Managing Quality

Integrating the Supply Chain

Jingchen Liu

Chapter 10
The Tools of Quality
Chapter Objectives
• Use process maps to improve a process
• Use extended value stream maps to improve supply chain performance
• Implement Ishikawa’s seven basic quality tools for improvement
• Use the new seven tools to improve managerial decision making
• Discuss other tools such as balanced scorecards, spider charts, and
dashboards

10-2
IMPROVING THE SYSTEM
• To be effective, quality improvement in
manufacturing or services should
address the needs of the system as a
whole
• The objective of the system is to satisfy
the customer
• Customer satisfaction means higher
customer retention, which leads to
improved profitability

10-3
IMPROVING THE SYSTEM Continued
• A quality system uses the business
model with a focus on the customer
and includes the dynamics of continual
improvement, change, planning, and
renewal
• This quality system is an
interconnected, interdisciplinary
network of people, technology,
procedures, markets, customers,
facilities, legal requirements, reporting
requirements, and assets that interact
to achieve an end
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Ishikawa’s BASIC SEVEN TOOLS OF QUALITY
1. Process maps
o Give the team the big
picture of the process to
be improved

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Ishikawa’s BASIC SEVEN TOOLS OF QUALITY Continued
1. Process maps
2. Check sheet
o Process data are collected
using a check sheet

10-6
Ishikawa’s BASIC SEVEN TOOLS OF QUALITY Continued
1. Process maps
2. Check sheet
3. Histograms
4. Scatter plots
5. Control charts
o The data are analyzed using
either histograms, scatter
plots, or control charts

10-7
Ishikawa’s BASIC SEVEN TOOLS OF QUALITY Continued
1. Process maps
2. Check sheet
3. Histograms
4. Scatter plots
5. Control charts
6. Cause-and-effect diagrams
o The root causes of the
problems associated with the
process are identified using a
cause-and-effect diagram
10-8
Ishikawa’s BASIC SEVEN TOOLS OF QUALITY Continued
1. Process maps
2. Check sheet
3. Histograms
4. Scatter plots
5. Control charts
6. Cause-and-effect diagrams
7. Pareto analysis
o Causes are prioritized using Pareto
analysis

10-9
Process Maps
• A process map is a picture or visual
display of a process
• The first step in many process
improvement projects is to create a
map of the process as it exists
• This is because we must know the
process before we can improve it

10-10
Basic Mapping Symbols
• The diamond indicates there is a
decision to be made, and they often
identify different paths of sequences in
the process map
• The parallelogram appears whenever
materials, forms, or tools enter or leave
the process
• The rectangle is the processing
symbol—the work that is actually
performed
• The start/stop symbol and the page
connector are used for the convenience
of the people using the process map
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Simple Rules for Process Maps
• Use these simple symbols to chart the process from the beginning, with all
arrows in the process map leaving and entering a symbol
• Develop a general process map and then fill it out by adding more detail or
a subflowchart to each of the elements
• Step through the process by interviewing those who perform it
• Determine which steps add value and which don’t in an effort to simplify
the work
• Before simplifying work, determine whether the work really needs to be
done in the first place

10-12
The Steps of Process Mapping
1. Settle on a standard set of process mapping symbols to be used
2. Clearly communicate the purpose of the process map to all the
individuals involved in the exercise
3. Observe the work being performed by shadowing the workers performing
the work
4. Develop a map of the process
5. Review the process map with the employees to make needed changes
and adjustments to the process map
6. Develop a map of the improved process

10-13
Example of Process Map
• This shows a simple process used in
a city planning department to issue
permits allowing applicants to take
possession of newly built homes
• Can you figure out how to further
simplify and improve the process?

10-14
Example of Process Map Continued

10-15
Example of Process Map
• The well construction unit of a
state department of water
resources entered into a multi-
year project to update its
database management system
• As part of the process, the well
construction staff was asked to
document its current process
flows

10-16
Example of Process Map
• The well construction unit of a
state department of water
resources entered into a multi-
year project to update its
database management system
• As part of the process, the well
construction staff was asked to
document its current process
flows

10-17
SIPOC Diagram
• A special type of process map is
called a SIPOC diagram
• A SIPOC diagram is a flowchart
organized around the acronym
“SIPOC”
o Suppliers, inputs, processes, outputs,
and customers
• SIPOC diagrams are often used in
Six Sigma projects

10-18
Extended Supply Chain Mapping

10-19
Check Sheets
• Check sheets are data-gathering
tools that can be used to provide
data for histograms
• They can be either tabular,
computer-based, or schematic
• Setting up a check sheet:
1. Identify common defects
2. Draw a table with common defects
(left column) and time period (top)
3. User places check marks on the sheet
whenever the defect is encountered
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Example of Check Sheet
Type of Problem Frequency Percentage
Setup routines are not 315 52.1
standardized
Equipment needed for 124 20.5
setup is missing
Internal and external 87 14.4
setup tasks not separated
Extensive machine 56 9.2
resetting and paper
change are needed
Other 23 3.8
Total 605 100.0

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Histograms
• Histograms are simply graphical
representations of data in a bar
format
• Note that a frequency chart is used
for categorical data, whereas
histograms are used for continuous
numerical data
• Histograms are also used to observe
the shape of data
o E.g., how are the data in an interval
scale distributed?

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Rules for Developing Histograms
• The width of the histogram bars
must be consistent
o Class widths are the same where No. Observations No. Classes
each bar contains a single class
9 to 16 4
• The classes must be mutually 17 to 32 5
exclusive and all-inclusive (or
33 to 64 6
collective exhaustive)
65 to 128 7
• A good rule of thumb for the
129 to 256 8
number of classes is given by the
model k ≥ !"# $#!"# %

10-23
Example of Histogram
• Problem: 4.51 0.79 4.19 2.29
o The Big City Cafeteria wants to 5.96 3.49 2.25 3.45
determine the distribution of its 2.24 5.25 5.36 1.15
sales during lunch-time 7.28 5.25 4.29 5.25
o On a given day, the manager 3.96 6.79 4.66 3.56
randomly selects 40 sales from the 8.22 2.56 5.25 3.33
sales register receipt 5.55 2.24 8.95 2.49
o Develop a histogram of the sales 5.25 2.26 0.79 5.25
4.11 6.11 5.25 4.56
1.15 5.25 2.21 5.25

10-24
Example of Histogram Continued
4.51 0.79 4.19 2.29 • Mean = 4.20
5.96 3.49 2.25 3.45 • Maximum value = 8.95
2.24 5.25 5.36 1.15 • Minimum value = 0.79
7.28 5.25 4.29 5.25
3.96 6.79 4.66 3.56 • Difference = 8.16
8.22 2.56 5.25 3.33 • Sum = 168
5.55 2.24 8.95 2.49 • k ≥ !"# $%#!"# & = 5.32 ⟹ 6
5.25 2.26 0.79 5.25
4.11 6.11 5.25 4.56 • Class width = '.)*⁄* = 1.36 ≈ 1.40
1.15 5.25 2.21 5.25 • Classes = 0.76–2.15; 2.16–3.55;
3.56–4.95; 4.96–6.35; 6.36–7.75;
7.76–9.15
10-25
Example of Histogram Continued
• Mean = 4.20
• Maximum value = 8.95
• Minimum value = 0.79
• Difference = 8.16
• Sum = 168
• k ≥ !"# $%#!"# & = 5.32 ⟹ 6
• Class width = '.)*⁄* = 1.36 ≈ 1.40
• Classes = 0.76–2.15; 2.16–3.55;
3.56–4.95; 4.96–6.35; 6.36–7.75;
7.76–9.15
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Scatter Diagrams
• The scatter diagram or scatter plot
is used to examine the relationships
between variables
• It is quite easy to develop scatter
plots using the charting facilities in
spreadsheet packages such as Excel

10-27
Steps for Setting Up a Scatter Plot
1. Determine your x (independent) and y (dependent) variables
2. Gather process data relating to the variables identified in step 1
3. Plot the data on a two-dimensional plane
4. Observe the plotted data to see whether there is a relationship between
the variables
o It is helpful to plot the data in Excel and to perform a correlation test to determine
whether the variables have a statistically significant relationship

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Example of Scatter Diagram
• Problem:
o Healthy People, Inc., wanted to study
the relationship between
absenteeism and the number of
overtime hours worked by
employees
o Thirty employees were randomly
selected, and numbers of overtime
hours were graphed against numbers
of days absent for the previous year

10-29
Example of Scatter Diagram Continued
• Solution:
o This analysis showed that there
appeared to be a positive
relationship between the number of
days absent and hours of overtime
o Subsequent analysis showed that, in
fact, these variables were
significantly related
o It led managers to recalculate the
actual cost of overtime

10-30
Control Charts
• Control charts are used to
determine whether a process will
produce a product or service with
consistent measurable properties
• Covered in detail in Chapters 11
and 12

10-31
Cause-and-Effect (Ishikawa) Diagrams
• The cause-and-effect diagram is a
good tool to help us move to lower
levels of abstraction in solving
problems
o Also known as an Ishikawa diagram or
a fishbone diagram
• The diagram looks like the skeleton
of a fish
o The problem is the head of the fish
o Major causes are the “ribs” of the fish
o Subcauses form smaller “bones” off
the ribs

10-32
Steps to Create a Cause-and-Effect (Ishikawa) Diagram
1. State the problem clearly in the head of the fish
2. Draw the backbone and ribs
o Ask the participants in the brainstorming session to identify major causes of the
problem labeled in the head of the diagram
3. Continue to fill out the fishbone diagram, asking “Why?” about each
problem or cause of a problem
4. View the diagram and identify core causes
5. Set goals to address the core causes

10-33
Pareto Charts
• Pareto charts are used to identify
and prioritize problems to be
solved
• They are actually frequency
charts that are aided by the
80/20 rule, sorted from largest to
smallest
o The 80/20 rule states that roughly
80% of the problems are created by
roughly 20% of the causes

10-34
Rules for Constructing Pareto Charts
• Information must be selected based on the types or classifications of
defects that occur as a result of a process
• Data must be collected and classified into categories
• A frequency chart must be constructed, showing the number of
occurrences in descending order
• The steps used in Pareto analysis include:
1. Gather categorical data relating to quality problems
2. Draw a frequency chart of the data
3. Focus on the tallest bars in the frequency chart first when solving the problem

10-35
Example of Pareto Chart
• Problem:
o A copying company is concerned because it is taking too long for operators to set up
new printing jobs
o They decide to use Pareto analysis to find out why setup times are taking so long
o The data gathered reflect the following major causes

10-36
Example of Pareto Chart Continued
• Solution:
o First, order the problems by frequency and compute the percentage of problems
related to each cause

10-37
Example of Pareto Chart Continued
• Solution:
o Next, draw a frequency chart of the results

10-38
THE SEVEN NEW TOOLS FOR IMPROVEMENT
• There is another set of tools that focuses on group processes and decision
making: the new seven tools for management
1. Affinity diagram
2. Interrelationship diagram
3. Matrix diagram
4. Tree diagram
5. Prioritization matrices
6. Process decision program chart
7. Activity network diagram

10-39
THE SEVEN NEW TOOLS FOR IMPROVEMENT Continued
• The N7 tools should be used in a “cycle of activity,” in which one tool
provides inputs to another tool

10-40
The Affinity Diagram
• When we are solving a problem,
it is often useful to first surface all
the issues associated with the
problem
• A tool to do this is the affinity
diagram
• An affinity diagram creates a
hierarchy of ideas on a large
surface

10-41
Steps Used in Establishing an Affinity Diagram
1. Identify the problem to be stated
2. Ask the team to write down issues that relate to the problem
3. Allow only about 10 minutes for this writing activity
4. Place the written cards on a flat surface
5. Lay out the finished cards so all participants can see and have access to all the
cards
6. Let everyone on the team move the cards into groups with a similar theme
7. If you disagree with someone else’s placement of a note card, say nothing, but
move it
8. You reach consensus when all the cards are in groups, and the team members
have stopped moving the cards
9. Draw a finished affinity diagram
10-42
Example of Affinity Diagram
• Problem:
o The sales team at HealthWise Corporation decided to develop a sales reference tool
(SRT) as a means of improving its training processes for new salespeople
o A team of experienced salespeople was assembled, who cataloged all the current
sales material in many different locations
o These materials were then reviewed by the team
o Prior to performing preliminary design work for the SRT, the team members had to
identify issues relating to the implementation of the SRT

10-43
Example of Affinity Diagram Continued

10-44
The Interrelationship Digraph
• After completing the affinity
diagram, it might be useful to
understand the causal relationships
between the different issues that
surfaced
• An interrelationship digraph shows
the relationships between different
issues
• The shaded boxes are major issues
that need to be addressed when
developing improvement strategies

10-45
Steps to Complete the Interrelationship Diagram
1. Construct an affinity diagram to identify the issues relating to a problem
o Place the cards with related issues in columns with gaps between the cards
2. Create the digraph by examining the cards one by one, asking, “What
other issues on this digraph are caused or influenced by this issue?”
3. After reviewing the arrows and making needed revisions, count the
numbers of arrows pointing to each note, and write the numbers on the
notes
4. Identify the cards with the most arrows as the “key factors”
o There should not be more than 5-10 key factors
5. Draw a double box around the key factors and brainstorm ways to address
these issues
10-46
Example of Interrelationship Digraph
• Problem:
o For the issues relating to sales reference tools, team members were interested in
knowing what issues had the greatest effects on other issues
o This would help them to know where to focus their efforts in coming weeks

10-47
Example of Interrelationship Digraph Continued

10-48
Tree Diagrams
• The tree diagram is useful to
identify the steps needed to
address the given problem
• A tree diagram is similar to a
work breakdown structure used
in planning projects

10-49
Steps to Complete a Tree Diagram
1. Assemble the header cards from the affinity diagram
o From these cards, choose the header card that represents the most important issue
2. Once the goal statement has been determined, ask this: “What are the
steps required to resolve or achieve this major objective or goal?”
3. Once the major tasks have been identified, move to the next level under
each task and ask this for the second-level tasks
o “What are the steps required to resolve or achieve this objective or goal?”
4. Continue doing this for successive levels until you have exhausted your
ideas for steps

10-50
Prioritization Grid
• A prioritization grid is used to make
decisions based on multiple criteria
• When there are multiple
alternatives and multiple criteria, a
prioritization grid is a good way to
inform your decision making
without resorting to more
sophisticated analysis

10-51
Steps Required to Make a Prioritization Grid
1. Determine your goal, your alternatives, and the criteria by which a decision is
to be made
2. Place the selection criteria in order from most important to least important
3. Apply a percentage weight (that sum to one) to each of the criteria for each
option
4. Average the individual ratings for each criterion; then rank those average scores
5. Rank each alternative with respect to the criteria
6. Multiply the final criteria ranking (from Step 4) by each corresponding
alternative’s rank (from Step 5)
7. Add the importance scores for each alternative
8. Rank each alternative according to importance (the lower the score, the better)
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Example of Prioritization Grid
• A company had to choose between five possible machines for a service
process with five criteria

Decision Criteria
Alternatives Criteria
Machine A Ease of use
Machine B Maintenance
Machine C Cost
Machine D Expected life
Machine E Reputation

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Importance Ratings
• The three team members provided subjective importance ratings for each
of the different decision criteria
Average Final Criteria
Criteria Person 1 Person 2 Person 3 Score Ranking
Ease of use 0.4 0.2 0.5 0.366 1
Maintenance 0.3 0.3 0.3 0.300 2
Cost 0.2 0.2 0.1 0.166 3
Expected life 0.05 0.1 0.005 0.066 5
Reputation 0.05 0.2 0.05 0.100 4
Total 1.00 1.00 1.00

10-54
Final Ranking for Ease of Use
• The three team members then provided ratings for each of the different
machines as they related to each criterion
Sum of Final
Alternatives Person 1 Person 2 Person 3 Scores Ranking
Machine A 1 1 1 3 1
Machine B 2 3 2 7 2
Machine C 4 4 4 12 4
Machine D 5 5 5 15 5
Machine E 3 2 3 8 3

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Final Ranking for Maintenance
• The three team members then provided ratings for each of the different
machines as they related to each criterion
Sum of Final
Alternatives Person 1 Person 2 Person 3 Scores Ranking
Machine A 2 2 1 5 1
Machine B 1 3 2 6 2
Machine C 5 5 4 14 5
Machine D 4 4 5 13 4
Machine E 3 1 3 7 3

10-56
Final Ranking for Cost
• The three team members then provided ratings for each of the different
machines as they related to each criterion
Sum of Final
Alternatives Person 1 Person 2 Person 3 Scores Ranking
Machine A 4 4 5 13 5
Machine B 5 3 4 12 4
Machine C 1 1 2 4 1
Machine D 2 2 1 5 2
Machine E 3 5 3 11 3

10-57
Final Ranking for Expected Life
• The three team members then provided ratings for each of the different
machines as they related to each criterion
Sum of Final
Alternatives Person 1 Person 2 Person 3 Scores Ranking
Machine A 1 2 1 4 1
Machine B 2 3 2 7 2
Machine C 3 4 5 12 4
Machine D 4 5 4 13 5
Machine E 5 1 3 9 3

10-58
Final Ranking for Reputation
• The three team members then provided ratings for each of the different
machines as they related to each criterion
Sum of Final
Alternatives Person 1 Person 2 Person 3 Scores Ranking
Machine A 4 4 5 13 5
Machine B 5 3 4 12 4
Machine C 1 1 2 4 1
Machine D 2 2 1 5 2
Machine E 3 5 3 11 3

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Combining Rankings
• We summarize all rankings for criteria and alternatives

Final Final Ease Final Final Final Final

Criteria of Use Maintenance Cost Expected Life Reputation
1 1 1 5 1 5
2 2 2 4 2 4
3 4 5 1 4 1
5 5 4 2 3 2
4 3 3 3 5 3

10-60
Final Rankings
• The final rankings were computed by multiplying the various rankings by
their importance
Final
Machine Calculations Ranking
Machine A 1(1) + 2(1) + 3(5) + 5(1) + 4(5) = 43 2
Machine B 1(2) + 2(2) + 3(4) + 5(2) + 4(4) = 44 3
Machine C 1(4) + 2(5) + 3(1) + 5(4) + 4(1) = 41* 1
Machine D 1(5) + 2(4) + 3(2) + 5(5) + 4(2) = 52 5
Machine E 1(3) + 2(3) + 3(3) + 5(3) + 4(3) = 45 4

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Matrix Diagram
• The matrix diagram is similar in
concept to quality function
deployment in its use of symbols, its
layout, and its application
• The matrix diagram is a
brainstorming tool that can be used
in a group to show the relationships
between ideas or issues
• Matrix diagrams are simple to use
and can be used in two, three, or
four dimensions

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Steps to Create a Matrix Diagram
1. Determine the number of issues or dimensions to be used in the matrix
2. Choose the appropriate matrix
3. Place the appropriate symbols in the matrix

10-63
Process Decision Program Chart
• A process decision program chart is
a tool to help brainstorm possible
contingencies or problems
associated with the implementation
of some program or improvement
• It can be presented in tree form or
outline form

10-64
Steps to Create a Process Decision Program Chart
1. When developing the tree diagram, place the first-level boxes in
sequential order
2. Moving to the second level, list implementation details at a fairly high
level
3. At the third level, ask this: “What unexpected things could happen in this
implementation?” or this: “What could go awry at this stage?”
4. At the fourth level, brainstorm possible countermeasures to the problems
identified at the third level
5. Evaluate the countermeasures for feasibility, and mark those that are
feasible with an O and those that are not feasible with an X
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Activity Network Diagram
• The activity network diagram is
used for controlling projects
• It is also known a program
evaluation and review technique
(PERT) diagram or a critical-path
diagram
• Discussed in depth in Chapter 14

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OTHER TOOLS FOR PERFORMANCE MEASUREMENT
• Spider or radar charts
• Balanced scorecards
• Dashboards
• Huddle boards
• Turtle diagrams
• Bowtie diagrams

10-67
Spider or Radar Charts
• Spider charts are graphs that
present multiple metrics
simultaneously in a two-
dimensional plane
• Include goal and current
performance for each metric

10-68
Balanced Scorecards
• Balanced scorecards are spreadsheets that are communicated to
management on a regular basis (e.g., weekly, monthly, quarterly)
• Integrate financial measures of business success along with nonfinancial,
operational information about the business

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Dashboards
• Dashboards look like electric
meters or car dashboards
• Each of the “gauges” on the
dashboard shows a different metric
• The focus is on easy, clear
communication

10-70
Huddle Boards
• A huddle board is a visual
management tool that can
appear in many forms and is used
by teams to collaborate around
project tasks and performance
• Boards are a central place where
team members can communicate
the status and needs of different
activities, goals, metrics,
schedules, notes, and so on

10-71
Turtle Diagrams
• Turtle diagrams are similar to
SIPOC diagrams
• They show inputs, requirements
and outputs
• They also diagram resources such
as machinery, plant, and people

10-72
Bowtie Diagrams
• A bowtie diagram is a tool used in risk
analysis to brainstorm for a particular
hazard
• What are the threats to the firm and
the consequences of those threats
• On the threat side, we list preventive
measures that should take place
• On the consequences side, we list
possible recovery strategies if the
problem occurs

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Key Terms
• Activity network diagram • Dashboards • Process decision program
• Affinity diagram • Histogram chart
• Balanced scorecard • Interrelationship digraph • Process map
• Basic seven (B7) tools of • Matrix diagram • Scatter diagram or
quality scatter plot
• New seven (N7) tools
• Bowtie diagram • SIPOC
• Pareto charts
• Cause-and-effect (or • Spider charts
• Plan–do–check–act
fishbone or Ishikawa) (PDCA) cycle • Tree diagram
diagram • Turtle diagram
• Prioritization grid
• Check sheets
• Control charts
10-74