Page 110 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 5: Quality Management

Many executives talk freely in terms of quality and standards. Most of these people will be hard- Notes
pressed to tell the exact nature of the non-financial measurements that they have in place in their
organizations, and what it is, in fact, that is being measured on an ongoing basis. There is a lot
of lip service paid to non-financial measures, but it always remains doubtful if they are reliable.
Much remains to be done to develop reliable non-financial performance measurement indicators,
as these are of great importance to service industries.

Self Assessment

Fill in the blanks:
12. Parameters of service quality include complex customer perceptions which are timeliness,
employee’s attitudes towards customers and the ……………… environment where the
service is delivered.
13. ……………… Standards are applied to all customer-contact areas.

5.7 What is Six Sigma?

Six Sigma refers to a disciplined, data-driven approach and methodology for eliminating defects
in any process—from manufacturing to transactional and from product to service. A defect is a
component that does not fall within the customer’s specification limits.

Example: In administrative processes, Six Sigma may mean optimizing response time to
inquiries, maximizing the speed and accuracy with which inventory and materials are supplied,
and fool proofing such support processes from errors, inaccuracies and inefficiency.

Six Sigma

Traditional quality programs focus on detecting and correcting defects. However, Six Sigma
programs seek to reduce the variation in the processes that lead to these defects. One of the most
important measures of variation is the standard deviation. The standard deviation (‘s’) of a set of
sample scores is a measure of variation of scores about the mean, and is defined by the following
formula:

s

Where: ‘x’ is the value of the attribute
‘x?’ is the mean value, and

‘n’ is the number of readings
The philosophy underlying Six Sigma is to reduce process output variation. The performance
of a process in terms of its variability is compared with different processes using a common
metric. This metric is Defects Per Million Opportunities (DPMO). This calculation requires
three pieces of data:
1. Unit: The item produced or being serviced.
2. Defect: Any item or event that does not meet the customer’s requirements.
3. Opportunity: A chance for a defect to occur.

LOVELY PROFESSIONAL UNIVERSITY 105