E13: The Taguchi Loss Function and Total Costs

In manufacturing, we live or die on tolerances. The tradition in American and other Western countries is we are so focused on the specification limits, while Japanese companies focus on uniformity and reducing variation around the target value. In other words, Western countries make a part and say, is it within specification? Or it is right on the limit, so it passed our quality checks and therefore must be good. While the Japanese say, how can we always make parts consistently as close to the target value and with the least amount of variation possible?

To help get us away from this poor traditional thinking, we will learn about how the Taguchi Loss Function provides us a way to quantify the cost of not producing something on the target value. What Genichi Taguchi did was create the Taguchi loss function to help quantify and show that quality does not all of a sudden plummet when the part is just outside of the specification limits. What instead occurs is that quality losses exponentially increases as the measurement value deviates away from the target value.

My hope is that this series of the 13 laws of System Optimization will help give us a larger and all-encompassing perspective to help take us to the next level from our traditional lean manufacturing training.