult. Quality
appraisal in a manufacturing operation can take place almost exclusively inhouse;
appraisal of service quality usually requires customer interviews, surveys,
questionnaires, and the like.

Cost of Poor Quality

The cost of poor quality (COPQ) is the difference between what it actually
costs to produce a product or deliver a service and what it would cost if there were
no defects. Most companies find that defects, rework and other unnecessary
activities related to quality problems significantly inflate costs; estimates range as
high as 20 to 30% of total revenues. This is generally the largest quality cost
category in a company, frequently accounting for 70 to 90% of total quality costs.
This is also where the greatest cost improvement is possible.

Internal failures are those discovered during the production process. These are
incurred when poor-quality products are discovered before they are delivered to the
customer.

Internal failures occur for a variety of reasons, including defective material from
vendors, incorrect machine settings, faulty equipment, incorrect methods, incorrect
processing, carelessness, and faulty or improper material handling procedures. The
costs of internal failures include lost production time, scrap and rework, investigation
costs, possible equipment damage, and possible employee injury. Rework costs
involve the salaries of workers and the additional resources needed to perform the
rework (e.g., equipment, energy, raw materials). Beyond those costs are items such
as inspection of reworked parts, disruption of schedules, the added costs of parts

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and materials in inventory waiting for reworked parts, and the paperwork needed to
keep track of the items until they can be reintegrated into the process.

Examples of internal failure costs include:

Scrap costs: The costs of poor-quality products that must be discarded,

including labor, material, and indirect costs.

Rework costs: The costs of fixing defective products to conform to quality

specifications.

Process failure costs: The costs of determining why the production process is
producing poor quality products.

Process downtime costs: The costs of shutting down the productive process
to fix the problem.

Price-downgrading costs: The costs of discounting poor-quality products—

that is, selling products as “seconds.”

External failures are those discovered after delivery to the customer. are incurred
after the customer has received a poor-quality product and are primarily related to
customer service.

External failures are defective products or poor service that go undetected by the
producer. Resulting costs include warranty work, handling of complaints,
replacements, liability/litigation, payments to customers or discounts used to offset
the inferior quality, loss of customer goodwill, and opportunity costs related to lost
sales. External failure costs are typically much greater than internal failure costs on
a per-unit basis.

Examples of external failure costs include:

Customer complaint costs: The costs of investigating and satisfactorily

responding to a customer complaint resulting from a poor-quality product.

Product return costs: The costs of handling and replacing poor-quality

products returned by the customer. In the United States it is estimated that
product returns reduce company profitability by an average of 4% annually.

Warranty claims costs: The costs of complying with product warranties.

Product liability costs: The litigation costs resulting from product liability and
customer injury.

Lost sales costs: The costs incurred because customers are dissatisfied with
poor-quality products and do not make additional purchases.

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 Internal and external failure costs represent costs related to poor quality,
whereas appraisal and prevention costs represent investments for achieving good
quality.

An important issue in quality management is the value received from

expenditures on prevention. There are two schools of thought on this. One is that
prevention costs will be outweighed by savings in appraisal and failure costs. This is
espoused by such people as Crosby and Juran. They believe that as the costs of
defect prevention are increased, the costs of appraisal and failure decrease by much

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more. What this means, if true, is that the net result is lower total costs, and,
thus, as Crosby suggests, quality is free. On the other hand, some managers
believe that by attempting to go beyond a certain point, such expenditures on
quality reduce the funds available for other objectives such as reducing product
development times and upgrading technology.

The return on quality (ROQ) approach focuses on the economics of

quality efforts. In this approach, quality improvement projects are viewed as
investments, and, as such, they are evaluated like any other investment, using
metrics related to return on investment (ROI).

Summary of Costs of Quality

Measuring and Reporting Quality Costs

Management wants quality costs reported in a manner that can be easily

interpreted and is meaningful. One format for reporting quality costs is with index
numbers, or indices. Index numbers are ratios that measure quality costs
relative to some base value, such as the ratio of quality costs to total sales
revenue or the ratio of quality costs to units of final product. These index
numbers are used to compare quality management efforts between time periods
or between departments or functions. Index numbers themselves do not provide
very much information about the effectiveness of a quality management program.
They usually will not show directly that a company is producing good- or poor-
quality products. These measures are informative only when they are compared
to some standard or other index. Some common index measures are:

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 Labor index: The ratio of quality cost to direct labor hours; it has the
advantage of being easily computed (from accounting records) and easily
understood, but it is not always effective for long-term comparative
analysis when technological advances reduce labor usage.
Cost index: The ratio of quality cost to manufacturing cost (direct and
indirect cost); it is easy to compute from accounting records and is not
affected by technological change.
Sales index: The ratio of quality cost to sales; it is easily computed, but
it can be distorted by changes in selling price and costs.
Production index: The ratio of quality cost to units of final product; it is
easy to compute from accounting records but is not effective if a number
of different products exist.

The Quality – Cost Relationship

In general, when the cost of achieving good quality increases, the cost
of poor-quality declines. Philip Crosby’s fourth absolute from his 1984 book
Quality Without Tears, explains that the dollar cost of quality is the difference
between the price of nonconformance, the cost of doing things wrong (i.e., the
cost of poor quality), and the price of conformance, the cost of doing things
right (i.e., the cost of achieving good quality). He estimates that the cost of
doing things wrong can account for 20 to 35% of revenues, while the cost of
doing things right is typically 3 to 4%.

As such, managers should determine where the cost of quality is

occurring and find out what causes it. Companies committed to quality
improvement know that the increase in sales and market share resulting from
increased customer satisfaction offsets the costs of achieving good quality.
Furthermore, as a company focuses on good quality, the cost of achieving
good quality will be less because of the improvements in technologies and
processes that will result from the quality improvement effort. These
companies are frequently the ones that seek to achieve zero defects, the goal
of Six Sigma.

Classwork

For the following products, provide examples of the different types of

costs of quality. Explain the associated quality costs for all the relevant
activities implemented in industry to ensure product or service quality
from the product conceptualization to manufacturing and product
delivery to customers.
A laptop computer
A car
A quick service restaurant or also called fast food restaurant
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 QUALITY MANAGEMENT SYSTEM

Introduction
Quality management is the act of overseeing all activities and tasks that must
be accomplished to maintain a desired level of excellence. This includes the
determination of a quality policy, creating and implementing quality planning and
assurance, and quality control and quality improvement. It is also referred to as total
quality management (TQM).

In general, quality management focuses on long-term goals through the

implementation of short-term initiatives.

Learning Objectives

Define Quality Management System and discuss its purpose.

Discuss and explain the Quality Management System elements,
principles, and design.
Summarize the foundation of Quality Management.

WHAT IS A QUALITY MANAGEMENT SYSTEM (QMS)?

A quality management system (QMS) is defined as a formalized system that
documents processes, procedures, and responsibilities for achieving quality policies
and objectives. A QMS helps coordinate and direct an organization’s activities to
meet customer and regulatory requirements and improve its effectiveness and
efficiency on a continuous basis.
ISO 9001:2015, the international standard specifying requirements for quality
management systems, is the most prominent approach to quality management
systems. While some use the term "QMS" to describe the ISO 9001 standard or the
group of documents detailing the QMS, it refers to the entirety of the system. The
documents only serve to describe the system.
⮚ Benefits of QMS
⮚ ISO 9001:2015 and other QMS standards
⮚ Elements and requirements of a QMS
⮚ Establishing and implementing a QMS
⮚ Industrial influence on quality and standardization
⮚ QMS resources

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BENEFITS OF QUALITY MANAGEMENT SYSTEMS
Implementing a quality management system affects every aspect of an
organization's performance. Benefits of a documented quality management system
include:

⮚ Meeting the customer’s requirements, which helps to instill confidence in

the organization, in turn leading to more customers, more sales, and more
repeat business
⮚ Meeting the organization's requirements, which ensures compliance with
regulations and provision of products and services in the most cost- and
resource-efficient manner, creating room for expansion, growth, and profit

Achievement of Project Scope

This system facilitates a business, to attain the objectives that have been
defined in the organization strategy. It ensures the achievement of stability and
reliability regarding the techniques, equipment, and resources being used in a
project. All project activities are integrated and aligned towards the achievement of
quality products. These efforts commence by identifying the customer needs and
expectations, and culminate in their contentment.

Customer Satisfaction
A fully recognized and implemented quality management system, will ensure
that the customer is satisfied by meeting their requirements, and will thus enhance
the confidence of the customer. Attaining customer satisfaction is a great
achievement for the organization, that will assist in capturing the market, or increase
the market share.

Consistent Products
Implementing a quality management system can assist to attain more
consistency in the project activities, and enhance the effectiveness by improvement
in the resources and time usage.

Implementation of Best Practices & Process Improvement

The discipline of quality includes the efforts directed towards the improvement
of processes, being used to maintain consistency, reduce expenditures, and ensure
production within the schedule baseline. The systems, products, and processes are
continually improved by the implementation of best practices, like modern
manufacture techniques, use of primavera project management software including
Primavera P6, and the use of proper quality control techniques.

Increase in Production
Improved production is achieved due to proper evaluation techniques being
applied, and better training of the employees. A strict process control is directed
towards performance consistency, and less scrap. Supervisors experience less late-
night problematic phone calls, since the employees are trained on troubleshooting.

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Less Rework
Quality is measured continuously due to the appropriate procedures that
ensure immediate corrective actions on occurrence of defects. Since efforts are
directed towards quality products, rework due to warranty claims is minimized. This
reduction increases customer confidence and increase in business.

Increased Financial Performance

Investment in quality management systems are rewarded by improved
financial performance. UCLA conducted a research on the companies being traded
on the New York Stock Exchange and observed that the financial performance of the
companies that obtained ISO 9000 Quality Standard certification was improved
significantly, compared to the other companies.

Increase in Market Share

Other quality management system benefits include proper management of
project risks and costs, and identification of development prospects. This results in
an increase in market share and reputation, and capability to react to industry
opportunities.

Improvement in Internal Communications

The quality management system emphasizes the issues related to operations
management. This encourages frequent interaction between project departments or
groups and promotes harmony. All these factors contribute to improved quality, and
customer satisfaction.

These benefits offer additional advantages, including:

● Defining, improving, and controlling processes

● Reducing waste
● Preventing mistakes
● Lowering costs
● Facilitating and identifying training opportunities
● Engaging staff
● Setting organization-wide direction
● Communicating a readiness to produce consistent results

Real-World Example of Quality Management

The most famous example of TQM is Toyota's implementation of

the Kanban system. A kanban is a physical signal that creates a chain reaction,
resulting in a specific action. Toyota used this idea to implement its just-in-time ( JIT)
inventory process. To make its assembly line more efficient, the company decided to
keep just enough inventory on hand to fill customer orders as they were generated.

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 Therefore, all parts of Toyota's assembly line are assigned a physical card
that has an associated inventory number. Right before a part is installed in a car, the
card is removed and moved up the supply chain, effectively requesting another of
the same part. This allows the company to keep its inventory lean and not overstock
unnecessary assets.

Understanding Quality Management

If Quality is the end point, then Quality Management is the approach and
process for getting there. Accordingly, we need also to develop an appropriate
understanding of what this idea means. In this context there is no simple definition
which encapsulates the area; instead, we need to consider the keep principles which
are central to the topic.

If we are concerned with providing value to customers, we must consider how

we can improve customer value. There are several principles which are central to
the practice of Quality Management.

● Customer
Focus. If we wish to create value for our customers, we need to become
obsessive about understanding our customers and their requirements and
expectations.
● Strategic Focus. Quality Management must be a strategic undertaking. If
companies survive and thrive through delivering value to their customers,
then they must treat this as a key strategic objective, creating a strategic

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 vision and deploying this throughout the company in associated goals and
actions. This implies long-term commitment and focus.
● Leadership Focus. Nothing happens in any organization without
commitment of leaders, their active driving of the strategy, and constant
positive engagement with its application.
● Process Focus. For too long organizations have been obsessed with
outcomes. Outcomes are driven by the effective application of appropriate
processes. Emphasis needs to move from assessment of outcome
performance to the development and control of processes to deliver customer
value. In particular it should be recognized that organizational processes flow
across departmental boundaries and management focus on departmental
outcomes will often have effect on the overall business process.
● People Focus. Quality management is fundamentally about people.
Processes are only effective in delivering customer value if they are
associated with appropriate behaviors from the individuals involved. An
excellent process can be let down by a demotivated or poorly trained member
or staff. An important aspect of managing quality is the creation of a
motivated and empowered workforce able to work with and on processes to
maximize customer value.
● Scientific focus. Quality management is fundamentally based on Scientific
Method – Plan, Do, Study, Act – where decisions are evaluated based on
evidence and data, and these evaluations are, in turn, used to drive further
iterations of action. This is supported by the appropriate use of analytical
tools to derive maximum information from the data available.
● Continual Improvement, Innovation and Learning. At the heart of Quality
Management is dissatisfaction with status quo. Process improvement in such
an organization is not simply about responding to problems (although this is
necessary) it is about proactively seeking to learn about customers,
processes and behaviors, and to improve upon existing practices, or to
innovate in developing new markets, processes and practices.
● Systems Thinking. Senge (1999) had “Systems Thinking” as his “Fifth
Discipline” because of its integrative qualities. By integrating the keep
concepts and seeing the organization in a holistic way we can create
synergies between the elements of the thinking and deliver a whole which is
much greater than the sum of the parts.

ELEMENTS AND REQUIREMENTS OF A QMS

Each element of a quality management system helps achieve the overall

goals of meeting the customers’ and organization’s requirements. Quality
management systems should address an organization’s unique needs; however, the
elements all systems have in common include:

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 ● The organization’s quality policy and quality objectives
● Quality manual
● Procedures, instructions, and records
● Data management
● Internal processes
● Customer satisfaction from product quality
● Improvement opportunities
● Quality analysis

ESTABLISHING AND IMPLEMENTING A QMS

Before establishing a quality management system, your organization must
identify and manage various connected, multi-functional processes to help ensure
customer satisfaction. The QMS design should be influenced by the organization’s
varying objectives, needs, and products and services provided. This structure is
based largely on the plan-do-check-act (PDCA) cycle and allows for continuous
improvement to both the product and the QMS. The basic steps to implementing a
quality management system are as follows:

1. Design
2. Build
3. Deploy
4. Control
5. Measure
6. Review
7. Improve

Design and Build

The design and build portions serve to develop the structure of a QMS, its
processes, and plans for implementation. Senior management should oversee this
portion to ensure the needs of the organization and the needs of its customers are a
driving force behind the systems development.
Deploy
Deployment is best served in a granular fashion by breaking each process
down into subprocesses and educating staff on documentation, education, training
tools, and metrics. Company intranets are increasingly being used to assist in the
deployment of quality management systems.

Control and Measure

Control and measurement are two areas of establishing a QMS that are
largely accomplished through routine, systematic audits of the quality management
system. The specifics vary greatly from organization to organization depending on
size, potential risk, and environmental impact.

Review and Improve

Review and improve detail how the results of an audit are handled. The goals
are to determine the effectiveness and efficiency of each process toward its

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objectives, to communicate these findings to the employees, and to develop new
best practices and processes based on the data collected during the audit.

INDUSTRIAL INFLUENCE ON QUALITY AND STANDARDIZATION

The history of quality can trace its roots back centuries when craftsmen
began organizing into unions called guilds. When the Industrial Revolution came,
early quality management systems were used as standards that controlled product
and process outcomes. As more people had to work together to produce results and
production quantities grew, best practices were needed to ensure quality results.
Eventually, best practices for controlling product and process outcomes were
established and documented. These documented best practices turned into
standard practices for quality management systems.
Quality became increasingly important during World War II, for example,
when bullets made in one state had to work with rifles made in another. The armed
forces initially inspected virtually every unit of product. To simplify the process
without sacrificing safety, the military began to use quality techniques of sampling for
inspection, aided by the publication of military-specification standards and training
courses in Walter Shewhart’s statistical process control techniques.
The importance of quality only grew after the war. The Japanese enjoyed a
quality revolution, improving their reputation for shoddy exports by fully embracing
the input of American thinkers like Joseph M. Juran and W. Edwards Deming and
shifting focus from inspection to improving all organization processes through the
people who used them. By the 1970s, the U.S. industrial sectors, such as electronics
and automobiles, had been broadsided by Japan’s high-quality competition.
The Rise of Quality Management Systems
The American response to the quality revolution in Japan gave birth to the
concept of total quality management (TQM), a method for quality management that
emphasized not only statistics but approaches that embraced the entire
organization.
In the late 20th century, independent organizations began producing
standards to assist in the creation and implementation of quality management
systems. It is around this time that the phrase “Total Quality Management” began to
fall out of favor. Because of the multitude of unique systems that can be applied, the
term “Quality Management System” or “QMS” is preferred.
At the start of the 21st century, QMS had begun to merge with the ideas of
sustainability and transparency, as these themes became increasingly important to
consumer satisfaction. The ISO 19011 audit regime deals with both quality and
sustainability and their integration into organizations.
ISO 9001:2015 AND OTHER QMS STANDARDS

ISO 9001:2015 is the most recognized and implemented quality management

system standard in the world. ISO 9001:2015 specifies the requirements for a QMS
that organizations can use to develop their own programs.

Other standards related to quality management systems include the rest of

the ISO 9000 series (including ISO 9000 and ISO 9004), the ISO 14000

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series (environmental management systems), ISO 13485 (quality management
systems for medical devices), ISO 19011 (auditing management systems), and
ISO/TS 16949 (quality management systems for automotive-related products).

KEY TAKEAWAYS

● Quality management is the act of overseeing all activities and tasks needed to
maintain a desired level of excellence.
● Quality management includes the determination of a quality policy, creating
and implementing quality planning and assurance, and quality control and
quality improvement.
● TQM requires that all stakeholders in a business work together to improve
processes, products, services, and the culture of the company itself.

Classwork

Choose one from the following products and identify and explain the
impact of Quality Management System. Infuse the relevant QMS
benefits, elements, principles, and foundations based from the
contributions of quality gurus.
Mobile phone
Laptop Computer
ISO 9000 and ISO 9001

Introduction

Quality Management is a contested area, and with the plethora of differing

views on what to do, and how to do it, authoritative and impartial guidance is
required to help most organizations make sense of the area. It should, of course, be
noted that these standards and models are for guidance purposes, rather than
comprehensive and complete ‘how to’ manuals.

Learning Objectives
Discuss and explain ISO 9000 and ISOO 9001 standards.
Summarize the use and benefits of ISO 9001.
Express the changes in ISO 9001 standards.
Examine the major clauses in ISO 9001 standards.
Identify the mandatory documentation required by ISO 9001: 2015

WHAT IS THE ISO 9000 STANDARDS SERIES?

ISO 9000 is defined as a set of international standards on quality management and
quality assurance developed to help companies effectively document the quality

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system elements needed to maintain an efficient quality system. They are not
specific to any one industry and can be applied to organizations of any size.
ISO 9000 can help a company satisfy its customers, meet regulatory requirements,
and achieve continual improvement. The objective of this series of standards is to
aid supplier quality assurance and to provide a common, authoritative, and widely
accepted standard by which to evaluate and compare the potential of firms to meet
acceptable levels of quality and reliability. The word potential is vital here, since it
looks at the system, and not the product.
ISO 9000 VS. 9001
ISO 9000 is a series, or family, of quality management standards, while ISO 9001 is
a standard within the family. The ISO 9000 family of standards also contains an
individual standard named ISO 9000. This standard lays out the fundamentals and
vocabulary for quality management systems (QMS).
ISO 9000 series of Standards
The ISO 9000 family contains these standards:

● ISO 9001:2015: Quality Management Systems - Requirements

● ISO 9000:2015: Quality Management Systems - Fundamentals and
Vocabulary (definitions)
● ISO 9004:2018: Quality Management - Quality of an Organization - Guidance
to Achieve Sustained Success (continuous improvement)
● ISO 19011:2018: Guidelines for Auditing Management Systems

ISO 9000 history and revisions: ISO 9000:2000, 2008, and 2015
ISO 9000 was first published in 1987 by the International Organization for
Standardization (ISO), a specialized international agency for standardization
composed of the national standards bodies of more than 160 countries. The
standards underwent major revisions in 2000 and 2008. The most recent versions of
the standard, ISO 9000:2015 and ISO 9001:2015, were published in September
2015.
ISO 9000:2000 refers to the ISO 9000 update released in the year 2000.
The ISO 9000:2000 revision had five goals:

1. Meet stakeholder needs

2. Be usable by all sizes of organizations
3. Be usable by all sectors
4. Be simple and clearly understood
5. Connect quality management system to business processes

ISO 9000:2000 was again updated in 2008 and 2015. ISO 9000:2015 is the most
current version.
ISO 9000:2015 principles of Quality Management
The underlying principle of all these standards is that quality systems are based on
formality since this permits objectivity. The standards attempt to formalize and

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standardize the general approach towards Quality (without standardizing
unnecessarily the detailed activities that underpin this approach) by:
⮚ A documented quality policy representing the management’s approach to
delivering customer requirements is set out and committed to by senior
management.
⮚ The policy is deployed throughout the organization with more detailed
descriptions of processes developed for implementation at lower levels in the
business.
⮚ The organization internally audits adherence to the policies and procedures,
keeping records of audits and quality performance.
⮚ The records are used as the basis for corrective and improvement actions.
⮚ The quality system is audited by third party certification bodies to ensure
compliance, and the organization works to improve the system in line with the
external audit.
The ISO 9000:2015 and ISO 9001:2015 standards are based on seven quality
management principles that senior management can apply to promote
organizational improvement.

ISO 9000 Quality Management Principles

1. Customer focus
o Understand the needs of existing and future customers
o Align organizational objectives with customer needs and expectations
o Meet customer requirements
o Measure customer satisfaction
o Manage customer relationships
o Aim to exceed customer expectations

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o Learn more about the customer experience and customer satisfaction

2. Leadership
o Establish a vision and direction for the organization
o Set challenging goals
o Model organizational values
o Establish trust
o Equip and empower employees
o Recognize employee contributions
o Learn more about leadership

3. Engagement of people
o Ensure that people’s abilities are used and valued
o Make people accountable
o Enable participation in continual improvement
o Evaluate individual performance
o Enable learning and knowledge sharing
o Enable open discussion of problems and constraints
o Learn more about employee involvement

4. Process approach
o Manage activities as processes
o Measure the capability of activities
o Identify linkages between activities
o Prioritize improvement opportunities
o Deploy resources effectively
o Learn more about a process view of work and see process analysis tools

5. Improvement
o Improve organizational performance and capabilities
o Align improvement activities
o Empower people to make improvements
o Measure improvement consistently
o Celebrate improvements
o Learn more about approaches to continual improvement

6. Evidence-based decision making

o Ensure the accessibility of accurate and reliable data
o Use appropriate methods to analyze data
o Make decisions based on analysis
o Balance data analysis with practical experience
o See tools for decision making

7. Relationship management

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 o Identify and select suppliers to manage costs, optimize resources, and create
value
o Establish relationships considering both the short and long term
o Share expertise, resources, information, and plans with partners
o Collaborate on improvement and development activities
o Recognize supplier successes
o Learn more about supplier quality and see resources related to managing the
supply chain

Summary of ISO 9000

The idea of a standard for quality management is a seductive one. It is, however,
fraught with difficulty in application; particularly when the pressure to achieve
accreditation from senior management or customer can be extremely high. This can
lead to game-playing, a compliance mentality, and other unintended negative
consequences. Undoubtedly, the standard can be useful first step on the road to
excellence, but it must be recognized as just that, and even then, only when
undertaken in the right spirit. ISO 9000 is not ‘Quality’ – more needs to be done,
particularly in in respect of leadership, people, and customers. It may also inhibit
exactly those things by being, to a degree, bureaucratic and top-down in nature.

ISO 9001:2015
ISO 9001 is defined as the international standard that specifies requirements for a quality
management system (QMS). Organizations use the standard to demonstrate the ability to
consistently provide products and services that meet customer and regulatory requirements. It
is the most popular standard in the ISO 9000 series and the only standard in the series to
which organizations can certify.
ISO 9001 was first published in 1987 by the International Organization for Standardization
(ISO), an international agency composed of the national standards bodies of more than 160
countries. The current version of ISO 9001 was released in September 2015.
WHAT IS ISO 9001:2015 – QUALITY MANAGEMENT SYSTEMS?

ISO 9001:2015 is an international standard dedicated to Quality Management

Systems (QMS). It outlines a framework for improving quality and a vocabulary of
understanding for any organization looking to provide products and services that
consistently meet the requirements and expectations of customers and other
relevant interested parties in the most efficient manner possible. The QMS is the
aggregate of all the processes, resources, assets, and cultural values that support
the goal of customer satisfaction and organizational efficiency. First published in
1987, the latest iteration (ISO 9001:2015) replaces ISO 9001:2008.

ISO 9001:2015 does not dictate what an organization’s objectives should be or how
to achieve them. In other words, it does not tell anyone how to run their business. It's
a flexible standard that allows each organization to define for itself what its
objectives and adherence to the standard ought to be. ISO 9001:2015 defines the
guiding principles that can be used to create efficiencies by aligning and streamlining

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processes throughout the organization, in an effort to bring down costs, create new
opportunities, meet regulatory requirements, and help organizations expand into
new markets in which clients demand ISO 9001 certification.

ISO does not perform certifications to ISO 9001:2015. Instead, organizations engage
an independent certification body to audit their QMS implementation against the ISO
requirements. Organizations of any size can certify to this standard, including
smaller ones with no dedicated Quality resources.

WHO SHOULD USE THE ISO 9001:2015 REVISION?

ISO 9001:2015 applies to any organization, regardless of size or industry. More than
one million organizations from more than 160 countries have applied the ISO 9001
standard requirements to their quality management systems.
Organizations of all types and sizes find that using the ISO 9001 standard helps
them:

● Organize processes
● Improve the efficiency of processes
● Continually improve

All organizations that use ISO 9001 are encouraged to transition to ISO 9001:2015
as soon as possible. This includes not only organizations that are certified to ISO
9001:2008, but also any organizations involved in training or certifying others.
As of September 14, 2018 organizations that are currently registered to ISO
9001:2008 should have transitioned to the 2015 standard.
What topics does ISO 9001:2015 cover?
ISO 9001 is based on the plan-do-check-act methodology and provides a process-
oriented approach to documenting and reviewing the structure, responsibilities, and
procedures required to achieve effective quality management in an organization.
Specific sections of the standard contain information on many topics, such as:

● Requirements for a QMS, including documented information, planning and

determining process interactions
● Responsibilities of management
● Management of resources, including human resources and an organization’s
work environment
● Product realization, including the steps from design to delivery
● Measurement, analysis, and improvement of the QMS through activities
like internal audits and corrective and preventive action

Changes introduced in the 2015 ISO 9001 revision are intended to ensure that ISO
9001 continues to adapt to the changing environments in which organizations
operate. Some of the key updates in ISO 9001:2015 include:

● The introduction of new terminology

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 ● Restructuring some of the information
● An emphasis on risk-based thinking to enhance the application of the process
approach
● Improved applicability for services
● Increased leadership requirements

Previous versions of ISO 9001

Originally published in 1987, ISO 9001 underwent revisions in 1994, 2000, and
again in 2008. The latest revision was published in September 2015.
● ISO 9001:1994 included changes to improve the control of design and
development clause, as well as provide other clarifications. The 1994 series
also slightly modified the role of ISO 9002 and 9003.
● The ISO 9001:2008 revision sought to clarify issues raised during the
application of ISO 9001:2000.

ISO 9001 Timeline

WHAT ARE THE BENEFITS OF ISO 9001?
ISO 9001 helps organizations ensure their customers consistently receive high
quality products and services, which in turn brings many benefits, including satisfied
customers, management, and employees.
Because ISO 9001 specifies the requirements for an effective quality management
system, organizations find that using the standard helps them:

● Organize a QMS
● Create satisfied customers, management, and employees
● Continually improve their processes
● Save costs

ISO 9001 CERTIFICATION

ISO 9001 is the only standard in the ISO 9000 series to which organizations can
certify. Achieving ISO 9001:2015 certification means that an organization has
demonstrated the following:

● Follows the guidelines of the ISO 9001 standard

● Fulfills its own requirements
● Meets customer requirements and statutory and regulatory requirements
● Maintains documentation

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Certification to the ISO 9001 standard can enhance an organization’s credibility by
showing customers that its products and services meet expectations. In some
instances or in some industries, certification is required or legally mandated. The
certification process includes implementing the requirements of ISO 9001:2015 and
then completing a successful registrar’s audit confirming the organization meets
those requirements.
Organizations should consider the following as they begin preparing for an ISO 9001
quality management system certification:

● Registrar’s costs for ISO 9001 registration, surveillance, and recertification

audits
● Current level of conformance with ISO 9001 requirements
● Amount of resources that the company will dedicate to this project for
development and implementation
● Amount of support that will be required from a consultant and the associated
costs

ISO 9001:2015 Clauses

1. Process approach

The process approach is the key to an effective Quality Management System.

It basically means that every operation of the company must be observed as
a process, meaning you should identify all inputs, necessary resources,
documents, activities, and outputs from each operation. Once you set up your
system based on the processes, you will be able to monitor and measure
your processes, their effectiveness, and efficiency and improve them, which is
the reason why it is emphasized at the beginning of the implementation,
before going into any other details regarding the standard requirements.

In simple terms, the process approach represents the concept of observing all
operations in the company as processes. This includes breaking the company
down into its processes, and determining their sequence, interaction, inputs,
and outputs; as well as identifying the processes in the company, which
processes can start before other processes are finished, resources and
information needed to start the process, and what results we expect from the
process.
The best way to start implementing the process approach is to create a
process map that will include all processes in your company and their
interconnections. For example, the delivery process cannot be done before
the production and sales process, and the production cannot be done before
the purchasing of raw materials. Once you create this global process map
and identify all the processes and their interrelations, you can start defining
your processes in terms of what are necessary inputs, what controls need to
be applied, and what are the outputs of the process. But this will be done
throughout the implementation; it doesn’t have to be done at once.

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2. Plan-Do-Check-Act cycle

The core of this standard, and many other management system standards, is
the so-called Plan-Do-Check- Act (PDCA) cycle, which says that, in order to
have an effective management system. The first step in the cycle is planning,
which includes defining objectives, policies, procedures, and processes,
including measuring aimed to show whether the processes are delivering the
expected results. The next step is the Do phase, which represents the
realization of the planned arrangements, applying policies and procedures,
performing processes, and producing records. After the Do phase comes the
Check phase, where the results of the Do phase are analyzed to determine
performance and effectiveness of the activities and actions that were taken
during the Do phase, which includes analyzing, monitoring, and measuring
results, audits, and management reviews. As the final stage of the cycle, the
Act phase is where the organization needs to take actions according to the
results of the Act phase to achieve continual improvement. The PDCA cycle
should be an ongoing cycle that drives the organization towards continual
improvement.

3. Terms and definitions

All terms and definitions related to ISO 9001:2015 can be found in the
standard. Unfortunately, ISO 9001:2015 does not provide any definitions for
the terms used, and it is very important to get an understanding of the terms

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before the company starts implementing the requirements of the standard.
Here are some of the most important terms and definitions.

Top management – An individual or group of individuals who coordinate and

control an organization at the highest level. In cases when the scope of the
management system covers just part of an organization, then top
management refers to the individuals who direct and control that part of the
organization.

Organization – A person or group of people who has their own functions with
responsibilities, authorities, and relationships to achieve the objectives.

Context of the organization – A combination of internal and external factors

that can have an effect on purpose, objectives, performance, and
sustainability of the organization. Internal factors include values, culture,
knowledge, and performance of the organization. External factors include
legal, technological, competitive, market, cultural, social, and economic
environment.

Interested party (stakeholder) – A person or organization that is involved in

or perceives itself to be affected by activities and actions taken by the
organization. Interested parties can be customers, suppliers, contractors,
local community, government, etc.

Process – A sequence of activities that use inputs to deliver an intended

result. For example, the production process has several steps that must be
conducted in the appropriate sequence; inputs in this process are raw
materials, product specifications, and work instructions, while the outputs are
the product, quality check report, etc.
Procedure – A defined way to execute an activity or a process. Procedures
can be documented or not.

Quality – Quality is the difference between a customer’s expectations and the

customer’s perception of the product or service that he received – the higher
the difference, the better perceived quality.

Nonconformity – The failure to meet a requirement.

Risk – Risk is the “effect of uncertainty on objectives,” and an effect is a

positive or negative deviation from what is expected. For example, the
company plans to deliver its products to the customers, but there is a risk of
product nonconformity due to a poorly controlled production process.
Effectiveness – The level of success in achieving or producing a desired
result. For example, the production process is effective if it is able to produce
the products.

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Documented information – Information required to be controlled and
maintained by an organization, and the medium on which it is contained. For
example, the documented policies, procedures, work instructions, and
records represent documented information.

4. Context of the organization

4.1 Understanding organization and its context

This clause brings new requirements compared to the 2008 version of the
standard, and requires the organization to determine all internal and external
issues that may be relevant to the achievement of the objectives of the QMS
itself. This includes all elements that are, and may be capable of, affecting
these objectives and outcomes in the future.

4.2 Understanding needs and expectations of interested parties

Due to the effect that interested parties may have on the organization in terms
of quality of products and services, customer satisfaction, and statutory and
regulatory requirements, the standard requires the organization to determine
interested parties relevant to the QMS and their needs and expectations.

4.3. Determining the scope of Quality Management System

Determining the scope of the QMS is one of the main milestones in the
implementation. The scope must be examined and defined considering the
internal and external issues, interested parties and their needs and
expectations, as well as legal and regulatory compliance obligations.
Additional required considerations for the QMS scope are products, services,
and organizational size, nature and complexity. The scope and justified
exclusions must be kept as documented information.

4.4. Quality Management System and its processes

The organization needs to establish, implement, maintain, and continually
improve its QMS, including the processes needed and their interactions, in
accordance with the requirements of the standard.

This is where the process approach comes into action. The organization will
need to determine inputs and outputs of the processes, sequence and
interaction of the processes, resources needed, and responsibilities, and
ensure the effectiveness of the processes.
In addition, the organization will have to maintain necessary documented
information to support the operation of the processes and keep records to
evidence that the processes were carried out as planned.
5. Leadership

5.1 Leadership and commitment

QMS implementation is your strategic decision that demonstrates your
commitment to development and application of the QMS and continual

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improvement of its effectiveness. This commitment must be demonstrated
through informing the organization about the importance of fulfilling customer
requirements, compliance with legal and other requirements, establishing a
Quality Policy and objectives, conducting management reviews, and providing
needed resources.

5.2 Policy
The Quality Policy is a high-level document containing statements about the
general direction of the organization, and its commitment to quality and
customer satisfaction. It provides a framework for quality objectives. Meeting
compliance and regulatory factors is obviously a key element. Finally, and
vitally, the policy must provide a commitment to the continual improvement of
the QMS and its results. Critically, the Quality Policy must be maintained as
documented information, be communicated within the organization, and be
available to all interested parties.

5.3 Organizational roles, responsibilities and authorities

Responsibilities and authorities must be precisely defined and communicated
to all hierarchical levels of the organization. In specific situations (seasonal
fluctuation of labor force, emergency situations, etc.), it is necessary to
precisely document and communicate authorities, and especially the
responsibilities of temporarily employed workers.

6. Planning

6.1 Actions to address risks and opportunities

When planning the QMS, the organization will have to consider context of the
organization (section 4.1) and the needs and expectations of interested
parties (section 4.2) in order to determine risks and opportunities that need to
be addressed.

The purpose of addressing risks and opportunities is to ensure that the QMS
will achieve the intended results, enhance desirable effects, and achieve
improvements. The actions have to be planned and implemented in the QMS,
and later evaluated for their effectiveness.

6.2 Quality objectives and planning to achieve them

The standard requires top-level management to establish quality objectives
for appropriate functions and departments in the organization (HR,
production, purchase, etc.).

Quality objectives must be measurable, quantitative, and timed. They must be

in line with the Quality Policy so it can be determined whether objectives are
met, and if not, what should be done.

6.3 Planning changes

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When the organization determines the need for changes to the QMS, the
changes should be carried out in a planned manner. This includes
considering their purpose and consequences, the integrity of the QMS,
availability of resources, and allocation of responsibilities and authorities.

7. Support

7.1 Resources
The standard requires the organization to determine and provide resources
for the establishment, implementation, maintenance, and continual
improvement of the QMS, taking into account the capabilities and constraints
of existing internal resources and the need to obtain additional resources from
external providers.

Resources to be obtained include people, infrastructure, environment for

operation of the processes, monitoring and measuring resources, and
organizational knowledge.

7.2 Competence
The organization needs to determine the necessary competence of its
employees, and ensure those employees are competent on the basis of
appropriate education, training, and experience. This means that the
organization will need to have a process for determining the necessary
competence and achieving it through trainings and other means.

7.3 Awareness
Awareness is closely related to competence in the standard. Employees must
be made aware of the Quality Policy and its contents, any current and future
impacts that may affect their tasks, what their personal performance means to
the QMS and its objectives, including the positives or improved performance,
and what the implications of poor performance may be to the QMS.

7.4 Communication
Processes for internal and external communication need to be established
within the QMS. The key elements that need to be decided and actioned are
what needs to be communicated, when it needs to be communicated, how it
should be done, who needs to receive the communication, and who will
communicate. It should be noted here that any communication outputs should
be consistent with related information and content generated by the QMS for
the sake of consistency.

7.5 Documented information

QMS documentation is comprised not only of the documents and records
required explicitly by the standard, but also of the documents and records the
organization finds necessary to execute its activities and processes. The

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volume of the documentation is affected by many factors: it will depend on the
size of the organization and the complexity of its processes, products, and
services; the organization’s compliance obligations; and by the competence
of the employees.

The standard requires that documented information created or updated in the

scope of the QMS must be properly identified and described, also considering
its content presentation, and media used. All documented information must
go under proper review and approval procedures to ensure it is fit for its
intended purpose.

For proper control of documented information, the organization must consider

the provision of processes regarding the distribution, retention, access,
usage, retrieval, preservation and storage, control, and disposition of such
information. It should also be noted that there must be controls in place to
prevent the unintentional use of obsolete information.

8. Operation

8.1 Operational planning and control

In order to meet the requirements for delivery of products and services, the
organization needs to plan, implement, and control its processes. The first
step is to determine the requirements for products and services, meaning
what features the product or service will have. Then, the organization needs
to define how processes will be performed and what criteria the product or
service needs to meet to be accepted for release. Finally, the organization
needs to determine the resources needed for the processes and the records
needed to demonstrate that the processes were carried out as planned.

8.2 Requirements for products and services

Requirements for products and services are closely related to communication
with customers. This communication must include information related to the
products or services, handling inquiries, contracts or orders, customer
feedback, handling and controlling customer property and, if needed,
establishing specific requirements for contingency actions.

Before offering the product or service to the customer, the organization needs
to ensure that the requirements for the products and services are defined,
and that the organization can deliver such products or services.
Requirements for products and services include any applicable legislation and
the requirements that the organization considers to be necessary.
After receiving the order, the organization must, prior to delivery, review the
requirements related to the product and keep records about the review. If the
customer changes its requirements, these also must be reviewed and
recorded. In case of changes, the organization must ensure that all

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documented information is amended and all relevant persons are aware of
the changes.

8.3 Design and development of products and services

This clause refers to design and development management, from the initial
idea to final acceptance of the product. ISO 9000 explains that the terms
“design” and “development” are often used as synonyms, and sometimes
define different phases of overall design and development. This means that
design can’t be used apart from development, and that they represent one
single process.

During design and development planning, all its phases must be defined with
appropriate activities of reviewing, verification, and validation for each phase.
Considering that ISO 9001 refers to design and development of product (not
design and development of processes), design and development inputs relate
to product requirements that include:

● Functional requirements and product performance requirements

● Legal and regulatory requirements for product
● Information from previous similar projects
● Other requirements relevant to design and development, usually customer
requirements, market information, package, etc.

Design and development outputs must be in a form suitable for verification

related to input elements, and must be approved before acceptance. They
can be in the form of a drawing, engineering documentation, plans, etc.
The organization also needs to define design and development review
activities. The purpose of these activities is to determine whether the design
and development process goes in the intended direction. The review can be
done in appropriate phases or at the end of project. The review identifies
problems during design and development and suggests actions to resolve
them; it can include other interested parties. The design and development
review must be documented.
Also, the company needs to identify, review, and control changes during the
design and development of products and services. Documented information
should be kept regarding the changes, results of reviews, authorization of the
change, and actions taken to prevent adverse effects.

8.4 Control of externally provided processes, products and services

This robust title of the clause refers to purchasing. The purchasing includes
products and services you acquire from suppliers and outsourced processes.
The organization needs to establish and document criteria for supplier’s
selection, which includes how crucial the purchased product or service is to
the quality of your product. Results of the supplier evaluation must be kept.

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 To ensure that externally provided processes, products, and services do not
have an adverse effect on the conformance of the organization’s products
and services, the organization needs to establish controls including
verification and other activities. As part of the controls, the organization needs
to communicate to external providers its requirements for:

● processes, products, and services to be provided

● the approval of methods, processes, and equipment
● competence
● verification or validation activities that the organization intends to perform

8.5 Production and service provision

The production and services provision process needs to be performed under
controlled conditions that will ensure that the product or service delivered is
compliant with initial requirements. This includes a sufficient level of
documentation, like procedures, work instructions and records, monitoring
and measurement equipment, appropriate infrastructure, etc.

The organization must use suitable means to identify outputs when it is

necessary to ensure products and services conformance. When the
traceability is a requirement, the organization needs to control the unique
identification of outputs and retain documented information necessary to
enable traceability.

In cases when the organization uses property belonging to a customer or

external provider, it is required to identify, verify, protect, and safeguard this
property. When the property of the customer or external provider is lost or
damaged, the organization will have to report to the owner and retain
documented information on what has occurred.

The decision on the extent of post-delivery activities will be affected by the

following:

● statutory and regulatory requirements

● potential undesired consequences related to products and services
● lifetime, use, and the nature of the products and services
● customer requirements and feedback.

In case of changes in the production and service provision process, the

organization must review and control the changes to ensure continuing
conformity with the requirements.
8.5 Product realization – Practical examples for compliance.

8.6 Release of products and services

Release of the products and services should not be performed until the
organization ensures that the products and services are conforming to the

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requirements. Demonstrating the conformance can be done by documenting
evidence of the conformance, which includes criteria for the acceptance and
information about the person who authorized release of the product or
service.

8.7 Control of nonconforming outputs

Nonconforming outputs must be prevented from unintended use or delivery,
so the organization must identify and control nonconforming outputs that
emerge from any phase of production or service delivery. Depending on the
nature of the nonconformity, the organization can take one or more of the
following actions:

● correction
● segregation, containment, return, or suspension of provision of products
and services
● informing the customer
● obtaining authorization for acceptance under concession

Conformity to the requirements must be verified when the nonconforming

output is corrected. The organization also needs to keep documented
information that describes the nonconformity, the action taken, concessions
obtained, and the authority deciding the action with respect to the
nonconformity.

9. Performance evaluation

9.1 Monitoring, measurement, analysis and evaluation

This requirement should not be equated with the requirement for managing
equipment for monitoring and measuring from clause 7.1.5 of the standard.
This is about a wider aspect of monitoring and measuring. Information derived
from monitoring, measurement, and analysis represents inputs in the process
of improvement and management review.

The organization needs to determine what needs to be monitored and

measured, how, and when, as well as when the results will be analyzed.

It is required to measure your own performance as a supplier in order to get

information about users’ observations, and the extent to which you fulfilled
their requirements. Monitoring customer satisfaction levels must be a
constant activity to determine trends, and because opinions about your
performance can change. Information about customer satisfaction can be
collected via phone, interview or questionnaire, direct contact with the user on
the field, etc.

Once the monitoring and measuring is performed and the results are
gathered, the organization needs to analyze the results in order to evaluate

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conformity of products and services, degree of customer satisfaction,
performance of the QMS, effectiveness of actions taken to address risks and
opportunities, performance of external providers, and need for improvements
to the QMS.

9.2 Internal audit

The goal of an internal audit is not to determine nonconformity; its goal is to
check whether your QMS:
a. complies with the requirements of ISO 9001 and the requirements of
your organization
b. is effectively implemented and maintained

At the end of the audit, you will get audit results by evaluating the data you
collected during the audit. Audit results can be manifested as: praise,
recommendations for improvements, and nonconformities (major and minor).
Verification of actions taken may be needed, and in that case, the next step is
a follow-up audit.

9.3 Management review

At least once a year, the top-level management must review the QMS to
determine its:

● Appropriateness – does it serve its purpose and satisfy the needs of

the organization?
● Adequacy – does the QMS conform to standard requirements?
● Applicability – are activities performed according to procedures?
● Effectiveness – does it accomplish the planned results?

This review must evaluate possibilities for improvement and needs for
changing the QMS, Quality Policy, and objectives. Considering the inputs for
the management review, such as the results of the previous management
reviews, changes in the context, customer satisfaction survey results,
performance of the QMS and suppliers, etc., the top management must make
decisions regarding opportunities for improvement, need for changes in the
QMS, and resources needed for the upcoming period.

10. Improvements

10.1 General
Based on the results of the management review, the organization must make
decisions and take actions that will drive it towards continual improvement.
Those actions can be in the form of corrective actions, trainings,
reorganization, innovation, and so on.

10.2 Nonconformity and corrective action

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 Any nonconformity needs to be reacted upon by taking actions to control it
and deal with the consequences. Once identified, a nonconformity should
trigger a corrective action to remove the cause of the nonconformity and
prevent its recurrence.
The effectiveness of actions taken must be evaluated and documented, along
with the originally reported information about the nonconformity / corrective
action and the results achieved.

10.3 Continual improvement

Continual improvement is a key aspect of the QMS, to achieve and maintain
the Quality Management System’s suitability, adequacy, and effectiveness
regarding the organizations’ objectives.

Conclusion
ISO 9001:2015 sets a global standard for Quality Management Systems and
ensures their efficiency for products, services, and international supply
chains. Whether an organization is starting down the path of a QMS or
transitioning to the 2015 standard, ISO 9001:2015 embodies the best
practices of Quality Management and Quality certification.

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Checklist of Mandatory Documentation Required by ISO 9001:2015

1. Which documents and records are required?

Mandatory Documents ISO 9001:2015 Clause

Scope of the Quality Management System 4.3

Quality Policy 5.2

Quality Objectives and Plans for Achieving Them 6.2

Mandatory Records ISO 9001:2015 Clause

Record of Maintenance and Calibration of Monitoring

and Measuring Equipment 7.1.5.1

Competence Records 7.2

Product/Service Requirements Review Record 8.2.3.2

Record of New Requirements for Product or Service 8.2.3.2

Design and Development Inputs Record 8.3.3

Record of Design and Development Controls 8.3.4

Design and Development Outputs Record 8.3.5

Record of Design and Development Changes 8.3.6

Record of Evaluation of External Provider (supplier) 8.4.1

Record of Product/Service Characteristics 8.5.1

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 Record of Changes on Customer’s Property 8.5.3

Record of Changes in Production/Service Provision 8.5.6

Evidence of Product/Service Conformity 8.6

Record of Nonconformity 8.7.2, 10.2.2

Monitoring Performance Information 9.1.1

Internal Audit Program and Results 9.2.2

Management Review Results 9.3

Nonconformities and Corrective Action 10.2.2

These are the documents and records that are required to be maintained for the
ISO 9001 Quality Management System, but you should also maintain any other
records that you have identified as necessary to ensure your management
system can function, be maintained, and improve over time.

2. Commonly used non-mandatory documents

Non-Mandatory Procedures ISO 9001 Clause

Determining Context of the Organization and

Interested Parties 4.1, 4.2

Procedure for Addressing Risks and Opportunities 6.1.

Competence, Training and Awareness Procedure 7.2, 7.3

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Procedure for Control of Documents and Records 7.5

Sales Procedure 8.2

Procedure for Design and Development 8.3

Procedure for Control of Externally Provided

Processes,
8.4.1

Products and Services (outsourced processes)

Procedure for Production and Service Provision 8.5

Warehousing Procedure 8.5.4

Procedure for Measuring Customer Satisfaction 9.1.2

Procedure for Internal Audit 9.2

Procedure for Management Review 9.3

Procedure for Nonconformity and Corrective Action 10.2

While ISO 9001 does not require that you document all the procedures, there are
several processes that are mandatory to be established to generate the required
records that are outlined in the first section. Remember these processes and

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procedures are not required to be documented; however, many companies
choose to do so. One rule of thumb when deciding if you want to document a
process is this: if there is a chance that the process will not be carried out as
planned, then you should document it. In many cases this is the best way to
ensure that your Quality Management System is reliably implemented.

3. How to structure documents and records

Determining Context of the Organization and Interested Parties

This is a new requirement of the standard that can bring some ambiguities, and it
is a good idea to document the process of determining the context and identifying
interested parties and their expectations, since it is being done for the first time.
This document should contain all internal and external issues to be considered,
as well as the process and responsibilities for identification of interested parties
and their needs and expectations. Procedure for Determining Context of the
Organization and Interested Parties can be of great help in implementation of
these new requirements.

QMS Scope

This document is usually rather short and written at the beginning of the ISO
9001 implementation. Its purpose is to define the boundaries of the QMS and to
determine to which parts of the organization the QMS applies. Normally, it is a
standalone document called Scope of the QMS, although it can be merged into a
Quality Manual.

Quality Policy

The Quality Policy is intended to be a company’s documented intention to comply

with appropriate requirements, increase customer satisfaction, and continually
improve. The policy is the focus for the company to work toward and should
readily convey the goal of the organization. It is a standalone document, but is
often documented in a Quality Manual and sometimes posted throughout the
organization as a way of communicating to all employees, since it is important
that every employee understand how the policy relates to his or her job.

Risks and Opportunities that need to be addressed

This is a new requirement that introduces significant changes to the QMS.

According to the new version, the risks and opportunities regarding the QMS
must be identified and addressed, but there is no requirement to use any
methodology or write a procedure. The process of addressing risks and

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opportunities includes consideration of internal and external issues relevant to
the QMS, interested parties, and scope of the QMS. Considering the importance
of this new requirement and the fact that it introduces a completely new process
into the organization, it is recommended that it be documented in the form of a
procedure.

Quality Objectives and Plans for Achieving Them

The requirements regarding setting the quality objectives remained as they were
in the previous version of the standard; they still need to be measurable and
timed. However, the standard now requires plans for achieving the objectives,
meaning that the organization will have to assign responsibilities and dedicate
resources for achieving the objectives. These requirements can be met in
separate documents, but it is much easier to create a Quality Objectives
document and fulfill all the above-mentioned requirements.

Competence, Training and Awareness records

Introducing quality management into an organization often requires additional

training of relevant employees. Describing the process of managing human
resources by documenting a procedure that defines identification of training
needs, training planning, conducting and evaluation of training effectiveness, as
well as assigning responsibilities for this, is the best way to ensure that the
requirements are met. Although it is not a requirement of the standard, good
practice shows that the Procedure for Competence, Training and Awareness can
be of great help to an organization. The standard explicitly requires only the
evidence of competence, and that is the Training Record.

Procedure for Control of Documents and Records

Managing documented information is defined by many requirements within

clause 7.5 in the standard. Activities of approval, update, managing changes,
and ensuring that the relevant version of the document is in use are best to be
defined in a documented procedure.

The company must also define rules to maintain its records that show the QMS is
implemented and maintained, including how they identify, store, and protect the
records so that they can be retrieved as necessary, for the correct amount of
time, and destroyed when no longer needed but not before.

Sales procedure

Although it is not a mandatory procedure, the standard prescribes numerous

rules regarding communication with customers, determining requirements related
to product and services, and activities regarding review of these requirements.
Good practice shows that the best way to conform to all these requirements is to

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document them, together with responsibilities. The only mandatory documented
information here are the records of reviewing requirements related to product and
service, as well as information about new requirements for products and
services.

Procedure for Design and Development

Requirements regarding the design and development process are among the
most demanding in the standard. Every step of the design and development
process needs to be documented in the form of a record, from design and
development inputs, controls, and outputs, to changes in design and
development. Considering all the requirements regarding the design and
development process, it is best to document the Procedure for Design and
Development and define all mandatory records that should accompany the
procedure.

Procedure for control of externally provided processes, products and

services (outsourced processes)

Creators of the standard decided to use this rather robust formulation of

something that is basically the Procedure for Purchasing and Evaluation of
Suppliers. Although the purchasing process does not have to be documented,
the standard requires companies to establish control over its externally provided
processes, products, and services. The standard does require the criteria for
evaluation, selection, monitoring, and re-evaluation of the suppliers to be
documented, and the best way to do it is through the procedure.

Procedure for production and service provision

The standard requires production and service provision processes to be under

control in terms of availability of necessary documented information about
product or service characteristics, intended results, availability of needed
resources, monitoring and measurement activities, etc. This rather complex
process will hardly achieve the intended outcomes without clearly defined rules
documented in the Procedure for Production and Service Provision.

Warehousing procedure

The importance and necessity of this procedure will vary depending on the type
of business the company performs, but the requirement for product preservation
is one of the most crucial ones in the way of the product or service toward the
end user. In cases when the storage conditions can have great influence on the

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product quality, rules for preservation of the product during storage should be
documented in the Warehousing Procedure.

Monitoring performance information

The new version of the standard emphasizes the importance of measuring and
evaluation of QMS performance. The organization needs to determine what
should be monitored, how, and when. This does not have to be in one document,
meaning that necessary monitoring and measuring is usually included in related
process procedures. But, it is good to have an overview of key performance
indicators and their status in the form of a Matrix of Key Performance Indicators.

Internal audit

How do you audit your Quality Management System to make sure that it is
performing as planned and is effective? Who is responsible for planning and
carrying out the audits? How do you report the results, and what records are
kept? How do you follow up on corrective actions noted in audits? Learn more in
this article about the Five Main Steps in ISO 9001 Internal Audit. You must also
keep records of these activities to show QMS conformance and improvement.

Management review

Management review as a process has not suffered any changes in the new ISO
9001:2015 revision in terms of how and how often it should be conducted.
However, the mandatory inputs and outputs of the management review have
changed. It is now required for the top management to review internal and
external issues relevant to the QMS, as well as the effectiveness of actions taken
to address risks and opportunities. As a result of the management review, there
should be decisions regarding opportunities for improvement of the QMS, need
for changes of the system, and resources needed. The best way to keep track of
what needs to be reviewed and the expected results of the management review
is to document the Procedure for Management Review.

Nonconformity and corrective action

What actions are in place, and who is responsible for making sure that a
nonconformity is addressed? How do you ensure that corrections are made, and
what records are kept of the process? Find out more here: Understanding
dispositions for ISO 9001 nonconforming product. How do you review
nonconformities, determine causes, and evaluate the need for actions to correct
them? How do you implement the necessary actions, review that the actions
were effective, and keep records of the actions taken? With the Quality

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 Management System you will find that you have non-conformances occur within
your processes that you will need to correct; and when you investigate the root
cause of these problems, you will have corrective actions taken. You will also
need to keep records of these activities to show improvement.

MALCOLM BALDRIGE NATIONAL QUALITY AWARD (MBNQA)

Introduction

The Baldrige Criteria for Performance Excellence are accepted around the world
as the gold standard for organizational performance excellence—a body of
principles and considerations that when used as a management framework lead
to improved performance results in organizations, from less defects, better health
care outcomes, and improved effectiveness; to more satisfied and engaged
customers, patients, and students; to improved financial and market share
results.

Learning Objectives
Discuss and explain the Malcolm Bladrige National Quality Award
(MBNQA)
Explain the seven MBNQA criteria categories.
Summarize the standards, core values and concept, and scoring
rubric of MBNQA criteria
Synthesize the wide-ranging impact of the Baldrige Framework in the
Global economy

The Malcolm Baldrige National Quality Award (MBNQA) is an award established by the
U.S. Congress in 1987 to raise awareness of quality management and recognize U.S.
companies that have implemented successful quality management systems. The award is
the nation's highest presidential honor for performance excellence.

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 The Malcolm Baldrige National Quality Award (MBNQA)

Three MBNQA awards can be given annually in six categories:

● Manufacturing
● Service Company
● Small Business
● Education
● Healthcare
● Non-profit

The education and healthcare categories were added in 1999, while the
government and non-profit categories were added in 2007.
The MBNQA award is named after the late Secretary of Commerce Malcolm
Baldrige, a proponent of quality management. The U.S. Commerce Department’s
National Institute of Standards and Technology manages the award, and ASQ
administers it.

THE SEVEN MBNQA CRITERIA CATEGORIES

Organizations that apply for the MBNQA are judged by an independent board of
examiners. Recipients are selected based on achievement and improvement in
seven areas, known as the Baldrige Criteria for Performance Excellence:
1. Leadership: How upper management leads the organization, and how the
organization leads within the community.
2. Strategy: How the organization establishes and plans to implement strategic
directions.
3. Customers: How the organization builds and maintains strong, lasting
relationships with customers.
4. Measurement, analysis, and knowledge management: How the
organization uses data to support key processes and manage performance.
5. Workforce: How the organization empowers and involves its workforce.
6. Operations: How the organization designs, manages, and improves key
processes.
7. Results: How the organization performs in terms of customer satisfaction,
finances, human resources, supplier and partner performance,
operations, governance and social responsibility, and how the organization
compares to its competitors.

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The 2019-2020 Baldrige Excellence Framework is available for the
business/nonprofit, healthcare, and education industries. The criteria focus on
managing all components of an organization, cybersecurity risks, and
understanding the role of risk management within a systems perspective of
organizational performance management.
Utilizing a systems perspective, the Baldrige Criteria have been used as a global
standard for organizational success because the leadership practices within have
been validated by more than 27 years of practice, expert review, and research.
The Baldrige Criteria use an approach that makes them adaptable for
manufacturers; businesses; and health care, education, and nonprofit
organizations around the world; this approach allows organizations to use the
Criteria requirements as a common language within their organizations, a
language that becomes the considerations to guide them to excellence.

The Development of the Baldrige Excellence Framework and Its Criteria

The development of the Baldrige Criteria has always been a collaborative one.
Prior to annual or biannual publication, the standards or requirements within the
Criteria are shared widely with quality experts, business executives, academics,
health care experts, government experts, and many others to ensure that they
always reflect the “leading edge of validated management practice” 4—a term first
coined by Arnold Weimerskirch, vice president of quality for Honeywell. In addition
to an expert review, the Criteria are reviewed by Baldrige overseers, who provide
advisory guidance to the Baldrige Performance Excellence Program that now
develops the Criteria. The Criteria are also reviewed by Baldrige judges and
examiners, who serve as volunteer

Use of the Baldrige Criteria can help organizations assess and improve their
performance, becoming more sophisticated about how to align all of their
processes to achieve desired results. That is important not only to the success of
manufacturing and service enterprises but also sectors such as health care and
education which are vital to the future of the economy and the well-being of
society. The Baldrige Award is given to only a few of the applicants because they
meet the highest standards. But in a sense, every organization that uses the
Baldrige Criteria for self-study and change can turn out to be a winner due to
their increased ability to learn, adapt, innovate, and achieve excellence.

The Standards, Core Values and Concepts, and Scoring Rubric of the
Baldrige Criteria

In the latest revision of the Baldrige Criteria for Performance Excellence, the
standards were published under the umbrella name Baldrige Excellence
Framework21 and include (1) the Core Values and Concepts that represent the
embedded beliefs and behaviors found in high-performing organizations and (2)
a scoring rubric that organizations can use to assess their performance.

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In the simplest terms, the Criteria have been defined as an “integrated
management framework”—a tool for understanding and managing organizational
performance. They are a set of questions that guide how to run any organization,
no matter its sector or size.

The Criteria are divided into process and results categories that represent all of
the components of a performance management system: leadership; strategy;
customers (or, in education and health care, students and patients, respectively);
measurement, analysis, and knowledge management; workforce; operations;
and results. They provide a systems perspective, meaning they look at alignment
and integration across an organization.

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 Core Values and Concepts Found in the Baldrige Framework

The Criteria are used to assess an organization's performance, helping the

organization identify its strengths, opportunities for improvement, and gaps/blind
spots. An assessment against the Baldrige Criteria has three elements. (1) In the

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Organizational Profile, the organization describes what is important to it (its
operating environment, key relationships, competitive environment, and strategic
context). (2) In responses to categories 1–7, the organization tells how it is
accomplishing what is important to it. (3) The scoring guidelines allow the
organization to assess how well it is accomplishing what is important to it: the
maturity of processes and their deployment, and the breadth and significance of the
organization’s results. Responses to the Criteria questions serve as an application
for the Baldrige Award and are used internally by organizations to self-assess their
own performance. Individual categories or items of the Criteria can be used as
focused study for personal or organizational learning, and many organizations seek
leadership development training in the Criteria.

Through the Baldrige Program, the Criteria facilitate the communication and
sharing of best practices among organizations. Many accreditation systems
(e.g., the Accreditation Council for Business Schools and Programs) and
standards are based on the Criteria or being revised to better align with them
(including ISO).

Many associations model their performance excellence programs on Baldrige

(e.g., the National Housing Quality Award and the American Health Care
Association/National Center for Assisted Living), and many small business
development centers, including the U.S. Small Business Administration, train
businesses and their executives on Baldrige principles.

The Criteria are used not only as an application for the Baldrige Award but as the
way to run an organization—even being called “A Road Map for the Future” by
Quality magazine.22 They offer something different than Lean Six Sigma, ISO,
Magnet, and other methodologies and strategies; the Baldrige Criteria offer an
organization-wide perspective that optimizes an entire system rather than just
focuses on pockets of excellence.

Using the Criteria as a Standard for Organizational Sustainability

As a set of organizational standards, the Criteria spell out through a systematic

approach how an organization can attain sustainability. The approach that Baldrige
examiners and others use23 begins with identifying an organization’s key factors:
attributes of an organization or its environment that influence the way the
organization operates and the key challenges it faces. Because each organization
will have unique key factors, an assessment using the seven Criteria categories will
be unique to that organization, no matter its size, sector, or country of origin.

The categories of the Criteria include all of the requirements that an organization
must consider to excel in that area. An assessment using the Baldrige approach will
help the organization identify its strengths and opportunities for improvement, as
well as prioritize its areas where improvement is needed to attain sustainability.

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 Categories and Items of the Baldrige Criteria

After an organization answers the Criteria requirements, the Baldrige approach 24 is

used to assess the organization’s operations using the evaluation factors approach,
deployment, learning, and integration for process categories, and levels, trends,
comparisons, and integration for results categories. A Baldrige examiner assessing
an organization for the Baldrige Award looks for approaches that are systematic;
systematic approaches are repeatable and use data and information to enable
learning. In other words, approaches are systematic if they build in the opportunity
for evaluation, improvement, innovation, and knowledge sharing, thereby enabling a
gain in maturity.

Approaches should also show deployment: how approaches are implemented in

different parts of an organization. Evidence of evaluation and improvement cycles for
processes, as well as the potential for innovation, is also part of the assessment.
Finally, an organization needs to show that process improvements are shared with
other appropriate units of an organization to enable organizational learning. The final
evaluation factor for process items is integration: alignment and harmonization
among processes, plans, measures, actions, and results. Such harmonization
generates organizational effectiveness and efficiencies.

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The second part of the Baldrige approach is used to assess an organization’s
results. Trends show the directions of results and rates of change in areas of
importance; a minimum of three historical data points is generally needed to
ascertain a trend. Trends represent historic and current performance and might span
five or more years or less than one year, depending on what is meaningful.
Comparisons show how results compare with those of other, appropriately selected
organizations. Integration is shown by including all important results and segmenting
them appropriately (e.g., by important customer, workforce, process, and product-
line groups).

The Wide-Ranging Impact of the Baldrige Framework on a Strong Global

Economy

The Baldrige Program also works closely with the Global Excellence Model
(GEM) Council that includes the European Foundation for Quality Management,
Japan Quality Award, Australian Organisational Excellence Foundation,
Confederation of Indian Industry, Fundação Nacional da Qualidade (Brazil),
Fundación Iberoamericana para la Gestión de la Calidad (Latin America), Instituto
para el Fomento a la Calidad Total (Mexico), Malaysia Productivity Center, and
SPRING Singapore. GEM meets annually to benchmark global excellence practices,
including conducting CEO roundtables and discussing the latest global management
trends. Of the Baldrige Program, the administrator of the Singapore excellence
award, Choy Sauw Kook, wrote, “The Baldrige Program has provided us with a
benchmark in terms of the development and enhancement of our framework, rigour
of assessment methodology, assessor development and recognition, as well as best
practice learnings. Within the [GEM] Council, the Baldrige Program is seen as the
leading excellence progamme, and SPRING Singapore, like other GEM Council
members, has always looked to Baldrige for the way forward.”

Standards are the world’s common language, and in the realm of organizational
performance excellence, and the measurement of organizational performance, there
are no more impactful standards than the ones found in the Baldrige Criteria for
Performance Excellence. These standards have become a common language for
every type of organization, touching countries around the globe. They have
contributed to the success of industries and subindustries within manufacturing,
business, health care, education, and nonprofits. Through this success, they have
helped hospitals save lives, educators to improve learning outcomes for children,
and businesses to create jobs and be more efficient. In the celebration of the global
importance of standards, the Baldrige Criteria rank as the gold standard for the
measurement and recognition of performance excellence—in other words, the
metrology of performance excellence—around the world.

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Classwork

Identify companies, agencies, or institutions that are recipients of the

Malcolm Baldrige National Quality Award.

Choose a company that is a recipient of the Baldrige Award and discuss

its best practices in quality management.

Make a brief comparison including similarities and differences of

MBNQA and ISO 9000 or ISO 9001:2015. You can use a matrix of
comparison.

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 LEAN SIX SIGMA

Introduction
Six Sigma is a method that provides organizations tools to improve the capability of their
business processes. This increase in performance and decrease in process variation helps lead
to defect reduction and improvement in profits, employee morale, and quality of products or
services.
"Six Sigma quality" is a term generally used to indicate a process is well controlled (within
process limits ±3s from the center line in a control chart, and requirements/tolerance limits
±6s from the center line).

Learning Objectives

Discuss and explain the differing opinions on the definition of Six

Sigma.
Define Lean Six Sigma
Compare and contrast Lean and Six Sigma.
Synthesize how Six Sigma is implemented.
Summarize the Six Sigma resources and Certifications
Discuss the tools and techniques for Six Sigma
DIFFERING OPINIONS ON THE DEFINITION OF SIX SIGMA
The differing definitions below have been proposed for Six Sigma, but they all share
some common threads:

● The use of teams that are assigned well-defined projects that have a direct
impact on the organization's bottom line.
● Training in "statistical thinking" at all levels and providing key people with
extensive training in advanced statistics and project management. These key
people are designated "Black Belts." Review the different Six Sigma belts,
levels, and roles.
● Emphasis on the DMAIC approach to problem solving: define, measure,
analyze, improve, and control.
● A management environment that supports these initiatives as a business
strategy.

Philosophy: The philosophical perspective of Six Sigma views all work as

processes that can be defined, measured, analyzed, improved, and controlled.
Processes require inputs (x) and produce outputs (y). If you control the inputs, you
will control the outputs. This is generally expressed as y = f(x).
Set of tools: The Six Sigma expert uses qualitative and quantitative techniques or
tools to drive process improvement. Such tools include statistical process control
(SPC), control charts, failure mode and effects analysis (FMEA), and process

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mapping. Six Sigma professionals do not totally agree as to exactly which tools
constitute the set.
Methodology: This view of Six Sigma recognizes the underlying and rigorous
DMAIC approach. DMAIC defines the steps a Six Sigma practitioner is expected to
follow, starting with identifying the problem and ending with the implementation of
long-lasting solutions. While DMAIC is not the only Six Sigma methodology in use, it
is certainly the most widely adopted and recognized.
Metrics: In simple terms, Six Sigma quality performance means 3.4 defects per
million opportunities (accounting for a 1.5-sigma shift in the mean).

Six Sigma Quality Performance

WHAT IS LEAN?

Lean was developed in Toyota as part of the Toyota Production System, which was
built around the work of Shewhart and Deming. Toyota had been a client of Deming
and established its operational management practices on the principles he taught.
The fundamental driver of Lean is the elimination of waste. In fact, a good
description of the Lean approach is, "a set of tools that assist in the identification and
the steady elimination of waste."
If a company is doing large scale, high-quantity production like Toyota; then a
process with waste in it means that company is creating large-scale, high quantity
waste. No company wants to do this. The Lean approach uses tools to analyze the
business process.

Five principles of lean manufacturing

1. Value
Value is determined by what the customer considers to be important within a
product or service, rather than what the individuals developing or delivering
the product or service consider important.
2. Value Stream
The set of business activities and steps involved in creating and delivering
products and services to the customer; it is the connection of the steps
together rather than considering each step in isolation.

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 3. Flow
The degree to which there is smooth uninterrupted flow of activities that add
value to the customer, rather than waste and inefficiency that impedes the
flow through the value stream.
4. Pull
The degree to which the value stream is only processing products and
services for which there is a customer demand, rather than creating
something and hoping someone wants it.
5. Perfection
The continuous assessment of value stream performance to identify and
improve the value created and delivered to the customer, rather than resisting
changes that improve the process of creating and delivering customer value.

Three types of waste

Using the terms of the Toyota Production System, the Lean methodology identifies
and strives to eliminate three types of waste:

1. Muda
Non-value-added work – pure waste.
2. Mura
Unevenness in flow – unpredictable variation requires compensation
elsewhere in the system.
3. Muri
Over-burdening resources beyond their normal rated capability – stresses
and damages resources so that they are unable to do a normal workload.

As you can probably tell from both lists, the principles of Lean can be applied to any
business process or operation, not just manufacturing. It is now used in literally all
functions and all industries.

What is Six Sigma?

Six Sigma was first developed at Motorola during the late 1980s. The methodology
was pioneered by Bill Smith, a quality engineer, whose goal was to improve the way
the quality and measurement systems worked so as to eliminate errors. The
Motorola systems tolerated error rates that created too much scrap, rework,
redundant testing and often customer dissatisfaction.
The Six Sigma approach focused on identifying and eliminating anything that caused
variation in the process. When the variation is gone, the process results can be
precisely predicted – every time. By designing the system so that these precisely
predictable results fall within the zone of acceptable performance from a customer
perspective, process errors are eliminated.

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But the engineers at Motorola went one step further. They knew from experience
that many process changes were not effective because they did not get to the root
cause of the problem. Also, the changes they made would not stick, as the operators
reverted to doing things in the original manner over time. Six Sigma was organized
with five phases to address these issues.

What are the five phases of Six Sigma?

1. Define

In this phase the boundaries for the process being analyzed are set and the
expectations or desired performance for that process are defined from a
customer perspective. This is to ensure a change does not degrade the
customer experience, but instead enhances it.

2. Measure

In this phase the current performance of the process, product or service is

measured to determine what is occurring, especially from a customer
perspective. This is to ensure the analysis and solution are based on actual
performance, not theoretical or anecdotal information.

3. Analyze

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 In this phase the process, product or service is analyzed using the measured
data to determine the source or sources of the variation that are causing the
problem. This is to ensure the true root cause(s) is identified and not just a
symptom.

4. Improve

In this phase the possible changes to the process, product or service are
assessed and a solution set of changes is designed and tested. This is to
ensure the solution creates the desired effect and that the variation is reduced
or eliminated.

5. Control

In this phase the changes are implemented, the supporting systems are also
updated and the process, product, or service is put under control – normally
statistical process control – to ensure the solution is fully implemented in a
sustainable manner and to identify if performance starts to degrade.

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The methodology of Six Sigma will work with any process, product or service that
has a definable performance goal and measurable characteristics, because the
methodology heavily relies on data.

Similarities and differences

Lean and Six Sigma have been combined because, although they are different, they
are complementary. The similarities allow them to mesh well. The differences ensure
that there are analytical tools and solution options available that will improve the
process, product, or service. It is due to the similarities that both types of analysis
can be done simultaneously on the same process, product, or service.

Similarities of Lean and Six Sigma

● Both rely on a definition of value that is based upon the customer experience.
The customer is king (or queen).
● Both use a process flow mapping approach to understand the process. Even
when the analysis is based upon a product or service, there is a process that
is associated with creating and delivering that product or service.
● Both rely on data for determining current performance and for determining the
impact of future performance. The data collected in a Lean Six Sigma project
can often be used to support both Lean analysis and Six Sigma analysis. The
reliance on data helps to ensure that the true root cause is identified.
● Both are applied using improvement projects that typically will be
implemented by a small cross-functional team. The duration of the project and
the size of the team will depend upon the scope and scale of the process,
product or service being analyzed for improvement.
● Both have migrated beyond the manufacturing operation and are now used
for all functions and for all internally facing and externally facing processes.
They are also used in all industries including industrial, consumer,
government, education, and non-profits.

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 ● Improvements based upon using either approach will normally both reduce
waste and reduce variation. Removing wasted steps and activities (muda)
eliminates sources of variation, and removing variation eliminates wasted
process capacity and steps associated with accommodating the variation
(mura and muri).

However, there are some differences in the two approaches. These differences do
not create a conflict, rather they provide multiple paths that can be used to reach a
similar destination. A Lean Six Sigma project should let the nature of the defect, as
defined by the customer value, and the current state of the process, product, or
service dictate which sets of tools are most appropriate. The final solution is often a
hybrid combination of both Lean improvements and Six Sigma improvements.

What is the difference between Lean and Six Sigma?

● Different focus for problem identification – Lean is focused on waste (muda,

mura, muri) and Six Sigma is focused on variation, any deviation from the
target performance.
● Different types of techniques – Lean primarily uses visual techniques for both
analysis and solution creation that are supported with data analysis. Six
Sigma primarily uses statistical techniques for analysis and solution creation
that are supported with data visualization. This leads to a myth that Lean is
easier than Six Sigma, because the visual analysis of Lean is easy to
understand, while many people are intimidated by Six Sigma’s numerical
analysis. The reality is that both types of analysis are easy to perform with
today’s statistical support tools.
● Different types of documentation for the solution – the Lean solution is
documented with a revised value stream map that leads to changes in
workflows and often changes in work instructions at many of the steps in the
process. The Six Sigma solution is documented with changes in setup
procedures and the control plan for monitoring the process and responding to
variation. It will also impact work instructions and frequently leads to changes
in the measurement approach or systems.

The two approaches are compatible in so many ways that it was easy to merge them
into one methodology to get the synergistic effect of combining them. Lean Six
Sigma, as it is normally practiced, avoids most of the pitfalls from earlier failed
approaches.
WHAT IS LEAN SIX SIGMA?
Six Sigma focuses on reducing process variation and enhancing process control,
whereas lean drives out waste (non-value-added processes and procedures) and
promotes work standardization and flow. The distinction between Six Sigma

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and lean has blurred, with the term "lean Six Sigma" being used more and more
often because process improvement requires aspects of both approaches to attain
positive results.
Lean Six Sigma is a fact-based, data-driven philosophy of improvement that values
defect prevention over defect detection. It drives customer satisfaction and bottom-
line results by reducing variation, waste, and cycle time, while promoting the use of
work standardization and flow, thereby creating a competitive advantage. It applies
anywhere variation and waste exist, and every employee should be involved.
Lean Six Sigma principles

Let us outline the principles that have helped to make Lean Six Sigma so effective. I
have been directly involved in the successful implementation of Lean Six Sigma in
many organizations, and I have done consulting in several organizations who had
tried and failed to implement an effective Lean Six Sigma program. In the successful
programs, the following principles were adopted. In the failed implementations, at
least one or more principle was not followed.
Addressing a real-world problem

Lean Six Sigma is both a top-down and bottom-up methodology. The top-down
element is associated with problem selection. The Lean Six Sigma project teams are
focused on real-world problems that are impacting customers and processes right
now. Often the team members are feeling the effect of the problem with rework and
repair activities or addressing customer complaints. This lends a sense of urgency
and importance to the project. It is not just "busy work," it is real work.
One of the reasons for the failure of the Quality Circle programs of the 1980s was
that every team could choose its own project. While this sounds great for
empowerment, often the projects selected were not real-world problems. In one
organization I worked with, one of the first projects selected by a team was to repaint
the lunch room and put up new curtains. Soon the whole initiative was viewed in the
organization as a "fun" party time activity, but not related to real business
improvement.
It is often hard to get the organization to recognize the importance of this
methodology for business success. Buy-in is much easier to achieve when both
management and the team understand the importance of identifying and fixing the

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problem. But management does not dictate a problem and solution. Rather the
analysis by the team determines the true root cause.
Analysis is accomplished by a team

A Lean Six Sigma project is normally staffed by a cross-functional team that is

involved with different aspects of the process being analyzed. Many business
processes are cross-functional, and a cross-functional analysis is needed to prevent
sub-optimization of the process. Improving one step at the expense of another step
does not eliminate waste or variation, it just moves it to a different step in the
process.
By including a cross-functional team, all the perspectives of the organizations that
are involved and impacted by the project are included in the problem analysis, and
even more importantly in the development of the solution. The in-depth knowledge of
the different team members is helpful for understanding the problem and the
implications of the data. These different perspectives are crucial to help the team
create a solution that addresses the immediate problem and often will help to
eliminate waste and variation in other aspects of the process.

Analysis is focused on a process

Lean Six Sigma is best used for analyzing processes. Even when the problem under
investigation is an obvious product problem, Lean Six Sigma will be much more
effective when it is applied to the process that designs or builds the product, rather
than looking at just the product itself. That is because the analysis is meant to
investigate and improve actions, and actions are the steps of processes. Actions
seldom happen in a vacuum with no impact from preceding or succeeding actions.

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Instead they must be considered in the context of the process in which they are
occurring. The Lean value stream map or Six Sigma process map provide a picture
of that process.
Analysis is based upon data

Lean Six Sigma relies on data, not guesses. The Lean value stream map is verified
with a walk-through of the process, and then data is collected at each step. The
current condition of the process, product or service is measured in the Measure
phase. This includes measuring the problem or defect and measuring anything that
is done correctly. The data that is captured is used for analysis to determine the
actual state of what is happening, not an assumed state. This analysis verifies the
underlying causes so that the correct problem is fixed. But the reliance on data does
not stop there. When a solution has been created, data is collected to determine if
the solution has truly fixed the problem. And then data is used to ensure the solution
stays in place and the problem does not return.
Understand the impact of the process sigma

This next principle is focused on the Six Sigma analysis. The practical impact of
sigma is that it represents the amount of normal variation that occurs. It is always
tied to a specific parameter or characteristic that is being measured. Same attributes
of a product or process will have virtually no variation. That attribute never changes,
no matter how often the product or process occurs. Other attributes do have

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variation. There is an average value, but there is uncertainty about any specific
instance. Sigma is the statistical measurement of that uncertainty.

● One sigma represents the boundaries for a little over two thirds of the
occurrences.
● Two sigma represents 95% of the occurrences.
● Three sigma represents over 99% of the occurrences.
● By the time you get out to six sigma, there are only about 3 chances in a
million that normal variation could cause the attribute being measured to be
that different from the average value.
Sigma represents variation, it says nothing about acceptability. An attribute could
have a very small sigma, essentially no variation. But if the average value of that
attribute is outside the bounds of what the customer finds acceptable, it just means
that it is always defective. By the same token, an attribute could have a very large
sigma, there is a high level of uncertainty. But if the customer has no expectations
concerning that attribute, it will always be acceptable regardless of the variation.
The reason the Lean Six Sigma methodology is concerned about sigma is not for the
purpose of customer acceptance. Rather when high variation and uncertainty exists
within key attributes or parameters, it causes the expense of extra time and money,
and it will often lead to the creation of defects. Remember, we are in a process and
the outputs of one step become the inputs of another step. When the inputs have a
great deal of uncertainty, which is indicated by a high sigma, the succeeding steps
should be able to accommodate the full range of possibilities for the value of that
attribute. That will often add cost and complexity. Lowering sigma can simplify and
streamline the entire process.

Solution addresses the real root cause(s)

Lean Six Sigma is one of the most powerful problem-solving and continuous
improvement methodologies because it identifies the characteristics of the real
problem. Some methodologies start with the assumption that every problem has a
unique or special cause, and if that cause can be identified and eliminated or

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controlled, the problem goes away. Other methodologies start with the assumption
that the problem is a common occurrence within the process. The process is
fundamentally flawed or inadequate and if the process were changed to avoid this
flaw or correct this inadequacy, the problem goes away.
Both goals are admirable and in fact are quite similar. But the way to fix the first
problem is to put in a place a "spot correction" to control the unique cause, and the
fix for the second approach is to re-engineer the process. Unfortunately, selecting
the wrong solution strategy does not improve the situation and can often make
things worse. Lean Six Sigma employs the tools to differentiate between whether the
problem is a special cause or a common cause. By making this differentiation, the
project team can go on to find the true root cause or causes. Also, the team can
create a solution strategy that will appropriately address the problem. If it is a special
cause, they can implement a special solution. If it is a common cause, they can
redesign the process.

Solution includes a control system to help it "stick"

Lean Six Sigma does not end with identifying the problem or even with implementing
a solution. The final phase of Lean Six Sigma is the Control phase. There is a
natural resistance to change in most organizations. For many people and systems,
change is hard. Habits must be broken, new methods learned, new information is
required. In the Lean Six Sigma Control phase, the solution is implemented, and the
organization begins to use it. While this is happening, the project team is ensuring all
the supporting systems are also updated to reflect any changes and they provide
training and coaching for process operators and managers on the use of the
solution. This even includes ensuring the control systems that monitor the process
are in place to identify if the process begins to revert to the previous behavior. The
project team does not declare victory and disband just because they have
successfully demonstrated their solution once. Rather they stick with it through a
statistically significant number of occurrences. This both demonstrates the solution

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really solved the problem and that the operators and managers are equipped and
able to manage the improved process.
INTEGRATING LEAN AND SIX SIGMA
Lean and Six Sigma both provide customers with the best possible quality, cost,
delivery, and a newer attribute, nimbleness. There is a great deal of overlap between
the two disciplines; however, they both approach their common purpose from slightly
different angles:
● Lean focuses on waste reduction, whereas Six Sigma
emphasizes variation reduction.
● Lean achieves its goals by using less technical tools such as kaizen,
workplace organization, and visual controls, whereas Six Sigma tends to
use statistical data analysis, design of experiments, and hypothesis testing.
Often successful implementations begin with the lean approach, making the
workplace as efficient and effective as possible, reducing waste, and using value
stream maps to improve understanding and throughput. If process problems remain,
more technical Six Sigma statistical tools may then be applied.
IMPLEMENTING SIX SIGMA
Six Sigma implementation strategies can vary significantly between organizations,
depending on their distinct culture and strategic business goals. After deciding to
implement Six Sigma, an organization has two basic options:

1. Implement a Six Sigma program or initiative

2. Create a Six Sigma infrastructure

Option 1: Implement a Six Sigma Program or Initiative

With this approach, certain employees (practitioners) are taught the statistical tools
from time to time and asked to apply a tool on the job when needed. The
practitioners might then consult a statistician if they need help. Successes within an
organization might occur; however, these successes do not build upon each other to
encourage additional and better use of the tools and overall methodology.
When organizations implement Six Sigma as a program or initiative, it often appears
that they only have added, in an unstructured fashion, a few new tools to their
toolbox through training classes. One extension of this approach is to apply the tools
as needed to assigned projects. It’s important to note, however, that the selection,
management, and execution of projects are not typically an integral part of the
organization.
Implementing a Six Sigma program or initiative can present unique challenges.
Because these projects are often created at a low level within the organization, they
may not have buy-in from upper management, which may lead to resistance from
other groups affected by the initiative. In addition, there typically is no one assigned
to champion projects across organizational boundaries and facilitate change.
A Six Sigma program or initiative does not usually create an infrastructure that leads
to bottom-line benefits through projects tied to the strategic goals of the organization.
Therefore, it may not capture the buy-in necessary to reap a large return on the
investment in training.

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For true success, executive-level support and management buy-in is necessary.
This can help lead to the application of statistical tools and other Six Sigma
methodologies across organizational boundaries.
Option 2: Create a Six Sigma Infrastructure
Instead of focusing on the individual tools, it is best when Six Sigma
training provides a process-oriented approach that teaches practitioners a
methodology to select the right tool, at the right time, for a predefined project. Six
Sigma training for practitioners (Black Belts) using this approach typically consists of
four weeks of instruction over four months, where students work on their projects
during the three weeks between sessions.
Deploying Six Sigma as a business strategy through projects instead of tools is the
more effective way to benefit from the time and money invested in Six Sigma
training.
Consider the following Six Sigma deployment benefits via projects that have
executive management support:

● Offers bigger impact through projects tied to bottom-line results

● Utilizes the tools in a more focused and productive way
● Provides a process/strategy for project management that can be studied and
improved
● Increases communications between management and practitioners via
project presentations
● Facilitates the detailed understanding of critical business processes
● Gives employees and management views of how statistical tools can be of
significant value to organizations
● Allows Black Belts to receive feedback on their project approach during
training
● Deploys Six Sigma with a closed-loop approach, creating time for auditing
and incorporating lessons learned into an overall business strategy

A project-based approach relies heavily on a sound project selection process.

Projects should be selected that meet the goals of an organization’s business
strategy. Six Sigma can then be utilized as a road map to effectively meet those
goals.
Initially, companies might have projects that are too large or perhaps are not chosen
because of their strategic impact to the bottom line. Frustration with the first set of
projects can be vital experience that motivates improvement in the second phase.
Six Sigma is a long-term commitment. Treating deployment as a process allows
objective analysis of all aspects of the process, including project selection and
scoping. Utilizing lessons learned and incorporating them into subsequent waves of
an implementation plan creates a closed feedback loop and real dramatic bottom-
line benefits if the organization invests the time and executive energy necessary to
implement Six Sigma as a business strategy!
Benefits of Lean Six Sigma
Lean Six Sigma is a continuous improvement methodology. However, a legitimate
question is, what does it improve? Does it increase sales or profits? Does it improve

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customer satisfaction and lower complaints? Does it lower costs, improve incoming
quality, outgoing quality or the cost of quality? Does it improve employee morale?
Does it increase your pay and benefits, or improve your promotability? Does it create
world peace and solve world hunger? "Yes" to all of these – except the last two.
Let’s look at benefits for the business and then benefits for the individuals who attain
a level of certification in Lean Six Sigma.

Organizational benefits

1. Simple processes
Lean Six Sigma will simplify the business processes. The cross-functional value
stream maps will identify areas of waste and inefficiency. Many of the processes
have embedded rework and workarounds for persistent problems. When the wasted
effort is removed and the rework and workarounds are no longer needed, the
remaining processes are simple and often much easier to manage and control. This
results in a faster process, which leads to better customer service and higher
customer satisfaction. Both of those will normally lead to greater sales. In addition,
the simpler, faster process will lower overhead costs which will increase profits.
Finally, simpler processes have fewer opportunities for errors. Therefore, they
normally are characterized by higher quality and fewer defects.

2. Fewer errors and mistakes

Let us dig deeper into that benefit of fewer errors and mistakes. Lean Six Sigma
starts with a definition of acceptable quality based upon what the customers value.
This external focus on quality prioritizes the continuous improvement efforts to
address the problems that have the most impact on business success. In addition,
the reliance on data to define problems rather than gut feel or anecdotes further
prioritizes the improvement effort on the real problems in the organization. The result
is that the improvements fix real problems and bring them to a level that is
acceptable to the real customers. So, it is not just that Lean Six Sigma addresses
errors and mistakes in the business, but rather that Lean Six Sigma addresses the
errors and mistakes that matter the most.

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3. Predictable performance
Simple processes are easier to control and manage than complex processes,
especially those processes with fewer errors and mistakes. But added to these
benefits, Lean Six Sigma has a focus on reducing variation within a process. With
less variation, processes become more predictable. That means predictable cycle
time, predictable quality output, and predictable costs. And these can lead to better
customer service, fewer complaints, and higher profits. This predictability becomes a
tremendous advantage for an organization when operating in an environment of fast-
moving changes. Changing technology and customer expectations are already
creating an unstable business environment. Without predictable processes it is
almost impossible to create and implement an appropriate reaction to this instability.

4. Active control
Which brings me to the final organizational benefit I want to discuss and that is an
improved ability to actively control processes. The Lean Six Sigma methodology
shortens cycle times and puts in place real-time data-based control plans and
systems. With short cycle times and data-based control systems, the operators and
process managers can make decisions that immediately impact process
performance. This improves performance, improves employee morale, and improves
agility. The operators understand how their work impacts the process performance
and they get rapid feedback. The operators are less likely to feel that they are
victims of the process since they are now involved in directly managing the process
and improving it. With short cycles and active control, the organization can quickly
respond to opportunities in the changing marketplace. And short efficient processes
that are documented with value stream maps and control charts are easier to update
than complex undocumented processes.

Personal benefits

1. Personal effectiveness
Lean Six Sigma provides a structured problem-solving methodology that can be
used to address any type of problem. Being able to find and fix problems will
improve your ability to perform in any position and industry. The Lean Six Sigma
methodology steers you through an organized process of inquiry, analysis, problem
identification and solution creation. Many of the tools and techniques can be applied
to everyday problems and issues. But even if you do not use all the tools, the
organized problem-solving approach will put you in control of finding and fixing your
problems. I have used this approach when fixing problems at my house, with local
charities I support, and of course in many different business settings.

2. Leadership opportunity
Lean Six Sigma is implemented through projects and projects have leaders. Leading
a Lean Six Sigma project will often provide an opportunity for exposure to other

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functions and senior management. This exposure is in the context of someone who
can find and fix a problem. Interacting with team members and managers will likely
improve your communication and decision-making skills. The structure of Lean Six
Sigma can help you to develop your project management skills. And of course being
able to put on your resume that you led a project team that achieved cost savings,
quality improvement, and cycle time reduction will only help you as you seek that
next promotion or new opportunity.

3. Pay and promotability

Which brings us to the pay and promotability of Lean Six Sigma practitioners.
Attaining belt certification is a valuable credential on your resume. Many job postings
require that an applicant have a Lean Six Sigma credential. So, this will open the
door for some promotions. In addition, within an organization, promotions are often
based upon how you have demonstrated your leadership skills. Effectively leading a
Lean Six Sigma project shows senior management and HR that you are ready for
greater responsibility. The average annual salary in the USA for Lean Six Sigma
Black belts is just under $100,000. The average for your industry and country will
vary. However, it is safe to say that Lean Six Sigma certification will enhance your
earning potential.
SIX SIGMA RESOURCES
You can also search articles, case studies, and publications for Six Sigma
resources.
Books

The Certified Six Sigma Master Black Belt Handbook

The Certified Six Sigma Black Belt Handbook
The Certified Six Sigma Green Belt Handbook
The Certified Six Sigma Yellow Belt Handbook
Case Studies
Pitch Perfect (Lean & Six Sigma Review) Learning the ins and outs of capability
analysis by examining a baseball pitcher’s performance.
The More The Merrier (Six Sigma Forum Magazine) It is well known in the world of
quality that Lean and Six Sigma (LSS) initiatives are not likely to succeed or be
implemented without the support of high-level management. In three case studies,
this concept is demonstrated using real examples.
Save Your Steps (Six Sigma Forum Magazine) Linde Group, a gases and
engineering organization, conducted process makeovers at several North American
facilities to improve process efficiency using lean and Six Sigma principles.
Mega Pack Line Blow-Up: DMAIC Roadmap Leads Boston Scientific Heredia to
Reengineer Packaging Lines (PDF)  Using a DMAIC roadmap to identify and
achieve positive results, the Mega Pack Line Blow-Up Project at Boston Scientific,
Heredia (Costa Rica) resulted in a savings of more than $100,000 and positively
affected many other aspects of production.

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Articles
Lean Six Sigma Deployment And Maturity Models: A Critical Review (Quality
Management Journal) The study signals an important need for scientific insight in
the process of implementing approaches such as LSS, and for a more effective
translation of established theory in organizational development to forms practitioners
can use.
Human Side Of Six Sigma: Positive Feedback (Six Sigma Forum Magazine) This
article explores the idea that for a lean Six Sigma project to be successful, team
members and others involved in the process must be vigilant about giving positive
feedback when commendable behavior is observed.
Expanding The Gift Of Quality: Tips For Translating Lean Six Sigma Concepts
For Transactional Environments (Division Conferences) Use of Lean Six Sigma
(LSS) tools and techniques is common practice in manufacturing areas but may not
be as common away from the manufacturing floor. This presentation shares lessons
learned about translating and applying LSS concepts in a transactional environment.
Webcasts
Lean Six Sigma in the Age of Artificial Intelligence Michael L. George, Sr., CEO
of AI Technologies, using practical manufacturing examples and a case study,
explains what AI is, why it’s important for analyzing Big Data and shedding light on
Dark Data, and how it can be applied to your Lean Six Sigma and continuous
improvement efforts to give you a substantial competitive advantage.
The Lean & Six Sigma Review Webcast Incoming editor, Dr. Jami Kovach, walks
us through a brief overview of the new Lean & Six Sigma Review, highlighting new
columns, features, FAQs, and hot topics.
SIX SIGMA CERTIFICATIONS
Six Sigma projects can bring benefits, including increased organizational efficiency,
improved customer satisfaction, reduced costs, increased revenues, and more.
The Certified Six Sigma Black Belt Handbook reports that many Six Sigma Black
Belts "manage four projects per year for a total of $500,000-$5,000,000 in
contributions to the company’s bottom line."
Certified Six Sigma Yellow Belt (CSSYB)

The Certified Six Sigma Yellow Belt is aimed at those new to the world of Six Sigma
who have a small role, interest, or need to develop foundational knowledge. Yellow
belts can be entry level employees who seek to improve their world or executive
champions who require an overview of Six Sigma and DMAIC.

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An organization can have many Yellow Belts. These individuals are team members
on a Lean Six Sigma project led by a Green Belt or Black Belt. They should be
familiar with the structured methodology and the use of cross-functional tools and
techniques.

● They will participate in all the project team meetings acting in the role of
subject matter expert for their function or discipline. This role is performed in
conjunction with their normal full-time job or position.
● A project will have as many or as few Yellow Belt members as are needed
based upon the scope of the process being investigated and the nature of the
problem.
● The training for a Yellow Belt normally focuses on the structure of the
methodology and the use of the cross-functional problem-solving tools and
techniques.
● The detailed Lean and Six Sigma analysis is normally handled by the Green
Belt or Black Belt who is leading the project. However, the Yellow Belt team
members are often the ones who collect the data used in analysis and help to
interpret the results of the analysis.
● The Yellow Belt team members will also lead the implementation of the
solution within their respective function or discipline.
● It is common for a person with Yellow Belt certification to be a member of
multiple Lean Six Sigma project teams.
Certified Six Sigma Green Belt (CSSGB)
The Certified Six Sigma Green Belt operates in support of or under the supervision
of a Six Sigma Black Belt, analyzes and solves quality problems and is involved in
quality improvement projects. A Green Belt is someone with at least three years of
work experience who wants to demonstrate his or her knowledge of Six Sigma tools
and processes.

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An organization will have multiple Green Belts. The Green Belt role is normally that
of a project leader. The Green Belt is typically working on Lean Six Sigma projects
that would fall within their area of expertise and responsibilities. These individuals
know the Lean Six Sigma methodology and structure. They are also able to apply
the Lean analysis tools and the statistical techniques commonly used with Six
Sigma.

● These individuals lead small projects or projects that are focused on just one
function. This role is normally performed in conjunction with another full-time
position.
● Most Green Belts are leading a project that is associated with improving some
aspect of their business processes. In some cases, a Green Belt may be
assigned to a large cross-functional project being led by a Black Belt.
● Large cross-functional projects often have multiple analyses occurring
simultaneously and a Green Belt will lead each of those efforts.
● As project leader, the Green Belt is responsible for ensuring that appropriate
Lean Six Sigma tools and techniques are used at each phase on the project.
● This individual will normally lead the presentation and discussion of the
project at the phase gate reviews. Because this individual is often the only
person on the project who has been trained in the Lean analysis techniques
and the statistical Six Sigma techniques, they will conduct these analyses.
● The Green Belt is not the subject matter expert on all aspects of the process
or product, but they often are the expert on some portion of the process or
product. As such they must bring their subject matter expertise to bear in the
same way in which a Yellow Belt functions. However, the Green Belt is not
expected to be an expert on all aspects of the advanced Lean Six Sigma tools
and techniques. When they run into problems, they turn to their Black Belt for
advice and coaching.

Certified Six Sigma Black Belt (CSSBB)

The Certified Six Sigma Black Belt is a professional who can explain Six Sigma
philosophies and principles, including supporting systems and tools. A Black Belt
should demonstrate team leadership, understand team dynamics and assign team

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member roles and responsibilities. Black belts have a thorough understanding of all
aspects of the DMAIC model in accordance with Six Sigma principles. They have
basic knowledge of lean enterprise concepts, are able to identify non-value-added
elements and activities and are able to use specific tools.

An organization will often have multiple Black Belts. The Black Belt role is that of
subject matter expert on Lean Six Sigma for a function or location within the
organization. These individuals lead large cross-functional projects and serve as
coaches for the Green Belts in that department or location. This is normally a full-
time position.
Black Belts know not only know how to apply the methodology and tools, but they
are also the trainers and coaches for the Green Belts and Yellow Belts within the
organization. A typical day will include:

● Conducting a team meeting for one of the projects they are leading.
● Meeting with several Green Belts to review their progress and provide
coaching for their next steps.
● Performing value stream or statistical analysis with data from one of the
projects they are leading.
● Provide training on the use of Lean Six Sigma within their organization for
Yellow Belt and Green Belt candidates.
● Meet with organizational stakeholders to discuss status of projects and
identify problems or issues for future projects.

As you can see, the individual is usually expected to lead several projects
simultaneously while acting as coach for a handful of Green Belts who are leading
their own projects. The projects being led by Black Belts are usually large cross-
functional projects. As project leaders they must plan and organize the work. What is
often the most challenging aspect of those projects is to work with the stakeholders
from the various functions. In many organizations, the Black Belt role is reassigned
every year or two so that multiple individuals can become adept at all aspects of the
Lean Six Sigma methodology.

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Certified Six Sigma Master Black Belt (CSSMBB)

The final level is that of Master Black Belt. Most organizations will have only one
Master Black Belt, someone who is normally a senior individual responsible for
managing the Lean Six Sigma initiative within the organization. This is a full-time
position. Many times this Master Black Belt reports to the C-level champion for the
Lean Six Sigma initiative.

● From a training and certification standpoint, this individual has the same
credential as a Black Belt. However, the role and responsibilities are different.
● The Master Black Belt is not managing projects, rather they are managing the
initiative.
● The Master Black Belt is normally working closely with senior leadership to
determine how many Black Belts and Green Belts are needed and which
functional departments or locations should get them first.
● The Master Black Belt normally maintains a status report on the portfolio of
Lean Six Sigma projects; the active ones, the completed ones and the
proposed ones. As such they can assess the impact of the overall program on
the organization and they can prioritize the improvement efforts based upon
the organization’s strategy.
● These individuals also work with HR to maintain the training records of all the
Yellow Belts, Green Belts, and Black Belts in the organization.
● If an organization is small, or if the Lean Six Sigma initiative is small within the
organization, the role of the Master Black Belt will be assumed by one of the
organization’s Black Belts.

Lean Six Sigma tools and techniques

Many of the tools and techniques were in use long before the Lean Six Sigma
methodology was formulated and have been incorporated into this methodology.
One of the powerful aspects of Lean Six Sigma is that multiple tools are available for
use in each phase. A team can then choose the tool or technique that best fits their
unique situation. Organizations will often have a favorite set of techniques based
upon their corporate culture or historical preferences.

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These tools and techniques are organized based upon the types of analysis in which
they are used. Many of these could be used in multiple phases of a Lean Six Sigma
project, depending upon the problem and analysis being conducted.

Process analysis tools and techniques

Process analysis tools and techniques are often associated with the Lean portion of
the analysis. They help to describe the process and understand its efficiency.

● Process Map – a graphical display that shows the interactions between all
process steps and decisions points within a process. Each step is a separate
item on the process map.
● Value Stream Map – a special case of a process map that shows the primary
flow through a process when every step goes as planned (no rework or
branch points). It is the set of steps that create the customer value from the
process.
● As-Is Process – this the process map or value stream map that shows all the
steps in the process as it is occurring in the current business environment.
This is not necessarily the same as what is documented in the procedures.
● To-Be Process – this is the desired process map or value stream map after
the problem solution has been implemented. This is often reflected in revised
process documentation that is released as part of the implementation.
● Data Boxes – these are boxes on a process map or value stream map that
are associated with each step. The data box is used to record the metrics
associated with that step in the process such as cycle time, value-added time,
yield, inventory, or resources.
● TAKT Time – this is a time measure associated with the process. It reflects
the amount of time allowed for each process step that ensures the process
can meet the customer demand.
● Value Added Time – this is the portion of processing time within a step
where an element of customer value is being created on a single item flowing
through the process. The value-added time is normally a very low percentage
of total time within a step and is zero for many steps.

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 ● Roll Throughput Yield – this is a calculation of the likelihood that an item will
pass through every step in the process being correctly processed on the first
pass through that step. It is calculated by multiplying all the step yield values
from a value stream map.
● Work-cells – this is a process structure that is often used to speed up flow
through the process. All process steps are arranged together in a work cell
which reduces time wasted in handoffs between steps.
● Kanban – this is a visual scheduling approach used in process management
where a step provides a signal to the preceding step showing that it is ready
for the next item. This approach minimizes inventory and ensures each step
is working on the item that is currently most important for that step to process.
● Visual Control – this is a set of signaling approaches that allows operators to
see where process bottlenecks are occurring and to assist in the actions to
relieve those bottlenecks. This allows for real-time process management.

Visual analysis tools and techniques

Visual analysis tools and techniques are used with virtually every problem-solving
methodology. These techniques can be used in multiple phases. Their value is that
they are quick and easy to understand. They are also excellent communication
techniques with senior management and the operations or organizations that will be
affected by the solution.

● Histogram – this is a vertical bar chart that shows the relative size of different
categories of instances or occurrences. It is used to identify what attributes
are the largest contributors to a problem.
● Pareto Chart – this is special version of the histogram. It is organized so that
the largest category is first, the second largest is next, and continues to the
smallest category. If provides focus for improvement.
● Fishbone (Cause and Effect or Ishikawa) Diagram – this is a graphical
depiction of all the possible causes of the problem, organized into logical
categories. This becomes a roadmap for investigation to determine which of
the causes contributes to the problem.
● Scatter Diagram – this is a plot of two attributes associated with each data
point. One attribute is shown on the vertical axis and one on the horizontal

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 axis. The plot will reveal whether there is correlation between the two
attributes.
● Box Plots – this diagram shows the spread of data for a parameter and the
nature of any central tendency. The center half of the data points are shown
in a box with a line at the value of the midpoint in the box. The outer half of
the data is split into the upper and lower portions and shows the extremes
and overall data spread.
● Run Chart – this is a diagram of the sequential values for a parameter as a
process is operating. The values are either each successive product or result
or they are values collected at set times during process operation.
● Pie Chart – this is a diagram that shows the relative size of categories of a
parameter. They are shown as slices of a “pie” representing their percentage.
It is often used for “before” and “after” comparisons.
● Check Sheets – this is a diagram showing what is to be measured on a
product, process, or service. It will often include the measurement technique.
● Quality Function Deployment (QFD) – this technique is a diagram of how
the prioritized customer needs are deployed across product and process
parameters. It is often used to set performance goals and identified both
missed opportunities and wasted activity.
● Solution Selection Matrix – this tool is a matrix that compares solution
options across several criteria. When done using plus and minus symbols, it
becomes a Pugh Concept Generation Matrix. The other option is to assign
scores to each option and weights to the criteria. The matrix can then be used
to evaluate the options to select the one with the highest score.
● Bottlenecks – these are areas in a process map with tangled flow or steps
where inventory accumulates. Bottlenecks are collectors of waste. There is
waste associated with slow moving inventory and waste associated with the
extra management needed to accommodate the bottleneck.
● Poka Yoke – this is a set of disciplines that embody the principle of error-
proofing. Through the design of the product or process, checks are
embedded to prevent mistakes from being made or to make them
immediately obvious so they can be fixed.
● Five “S” Disciplines – these are a set of workplace organization disciplines
that are visual in nature and provide an indication of whether the workplace is
operating smoothly. Deploying the Five “S” Disciplines improves quality and
employee safety and morale.

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Statistical analysis tools and techniques

The statistical analysis tools and techniques are often associated with the Six Sigma
portion of the analysis. The statistical tools help us to make sense of the data and to
determine what is significant and what is not. The use of statistical software such as
Excel Analysis Tool Pak or the Minitab application has minimized the amount of
mathematical computation that the team members must do. However, they still need
to understand which statistical techniques to use in each situation and how to
interpret the results.

● Process Capability – this is a statistical ratio that compares the normal

process variability with the customer or specification limits. It is expressed
with process capability indices of Cp, Pp, Cpk, Ppk, or process sigma. The
process capability ratio is an excellent predictor of whether the process will be
able to deliver defect-free results.
● Descriptive Statistics – these are statistics that describe the normal
behavior of a measured parameter within a process or product. It includes the
mean, median, mode, and standard deviation.
● Inferential Statistics – these are statistics used to relate the statistical
performance of a sample to the statistical performance of the larger data
population that the sample represents. These statistics are based upon the
sampling approach used and include confidence interval and confidence
level.
● Measurement System Analysis – this is a comprehensive analysis of an
inspection or test systems ability to correctly determine a measured value
within a process or product. It includes an assessment of accuracy, precision,
stability, linearity, and discrimination.
● Correlation – this is a hypothesis test that is used to show whether two
continuous data parameters are related, and how they are related.
● Regression Tests – this is a hypothesis test that determines the
mathematical relationship between two or more continuous data parameters.
● T Tests – this family of hypothesis tests is used to compare the descriptive
statistics of two data samples to determine if they are similar.
● ANOVA – this technique is used to compare the descriptive statistics of two
or more data samples to determine if they are similar.

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 ● Tests of Proportions – this family of hypothesis tests is used to determine if
two samples of discrete data are similar.
● Chi-Square Test – this technique is used to determine if two or more
samples of discrete data are similar.
● Gage R&R – this is a subset of a typical measurement systems analysis that
focuses on the precision of the measurement system. It is a set of
experiments using products or processes with predetermined known values
and measuring them to determine whether the measurements system will
consistently assign the same values.
● Hypothesis Tests – These are statistical tests of a data set to determine
whether an assumption about the data can be verified or not. Typically, it is
used within Lean Six Sigma to determine if data samples are similar or if
there is a statistical difference. If data sets can be shown to be dissimilar, that
is an indication that the factor which separates the two data sets has a
significant impact on process or product performance. There are many
different statistical techniques used depending upon whether the data is
normal or non-normal, continuous, or discrete, and the number of data sets or
parameters being evaluated.
● Design of Experiments – this is a statistical technique for creating a set of
tests with test specimens that are designed to include or exclude certain
features and with attributes set at the minimum or maximum level. Based
upon the set of experiments, a best-case design can be created with the
appropriate design features and design targets. This technique is often used
when creating a new product or process during the Improve phase.
● Control Charts – these are charts that track the performance of selected
process or product parameters and determines whether the variation that is
displayed is due to common causes or special causes. There are many
different control chart designs, based upon the characteristics of the data and
the attribute being measured. These charts are normally used in the Control
phase as means of ensuring the improved process performance is sustained.

Project and team management tools and techniques

Lean Six Sigma projects must also be able to interact with stakeholders and
customers. There are several techniques that have proven effective in this regard.
Some of these are based upon understanding the perspective of external

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stakeholders and some of these are useful for organizing and communicating with
internal stakeholders, such as team members.

● Critical to Quality (CTQ) – these are the process, product, or service

parameters that are the attributes of customer value. They are determined by
the stakeholders, not the project team.
● Project Charter – this is a project management document used to authorize
the project and provide boundaries on the scope of the activity. The format
varies from organization to organization.
● In-frame/Out-of-frame – this technique is used to clarify boundaries for a
project team. The scope of the project is described in the frame. Areas that
are not to be included in the analysis are listed as out-of-frame.
● SIPOC – This stands for Supplier, Input, Process, Output, Customer. It is a
technique used to define the limits of the process that is being analyzed and
to clarify the stakeholders for the process.
● Cross-functional team – this refers to the makeup of the Lean Six Sigma
team. Normally there is at least one representative from each function who
has responsibility for performing activities within the process being studied.
● Team decision-making – this is a set of practices used by teams to reach
consensus when making decisions. Although many of the team conclusions
are determined by the results of the data analysis, there are still decisions to
be made in team operation, solution development, and implementation
planning.
● Stakeholder management – this is a set of practices that are used to identify
the key stakeholders for the Lean Six Sigma project. The key performance
goals and communication pattern are also established for each stakeholder.
● Culture change management – this is a set of communication and
implementation practices that focus on building buy-in and support for
changing processes and work practices. This is often needed during the
Improve and Control phases to ensure the solution is viable and sustainable.
● Implementation planning – the implementation of the solution is often a
project as big or bigger than the Lean Six Sigma analysis project. This is a set
of project management practices used to plan and execute a project.

Classwork

Summarize the Lean Six Sigma concept, phases, tools, and

techniques in a matrix format.

Write a simple example in your household of the Lean Six Sigma

implementation as a problem-solving tool highlighting the five phases. 
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 TOTAL QUALITY MANAGEMENT

Introduction
Total quality management (TQM) is a term first used to describe a management
approach to quality improvement. Since then, TQM has taken on many meanings.
Simply put, it is a management approach to long-term success through customer
satisfaction. TQM is based on all members of an organization participating in
improving processes, products, services, and the culture in which they work. The
methods for implementing this approach are found in the teachings of such quality
leaders as Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru
Ishikawa and Joseph M. Juran.

Learning Objectives Page 98 | 181

Identify the primary elements of TQM.
Discuss and explain the benefits of TQM.
PRIMARY ELEMENTS OF TQM
TQM can be summarized as a management system for a customer-focused
organization that involves all employees in continual improvement. It uses strategy,
data, and effective communications to integrate the quality discipline into the culture
and activities of the organization. Many of these concepts are present in
modern quality management systems, the successor to TQM. Here are the 8
principles of total quality management:
1. Customer-focused: The customer ultimately determines the level of
quality. No matter what an organization does to foster quality improvement
—training employees, integrating quality into the design process, or
upgrading computers or software—the customer determines whether the
efforts were worthwhile.

2. Total employee involvement: All employees participate in working toward

common goals. Total employee commitment can only be obtained after fear
has been driven from the workplace, when empowerment has occurred,
and when management has provided the proper environment. High-
performance work systems integrate continuous improvement efforts with
normal business operations. Self-managed work teams are one form of
empowerment.
3. Process-centered: A fundamental part of TQM is a focus on process
thinking. A process is a series of steps that take inputs from suppliers
(internal or external) and transforms them into outputs that are delivered to
customers (internal or external). The steps required to carry out the process
are defined, and performance measures are continuously monitored to
detect unexpected variation.

4. Integrated system: Although an organization may consist of many different

functional specialties often organized into vertically structured departments,
it is the horizontal processes interconnecting these functions that are the
focus of TQM.
▪ Micro-processes add up to larger processes, and all
processes aggregate into the business processes required for
defining and implementing strategy. Everyone must
understand the vision, mission, and guiding principles as well
as the quality policies, objectives, and critical processes of
the organization. Business performance must be monitored
and communicated continuously.
▪ An integrated business system may be modeled after
the Baldrige Award criteria and/or incorporate the ISO 9000
standards. Every organization has a unique work culture, and
it is virtually impossible to achieve excellence in its products
and services unless a good quality culture has been fostered.
Thus, an integrated system connects business improvement

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 elements to continually improve and exceed the expectations
of customers, employees, and other stakeholders.

5. Strategic and systematic approach: A critical part of the management of

quality is the strategic and systematic approach to achieving an
organization’s vision, mission, and goals. This process, called strategic
planning or strategic management, includes the formulation of a strategic
plan that integrates quality as a core component.

6. Continual improvement: A large aspect of TQM is continual process

improvement. Continual improvement drives an organization to be both
analytical and creative in finding ways to become more competitive and
more effective at meeting stakeholder expectations.

7. Fact-based decision making: To know how well an organization is

performing, data on performance measures are necessary. TQM requires
that an organization continually collect and analyze data to improve
decision making accuracy, achieve consensus, and allow prediction based
on history.

8. Communications: During times of organizational change, as well as part

of day-to-day operation, effective communications plays a large part in
maintaining morale and in motivating employees at all levels.
Communications involve strategies, method, and timeliness.

Primary Elements of Total Quality Management (TQM)

These elements are considered so essential to TQM that many organizations define
them, in some format, as a set of core values and principles on which the
organization is to operate. The methods for implementing this approach come from
the teachings of such quality leaders as Philip B. Crosby, W. Edwards
Deming, Armand V. Feigenbaum, Kaoru Ishikawa, and Joseph M. Juran. 
BENEFITS OF TOTAL QUALITY MANAGEMENT

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Total quality management benefits and advantages:
● Strengthened competitive position
● Adaptability to changing or emerging market conditions and to environmental
and other government regulations
● Higher productivity
● Enhanced market image
● Elimination of defects and waste
● Reduced costs and better cost management
● Higher profitability
● Improved customer focus and satisfaction
● Increased customer loyalty and retention
● Increased job security
● Improved employee morale
● Enhanced shareholder and stakeholder value
● Improved and innovative processes

Total Quality Management (TQM) Benefit: Methodology Creates

an Adaptive Organization

TQM IMPLEMENTATION AND SYSTEMS

When planning and implementing a total quality management system or quality

management strategy, there is no one solution for every situation or workplace.
Each organization is unique in terms of the culture, management practices, and the
processes used to create and deliver its products and services. Quality management
strategy vary from organization to organization; however, a set of primary
elements should be present in some format.

GENERIC STRATEGY MODEL FOR IMPLEMENTING TQM SYSTEMS

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 1. Top management learns about and decides to commit to TQM. TQM is
identified as one of the organization’s strategies.
2. The organization assesses current culture, customer satisfaction, and
quality management systems.
3. Top management identifies core values and principles to be used and
communicates them.
4. A TQM master plan is developed based on steps 1, 2, and 3.
5. The organization identifies and prioritizes customer demands and aligns
products and services to meet those demands.
6. Management maps the critical processes through which the organization
meets its customers’ needs.
7. Management oversees the formation of teams for process improvement
efforts.
8. The momentum of the TQM effort is managed by the steering committee.
9. Managers contribute individually to the effort through hoshin planning,
training, coaching, or other methods.
10. Daily process management and standardization take place.
11. Progress is evaluated and the plan is revised as needed.
12. Constant employee awareness and feedback on status are provided and a
reward/recognition process is established.

EXAMPLES OF TOTAL QUALITY MANAGEMENT SYSTEM STRATEGIES

Imprints of TQM concepts can be found in modern approaches to quality

management, such as the Malcolm Baldrige National Quality Award
(MBNQA) criteria, ISO 9001, Six Sigma and lean manufacturing, as well as the
examples below.

Total Quality Management (TQM) Implementation Strategies

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Strategy 1: The TQM element approach
The TQM element approach takes key business processes and/or organizational
units and uses the tools of TQM to foster improvements. This method was widely
used in the early 1980s as companies tried to implement parts of TQM as they
learned them. Examples of this approach include quality circles, statistical process
control, Taguchi methods, and quality function deployment.

Strategy 2: The guru approach

The guru approach uses the teachings and writings of one or more of the leading
quality thinkers as a guide against which to determine where the organization has
deficiencies. The organization makes appropriate changes to remedy those
deficiencies. For example, managers might study Deming’s 14 points or attend the
Crosby College. Afterward, they would work on implementing the approach learned.

Strategy 3: The organization model approach

In this approach, individuals or teams visit organizations that have taken a
leadership role in TQM and determine their processes and reasons for success.
They then integrate these ideas with their own ideas to develop an organizational
model adapted for their specific organization. This method was used widely in the
late 1980s and is exemplified by the initial recipients of the Malcolm Baldrige
National Quality Award.

Strategy 4: The Japanese total quality approach

Organizations using the Japanese total quality approach examine the detailed
implementation techniques and strategies employed by Deming Prize-winning
companies and use this experience to develop a long-range master plan for in-
house use. This approach was used by Florida Power and Light—among others—to
implement TQM and to compete for, and win, the Deming Prize.

Strategy 5: The award criteria approach

When using this model, an organization uses the criteria of a quality award (e.g., the
Deming Prize, the European Quality Award, or the Malcolm Baldrige National Quality
Award), to identify areas for improvement. Under this approach, TQM
implementation focuses on meeting specific award criteria.
Although some argue that this is not an appropriate use of award criteria, some
organizations do use this approach and it can result in improvement.

HISTORY OF TOTAL QUALITY MANAGEMENT

The history of total quality management (TQM) began initially as a term coined by

the Naval Air Systems Command to describe its Japanese-style management
approach to quality improvement. An umbrella methodology for continually improving
the quality of all processes, it draws on a knowledge of the principles and practices
of:
● The behavioral sciences

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 ● The analysis of quantitative and nonquantitative data
● Economics theories
● Process analysis

History of Total Quality Management (TQM)

1920s ● Some of the first seeds of quality management were planted as the
principles of scientific management swept through U.S. industry.
● Businesses clearly separated the processes of planning and carrying
out the plan, and union opposition arose as workers were deprived of
a voice in the conditions and functions of their work.
● The Hawthorne experiments in the late 1920s showed how worker
productivity could be impacted by participation.

1930s ● Walter Shewhart developed the methods for statistical analysis and

control of quality.

1950s ● W. Edwards Deming taught methods for statistical analysis and

control of quality to Japanese engineers and executives. This can be
considered the origin of TQM.
● Joseph M. Juran taught the concepts of controlling quality and
managerial breakthrough.
● Armand V. Feigenbaum’s book Total Quality Control, a forerunner for
the present understanding of TQM, was published.
● Philip B. Crosby’s promotion of zero defects paved the way for quality
improvement in many companies.

1968 ● The Japanese named their approach to total quality "companywide

quality control." It is around this time that the term quality
management systems arises.
● Kaoru Ishikawa’s synthesis of the philosophy contributed to Japan’s
ascendancy as a quality leader.

Today ● TQM is the name for the philosophy of a broad and systemic
approach to managing organizational quality.
● Quality standards such as the ISO 9000 series and quality award
programs such as the Deming Prize and the Malcolm Baldrige
National Quality Award specify principles and processes that

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 comprise TQM.
● TQM as a term to describe an organization's quality policy and
procedure has fallen out of favor as international standards for quality
management have been developed. Please see our series of pages
on quality management systems for more information.

W. EDWARDS DEMING’S 14 POINTS FOR

TOTAL QUALITY MANAGEMENT

Deming’s 14 Points on Quality Management, or the Deming Model of Quality

Management, a core concept on implementing total quality management (TQM), is a
set of management practices to help companies increase their quality and
productivity.

Deming's 14 Points for Total Quality Management

W. EDWARDS DEMING’S 14 POINTS

1. Create constancy of purpose for improving products and services.

2. Adopt the new philosophy.
3. Cease dependence on inspection to achieve quality.
4. End the practice of awarding business on price alone; instead, minimize
total cost by working with a single supplier.
5. Improve constantly and forever every process for planning, production, and
service.
6. Institute training on the job.
7. Adopt and institute leadership.
8. Drive out fear.
9. Break down barriers between staff areas.
10. Eliminate slogans, exhortations, and targets for the workforce.
11. Eliminate numerical quotas for the workforce and numerical goals for
management.

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 12. Remove barriers that rob people of pride of workmanship and eliminate the
annual rating or merit system.
13. Institute a vigorous program of education and self-improvement for
everyone.
14. Put everybody in the company to work accomplishing the transformation.

These total quality management principles can be put into place by any organization
to implement total quality management more effectively. As a total quality
management philosophy, Dr. Deming’s work is foundational to TQM and its
successor, quality management systems.

Classwork

Compare the Principles and/or elements of Total Quality Management,

ISO 9001, MBNQA, and Lean Six Sigma.  You can provide a matrix and
identify which principles or elements are common to all and which are not.

Discuss and explain the Primary Elements of TQM related to the simple
example that you have provided for the Lean Six Sigma exercise.  Identify
how these elements may be evident in your example.

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 QUALITY IMPROVEMENT TOOLS AND TECHNIQUES
Introduction

Quality professionals require both a strong foundation in managerial practices and

expertise in technical subjects. Assuring quality of products and services is
accomplished primarily by the appropriate use of statistical tools and other analytical
techniques for analyzing data; solving problems; designing; controlling and
improving processes; and reducing the potential for failure.

THE 7 BASIC QUALITY TOOLS FOR PROCESS IMPROVEMENT

Learning Objectives

Discuss and explain the Magnificent Seven Quality Control Tools.

Tell when to use the Quality Control Tools.
Describe how to use the Quality Control Tools
Discuss and explain the Problem Identification Tools
Tell when to use the Problem Identification and Process Improvement
Tools
Identify a problem and use the Quality Control and Process
Improvement Tools

"The Old Seven." "The First Seven." "The Basic Seven." “The Magnificent Seven”.
Quality pros have many names for these seven basic tools of quality, first
emphasized by Kaoru Ishikawa, a professor of engineering at Tokyo University and
the father of "quality circles."

1. Cause-and-effect diagram 

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(also called Ishikawa or fishbone diagrams): Identifies many possible causes for an
effect or problem and sorts ideas into useful categories.

Variations: cause enumeration diagram, process fishbone, time-delay fishbone, CEDAC

(cause-and-effect diagram with the addition of cards), desired-result fishbone, reverse
fishbone diagram 

This cause analysis tool is considered one of the seven basic quality tools. The fishbone
diagram identifies many possible causes for an effect or problem. It can be used to structure a
brainstorming session. It immediately sorts ideas into useful categories.

When to use a fishbone diagram:

● When identifying possible causes for a problem
● When a team’s thinking tends to fall into ruts
Fishbone Diagram Procedure

Fishbone Diagram Example

Materials needed: marking pens and flipchart or whiteboard.

1. Agree on a problem statement (effect). Write it at the center right of the
flipchart or whiteboard. Draw a box around it and draw a horizontal arrow
running to it.
2. Brainstorm the major categories of causes of the problem. If this is difficult
use generic headings:
▪ Methods
▪ Machines (equipment)
▪ People (manpower)
▪ Materials
▪ Measurement
▪ Environment
3. Write the categories of causes as branches from the main arrow.
4. Brainstorm all the possible causes of the problem. Ask "Why does this
happen?" As each idea is given, the facilitator writes it as a branch from the

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 appropriate category. Causes can be written in several places if they relate
to several categories.
5. Again ask "Why does this happen?" about each cause. Write sub-causes
branching off the causes. Continue to ask "Why?" and generate deeper
levels of causes. Layers of branches indicate causal relationships.
6. When the group runs out of ideas, focus attention to places on the chart
where ideas are few.

Fishbone Diagram Example:

This fishbone diagram was drawn by a manufacturing team to try to understand the
source of periodic iron contamination. The team used the six generic headings to
prompt ideas. Layers of branches show thorough thinking about the causes of the
problem.

Fishbone Diagram Example

For example, under the heading "Machines," the idea "materials of construction"
shows four kinds of equipment and then several specific machine numbers.
Note that some ideas appear in two different places. "Calibration" shows up under
"Methods" as a factor in the analytical procedure, and under "Measurement" as a
cause of lab error. "Iron tools" can be considered a "Methods" problem when taking
samples or a "Manpower" problem with maintenance personnel. 

2. Check sheet

A structured, prepared form for collecting and analyzing data; a generic tool that can
be adapted for a wide variety of purposes.

Also called: defect concentration diagram

This is a generic data collection and analysis tool that can be adapted for a wide variety of
purposes and is considered one of the seven basic quality tools.

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When to use a Check Sheet
● When data can be observed and collected repeatedly by the same person or at the
same location
● When collecting data on the frequency or patterns of events, problems, defects,
defect location, defect causes, or similar issues
● When collecting data from a production process

Check Sheet Procedure

1. Decide what event or problem will be observed. Develop operational definitions.
2. Decide when data will be collected and for how long.
3. Design the form. Set it up so that data can be recorded simply by making check
marks or X's or similar symbols and so that data do not have to be recopied for
analysis.
4. Label all spaces on the form.
5. Test the check sheet for a short trial period to be sure it collects the appropriate data
and is easy to use.
6. Each time the targeted event or problem occurs, record data on the check sheet.

Check Sheet Example

The figure below shows a check sheet used to collect data on telephone interruptions. The
tick marks were added as data was collected over several weeks.

Check Sheet Example

3. Control chart

Graph used to study how a process changes over time. Comparing current data to
historical control limits leads to conclusions about whether the process variation is
consistent (in control) or is unpredictable (out of control, affected by special causes
of variation).

Also called: Shewhart chart, statistical process control chart

Data are plotted in time order. A control chart always has a central line for the average, an
upper line for the upper control limit, and a lower line for the lower control limit. These lines
are determined from historical data. By comparing current data to these lines, you can draw

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conclusions about whether the process variation is consistent (in control) or is unpredictable
(out of control, affected by special causes of variation).

This versatile data collection and analysis tool can be used by a variety of industries and is
considered one of the seven basic quality tools.

Control charts for variable data are used in pairs. The top chart monitors the average, or the
centering of the distribution of data from the process. The bottom chart monitors the range,
or the width of the distribution. If your data were shots in target practice, the average is
where the shots are clustering, and the range is how tightly they are clustered. Control charts
for attribute data are used singly.

Control Chart Example

When to use a Control Chart

● When controlling ongoing processes by finding and correcting problems as they
occur
● When predicting the expected range of outcomes from a process
● When determining whether a process is stable (in statistical control)
● When analyzing patterns of process variation from special causes (non-routine
events) or common causes (built into the process)
● When determining whether your quality improvement project should aim to prevent
specific problems or to make fundamental changes to the process 

Basic Procedure
1. Choose the appropriate control chart for your data.
2. Determine the appropriate time period for collecting and plotting data.
3. Collect data, construct your chart and analyze the data.
4. Look for "out-of-control signals" on the control chart. When one is identified, mark
it on the chart and investigate the cause. Document how you investigated, what you
learned, the cause and how it was corrected.

Out-of-control signals
o A single point outside the control limits. In Figure 1, point sixteen is above
the UCL (upper control limit).

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 o Two out of three successive points are on the same side of the centerline
and farther than 2 σ from it. In Figure 1, point 4 sends that signal.
o Four out of five successive points are on the same side of the centerline and
farther than 1 σ from it. In Figure 1, point 11 sends that signal.
o A run of eight in a row are on the same side of the centerline. Or 10 out of
11, 12 out of 14, or 16 out of 20. In Figure 1, point 21 is eighth in a row
above the centerline.
o Obvious consistent or persistent patterns that suggest something unusual
about your data and your process.

Control Chart: Out-of-Control Signals

5. Continue to plot data as they are generated. As each new data point is plotted,
check for new out-of-control signals.
6. When you start a new control chart, the process may be out of control. If so, the
control limits calculated from the first 20 points are conditional limits. When you
have at least 20 sequential points from a period when the process is operating in
control, recalculate control limits.

4. Histogram

A frequency distribution shows how often each different value in a set of data
occurs. A histogram is the most used graph to show frequency distributions. It looks
very much like a bar chart, but there are important differences between them. This
helpful data collection and analysis tool is considered one of the seven basic quality
tools.

When to use a Histogram

Use a histogram when:

● The data are numerical
● You want to see the shape of the data’s distribution, especially when determining
whether the output of a process is distributed approximately normally

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 ● Analyzing whether a process can meet the customer’s requirements
● Analyzing what the output from a supplier’s process looks like
● Seeing whether a process change has occurred from one time period to another
● Determining whether the outputs of two or more processes are different
● You wish to communicate the distribution of data quickly and easily to others

Histogram Example

How to create a Histogram

● Before drawing any conclusions from your histogram, be sure that the process was
operating normally during the time period being studied. If any unusual events
affected the process during the time period of the histogram, your analysis of the
histogram shape likely cannot be generalized to all time periods.
● Analyze the meaning of your histogram's shape. Typical histogram shapes and what
they mean are covered below.

Histogram Worksheet Example

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TYPICAL HISTOGRAM SHAPES AND WHAT THEY MEAN

Normal Distribution
A common pattern is the bell-shaped curve known as the "normal distribution." In a normal
or "typical" distribution, points are as likely to occur on one side of the average as on the
other. Note that other distributions look like the normal distribution. Statistical calculations
must be used to prove a normal distribution.
It is important to note that "normal" refers to the typical distribution for a particular process.
For example, many processes have a natural limit on one side and will produce skewed
distributions. This is normal—meaning typical—for those processes, even if the distribution
is not considered "normal."

Skewed Distribution
The skewed distribution is asymmetrical because a natural limit prevents outcomes on one
side. The distribution’s peak is off center toward the limit and a tail stretches away from it.

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For example, a distribution of analyses of a very pure product would be skewed, because the
product cannot be more than 100 percent pure. Other examples of natural limits are holes that
cannot be smaller than the diameter of the drill bit or call-handling times that cannot be less
than zero. These distributions are called right- or left-skewed according to the direction of the
tail.

Double-Peaked or Bimodal
The bimodal distribution looks like the back of a two-humped camel. The outcomes of two
processes with different distributions are combined in one set of data. For example, a
distribution of production data from a two-shift operation might be bimodal, if each shift
produces a different distribution of results. Stratification often reveals this problem.

Plateau or Multimodal Distribution

The plateau might be called a “multimodal distribution.” Several processes with normal
distributions are combined. Because there are many peaks close together, the top of the
distribution resembles a plateau.

Edge Peak Distribution

The edge peak distribution looks like the normal distribution except that it has a large peak at
one tail. Usually this is caused by faulty construction of the histogram, with data lumped
together into a group labeled “greater than.”

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Comb Distribution
In a comb distribution, the bars are alternately tall and short. This distribution often results
from rounded-off data and/or an incorrectly constructed histogram. For example, temperature
data rounded off to the nearest 0.2 degree would show a comb shape if the bar width for the
histogram were 0.1 degree.

Truncated or Heart-Cut Distribution

The truncated distribution looks like a normal distribution with the tails cut off. The supplier
might be producing a normal distribution of material and then relying on inspection to
separate what is within specification limits from what is out of spec. The resulting shipments
to the customer from inside the specifications are the heart cut.

Dog Food Distribution

The dog food distribution is missing something—results near the average. If a customer
receives this kind of distribution, someone else is receiving a heart cut and the customer is
left with the “dog food,” the odds and ends left over after the master’s meal. Even though
what the customer receives is within specifications, the product falls into two clusters: one
near the upper specification limit and one near the lower specification limit. This variation
often causes problems in the customer’s process.

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5. Pareto chart

A bar graph that shows which factors are more significant.

Also called: Pareto diagram, Pareto analysis, 80 – 20 Rule, Vital Few Trivial Many

Variations: weighted Pareto chart, comparative Pareto charts

The lengths of the bars represent frequency or cost (time or money) and are arranged with
longest bars on the left and the shortest to the right. In this way the chart visually depicts
which situations are more significant. This cause analysis tool is considered one of the seven
basic quality tools.

When to use a Pareto Chart

● When analyzing data about the frequency of problems or causes in a process
● When there are many problems or causes and you want to focus on the most
significant
● When analyzing broad causes by looking at their specific components
● When communicating with others about your data
Pareto Chart Procedure

1. Decide what categories you will use to group items.

2. Decide what measurement is appropriate. Common measurements are frequency,
quantity, cost and time.
3. Decide what period of time the Pareto chart will cover: One work cycle? One full
day? A week?
4. Collect the data, recording the category each time, or assemble data that already
exist.
5. Subtotal the measurements for each category.
6. Determine the appropriate scale for the measurements you have collected. The
maximum value will be the largest subtotal from step 5. (If you will do optional
steps 8 and 9 below, the maximum value will be the sum of all subtotals from step
5.) Mark the scale on the left side of the chart.
7. Construct and label bars for each category. Place the tallest at the far left, then the
next tallest to its right, and so on. If there are many categories with small
measurements, they can be grouped as “other.”

Note: Steps 8 and 9 are optional but are useful for analysis and communication.

8. Calculate the percentage for each category: the subtotal for that category divided by
the total for all categories. Draw a right vertical axis and label it with percentages.
Be sure the two scales match. For example, the left measurement that corresponds
to one-half should be exactly opposite 50% on the right scale.
9. Calculate and draw cumulative sums: add the subtotals for the first and second
categories and place a dot above the second bar indicating that sum. To that sum
add the subtotal for the third category and place a dot above the third bar for that

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 new sum. Continue the process for all the bars. Connect the dots, starting at the top
of the first bar. The last dot should reach 100% on the right scale.

Pareto Chart Examples

Figure 1 shows how many customer complaints were received in each of five categories.

Figure 2 takes the largest category, "documents," from Figure 1, breaks it down into six
categories of document-related complaints, and shows cumulative values.
If all complaints cause equal distress to the customer, working on eliminating document-
related complaints would have the most impact, and of those, working on quality certificates
should be most fruitful.

Figure 1: Pareto Chart, Customer Complaints

Figure 2: Pareto Chart, Document Complaints

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 Pareto Chart Template Example
6. Scatter diagram

Graphs pairs of numerical data, one variable on each axis, to look for a relationship.
Also called: scatter plot, X-Y graph

The scatter diagram graphs pairs of numerical data, with one variable on each axis, to look
for a relationship between them. If the variables are correlated, the points will fall along a
line or curve. The better the correlation, the tighter the points will hug the line. This cause
analysis tool is considered one of the seven basic quality tools.

When to use a Scatter Diagram

● When you have paired numerical data
● When your dependent variable may have multiple values for each value of your
independent variable
● When trying to determine whether the two variables are related, such as:
o When trying to identify potential root causes of problems
o After brainstorming causes and effects using a fishbone diagram to determine
objectively whether a particular cause and effect are related
o When determining whether two effects that appear to be related both occur
with the same cause
o When testing for autocorrelation before constructing a control chart

Scatter Diagram Procedure

1. Collect pairs of data where a relationship is suspected.

2. Draw a graph with the independent variable on the horizontal axis and the
dependent variable on the vertical axis. For each pair of data, put a dot or a symbol
where the x-axis value intersects the y-axis value. (If two dots fall together, put
them side by side, touching, so that you can see both.)
3. Look at the pattern of points to see if a relationship is obvious. If the data clearly
form a line or a curve, you may stop because variables are correlated. You may

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 wish to use regression or correlation analysis now. Otherwise, complete steps 4
through 7.
4. Divide points on the graph into four quadrants. If there are X points on the graph:

o Count X/2 points from top to bottom and draw a horizontal line.
o Count X/2 points from left to right and draw a vertical line.
o If number of points is odd, draw the line through the middle point.

5. Count the points in each quadrant. Do not count points on a line.

6. Add the diagonally opposite quadrants. Find the smaller sum and the total of points
in all quadrants.
A = points in upper left + points in lower right
B = points in upper right + points in lower left
Q = the smaller of A and B
N = A + B
7. Look up the limit for N on the trend test table.

o If Q is less than the limit, the two variables are related.

o If Q is greater than or equal to the limit, the pattern could have occurred
from random chance.

Scatter Diagram Example

The ZZ-400 manufacturing team suspects a relationship between product purity (percent
purity) and the amount of iron (measured in parts per million or ppm). Purity and iron are
plotted against each other as a scatter diagram, as shown in the figure below.

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There are 24 data points. Median lines are drawn so that 12 points fall on each side for both
percent purity and ppm iron.
To test for a relationship, they calculate:
A = points in upper left + points in lower right = 9 + 9 = 18
B = points in upper right + points in lower left = 3 + 3 = 6
Q = the smaller of A and B = the smaller of 18 and 6 = 6
N = A + B = 18 + 6 = 24

Then they look up the limit for N on the trend test table. For N = 24, the limit is 6.
Q is equal to the limit. Therefore, the pattern could have occurred from random chance, and
no relationship is demonstrated.

Scatter Diagram Example

Additional Scatter Diagram Examples

Below are some examples of situations in which might you use a scatter diagram:
● Variable A is the temperature of a reaction after 15 minutes. Variable B measures the
color of the product. You suspect higher temperature makes the product darker. Plot
temperature and color on a scatter diagram.
● Variable A is the number of employees trained on new software, and variable B is
the number of calls to the computer help line. You suspect that more training reduces
the number of calls. Plot number of people trained versus number of calls.
● To test for autocorrelation of a measurement being monitored on a control chart, plot
this pair of variables: Variable A is the measurement at a given time. Variable B is
the same measurement, but at the previous time. If the scatter diagram shows
correlation, do another diagram where variable B is the measurement two times
previously. Keep increasing the separation between the two times until the scatter
diagram shows no correlation.

Scatter Diagram Considerations

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 ● Even if the scatter diagram shows a relationship, do not assume that one variable
caused the other. Both may be influenced by a third variable.
● When the data are plotted, the more the diagram resembles a straight line, the
stronger the relationship.
● If a line is not clear, statistics (N and Q) determine whether there is reasonable
certainty that a relationship exists. If the statistics say that no relationship exists, the
pattern could have occurred by random chance.
● If the scatter diagram shows no relationship between the variables, consider whether
the data might be stratified.
● If the diagram shows no relationship, consider whether the independent (x-axis)
variable has been varied widely. Sometimes a relationship is not apparent because the
data do not cover a wide enough range.

7. Stratification

A technique that separates data gathered from a variety of sources so that patterns
can be seen (some lists replace stratification with flowchart or run chart).

Stratification is defined as the act of sorting data, people, and objects into distinct groups or
layers. It is a technique used in combination with other data analysis tools. When data from a
variety of sources or categories have been lumped together, the meaning of the data can be
difficult to see. This data collection and analysis technique separates the data so that patterns
can be seen and is considered one of the seven basic quality tools.

When to use Stratification

● Before collecting data
● When data come from several sources or conditions, such as shifts, days of the week,
suppliers, or population groups
● When data analysis may require separating different sources or conditions

Here are examples of different sources that might require data to be stratified:
● Equipment
● Shifts
● Departments
● Materials
● Suppliers
● Day of the week
● Time of day
● Products

Stratification Procedure

1. Before collecting data, consider which information about the sources of the data
might influence the results. Set up the data collection so that you collect that
information as well.

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 2. When plotting or graphing the collected data on a scatter diagram, control
chart, histogram, or other analysis tool, use different marks or colors to distinguish
data from various sources. Data that are distinguished in this way are said to be
"stratified."
3. Analyze the subsets of stratified data separately. For example, on a scatter diagram
where data are stratified into data from source 1 and data from source 2, draw
quadrants, count points, and determine the critical value only for the data from
source 1, then only for the data from source 2.

Stratification Example

The ZZ-400 manufacturing team drew a scatter diagram to test whether product purity and
iron contamination were related, but the plot did not demonstrate a relationship. Then a team
member realized that the data came from three different reactors. The team member redrew
the diagram, using a different symbol for each reactor’s data (Figure 1).

Stratification Diagram

Now patterns can be seen. The data from reactor 2 and reactor 3 are circled. Even without
doing any calculations, for those two reactors, purity decreases as iron increases. However,
the data from reactor 1, the solid dots that are not circled, do not show that relationship.
Something is different about reactor 1.

Stratification Analysis Considerations

● Survey data usually benefit from stratification.
● Always consider before collecting data whether stratification might be needed during
analysis. Plan to collect stratification information.

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 ● On your graph or chart, include a legend that identifies the marks or colors used. 
 

Problem Identification and Process Improvement Tools

SIPOC+CM DIAGRAM

A SIPOC diagram is a data collection tool used by Six Sigma process improvement

teams to assist in gathering information about all relevant elements, including
suppliers, inputs, processes, outputs, and customers of a process. The +C stands
for constraints facing the system, and the +M for the measures to be used.

As a high-level view of the "as is" state of a process under investigation, use the
SIPOC diagram tool:

● Before constructing a flowchart since it helps gather relevant information

about the process.
● When first starting to investigate a process and a team needs to understand
the basics that make up the process.
● To record collective knowledge about a process in an easy-to-view format.
● To help make a concise communication to others about a process and the
parameters that it encompasses.

SIPOC+CM DIAGRAM PROCEDURE

Materials needed: Large writing surface (e.g., flip chart) and pen/marker.

1. On a large piece of paper, draw the SIPOC+CM diagram with seven blocks

indicating the components of SIPOC+CM (see Step 3).

2. Clearly identify the process under study and define the process boundaries
(i.e., the start and end points) so that everyone involved understands the
limits of the analysis.

3. In each of the seven SIPOC+CM component blocks, identify the data

available for each of the following:

o Suppliers: who or what (internal or external) provides the raw

materials, information, or technology to the process.

o Inputs: the material or information specifications that are needed by

the process.

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 o Process: a high-level flowchart of the key five to seven core
activities that comprise the process. This is a "35,000-foot" view of
the process. The detailed steps will be developed in the flowchart.

o Outputs: what the process produces as products, services, or

technology.

o Customers: the main users of the process’s output.

o +C: constraints facing the system or process.

o +M: measures being used or to be used.

4. Review the diagram for completeness with relevant stakeholders, sponsors,

and other interested parties.

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 High-level SIPOC+CM example
5 Whys
Getting to the Root of a Problem Quickly

Origins of the 5 Whys Technique

Sakichi Toyoda, the Japanese industrialist, inventor, and founder of Toyota

Industries, developed the 5 Whys technique in the 1930s. It became popular in the
1970s, and Toyota still uses it to solve problems today.

Toyota has a "go and see" philosophy. This means that its decision making is based
on an in-depth understanding of what's actually happening on the shop floor , rather
than on what someone in a boardroom thinks might be happening.

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The 5 Whys technique is true to this tradition, and it is most effective when the
answers come from people who have hands-on experience of the process or
problem in question.
The method is remarkably simple: when a problem occurs, you drill down to its root
cause by asking "Why?" five times. Then, when a countermeasure becomes
apparent, you follow it through to prevent the issue from recurring.

Note:

The 5 Whys uses "counter-measures," rather than "solutions." A countermeasure is

an action or set of actions that seeks to prevent the problem from arising again,
while a solution may just seek to deal with the symptom. As such, countermeasures
are more robust, and will more likely prevent the problem from recurring.

When to Use a 5 Whys Analysis

You can use 5 Whys for troubleshooting, quality improvement, and problem solving,
but it is most effective when used to resolve simple or moderately difficult problems.
It may not be suitable if you need to tackle a complex or critical problem. This is
because 5 Whys can lead you to pursue a single track, or a limited number of tracks,
of inquiry when, in fact, there could be multiple causes. In cases like these, a wider-
ranging method such as Cause and Effect Analysis  or Failure Mode and Effects
Analysis  may be more effective.

This simple technique, however, can often direct you quickly to the root cause of a
problem. So, whenever a system or process is not working properly, give it a try
before you embark on a more in-depth approach – and certainly before you attempt
to develop a solution.

The tool's simplicity gives it great flexibility, too, and 5 Whys combines well with
other methods and techniques, such as Root Cause Analysis . It is often associated
with Lean Manufacturing , where it is used to identify and eliminate wasteful
practices. It is also used in the analysis phase of the Six Sigma  quality improvement
methodology.
How to Use the 5 Whys

The model follows a very simple seven-step process:

1. Assemble a Team

Gather people who are familiar with the specifics of the problem, and with the
process that you are trying to fix. Include someone to act as a facilitator , who can
keep the team focused on identifying effective counter-measures.

2. Define the Problem

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If you can, observe the problem in action. Discuss it with your team and write a brief,
clear problem statement that you all agree on. For example, "Team A isn't meeting
its response time targets" or "Software release B resulted in too many rollback
failures."
Then, write your statement on a whiteboard or sticky note, leaving enough space
around it to add your answers to the repeated question, "Why?"

3. Ask the First "Why?"

Ask your team why the problem is occurring. (For example, "Why isn't Team A
meeting its response time targets?")
Asking "Why?" sounds simple, but answering it requires serious thought. Search for
answers that are grounded in fact: they must be accounts of things that have
happened, not guesses at what might have happened.

This prevents 5 Whys from becoming just a process of deductive reasoning, which
can generate many possible causes and, sometimes, create more confusion as you
chase down hypothetical problems.

Your team members may come up with one obvious reason why, or several
plausible ones. Record their answers as succinct phrases, rather than as single
words or lengthy statements, and write them below (or beside) your problem
statement. For example, saying "volume of calls is too high" is better than a vague
"overloaded."

4. Ask "Why?" Four More Times

For each of the answers that you generated in Step 3, ask four further "whys" in
succession. Each time frame the question in response to the answer you have just
recorded.

Tip:

Try to move quickly from one question to the next, so that you have the full picture
before you jump to any conclusions.
The diagram, below, shows an example of 5 Whys in action, following a single lane
of inquiry.

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 5 Whys Example (Single Lane)
The 5 Whys method also allows you to follow multiple lanes of inquiry. An example
of this is shown in Figure below.

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In our example, asking "Why was the delivery late?" produces a second answer
(Reason 2). Asking "Why?" for that answer reveals a single reason (Reason 1),
which you can address with a countermeasure.

Similarly, asking "Why did the job take longer than expected?" has a second answer
(Reason 2), and asking "Why?" at this point reveals a single reason (Reason 1).

Another "Why?" here identifies two possibilities (Reasons 1 and 2) before a possible
countermeasure becomes evident.
There is also a second reason for "Why we ran out of printer ink" (Reason 2), and a
single answer for the next "Why?" (Reason 1), which can then be addressed with a
countermeasure.

5 Whys Example (Multiple Lanes)

Step 5. Know When to Stop
You will know that you have revealed the root cause of the problem when asking
"why" produces no more useful responses, and you can go no further. An

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appropriate countermeasure or process change should then become evident. (As we
said earlier, if you're not sure that you've uncovered the real root cause, consider
using a more in-depth problem-solving technique like Cause and Effect
Analysis , Root Cause Analysis , or FMEA .)
If you identified more than one reason in Step 3, repeat this process for each of the
different branches of your analysis until you reach a root cause for each one.

Tip 1:

The "5" in 5 Whys is really just a "rule of thumb ." In some cases, you may need to
ask "Why?" a few more times before you get to the root of the problem.
In other cases, you may reach this point before you ask your fifth "Why?" If you do,
make sure that you have not stopped too soon, and that you're not simply accepting
"knee-jerk" responses.
The important point is to stop asking "Why?" when you stop producing useful
responses.

Tip 2:
As you work through your chain of questions, you may find that someone has failed
to take a necessary action. The great thing about 5 Whys is that it prompts you to go
further than just assigning blame, and to ask why that happened. This often points to
organizational issues or areas where processes need to be improved.

6. Address the Root Cause(s)

Now that you have identified at least one root cause, you need to discuss and agree
on the countermeasures that will prevent the problem from recurring.

7. Monitor Your Measures

Keep a close watch on how effectively your countermeasures eliminate or minimize

the initial problem. You may need to amend them or replace them entirely. If this
happens, it is a good idea to repeat the 5 Whys process to ensure that you have
identified the correct root cause.
 
Key Points

The 5 Whys strategy is a simple, effective tool for uncovering the root of a problem.
You can use it in troubleshooting, problem-solving, and quality-improvement
initiatives.

Start with a problem and ask why it is occurring. Make sure that your answer is
grounded in fact, and then ask the question again. Continue the process until you
reach the root cause of the problem, and you can identify a countermeasure that will
prevent it from recurring.

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Bear in mind that this questioning process is best suited to simple or moderately
difficult problems. Complex problems may benefit from a more detailed approach,
although using 5 Whys will still give you useful insights.

FAILURE MODE AND EFFECTS ANALYSIS (FMEA)

Also called: potential failure modes and effects analysis; failure modes, effects, and
criticality analysis (FMECA)

Begun in the 1940s by the U.S. military, failure modes and effects analysis (FMEA)
is a step-by-step approach for identifying all possible failures in a design, a
manufacturing or assembly process, or a product or service. It is a common process
analysis tool.

● "Failure modes" means the ways, or modes, in which something might fail.

Failures are any errors or defects, especially ones that affect the customer,
and can be potential or actual.

● "Effects analysis" refers to studying the consequences of those failures.

Failures are prioritized according to how serious their consequences are, how
frequently they occur, and how easily they can be detected. The purpose of the
FMEA is to take actions to eliminate or reduce failures, starting with the highest-
priority ones.

Failure modes and effects analysis also documents current knowledge and actions
about the risks of failures, for use in continuous improvement. FMEA is used during
design to prevent failures. Later it is used for control, before and during ongoing
operation of the process. Ideally, FMEA begins during the earliest conceptual stages
of design and continues throughout the life of the product or service.

Failure Modes and Effects Analysis Example

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WHEN TO USE FMEA

● When a process, product, or service is being designed or redesigned,

after quality function deployment (QFD)
● When an existing process, product, or service is being applied in a new way
● Before developing control plans for a new or modified process
● When improvement goals are planned for an existing process, product, or
service
● When analyzing failures of an existing process, product, or service
● Periodically throughout the life of the process, product, or service

FMEA PROCEDURE

Note: This is a general procedure. Specific details may vary with standards of your
organization or industry. Before undertaking an FMEA process, learn more about
standards and specific methods in your organization and industry through other
references and training.

1. Assemble a cross-functional team of people with diverse knowledge about

the process, product or service, and customer needs. Functions often
included are: design, manufacturing, quality, testing, reliability,
maintenance, purchasing (and suppliers), sales, marketing (and
customers), and customer service.
2. Identify the scope of the FMEA. Is it for concept, system, design, process,
or service? What are the boundaries? How detailed should we be?
Use flowcharts to identify the scope and to make sure every team member
understands it in detail.
3. Fill in the identifying information at the top of your FMEA form. (Figure 1
shows a typical format.) The remaining steps ask for information that will go
into the columns of the form.
4. Identify the functions of your scope. Ask, "What is the purpose of this
system, design, process, or service? What do our customers expect it to
do?" Name it with a verb followed by a noun. Usually one will break the
scope into separate subsystems, items, parts, assemblies, or process steps
and identify the function of each.
5. For each function, identify all the ways failure could happen. These are
potential failure modes. If necessary, go back and rewrite the function with
more detail to be sure the failure modes show a loss of that function.
6. For each failure mode, identify all the consequences on the system, related
systems, process, related processes, product, service, customer, or
regulations. These are potential effects of failure. Ask, "What does the

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 customer experience because of this failure? What happens when this
failure occurs?"
7. Determine how serious each effect is. This is the severity rating, or S.
Severity is usually rated on a scale from 1 to 10, where 1 is insignificant
and 10 is catastrophic. If a failure mode has more than one effect, write on
the FMEA table only the highest severity rating for that failure mode.
8. For each failure mode, determine all the potential root causes. Use tools
classified as cause analysis tools, as well as the best knowledge and
experience of the team. List all possible causes for each failure mode on
the FMEA form.
9. For each cause, determine the occurrence rating, or O. This rating
estimates the probability of failure occurring for that reason during the
lifetime of your scope. Occurrence is usually rated on a scale from 1 to 10,
where 1 is extremely unlikely and 10 is inevitable. On the FMEA table, list
the occurrence rating for each cause.
10. For each cause, identify current process controls. These are tests,
procedures, or mechanisms that you now have in place to keep failures
from reaching the customer. These controls might prevent the cause from
happening, reduce the likelihood that it will happen or detect
failure after the cause has already happened but before the customer is
affected.
11. For each control, determine the detection rating, or D. This rating estimates
how well the controls can detect either the cause or its failure mode after
they have happened but before the customer is affected. Detection is
usually rated on a scale from 1 to 10, where 1 means the control is
absolutely certain to detect the problem and 10 means the control is certain
not to detect the problem (or no control exists). On the FMEA table, list the
detection rating for each cause.
12. Optional for most industries: Ask, "Is this failure mode associated with a
critical characteristic?" (Critical characteristics are measurements or
indicators that reflect safety or compliance with government regulations and
need special controls.) If so, a column labeled "Classification" receives a Y
or N to show whether special controls are needed. Usually, critical
characteristics have a severity of 9 or 10 and occurrence and detection
ratings above 3.
13. Calculate the risk priority number, or RPN, which equals S × O × D. Also
calculate Criticality by multiplying severity by occurrence, S × O. These
numbers provide guidance for ranking potential failures in the order they
should be addressed.
14. Identify recommended actions. These actions may be design or process
changes to lower severity or occurrence. They may be additional controls to
improve detection. Also note who is responsible for the actions and target
completion dates.

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 15. As actions are completed, note results and the date on the FMEA form.
Also, note new S, O, or D ratings and new RPNs.

FMEA EXAMPLE

A bank performed a process FMEA on their ATM system. The Figure shows part of
it: the function "dispense cash" and a few of the failure modes for that function. The
optional "Classification" column was not used. Only the headings are shown for the
rightmost (action) columns.

Notice that RPN and criticality prioritize causes differently. According to the RPN,
"machine jams" and "heavy computer network traffic" are the first and second
highest risks.

One high value for severity or occurrence times a detection rating of 10 generates a
high RPN. Criticality does not include the detection rating, so it rates highest the only
cause with medium to high values for both severity and occurrence: "out of cash."
The team should use their experience and judgment to determine appropriate
priorities for action.

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VALUE STREAM MAPPING (VSM)

Also called: value stream analysis, lean process mapping

Value stream mapping (VSM) is defined as a lean tool that employs
a flowchart documenting every step in the process. Many lean practitioners see VSM
as a fundamental tool to identify waste, reduce process cycle times, and implement
process improvement.
VSM is a workplace efficiency tool designed to combine material processing steps
with information flow, along with other important related data. VSM is an essential
lean tool for an organization wanting to plan, implement, and improve while on its
lean journey. VSM helps users create a solid implementation plan that will maximize
their available resources and help ensure that materials and time are used
efficiently.
PROFITABLE APPLICATIONS OF LEAN VALUE STREAM MAPPING
The original VSM template was created by Toyota Motor Company and implemented
via material and process flowcharts. This VSM illustrated the necessary process
steps that existed from order entry to final product delivery and was useful for
gaining a wide-reaching view of the company’s activities. It allowed Toyota to
remove nonessential activities that created waste while maintaining the
manufacturing process.
The "value stream" portion of the VSM system centers on how value can be added
to a product or service by changing the market form or function to meet the
customer’s needs. This includes adding features and functionality to a product or
service that benefit the customer without increasing wasted time and materials (also
called muda, the Japanese term for waste) on the company’s side.
Scoping Out Your Value Stream Map
Understanding the scope of the value stream under examination is a good start
when planning your lean process or value stream map. This map is a single area in
your organization. However, when multiple plants, customers, or suppliers are
included, an extended level map is created.
Consider an extended level map as the view of the values stream at 60,000 feet, the
facility level map at 30,000 feet, and the process level map at 10,000 feet. It is best
to start at diagramming a facility level map before attempting to draw a process level
map or extended level map so you do not optimize one area and suboptimize
another.
Step 1: Form a Team to Create the Lean Value Stream Map
Form a cross-functional team of high-level managers and supervisors from
throughout your company. Representatives from multiple departments, such as
sales, customer service, inventory, operations, and beyond, will help ensure that
information can be passed freely back and forth, and that items do not slip through

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the cracks. Consider also adding important suppliers to this group because an
outside perspective can be helpful.
● The ideal team size is about 10 members. Small teams can miss important
items, while large teams can end up being difficult to manage and coordinate.
Step 2: The Kaizen Kick-Off – VSM Planning
After you’ve formed your VSM team, your next step is to hold a three-day kaizen
event (see Table 1). Kaizen is Japanese and means "change for the better." During
a kaizen, team members begin developing current and future plans.
Note: It’s important to include an individual with VSM experience to help facilitate
the kaizen event.

Value Stream Mapping, The Kaizen Kick-Off

At the kaizen event, the team must complete four important steps:
1. Determine the process family.
2. Draw the current state map.
3. Determine and draw the future state map.
4. Draft a plan to arrive at the future state.
Once these four steps have been completed and the team agrees with the plans and
tactics, the VSM team can proceed to the next steps.
Step 3: The Process Family – VSM Planning
A process family, also known as a product family, is a group of products or services
that go through the same or similar processing steps. To determine your process
family, create a matrix like the example shown in Figure 1 below.

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Value Stream Mapping, The Process Family Matrix
Along the top row, write all the process steps your organization performs from a
30,000-foot point of view.
● In the first column, write down the parts (e.g., components, stock keeping
units, finished good items, or services) your organization makes or provides.
● Place an X in the corresponding box if the part goes through the processing
step.
It is important that this step is applied to all cross-functional teams and key areas
within your company. This helps ensure all vital steps are included and no steps are
overlooked.
Step 4: Identifying Similarities
Examine the matrix and look for sections that have similar or identical processing
steps. Also look for sections that share about 80% of the steps. Consider items that
share many of the same steps and procedures that can be created together—by the
same workers using similar or related steps—more efficiently in a manufacturing
cell.
Once you’ve identified similarities, the team must then identify which process family
it will concentrate on first. The list below represents some common reasons for
picking certain areas, and they are areas that the VSM team should consider:
● Biggest "bang for the buck"
● Largest reduction in lead time or inventory

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 ● Biggest impact to the customer
● Highest probability for success
● Most visible to stakeholders
● New product or service line
● Volume or quantity
Step 5: Creating the Current State Map – VSM Planning
To create a current state map, collect the data and information by "walking the flow"
and interviewing the people who perform the task. This is beneficial for two reasons:
1. The team will have the opportunity to see the entire process and look for
waste.
2. The people who perform the work (e.g., operators, assemblers, technicians)
can answer questions and clarify any misconceptions or preconceived
notions on how tasks are performed.
When your team is "walking the flow," be sure to gather high-value information from
employees, including:
● Cycle time or processing time
● Changeover time
● Reliability of equipment
● First pass yield
● Quantities
● Number of operators and shifts
● Hard copy information
● Electronic information
● Inventory levels
● Queue or waiting times
The information gathered does not have to be perfect or overly detailed. If the data
provides a relatively clear picture of major issues, the team can begin building its
lean process map.
Step 6: Start by Creating the Basic VSM Template
Once your team has gathered and reviewed the information obtained while "walking
the flow," begin drawing the value stream map. Figure 2 below shows some
common examples and strategies with VSM template development.

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Value Stream Mapping Template Development
Key areas on the map are:
● The upper-right corner for customer information
● The upper-left corner for supplier information
● The top half of the paper for information flow
● The bottom half for material (or product) flow
● The gutters on top and bottom to calculate value added and nonvalue added
time
Calculate the cycle time vs. the inventory time (in days) for the material and
information flow. Each VSM will look slightly different depending on the process and
how it was drawn. Figure 3 below features an example of a VSM current state map
used for a metal fabricating company.

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Value Stream Mapping Current State Map Example
If this is one of the team’s first VSM kaizens, have the facilitator draw the map on a
large dry-erase board and then have the team members draw each of their own
maps on paper (ideally in pencil). The current state map is usually completed by the
second day, but it may need refining.
Step 7: Creating the Future State Map
● What is the takt time?
o Takt is the German word for the baton a conductor uses to control his
orchestra’s speed, beat, and timing. Takt time refers to how frequently
a part or component must be produced to meet your customers’
demand. The formula is the time available (per shift) divided by the
demand (per shift). For example:
▪ 22,000 seconds (time available)
▪ ÷ 200 pieces (demand)
▪ = 110 seconds/piece
● Are there bottlenecks or constraints?
o From the data collection during the kaizen, look at the cycle times or
processing times. If any of these are greater than your takt time, you
have a candidate for a bottleneck or constraint. This may be causing

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 overproduction waste or work in process (WIP) in some areas, or
extra processing time, such as overtime, to meet demand.
● Where can inventory (or queue time) be reduced or supermarkets used?
o A supermarket is a controlled inventory system—the downstream
process removes items from the shelf and the process owners
upstream replenish that amount to the supermarket.
o Look at raw material, WIP, buffer stock, safety stock, and finished
goods inventories to see whether these can be reduced. Does it make
sense to put in a supermarket replenishment system?
o The key is to find ways to reduce inventory in a logical manner. Also
look for opportunities for paperwork to flow and not sit around, like in
batching.
● Where can you improve flow?
o Is it possible to put materials into a cell or eliminate materials from
stopping and waiting? If flow improvement isn’t possible, could a "first
in, first out" lane be established between processes?
● What other improvements are required?
o For instance, does the reliability of equipment need to be improved?
Are the first pass yield or quality levels acceptable? Is training
in 5S (workplace organization) needed? Does a new layout for an
area need to be created?
On the VSM, place a kaizen burst (a sticky note or thought bubble) around any items
to signal improvement is needed. Items may include low equipment reliability or first
pass yield; long changeover times; large batches; any waste such as
overproduction, motion, transportation, waiting, defects, or adjustments; and over or
extra processing.
Step 8: Creating the VSM Draft Plan
During a typical VSM event, it is possible to create the draft plan based on the
information from the future state map. The plan will need further refinement,
especially in determining resources required, such as time, people, and budgets. A
good plan, as shown in the example below, will include the description of the project,
name of the project leader, possible team members, a schedule (or Gantt chart) of
events and deliverables, an estimate of costs, and the impact, goals, or benefits.

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Classwork

Identify a simple problem in your household activities and apply the

problem identification tools, quality control tools and process improvement
tools to make the necessary improvement.
Present an organization’s best practice in quality control and synthesize
the tools and strategies applied to improve their process.

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 CONTROL CHARTS

Introduction

The control chart is also called the Shewhart Chart or Statistical Process Control
Chart. It is a graph used to study how a process changes over time. Data are
plotted in time order. A control chart always has a central line for the average, an
upper line for the upper control limit, and a lower line for the lower control limit.
These lines are determined from historical data. By comparing current data to these
lines, you can draw conclusions about whether the process variation is consistent (in
control) or is unpredictable (out of control, affected by special causes of variation).
This versatile data collection and analysis tool can be used by a variety of industries
and is considered one of the seven basic quality tools.

Learning Objectives

To define what control charts are.

To explain In Spec and In Control.
To explain how to interpret control charts.
To compare different patterns of instability.
To discuss different types of control charts.

What are Control Charts?

● Control charts give a statistical signal that a process has gone out-of-
control so the operator can make the necessary adjustments to bring the
process back into control.

● The chart itself cannot control the process. The control chart provides a
signal so the operator can take action on the process.

● A process that is stable is in-control. If the process changes, we get a

signal from the control chart that it has gone out-of-control.

● Adjusting a process when it is not statistically out-of-control is considered

over-adjustment and results in increased process variation.

● Control charts can be used to measure product characteristics or in-

process parameters.

● Measuring an in-process parameter is the best way to monitor a process

because it may provide a signal that the process is going out-of-control
before bad product is made.

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What Control Charts Look Like

All control charts have four major sections:

● Information section
● Data section
● Graph section
● Comments section

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An area of the control chart that is often overlooked is the Comments section.

● If your process has gone out-of-control, the notes in this section will give
you clues as to why the process went out-of-control.

All control chart graphs have a centerline and upper and lower control limits.

● The centerline represents the process mean, or grand average, for the
process.

● The upper and lower control limits show the extents of the common cause
variation in the process. They approximate plus and minus three standard
deviations from the process mean.

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Interpreting Control Charts

There are patterns or rules that help us determine whether a process has gone
out-of-control.

● Four Western Electric rules.

● Five Automotive Industry Action Group (AIAG) rules.

● Your company may have rules based on these rules or on the rules from
other organizations.

✔ Both the Western Electric and AIAG rules cite the need to look for other
unnatural or non-random patterns of variation when interpreting control
charts.

Corrective action must be taken when one of these patterns develops.

● Your company will determine the exact steps you must take to correct the
situation.

Corrective action includes:

● Identifying the out-of-control situation,

● Looking at the Comments section to help determine why the process has
changed, and
● Making a correction.

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More Patterns of Instability

There are many statistically valid patterns of instability. Every pattern of

instability is based on the properties of the normal curve and the 68-95-99.7
Rule.

● Most are based on the Western Electric Handbook first published in 1954.

● Different organizations use slightly different variations of these patterns to

interpret control charts.

● Your industry or company may decide to modify these guidelines to suit

your unique manufacturing situation.

There are 4 tests of instability that many people know of as the Western
Electric Rules. In addition to these tests, the Western Electric Handbook also
identifies “14 Other Unnatural Patterns of Variation.”

● All are based on the probabilities and properties of the normal curve.

The 4 common Western Electric tests of instability are:

● Point outside the control limits.

● 2 of 3 points between 2s & 3s from the mean.
● 4 of 5 points between 1s & 3s from the mean.
● 8 points in a row on one side of the centerline.

The 14 Other (Western Electric) Unnatural Patterns of Variation are:

1. Cycles
2. Freaks
3. Gradual Change in Level
4. Grouping or Bunching
5. Instability
6. Interaction
7. Mixtures
8. Stable Forms of Mixture
9. Unstable Forms of Mixture.
10. Stratification
11. Sudden Shift in Level
12. Systematic Variables

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 13. Tendency of One Chart to Follow Another
14. Trends

The AIAG Rules for interpreting patterns of instability are:

● 1 point outside of control limits.
● Run of 7 points on one side of the mean.
● Trend up or down of 7 points in a row.
● Recurring cycles.
● Other non-random patterns.

The Nelson Rules were developed in the 1980s by Dr. Lloyd Nelson. Dr. Nelson
put numbers to some of the Western Electric Other Unnatural Patterns. Nelson
Rules are:

● 1 point outside of control limits.

● 2 of 3 points in zone A (between 2s and 3s from the mean).
● 4 of 5 in zones A or B (between 1s and 3s from the mean).
● Run of 9 on one side of the mean.
● 15 in a row near the centerline.
● Trend of 6 points in a row increasing or decreasing.
● 8 in a row not within 1s of the mean (on both sides of the mean).
● 14 points in a row that alternate up and down.

Boeing’s AQS (Advanced Quality System) Rules for interpreting control charts
are:

● 1 point outside of control limits.

● 2 of 3 points in zone A (between 2s and 3s from the mean).
● 4 of 5 in zones A or B (between 1s and 3s from the mean).
● Run of 8 on one side of the mean.
● Lumping.
● Mixtures.
● Trend.
● Recurring
cycles.
● Strays.

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 ● Process shifts.
● Few points within limits.
● Too few discrete levels.

The General Electric Six Sigma Rules for interpreting control charts are:
● 1 point outside of control limits.
● 2 of 3 points in zone A (between 2s and 3s from the mean).
● 4 of 5 in zones A or B (between 1s and 3s from the mean).
● Run of 8 on one side of the mean.
● Trend.
⮚ While Western Electric, AIAG, Nelson, Boeing, and GE Six Sigma “Rules”
may look different at first, they all have the same derivation.

Types of Control Charts

Control charts fall into two categories: Variable and Attribute Control Charts.

● Variable data are data that can be measured on a continuous scale such
as a thermometer, a weighing scale, or a tape rule.

● Attribute data are data that are counted, for example, as good or
defective, as possessing or not possessing a particular characteristic.

The type of control chart you use will depend on the type of data you are
working with.

● It is always preferable to use variable data.

● Variable data will provide better information about the process than
attribute data.

● Additionally, variable data require fewer samples to draw meaningful

conclusions.

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Using Variable Control Charts

Two types of charts are used to track variable data; one for averages and one
for ranges. These charts are commonly used together and are known as an X-
bar & R Chart.

● Raw data are not plotted on X-bar & R charts. Instead, samples of data
are collected in subgroups of 2 to 5 data points and the mean and the
range of those samples are plotted on the charts.

The Chart monitors the process center, or location.

● The subgroup mean (all of the points in the subgroup added up and
divided by the number of points in the subgroup) is plotted on the X-bar
Chart.

The R Chart monitors the process variation, or dispersion.

● The subgroup range (highest point minus the lowest point in the subgroup)
is plotted on the R Chart.

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As the data points for each subgroup are plotted, the points are connected to
the previous point and the charts are interpreted to determine if one of the out-
of-control patterns has occurred.

● Typically, only one of the charts will go out-of-control at any one time.

● Remember to add a comment on a chart to indicate the action taken to

correct an out-of-control situation.

Five Steps: Setting Up a Variables Control Chart

The five steps for setting up X-bar & R control charts are:

1. Collect and Calculate Subgroup Data

● Collect (at least) 20 subgroups of data from the process.

2. Calculate the Centerlines and Control Limits

● The formulas for calculating the centerlines and control limits are given in
Appendix 1. The control chart factors you will need for the limits can be
found in Appendix 2.

● Set the scales for the charts.

● Add the centerlines and control limits.

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3. Plot the Data

● Plot on both the X-bar and the R Charts.

4. Interpret the Control Chart

● If no points are outside the limits and there are no unusual patterns, the
process is stable.

● If more than two points are outside of the limits, it is not stable.

● If one point is outside the limits, drop it, recalculate the centerline and
limits, and replot the data. In this case, the process is stable if all points
are within the control limits.

5. Take Action – Use the calculated limits if the process is stable.

● Improve the process if it is not stable.

● You cannot use a control chart on an unstable process.

Special Control Charts for Special Applications

There are variations on the standard X-bar & R Charts which may be more
appropriate in certain manufacturing situations.

Variations on the R Chart include:

● R – Monitors range within a subgroup.

● MR – Monitors range between subgroups.

● RD – Monitors range of parameter difference.

● s – Monitors the process standard deviation.

Variation on the Chart include:

● X-Bar – Monitors the process location with subgroups.

● IX – Monitors single samples, not subgroups.

● X-Bard – Monitors the difference between the subgroup average and the

historical process average or the nominal of the specification.

● IXd – Monitors the difference between the individual value and the historical
process average or the nominal of the specification.

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Types of Variable Control Charts

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Individuals, Moving Range Control Charts

Average, Range and Moving Range Control Chart

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Moving Average, Moving Range Control Chart

Attribute Control Charts

Attribute Control Charts are a set of control charts specifically designed for

tracking defects (also called non-conformities). These types of defects are binary in
nature (yes/no), where a part has one or more defects, or it does not.

Examples of defects are paint scratches, discolorations, breaks in the weave of a

textile, dents, cuts, etc. Think of the last car that you bought. The defects in each
sample group are counted and run through some statistical calculations.

Depending on the type of Attribute Control Chart, the number of defective parts is
tracked (p-chart and np-chart), or alternatively, the number of defects is tracked (u-
chart, c-chart). The difference in terminology “number of defective parts” and
“number of defects” is highly significant, since a single part not only can have
multiple defect categories (scratch, color, dent, etc), it can also have multiple defects
per category. A single part may have 0 – N defects. So, keeping track of the number
of defective parts is statistically different from keeping track of the number of defects.
This affects the way the control limits for each chart are calculated.

p-Charts

The p-Chart, also known as the Percent or Fraction Defective Parts Chart, is the
most common of the Attribute Control Charts. For a sample subgroup, the number of

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defective parts is measured and plotted as either a percentage of the total subgroup
sample size, or a fraction of the total subgroup sample size. Since the plotted value
is a fraction or percent of the sample subgroup size, the size of the sample group
can vary without rendering the chart useless.

The p-Chart chart can also be used if the sample subgroup size varies from
sampling interval to sampling interval. In this case, the control chart high and low
limits vary from sample interval to sample interval, depending on the number of
samples in the associated sample subgroup. A low number of samples in the sample
subgroup make the band between the high and low limits wider than if a higher
number of samples are available. Both the Fraction Defective Parts and Percent
Defective Parts control charts come in versions that support variable sample sized
for a subgroup.

np-Chart

The np=Chart is also known as the Number Defective Parts, and Number Non-
Conforming Parts Chart for a sample subgroup, the number of defective parts is
measured and plotted as a simple count. Statistically, to compare number of
defective parts for one subgroup with the other subgroups, this type of chart requires
that the subgroup sample size be fixed across all subgroups. 

c-Chart

The c-Chart is also known as the Number of Defects or Number of Non-Conformities

Chart. For a sample subgroup, the number of times a defect occurs is measured and
plotted as a simple count. Statistically, to compare number of defects for one
subgroup with the other subgroups, this type of chart requires that the subgroup
sample size be fixed across all subgroups. 

u-Chart

The u-Chart is also known as the Number of Defects per Unit or Number of
NonConformities per Unit Chart. For a sample subgroup, the number of times a
defect occurs is measured and plotted as either a percentage of the total subgroup
sample size, or a fraction of the total subgroup sample size. Since the plotted value
is a fraction or percent of the sample subgroup size, the size of the sample group
can vary without rendering the chart useless.

The u-Chart chart can also be used if the sample subgroup size varies from
sampling interval to sampling interval. In this case, the control chart high and low
limits vary from sample interval to sample interval, depending on the number of
samples in the associated sample subgroup. A low number of samples in the sample
subgroup make the band between the high and low limits wider than if a higher
number of samples are available. 

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DPMO-Chart

The DPMO-Chart is also referred to as the Number Defects per Million chart. For a
sample subgroup, the number of times a defect occurs is measured and plotted as a
value normalized to defects per million. Since the plotted value is normalized to a
fixed sample subgroup size, the size of the sample group can vary without rendering
the chart useless. 

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 PROCESS CAPABILITY

Learning Objectives

To define and explain Process Capability.

To discuss how to measure process capability.
To classify different process capability indices.
To infer process capability study complications.
To discuss and explain Six Sigma Capability.

What is Process Capability?

● Process capability compares the process output with the customer’s

specification.

● The purpose of a process capability study is to compare the process

specification to the process output and determine statistically if the
process can meet the customer’s specification.

A capable process is:

● Stable and not changing.

● Can fit within the customer’s specification with a little extra room (usually
25%) to spare.

The less variation there is in a process, the more capable it will be of meeting the
customer’s specification.

Capable AND Centered

● When using process capability as a means for measuring how well our
process is producing compared to the customer’s requirements, it is not
good enough to just make sure the process is capable; it must also be
fairly well-centered.

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Measuring Process Capability

⮚ The primary measures of process capability used are the process capability
ratio, the process capability index, and the Cpk.

⮚ Some organizations also use Process Performance Indicators (Pp and Ppk),
which are related to Cp and Cpk.

Process Capability Ratio (Cr)

● Describes what portion of the specification the process is taking up. The
Cr should be no greater than 75% for the process to be considered
capable.

Process Capability Index (Cp)

● The inverse of the capability ratio. The Cp should be at least 1.33 for the
process to be considered capable.

Cpk

● The capability measure preferred in most industries because it indicates

whether it is capable and how well-centered the process is. The Cpk is the
smaller of the Cpu (capability of the upper half of the process) and the Cpl
(capability of the lower half of the process). Cpk = smaller of {Cpu, Cpl}

Conducting a Process Capability Study

The steps for conducting a process capability study are:

1. Preparing for the study.
2. Determining the process output.
3. Comparing the output to the spec.
4. Taking action to improve the process.

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A process capability study measures the capability of a specific piece of
equipment or a process under specific operating conditions.

● It is important to identify and record this information prior to the beginning

of the process capability study.

Step 1: Preparing for the Study

To prepare for the Study
● Define the processing conditions.
● Select a representative operator.
● Assure sufficient raw materials are available.
● Make sure the measurement system is reliable.
Step 2: Determining the Process Output
To determine the Process Output, run the process and collect data as you
would if you were setting up a Control Chart.
● Make sure the process is stable using the same methods as for setting up
a control chart.
● Since common process capability calculations are based on a stable,
normally distributed process, if the process is not stable, you should not
conduct a process capability study.
● Calculate the process mean and process variation for the measured
output.
Step 3: Comparing Process Output to the Spec
A specification normally consists of the Nominal, or Ideal, measure for the
product and tolerance, which is the amount of variation acceptable to the
customer. It is often referred to as “The Spec”.

● The distance between the upper spec limit (USL) and the lower spec limit
(LSL) is called the total tolerance, or T.T.
● The Cpk for a process is determined by calculating the Cpu and the Cpl.
The Cpk is the lower of those two numbers.

Step 4: Taking Action to Improve the Process

● There are a variety of activities that can be undertaken to improvement
process such as 8D Problem Solving or Mistake-Proofing.

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More Process Capability Indices

There are several different variations on Process Capability Indices.  They are Pp,
Ppk, Cpm, and Ppm.

Pp and Ppk are called Process Performance Indicators.

● As their description implies, Pp and Ppk look at what the performance

could be. Some people refer to them as short-term capability indices
because they do not look at process variation over time.

● Another use of the Process Performance Indicators today is to get a look

at how the total variation from the process compares to the specification.
Even special causes are included in the determination of total variation.

Editorial Note: We believe that the inclusion of special causes creates some
problems for these indicators. Per AIAG manuals, Pp and Ppk are based on a
“statistically stable” process with process data that form “an approximately normal
distribution.” In our view, it is hard to see how a process can be statistically stable
while having special causes of variation; we suggest Ppk and Pp are best used as
preliminary process performance indicators.

● The formulas for Pp and Ppk are quite like those for Cp and Cpk. The big
difference between them is how we calculate the sample standard
deviation, s.

For Pp and Ppk, the sample standard deviation, s, is calculated directly from
the data using:

For Cp and Cpk, s is calculated by using R-bar/d2.

Typically, there will be less sources of variation represented in a preliminary process

performance study than in a process capability study so the preliminary Ppk value is
usually greater than the Cpk value for a process.

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Cpm is the process capability measured against performance to a target.

● The Cpm capability index compares the width of the specification to the
spread of the process output plus an error term for how far the center of
the distribution is from the target.

● The process is penalized for not running on-target. And since the
difference-from-target term is squared in the calculation, as the distance
from the target increases, the penalty increases dramatically.

● For a centered process that is on-target (that is, the center of the
specification is the target), Cp, Cpk, and Cpm will be equal. When close to
center, we often find that the Cpk and Cpm values are similar. But if the
mean is more than one standard deviation away from the target, then the
three indices will give us very different views of the process capability.

Ppm is a process performance index based on Cpm.

● Like Pp and Ppk, Ppm uses the standard deviation equation, and not
subgroups, to calculate s.

Process Capability Study Complications

Some of the complications we may be faced with while conducting capability studies
include:
● Using Individual Data, not Subgroups
● Handling One-Sided Tolerances
● Handling Short-Run Processes
● Dealing with Tool Wear Issues
● Dealing with Skewed Distributions
● Not Knowing What the Spec Should Be
● Assessing True Position Capability

Six Sigma Capability

Six Sigma is a broad business approach to drive defects produced by all

processes down into parts per million levels of performance.

● This means it is really about improving the process capability for all
critical-to-quality (CTQ) characteristics from all processes in the
organization.

● The goal in a Six Sigma organization is to achieve defect levels of less

than 3.4 parts per million for every process in the organization and for
every CTQ characteristic produced by those processes.

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Six Sigma has been accepted to mean a 4.5-sigma process, not “true six
sigma” process.

● A process that operates with “true six sigma” performance takes up 50%
of the specification if centered. This gives it a Cpk and a Cp of 2.0. A
process such as this will produce defects at a rate of only ~2 parts per
billion.

● Six Sigma professionals have allowed for the process to drift by up to 1.5
standard deviations from the mean. So, if we have a process with a Cp =
2.0 but allow for a 1.5s drift, then we have the equivalent of a 4.5 sigma
process. That is, the mean will be 4.5s from the specification limit at the
edges of the drift. A 4.5 sigma process yields a 3.4 ppm defect level.

Instead of Cp and Cpk, some Six Sigma organizations report capability in

terms of Z-values.

● The Z-values represent the number of standard deviation units the mean
is away from the specification limits.

● Zl is the distance from the mean to the lower spec and Zu is the distance
from the mean to the upper spec.

● Zl equals 3 times Cpl and Zu equals 3 times Cpu. For example, if the Cpl
of a process was 1.5, the Zl would be 4.5.

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 ACCEPTANCE SAMPLING

Introduction
Acceptance sampling is a quality control procedure, which uses the inspection of
small samples instead of 100 percent inspection in making the decision to accept or
reject much larger quantities, called a lot. This is a statistical procedure, which uses
random samples, that is, each item in the lot has an equal chance of being a part of
the sample that is inspected.
In its simplest form, If the sample from a larger lot has an acceptable level of
defects, it will be accepted. If not, the entire lot will be rejected. If acceptance
sampling is used prior to accepting goods from a supplier (i.e., incoming inspection),
then the acceptable level of defects must be agreed between the supplier and
customer because the supplier may have to take back the entire lot if it fails
acceptance sampling. A sampling plan establishes the rules guiding the sampling
and the criteria for accepting or rejecting the lot.
Making a decision about the entire lot based on an inspection of a smaller sample...

Learning Objectives

To define and explain Acceptance Sampling.

To discuss the history of acceptance sampling.
To differentiate attribute sampling plan to variable sampling plan.
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To explain the terminologies used in acceptance sampling.
To discuss the advantages and limitations of acceptance sampling.
What is acceptance sampling?
Acceptance sampling is a major component of quality control and is useful when the
cost of testing is high compared to the cost of passing a defective item or when
testing is destructive. It is a compromise between doing 100% inspection and no
inspection at all. In cases when the quality of a supplier's process is unknown,
acceptance sampling may be a good option as opposed to 100% inspection.
Acceptance sampling can be done on attributes or measurements of the product.
You can use acceptance sampling to develop inspection plans that enable you to
accept or reject a particular lot of incoming material based on the data from a
representative sample.
One method of controlling the quality of a product is 100% inspection which requires
huge expenditure in terms of time, money and labour. Moreover, due to boredom
and fatigue involved in repetitive inspection process, there exists a possibility to
overlook and some defective products may pass the inspection point.
Also, when the quality of a product is tested by destructive testing (e.g., life of a
candle or testing of electrical fuses) then 100% inspection shall destroy all the
products.
The alternative is statistical sampling inspection methods. Here from the whole lot of
products/items to be inspected, some items are selected for inspection.
If that sample of items conforms to be desired quality requirements then the whole
lot is accepted, if it does not, the whole lot is rejected. Thus, the sample items are
the representative of the whole lot. This method of acceptance or rejection of a
sample is called Acceptance Sampling.
In general acceptance sampling method proves to be economical and is used under
the assumption when the quality characteristics of the item are under control and
relatively homogeneous.

For example, if we purchase a bag of potatoes, only a few potatoes can be observed
from the whole bag however we draw an inference about the whole bag by only
inspecting a few. If these look alright, it is assumed that all the potatoes in that bag
will be alright.

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History of Acceptance Sampling
Acceptance sampling in its modern industrial form dates from the early 1940s. It was
originally applied by the U.S. military to the testing of bullets during World War II.
The concept and methodology were developed by Harold Dodge, a veteran of the
Bell Laboratories quality assurance department, who was acting as a consultant to
the Secretary of War.
While the bullets had to be tested, the need for speed was crucial, and Dodge
reasoned that decisions about entire lots could be made by samples picked at
random. Along with Harry Romig and other Bell colleagues, he came up with a
precise sampling plan to be used as a standard, setting the sample size, the number
of acceptable defects, and other criteria.
Acceptance sampling procedures became common throughout World War II and
afterward. However, as Dodge himself noted in 1969, acceptance sampling is not
the same as acceptance quality control. Dependent on specific sampling plans, it
applies to specific lots and is an immediate, short-term test—a spot check, so to
speak. In contrast, acceptance quality control applies in a broader, more long-term
sense for the entire product line; it functions as an integral part of a well-designed
manufacturing process and system.

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Classification of Acceptance Sampling:
Depending upon the type of inspection acceptance sampling may be classified in
two ways:
1. Acceptance sampling on the basis of attributes i.e. GO and NOT GO gauges
2. Acceptance sampling based on variables.
Attribute acceptance sampling plan
In acceptance sampling by attributes, no actual measurement is done, and the
inspection is done by way of GO & NOT GO gauges. If the product conforms to the
given specifications it is accepted, otherwise rejected. The magnitude of error is not
important in this case.
For example, if cracks is the criteria of inspection/the products with cracks will be
rejected and without cracks accepted the shape and size of the cracks shall not be
measured and considered.
For example, you receive a shipment of 10,000 microchips. You either cannot or do
not want to inspect the entire shipment. An attribute sampling plan can help you
determine how many microchips you need to examine (sample size) and how many
defects are allowed in that sample (acceptance number).
In this case, suppose your acceptable quality level (AQL) is 1.5% and the rejectable
quality level (RQL) is 5.0%, and you assume alpha = 0.05 and beta = 0.1. Minitab
generates a sampling plan that indicates that you need to inspect 209 chips. If 6 or
less of the 206 inspected microchips are defective, you can accept the entire
shipment. If 7 or more chips are defective, you must reject the entire shipment.
Variable acceptance sampling plan
In acceptance sampling by variables, the actual measurements of dimensions are
taken or physical and chemical testing of the characteristics of sample of
materials/products is done. If the results are as per specifications the lot is accepted
otherwise rejected.
For example, you receive shipments of 2500 plastic pipe segments each week and
you need to verify that the wall thickness measurements meet specifications. You
either cannot or do not want to inspect the entire shipment. A variable sampling plan
can help you determine how many pipes you need to measure (sample size) and the
criteria for accepting or rejecting an entire lot (critical distance).
In this case, the lower specification for the wall thickness of the piping is 0.09". You
and the supplier agree that the acceptable quality level (AQL) is 100 defectives per
million and the rejectable quality level (RQL) is 300 defectives per million, and you
assume alpha = 0.05 and beta = 0.1. Minitab generates a sampling plan that
indicates that you need to measure 760 pipes and indicates that the critical distance
is 3.55748. You then measure a sample of 760 pipes and use the accept/reject tool
in Minitab to indicate whether a shipment should be accepted or rejected.

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Terms Used in Acceptance Sampling:
The following terms are generally used in acceptance sampling:

1. Acceptable Quality Level (AQL):

It is the desired quality level at which probability of a acceptance is high. It
represents maximum proportion of defectives which the consumer finds
acceptable or it is the maximum percent defectives that for the purpose of
sampling inspection can be considered satisfactory.

2. Lot Tolerance Percent Defective (LTPD) or Reject able Quality Level

(RQL):
It is the quality level at which the probability of acceptance is low and below
this level the lots are rejected. This prescribes the dividing line between good
and bad lots. Lots at this quality level are poor.

3. Average outgoing Quality (A.O.Q):

Acceptance sampling plans provides the assurance that the average quality
level or percent defectives going to consumers will not exceed certain limit.
The following Figure demonstrates the concept of average outgoing quality
related with actual percent defectives being produced.

The AOQ curve indicates that as the actual percent defectives in a production
process increases, initially the effect is for the lots to be passed for
acceptance even though the number of defectives has gone up and the
percent defectives going to the consumer increases.

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If this upward trend continues, the acceptance plan beings to reject lots and when
lots are rejected, 100% inspection is followed, and defective units are replaced by
good ones. The net effect is to improve the average quality of the outgoing products
since the rejected lots which to are ultimately accepted contain all non-defective
items (because of 100% inspection).

4. Operating Characteristic Curve or O.C. Curve:

Operating characteristic curve for a sampling plan is a graph between fraction
defective in a lot and the probability of acceptance. In practice the
performance of acceptance sampling for distinguishing defectives and
acceptable or good and bad lots mainly depends upon the sample size (n)
and the number of defectives permissible in the sample.
The O.C. curve shown in the following Figure is the curve of a 100 percent
inspection plan is said to be an ideal curve, because it is generated by and
acceptance plan which creates no risk either for producer or the consumer.
The figure shows the O.C. curve that passes through two stipulated points i.e.
two pre-agreed points AQL and LTPD by the producer and the consumer.
Usually, the producer’s and consumer’s risks are agreed upon the Figure and
explicitly recorded in quantitative terms.

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The merit of any sampling plan depends on the relationship of sampling cost to risk.
As the cost of inspection go down the cost of accepting defectives increases.

Characteristics of O.C. Curve:

1. The larger the sample size and acceptance number steeper will be the slope
of O.C. curve.
2. The O.C. curve of the sampling plans with acceptance number greater than
zero are superior to those with acceptance number as zero.
3. Fixed sample size tends towards constant quality production.

Advantages of Acceptance Sampling

1. The method is applicable in those industries where there is mass production,
and the industries follow a set production procedure.
2. The method is economical and easy to understand.
3. Causes less fatigue boredom.
4. Computation work involved is comparatively very small.
5. The people involved in inspection can be easily imparted training.
6. Products of destructive nature during inspection can be easily inspected by
sampling.
7. Due to quick inspection process, scheduling and delivery times are improved.

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Limitations of Acceptance Sampling
1. It does not give 100% assurance for the confirmation of specifications so
there is always some likelihood/risk of drawing wrong inference about the
quality of the batch/lot.
2. Success of the system is dependent on, sampling randomness, quality
characteristics to be tested, batch size and criteria of acceptance of lot.

Producer’s and Consumer’s Risk

The acceptance or rejection of the whole batch of products in acceptance sampling
depends upon the results of the sample inspected. There is always a chance that a
sample may not be true representative of the batches or lots from which it is drawn.

This leads to following two types of risks

1. Producer Risk (α):
It is the small probability of a lot/batch being good or even better acceptable
quality level (AQL) but yielding a bad sample and thus getting rejected. So
this probability of rejection of a good lot which otherwise would have been
accepted is known as producer’s risk (α).
2. Consumer Risk (β)
It is the probability of a batch/lot being bad or worse than the limiting quality
(LQ) but yielding a good sample and getting accepted. So this probability of a
defective lot being accepted which otherwise would have been rejected is
known as consumer risk (β).

Special Considerations
When done correctly, acceptance sampling can be a very effective tool in quality
control. Probability is a key factor in acceptance sampling, but it is not the only
factor. If a company makes a million products and tests 10 units with one default, an
assumption would be made on the probability that 100,000 of the 1,000,000 are
defective.
However, this could be a grossly inaccurate representation. More reliable
conclusions can be made by increasing the batch size higher than 10 and increasing
the sample size by doing more than just one test and averaging the results.

KEY TAKEAWAYS
● Acceptance sampling is a statistical quality-control measure that lets a
company determine the quality of an entire product lot by testing randomly
selected samples.

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● When done correctly, acceptance sampling is a very effective tool in quality
control.
● Developed during World War II as a quick fix for manufacturing, acceptance
sampling should not replace more systemic acceptance quality control
methods.

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