The processes in a project operating at Six Sigma result in only 3.4 defects for every million opportunities in that project--or 99.9997% error-free. If the difference between 99.4% and 99.9997% error-free performance doesn’t seem like much, consider the huge difference in defects from level to level. Most companies operate at about Three Sigma. At the beginning of 2000, Honeywell overall was at about the Four Sigma level, although many individual processes are well beyond that mark. In our own business, we are at about _____. Four Sigma looks pretty good, and you may wonder why we bother to strive for the near-perfect goal of Six Sigma performance.
Introduction to Six Sigma Business Process Improvement through Six Sigma
It is based on rigourous process based performance measures.
A Process for Continuous Improvement:
Six Sigma is a “generic” structured methodology for continuous improvement, that can be used to improve any process in any business.
An Enabler of Cultural Change:
Six Sigma changes the way organisations work and the way they think.
A disciplined process focussed on delivering near perfect products and services.
Six Sigma : A Definition “ A comprehensive and flexible system for achieving, sustaining and maximising business success. Six Sigma is uniquely driven by close understanding of customer needs, disciplined use of facts, data and statistical analysis, and diligent attention to managing, improving and reinventing business processes.” The Six Sigma Way, by Pande, Newman and Cavanaugh
Six Sigma is a statistical measure of quality, which reflects process capability;
It set the goal of achieving capability levels of 3.4 defects per million opportunities.
Focuses on driving out variation in business processes - this is what the customer feels!
Sigma is the Greek symbol used for Standard Deviation of a population.
Why Six Sigma?
A 6 Sigma Process Customer target Lower Specification Limit Upper Specification Limit 6 6 0.00034% of points will be outside of the specification limits ie. defects (= 3.4 parts per million out of spec.) = 99.7966% of data inside the limits (C p = 2) 0.00017% 1.7 ppm 0.00017% 1.7 ppm
Relating Sigma to Defect Levels 9 Six Sigma 3.4 99.9997% Five Sigma 233 99.977% Four Sigma 6,210 99.4% Three Sigma 66,810 93% Two Sigma 308,500 69% One Sigma 691,500 31% DPMO (Defects Per Million Opportunities) Error Free Rate
If you played 100 rounds of golf per year, and played at:
2 sigma - you'd miss 6 putts per round
3 sigma - you'd miss 1 putt per round
4 sigma - you'd miss 1 putt every 9 rounds
5 sigma - you'd miss 1 putt every 2.33 years
6 sigma - you'd miss 1 putt every 163 years!
History of Six Sigma 1985 1990 1995 2000 Motorola launches its Six Sigma program Allied Signal introduces its Six Sigma program GE introduces its Six Sigma program and adds the “D” in DMAIC 1987
Dupont, 3M, Sun Microsystems, Raytheon, Boeing, Lockheed-Martin, Bank-of-America, American Express, HSBC, SAS Institute … the list keeps growing every day.
GE - All 300,000+ GE employees must be Six Sigma certified. All new GE products developed using the “Design for Six Sigma” approach.
3M - CEO (from GE) requires all employees to become Six Sigma certified.
Six Sigma at Dupont Many companies consider productivity to be a cost-saving operational issue. We at DuPont have elevated productivity to the strategic level because we believe that it is central to our efforts in sustainability. As a sign of our commitment in this area, we have adopted six-sigma methodology, a stringent approach that strives to reduce manufacturing defects to just several per million. At the end of last year, we had 1,100 black belts and 1,700 green belts (employees who have undergone weeks of training in the six-sigma methodology) working on 4,200 projects. In one of them, DuPont was able to increase the production rate of its plant in Buffalo, New York, by 10% –without any capital investments. … The result: $26 million in additional revenue last year. This number might not seem huge for a company with $30 billion in sales, but DuPont has thousands of such projects, and we are adding 200 new ones each month. Altogether, our projects using six-sigma methodology are responsible for savings of more than $1 billion a year. Source: Holliday, C. (2001). Sustainable growth the DuPont way. Harvard Business Review , Sept, pp 132
“ Sustaining the intensity of our Six Sigma work is critical for Bank of America to achieve its strategic goals. Six Sigma has enabled us to generate more than $300MM in first-year productivity gains for the company. It has also had a significant impact upon the leadership team with our personal education and certification as Six Sigma Green Belts. As we look to the future, our leadership charge is to keep Six Sigma a top priority and use it to produce organic customer revenue growth.” - Ken Lewis (10/9/02)
Failing to implement Six Sigma in commercial areas with the same force that the company implemented it in its industrial sectors cost Motorola $5 billion over a four-year period.
A Timeline of Key Events leading up to Six Sigma 1994 1920's 1931 1940's 1943 1950 1960 1970 1980 1990 2000 Shewhart's studies into variation at Bell Telephone Labs Shewhart publishes book, "Economic Control of Quality of Manufactured Product Widespread adoption of Shewhart's principles for War-time Production in the US Ishikawa develops Ishikawa diagram and pioneers use of 7-tools Widespread abandonment of Shewhart's principles in Post-War US. Deming teaches Shewhart principles to Japanese Deming develops management philosophy based on Shewhart concepts own ideas Japanese extend Deming's teachings, develop the "Total Quality” concept USA starts to copy Japan, called TQC (Total Quality Control) eventually the term TQM (Total Quality Management) is used as the label. US discovers Deming Rapid spread TQM principles to US service industries Pacific basin countries, excluding Australia commence adopting TQM Western Europe discovers TQM Developing countries rapidly adopting TQM Australian services sector copies US with adoption of TQM Australian manufacturing commences with TQM Benchmarking emerges as a supporting practice Business Process Reengineering Team based approaches to work gaining broad acceptance in industry Organisational learning emerging as a key competitive issue 1996 Renewed focus on Process Management Widespread emergence of Balanced Scorecard 6-sigma goes mainstream 2002
The DMAIC Process Improvement/Problem Solving Process
Bottom Line Results Focussed
Data Driven Culture (In God we trust, all others bring Data)
The Six Sigma Approach DMAIC Define the problem or opportunity. Measure the current performance and capability Analyse to identify root causes. Improve by implementing potential solutions. Control by standardising solution and monitoring performance. Define Measure Analyse Improve Control 6
The Role of Statistics in Six Sigma Define Measure Analyse Improve Control 6 Practical Problem Statistical Problem Statistical Solution Statistical Control Practical Solution
Champions: Business leaders who lead the implementation of Six Sigma within the business;
Sponsors/Process Owners: Business leaders responsible for the implementation of process improvements and monitoring process performance;
Master Black Belts: Fully trained quality leaders responsible for Six Sigma strategy, training, mentoring, deployment and results;
Black Belts: Fully trained Six Sigma experts who lead improvement teams, work on Six Sigma projects and mentor Green belts;
Green Belts: Fully trained individuals who apply Six Sigma skills to improvement projects;
Team Members : (Yellow Belts) Individuals who support projects in their areas.
Implementing Six Sigma Strategic Level Tactical Level Operational Level Executive Steering Committee Master Black Belts Champions Black Belts Team Members Stakeholders Green Belts Yellow Belts
Relationship between Quality, Market Share and ROI - The Business Case for Six Sigma Relative Market Share Relative Quality Low 25% 60% High Inferior Superior 33 % 67% Return on Investment (ROI) % 21 38 20 29 27 20 13 7 14 Source: Buzzell, R.D. & Gales, B.T. (1987) The PIMS Principles
Improve Quality External Quality Customer Satisfaction Market Share Revenue Internal Quality Operating Costs Capital Costs Economies of Scale Higher Profit Higher ROI Products & Services Processes & People
How did leaders become leaders …… A accumulation of competencies Quality Delivery Cost Flexibility Nakane and Hall (1994) Six Sigma provides the on-ramp and the mechanism to progress up the steps. Define Measure Analyse Improve Control 6
In god we trust, all others bring data. Grade your organisation on its use of data
Our organisation uses only tribal knowledge i.e. people experience and “the way we do things around here”. We do not use data.
Our organisation collects data so as to say “we collect data” but the data is not used.
Our organisation collects data and we sometimes look at the numbers and use them to support problem solving and decision making.
Our organisation logically groups the data. We report it in the form of charts.
Our organisation uses sample data along with basic statistics.
Our organisation uses sample data along with inferential statistics.
Our organisation quantifies processes via predictive equations.