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Aqm Programme Six Sigma

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  • 1. Six Sigma
  • 2. Six Sigma -- Practical Meaning 99% Good (3.8 Sigma) 99.99966% Good (6 Sigma) • 20,000 lost articles of mail per • Seven articles lost per hour hour • Unsafe drinking water for • One unsafe minute every seven almost 15 minutes each day months • 5,000 incorrect surgical operations per week • 1.7 incorrect operations per week • Two short or long landings at • One short or long landing every most major airports each day five years • 200,000 wrong drug • 68 wrong prescriptions per year prescriptions each year • No electricity for almost seven • One hour without electricity hours each month every 34 years
  • 3. World Class Performance With 99 % Quality With Six Sigma Quality For every 300000 letters 3,000 misdeliveries 1 misdelivery delivered For every week of TV 1.68 hours of dead air 1.8 seconds of dead air broadcasting per channel Out of every 500,000 4100 crashes Less than 2 crashes computer restarts Source: The Six Sigma Way by Peter Pande and Others
  • 4. Cost of Poorly Performing Processes σ level DPMO CP3 Cost of Poorly Performing 2 308,537 Not Applicable Processes (CP3) 3 66,807 25%-40% of sales 4 6,210 15%-25% of sales 5 233 5%-15% of sales 6 3.4 < 1% of sales Each sigma shift provides a 10% net income improvement Sigma (σ) is a measure of “perfection” relating to process performance capability … the “bigger the better.” A process operating at a “Six Sigma” level produces only 3.4 defects per million opportunities (DPMO) for a defect. Without dedication of significant and appropriate attention to a process, most processes in leading U.S. companies operate at a level between 3 and 4 sigma. Why is Six Sigma Important?
  • 5. What is Six Sigma ? • Based on teachings of Dr. Walter Shewhart, Dr. W. E. Deming & Dr. J. Juran. • Process Control; • Plan Do Check Act; • Common and Special Causes; • Improvement can be done project by project • Statistical tools • Hawthorne Plant Experiences • Developed by Bill Smith at Motorola in 1980s
  • 6. Six Sigma Is a management methodology • Customer focused • Data driven decisions • Breakthrough performance gains • Validated bottom line results
  • 7. JURAN SAID… “All quality improvement occurs on a project-by-project basis and in no other way.”
  • 8. Who is Implementing Six Sigma At least 25% of the fortune 200 claim to have a serious six sigma program - Michael Hammer. Financial - Bank of America, GE Capital, Electronics - Allied Signal, Samsung, Sony Chemicals - Dupont, Dow Chemicals Manufacturing - GE Plastics, Johnson and Johnson, Motorola, Nokia, Microsoft, Ford. Airline - Singapore, Lufthansa, Bombardier And hundreds of others in Americas, Europe, Sub Continent.
  • 9. Six Sigma Results Company Annual Savings General Electric $2.0+ billion JP Morgan Chase *$1.5 billion (*since inception in 1998) Motorola $ 16 billion (*since inception in 1980s) Johnson & Johnson $500 million Honeywell $600 million Six Sigma Savings as % of revenue vary from 1.2 to 4.5 % For $ 30 million/yr sales – Savings potential $ 360,000 to $ 1.35 million. Investment: salary of in house experts, training, process redesign.
  • 10. Customer Focused Our Performance Compared to Competitors • Complete Importance to Customers • Quality • OTD High • Training Moderate- • Price • Shared Goals • Complaints to-’Low’ We’re Better They’re Better
  • 11. Data Driven Decisions Y= f (X) To get results, what should we focus on - Y or X ? • Y • X1 . . . XN • Dependent • Independent • Output • Input-Process • Effect • Symptom • Cause • Monitor • Problem • Response • Control • Factor
  • 12. Six Sigma Methodology Define Measure Analyze Improve Control
  • 13. Six Sigma Project Methodology Project Phases Define Define Measure Measure Analyze Analyze Improve Improve Control Control Identify, Collect data Analyze data, Improvement Establish evaluate and on size of the establish and strategy standards to select projects selected confirm the “ Develop ideas maintain for problem, vital few “ to remove root process; improvement identify key determinants causes Design the Set goals customer of the Design and controls, Form teams. requirements, performance. carry out implement and Determine key Validate experiments, monitor. product and hypothesis Optimize the Evaluate process process. financial characteristic. characteristic Final solutions impact of the project
  • 14. The Normal Curve and Capability Performance Limit Area of Yield Probability of a Defect Units of Measure Excellent Poor Process Process Capability Capability Very High Very High Very Low Very Low Probability Probability Probability Probability of Defects of Defects of Defects of Defects LSL USL LSL USL Low Sigma Low Sigma High Sigma High Sigma
  • 15. Process Capability Indices USL − LSL Cp = 6σ where LSL and USL are the lower and upper specification limits, respectively.
  • 16. K-sigma  USL - LSL    Half Range  2  k= = σ σ
  • 17. The Sigma Scale Sigma % Good % Bad DPMO 1 30.9% 69.1% 691,462 2 69.1% 30.9% 308,538 3 93.3% 6.7% 66,807 4 99.38% 0.62% 6,210 5 99.977% 0.023% 233 6 99.9997% 0.00034% 3.4
  • 18. Sigma Defects Per Million Rate of Level Opportunities Improvement 1σ 690,000 2σ 308,000 2 times 3σ 66,800 5 times 4σ 6,210 11 times 5σ 230 27 times 6σ 3.4 68 times
  • 19. Process Capability Ratio Off-Center Process Cp does not take into account where the process mean is located relative to the USL − µ specifications. C pu = A process capability ratio that does take into 3σ account centering is Cpk defined as µ − LSL Cpk = min(Cpu, Cpl) C pl = 3σ
  • 20. Bank of America – SS Experience Goals # 1 in Customer Satisfaction Worlds’ most admired company Worlds’ largest bank Strategy - “ Develop business process excellence by applying voice of the customer to identify and engineer critical few business processes using Six Sigma Created Quality & Productivity Division Source: Best Practices Report
  • 21. Bank of America – SS Experience Wanted results in 1 year; Hired more than 225 MBB & BBs from GE, Motorola, Allied Signal for rapid deployment Developed 2 week Green Belt training programs Introduced computer simulation of processes Trained 3767 Green Belts, certified 1230 - Minimum value target per GB project – $ 250K Trained 305 Black Belts, certified 61 - Minimum value target per BB project – $ 1 million Trained 43 MBB, 1017 in DFSS 80 % of Executive Team trained in GB and 50 % Certified
  • 22. Bank of America – SS Experience Results of first 2 years: Reduced ATM withdrawal losses by 29.7 % Reduced counterfeit losses in nationwide cash vaults by 54% Customer delight up 20%; Added 2.3 million customer households 1.3 million fewer customer households experienced problems Stock value up 52% Y 2002 – BOA named Best Bank in US & Euro money's Worlds Most Improved Bank
  • 23. Six Sigma – Case Study Service Organisation Background M/s Alpha Inc. manages out bound cargo from a distribution centre to different stores. Deliveries made on trucks - owned and hired. Customers dissatisfied at delivery schedules. Leadership decision to deploy Six Sigma; Team of 1 Black Belt and 3 Green Belts formed Sponsor of the project – Distribution Manager
  • 24. Define - Critical to Quality (CTQ) Focus on customers generating annual revenue of USD 400,000/-. Customer Improved delivery performance needs Level 1 CTQ Timely delivery Level 2 CTQ On time delivery to schedule Level 3 CTQ Delivery within +/- 1 hour of scheduled delivery time Current process sigma level - 2.43 or 175889 DPMO
  • 25. Define - Goal Statement Reduce number of delayed deliveries by 50 % by 31st December Y 2002 to better meet customer requirement of timely delivery defined as within +/- 1 hour of scheduled delivery.
  • 26. Define - Performance Standards Output unit A scheduled delivery of freight Output characteristic Timely delivery Project Y measure Process starts when an order is received Ends when goods are received & signed for at customers desk. Process measurement – Deviation from scheduled delivery time in minutes. Specification limits LSL = -60 minutes USL= +60 minutes Target Scheduled time or zero minutes deviation Defect Delivery earlier or later than 1 hour. No. of defect 1 opportunity for a defect per scheduled opportunities per unit delivery of freight.
  • 27. Define - SIPOC Diagram Supplier Stores Manager Input Stores Order Process Steps (high Receive order level) Plan delivery Dispatch Driver with goods Deliver goods to stores Receive delivery Output Received freight with Documents Customer Store Manager
  • 28. Measure and Analyze Driver and Distance identified as key factors influencing delivery performance. Driver selected for focus. Potential root causes as to why Driver influenced the time: Size of the vehicle Type of engine Type of tyres Fuel capacity
  • 29. Improve Experiments designed and conducted using truck type and tyre size. Findings: Larger tyres took longer time at certain routes where area was cramped and time lost in maneuvering. High incidence of tyre failures since tight turns led to stress on tyres thus increasing number of flat tyres. Team modified planning of dispatch process by routing smaller trucks at more restrictive areas.
  • 30. Control Test implementation. Process sigma level up from 2.43 or 175889 DPMO to 3.94 or 7353 DPMO. Performance still fell short of best in class 4.32 or 2400 DPMO. Improvement led to significant customer satisfaction. Process continually monitored and data on new cycle times, tyre failure collected as per defined methods and frequency, analysed and monitored. Customer satisfaction measured and monitored.
  • 31. Some Common Challenges in Implementation Define Difficulty in identifying the right project and defining the scope; Difficulty in applying statistical parameters to Voice of the Customers; Trouble with setting the right goals; Measure Inefficient data gathering; Lack of measures; Lack of speed in execution;
  • 32. Some Common Challenges in Implementation Analyse Challenge of identifying best practices Overuse of statistical tools/ under use of practical knowledge Challenge of developing hypotheses Improve Challenge of developing ideas to remove root causes Difficulty of implementing solutions Control Lack of follow up by Managers/ Process Owners Lack of continuous Voice of the Customer feedback Failure to institutionalize continuous improvement.
  • 33. Points to remember… “ Define “ ranked most important step but often gets the lowest resource allocation Project scoping and its definition is critical to its success/ failure; “Measure” is considered most difficult step and also gets the highest resources Source: Greenwich Associates Study Y 2002
  • 34. Benefits of Six Sigma Generates sustained success Sets performance goal for everyone Enhances value for customers; Accelerates rate of improvement; Promotes learning across boundaries; Executes strategic change
  • 35. Which Business Function Needs It? SERVICE DESIGN PURCH. ADMIN. 6 Sigma Methods Marketing QA MFG. MAINT. As long as there is a process that produces an output, whether it is a manufactured product, data, an invoice, etc…, we can apply the Six Sigma Breakthrough Strategy. For these processes to perform to a customer standard they require correct inputs!!!
  • 36. Education Mentor, trainer, and coach of Black Belts and others Master in the organization. Black Belt Leader of teams implementing the six sigma methodology on projects. Black Belts Champions Delivers successful focused projects using the six sigma methodology and tools. Green Belts Participates on and supports the project Team Members teams, typically in the context of his or her existing responsibilities. Quality Fundamentals/ Kaizen Now Deployment Responsible for supporting the Deployment Champions Strategy within Line of Business/Customer Segment or Golden Thread
  • 37. Six Sigma & Leadership Six Sigma only works when Leadership is passionate about excellence and is willing to change. Leadership in Six Sigma context Challenge the process Inspire a shared vision Enable others to act Model the way Encourage the heart Six Sigma is can be a catalyst for leaders to accomplish change
  • 38. Role of Champions Promote awareness and execution of Six Sigma within lines of business and/or functions Identify potential Six Sigma projects to be executed by Black Belts and Green Belts Identify, select, and support Black Belt and Green Belt candidates Participate in six sigma workshop trainings
  • 39. Role of Black Belts Use Six Sigma methodologies and advanced tools (to execute business improvement projects Are dedicated full-time (100%) to Six Sigma Serve as Six Sigma knowledge leaders within Business Unit(s) Undergoes periodic training on advanced methods of data analysis
  • 40. Role of Green Belts Use Six Sigma DMAIC methodology and basic tools to execute improvements within their existing job function(s) May lead smaller improvement projects within Business Unit(s) Bring knowledge of Six Sigma concepts & tools to their respective job function(s) Undergoes periodic training in statistical methods for quality improvement
  • 41. Other Roles Subject Matter Experts Provide specific process knowledge to Six Sigma teams Ad hoc members of Six Sigma project teams Financial Controllers Ensure validity and reliability of financial figures used by Six Sigma project teams Assist in development of financial components of initial business case and final cost-benefit analysis
  • 42. Thank You