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The Gaps Between Performance and Potential

Using the effective costs of production and use

Donald J. Wheeler
Wed, 09/01/2010 - 06:00
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In my August column, “How to Turn Capability Indexes Into Dollars,” I defined the effective cost of production and use and showed how it can be obtained directly from the capability and performance indexes. In this column, I will show how these indexes can be used to estimate the benefits to be obtained from different improvement strategies.

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Submitted by Michael V. Petrovich on Wed, 09/01/2010 - 14:19

Process Performance Analysis

Don,
Great article. I had given you a paper many years ago that I wrote for the ASQ congress back in 1998. Your article is quite similar to what I was saying back then, and adds some additional insight. Here is a link to that paper: http://mvpprograms.com/html/ppa_asq1998

Let me add a few things to consider.

I developed this methodology back in the mid 90s, and this has since been used on thousands of processes across a wide range of industries. It has been used as a means of supplier quality evaluation by some major companies. As someone once said, "What we like about this approach tells you what to work on as well as what not to work on." I have since concluded this this really is a breakthrough approach.

Consider the use of Ppm as an overall performance measure. Ppm considers target, and lends itself to analysis with the Taguchi loss function. I did not find Ppk quite as useful, except in cases where no target was available.

In many production processes, you will find multiple process streams. I created the index, Pp(process stream), to look at the potential within stream. From this measure and analysis, you can get an idea of the cost of differences in stream to stream targeting.

I created the idea of using stacked bar charts to display the process measures. That is described in the paper I wrote. Over time, this did prove to be a quite useful way to display the performance of multiple processes. Maybe you could expand this and use your cost analysis in a similar display.

I developed a simple means to decompose the sources of variation with some relatively simple formulas. I also used pie chart to display those sources of variation and their contribution. (I used the pie chart because it was different from the stacked bar.) This helps you prioritize.

What I ultimately saw with this approach is the ability to prioritize which processes needed work, and then to determine what was most important for those processes: achieving control, targeting, removing process stream differences, or working on the process potential. Although every process is different, but from my experience targeting was often the "biggest bang for the buck."

Don, thanks for your valuable contribution to this area of analysis and inquiry.

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