Cost reduction in quality through quality improvement. Understanding sporadic and chronic problems

Cost reduction in quality through quality improvement. Understanding sporadic and chronic problems

1. Cost reduction
Through quality improvement

2. 2
Quality problems
The costs associated with poor quality are due to:
•Sporadic problems – Sudden problems, or adverse change in
the status quo, which requires remedy through restoration of
the status quo.
•Chronic problems – A long-standing adverse situation, which
is remedied through changing the status quo.

3. 3
Quality problems

4. 4
Quality problems
Difference between sporadic and chronic problems:
•Sporadic problems are solved through Quality Control;
whereas chronic problems are solved through Quality
improvement.
•Sporadic problems are dramatic and must receive immediate
attention. Chronic problems are gradual, because they occur
over a longer time window.
•Chronic problems are often difficult to solve than the sporadic
problems. They are, at times, even difficult to detect, because
they are accepted as inevitable.

5. 5
Quality problems
•Sporadic problems require a ‘fire fighting’ approach and hence
may get more attention.
•More savings, however, can be generated by targeting on
chronic problems.
Kaizen principles are applicable to both types of the problem.
•For chronic problems, it prescribes achieving better levels of
performance each year.
•For sporadic problems, it means taking corrective action on
periodic problems.
•For overall process refinement, it tells us to reduce process
variation around a target value.

6. 6
Chronic problems
•Addressing chronic quality problems achieves a breakthrough
to an improved level of quality.
•This is best achieved by selecting specific projects one at a
time and focusing on these problems individually.
•For that one needs to set up a project approach wherein the
need for improvement is proved, projects short-listed, and
project teams organized.

7. 7
Chronic problems
For the selected project, we –
2.Verify the project need and mission
3.Diagnose the causes
4.Provide a remedy and prove its effectiveness
5.Deal with resistance to change
6.Instituting controls to hold the gains.

8. 8
Solution methodology
Prove the need
•Convincing the managers that the quality issue is significant
enough to require a new approach.
•Chronic problems often require substantial time and resources.

To gain approval:
•Collect factual data to show the size of the quality problem.
Studying the costs of poor quality might be useful.
•Show the benefits possible from an improvement program and
use this to justify the resources required.
•Sort out the “language” issue.

9. 9
Solution methodology
Identify projects
•Nomination of the project: It can come from various sources
(like shop-floor data, workers, government regulations etc.)
•Project short-list: Pareto principle can be applied to sort out
important projects and accordingly priorities can be
established.
•At times, specific quantifiable measure could be developed to
sort projects based on its value on that measure.

10. 10
Solution methodology
Organize project teams
•A project team usually consists of persons drawn from
multiple departments.
•The team meets periodically and members serve part time in
addition to performing their regular functional jobs. When the
project is completed, the team disbands.
•A companywide problem may require several teams working
on various aspects of the problem.

11. 11
Solution methodology
Verify the project need and mission
•Even though the project was selected because it is considered
“important,” it is useful to verify the numbers again.
•Also essential that scope of the project be discussed and
accepted.
•Typically, scope should be such that project is completed
within 6 months.

12. 12
Solution methodology
Diagnose the causes
•Process of studying the symptoms of a problem and
determining their causes.
•Beginning of the diagnosis process is data collection; and
end is an agreement on the causes.
•Prevalent belief is that most defects are caused during
manufacturing and are worker controllable. Its incorrect on
both counts!
Two journeys are required for quality improvement:
6.Diagnostic journey: from symptom to cause
7.Remedial journey: from cause to remedy.

13. 13
Solution methodology
Diagnose the causes
Steps involved:
3.Description of symptoms.
4.Quantification of symptoms.
5.Formulation of theories.
6.Testing of theories – both management- and worker-
controllable theories.
7.Design and analysis of production experiments.

14. 14
Solution methodology
Provide a remedy and prove its effectiveness
•Choice of alternative: Diagnostic journey may throw wide
variety of causes of the symptoms. Remedial action responds
to the findings of the diagnosis.
An essential criteria is that both company and customer costs
be optimized.
Cost optimization should focus on costs of poor quality,
facilities usage, material usage etc.
On the customer side, focus should be on those remedies
where value is added without further costs.

15. 15
Solution methodology
Provide a remedy and prove its effectiveness
Proving effectiveness –
•Preliminary evaluation of the remedy through simulation.
•Final evaluation under real-world situation.
It is useful to communicate the remedy to
7.Others who may face similar situation
8.Those responsible for planning future products and
processes.

16. 16
Solution methodology
Deal with resistance to change
•Be aware that we could be dealing with a culture that may
differ from our own.
•Discover what will be the social effects of the proposed
technological change.
Rules to introduce change:
•Provide for participation.
•Establish the need for the change.
•Provide enough time.
•Treating people with dignity.

17. 17
Solution methodology
Deal with resistance to change
•Dealing directly with the resistance.
•Working with recognized leadership of the culture.
•Reversing the positions.
•Keeping the proposal free of excess baggage.

18. 18
Solution methodology
Institute controls to hold the gains
•Providing for a process capable of holding the gains under
operating conditions.
•Establishing operating procedures and training the operating
forces to use the new procedures and to meet the standards.
The process changes should be irreversible.
•Providing for systematic means of holding the gains – process
of quality control.