Chapter 4

• Introduction to Taguchi methods; process capability: JIT

environment; value engineering; zero defects approach.;
• Organisation for total quality management: departmental
purpose analysis, competitive bench marking, structuring the
quality function, quality information system, quality manual,
training for quality, TBS and ISO standards on quality.

Compiled by Dr. I.W.R. Taifa

1
Design of Experiments

DoE
• It is important to obtain maximum realistic information
with the minimum number of well designed experiments.
• An experimental program recognizes the major “factors”
that affect the outcome of the experiment.
• The factors may be identified by looking at all the
quantities that may affect the outcome of the experiment.
• The most important among these may be identified using:
– a few exploratory experiments or
– From past experience or
– based on some underlying theory or hypothesis.

This Selection Process is known as

Design of Experiments.
 Special Terminology: Design of Experiments
• Response variable
– Measured output value
• Factors
– Input variables that can be changed
• Levels
– Specific values of factors (inputs)
• Continuous or discrete
• Replication
– Completely re-run experiment with same input levels
– Used to determine impact of measurement error
• Interaction
– Effect of one input factor depends on level of another
input factor
 Design of Experiments (DOE)

– A statistics-based approach to design

experiments

– A methodology to achieve a predictive

knowledge of a complex, multi-variable process
with the fewest acceptable trials.

– An optimization of the experimental process

itself
 Major Approaches to DOE

• Factorial Design
• Taguchi Method
• Response Surface Design
 Factorial Design: Full factorial design

• A full factorial design of experiments consists of the

following:
• Vary one factor at a time
• Perform experiments for all levels of all factors
• Hence perform a large number of experiments that are
needed!
• All interactions are captured.
• Consider a simple design for the following case:
• Let the number of factors = k
• Let the number of levels for the ith factor = ni
• The total number of experiments
K (N) that need to be
performed is N =  ni
i =1
 2k factorial design

• Used as a Preliminary Experimentation !!!

• Each of the k factors is assigned only two levels.

• The levels are usually High = 1 and Low = -1.

• Scheme is useful as a preliminary experimental

program before a more ambitious study is undertaken.

• The outcome of the 2k factorial experiment will help

identify the relative importance of factors and also will
offer some knowledge about the interaction effects.
 DOE - Factorial Designs - 23

Trial A B C
1 Lo Lo Lo
2 Lo Lo Hi
3 Lo Hi Lo
4 Lo Hi Hi
5 Hi Lo Lo
6 Hi Lo Hi
7 Hi Hi Lo
8 Hi Hi Hi
 DOE - Factorial Designs - 23

Trial A B C
1 -1 -1 -1
2 -1 -1 +1
3 -1 +1 -1
4 -1 +1 +1
5 +1 -1 -1
6 +1 -1 +1
7 +1 +1 -1
8 +1 +1 +1
 Output Matrix

• Let us represent the outcome of each experiment to be

a quantity y.

• Thus y1 will represent the outcome of experiment

number 1 with all three factors having their “LOW”
values,

• y2 will represent the outcome of the experiment number

2 with the factors A & B having the “Low” values and
the factor C having the “High” value and so on.

• The outcome of the experiments may be represented

as the following matrix:
 Outcome Matrix

Trial xA xB xC
y1 -1 -1 -1
y2 -1 -1 +1
y3 -1 +1 -1
y4 -1 +1 +1
y5 +1 -1 -1
y6 +1 -1 +1
y7 +1 +1 -1
y8 +1 +1 +1

How to find the degree of contribution of xA,xB & xC on y?

 A simple regression model that may be used can have
up to eight parameters.
Thus we may represent the regression equation as

y = p0 + p A x A + pB xB + pC xC + p AB x A xB + pBC xB xC + pCA xC x A + p ABC x A xB xC

The p’s are the parameters that are determined by using

the “outcome” matrix by the simultaneous solution of the
following eight equations:

p0 − p A − pB − pC + p AB + pBC + pCA − p ABC = y1

p0 − p A − pB + pC + p AB − pBC − pCA + p ABC = y2

p0 − p A + pB − pC − p AB − pBC + pCA + p ABC = y3
 -1,+1,+1
+1,+1,+1
xC
-1,-1,+1
+1,-1,+1
y = p0 + p A x A + pB xB + pC xC + p AB x A xB x+B pBC xB xC + pCA xC x A + p ABC x A xB xC
Spread of B

xmean
xA
-1,+1,-1
+1,+1,-1

-1,-1,-1 +1,-1,-1
Spread of A
• It is easily seen that the parameter p0 is simply the mean
value of y.
• This is obtained by putting xA= xA= xC=0 corresponding to
the mean values for the factors.
• It is thus seen that the values of y- p0 at the corners of
the square indicate the deviations from the mean value.
• The mean of the square of these deviations is the
variance of the sample data collected in the
experiment.
• The influence of the factors may then be gauged by the
contribution of each term to the variance.
 The deviation with respect to the mean is obviously given by

y − p0 = p A x A + pB xB + pC xC + p AB x A xB + pBC xB xC + pCA xC x A + p ABC x A xB xC

It may be verified that the total sum of squares (SST) of the

deviations is given by


SST = 8 p A + pB + pC + p AB + pBC + pCA + p ABC
2 2 2 2 2 2 2

The sample variance is thus given by
SST
S = 2

N −1
y
Contributions to the sample variance are given by 8 times the
square of the respective parameter (p) and hence we also have

SSA = 8 p A2 ;
SSB = 8 pB2 ;
............;
SSABC = 8 p ABC
2

Here SSA means the sum of squares due to variation in level of xA

and so on.
The relative contributions to the sample variance are represented as
percentage contributions in the following table:
 Variance contribution %
SST 8 p 2 100
SSA 8pA2 SSA/SST X 100
SSB 8pB2 SSB/SST X 100
SSC 8pC2 SSC/SST X 100
SSAB 8pAB2 SSAB/SST X 100
SSBC 8pBC2 SSBC/SST X 100
SSCA 8pCA2 SSCA/SST X 100
SSABC 8pABC2 SSABC/SST X 100

Thus the dominant factor is the factor which has the

highest value of percentage of contribution.
 DOE - Fractional Factorial Designs
• In a multivariable experiments, with k number of variables
and l number of levels per variable demands lk number of
measurements for complete understanding of the process
or calibration.
• In statistics, fractional factorial designs are experimental
designs consisting of a carefully chosen subset (fraction) of
the experimental runs of a full factorial design.
• The subset is chosen so as to exploit the sparsity-of-effects
principle using a fraction of the effort of a full factorial
design in terms of experimental runs and resources.
• Fractional designs are expressed using the notation lk − p,
• where l is the number of levels of each factor investigated,
• k is the number of factors investigated, and
• p describes the size of the fraction of the full factorial to be
eliminated.
• A design with p such generators is a 1/(lp) fraction of the full
factorial design.
 DOE – Factorial Designs (Fractional: 7 factor, 2
level; 128 → 8)
Trial A B C D E F G
1 Lo Lo Lo Lo Lo Lo Lo
2 Lo Lo Lo Hi Hi Hi Hi
3 Lo Hi Hi Lo Lo Hi Hi
4 Lo Hi Hi Hi Hi Lo Lo
5 Hi Lo Hi Lo Hi Lo Hi
6 Hi Lo Hi Hi Lo Hi Lo
7 Hi Hi Lo Lo Hi Hi Lo
8 Hi Hi Lo Hi Lo Lo Hi
 One half factorial design

• For a system with k factors and 2 levels the number

of experiments in a full factorial design will be 2k.
• For example, if k=3, this number works out to be
23=8.
• The eight values of the levels would correspond to
the corners of a cube as represented by Figure.
• A half factorial design would use 2k-1 experiments.
• With k=3 this works out to be 22=4.
• The half factorial design would cut the number of
experiments by half.
• In the half factorial design we would have to choose
half the number of experiments and they should
correspond to four of the eight corners of the cube.
• We may choose any set as given below:
 Half Factorial Matrix
Point xA xB xC

y1 + - -

y2 - + -

y3 - - +

y4 + + +

The three column vectors are Orthogonal…..

 Half Factorial Matrix
Point xA xB xC

y1 - + +

y2 + - +

y3 + + -

y4 - - -

The three column vectors are Orthogonal…..

 More on full factorial design
• We like to generalize the ideas described above in what follows.
• Extension to larger number of factors as well as larger number of levels
would then be straight forward.
• Let the High and Low levels be represented by + an –respectively.
• In the case of 22 factorial experiment design the following will hold:
• We note that the product of any two columns is zero.
• Also the column sums are zero.
• Hence the three columns may be considered as vectors that
form an orthogonal set.
• In fact while calculating the sample variance earlier these
properties were used without being spelt out.
• Most of the time it is not possible to conduct that many
experiments!
• The question that is asked is:
• “Can we reduce the number of experiments and yet get an
adequate representation of the relationship between the
outcome of the experiment and the variation of the factors?”
• The answer is in general “yes”.
• Replace the full factorial design with a fractional factorial
design.
• In the fractional factorial design only certain combinations of the
levels of the factors are used to conduct the experiments.
• This ploy helps to reduce the number of experiments.
• The price to be paid is that all interactions will not be resolved.
• In this simple case of two or three factors the economy of
reducing the number of experiments by one may not be
all that important.
• However it is very useful to go in for a fractional factorial
design when the number of factors is large and
• When it is expected some factors or interactions between
some factors to be unimportant.
• The fractional factorial experiment design is useful when
main effects dominate with interaction effects being of
lower order.
TAGUCHI METHOD

27
 Who is Dr. Genichi Taguchi?
• Born in 1924 in the town of
Tokamachi, Japan
• Widely acknowledged leader in
the U.S. industrial quality
movement.
• Credited for starting the “Robust
Design” movement in Japan in
1950’s.
• Helped correct postwar Japan's
telephone system.
• 1980 introduced Taguchi method
to AT&T.
28
 Taguchi Method/Taguchi Designs
• Introduced by Dr. Genichi Taguchi (1980)
✓Comparable in importance to Statistical
Process Control (SPC), the Deming approach
and the Japanese concept of TQC

• Unique aspects of the Taguchi method

✓The Taguchi definition of quality
✓The Taguchi Quality Loss Function (QLF)
✓The concept of Robust Design

29
 Taguchi Method/Taguchi Designs
• The concern is deviation of a characteristic
from its nominal value. Uncontrollable
factors (noise) are often responsible for
this deviation (loss of quality).

• Therefore, Taguchi’s approach to

experimental design has as its goal the
design of products/process that are robust
to these noise factors.

30
– The quality loss function as defined by Taguchi is
the loss imparted to the society by the product
from the time the product is designed to the time
it is shipped to the customer.
– In fact, he defined quality as the conformity
around a target value with a lower standard
deviation in the outputs.
– Taguchi doesn’t agree with traditional
quality thought as it relates to
specifications.
– Normally, when specifications are set, a
target is specified with some allowance for
variation. Taguchi states that any deviation
from target specs results in loss to society
produced.
31
 The Taguchi Quality Loss Function

• The traditional model for quality losses

• No losses within the specification limits!
Cost
Scrap Cost

LSL Target USL

• The Taguchi loss function

• the quality loss is zero only if we are on target

32
Example (heat treatment process
for steel)
• Heat treatment process used to harden steel
components
Parameter Parameters Level 1 Level 2 unit
number
1 Temperature 760 900 OC

2 Quenching rate 35 140 OC/s

3 Cooling time 1 300 s

4 Carbon contents 1 6 Wt% c
5 Co 2 concentration 5 20 %

• Determine which process parameters have the

greatest impact on the hardness of the steel
components
 Taguchi method
• To investigate how different parameters
affect the mean and variance of a process
performance characteristic.

• The Taguchi method is best used when

there are an intermediate number of
variables (3 to 50), few interactions
between variables, and when only a few
variables contribute significantly.
 Process as per Taguchi…

Noise
Factors

Product/Process
inputs Response

Control Factors

35
 Identify Control and Noise Factors

Control Factors: Those factors that a manufacturer can control in

the design of a product, the design of a process, or during a
process.
Examples: design variables (widths, heights), assembly
method, cooling temperature, cycle time, materials, speeds,
feeds

Noise Factors: Those factors that a manufacturer can not or

wishes not to control (because of cost reasons).

Examples: material inconsistencies, supplier variation,

machine operators, ambient temperature, ambient humidity.

36
A design which leads to a product or process
which is capable of delivering close-to-target
performance even in the presence of noise
factors.

37
 Robust Design
• The Taguchi concept of robust design states that products and
services should be designed so that they are inherently defect free
and of high quality.
• Taguchi devised a three-stage process that achieves robust design
through what he terms: concept design; parameter design and
tolerance design
• Applies engineering and scientific principles and
together with the necessary experience to
System/concept
generate product prototype that would meet or
design
exceed the functional necessities and also forms
the process that makes it
• Comprises the optimal settings of the process
Parameter
and product factors with the purpose of
design
minimising performance variability
• Comprises “tightening tolerances on those
product/process parameters whose fluctuations
Tolerance cause large variation of the quality characteristic.
design It should be stressed that this should only be
done if the results obtained during the parameter
design stage are not satisfactory variability”
38
Taguchi Method : When to Select a ‘larger’ OA
to perform “Factorial Experiments”
• We always ‘think’ about ‘reducing’ the number of
experiments (to minimize the ‘resources’ – equipment,
materials, manpower and time)
• However, doing ALL / Factorial experiments is a good
idea if
– Conducting experiments is ‘cheap/quick’ but
measurements are ‘expensive/take too long’
– The experimental facility will NOT be available later
to conduct the ‘verification’ experiment
– We do NOT wish to conduct separate experiments
for studying interactions between Factors
 Taguchi Method/Taguchi Designs
• Taguchi designed a number of orthogonal arrays
to aid in the development of experiments
• These orthogonal arrays are balanced fractional
orthogonal designs and can be used to estimate
main effects using only a few experimental runs.
• Two of the Taguchi’s simpler Orthogonal arrays
are: L4(23) and the L8(27)

40
 Taguchi Method Design of Experiments
The general steps involved in the Taguchi Method are as
follows:
[Link] the process objective, or more specifically, a target
value for a performance measure of the process.
– Determine the design parameters affecting the process.
[Link] number of levels that the parameters should be varied
at must be specified.
[Link] orthogonal arrays for the parameter design
indicating the number of and conditions for each experiment.
– The selection of orthogonal arrays is based on the number of
parameters and the levels of variation for each parameter, and will
be expounded below.
[Link] the experiments indicated in the completed array to
collect data on the effect on the performance measure.
[Link] data analysis to determine the effect of the
different parameters on the performance measure.
Taguchi’s Two Level Designs

43
Taguchi’s Two Level Designs

44
Taguchi’s Three Level Designs

45
 Signal to Noise (SN) Ratios
• To determine the effect each variable has
on the output, the signal-to-noise ratio, or
the SN number, needs to be calculated for
each experiment conducted.
• The signal to noise ratios are derived from
the Taguchi loss function.
• The following three signal to noise ratios
are widely used:

46
Signal to Noise (SN) Ratios
Experimental goal

Minimise the response

Target the response and base the

SNR on standard deviations only

Maximise the response

47
 Determining Parameter Design Orthogonal
Array
• The effect of many different factors on the performance
characteristic in a condensed set of experiments can be
examined by using the orthogonal array experimental design
proposed by Taguchi.
• The main factors affecting a process that can be controlled
(control Factors) should be determined.
• The levels at which these parameters should be varied must be
determined.
• Determining what levels of a variable to test requires an in-depth
understanding of the process, including the minimum,
maximum, and current value of the parameter.
• If the difference between the minimum and maximum value of a
parameter is large, the values being tested can be further apart
or more values can be tested.
• If the range of a parameter is small, then less values can be
tested or the values tested can be closer together.
• Typically, the number of levels for all parameters in the
experimental design is chosen to be the same to aid in the
selection of the proper orthogonal array.
Number of Orthogonal Array Selector
Levels

Number of Factors
 Taguchi Method :
How to Select a ‘larger’ OA
to perform “Factorial Experiments”
Control Factors Factorial Suitable
and Levels Combinations OA
2 CF / 2-levels 4 L4

3 CF / 2-levels 8 L8

4 CF / 2-levels 16 L16

5 CF / 2-levels 32 L32
L27 Array
L 50 Array
Just-in-Time and Lean
Operations

53
 Developments of JIT and Lean Operations
• Evolved in Japan after World War II, as a result of
their diminishing market share in the auto industry
• 1960’s: Developed as Toyota Production System
by Taiichi Ohno and his colleagues
• Toyota Motor Company- first to implement fully
functioning and successful JIT system, in 1970’s.
• 1970’s: U.S. and European auto makers began to
apply JIT to improve quality and productivity
• 1990’s and beyond: Expanded the JIT concept to
streamline all types of operations 54
 Developments of JIT and Lean Operations
• The philosophy of JIT can be traced back to Henry Ford,
but formalized JIT originated in Japan as the Toyota
Production System. W. Edwards Deming’s lesson of
variability reduction was a huge influence.

55
 Just In Time
• Just in Time is an integrated set of activities
designed to achieve high volume production using
minimal inventories of raw materials, work in
process, and finished goods.
• Raw materials are arrived at Just in time, parts are
processed at just in time.
• JIT is based on the logic that nothing is produced
until it is needed.
• Need is created by actual demand of the product.
• When item is sold, the market pulls another unit
from last position of the system.
• JIT is called Pull system.
56
56
• Many people believes that / it is true that
– JIT is an inventory reduction technique
– JIT is a KANBAN system
– JIT is alternative to MRP
• But it is beyond everything mentioned
above.
• JIT is a production control technique by
elimination of waste.
57
 Comparison – JIT - MRP
JIT MRP
It is a Pull system. It is a Push system.
Material / Parts ordered when they Material / Parts ordered when
are required. stock is less.
Material / Parts manufactured Material / Parts manufactured
when they are required. when stock is less.

No queuing of material at work Materials are in queue at work

station. centers.
Work is started on machine only Work is continuous.
after getting order.
Machines are idle when there is no Machines are working
order. continuously even without order.
Makes to order / single unit flow Any layout can be used.
line production lay out.
58
 JIT
• JIT demands
– high level of quality at each stage of process
– Strong vendor relations,
– And fairly predictable demand for the end product.
• Japanese approach to quality
• Japanese improved technology
• They avoided major R & D and expenditure in that
• They directed their best engineering talent to the shop
floor, not to product design activities.
• They also worked to improve product quality and
reliability above what competitors could supply.

59
59
 Definition of JIT

• A set of techniques to increase

productivity, improve quality, and reduce
cost of an operations
• A management philosophy to promote
elimination of waste and continuous
improvement of productivity

60
What Could Be the Expected Benefits of
JIT?

61
 Expected Benefits of JIT

• Reduction in throughput times

• Reduction in WIP
• Improvement in quality
• Improvement in productivity
• Reduction in resource requirements
• Improvement in customer satisfaction
• improvements in return on assets
62
 Main Elements of JIT

1. Elimination of waste
2. Quality at the source
3. Balanced and flexible work flow
4. Respect for people
5. Continuous improvement (Kaizen)
6. Simplification and visual control
7. Focus on customer needs
8. Partnerships with key suppliers
63
What is A “Waste?”

64
 Wastes
• Anything that exceeds the minimum resources
needed for the appropriate value
• Toyota’s seven deadly wastes (now they are
8):
• Overproduction (excessive production resources)
• Inventory
• Waiting
• Transportation
• Processing
• Motion
• Defective parts
• Skills/under utilization of talent
65
Waste Definition
Overproduction Manufacturing an item before it is needed.
Inappropriate Using expensive high precision equipment when simpler
Processing machines would suffice.
Waiting Wasteful time incurred when product is not being moved or
processed.
Transportation Excessive movement and material handling of
product between processes.
Motion Unnecessary effort related to the ergonomics of bending,
stretching, reaching, lifting, and walking.
Inventory Excess inventory hides problems on the shop floor, consumes
space, increases lead times, and
inhibits communication.
Defects Quality defects result in rework and scrap, and add
wasteful costs to the system in the form of lost
capacity, rescheduling effort, increased
inspection, and loss of customer good will.
Underutilization of Failure of the firm to learn from and capitalize on
Employees its employees’ knowledge and creativity impedes
long term efforts to eliminate waste. 66
 67
8. Skills/under utilization of employee
Why is Inventory Reduction
Important?

68
Importance of Inventory Reduction

• Inventory costs money - carrying costs,

obsolescence costs, and opportunity costs
• Inventory covers up problems and
bottlenecks.
• Inventory reduction forces organization
and employees to eliminate sources of
problems and work as a team.
69
 Quality at the Source

• Jidoka – autonomation (automatic detection

of defects, e.g., Poka-yoke)
• Employee empowerment
• Statistical process control
• Prevention orientation (elimination of root
causes through PDSA/PDCA cycle)
70
 Balanced and Flexible
Work Flow
• Yo-i-don (ready, set, go) system
• Stable production schedule
• Set-up time reduction
• Flow-shop and cellular layouts
• Shojinka (flexible & multi-skilled workforce)
• Teamwork
• Total productive maintenance (TPM)
71
 Respect for People

• Productivity improvement needs employee support

• Demonstrate by
– providing cross-training opportunities
– creating a safe and equitable work environment
– encouraging people to achieve their potential by
giving them greater responsibility and authority
– promoting teamwork (formal and informal)
– developing partnerships with unions
72
 Continuous Improvement (Kaizen)
• Kaizen is a Japanese term meaning "change for
the better" or "continuous improvement."

• It is a Japanese business philosophy regarding

the processes that continuously improve
operations and involve all employees.

• Employee suggestion system

• Process improvement
• 5S’s philosophy
73
 Five S (5S)
Japanese English
Description
Version Approximation
Get rid of
Seiri Sort out
untidiness
Organize the
Seiton Set in order
workplace
Clean the
Seison Shine/Sweep
workplace
Apply standard
Seiketsu Standardize
methods
Maintain
Shitsuke Sustain Order
discipline 74
 The “5S” Philosophy
• Based on Japanese words that begin with
S, the 5S Philosophy focuses on effective
work place organization and standardized
work procedures.
• 5S simplifies your work environment,
reduces waste and non‐value activity while
improving quality efficiency and safety.
• If you’re going to do it, do it RIGHT!

75
 Sort – (Seiri)
• The first S focuses on eliminating unnecessary
items from the workplace.

76
 Sort – (Seiri)…..
• An effective visual method to identify these unneeded
items is called red tagging. A red tag is placed on all
items not required to complete your job.
• These items are then moved to a central holding area.
This process is for evaluation of the red tag items.
Occasionally used items are moved to a more organized
storage location outside of the work area while
unneeded items are discarded.

77
 Sort – (Seiri)…..
• Sorting frees up valuable floor space and eliminates
such things as broken tools, obsolete jigs and fixtures,
scrap and excess raw material.
• The Sort process also helps prevent the ‘hoarder’ job
mentality (“I might need it”).

78
 Set in Order – (Seiton)
• The second S focuses on efficient and effective storage
methods.
• You must ask yourself these questions:
1. What do I need to do my job?
2. Where should I locate this item?
3. How many do I need?

Strategies for effective Set In Order are:

• Painting floors
• Outlining work areas and locations
• Shadow boards
• Modular shelving and cabinets
79
 Shine – (Seiso)
• Once you have eliminated the clutter and junk that has
been clogging your work areas and identified and
located the necessary items, the next step is to
thoroughly clean the work area.
• Daily follow‐up cleaning is necessary in order to sustain
this improvement.
• Workers take pride in a clean and clutter‐free work area
and the Shine step will help create ownership in the
equipment and facility.

80
 Shine – (Seiso)
• Workers will also begin to notice changes in equipment
and facility location such as air, oil and coolant leaks,
repeat contamination and vibration, broken, fatigue,
breakage, and misalignment.
• These changes, if left unattended, could lead to
equipment failure and loss of production. Both add up to
impact your company’s bottom line.

81
 Standardize – (Seiketsu)
• Once the first three of the 5S’s have been implemented, you should
concentrate on standardizing best practice in your work area.
• Allow your employees to participate in the development and
documentation of such standards.
• They are a valuable but often overlooked source of information
regarding their work.
• Standardize means establishing “Best Manufacturing
Practices”, including:
i. Workplace Layout and Design
ii. Materials Handling Analysis
iii. Clear and Concise Work Instructions
iv. Well Defined Work Methods
v. Safe (Ergonomic) Working Practices
vi. Cycle Time Reduction
vii. Training
[Link] 82
 The “5S” Philosophy
• Once fully implemented, the 5S process can increase
moral, create positive impressions on customers, and
increase efficiency and organization.

• Not only will employees feel better about where they

work, the effect on continuous improvement can lead to
less waste, better quality and shorter lead times.

• Any of which will make your organization more profitable

and competitive in the market place

83
 Benefits of the “5S” Philosophy
Improvements in:‐
• Workforce morale
• Company image
• Health and Safety
• Machine maintenance
• Quality
• Productivity
… Leading to Increased Competitiveness

84
WHY DO IT? The “5S” Philosophy

QUALITY EFFICIENCY

ELIMINATING
BREAKDOW SAFETY
NS

85
86
 Kaizen
• It is small improvements carried out by an
employee in the course of daily work.

• It is a continuous and gradual improvement

in small scale with minimum disruption to
the organization.

• It is process oriented thinking, since process

must be improved before one gets improved
results. 87
88
 JIT: Simplification and Visual
Control
• Standard and simple product designs
• Andon boards
• Kanban pull system
• Flag systems
• Music as signals
• Performance display systems
89
 JIT: Focus on Customer Needs

• Customer needs determine the “value” of

a product or service
• Be responsive to customers needs
(present and future)
• Strive to “delight,” not just “satisfy”
customers

90
 JIT: Partnerships with Suppliers

• Reduce number of suppliers

• Use long-term contracts
• Emphasize price, delivery, and services
• Improve communication
• Share information
• Develop local just-in-time delivery
• Provide technical support to suppliers
91
 JIT Implementation

• Top management commitment

• Steering committee
• Education program
• Pilot project planning
• Employee training
• Pilot implementation
• Pilot post mortem
• Feedback to steering committee
• Expansion to next project
92
 Advancements in JIT (JIT II)

• Backwards Integration of staff and line

functions to suppliers (e.g., purchasing)
• Requires EDI or web access to materials
and logistics systems
• On-site supplier representative(s) with
transaction processing authority
• Goal: link suppliers’ cycle to firm’s cycle to
mutually reduce wait and move times
93
How Can JIT Be Applied to Non-
Manufacturing Operations?

94
 JIT for Non-Manufacturing
Operations (Lean Operations)

• Implement demand-pull operations

• Eliminate unnecessary activities
• Standardize process flows
• Increase process flexibility
• Reorganize physical layouts
• Upgrade housekeeping and workplace
organization
95
 JIT for Non-Manufacturing
Operations (Lean Operations)
• Develop supplier partnership networks
• Level work load
• Organize problem-solving groups
• Improve quality
• Develop effective suggestion systems
• Cross-train employees
• Promote teamwork
96
What Are Toyota’s Secrets of
Success?

97
 Toyota’s Secrets of Success
(Steve Spear, HBR, May 2004)

• There is no substitute for direct observation

• Proposed changes should always be structured
as experiments
• Workers and managers should experiment as
frequently as possible
• Managers should coach, not fix

98
 Suggested Readings

• Monden, Yasuhiro (1993). Toyota Production

System: An Integrated Approach to Just-In-Time,
3rd edition, Institute of Industrial Engineers.
• Womack, James P. and Jones, Daniel T. (2003).
Lean Thinking: Banish Waste and Create Wealth in
Your Corporation, The Free Press.
• Jeffrey K. Liker (2004). The Toyota Way: 14
Management Principles from the World’s Greatest
Manufacturer, McGraw-Hill.
99
Value Engineering
(VE)

100
• A ship in port is safe, but that’s not what ships
are built for. (Grace Hopper)

• There is as much risk in doing nothing as in

doing something. (Trammell Crow)

• No one ever achieved greatness by playing it

safe. (Harry Gray)

• You can’t steal second with your foot on first.

(Chuck Noe)

• Cost and Quality have no direct relations (Larry

Miles) 101
What Is Value
Engineering?
?
102
What is Value?

103
 Value
1. Cost Value – Cost of Manufacturing a
product / component.
2. Use Value – Functional value / Service
rendered
3. Esteem Value – Appearance value
4. Exchange Value – It is exchanged for
something else.
Why do Projects have “Unnecessary” Costs?

1. Low Time for Designing

2. Lack of information
3. Lack of Ideas
4. Negative Prejudice
5. Lack of Experience
6. Weaknesses in human relations
7. Multi Concept
…
105
 Value Engineering Definition
The systematic application of recognized techniques
which:
• Identify the function of a product or service,
• Establish a value for that function, and
• Provide the necessary function reliably at the least
overall cost.

In all instances, the required function should be

achieved at the lowest possible life cycle cost
consistent with requirements and/or performance,
maintainability, safety and aesthetics.
106
 Questions, Questions…
You’re probably thinking:
• Why use Value Engineering?
• Don’t we do it all the time?
• How can it help me? Really?
• What’s it all about?

107
 Value Engineering is:
• A structured and systematic problem
solving methodology

• A process designed to find creative

alternative solutions

• Applied in a workshop environment by

a Multidisciplinary team
108
Value Engineering is: (continued)
• Concerned with life cycle costs

• A flexible set of techniques

• Function oriented

• Focused on

• “How Can We Improve Value?”

109
 What VE Is Not:
• Not just good engineering

• Not a suggestion program

• Not a routine project or plan review

• Not a cost reduction exercise

110
 Value Engineering is also known as:
• Value Analysis,

• Value Planning,

• Value Management

111
 History of VE
• Larry Miles (1904 – 1985), a
purchasing engineer for
General Electric, developed
VE concepts during WW2.

• His problem was he could not

get strategic materials to
produce the turbo-
supercharger for the B-17 and
P-47.

• Larry developed a process that

did not solve the problem (lack
of a particular material), it
solved the function!
112
 The First VE Study
• Larry and his team
determined the function of
each part in the
turbocharger.

• Found more cost effective

materials to achieve the
necessary functions.

• Pratt&Whitney Canada
still have a VE program for
development of engines. 113
 Who Uses VE?
• Value Engineering is used anywhere
• Value for money is a concern:
• Purchasing
• Construction,
• Manufacturing
• Engineering
• Services Industry
• Health Care
• Government

114
 Why Use VE?
• Knowledge of Value Engineering will improve
your ability to manage projects, solve problems,
innovate, and communicate.

• A VE program in your organization will provide

your staff with a definitive tool to improve value in
any product, project or process.

• Cost savings, risk reduction, schedule

improvements and even improved job satisfaction
can and have been the outcomes of VE studies.
115
 Why Does VE Work
• All projects have unnecessary costs

• Decisions are often made without knowing

the cost impact

• The design process focuses on expected

solutions

• Function analysis
116
 Why Does VE Work
• Function analysis ensures compatibility
between capital decisions and program
requirements

• Focus of a VE study is
• “How Can We Improve Value?”

117
• Function:
• is the fundamental concept underlying
Value Engineering.

Function analysis
• “Heart” of VE process
• A new way of thinking
• A catalyst to a paradigm shift

118
 Pencil Example
• What is the function of a pencil?

119
 Pencil Example
• What is the function of a pencil?

120
 Pencil Example
• Pencil make marks
• Eraser S remove marks
• Band S hold eraser
• Barrel S hold graphite
• Paint S protect wood/add beauty
• Markings S identify product
• Graphite B make marks

• B – Basic Function
• S – Secondary/Supporting Function
121
VE Process Diagram

122
 Information Phase
Key Questions “WHY”
• What is the problem?
• Why is it a problem?
• Why must it be solved?
• Why was it solved as proposed?
• What does it cost?

123
 Pareto’s Law of Distribution

• “The 80 / 20
Rule”
• 20% of the items
in any complex
thing account for
80% of the cost.

124
 Workshop - Function Phase

• What must be done versus how is it being done?

Techniques
• Function Analysis
• Categorize Functions
• Function Logic FAST diagram
• Value Index (Worth to Cost)
125
 Creative Phase

• What else will accomplish the basic function(s)?

Techniques
• Creative thinking - brainstorming
• Set aside policies & rules
• Depart from the norm
• Good human relations 126
 Evaluation (or Judgement) Phase

• Select the Best Ideas for Development

Techniques
• Explain & Validate Concepts
• Develop Scenarios to compare to base case
• Make Comparisons – measure performance &
cost of scenarios and base case
127
 Presentation Phase

• Present Results of Study to the Owner

Techniques
• Oral Presentation
• Written Report
• Answer Questions
• Discover Oversights 128
 Some value societies
• SAVE International [Link]
[Link]/
• Canadian Society of Value Analysis
(CSVA) [Link]
• Indian Value Engineering Society
(INVEST) [Link]

129
 Where can VE help?
• VE can help where there is scope for change:
• Difficult or contentious projects – cost –
schedule – scope
• Projects and processes where communications
are difficult (silos) and horizontal integration is
desired.
• Projects or products where innovation is
required.
• High value projects – capital – labour – services

130
 Benefits of a VE Program?
• Accomplish more projects for the same money
• Validate that capital expenditures are
appropriate for program needs
• Validate planning & design decisions
• Validate project costs
• Improve project designs, function, performance
& safety

131
What are the Benefits of a VE Program?
• Save money and time

132
The Concept of Zero
Defects in Quality
Management

133
 Zero Defects
• Zero Defects, a term coined by Mr. Philip Crosby in his
book “Absolutes of Quality Management” has emerged
as a popular and highly-regarded concept in quality
management – so much so that Six Sigma is adopting
it as one of its major theories.
• Unfortunately, the concept has also faced a fair degree
of criticism, with some arguing that a state of zero
defects simply cannot exist.
• Others have worked hard to prove the naysayers wrong,
pointing out that “zero defects” in quality management
doesn’t literally mean perfection, but rather refers to a
state where waste is eliminated and defects are reduced.
• It means ensuring the highest quality standards in
projects.
134
 What Do We Mean by Zero Defects?
• From a literal standpoint, it’s pretty obvious that attaining zero
defects is technically not possible in any sizable or complex
manufacturing project.

• According to the Six Sigma standard, the definition of zero defects is

defined as 3.4 defects per million opportunities (DPMO), allowing for
a 1.5-sigma process shift.

• The zero defects concept should pragmatically be viewed as a quest

for perfection in order to improve quality in the development or
manufacturing process.

• True perfection might not be achievable but at least the quest will
push quality and improvements to a point that is acceptable under
even the most stringent metrics.

135
 Zero Defects: The Theory and Implementation
• Zero defects theory ensures that there is no waste existing in
a project. Waste refers to all unproductive processes, tools,
employees and so on.

• Anything that is unproductive and does not add value to a

project should be eliminated, called the process of elimination
of waste.

• Eliminating waste creates a process of improvement and

correspondingly lowers costs.

• Common with the zero defects theory is the concept of “doing

it right the first time” to avoid costly and time-consuming fixes
later in the project management process.
136
 Zero Defects: The Theory and Implementation
• The zero defects theory is based on four elements for
implementation in real projects.

1. Quality is a state of assurance to requirements. Therefore, zero

defects in a project mean fulfilling requirements at that point in time.

2. Right the first time. Quality should be integrated into the process
from the beginning, rather than solving problems at a later stage.

3. Quality is measured in financial terms. One needs to judge

waste, production, and revenue in terms of budgetary impact.

4. Performance should be judged by the accepted standards, as

close to perfection as possible.

137
 Zero Defects: Pros and Cons
• The clear advantage of achieving a zero-defect level is waste and
cost reduction when building products to customer specifications.

• Zero defects mean higher customer satisfaction and improved

customer loyalty, which invariably leads to better sales and profits.

• Nonetheless, a zero defects goal could lead to a scenario where a

team is striving for a perfect process that cannot realistically be met.

• The time and resources dedicated to reaching zero defects may

negatively impact performance and put a strain on employee morale
and satisfaction.

• There can also be negative implications when you consider the full
supply chain with other manufacturers that might have a different
definition of zero defects.
138
 Reference
• [Link]
zero-defects-quality-management-article

139
 Assignment 1
Discuss the organization for total quality management
by detailing on the departmental purpose analysis,
competitive bench marking, structuring the quality
function, quality information system, quality manual,
training for quality, TBS and ISO standards on quality.
Then, contrast between TBS and ISO standards on
quality by performing SWOT/SWOC analysis which
can be capitalized by imminent researchers.

Submission: Hardcopy (printed) in two weeks time

from today
140