This document provides a summary of quality control tools and applications, including: - A brief history of quality control from ancient times to the modern development of statistical quality control methods. - An overview of W. Edwards Deming's 14 principles for transforming quality management. - An explanation of Six Sigma methodology and associated statistical measures and tools like DMAIC, control charts, and Pareto charts. - A discussion of how balanced scorecards can be used to communicate strategy and align organizational goals across financial, customer, internal processes, and learning/growth perspectives. - Examples of balanced scorecards implemented at a healthcare organization and the University of Minnesota Morris campus.

1. SQC, Tools and Applications Adam Falkenstein December 14 th , 2004

2. Outline Brief History of Quality Control Deming’s Principles Six Sigma—methodology and tools Balanced Scorecard A Scorecard from Healthcare A Scorecard for the U of M Morris

3. Brief History of Quality Control Pre-statistics Chinese hand crafts 11-8th centuries BC Scandinavian shipbuilders Examples from Bible circa 600 BC Greeks building temples India Working with Gold in 300 BC Romans standardization-400BC to 400 AD Guilds and Governments-competition, quality

4. Pre WWII Walter Shewhart, 1924 Bell Laboratories Shewhart develops and improves methodology for Statistics in industry. (Economic Control of Quality of Manufactured Product, 1931) US Military Adopts SQC during WWII Brief History of Quality Control

5. Post WWII SQC spreads to Europe through industry Japanese Quality Deming Advises Japan in SQC Brief History of Quality Control

6. Deming’s Principles . Create Constancy of purpose Adopt a new philosophy Cease dependence on inspection for quality End Proactive awarding of business on price tag alone-instead minimize total cost Improve every process constantly/forever

7. Deming’s Principles . Institute training on the job Adopt and institute Leadership Drive out fear Break down barriers between staff areas Eliminate Slogans, exhortations and targets for workforce Eliminate numerical quotas

8. Deming’s Principles . Remove barriers that rob pride of workmanship Institute rigorous programs for education and self Improvement Put everybody in the company to work to accomplish this transformation

9. Six Sigma What is six sigma? 3 Key Principles DMAIC Statistical Measures Tools 6σ

10. Term trademark to Motorola Methodology for SQC Six Sigma means-- Products and processes whose range of values that are…acceptable, for whatever is being measured, covers a range of 12 standard deviations (sigma)—6 on each side of the average or nominal value What is Six Sigma? 6σ

11. Six Sigma Assumptions Normal distribution Nominal shift of 1.5 σ μ and σ are known Defects randomly distributed Parts and process steps independent 6σ

12. Leadership Commitment Key word “Leader”ship Data Based Decisions Not sound decisions without data Training and Culture change Knowledge and understanding in order for change 3 key Principles of Six Sigma 6σ

13. DMAIC in Six Sigma 6σ Characterization Monitoring Systems Define Measure Analyze Improve Control Optimization Controlling Systems

14. DMAIC in Six Sigma 6σ Define Measure Analyze Improve Control What is Important? Set expectations Identify processes to be improved How are we doing? Identify processes that are critical for quality Define defects Establish Goals What is wrong? Explain variables that are likely to cause process variation What needs to be done? Confirm variables that are critical for quality Identify acceptable ranges for key variables How do we guarantee performance? Ensure solution is sustained Statistics!!!

15. Defects Yield DPO DPMO Process Sigma Example….Adverse Drug Events Statistical Measures in Six Sigma ………… Sample 1000 admins—20 ADEs …………...980/1000=98.0% ……………20/1000=2.0% ………….DPO*1,000,000=20,000 ….From Scale, 3.55 6σ

16. Tools in Six Sigma Histogram/Pie Chart Time Series Analysis ANOVA Cause and Effect Analysis Pareto Charts Control Charts All graphs created in MiniTab ® 6σ

17. Pareto Chart Chart consistencies of most frequent defects Used to locate Major sources of problems Able to use with Count and Categorical Data Example… 6σ

18. Example Pareto Data 6σ red blue green blue red red red yellow red red green red blue blue green green red red green red red red red red blue red blue blue blue blue blue red blue red red yellow red red yellow red green red green green green red red red red green red green red red blue red blue green red yellow blue blue blue yellow green red red blue blue red red green blue red red red yellow red red red red yellow blue blue green red blue blue green red green blue green red red red red red blue red brown red blue blue red brown green red

19. Example Pareto Chart 6σ

20. Used to determine if variation is chance or assignable cause Good for measuring control of variation Control needed before Change More appropriately applied to process rather than product Control Charts 6σ

21. X-bar: Continuous values measuring product or service attributes X: similar, but subgroups contain one value P: Proportion of units defective C: Count of units defective (equal subgroups needed) U: Rate of defects per unit Types of Control Charts 6σ

22. Control Charting Sub-grouping—Time, random Sample Mean Sample Standard Error UCL, LCL (usually mean plus and minus 3 times standard error) 6σ

23. Sample Control Chart Data 6σ .70 22.81 Avg 22 23 21 25 24 22 22 23 22 24 23 22 22 20 X10 20 21 23 26 25 23 16 21 24 26 25 24 21 23 X8 25 23 21 26 24 22 23 23 24 23 22 18 24 23 X9 25 24 23 25 24 26 26 26 25 27 26 24 23 22 X7 24 26 25 25 26 24 26 25 23 25 24 25 26 24 X6 24 23 27 24 21 26 23 22 25 21 24 22 22 28 X5 .66 22.2 21 20 21 20 14 .54 22.5 22 21 20 22 13 .78 22.5 21 18 23 23 12 .83 23.4 21 23 21 18 11 .78 22.9 18 20 23 24 10 .54 23.6 24 21 23 25 9 .93 22.7 23 20 24 24 8 .53 23.2 26 22 22 22 7 .52 23 23 21 20 23 6 .79 23.2 24 19 21 22 5 .69 22.9 18 22 23 22 4 .79 22.5 19 22 23 26 3 .65 22.4 25 20 20 21 2 .80 22.3 22 19 22 20 1 S. E. Mean X4 X3 X2 X1 Batch

24. Sample Control Chart 22.8+3(.7)~24.9 22.8-3(.7)~20.7 6σ

25. Balanced Scorecard Purpose Brief Understanding Financial Customer Internal Business Process Learning and Growth Flow Diagram

26. Purpose of Balanced Scorecard Focus Strategy Communicate Strategy Align company Goals Identify and Align strategic objectives Perform periodic reviews

27. Financial Perspective Lagging Indicators Usually Long term goals of company Linked to drivers Most companies aim to improve here

28. Customer Perspective Also lagging indicator Share, retention, acquisition, satisfaction, profitability 3 class attributes Product and service Customer relationships Image and Reputation

29. Internal-Business-Process Process Quality/Time Identification of Critical Processes Identification of Critical VOC

30. Learning and Growth Employee Skills Other perspectives depend upon learning and growth Enablers Employees Systems Organizational Alignment Satisfaction, Productivity, Retention

31. Balanced Scorecard Financial Cusotmer Internal-Business-Processes Learning and Growth

32. Immanuel St. Joseph-Mayo H.S. Balanced Scorecard in slightly different Context Six Sigma foundation for Strategic Improvement Initiatives Scorecard fundamental for tracking progress Integrates Strategic Aims to Support Balanced Scorecard Methodology

33. Immanuel St. Joseph-Mayo H.S. Hospital specific Backed by Institutional Data Dashboard Tailored appropriately to meet the needs of Senior Team Ultimate goal to expand Network-wide

36. UMM Scorecard A ranking tool to see how UMM matches against other Liberal Arts Colleges Nation-wide Same standards as US News & World Report Looks at past performance in different areas Ranking by percentile in each category Weighted Percentile overall

37. UMM Scorecard Peer assesment Acceptance rate H.S. Class standing SAT/ACT scores Faculty compensation Faculty with highest possible degree Full time Faculty Student/Faculty ratio Class size, 1-19 Class size, 50+ Graduation Rate Freshman Retention Educational Expense per student Alumni giving rate Graduation rate performance

38. UMM Scorecard-all LA

40. UMM Scorecard-PLAC

42. Questions?