Six Sigma–Not all Yields are Created Alike

In the sixth chapter of their book Six Sigma:  The Breakthrough Strategy Revolutionizing the World’s Top Corporations, by Ikel Harry, Ph.D., and Richard Schroeder, called “Unmasking the Hidden Factory,” the authors discuss the metric called “yield”.  The basic concept of yield is that it takes the number of units that leave an inspection point after passing inspection, called the “output”, and divides it by the number of units that enter that particular inspection point, known as the “input”.   So if 100% of the units pass, the yield is 100%, but if only 50% of them pass, the yield is 50%.   This is sometimes referred to as “first-time yield” if the yield is measured at the first point of inspection.   The “final yield” would be, in contrast, the yield measured after the final point of inspection.

What is the problem with this metric?   Well, the problem with is that not all yields are created alike.   From a quality perspective, the total defects per unit is a better measure of the quality of a unit.   If 50% of the units of product A and product B are found to have at least one defect, then the yields would be considered the same.    But a better metric comparing product A and product B would be the total number of defects per unit (TDPU).   So if product A has 2 defects per unit and product B only has on average 1 defect per unit, then product B has higher quality.

First-time yield therefore does not give an indication of quality as reliable as the TDPU.   Another way that it is not a reliable indicator is the factor that, if an inspection shows that 5 out of 10 units contain defects, and the inspector throws out the 5 defect-containing units, then someone down the line may think, “wow, all of the units coming out of the last inspection point are defect-free; we must be doing high quality work!”   Unfortunately, this is only if the cost of the 5 scrapped units are not taken into consideration.

So that is why it is important to have a good metric of “yield”, because not all yields are created alike.

The next post goes into more detail about the difference between first-time yield, the total number of units with one or more defects, and throughput yield, the total number of defects per defect opportunity.

Six Sigma–Unmasking the “Hidden Factory”

In the sixth chapter of their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, the authors Ikel Harry, Ph.D. and Richard Schroeder bring up a fascinating concept of the “Hidden Factory.”

What is a factory?  It is a place where things are made.   Theoretically, the materials and staff in the factory should all be engaging in processes which either directly involve manufacturing or indirectly support those efforts.    However, the problem with a company that is producing products and services at quality levels of four Sigma or lower is that a lot of its time and attention are focused on detection and correction of defects.   The correction may involve reworking those products that contain defects, or it may involve scrapping those products if they are beyond repair.   Those processes in a factory that detect and correct mistakes made during the originally conceived manufacturing process are termed “the hidden factory.”   They are called “hidden” since these processes for correcting mistakes are not part of the original plan for the factory.

Whether planned for or not, the costs associated with these processes, whether they cover the extra material and labor costs involved, end up hurting the bottom line of the company.   Those companies that base their financial strategy on the profitability of the factory will find that those strategic targets may end up not being met because of the unanticipated costs created by the hidden factory.

So it should be the goal of every company that runs a factory where the processes are the level of four Sigma or lower to unmask the hidden factory.   Unmasking it is the first stage in dismantling it, and how to unmask it is the subject of the next post.

Six Sigma–Mastering Process, not Product Technology

In the final section of the sixth chapter of their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, the authors Ikel Harry, Ph.D. and Richard Schroeder talk about the difference between product technology, which focuses on the invention and introduction into the marketplace of new products, and process technology, which focuses on the constant improvement of processes which develop those products for the marketplace.
Their observation that the United States has focused on product technology, and that Japan has focused on process technology is connected with the “invented here, perfected there” syndrome, where many inventions such as the transistor, the video camera or the fax machine were created in the United States, but not commercialized successfully until the Japanese took those inventions and implemented various process improvements or kaizen.
Nowadays, the pace of technology change is such that, if you have good product technology you may create a new product, but that market advantage only lasts a short period of time until one’s competitors have done their reverse engineering on your product and introduce their version with improvements that may outshine yours in the eyes of the public.   It is only those companies that have good process technology that can maintain a leading edge by the constant “raising of the bar” that such technology makes possible.
In the next chapter called “Unmasking the Hidden Factory,” the authors show how a company can go from focusing on product technology (the typical focus of a factory) to emphasizing process technology using Six Sigma.   That next chapter is introduced in the next post.

Six SIgma–The Customer: The North Star of Quality

In their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, Ikel Harry, Ph.D., and Richard Schroeder discuss the topic “Changing What Companies Measure” in chapter six.

In the last post, I discussed the importance of CTQ or Critical-to-Quality characteristics and how they need to be linked first and foremost to customer satisfaction, and then to the processes which a company needs to focus on improving in order to increase quality.   Again, it is important to remind the readers that the common sense of the meaning “quality”, that is, the absence of defects, is a necessary but not sufficient condition for quality.   Meaning that yes, the product has to be defect-free, but it also has to be what the customer wanted.   Necessary but not sufficient means that if the product is defect-free, but is not what the customer wanted, then the customer won’t buy it.   So “quality” in the world of manufacturing has to mean “a product the customer wants which is free of defects.”

The purpose of this post is to delve a little more deeply into what “customer satisfaction” means.  There are three areas:

  1. Products that are high-quality (no defects and in line with customer requirements)
  2. Products that are delivered on time
  3. Products that are at the lowest possible cost (while being consistent with 1 and 2)

Why is this important for companies to focus on?   Many companies focus on quantities like “production time”, or how fast the products are being put through the manufacturing line, which do not correlate with 1, 2 or 3 above.   One of the famous scenes in the I Love Lucy series is the one where Lucy and Ethel decide to get a job in a chocolate factory.   They do okay during the first line test, so the supervisor yells “SPEED IT UP!” and it goes so impossibly fast that the hapless pair end up cramming the chocolates into mouths, pockets, and anywhere they can in order to make sure none of the chocolates end up going unwrapped through the conveyor belt to the next station.    The chances that some chocolate may have defects in them (like Lucy and Ethel’s teeth marks) has been increased by the unreasoning “need for speed” on the part of the supervisor.

And just because the chocolates are shooting out of the conveyor belt at lightning speed doesn’t mean they’ll get to the customer on time, because that will depend on delivery trucks, etc.    And the fact that there may need to be some “rework” on the assembly line will increase the cost of the product, not decrease it.

So this is an example of how the company is focusing on something that impressed the supervisor and may even impress someone in the board room but does not correlate to customer satisfaction in any way, shape or form.   Although this is a ridiculous example taken from a classic comedy show, the authors assure us that there are examples such as ridiculous out there in the world of manufacturing, with one difference:   the stories told by those companies more often as not end up not being comedies, but tragedies.

In the last post on this chapter, the authors talk about the difference between product technology and process technology, which is why many inventions created in America, from the transistor back in the 1950s to the fax machine in the1960s, were only made profitable by the Japanese.   This culture difference is the subject of the next post.

Six Sigma–Cutting To the Quick with CTQ

In their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, the authors Ikel Harry, Ph.D., and Richard Schroeder discuss in chapter six the issue of changing what it is that companies measure.   One of the ways that companies can “measure” customer satisfaction is with a set of characteristics called “CTQ” or Critical-To-Quality.

Archimedes, the Greek mathematician and engineer, once said “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.”   In the world of manufacturing, you want to be able to move customer satisfaction, because that is what will get the customers buying your product and making your company profitable.

In the world of quality, the lever with which you move customer satisfaction is “CTQ” or “Critical-To-Quality” characteristics.   These are the characteristics which correlate with customer satisfaction.   And where is the fulcrum, the place you position the lever?   That is determined through Six Sigma–you have process metrics which reflect how well your processes are creating products and services which meet the CTQ characteristics and thus have a positive impact on customer satisfaction.

The problem is “satisfaction” is a quality internal to the customer, and so you must interpret what features in the external world correlate to that inner sense of satisfaction.   This is where skillfully written surveys, or even better yet, focus groups come into play.   Sometimes the customer cannot articulate what it is about a product that moves him or her to buy it, because the features may trigger some unconscious reaction that the customer, by definition, is not consciously aware of.

Note that creating a defect-free product, which is what people normally think of as “quality”, is a necessary condition for a product to create customer satisfaction, but it is not a sufficient condition.   In other words, if a product has no defects but is not what the customer ordered, well then the customer isn’t going to buy it no matter how defect-free it is.

So the key here is make the following links:

customer satisfaction ↔ critical-to-quality characteristics ↔ manufacturing and/or business processes

Companies who either don’t find out the CTQ characteristics that correlate to customer satisfaction, or who don’t correlate their process improvement with those same CTQ characteristics are going to find that their “quality wheels are spinning without any traction.”

To go into this matter further, let’s discuss the “customer satisfaction” part of the equation in more detail, which I will do in the following post.

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Six Sigma–Testing the Process, not the Product

In the last post, I mentioned that the authors Ikel Harry, Ph.D., and Richard Schroeder of the book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporation were extolling the value of metrics to be able to reveal the hidden cause “X” of the outcome “Y”.

I wanted to expand this basic concept of Six Sigma by mentioning that the outcome “Y” is what can be observed in the product, so that when you are inspecting a product, you are looking at outcome “Y”.   Obviously, if outcome “Y” contains defects, you want to get rid of them.   But you don’t focus on Six Sigma on changing “Y”.  What you do is you focus on the process “X” which is somehow causing “Y”.

Sometimes you have to go through a process of elimination, where you end up formulating hypothesis and hypothesis that posits a series of processes as the hidden culprit, only to find that changing them doesn’t make the defects in “Y” go away.  In that way, it’s like if you were in a sculpture class, and the instructor gave you a block of marble and said “carve a copy of this statue of an elephant.”   If you say “I don’t know how to carve an elephant,” he may say, “well, then take the block of marble and chip away everything that isn’t an elephant.”

In a sculpting class, that may not be practical advice, but in the Six Sigma world, proving hypotheses to be false (chipping away those parts that are not the problem) may end up revealing or hinting at those hypotheses that end up being true.

But you will only get to that correct hypothesis by focusing on the various processes that produce the product.   And that is why Six Sigma is said to test the process.    Since you cannot test a process directly, you have to test it indirectly by studying what effect changing it has on the visible product “Y”.

So it is an excellent tool for detection–but only if you first know where to look and what you are looking for!