Define, Measure, Analyze, Improve, Control

The Problem: A company which supplies parts and services has certain requirements from
its customers, which include low cost, reliable assemblies, and on-time delivery. While all three
factors are important to both the supplier and the customer, the customer has identified delivery
time as their primary concern since they do not have the resources to handle the variation. The
supplier is late far too often, and if the supplier ships the assemblies too early, it causes problems
for the customer.

The company held an internal meeting to see what they can measure at their facility as a
predictor of what their facility needs to improve. Delta Days to Required Date was determined
to be the most vital measurable factor.

Product Requirements
$ charged per unit

% markup

Material $
Mean Time to Failures
Importance
Delta Days to Required Date

Instantaneous Failure Rate

Total
Days from dock to dock
Mean Time Between Failures
Customer Expectations
rmestoCuoficeVo

On-Time Deliver 5 H L 50
Low Cost 3 H M L M L L L 57
Reliable 2 H H M L 44

Total
45 27 27 21 9 9 8 5

In the above, each H(igh) has a value of 9, each M(edium) has a value of 3, each L(ow) has a value of 1
To find the total value, multiply the value of each letter by its customer importance for that row

Areas of Application:
• Regression
• Statistics – histogram, mean, standard deviation, correlation plot
• Excel
• Mini-Tab (optional instead of Excel)
Materials Included:
Excel files:
• DataFile.xls
• GageRR.xls
• MSAResults.xls
• ICD.xls

Goal: Since the supplier has decided that delta days to required date has the highest priority in
keeping their customers satisfied, the supplier would like to explore the various factors that cause
the variability in delta days and determine mathematically which, if any, can be controlled. The
delivery dates acceptable to the customer are in the time frame of 10 days early and 20 days late
95% of the time.
Questions: Define, Measure, Analyze, Improve, Control

There are a number of questions the supplier would like to explore. Use the DMAIC process to
drive out the variability.

Define:
• What is important to the customer?

Measure:
• How high is the quality of the data available? Could it be that the problem lies in the
measurement system and not the process itself? The quality of data is and always should
be an area of concern. There is always the tendency to have human errors and
differences in measuring. Use the Gage R&R (GageRR.xls) tool and MSA Results
(MSAResults.xls) to determine if the variation is too large between the two operators.
Explain and justify your answer.

Working with the Gage R&R Tool. You must enter data in all of the green fields:
A. Enter operator measurement data from MSA Results.xls.
o The spreadsheet then calculates the range for each part, then calculates an average
range between the two operators.
B. Enter the identical Part ID next to Part Number
C. Enter the number of operators: 2
o Enter the number of parts: 10
 The spreadsheet will then determine the d2* value, based on a standard
table of reliabilities that takes into account the number of operators versus
the number of parts.
D. Your tolerance for delivery has a range from 10 days early to 20 days late.
o Enter your lower and upper limits for delivery time in LSL and USL, respectively.
 The spreadsheet will calculate the tolerance
E. The spreadsheet will now calculate several more values:
o First, the spreadsheet estimates standard deviation [Sm (Est.)] by dividing the
average range by the d2* value.
o Next, the standard deviation estimate is multiplied by 5.15 (because 5.15 standard
deviations represent 99% of the expected population of ranges) to determine the
Gage Error.
o Finally, % R&R is calculated by dividing the Gage Error by the calculated
tolerance. If the % R&R is less than 30%, we can be confident that measurement
is not the primary cause of the variability.

• How good is the supplier relative to the customer’s requirements (show graphically)?
How far off is the company? Express the answer in terms of mean and standard
deviation. What should the mean and standard deviation be in order to meet the
customer’s requirements?
Analyze:
• Look at the fishbone diagram and discuss what you think the two major causes for the
customer delivery problem are. Use data analysis to verify these causes.

Potential X’s
Measurements Materials Men

Data Base Supplier Delivery

Plant Location

Manual Supplier
Documentation

Customer
Delivery
Near holiday Cleaner

Internal TAT

Near end of quarter Grinder

Environment Methods Machines

• Looking at the next fishbone diagram, discuss what you think would be the top two
causes of Supplier Delivery variation. Use graphical and/or mathematical verification.

Potential X’s
Measurements Materials Men

Tracking System Weld Supplier

Supplier
Delivery
Holidays

Schedule variation Type

Strike

Environment Methods Machines

 • What drives schedule variation? Look at the next fishbone diagram and remember to use
graphical and/or mathematical verification.

Potential X’s
Measurements Materials Men

Parts

Planner

Sales input

Schedule
Variation

End of Quarter End of Quarter

Environment Methods Machines

• Looking at the internal process below, which of the three manufacturing “Gates” appear
to have the greatest influence on TAT? Prove using the Excel file Data File.xls and
making regression plots (scatterplots) between the Gates and TAT and looking at the
correlation.

Process Map

Receive Clean Inspect Machine Clean Inspect Ship

Gate 1 Gate 2 Gate 3

• Using the “Family Tree” concept below, fill in the X’s based on the information gathered
so far.

Summary of Variation Sources

Customer Delivery

Supplier Delivery TAT

X X X X X

X X X
Improve and Control:
• Based on your findings, create an Improve plan complete with recommended actions and
a Control plan for each of your corrective actions that will need to be implemented to
control and minimize the variability in the customer delivery problem. Support the
Improve plan with your data analysis as you will be trying to convince the finance
department and other groups to support your actions.

• With the newly implemented changes, customer delivery has improved. Use the new
data in Improved Customer Delivery.xls to determine if you have reached your statistical
goals. Show your results using graphical and statistical methods. Has the customer
delivery improved enough that 95% of the deliveries occur within the given tolerance?
Solutions: Define, Measure, Analyze, Improve, Control

There are a number of questions the supplier would like to explore. Use the DMAIC process to
drive out the variability.

Define:
• What is important to the customer?

Possible Solution: The company needs to deliver goods and services on time and in a consistent
manner. Ten days early and twenty days late is the time frame that is acceptable to the customer.

Measure:
• How high is the quality of the data available? Could it be that the problem lies in the
measurement system and not the process itself? The quality of data is and always should
be an area of concern. There is always the tendency to have human errors and
differences in measuring. Use the Gage R&R (GageRR.xls) tool and MSA Results
(MSAResults.xls) to determine if the variation is too large between the two operators.
Explain and justify your answer.

Possible solution: The % R&R is calculated to be 7.84%. This is less than 30%, which
indicates that are no significant differences in measurement between the two operators and that
measurement is not the primary cause of the variability, so we proceed to look for the true cause
of the variability in the process.
 • How good is the supplier relative to the customer’s requirements (show graphically)?
How far off is the company? Express the answer in terms of mean and standard
deviation. What should the mean and standard deviation be in order to meet the
customer’s requirements?

Possible solution: Develop a histogram in Excel using the file data.xls.

You can easily see that the company is not meeting the customer’s time frames, as only 55.3% of
the deliveries occur within the acceptable timeframe. The mean is 17.96 and the standard
deviation is 12.42.

In order to maximize the number of deliveries that occur within the acceptable timeframe, the
mean value for the ideal situation would be halfway between the minimum and maximum limits
for delivery, 10 days early and 20 days late. Therefore, the mean should be 5 days late.

We know that, based on the empirical rule of a normal distribution, 95% of the data is included

180
within 2 standard deviations of the mean. Therefore, 95% of the data must lie between -10 and
20, or 15 days in either direction of the mean. In order to ensure that 95% of the deliveries occur
within the acceptable timeframe, the standard deviation should be 7.5.
Analyze:
• Look at the fishbone diagram and discuss what you think the two major causes for the
customer delivery problem are. Use data analysis to verify these causes.

Potential X’s
Measurements Materials Men

Data Base Supplier Delivery

Plant Location

Manual Supplier
Documentation

Customer
Delivery
Near holiday Cleaner

Internal TAT

Near end of quarter Grinder

Environment Methods Machines

Possible solution: Looking at the fishbone diagram, it is logical that Supplier Delivery (how
well the suppliers are performing) and Internal TAT (the company’s manufacturing Turn-
Around-Time) are the key drivers influencing the customer delivery problem.

To investigate the correlation between Supplier Delivery and Customer Delivery, a scatter plot
was generated in Excel, graphing Supplier Delivery (x) vs. Customer Delivery (y). Then the
data was regressed (a linear trend line was added) and the correlation coefficient, R, was
calculated. The R value was calculated to be .781, which indicates a strong positive relationship
between Supplier Delivery and Customer delivery, implying a correlation between the variation
in the delivery times of each.

The investigatory process for determining the correlation between Turn Around Time (TAT) and
Customer Delivery is similar. The R value was calculated to be .477, indicating only a mild
positive relationship between TAT and Customer Delivery.

(See scatter plots on following page)

 • Looking at the next fishbone diagram, discuss what you think would be the top two
causes of Supplier Delivery variation. Use graphical and/or mathematical verification.

Potential X’s
Measurements Materials Men

Tracking System Weld Supplier

Supplier
Delivery
Holidays

Schedule variation Type

Strike

Environment Methods Machines

Possible solution: Schedule Variation and Supplier are the top two causes of Supplier Delivery
variation. Most of the other factors affecting Supplier Delivery cannot be controlled.
A scatter plot was developed in Excel to compare Schedule Variation vs. Supplier Delivery. The
R value was calculated to be 0.728, indicating a fairly strong positive relationship between
Schedule Variation and Supplier Delivery.

To demonstrate that the different suppliers affect supplier delivery variation, the mean and
standard deviation were calculated for the delivery times for each supplier, ACME, Best,
Kansans, and New Buy. The standard deviations are relatively close for each company: every
company delivers 95% of its shipments within about a 72 day time span (2 standard deviations).
The differences in variation come into play because of where these times spans are centered, or
their mean delivery times. For instance, ACME is on average 6 days early, while New Buy is 35
days late. With a range of 72 days, ACME delivers 95% of its products between 42 days early
and 30 days late, while New Buy delivers 95% of its products between 1 day early and 71 days
late. Each company is consistent within a 72 day range, but the overlap is minimal, causing a
huge variation in overall supplier delivery.

ACME Best Kansans NewBuy

Mean -6.3 Mean 24.3 Mean 2.6 Mean 35.0
18.6785
St. Dev 18.5 St. Dev 9 St. Dev 17.4 St. Dev 17.29501
 • What drives schedule variation? Look at the next fishbone diagram and remember to use
graphical and/or mathematical verification.

Potential X’s
Measurements Materials Men

Parts

Planner

Sales input

Schedule
Variation

End of Quarter End of Quarter

Environment Methods Machines

Possible Solution: Schedule Variation is affected by Parts, End of Quarter, and Planner.

 Parts:

The schedule variations were sorted by parts and their means and standard deviations were
calculated.

A B C D
Average -2.8 1.1 -3.0 28.2
Standard Dev 21.1 21.7186 19.96461 20.25956

As can be seen in the table, parts A through C have an average schedule variation close to zero,
meaning that on average the parts come in on time, and similar standard deviations. Part D,
however, has an average schedule variation of 28.2, meaning that it is always significantly late,
and could account for a lot of the schedule variation in the parts.
  End of Quarter:

The data for schedule variation were sorted by whether the deliveries occurred at the end of the
quarter or not. The average and standard deviations were calculated.

EOQ? Average St. Dev.

Yes -17.1 21.45522
No 13.1 20.39629

The calculations show that, while standard deviation is similar at either time (the delivery times
always vary by the same amount), the average time of delivery at the end of the quarter is 17
days early, while the average delivery time otherwise is 13 days late. This indicates that whether
or not the delivery occurs near the end of the quarter can cause great variation in the delivery
schedule.

 The Planner

The data for schedule variation were sorted by the planner, John or Mary. The average and
standard deviations were calculated.

Planner Average St. Dev.

John 20.2 18.91597
Mary -9.8 19.62879

The calculations show that, while standard deviation is similar at either time (the delivery times
always vary by the same amount), the average time between planners is very different. John is,
on average, 20 days late, while Mary is about 10 days early on average. This indicates that the
planner can cause great variation in the delivery schedule.
 • Looking at the internal process below, which of the three manufacturing “Gates” appear
to have the greatest influence on TAT? Prove using the Excel file Data File.xls and
making regression plots (scatterplots) between the Gates and TAT and looking at the
correlation.

Process Map

Receive Clean Inspect Machine Clean Inspect Ship

Gate 1 Gate 2 Gate 3

Possible solution: Gate 2 has the greatest influence on TAT. The correlation is the strongest
(0.816) for this Gate. See scatterplots below.
100.0
 • Using the “Family Tree” concept below, fill in the X’s based on the information gathered
so far.

Summary of Variation Sources

Customer Delivery

Supplier Delivery TAT

X X X X X

X X X

Possible Solution:

Summary of Variation Sources

Customer Delivery

Supplier Delivery TAT

Schedule Variation Supplier Gate 1 Gate 2 Gate 3

Parts *EOQ Planner

*Note: EOQ = End of Quarter

 Improve and Control:
• Based on your findings, create an Improve plan complete with recommended actions and
a Control plan for each of your corrective actions that will need to be implemented to
control and minimize the variability in the customer delivery problem. Support the
Improve plan with your data analysis as you will be trying to convince the finance
department and other groups to support your actions.

Possible Solution:

Improve/Control: TAT
Gate 2
Since Gate 2 has the highest influence on TAT, the company needs to improve
their performance in the inspect and machine areas.

Improve/Control: Supplier Delivery

Supplier
Kansans has the least variability of all the suppliers. They are also closest, on
average, to the mean date and to the range of delivery times for customer delivery.
The company should either use Kansans more or to ask the other suppliers to
reduce their schedule variability.
Institute a penalty if the suppliers do not deliver their parts within an acceptable
range of times.

Schedule Variation
Improve the efficiency of manufacturing part D so that it can be closer to on-time
Parts
delivery as the other parts are.
End of The parts coming in at the End of Quarter are too early. Minimize variations due
Quarter to the changes that occur near the End of Quarter.
Because both planners have about the same variability, the company should use
one planner for each customer depending on whether they prefer their parts early
(Mary) or late (John). There should be no rewards for bringing parts in early and
Planner
penalties for bringing parts in late. The planners should be rewarded when their
average in schedule variation is close to 5 and their standard deviation is close to
7.5.
 • With the newly implemented changes, customer delivery has improved. Use the new
data in Improved Customer Delivery.xls to determine if you have reached your statistical
goals. Show your results using graphical and statistical methods. Has the customer
delivery improved enough that 95% of the deliveries occur within the given tolerance?

Possible Solution: Develop a histogram in Excel using Improved Customer Delivery.xls

We can see that the company is now very close achieving their goals and meeting their
customer’s needs. The deliveries occur within the acceptable time frame 94.4% of the time, an
increase of 39.1%. The mean has been reduced to 6.05 days late, and the standard deviation has
been reduced to 7.95. This is very close to the ideal situation which prescribes an average of 5
days and a standard deviation of 7.5. The company has done a good job and the customer is
happy.

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