This document provides an overview of several quality management principles and methodologies, including: - Lean manufacturing, which aims to eliminate waste and improve efficiency. Key aspects are flow, value streams, and eliminating muda (waste). - The seven types of waste in lean manufacturing: overproduction, queues, transportation, inventory, motion, overprocessing, and defects. - Just-in-time manufacturing, which supplies customers with exactly what they want when they want it by pulling supplies through the system as needed. - Six Sigma, which identifies and removes defects from processes to improve quality using a DMAIC methodology of define, measure, analyze, improve, and control. - Total quality management, which takes

1. Quality
Management
Principles
BY=AMIT KUMAR SINGH

2. 2
• Lean Manufacturing – A way to eliminate waste and improve efficiency in a
manufacturing environment
• Lean focuses on flow, the value stream and eliminating muda, the Japanese
word for waste
• Lean manufacturing is the production of goods using less of everything
compared to traditional mass production: less waste, human effort,
manufacturing space, investment in tools, inventory, and engineering time to
develop a new product
• Lean was generated from the Just-in-time (JIT) philosophy of continuous and
forced problem solving
• Just-in-time is supplying customers with exactly what they want when they
want it
• With JIT, supplies and components are “pulled” through a system to arrive
where they are needed when they are needed
Introduction-Lean Manufacturing

3. 3
• Waste is anything that happens to a product that does not add value from
the customer’s perspective
• Products being stored, inspected or delayed, products waiting in queues,
and defective products do not add value
• Seven types of waste:-
1. Overproduction – producing more than the customer orders or producing
early. Inventory of any kind is usually waste.
2. Queues – idle time, storage, and waiting are wastes
3. Transportation – moving material between plants, between work centers,
and handling more than once is waste
4. Inventory – unnecessary raw material, work-in-process (WIP), finished goods,
and excess operating supplies
5. Motion – movement of equipment or people
6. Overprocessing – work performed on product that adds no value
7. Defective product – returns, warranty claims, rework and scrap
What is Waste?

4. 4
• Lean Manufacturing is sometimes called the Toyota Production System
(TPS) because Toyota Motor Company’s Eiji Toyoda and Taiichui Ohno
are given credit for its approach and innovations
• Work shall be completely specified as to content, sequence, timing,
and outcome
• Every customer-supplier connection, both internal and external, must
be direct and specify personnel, methods, timing, and quantity of
goods or services provided
• Product and service flows must be simple and direct – goods and
services are directed to a specific person or machine
• Any improvement in the system must be made in accordance with the
“scientific method” at the lowest possible level in the organization
Principles of Lean Manufacturing

5. 5
A Lean leaders:
Understand the work
Have the ability to develop, mentor, and lead people
Are respected for their technical knowledge
Realize that problems are opportunities for employee
development
Seldom give orders
Ask questions and get employee input
Understanding Lean

6. 6
•Sort—Perform “Sort Through and Sort Out,” - red tag all unneeded items
and move them out to an established “quarantine” area for disposition
within a predetermined time. “When in doubt, move it out!”
•Set in Order—Identify the best location for remaining items and label
them. “A place for everything & everything in its place”.
•Sweep (Systematic Cleaning)—Clean everything, inside and out. Use
visual sweeps to ensure everything is where it should be and that junk
is not accumulating.
•Standardize—Create the rules for maintaining and controlling the first 3
S’s. Use visual controls.
•Sustain—Ensure adherence to the 5S standards through
communication, training, self-discipline and rewards.
Elements of 5S program

7. 7
• Six sigma is a business statistical Strategy.
• Is to identifying defects and removing them from the process of
products to improve quality.
• A defect is defined as any process output that does not meet
customer specifications.
• Statistical measure to objectively evaluate processes.
• Management philosophy focused on business process improvements
to:
 Eliminate waste, rework, and mistakes
 Increase customer satisfaction
 Increase profitability and competitiveness
Introduction-Six Sigma

8. 8
• Lean tends to be used for shorter, less complex problems. Often time
driven. Focus is on eliminating wasteful steps and practices.
• Six Sigma is a bigger more analytical approach – often quality driven –
it tends to have a statistical approach. Focus on optimizing the
important steps – reducing defects.
• Some argue Lean moves the mean, SixSigma moves the variance. But
they are often used together and should not be viewed as having
different objectives.
Waste elimination eliminates an opportunity to make a defect
Less rework means faster cycle times
• Six Sigma training might be specialized to the “quality” department,
but everyone in the organization should be trained in Lean
Lean vs Six Sigma

9. 9
• Define – describe the problem quantifiably and the underlying process
to determine how performance will be measured.
• Measure – use measures or metrics to understand performance and
the improvement opportunity.
• Analyze – identify the true root cause(s) of the underlying problem.
• Improve – identify and test the best improvements that address the
root causes.
• Control – identify sustainment strategies that ensure process
performance maintains the improved state.
The DMAIC Methodology

10. 10
• Define design goals that are consistent with customer demands and
the enterprise strategy.
• Measure and identify CTQs (characteristics that are Critical To Quality),
product capabilities, production process capability, and risks.
• Analyze to develop and design alternatives, create a high-level design
and evaluate design capability to select the best design.
• Design details, optimize the design, and plan for design verification. This
phase may require simulations.
• Verify the design, set up pilot runs, implement the production process
and hand it over to the process owner(s).
DMADV Methodology

11. 11
• Competition is getting harder and becoming global. Companies now have to be
more responsive, offer a better product and keep improving. Total quality
management (TQM) increases customer satisfaction by boosting quality. It does this
by motivating the workforce and improving the way the company operates. In an
increasingly competitive market, firms with a continuous improvement culture and
external focus are more likely to survive and prosper. TQM is considered an
important catalyst in this context.
• TQM is an approach to improving the effectiveness and flexibilities of business as a
whole. It is essentially a way of organizing and involving the whole organization,
every department, every activity and every single person at every level. TQM
ensures that the management adopts a strategic overview of the quality and focuses
on prevention rather than inspection.
Introduction-TQM

12. 12
• Meeting the customer's requirements is the primary objective and the key to
organizational survival and growth.
• The second objective of TQM is continuous improvement of quality. The
management should stimulate the employees in becoming increasingly
competent and creative.
• Third, TQM aims at developing the relationship of openness and trust among
the employees at all levels in the organization
• The importance of TQM lies in the fact that it encourages innovation, makes
the organization adaptable to change, motivates people for better quality,
and integrates the business arising out of a common purpose and all these
provide the organization with a valuable and distinctive competitive edge.
• A comprehensive, organization-wide effort to improve the quality of products
and services, applicable to all organizations.
Objective and importance of TQM

13. 13
• The Deming Philosophy
Definition of quality, “A product or a service possesses quality if it helps somebody and
enjoys a good and sustainable market.”
Evolution of TQM philosophies
Improve quality Decrease cost
because of less
rework, fewer
mistakes.
Productivity improves
Long-term
competitive
strength
Stay in
business
Capture the
market with better
quality and
reduced cost.

14. 14
• “A System of Profound Knowledge”
1. Appreciation for a system - A system is a set of functions or activities within an
organization that work together to achieve organizational goals. Management’s job is to
optimize the system. (not parts of system, but the whole!). System requires co-
operation.
2. Psychology – The designers and implementers of decisions are people. Hence
understanding their psychology is important.
3. Understanding process variation – A production process contains many sources of
variation. Reduction in variation improves quality. Two types of variations- common
causes and special causes. Focus on the special causes. Common causes can be reduced
only by change of technology.
4. Theory of knowledge – Management decisions should be driven by facts, data and
justifiable theories. Don’t follow the managements fads!
The Deming philosophy

15. 15
• Deming’s 14 Points
1. Create constancy of purpose for improvement
2. Adopt a new philosophy
3. Cease dependence on mass inspection
4. Do not award business on price alone
5. Work continually on the system of production and service
6. Institute modern methods of training
7. Institute modern methods of supervision of workers
8. Drive out fear
9. Break down barriers between departments
10. Eliminate slogans, exhortations, and targets for the work force
11. Eliminate numerical quotas
12. Remove barriers preventing pride of workmanship
13. Institute a vigorous program of education and retraining
14. Take action to accomplish the transformation
History of Quality Management

16. 16
• Pursue quality on two levels:
1. The mission of the firm as a whole is to achieve high product quality.
2. The mission of each individual department is to achieve high production quality.
• Quality should be talked about in a language senior management understands:
money (cost of poor quality).
• At operational level, focus should be on conformance to specifications through
elimination of defects- use of statistical methods.
The Juran philosophy

17. 17
Quality Trilogy –
1. Quality planning: Process of preparing to meet quality goals. Involves
understanding customer needs and developing product features.
2. Quality control: Process of meeting quality goals during operations. Control
parameters. Measuring the deviation and taking action.
3. Quality improvement: Process for breaking through to unprecedented levels of
performance. Identify areas of improvement and get the right people to bring about
the change.
The Juran philosophy

18. 18
Absolute’s of Management
• Quality means conformance to requirements not elegance.
• There is no such thing as quality problem.
• There is no such thing as economics of quality: it is always cheaper to do the job right
the first time.
• The only performance measurement is the cost of quality: the cost of non-
conformance.
Basic Elements of Improvement
• Determination (commitment by the top management)
• Education (of the employees towards Zero Defects (ZD))
• Implementation (of the organizational processes towards ZD)
The Crosby philosophy

19. 19
• Top management sees no reason for change.
• Top management is not concerned for its staff.
• Top management is not committed to the TQM program.
• The company loses interest in the program after six months.
• The workforce and the management do not agree on what needs to happen.
• Urgent problems intervene.
• TQM is imposed on the workforce, which does not inwardly accept it.
• No performance measure or targets are set, so progress cannot be measured.
• Processes are not analyzed, systems are weak and procedures are not written down.
Failure of TQM

20. 20
• Kai=change, Zen=Better. It means change for better
• It is Japanese term for making improvements to a process through
small, incremental amounts rather than through large innovations
• Proactive approach to cost management
• Orients organizations towards customers
• Break down barrier between departments
• Foster partnerships with suppliers
• Minimize non value added activities
• Encourages selection of lowest cost value added activities
Introduction-Kaizen

21. 21
• The Toyota Production System is known for Kaizen, where all line
personnel are expected to stop their monthly production line in case of
any abnormality and along with their supervisor suggests an
improvement to resolve the abnormality which may kick off a kaizen
• The continual and relentless reduction of non value added activities
and costs, the elimination of waste, and the improvements in
manufacturing cycle time all contribute to the effort
• In addition, the improvement suggestions and Kaizen efforts of all
employees are taken seriously and implemented when appropriate
• The result is continually more efficient and cost effective production
process
Kaizen-Implementation

22. 22
Kaizen Elements

23. 23
• Kaizen reduces waste - like inventory waste, time waste and workers
motion.
• Kaizen improves space utilization and product quality.
• Results in higher employee moral and job satisfaction.
• Teaches workers how to solve everyday problems.
Benefits Of Kaizen

24. 24
• Resistance to change.
• Lack of proper procedure to implement.
• Too much suggestion may lead to confusion and time wastage.
• Difficult to implement in large scale process, where analyzing requires a
lot of time.
Pit Falls in Kaizen

25. 25
• JIT manufacturing is a coordinated production system that enables the right
quantities of parts to arrive when/where they are needed. Key elements of
JIT manufacturing are the pull system and kanban production, small lot sizes
and quick setups, uniform plant loading, flexible resources, and streamlined
layout.
• Traditional manufacturing systems use “push” production; JIT uses “pull”
production. Push systems anticipate future demand and produce in
advance in order to have products in place when demand occurs. Pull
systems work backwards. The last workstation in the production line requests
the precise amounts of materials required.
• JIT considers people to be the organization’s most important resource.
• JIT is equally applicable in service organizations, particularly with the push
toward time-based competition and the need to cut costs.
• JIT success is dependent on inter functional coordination and effort.
Features of JIT

26. 26
• Respond to customer requirements
• Integrate all processes in the Manufacturing System
• Employee participation in meeting commitments
• Company wide commitment to education
• Eliminate redundancy
• Reduce all inventory
• Establish continuous inventory goals
• Reduce set up time
• Develop controllable production process
Requirements for JIT

27. 27
• Reduction in inventories
• Improved quality
• Reduced space requirements
• Shorter lead times
• Lower production costs
• Increased productivity
• Increased machine utilization
• Greater flexibility
Benefits of JIT

28. 28
• 看板 – Kanban literally means “visual card,” “signboard,” or “billboard.”
• Toyota originally used Kanban cards to limit the amount of inventory
tied up in “work in progress” on a manufacturing floor
• Not only is excess inventory waste, time spent producing it is time that
could be expended elsewhere
• Kanban cards act as a form of “currency” representing how WIP is
allowed in a system
Introduction-Kanban

29. 29
• Primary
Eliminate over-production, the #1 waste
Produce only what is ordered, when ordered, & quantity ordered
• Secondary
Increase flexibility to meet customer demand
Reduction in scheduling by Production Control & Manufacturing
Competitive advantage by sequencing shipments to customers (what they want,
when they want it, in the order they want it!)
Benefits of Kanban

30. 30
• No Cards
Visual (Tape On Floor)
Two-Bin or Bin Systems
Supplier Containers
Painted floors, i.e. squares, circles
• Card Systems
Electronic Kanbans - Fax or Emails
Warehouse Or Parts Racks
Kanban Boards – Magnetic or Cards
Containers
Flow Thru Racks
Supplier Boxes
Kanban Options

31. 31
Categories of Kanban
Kanba
n
Instruction
Withdrawal
Production
Kanban (non lot
production)
Triangle Kanban
(for lot production)
Interprocess
Kanban
Supplier
Kanban

32. 32
Production or (In-Process)-Kanban
Provides production instructions for the work center
Tells the workers exactly the quantity and the type of part to produce
Used for work centers that produce only one part number or have minimal setups in spite of multiple part
number production
Rectangular – one piece flow production
Triangular – for small lot production
Withdrawal-Kanban
Inter-Process Kanban
Delivers order for parts from a preceding process
Specifies quantity and type of parts to deliver from Location A to Location B
Later replenishment system – kanban are filled from suppliers finished goods shelf
Sequenced withdrawal – supplier sequences parts in reverse order for truck loading
Supplier Kanban
Same as an inter-process Kanban, except it signals conveyance of part from an outside supplier
Kanban Types

33. 33
Job order-Kanban
Issued for each job order
Through-Kanban
When two processes are very close, it doesn’t make sense to issue two Kanbans. Used where one process directly feeds
(conveyor) the next process.
Common-Kanban
Where a withdrawal kanban is used as a production ordering kanban if the distance between two processes is very
short and share the same supervisor.
Emergency-Kanban
Temporary, when there is a defect or problem, can be withdrawal or production
Kanban Types

34. 34
 QFD is a planning technique that is born in Japan as a strategy for
assuring that quality is built into new processes or systems design.
 It helps organization to take the voice of the customer and factor their
wants and needs into organization product and process planning
• Yoji Akao is widely regarded as the father of QFD and his work led to its
first implementation at the Mitsubishi Heavy Industries Kobe Shipyard in
1972. The interest in QFD in the West was stimulated by reports of the
achievements made by Toyota through its application between 1977
and 1984. These included a reduction in product development costs
by 61%, a decrease in the development cycle by one third and the
virtual elimination of rust related warranty problems
Introduction-Quality Function Deployment

35. 35
• Yoji Akao defined QFD as "a method for developing a design quality
aimed at satisfying the consumer and then translating the consumer's
demands into design targets and major quality assurance points to be
used throughout the production phase“
• QFD is a TQM tool. It is a planning technique that was born in Japan as
a strategy for assuring that quality is built into new processes.
• The QFD process uses matrices (sometimes called quality tables) to
help organizations to satisfy their customer requirements, e.g. House of
Quality (HOQ).
• These matrices are developed to generate design concepts, evaluate
them and propose process parameters to deliver or produce the best
design concept that meets customer requirements
QFD-Understanding by Yoji Akao

36. 36
• The "House of Quality" matrix is the most recognized form of QFD. It is
utilized by a multidisciplinary team to translate a set of customer
requirements, drawing upon market research and benchmarking data,
into an appropriate number of prioritized engineering targets to be
met by a new product design. There are many slightly different forms of
this matrix and this ability to be adapted to the requirements of a
particular problem or group of users forms one of its major strengths.
The general format of the "House of Quality" is made up of six major
components which are completed in the course of a QFD project
The House of Quality

37. 37
House of Quality
slides(yes/no)
frictionfactor
startswitchforce(lbf)
forcetosharpen(lbf)
holdforcerequired(lbf)
grasptorque(in-lbf)
shavingsstoreage(cu.in.)
no.stepstoempty
120VAC(yes/no)
cordlength(ft)
pointconeangle(degrees)
no.handstooperate
weight(oz)
pointroughness(microin.)
Cus tom e r Re quire m e nts 1 2 3 4 5 6 7 8 9 10 11 12 13 14 CP A B
1 doesn't slide w hen using 0.10 9 3 3 3 9 1 3 3 0.9
2 needs little insertion f orce 0.05 9 9 0.8
3 requires little insertion torque 0.05 9 0.9
4 operates w hen pencil is inserted 0.15 9 9 1.0
5 collects pencils shavings w ell 0.05 9 1 1.0
6 empties shavings easily 0.20 3 9 1 3 -3 0.6
7 plugs into w all socket easily 0.05 9 0.9
8 cord is long enough 0.05 9 0.8
9 grinds pencil to sharp point 0.20 9 3 0.7
10 needs only one hand tw o operate0.10 3 9 3 0.8
Total Importance 1.00
Pe rform ance current product(CP)
competitior A: Model #25 N 1 0 0 0 0 2 6 Y 6 20 1 20 6
competitor B
New Product Targets N 1 0 0 0 0 3 4 Y 6 18 1 18 5
Cus tom e r
Satis factio
n Rating
(0.00 -
1.00)
Engine e ring Characte ris tics (units)
Importancewt.
1 -31
1
-3
3
9
9
-9
9
31
-9
3
-3
1
1

38. 38
• The QFD process uses matrices to help the organization to satisfy their
customer requirements ( which are a structured list of requirements
derived from customer statements).
• The first of these matrices is called the house of quality (HOQ).
• It displays the customer wants and needs along the left side of the
matrix and the technical requirement (which are a structured set of
relevant and measurable product characteristics )to meet these wants
along the top of the matrix
• The HOQ has several sub-matrices joined together and they relate
technical requirements and technical targets to customer needs.
• Then a series of matrices is generated to address the whats (customer
needs) with the Hows ( possible technical Know-how) .
QFD Process

39. 39
 Reduced time to market
 Reduction in design changes
 Decreased design and manufacturing costs
 Improved quality
 Increased customer satisfaction
Advantages-QFD

40. 40
• Production/Manufacturing
• Maintenance
• Design courses and curriculum
• Design of performance measures
• Aerospace
Application of QFD

41. 41
• QFD is a method. It is not a panacea.
• QFD is an effective tool for improving the inventory system.
• It matches customer requirements with technical requirements.
• The use of QFD provides a better understanding of the planning
process.
• More work could be done to identify more design concepts for
evaluation.
• AHP or a more sophisticated evaluation process can be used to
evaluate resulting design concepts.
• An awareness program must be launched before applying QFD in
process, product or service design.
Conclusion-QFD

42. 42
• Never Pass on A Bad Part
• The Parts Are Always Withdrawn From The Prior Process
• Produce Only What Is Necessary To Replenish The Quantity Withdrawn
• Level Load Production, Rapid Changeover, Small Lot Production, Zero Defects
• Kanban Is Used To Fine Tune (Not Provide For Major Changes)
• The Process Must Be Capable Of Producing Good Parts (Rational And Stable)
• Need Efficient Methods Of Transportation, Shortest Routes Possible
• Disciplined Organization
• Nothing Is Made or Transported Without A Kanban.
• Kanban Cards Always Accompany the Parts Themselves.
• The Number of Kanbans Should Decrease over time.
Rules of the Kanban

43. 43
• A flexible manufacturing system (FMS) is a form of flexible automation in
which several machine tools are linked together by a material-handling
system, and all aspects of the system are controlled by a central computer.
• An FMS is distinguished from an automated production line by its ability to
process more than one product style simultaneously.
• At any moment, each machine in the system may be processing a different
part type.
• FMS can let us make changes in production schedule in order to meet the
demands on different products
• New product styles can be introduced into production with an FMS, so long
as they are to be used on the products that the system can process.
• This kind of system is, therefore, ideal when there are likely to be changes in
demands.
Introduction-Flexible Manufacturing System

44. 44
FMS Layout

45. 45
• An automatic materials handling subsystem links machines in the
system and provides for automatic interchange of work pieces in each
machine
• Automatic continuous cycling of individual machines
• Complete control of the manufacturing system by the host computer
• Lightly manned, or possibly unmanned
By implementing the components of robotics, manufacturing
technology and computer integrated manufacturing in a correct
order one can achieve a successful Flexible Manufacturing System
Distinguishing characteristics

46. 46
Several actions must be decided on before you can have a FMS. These
actions include.
• Selecting operations needed to make the product.
• Putting the operations in a logical order.
• Selecting equipment to make the product.
• Arranging the equipment for efficient use.
• Designing special devices to help build the product.
• Developing ways to control product quality.
• Testing the manufacturing system.
Development of FMS

47. 47
1-Basic Flexibilities
 Machine flexibility - the ease with which a machine can process various
operations
 Material handling flexibility -a measure of the ease with which different part
types can be transported and properly positioned at the various machine
tools in a system
 Operation flexibility - a measure of the ease with which alternative operation
sequences can be used for processing a part type
2-System Flexibilities
 Volume flexibility
 Expansion flexibility
 Routing flexibility
 Process flexibility
 Product flexibility
Three levels of manufacturing flexibility

48. 48
3-Aggregate flexibilities
 Program Flexibility
 Production Flexibility
 Market Flexibility
Three levels of manufacturing flexibility

49. 49
 Weaving Looms with paper tapes,
 NC machines with paper tapes
 Hard wired NC machines
 Computer controlled NC machines (CNC)
 Direct Numerical Control (DNC)
Major historical developments

50. 50
 Robotics
 Material Handling / Transport
 Machines
 Manual / Automated Assembly Cells
 Computers
 Controllers
 Software
 Networks
Components of FMS Systems

51. 51
 Reduced work in process
 Increased machine utilization
 Better management control
 Reduced direct and indirect labor
 Reduced manufacturing lead-time
 Consistent and better quality
 Reduced inventory
Benefits of FMS

52. 52
 Expensive, costing millions of dollars
 Substantial pre-planning activity
 Sophisticated manufacturing systems
 Limited ability to adapt to changes in product
 Technological problems of exact component positioning and precise
timing necessary to process a component
The Disadvantages of FMS

53. 53
 Technology will make 100% inspection feasible
 Computer diagnosis will improve estimation of machine failure, and
guide work crews repairing failures
 The use of robots that have vision, and tactile sensing
 Minimum human labor in manufacturing systems
 More sophisticated tools with increased computing power
 Better management software, hardware, and fixturing techniques
 Developed standards that will let us install new machines easily
 Reduced marketing of products
 Custom orders for customers will be made immediately with exact
specifications
 Improved network systems between manufacturers and suppliers
Future Benefits of FMS

54. 54
Differences Between FMS and FMC
FMS
Has four or more machines
Larger and more
sophisticated computer
control system
Minimized effect of
machine breakdowns
FMC
Has two or three machines
Simpler computer control
system
Limited error recovery by
fewer machines

55. 55
• In today’s ever-changing world, the only thing that doesn’t change is
‘change’ itself. In a world increasingly driven by the three Cs:
Customer, Competition and Change,
• companies are on the lookout for new solutions for their business
problems[4]. Recently, some of the more successful business
corporations in the world seem to have hit upon an incredible solution:
Business Process Reengineering (BPR).
• Some of the recent headlines in the popular press read, “Wal-Mart
reduces restocking time from six weeks
• to thirty-six hours.”” Hewlett Packard’s assembly time for server
computers touches new low- four minutes.”
• The reason behind these success stories: Business Process
Reengineering!
Introduction-Business Process-Re-engineering

56. 56
• “Reengineering is the fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in critical,
contemporary measures of performance such as cost, quality, service and
speed”.
• BPR advocates that enterprises go back to the basics and reexamine their
very roots. It doesn’t believe in small improvements. Rather it aims at total
reinvention.
• BPR focuses on processes and not on tasks, jobs or people
• “A business process is a series of steps designed to produce a product or a
service. It includes all the activities that deliver particular results for a given
Customer(external or internal)”.
• Talking about the importance of processes just as companies have
organization charts, they should also have what are called process maps to
give a picture of how work flows through the company.
What to re-engineer?

57. 57
• Historical ‘reality’ for organizations:
High level of demand: organizations are order takers
Management (and IT!) focus – efficiency and control of operations
• Modern ‘reality’ since 1990s:
Hyper-competiveness
Globalization
Very demanding customers
Management and IT focus: Innovation, responsiveness/speed,
quality and service.
Why to re-engineer?

58. 58
FORD company

59. 59
FORD company

60. 60
Process of BPR

61. 61
• Organize around outcomes not around tasks
• Have those who use the output of the process perform the process
• Subsume information processing work into the real work that produces
the information
• Treat geographically dispersed resources as though they were
centralized
• Link parallel activities instead of integrating their results
• Put decision points where work is performed and build controls into the
process
• Capture information once and at the source
BPR Principles

62. 62
• Prepare for Re-engineering
• Map and analyze process
• Design to be process
• Implement Re-engineered process
• Improve process continuously
Activities in Business Process Re-Engineering

63. 63
• Client/server technology
• Groupware and collaboration technologies
• Mobile computing (wireless LAN, pen-based computing, GPS, iPhone)
• Data capturing technology (scanner/barcode reader/RFID)
• Telephony: Integration of computer and telephone systems; VoIP;
Unified communications
• Web services and Service-Oriented Architecture (SOA)
• Imaging technology, work flow management systems, Business Process
Management (BPM)
• Decision support systems, Data warehouse, Business intelligence, Data
mining, Digital dashboard
• ERP, CRM, SCM
• Electronic Data Interchange (EDI), Electronic Commerce, WWW, and
Internet
Enabling IT to Consider

64. 64
• Created by International Organization for Standardization (IOS) which was created
in 1946 to standardize quality requirement within the European market.
• IOS initially composed of representatives from 91 countries: probably most wide base
for quality standards.
• Adopted a series of written quality standards in 1987 (first revised in 1994, and more
recently (and significantly) in 2000).
• Prefix “ISO” in the name refers to the scientific term “iso” for equal. Thus, certified
organizations are assured to have quality equal to their peers.
• Defines quality systems standards based on the premise that certain generic
characteristics of management principles can be standardized.
• And that a well-designed, well-implemented and well managed quality system
provides confidence that outputs will meet customer expectations and requirements.
• Standards are recognized by 100 countries including Japan and USA.
• Intended to apply to all types of businesses.
Introduction-ISSO 9000:2000

65. 65
Created to meet five objectives:
1. Achieve, maintain, and seek to continuously improve product quality in relation to
the requirements.
2. Improve the quality of operations to continually meet customers’ and stakeholders’
needs.
3. Provide confidence to internal management that quality requirements are being
met.
4. Provide confidence to the customers that quality requirements are being met.
5. Provide confidence that quality system requirements are fulfilled.
ISO 9000: 2000

66. 66
• Consists of three documents
1. ISO 9000 – Fundamentals and vocabulary.
2. ISO 9001 – Requirements. Organized in four sections: Management Responsibility;
Resource Management; Product Realization; and Measurement, Analysis and
Improvement.
3. ISO 9004 – Guidelines for performance improvements.
ISO 9000: 2000 structure

67. 67
• Establishes a quality management system (QMS) to facilitates
consistency
• It is not prescriptive; does not tell you “how” to do anything; specifies
“what” processes need to be in place
• It is not a product standard
• It is not TQM
• It is site specific
ISO 9000 Key Characteristics

68. 68
1. Customer Focus
2. Leadership
3. Involvement of People
4. Process Approach
5. System Approach to Management
6. Continual Improvement
7. Factual Approach to Decision Making
8. Mutually Beneficial Supplier Relationships
ISO 9000:2000 Quality Management Principles

69. 69
• 21 elements organized into five major sections:
System Requirements
Management Responsibility
Resource Management
Product Realization
Measurement, Analysis, and Improvement
Structure of ISO 9000 Standards

70. 70
• Originally intended to be a two-party process where the supplier is audited by its
customers, the ISO 9000 process became a third-party accreditation process.
• Independent laboratory or a certification agency conducts the audit.
• Recertification is required every three years.
• Individual sites – not entire company – must achieve registration individually.
• All costs are to be borne by the applicant.
• A registration audit may cost anywhere from $10,000 to $40,000.
ISO 9000: 2000 registration

71. 71
1. The company first implements the control and documentation procedures outlined
in the series.
2. It then involves a thorough audit by an independent certification organization (i.e.,
a Registrar) that is licensed to register quality systems by an accreditation body
(e.g., Registrar Accreditation Board in U.S.)
3. Upon compliance, it receives a registration certificate and its name is included in a
published directory of registered suppliers.
4. The systems will be continually verified by the registrar in periodic surveillance and
full audits are conducted every few years
5. Through Dec. 2002, at least 561,747 ISO 9000 certifications have been issued in 159
countries and economies. In North America, 53,806 certifications were issued. In
Europe, 292,970 certifications were issued – The ISO Survey
6. Some beginning to question its usefulness
ISSO 9000 certification process

72. 72
• Documentation of quality management system
• Reduction of variation
• Help develop and expand business
• Reduction or elimination of customer audit
• Increased profitability/reduced costs
• Improved communication, both internal and external
• Greater awareness of quality by employees
• Provision of training to all employees
• Ability to remain or become competitive
• Elimination of duplication of quality systems
Potential benefits of registration

73. 73
• Costs - application & maintenance
• Time - application & maintenance
• Level of internal expertise
• Executive commitment
• Selection of registration
Problem with certification

74. 74
• Until 1960s when gained public attention
• Corporations reacted to increased legislation
• Responsible Care Program (Canada) in 1984
• British created the first national EM standard BS 7750 in 1994
• A Canadian standard Z750 was created in 1994
• Legislated in 1993, EU published EMAS in 1994, open in 1995.
• In the U.S. no national standard was developed during the 1990s, however groups of companies did (e.g. GEMI)
• The first international EMS was ISO 14001 by ISO.
• Based on:
The success of ISO 9001
Increasing international concern (UN Conference of Rio 1992)
Created a Technical Committee 207
• The ISO 14001 was published for the first time in 1996.
Introduction-ISSO 14001

75. 75
…to "promote a harmonious and balanced development of economic
activities, sustainable and non-inflationary growth respecting the
environment… the raising of standards of living and quality of life"
(EMAS).
…to support environmental protection and prevention of pollution in
balance with socio-economic needs (ISO 14001)
Why environmental standards?

76. 76
• First version finalized and issued in 1996, revised every five years (2004
current version)
• Market sector created and driven; governments participate but it is not
legislative or regulatory
• Process standard, not performance
• Each participating nation has a committee that develops consensus
and contributes (one vote each, for US it is ANSI)
• 14001 is one of the standards in the 14000 series
EMS and ISO 14001

77. 77

78. 78
• Voluntary
• Set up the by industry: countries can adapted into their legislation
• Is aimed to improve processes not performance itself
• Key aspect is that of continual improvement
• Doesn’t require the publication of an environmental statement
• Provides the company with a guideline on how to manage environmental
aspects
• Requires management commitments and involvement from all employees
ISO 14001 standards

79. 79
• ISO develops International Standards but does not operate any
schemes for assessing conformity with them.
What ISO is not?
• ISO is not an auditor, assessor, registrar, or certifier of management
systems, products, services, materials or personnel, nor does it endorse
or control any such activities performed by other parties.
ANSI coordinates the development of standards in the U.S. and
accredit programs that assess conformance with the standards
• 750 certification bodies worldwide
ISO

80. 80
Environmental Management System
Policy
Management
Review
Implementation
and Operation
Checking and
Corrective Action
Planning

81. 81
ISO 14001 EMS Model
4.5.1 Monitoring & Measurement
4.5.2 Preventive & Corrective Action
4.5.3 Records
4.5.4 EMS Audit
4.4.1 Resources, Roles,
responsibility and authority
4.4.2 Competence, Training &
Awareness
4.4.3 Communication
4.4.4 Documentation
4.4.5 Document Control
4.4.6 Operational Control
4.4.7 Emergency Preparedness
4.2 Define Policy
4.3.1 Identify Aspects
4.3.2 Legal Requirements 4.3.3 Identify Objectives
Targets and Programs
4.4 Implementation
and Operation
4.5 Checking
4.6 Management Review
3.2 Continual Improvement
3.18 Prevention of Pollution
Products,
Services, and
Activities

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To meet ISO 14001 requirements, the policy must:
1. Be appropriate to the nature, scale, and environmental impacts of the organization
activities and goods produced.
2. Include a commitment to continual improvement and prevention of pollution.
3. Include a commitment to relevant legal requirements.
4. Provide a framework for setting and reviewing environmental objectives and targets.
5. Be documented, implemented and maintained, and communicated to all employees
(also contractors)
6. Be available to the public.
Policy Requirements

83. 83
• Under ISO 14001, documentation refers to all written material
concerning the EMS
• Documents include policies, procedures, manuals, plans, diagrams,
flowcharts, correspondence, memoranda related to the EMS
• Records are documents, but under ISO 14001 are distinguished from
documentation:
Documentation concerns what should happen
Records contain information on what has happened
The organization shall establish and maintain procedures related
to the identifiable significant environmental aspects of goods and
services used by the organization and communicate relevant
procedures and requirements to suppliers and contractors
Documentation-ISO 14001

84. 84
• 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.
• Types of FMEA are:-
1. System - focuses on global system functions
2. Design - focuses on components and subsystems
3. Process - focuses on manufacturing and assembly processes
4. Service - focuses on service functions
5. Software - focuses on software functions
Introduction-FMEA

85. 85
• Failure Modes and Effects Analysis provides a framework for analyzing
potential reliability problems early on in design.
• The FMEA framework is used to identify and prioritize possible points of
failure, determine their effect on the product’s operation, and identify
actions to reduce potential failures.
• Failure Modes – Ways in which the solution might fail
• Severity – Likely impact of the failure
• Occurrence – Probability that potential cause will happen
• Detection – Likelihood current controls will detect failure
• Risk Priority Number (RPN)
=Severity x Occurrence x Detection
Purpose of FMEA

86. 86
• Sort Capability for Severity, Occurrence, and Detectability fields
• RPN Charting – bar chart sorts RPN in descending order
• Priority Field – can be used as a manual override after charting and
sorting the FMEA template by RPN
• FMEA Resolution tab – displays actions taken and new RPN values.
These can be sorted and the process can be restarted
Features of FMEA

87. 87
• Allows us to identify areas of our process that most impact our customers
• Helps us identify how our process is most likely to fail
• Points to process failures that are most difficult to detect
• Manufacturing: A manager is responsible for moving a manufacturing
operation to a new facility. He/she wants to be sure the move goes as
smoothly as possible and that there are no surprises.
• Design: A design engineer wants to think of all the possible ways a product
being designed could fail so that robustness can be built into the product.
• Software: A software engineer wants to think of possible problems a software
product could fail when scaled up to large databases. This is a core issue for
the Internet.
Benefits and Application of FMEA

88. 88
• First used in the 1960’s in the Aerospace industry during the Apollo
missions
• In 1974, the Navy developed MIL-STD-1629 regarding the use of FMEA
• In the late 1970’s, the automotive industry was driven by liability costs to
use FMEA
• Later, the automotive industry saw the advantages of using this tool to
reduce risks related to poor quality
History

89. 89
• Severity
Importance of the effect on customer requirements
• Occurrence
Frequency with which a given cause occurs and
creates failure modes (obtain from past data if possible)
• Detection
The ability of the current control scheme to detect
(then prevent) a given cause (may be difficult to estimate early in
process operations).
Severity, Occurrence and Detection

90. 90
• There are a wide variety of scoring “anchors”, both quantitative or qualitative
• Two types of scales are 1-5 or 1-10
• The 1-5 scale makes it easier for the teams to decide on scores
• The 1-10 scale may allow for better precision in estimates and a wide
variation in scores (most common)
• Severity
1 = Not Severe, 10 = Very Severe
• Occurrence
1 = Not Likely, 10 = Very Likely
• Detection
1 = Easy to Detect, 10 = Not easy to Detect
Rating Scales

91. 91
• A team approach is necessary.
• Team should be led by the Process Owner who is the responsible
manufacturing engineer or technical person, or other similar individual
familiar with FMEA.
• The following should be considered for team members:
– Design Engineers – Operators
– Process Engineers – Reliability
– Materials Suppliers – Suppliers
– Customers
FMEA: A Team Tool

92. 92
For each process input (start with high value inputs), determine the ways in which the
input can go wrong (failure mode)
2. For each failure mode, determine effects
Select a severity level for each effect
3. Identify potential causes of each failure mode
Select an occurrence level for each cause
4. List current controls for each cause
Select a detection level for each cause
5. Calculate the Risk Priority Number (RPN)
6. Develop recommended actions, assign responsible persons, and take actions
Give priority to high RPNs
MUST look at severities rated a 10
7. Assign the predicted severity, occurrence, and detection levels and compare RPNs
FMEA Procedure

93. 93
• TPM is a plant improvement methodology which enables continuous and
rapid improvement of the manufacturing process through use of
employee involvement, employee empowerment, and closed-loop
measurement of results
TPM is both a philosophy to permeate throughout an operating company
touching people of all levels and it is aimed at maximizing the
effectiveness (best possible return) of business facilities and processes
• TOTAL = All encompassing by maintenance and production individuals
working together
• PRODUCTIVE = Production goods and services that meet or exceed
customers’ expectations
• MAINTENANCE = Keeping equipment and plant in as good as or better
than the original conditions at all times
Introduction-TPM

94. 94
TPM Philosphy

95. 95
It is Japanese approach for creating company culture for
maximum efficiency
Striving to prevent losses with minimum cost
The essence of team work (small group activity) focused on
condition and performance of facilities to achieve zero loss for
improvement
Involvement of all people from top management to operator
Perspective-TPM Philosphy

96. 96
• Productive maintenance (PM) originated in the U.S. in late 1940’s &
early 1950’s
• Japanese companies modified and enhanced it to fit the Japanese
industrial environment
• The first use the term TPM was in 1961 by Nippondenso, a Japanese
auto components manufacturer
• Seiichi Nakajima – head of JIPM, one of the earliest proponents, known
as the Father of TPM
• TPM first introduced in Japan 20 years ago and rigorously been applied
in past 10 years
• TPM planning & implementation in Japanese factories supported by
JIPM (Japan Institute of Plant Maintenance)
History/Origin

97. 97
• Breakdown maintenance
• Preventive maintenance (PM)
• Productive maintenance
• Total productive maintenance
• Equipment improvement
• Maintenance System Preventive Building
• Education and Training
TPM-Evolution

98. 98

99. 99
• Aims at getting the most effective use of equipment
• Builds a comprehensive PM system
• Brings together people from all departments concerned with
equipment
• Requires the support and cooperation of everyone from top managers
down
• Promotes and implements PM activities based on autonomous small
group activities.
• Maintaining Equipment for life
• Encouraging input from all employees
• Using teams for continuous improvement
Goals of TPM

100. 100
It guarantees dramatic results (Significant tangible results)
Reduce equipment breakdowns
Minimize idle time and minor stops
Less quality defects and claims
Increase productivity
Reduce manpower and cost
Lower inventory
Reduce accidents
Visibly transform the workplace
Through TPM, a filthy, rusty plant covered in oil and grease, leaking fluids and
spilt powders can be reborn as a pleasant and safe working environment
Customers and other visitors are impressed by the change
Confidence on plant’s product increases
Why TPM so popular and important?

101. 101
Raises the level of workers knowledge and skills
The workers to become motivated
Involvement increases
Improvement suggestions proliferate
People begin to think of TPM as part of the job
Why TPM so popular and important?

102. 102
To maximize overall equipment effectiveness (Zero breakdowns and failures,
Zero accident, and Zero defects etc) through total employee involvement
To improve equipment reliability and maintainability as contributors to quality
and to raise productivity
To aim for maximum economy in equipment for its entire life
To cultivate equipment-related expertise and skills among operators
To create a vigorous and enthusiastic work environment
To aim for world-class maintenance, manufacturing performance and quality
To plan for corporate growth through business leadership
To promote greater efficiency through greater flexibility
Revitalize the workshop and make the most of employee talents
TPM Policy and Objective

103. 103
• Improved equipment eliminates the root cause of defects
• Defects are prevented through planned maintenance
• Preventive maintenance costs are reduced as equipment operators
conduct autonomous maintenance
• Improved equipment designs ensure that new equipment naturally
produces fewer defects
• Simplified products designs and a redesigned process produce with
few defects
• Engineers, technicians and managers are trained in maintenance and
quality
TPM-Benefits

104. 104
• 5S is a workplace organization methodology that uses a list of
five Japanese words which are seiri, seiton, seiso, seiketsu and shitsuke.
• Sorting (seiri)
• Straightening (seiton)
• Systematic cleaning (seiso)
• Standardizing (seiketsu)
• Sustaining (shitsuke)
Introduction-5s

105. 105
• Eliminate all unnecessary tools, parts, and instructions.
• Keep only essential items and eliminate what is not required
• Prioritizing things per requirements and keeping them in easily-
accessible places.
• Everything else is stored or discarded.
Sorting (Seiri)

106. 106
• There should be a place for everything and everything should be in its
place.
• The place for each item should be clearly labelled or demarcated.
• Items should be arranged in a manner that promotes efficient work
flow, with equipment used most often being the most easily accessible.
Straightening or setting in order / stabilize (Seiton)

107. 107
• Clean the workspace and all equipment, and keep it clean, tidy and
organized.
• At the end of each shift, clean the work area and be sure everything is
restored to its place.
• Maintaining cleanliness should be part of the daily work – not an
occasional activity initiated when things get too messy.
shining or systematic cleaning (Seiso)

108. 108
• All work stations for a particular job should be identical.
• All employees doing the same job should be able to work in any
station with the same tools that are in the same location in every
station.
• Everyone should know exactly what his or her responsibilities are for
adhering to the first 3 S's.
Standardizing (Seiketsu)

109. 109
• Maintain and review standards.
• Maintain focus on this new way and do not allow a gradual decline
back to the old ways.
• While thinking about the new way, also be thinking about yet better
ways.
Sustaining the discipline or self-discipline (Shitsuke)

110. 110
• improves organizational efficiency
• reduces waste in all forms
• cuts down employee frustration when "the system doesn’t work"
• improves speed and quality of work performance
• improves safety
• creates a visually attractive environment
Benefits of 5s

111. 111
• Productivity
• Safety
• Reduced Waste
• Worker Commitment
Objective of 5s

112. 112

113. 113
• ‘Poka’ means ‘Mistakes’ & ‘Yoke’ means ‘Avoid’. It’s objective is to
achieve Zero Defects.
• Poka-yoke is a quality assurance technique ,the aim of poka-yoke is to
eliminate defects in a product by preventing or correcting mistakes as
early as possible.
• Term adopted by Dr. Shigeo Shingo as part of the Toyota Production
System in 1960.
• It was originally described as “baka-yoke”, but this name mean “Fool-
Proofing” so the name was changed to the Poka-yoke
Introduction-Poka-Yoke

114. 114
• Processing Errors
• Missing Operations
• Inappropriate procedures
• Missing parts
• Missing Information
• Wrong parts
• Damaged Parts
• Damaged Materials
• Tools or equipment improperly prepared or set up
• Human errors
Typical Errors

115. 115
• Processing omissions (a step was forgotten)
• Processing errors (something was done incorrectly)
• Error in setting up the work piece
• Assembly omissions (a part was forgotten)
• A wrong part / item was included
• Wrong work piece
• Operations errors (incomplete information, procedures not followed)
• Adjustment, measurement, dimensional errors
• Equipment maintenance errors
• Errors in preparation of tools, fixtures, blades, etc
Errors that causes defects

116. 116
• Defect free product is a necessity to compete in the market place.
• Every Customers has a right to demand 100% good product /service
and every provider has an obligation to provide the same.
• Bad products hurt both reputation and bottom line (Scrap, rework,
warranty….etc.,.)
• Defects have a direct impact on process yield affecting speed and
flow of the product to the customer.
Defects and its impact

117. 117
• Identify a problem
• Observations at work station
• Brain storm for ideas
• Zero is on best idea
• Implementation plan
• Monitor & sign off
Methodology

118. 118
• Make it harder to create the error
• Make it possible to reverse the error
• Make it obvious that the error has occurred
• Detect deviations from procedures or fixed values (e.g., Number of
parts)
• Design
• Design process so it tolerates the error and doesn’t result in a defect
• Design process to decrease complexity
Mistake proofing strategies

119. 119
• Control approach
• Shuts down the process when an error occurs
• High capability of achieving zero defects (ie robust design that can
tolerate variation or eliminates variation or assembly mistakes)
• Warning approach
• Signals the operator to stop the process and correct problem or check
for a problem (ie are parts still ok, is oil level ok)
• Sometimes an automatic shutoff is not an option
• Dials, lights, and sounds to bring attention to the problem
Approaches to mistake proofing

120. 120
• Guide pins, to assure that parts can only be assembled in the correct
way.
• Limit switches, that sense the presence or absence of a part.
• Mistake-proofing jigs, detect defects immediately upstream of the
process ensuring that only the correct part reach the process.
• Counters, that verify that the correct number of parts or steps have
been taken.
• Checklist, that reminds operators to do certain actions.
Examples of Mistake Proofing Devices

121. 121
• Home
– Automated shut-offs on electric coffee pots
– Child-Proof caps on mediations
– Ground fault circuit breakers for bathrooms or outside electric circuits
• Office
– Spell check in word processing
– Question prompt “Do you want to delete?” after pressing the “Delete” button
on your computer
• Factory:
– Dual palm button and light curtains on machines
• Retail:
– Tamper-Proof packaging
– Bar coding at checkout.
Everyday examples of mistake proofing

122. 122
• Types of mistake proofing devices within control or warning approach can be of:
–Contact type:
•The contact type makes contact with every product or has a physical shape that
prevents mistakes. Example: Fixed diameter hole through which all products must fall
and an oversize product does not fall through and a defect is registered.
–Fixed value type:
• The fixed value method is a design that makes it clear when a part is missing or not
used.
Example: “Egg tray” used for supply of parts,
–Motion step type:
• The motion step type automatically ensures that the correct number of steps have
been taken. Example: An operator is required to step on a foot pedal every
assembly cycle, Correct sequence for switches that do not work unless the order is
correct.
Mistake Proofing Devices

123. 123
• Sensing devices that are traditionally used in poka-yoke systems can
be divided into three categories: 1. Physical contact devices 2. Energy
sensing devices 3. Warning Sensors
• These devices work by physically touching something
• In most cases these devices send an electronic signal when they are
touched.
• Depending on the process, this signal can shut down the operation or
give an operator a warning signal.
Types of Sensing devices-Physical Contact Devices

124. 124
• Used to physically detect the presence or absence of an object or
item-prevents missing parts. Used to physically detect the height of a
part or dimension
• These devices work by using energy to detect whether or not an
defect has occurred
• Warning sensors signal the operator that there is a problem
• These sensors use colors, alarms, lights to get the workers attention !
• These sensors may be used in conjunction with a contact or energy
sensor to get the operators attention.
Touch Switch, Energy Sensors and Warning Sensors

125. 125
• Remove defect from root cause or source
• Faster defect detection and correction
• Less attention from worker/operators
• Improve safety of workers
• Improve equipment effectiveness and assures higher reliability
Advantages of Poka-Yoke

126. 126
• Requires special expertise in terms of instrumentation knowledge
• Requires work culture of 100% inspection and perfectionism, which is
difficult to sustain
• Worker may sometimes fiddle with the instruments, especially settings
on their machines, resulting in losses to the company
Limitation of Poka-Yoke

127. 127
 Planning and arranging manufacturing machinery, equipment and
services for the first time in completely new plants.
 The improvements in layouts already in use in order to introduce new
methods and improvements in manufacturing procedures.
Arrangement of –
 Machinery
 Equipment
 Other industrial facilities
 Achieving Quick production at least cost.
Facility Layout

128. 128
 Provide enough production capacity.
 Reduces handling costs.
 Reduces congestion.
 Reduces hazards to personnel.
 Utilizes labour efficiently.
 Increase employee morale.
 Reduce accidents.
Objective of good layout

129. 129
 Facilitate co-ordination communication.
 Provide safety and health.
 Allow ease of maintenance.
 Allow high machine/equipment utilization.
 Improve productivity.
 Utilizes available space efficiently and effectively.
 Provide for volume and product facility.
 Provide ease for supervision.
Objective of good layout

130. 130
• MATERIALS (Type of raw materials and availability)
• PRODUCT (Type of product and its position)
• WORKER (Type , position and requirements)
• MACHINERY(Product, volume and process)
• INDUSTRY (Type of industry: Synthetic, Analytical, Conditioning and
Extractive)
• LOCATION (Factor of production)
• MANAGERIAL POLICIES ( volume, provision for expansion, automation,
making or buying decisions, desire for rapid delivery, purchasing policy
and personnel policies)
Factors influencing Facility Layout

131. 131
• Principle of minimum travel
• Principle of sequences
• Principle of usage
• Principle of compactness
• Principle of safety and satisfaction
• Principle of flexibility
• Principle of minimum investment.
Principles of Layout

132. 132
• Process layout or functional or job shop layout.
• Product layout or line processing layout.
• Fixed position layout or static layout.
• Cellular manufacturing layout or Group Technology layout .
• Combination layout or Hybrid layout.
Types of Layout

133. 133
• The distance between departments should be as short as possible.
• Machines should be grouped in accordance with the principle of
sequence of operation.
• Convenience for inspection.
• Convenience for supervision.
Process Layout

134. 134
• Reduced investment of machine.
• Greater flexibility.
• Better and efficient supervision.
• Scope for expansion as the capacity can be easily increased.
• Better utilisation of men and machine.
• Easier to handle breakdown of equipment.
• Full utilisation of equipments.
• Investment of equipment would be comparatively lower.
• Greater incentive to individual worker .
Advantages of Process layout

135. 135
• Difficulty in the movement of material.
• Requires more space.
• Difficult in production control.
• More production time as work in progress has to travel from place to
place.
• Accumulation of work in progress at different places.
Disadvantages of Process Layout.

136. 136
• All the machine tool and equipment must be placed at the point
demanded by the sequences of operations.
• There should be no points where one line crosses another line.
• Materials may be fed where they are required for assembly but not
necessarily all at one point.
• All the operations , including assembly, testing and packing should be
included in the line.
Product Layout

137. 137
• Reduction in material handling cost due to mechanization.
• Avoid production bottleneck.
• Economy in manufacturing time.
• Better production control.
• Require less floor area per unit of production.
• Work-in-progress is reduced and so on investment.
• Early detection of mistakes.
• Greater incentive to a group of workers to raise their level of
performance.
Product Layout (advantages)

138. 138
• Product layout is known for its inflexibility.
• This is an expensive layout
• Difficulty in supervision.
• Expansion is also difficult.
• Breakdown can disrupt the whole system.
Product Layout (disadvantages)

139. 139
• Movement of men and machine to the product.
• Product remain stationary.
• Material or major components remain in a fixed location.
• Cost of moving the machine and men is lesser than the cost of moving
the product.
• Men and machine can be used for a wide variety of operations
producing different products.
• The investment on layout is very small.
• The worker identifies himself with the product and takes pride in it when
the work is complete.
• The high cost of, and difficulty in transporting a bulky product are
avoided.
Fixed position layout

140. 140
• In this machines are grouped into cells and the cells function somewhat
like product layout within a larger shop or process layout.
• A product layout is visible inside each cell
• Each cell is formed to produce a few parts with common characters.
Introduction-Cellular layout

141. 141
Cellular Manufacturing

142. 142
• In 1973, Henry Ford employed up to 1,000 people simply to move
material in his automobile factory, an occupation that was to be
virtually eliminated In a new building with an improved layout
and with mechanized and gravity-based material-handling
systems. Ford discovered that great economies could be made
by moving stocks to the assembly staff rather than having them
leave their workplace to get materials. He also noted that costs
could be greatly reduced by providing that workers with all the
necessary tooling and thereby eliminating tool rooms. The great
emphasis placed on efficiency in transporting materials in ford
factories seems to have been the motivating factor that led to
the development of an assemble line.
Case Study-1-Henry Ford-Invention of Assembly Line

143. 143
• Ford engineers conserved space by using very detailed floor
plans and positioned equipment such that when a machine
comes into the factory, it is placed so that the material coming
from an operation will be as exactly as possible in position for
succeeding one. Ford himself said, “they (machines) are
scientifically arranged, not only in the sequence of operations,
but to give every man and every machine every square inch of
space that he/it requires and… not… more”.
• Ford was extremely conscious that space in his factory was valuable and
sought to exploit it as completely as possible without giving any more to work
in progress than was necessary. Ford emphasizes ‘dividing and subdividing
operations, keeping the work in motion- those are the keynotes of
production’, in a perspective that leaves no room for excessive or idle
inventories (Wilson 1995).
Case Study-1-Henry Ford-Invention of Assembly Line

144. 144
• Shinichi Takeuchi, former head of Suzuki’s Kosai facility in Japan, was sent to one of
Suzuki’s most profitable subsidiaries, Maruti Udyog, as director(Production) in
October 2001.
• In may 2002, Takeuchi launched the challenge 50 programme at Maruti. Challenge
50 aims at increasing the productivity at Maruti’s Gurgaon facility by 50% and
reducing the costs by 30%.
• Thus trying to fill in the wide performance gap between Maruti and Suzuki’s Kosai
facility, which produces 600,000 cars in a year.
• The low production cost will give Maruti not just more profits, but an advantage
over competition.At Maruti’s Gurgaon plant, Takeuchi has pulled from under the
carpet all kinds of Muda(Japanese for wastage) starting with the assemble line.
Maruti Udyog-Case Study 2

145. 145
• At some of the workstations of the assemble line, the number of steps a worker has to
walk to fetch parts and tools from their racks has been brought down to 5 from the earlier
10-15.With almost 200 workers manning one assemble line, the saving have led not just to
increase in productivity, but also safety.
• Another problem successfully handled by Takeuchi at the assemble line is the proper
installation of rubber beadings for doors by the line operators. Earlier staggering 14% of the
cars would fail the shower test(to check the leakage) as a result of the improper installation
of these beadings. Today, the figure stands at less than 1%. Takeuchi is still not happy
because that means nine cars fail the test in every shift.
• There is a specific sequence to be followed for making the fitment. If that is not done, it may
result in warranty claims at the customer’s end. Even if it is detected in the shower test,
costly rework is required. The car needs to be taken off the assembly line to a rework
station, where extra man-hours have to be spent fixing the problem. Takeuchi ensured that
the workers follow the installation sequence exactly, so that there is no scope for rework.
Maruti Udyog-Case Study 2

146. 146
• Maruti udyog ltd. is raising quality and efficiency levels across the board in order to
achieve its benchmark of Suzuki’s facility at Kosai, Japan, through the challenge 50
programme.
• Compared to the 100% benchmark of Kosai, Maruti presently has comparative
assemble hours per vehicle of 78.12% and a direct pass rate of 80.64%.
• Takeuchi has introduced a quicker set-up technique called the single-minute
exchange of dies. Simultaneously to tackle the non-availability of components,
about 160 vendors who do not meet strict parameters of quality, cost, productivity,
and delivery will be dropped.
• To increase the speed and quality, Maruti has 120 robots now compared to only
half a dozen of robots five years ago. It is striving to reach its benchmark on every
parameter by the year 2004-2005.
Maruti Udyog-Case Study 2

147. 147
• People are the greatest assets of an organization, because, through people all other
resources are converted into utilities. However, management of ‘People Resources’ has
always been a vexed problem ever since the beginning of organized human activities. A
number of managerial responses have been developed to answer this question.
• Quality Circle is a small group of 6 to 12 employees doing similar work who voluntarily
meet together on a regular basis to identify improvements in their respective work areas
using various techniques for analyzing and solving work related problems coming in the
way of achieving and sustaining excellence leading to mutual upliftment of employees as
well as the organization. It is "a way of capturing the creative and innovative power that
lies within the work force“
Introduction-Quality Circles

148. 148
• After the Second World War Japanese economy was in the doldrums, Americans
decided to help Japan in improving the quality standards of their products. General
Douglas Mac Arthur who, at that time, was the commander of the occupational forces
in Japan took up the task of imparting quality awareness among Japanese to help them
improve their products and the reliability of manufacturing systems including men,
machine and materials. Thus, by 1975, they were topping the world in quality and
productivity. This astonishing and unique achievement in modern history became an
eye – opener to the world. Industrialists and politicians from all over the world started
visiting Japan to know how they have achieved such magical results in such a short
span. The answer to this was painstaking and persevering efforts of the Japanese
leaders and workers and the development and growth of the philosophy of small
working groups.
Genesis of Quality Circles

149. 149
• Quality circle are small primary groups of employee whose lower limit is three and
upper limit twelve.
• The membership of quality circle is most voluntary .
• Each circle is lead by area supervisor .
• The member meet regularly every week or according to an agreed schedule.
• The circle members are specially trained in techniques of analysis and problem
solving.
• The basic role of circles to identify and solve work related problems for improving
quality and productivity.
• Quality circle enable their member to exercise their hidden talents for tackling
challenging tasks.
Characteristics of Quality Circles

150. 150
• The concept of Quality Circle is primarily based upon recognition of the value of the
worker as a human being, as someone who willingly activates on his job, intelligence,
experience, attitude and feelings. It is based upon the human resource management
considered as one of the key factors in the improvement of product quality &
productivity. Quality Circle concept has three major attributes:
• Quality Circle is a form of participation management. Quality Circle is a human
resource development technique.
• Quality Circle is a problem solving technique.
Concept-Quality Circles

151. 151
• The objectives of Quality Circles are multi-faced.
• a) Change in Attitude.
• From "I don’t care" to "I do care"
• Continuous improvement in quality of work life through humanization of work
• b) Self Development
• Bring out ‘Hidden Potential’ of people
• People get to learn additional skills.
• c) Development of Team Spirit
• Eliminate inter departmental conflicts.
• d) Improved Organizational Culture
• Positive working environment.
• Higher motivational level.
Objective of Quality Circles

152. 152
• All members of a Circle need to receive training
• Members need to be empowered
• Members need to have the support of Senior Management
• Characteristics
Volunteers
Set Rules and Priorities
Decisions made by Consensus
Use of organized approaches to Problem-Solving
How do quality circles works?

153. 153
• A steering committee: This is at the top of the structure. It is headed by a senior
executive and includes representatives from the top management personnel and
human resources development people. It establishes policy, plans and directs the
program and meets usually once in a month.
• Co-ordinator: He may be a Personnel or Administrative officer who co-ordinates and
supervises the work of the facilitators and administers the program.
• Circle leader : Circle leader may be from lowest level supervisors. A circle leader
organize and conduct circle activities.
• Circle members : They may be staff workers. Without circle members the program
cannot exist. They are the lifeblood of quality circles. They should attend all meetings
as far as possible, offer suggestions and ideas, participate actively in group process.
The roles of Steering Committee and Circle members are well defined.
Who works for quality circles

154. 154
• Product improvement
• Customer satisfaction
• efficiency savings
• financial savings
• improved company performance
• reduced customer complaints
• reduced wasted
• reduced error
• increased accuracy
Advantages of Quality Circles

155. 155
• The overall productivity may decrease initially.
• A large investment and time is required for a concept that is essentially new .
• The chances of error increase initially .
• After circle implementation a period of confusion may arise. This is because people
experiment with new ideas , new skill and new roll.
Limitation-Quality Circles

156. 156
• Problem identification: Identify a number of problems.
• Problem selection : Decide the priority and select the problem to be taken
up first.
• Problem Analysis : Problem is clarified and analyzed by basic problem solving
methods.
• Generate alternative solutions : Identify and evaluate causes and generate
number of possible alternative solutions.
• Select the most appropriate solution
• Discuss and evaluate the alternative solutions by comparisons. This enables
to select the most appropriate solution
• Prepare plan of action : Prepare plan of action for converting the solution
into reality which includes the considerations "who, what, when, where, why
and how" of solving problems.
• Present solution to management circle: Members present solution to
management fore approval.
• Implementation of solution : The management evaluates the recommended
solution. Then it is tested and if successful, implemented on a full scale .
Process of Operation

157. 157
The following techniques are most commonly used to analyze and solve
work related problems.
Brain storming
Pareto analysis
Cause & Effect Analysis
Data Collection & Analysis
Basic Problem solving techniques

158. 158
 Inadequate Training
 Unsure of Purpose
 Not truly Voluntary
 Lack of Management Interest
 Quality Circles are not really empowered to make decisions
Problems with quality circles

159. 159
The quality circle under consideration has a leader, a facilitator, a coordinator and four
members. The object of the present quality circle is ‘reduction of material wastage’.
This problem was so chosen for solution because of following facts :
a) Whether there was any reduction in material wastage.
b) Whether there were any saving and financial losses that should be minimized.
c) Whether it had any effect on the working of the workers and relationship between
workman and management.
Formation of quality circles

160. 160
Structure of Quality Circle
Non Qc - Members
Members
Leader
Facilitator
Co-ordinator
Steering committee
Top
Management

161. 161
• A Value Stream is the set of all actions (both value added and non value added)
required to bring a specific product or service from raw material through to the
customer.
• It is a tool that helps you to see and understand the flow of material and
information as a product or service makes its way through the value stream.
• gathers and displays a far broader range of information than a typical process
map.
• tends to be at a higher level (5-10 boxes) than many process maps.
• tends to be used at a broader level, i.e. from receiving of raw material to delivery
of finished goods.
• tends to be used to identify where to focus future projects, subprojects, and/or
kaizen events
• Follow a “product” or “service” from beginning to end, and draw a visual
representation of every process in the material & information flow
Introduction-Value Stream Mapping

162. 162
• Special type of flow chart that uses symbols known as "the language of
Lean" to depict and improve the flow of inventory and 2 information.
• Provide optimum value to the customer through a complete value
creation process
1. with minimum waste in: Design (concept to customer)
2. Build (order to delivery)
3. Sustain (in-use through life cycle to service)
• Many organizations pursuing “lean” conversions have realized that
improvement events alone are not enough
• Improvement events create localized improvements, value stream
mapping & analysis strengthens the gains by providing vision and plans
that connect all improvement activities
Value Stream Mapping

163. 163
• Helps you visualize more than the single process level
• Links the material and information flows
• Provides a common language
• Provides a blueprint for implementation
• More useful than quantitative tools
• Ties together lean concepts and techniques
Value Stream Mapping

164. 164
Typical steps in value stream mapping include:
1.Select a product family
2.Collect data on the current state of the value stream
3.Draw a current state value stream map, identifying waste (non-value-
added activity) in the value stream
4.Brainstorm ideas to improve production flow, meet customer demand
(takt time), and level product mix
5.Draw a future state value stream map, highlighting targets for Lean
improvement efforts
6.Develop a kaizen implementation plan
Steps of Value Stream Mapping

165. 165
• Specify value from the standpoint of end customer
• Identify the value stream for each product family
• Make the product flow so the customer can pull as you manage
toward perfection
• Specify value from the standpoint of the end customer
Steps in Value Stream Mapping

166. 166
• is a hierarchical method for displaying processes that illustrates how a
product or transaction is processed.
• is a visual representation of the work-flow either within a process - or an
image of the whole operation.
• should allow people unfamiliar with the process to understand the
interaction of causes during the work-flow.
Process Mapping

167. 167
• Conduct Workshops
Cross-functional team
Max. 1.5 hours
• Start with “GRCA” forms (see example)
• Create cross-functional Process Flow Chart(s)
Identify number of interfaces
• Collect processing time and lead time
• Identify Number of Products/Services (m/d/hr)
Helpful but not always required
Process Mapping Project

168. 168
GRCA Form
Goal
General
Results
Specific
Forms
Activities
Specific step-by-step
Conditions
Specific requirements
to start process

169. 169
• Analyze the process
Reduce number of interfaces
Identify obstacles
• Determine possible causes
Ishikawa, Cause-and-Effect, Fishbone diagram (see example)
• Select and implement solutions
• Document the results
• Follow up
Process Mapping Project

170. 170
• Management must understand, embrace, and lead the organization into
lean thinking
• Value stream managers must be empowered and enabled to manage
implementations
• Improvements must be planned in detail with the cross functional Kaizen
teams
• Successes must be translated to the bottom line and/or market share
• Continuously improving fundamentally flawed processes will yield limited
results.
• Simply automating existing manual processes can also yield limited results.
• Seriously challenging old practices will provide the dramatic results desired.
Critical Success Factors

171. 171
• Statistical process control is a collection of tools that when used together
can result in process stability and variance reduction.
• SPC is a family of tools used to monitor, control, and improve processes.
• It involves tabulating, depicting, and describing data sets by applying the
seven basic tools of quality and a formalized body of techniques.
• Understanding and using SPC does not require knowledge of
statistics. Rather one uses applied general math and a reliable software
program such as Excel.
• A method of inspection by which it can be determined whether a process
is in control
• Differs from Acceptance Sampling in which SPC does not make
judgements about the quality of items produced
Introduction-Statistical Process Control

172. 172
• Flowchart/process map
• Check sheet
• Cause-effect diagram
• Pareto chart
• Histogram
• Control chart/Run Chart
• Scatter diagrams
Basic tools of quality

173. 173
• An essential element of producing a high quality product or service is insuring
that the characteristics of that product remain constant over time.
• Product quality is directly dependent on the process capability. Two key
process requirements are – Capability and Stability
• SPC charts are widely used to determine whether a process is capable and
stable over time.
• There is inherent variation in any process which can be measured and
“controlled.”
• SPC does not eliminate variation, but it does allow the user to track special
cause variation
• SPC is a statistical method of separating variation resulting from special
causes from
natural variation and to establish and maintain consistency in the process,
enabling process
improvement.”
Ensuring successful delivery

174. 174
• Control of Variation
• Continuous improvement
• Predictability of Processes
• Elimination of waste
• Product inspection
Rationale for SPC

175. 175
• SPC has the same Type I and Type II risks as acceptance sampling
• If the process if in fact in control but we conclude that it is out of control, we
have committed a Type I error.
• If the process if in fact out of control but we conclude that it is in control, we
have committed a Type II error.
• SPC only determines whether a process is in statistical control NOT whether
the
process is producing within specifications nor whether the process is even
capable
of producing within specifications
• We must rely on another measure AFTER we have assured that the process is
in
control using SPC.
Risks of SPC

176. 176
• All control charts rely on the periodic sampling and measurement of
items
• The data collected will allow the calculation of a centerline, and
upper and lower control limits
• The centerline is the mean of all samples, whereas the control limits
are,
conceptually, the mean +/- three standard deviations
• SPC is based upon the Central Limit Theorem which tells us, in effect
that the samples will follow a normal distribution regardless of the
shape of the parent distribution
Creating Control Charts

177. 177
• Control charts are graphical representation of product / process
performance over time with Control Limits. It may or may not have
Specification limits. They are widely used to determine whether a
process is capable and stable over time.
• Control Limit – The actual performance of the process
• Specification Limits – What the process is required to perform
• Capable – Process Performance well within Specification Limits
• Stable – Process does not have special causes and have no
trends/cycles
Understanding Control Charts

178. 178
• Take samples from the population and compute the appropriate
sample statistic
• Use the sample statistic to calculate control limits and draw the control
chart
• Plot sample results on the control chart and determine the state of the
process (in or out of control)
• Investigate possible assignable causes and take any indicated actions
• Continue sampling from the process and reset the control limits when
necessary
Steps in creating control charts

179. 179
The natural variation of a process should be small enough to produce
products that meet the standards required
A process in statistical control does not necessarily meet the design
specifications
Process capability is a measure of the relationship between the natural
variation of the process and the design specifications
Process Capability ratio is defined as
Upper Specification - Lower Specification
6s
Process Capability Ratio

180. 180
A capable process must have a Cp of at least 1.0
Does not look at how well the process is centered in the specification
range
Often a target value of Cp = 1.33 is used to allow for off-center
processes
Six Sigma quality requires a Cp = 2.0
Process Capability Ratio

181. 181
• Determining if the long term process average is rising, falling, or
remaining the same.
• Identifying common causes of variation in our processes. Common
cause refers to that fact that the processes we use contain sources of
variation. We should seek to reduce or limit common causes of
variation [i.e. improve the process capability].
• Calling attention to data points which falls beyond the statistically
determined control limits. Such points generally represent special
causes of variation. Sometimes these data points can be attributed to
individuals. By changing the behavior of some individuals we can
improve results.
Summarizing SPC Charts

182. 182
• A set of design methods that
1. Improve the quality of a product
2. Without eliminating the sources of variation (noise factors)
3. By minimizing sensitivity to noise factors
4. Most often through parameter design
• Designing products and processes that are minimally impacted
by external forces such as environment, customer use, or
manufacturing conditions
Introduction-Robust Design

183. 183
• Robust Design method is essential to improving engineering productivity. It
was pioneered by Dr. Genichi Taguchi after the end of the Second World
War. This method has evolved over the last five decades. Companies around
the world have saved millions of dollars by using the method in diverse
industries such as automobiles, xerography, telecommunications, electronics,
software, etc
• The Robust Design method can also be called the Taguchi Method, and was
pioneered by Dr. Genichi Taguchi. Robust Design greatly improves
engineering productivity by consciously considering the noise factors:
environmental variation during the product's usage, manufacturing variation,
and component deterioration. The cost of failure in the Robust Design
method helps ensure customer satisfaction. Robust Design focuses on
improving the fundamental function of the product or process. Robust Design
facilitates flexible designs and concurrent engineering. It is the most powerful
method available to reduce product cost, improve quality, and reduce
development interval
History of Robust Design

184. 184
Quality losses result from poor design
• Signal to noise ratios should be improved
• Expose your system to noises systematically
• Two step process – reduce variance first THEN get on target
• Tolerance design – select processes based on total cost
(manufacturing cost AND quality)
• Robustness in the field / robustness in the factory
Taguchi’s Quality Imperatives

185. 185
• Taguchi’s Quote: “Robust Design: Not just strong. Flexible! Idiot Proof!
Simple! Efficient! A product/process that produces consistent, high
level performance despite being subjected to a wide range of
changing client and manufacturing conditions
• This approach costs more, takes more time, and isn’t always successful
• This approach allows experiments to be performed and the
product/process becomes insensitive to use-conditions and other
uncontrollable factors
Taguchi’s Approach

186. 186
• Identify Control Factors, Noise Factors, and Performance Metrics
• Formulate an objective function
• Develop an experimental plan
• Run the experiment
• Conduct the analysis
• Select and confirm factor set points
• Reflect and repeat
Robust Design Process

187. 187
• An example of a problem with Robust Design: A team of engineers was
working on the design of a radio receiver for ground to aircraft
communication. This receiver required high reliability, and low bit error rate for
data transmission. Building series of prototypes to sequentially eliminate
problems would be expensive. The other problem was that computer
simulation effort for evaluating a single design was time consuming and
expensive. So, how can you speed up development but assure reliability
• Another example: A manufacturer introduced a high speed copy machine
only to find that the paper feeder jammed almost ten times more frequently
than what was planned. The traditional method for evaluating the reliability
of a single new design idea took several weeks. How can the company
conduct the needed research in a short time and come up with a design
that would not embarrass the company
Problems Using Robust Design

188. 188
• Robust design allows engineers to develop products and processes
which perform as intended through a wide range of user’s conditions in
their life cycle which is durable and reliable
• To maximize robustness engineers improve the intended function of the
product and increase their noise to factors which can lead to a
decrease in performance.
• Engineers can change the product formulas and process settings to
gain their desired performance level in the shortest time with the lowest
cost.
• Engineers can simplify their designs and the process to reduce the cost
Robust Design & Engineers

189. 189
• Improvement through quality, reliability, and durability.
• Manufacturing cost reduction.
• Design cycle time reduction.
• New knowledge
Results from Robust Design

190. 190
Cost of quality = Cost of conformance + Cost of non-
conformance
• Cost of conformance is the cost of providing products or
services as per the required standards. This can be termed as
good amount spent. (Prevention & Appraisal costs)
• Cost of non-conformance is the failure cost associated with a
process not being operated to the requirements. This can be
termed as unnecessary amount spent.( Internal & External
failure costs)
Introduction-Cost of Quality

191. 191
• Traditionally recorded quality cost generally account for only 4 to 5
percent of sales which mainly comprise of cost of scrap, re-work and
warranty.
• There are additional costs of quality which are hidden and do not
appear in the account books of the company, as they are intangible
and difficult to measure. These additional costs could be as high as 20-
25% of sales.
Features of COQ

192. 192
 Prevention costs are associated with design, implementation ,
maintenance, and planning prior to actual operation, in order to avoid
defects from happening.
 The emphasis is on the prevention of defects in order to reduce the
probability of producing defective products. Prevention activities lead
to reduction of appraisal costs and both type of failures ( internal and
external ).The motto is “Prevention rather than appraisal” .
Prevention Cost

193. 193
 Market research
 Quality training programs.
 Contract review
 Design review
 Field trials
 Supplier evaluation
 Process plan review
 Process capability review
 Design and manufacture of jigs and fixtures
 Preventive checks & maintenance
Activities associated with Prevention costs

194. 194
• Appraisal costs are spent to detect defects to assure conformance to
quality standards. Appraisal cost activities sums up to the “cost of
checking if things are correct”. The appraisal costs are focused on the
discovery of defects rather than prevention of defects
Appraisal costs

195. 195
 Proto type testing
 Vendor surveillance
 Incoming material inspection
 Process inspection/control
 Final inspection
 Laboratory testing / measurement
 Depreciation cost for measuring
 Quality audits.
Activities associated with Appraisal costs

196. 196
• Internal failure costs occurs when results of work fail to reach designated
quality standards , and are detected before transfer to the customer takes
place.
• Examples of Internal Failure Costs:-
 Design changes/ corrective action
 Scrap due to design changes
 Excess inventory
 Rectification / reject disposition of purchased material
 Rework/rejection in manufacturing
 Downgrading of end product
 Downtime of plant & machinery
 Trouble-shooting & investigation of defects
Internal failure costs

197. 197
• External failure costs occur when the product or service from a process
fails to reach designated quality standards , and is not detected until
after transfer to the customer.
• Examples are
 Processing / investigation of customer complaint
 Repair/replacement of sold goods
 Warranty claims
 Product liability & litigation costs
 Interest charges on delayed payment due to quality problems
 Loss of customer goodwill & sales.
External failure costs

198. 198
Size of various quality cost elements