This month’s first question
I am curious about how Six Sigma stacks up against a quality management system (QMS). Would Six Sigma work in conjunction with a QMS? What are the advantages of Six Sigma over a QMS that focuses on improvement?
First, let me clarify that there should not be a distinction between Six Sigma (lean, TRIZ or any other method or approach) and a QMS. They are—and should be—interrelated.
A QMS has certain requirements, such as processes must be defined and documented. Process implementation procedures, the QMS’s effectiveness and an improvement system also must be documented.
That said, Six Sigma and lean, for example, should be part of the improvement system that supports the QMS and shows formal documented programs that support improvement in a controlled manner.
Implementing Six Sigma without a mature QMS means that projects and improvements across the organization won’t have an overarching business management program for quality management. On the other hand, implementing a QMS without Six Sigma (or other approaches—I’m a believer in blended methods) won’t provide sufficient control or show a formal documented approach in and inclusive of an improvement system.
This response was written by William LaFollette, chief process officer, WL Performance Excellence, Phoenix.
This month’s second question
What are the key performance indicators (KPI) for quality and continuous improvement in the manufacturing industry?
An organization’s KPIs for quality and continuous improvement should be specific to the organization and based on what the organization seeks to monitor and improve. Scrap rate, for example, can be a good measure of quality and improvement in a manufacturing organization.
But what if the organization has little scrap due to the high amount of rework that goes into shipping parts? Dropping the scrap rate from 0.004% to 0.003% won’t accomplish much if the organization needs to rework more than 70% of its parts. Instead, using rework as a KPI makes more sense than scrap.
KPIs for monitoring continuous improvement include machine downtime, overall equipment effectiveness and changeover time. The organization can monitor the time it takes to change over tooling when new orders are started, for example, and this data can be used as a baseline for setting a target improvement rate. The same metric can be used first to ensure the improvement was effective and maintained.
Quality can be monitored by tracking the scrap rate, first-time yield, customer returns, customer complaints and rework. Scrap should be monitored as a ratio to account for fluctuations in production quantities. A sharp reduction in scrap may be due to fewer parts being produced, for example, and not an actual improvement in quality.
Additional KPIs to consider include cost of goods sold, customer satisfaction survey results, energy consumption, energy costs, inventory turnover, labor costs, machine use, material cost, on-time delivery, production downtime, production lead time, quantity produced in a given time, safety incidents, supplier complaints, training completed, training costs, waste removal costs, water use and warranty costs.
It is critical to remember that KPIs should support the organization’s objectives. If the organization is attempting to achieve a certain level of quality-related savings in a year, multiple KPIs can be used to monitor this, such as scrap rate, rework and customer complaint costs. But simply monitoring these metrics won’t drive savings. Improvement projects also must be implemented to achieve improvements in the selected metrics.
The selected metrics should be specific, measurable, actionable, realistic and time related (SMART). A vague metric is worse than useless because it can be misinterpreted as being met, which results in a false sense of security—such as when performance is thought to have improved when it actually has declined.
There must be a way to measure the metric, such as counting the number of parts reworked per day. The metric also must be realistic—an unrealistic target wastes time that could have been spent attempting something achievable, and the inevitable failure will be discouraging to those who must pursue it. A time-related element also is needed, such as the deadline for an improvement project.
There are many possible KPIs for quality and continuous improvement in manufacturing organizations, but it’s essential to select the correct indicators for the organization. Quality can be improved by completing projects based on SMART KPIs that fit the organization’s needs and objectives.
This response was written by Matthew Barsalou, certified Master Black Belt, Germany.