Six Sigma: Critical to Quality (CTQ) and Customer Requirements

Critical to Quality ensures that during the design stage, engineers meet the customer requirements for the specific product.

1. 1
Decompose Y
iinto
contributing elements, y
i
Decompose y
iinto
contributing elements x
i, n
Select Y’s (CTQ’s)
Y
i
y
1y
2y
3…
y
i
x
1x
2x
3…
Customer
needs/wants
Y
1Y
2Y
3…
CTQ Flow Down

2. 2
CTQ Flow Down Example
Customer Requirement (Critical to Quality):
Low Emissions
HC
CO
NOx
Fuel Type
RPM
Air/Fuel Ratio
Fuel Measurement
MAF Flow Measurement
5 Fixed Resistors
Ammeter Reading
Battery Voltage
1 Variable Resistor
Circuit
Y
y
y’
x

3. 3
Critical Requirements
There are other types of critical requirements for Six Sigma projects, called
CTX (Critical to X) requirements, here is a list.
CTQ (Critical to Quality)
CTQ improvement projects may include:
•Simplifying product designs
•Aligning product designs with customer requirements
•Meeting current market place quality levels
•Exceeding current market place quality levels
•Exceeding reliability and maintainability requirements
•Exceeding product appearance expectations
•Meeting technical requirements
•Providing products that are more durable

4. 4
COQ (Cost of Quality)
COQ improvement projects may include:
•Reducing internal rejections
•Reducing external rejections
•Minimizing salvage and sorting operations
•Reducing warranty claims
•Reducing product variation
•Reducing process variation
•Reducing various forms of waste
•Eliminating unnecessary inspections

5. 5
CTD (Critical to Delivery))
CTD improvement projects may include:
•Providing exact amounts of products
•Providing service within a specific time interval
•Ensuring immediate response to customer questions
•Providing a product or service on the proper day and time
•Providing more rapid field service
•Providing cost effectie delivery methods
•Meeting customer packaging requirements
•Minimizing shipping damage

6. 6
CTP (Critical to Process)
CTP improvement projects may include:
•Designing products that are easier to assemble
•Minimizing the changeover times
•Reducing in-process inventories
•Minimizing product touch times
•Optimizing work cell design
•Streamlining internal work flows
•Reducing process flow variation
•Enhancing process velocity
•Eliminating redundant operations
•Maximizing product yields
•Speeding up operations
•Reducing cycle times
•Minimizing equipment downtime
•Maximizing preventative maintenance
•Performing value stream mapping

7. 7
Kano Model
The Kano Model is also referred to as Kano Analysis. Noriaki Kano is a Japanese
engineer and consultant, whose work is being used by a growing number of Japanese and
American companies. The model is based on 3 categories of customer needs:
1. Dissatisfiers, (basic requirements, or "must be's"):
The customer expects these basic requirements as part of the total package. If the basic
requirements are not present, the customer will be unhappy.
2. Satisfiers, (variable requirements, or "more is better"):
When the requirements of the customer are met, the more it is met, the better. The tourist
taking a Caribbean cruise expects a week of entertainment and food at a reasonable price.
The more the tourist is taken care of on the cruise, the better it is. In fact, the cabin help,
dining room help, or any staff on the ship are out to make your travel experience, a great
one.
3. Delighters, (latent requirements):
These are features or services that go beyond the expectations of the customer. For the
tennis fan who. purchases a ticket to the U.S. Open, the basic requirements would at least
be to see some players in competition, not get sunburnt, and to see some thrilling matches.
Imagine meeting these expectations, and then being able to have lunch or dinner with
some players as part of the experience. This would be a delighter.

8. 8
Poor
Functionality
Excellent
Functionality
Dissatisfied
Customer
Satisfied
Customer
Indifferent Needs
“If it’s not there, I’ll never
be satisfied”
•Ability to Print
•Coffee is hot
•Car has brakes
•Ability to transfer digital
pictures to computer
“I don’t care”
•MapPoint on standard tool bar
•Color of coffee cup
•Size of tires
•Voltage of battery
“More Is Better”
•Speed of Internet Connection
•Flavor of coffee
•Gas Mileage
•Battery life on digital camera
“That’s Cool”
•Web page editing on IE Tool Bar
•Free Internet Access @ Starbucks
•Retractable light under hood
•Send digital pix with your cell phone
•Web page editing
on IE Tool Bar
Customers don’t know they
have Attractive (latent)
needs…can only determined
by watching them work!

9. 9
General Example –Air Travel
•Dissatisfiersrequirements (absolutely required for satisfaction)
–Safe arrival
–Accurate booking
–Baggage arrives with passenger
•Satisfiersrequirements (the better it is, the happier the customer)
–Seat comfort
–Quality of refreshments
–Friendliness of staff
–Baggage speed
–On-Time arrival
•Delighters(not expected; can increase satisfaction)
–Free upgrades
–Individual movies and games
–Special staff attention/services
–Computer plug- ins (power sources)

10. 10
1b.If (need 1) is poor, how do you feel?
1. I really like it
2. I fully expect it
3. I am neutral
4, I can tolerate
5. I really dislike it
Customer Requirement Is
A: Attractive O: One-Dimensional
M: Must Have Q: Questionable Result
R: Reverse I: Indifferent
Survey Questions:
1a.If (need 1) is good, how do you feel?
1. I really like it
2. I fully expect it
3. I am neutral
4, I can tolerate it
5. I really dislike it
1. I really like it
2. I fully expect it
3. I am neutral
4. I can tolerate it
5. I really dislike it
1. I really like it QAAAO
2. I fully expect it
R
AQIIM
3. I am neutral IIIM
4. I can tolerate it IIQM
5. I really dislike it Q
Functional
Form of
Question
Dysfunctional
Form of Question
Kano Evaluation Table
Functional Dysfunctional
Example
If the speed of the internet connection is fast, how do you
feel?
1. I really like it
If the speed of the internet connection is slow, how do you
feel?
5. I really dislike it
One-Dimensional Need
R
A
R
A
R
OR
MR
MR
M
Functional
Dysfunctional

11. 11
Process Performance Metrics
Traditional performance metrics
Business level metrics
Business level metrics are typically financial (external) and operational (internal) summaries for
Shareholders and management.
Kaplan and Norton (1996) introduced the Balanced Scorecard for business level management
Metrics in the following areas:
•Financial
•Customer Perception
•Internal-Business-Process (operational)
•Company Learning and Growth
•Employee satisfaction
Operation level Metrics
•Operational efficiency measures
•Cost measures
•Time measures
Process Metrics
•Machine
•People

12. 12
Six Sigma Metrics
Harry (2000) introduced a significant new group of metrics for Six Sigma that serve to:
•Measure customer opinions
•Determine customer critical to quality (CTQ) factors
•Measure product outcomes (throughput yield, rolled throughput yield, normalized yield)
•Correlate process outcomes to CTQs (measure processes with metrics that correlate to company’s
fundamental economics)
•DPMO
•Sigma Quality

13. 13
Calculation of DPMO
Objective:
•DPMO, i.e.DefectsPerMillionofOpportunityisaperformance
indicatorcalculatedasaratioofnumberofdefectsdividedby
maximumnumberofpotentialdefectsinabatchofunitsinspected.
D
DPO =
U×O
Definitions:
•U = number of units inspected
•D = number of total defects
•O = number of opportunities for defect per unit inspected. It is the
maximum number of potential defects of all failure modes for a
unit
1000000×
D
DPMO =
U×O
DEFINE MEASURE ANALYZE IMPROVE CONTROL

14. 14
Calculation of Process Sigma
Objective:
•Process Sigma
(G)calculates Sigma level of a process based on defects
detected in a batches of units
51
DPO =
1000×2
Calculation procedure:
η
51
=1- = 0,9745
1000×2
DEFINE MEASURE ANALYZE IMPROVE CONTROL

15. 15
Widely used symbols
•Defects = D
•Units = U
•Opportunities (for a defect) = O
•Yield = Y
Defect Relationships
•Total opportunities: TO = TOP = U x O
•Defects per unit: DPU = also = -ln(Y) (See yield)
•Defects per normalized unit: = -ln(Y
norm) (See yield)
•Defects per unit opportunity: DPO =
•Defects per million opportunities: DPMO = DPOx10
6
OU
D
O
DPU
×
=
U
D

16. 16
Example 4.1 Given the following defects information for 100 production units. Determine DPU:
Defects0 1 2 3 4 5
Units70 20 5 4 0 1
70.4
100
5121020
100
5(1)3(4)2(5)1(20)
U
D
DPU =
+++
=
+++
==
Therefore, we expect to find 0.47 defects per units
Example 4.2Assume that each unit in Example 4.1 had 6 opportunities for a defect (that is,
Characteristics A,B,C,D,E and F). Determine DPO and DPMO
0.078333
6
0.47
6
0.47
O
DPU
DPO ====
78,33310DPODPMO
6
=×=

17. 17
Yield:
Yield = Probability (Defect free unit), when Yield= 1 = 100%, zero defect.
Poisson distribution is usually used to model defect occurrences. If there is a historic defect per unit (DPU) level
For a process, the probability that an item contain X flaws (P
X) is:
!X
DPU
P
X
XDPU
e
−
=
DPU
0P0XP
−
=== e
)()(
Therefore
Yield or first pass yield:
DPU
eFPYY
−
==
DPU
eFPYY
−
==
Defect per unit: ln(Y)DPU−=
If a process has n steps, at each step I, the yield is Y
i, then the ‘Rolled throughput yield’, Y
rtis:
∏
=
==
n
i1
irt YRTYY
Normalized Yield:
n
RTYY
norm
=
Total defects per unit: TDPU = -ln(Y
rt)

18. 18
Example 4.3Assume that a process has a DPU of 0.47. Determine the yield
%5.62625.0
47.0
====
−−
e
DPU
eY
Example 4.4Assume that a process has a first pass yield of 0.80, determine the DPU.
0.223ln(0.8)ln(Y)DPU =−=−=
Example 4.5A process consists of 4 sequential steps: 1,2,3, and 4 . The yield od each step is as
Follows: Y
1=99%, Y
2=98%, Y
3=97%, and Y
4=96%. Determine the rolled throughput yield and the
Total defects per unit.
%
4
1
90.3450.90345.96)8)(0.97)(0(0.99)(0.9YY
irt
====∏
=i
TDPU=-ln(RTY)=-ln(0.90345)=0.1015

19. 19
Six Sigma Relationships
Probability of a defect = P(d), P(d) = 1 –Y, or 1 –FPY for first pass
For a series of operations: P(d) = 1 – Y
RT
The relationship between P(d) and Sigma level can be found in Z table
Example 4.6The first pass yield for a single operation is 95%, what is the probability of a defect
and what is the Z value?
P(d) = 1 -0.95 = 0.05, by using Z table for 0.05 and found approximately 1.645 Sigma
The Z value determined in Example 4.6 is called Z long term or Z equivalent
Z short term is defined as: Z
ST= Z
LT+ 1.5 shift, or Z
LT= Z
ST-1.5 shift
Example 4.7If Z long term = 1.645, what is Z short term? Z
ST= Z
LT+ 1.5=1.645+1.5 = 3.145
Schmidt and Launsby (1997) report that 6 sigma quality level (with 1.5 sigma shift, or short
term Z) can be approximated by: 6 Sigma Quality Level =
ln(ppm)2.22129.370.8406 ×−+
Example 4.8. If a process were producing 80 defective/million, what would be the 6 sigma quality
Level?
6 sigma quality level = 5.272ln(80)2.22129.370.8406 =×−+

20. 20

21. 21

22. 22
Project Financial Benefit Analysis
Frequently used measures
•Return on Assets (ROA)
AssetsTotal
IncomeNet
ROA
_
_
=
Net income for a project is the expected earnings and total assets is the value of the assets applied to the project.
•Return on Investment (ROI)
Investment
IncomeNet
ROI
_
=
•Payback period
vestmentInitial_InwCash_Inflo
i≥∑
=
n
i1
Payback period is the smallest n such that

23. 23
Net Present Value (NPV) and Internal Rate of Return (IRR)
()
∑
=+
=
n
t
t
t
0
r1
CF
NPV
Where
CF
t: cash flow at period t; CF
t= CF
B,t–CF
C,t
CF
B,t: Benefit at time period t; CF
C,t: Cost at time period t
r: per period cost of capital for the organization
i: Annual interest rate
CF
0: Initial investment
()1r1i
m
−+=
,
1i)(1r
m
1
−+=and
Internal rate of return (IRR) is the interest or discount rate, i or r, that results in NPV=0
()
∑
=+
==
n
0t
t
t
r1
CF
0NPV

24. 24
Example 4.9A benefit cost analysis is conducted for a training program to reduce operator assembly
Errors, thus reduce scrap cost.
Project benefit:
•Scrap reduction of $700 in month 3
•Scrap reduction of $500 in month 4
•Scrap reduction of $450 in month 5 and 6
Project Costs:
•Training material preparation: $400 in month 1
•Employee training: $840 in month 2
•Reporting of program effectiveness will cost $100 in month 6
0 1
2
3 4 5 6
$400
$840
$700
$500
$450
$450
$100
Cash (+)
Cash (-)

25. 25
Cost of capital (i) =9.5% per year, equivalent monthly rate r is
00759.0095.0
12
=−+= 1)(1r
1
Net Present Value is
()( )
80.712$
)00759.01(
100450
)00759.01(
450
)00759.01(
500
)00759.01(
700
)00759.01(
840
)00759.01(
400
00759.01
0
6543
210
=
+
−
+
+
+
+
+
+
+
+
−
+
+
−
+
+
=
+
=∑
=
n
0t
t
t
r1
CF
NPV
Since NPV > 0, this project is worth while
The IRR of this project can be calculated as follows
()()
65
432
n
0t
10t
t
r)(1
100450
r)(1
450
r)(1
500
r)(1
700
r)(1
840
r)(1
400
r1
0
r1
CF
NPV0
+
−
+
+
+
+
+
+
+
+
−
+
+
−
+
+
=
+
== ∑
=
r can be solved and r=21.51% per month!

26. 26
() 936%9.3610.2151)(11r1i
12m
==−+=−+=
Annual internal rate of return is:
Per year!
Payback period:
Month Benefit Costs
Net=cumulative
Benefit-cost
Result
1 $400 -$400
2 $840 -$1240
3 $700 -$540
4 $500 -$40
5 $450 $410 Payback
period = 5
month
6 $450 $100 $760

27. 27
Quality Cost
•Prevention costs: The costs of activities specifically designed to prevent poor quality in
products or services
•Appraisal costs: The costs associated with measuring, evaluating, or auditing products or
Services to assure conformance to quality standards abd performance requirements.
•Failure costs: The costs resulting from products or services not conforming to requirements
Or customer/user needs-that is, the costs resulting from poor quality.
Internal failure costs: Failure costs which occur prior to delivery or shipment of
the product, or service to customer
External failure costs: Failure costs which occur after shipment of the product,
or service, to customer.
Prevention
Appraisal
Failure

28. 28
COPQ: Cost Of Poor Quality
DEFINE MEASURE ANALYZE IMPROVE CONTROL

29. 29

30. 30

31. 31
More on Quality Cost
Optimum Quality Cost
Some experts say that for every dollar spent on prevention will save approximately
Seven dollars in failure costs. This estimate may not be exact but many companies do
not spent enough on prevention.
Here is a table listing typical ratio of quality costs for American companies.
Cost categoryPercent of Total
Prevention 0 -5%
Appraisal 10 -50%
Internal Failure20 -40%
External Failure20 -40 %
Increasing prevention will take long time to see the result.
Increasing appraisal usually cause internal failure to increase and external failure
To decrease in the beginning.

32. 32
Advantages of a Quality Cost System
•Provides a manageable entity and a single view of quality
•Aligns quality and company goals
•Provides a problem prioritization system and a means of measuring change
•Provides a way to distribute controllable quality costs for maximum profits
•Improves the effective use of resources
•Provides emphasis for doing job right every time
•Helps to establish new product processes
Limitations of a Quality Cost System
•Quality cost measurement does not solve quality problems
•Quality cost report do not suggest specific actions
•Quality costs are susceptible to short-term mismanagement
•It is often difficult to match effort and accomplishment
•Important costs may be omitted from quality cost reports
•Inappropriate costs may be included in quality cost report
•Many quality costs are susceptible to measurement errors