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I am in materials management. I manage the inventory levels of direct material parts that go into finished goods. It is not uncommon to run out of inventory when production and demand is unpredictable. We pareto chart our stockouts to determine the frequency and commonality of parts that we run out of. It helps us to determine if inventory levels need to be adjusted based on the stockout frequency, or if a stockout was a “one off”. Discuss this statement briefly and what other B7 quality improvement tools can be used and why?
Expert Answer
Using the technique of ABC (Always Better Control) analysis under Inventory control methods, one of the concepts inspired by Vilfred Pareto’s 80:20 theory. Accordingly, this technique could be used to undertake decisions in terms of adapting to limited number of tasks that can produce the maximum results. The Pareto’s principle suggests that 20% of input of efforts should produce 80% of the overall advantage of the Project so undertaken. It is hence a step for taking corrective measures by identifying the tasks that contains the most number of defects.
Discussing about Quality improvement, it is important to understand the significance of Quality management first. Quality Management is important pertaining to the following reasons:
• It is a philosophy that involves everyone in the organization in a continual effort to improve quality and achieve customer satisfaction
• With Quality Management in place, the whole organization works together to guarantee product quality products and services.
• The aim is to make products of perfect quality- with Zero Defect in the system.
Accordingly, the following are the other quality improvement tools that can be adapted:
Six sigma, Baldrige criteria and ISO 9000.
In case of Six sigma, it is a statistical program undertaken by the Organization for the process improvement. It has six standards that is set to reduce defects to 3.4 per million, thereby helping in identifying and mitigating any variances in the system. It is a customer-centric approach to cater the requirements of the end-users. The process starts with defining a problem pertaining to the ongoing process, measuring the same against the current performances, analyze such measurements to undertake the root-cause analysis, improving the variances with various innovative approaches and control the same by monitoring the performances.
However it differs from ISO 9000 that was developed by Motorola in the sense that Six Sigma cannot be used for Quality Management program in an Organization. It is a Quality Management Standard. As against that Six sigma is a method of reducing defects in a process. However, the similarity of Six Sigma with that of the ISO 9000 is that Six Sigma also aims in identifying issues incidental to the successful implementation of a process in a given system which could be issues pertaining to quality-related problems as well. Upon successful identification and mitigation of the issues from the process, quality of the overall process also improves thereby reaching to the ISO 9000 standards. Another difference of ISO 9000 from Six sigma is that it documents the knowledge of the processes and that is how it forms a training base for its users. Six Sigma, on the other hand follows a methodology to identify and eliminate any errors in the system which cannot really act as a Training guide for the users to undertake the processes. ISO 9000 states how a particular process could be most efficiently operated in the system based upon the guidelines it lays down towards the same while Six Sigma helps in understanding the ways that could be implemented in improving such processes.
Baldrige Criteria program is part of the Total Quality Management system that also aims in the Quality management aspects throughout the Organization. It throws light upon improvement of performances, adhering to Business Ethics and integrating of various processes across the Departments. This technique thereby helps synchronizing the ISO 9000 standards with that of Six Sigma resources. Apart from mere process improvements in case of Six Sigma or simply basing the guidelines like in case of ISO 900, this technique also aims at improving the overall performances of the all the resources, including the Human resources, Financial resources, etc. within an Organization. Unlike the Six Sigma’s six standards of error mitigation, Baldrige Criteria relies upon Leadership Strategic Planning, Customer and Market Focus, Information and Analysis, Workforce Focus, Process Management and the Business Results.
Hence while all the above three are Quality management measures in an Organization, Baldrige criteria basically focuses upon in excellence in Performance management of various resources available within an Organization, Six Sigma aims at measuring product quality to improve process engineering and ISO 9000 is a dedicated system for Quality management.
