Professional Development Series: SIX SIGMA


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Professional Development Series: SIX SIGMA

  1. 1. Professional Development Series: SIX SIGMA University of Louisville School of Business March 27, 2010 Copyright 2010 CGM Associates, LLC – All Rights Reserved
  2. 2. Agenda Part I: The Nature of Six Sigma • Historical perspective • 100,000 foot view – roles, methodology • Advantages • Trends Part 2: Training and Certification • Curriculum and requirements • Providers and costs • Other Resources Part 3: Benefits and Value • Career value • Personal value 2
  3. 3. PART 1: The Nature of Six Sigma Copyright 2010 CGM Associates, LLC – All Rights Reserved
  4. 4. The History of Six Sigma • Early 80’s: Motorola develops a statistically-based problem- solving methodology to improve the „Bandit‟ pager (manufacturing focus only) • Late 80’s: Motorola entrepreneurs leave to promote Six Sigma elsewhere • 1995: Allied Signal introduces Six Sigma to GE • 1998 - Present: Six Sigma evolves into non-manufacturing, design and transactional applications • 2000 – Present: Lean Six Sigma and DFSS become prevalent Six Sigma changes the business culture 4
  5. 5. The Phases of Six Sigma DEFINE Determine MEASURE customer need to Identify ANALYZE be the business Study the IMPROVE satisfied process, process that fulfills identify CONTROL Customer variation Optimize Scope the need the Team drivers Ensure that Measurement process customer Baseline Graphs need is met Statistics and fix is Experiment sustained Optimize Sustain Validate & Close 5
  6. 6. Why Six Sigma Now? Customer Satisfaction is the differentiator in today‟s market • ‘Effectiveness’ (customer‟s view): meeting customer requirements and creating „delight‟ Customers feel VARIATION, not averages • ‘Efficiency’ (management view): providing streamlined processes, minimizing internal costs Win by preventing fires, not fighting them Six Sigma goal: satisfy customers profitably 6
  7. 7. ‘Top 10’ Six Sigma Concepts 1. Customers are ALWAYS the starting point 2. The methodology is the key, not the tools 3. Issues arise from the process, not the people 4. Excessive variation is the enemy 5. Control the x‟s, not the „y‟ 6. Change must be managed 7. Measurement systems create variation 8. Data always drive good decision-making 9. Test theories before making decisions 10.Create systems to sustain the gains 7
  8. 8. Six Sigma Roles Yellow Belts (team members) Green Belts • Project leaders (typically smaller-scope projects) ~ 80% of those • Part-time process improvement role trained Black • Project leaders (typically larger-scope projects) Belts • Typically full-time process improvement role ~ 15% • Mentor Green Belts Master Black ~ 5% Belts: • Project leaders (typically strategic initiatives) • Full-time process improvement role • Mentor Black Belts, Green Belts • Subject-matter experts, trainers, facilitators Other Roles: • Process Owner – first-level „client‟, budget-owner of functional area • Champion – roadblock remover, resource provider, ultimate process owner • Sponsor – high-level supporter of project (typically VP+) 8
  9. 9. Six Sigma Roadmap & Tools DEFINE PHASE – Understand Customer Needs Step 1: Customer Tools: VOC, COPQ, Stakeholder Analysis Step 2: Team Tools: Project Charter, Elev. Speech, T/O Matrix, Comm. Plan Step 3: Scope Tools: Pareto, C & E, CTQ tree, QFD, SIPOC, Process Map, Value Stream MEASURE PHASE – Develop Process Measurements Step 4: Measurement Tools: Operational Definition, Measurement Validation Step 5: Baseline Tools: Brainstorming, Sampling, DPMO/Sigma Level, Benchmarking ANALYZE PHASE – Develop Theories Step 6: Correlation Tools: Graphical analysis, Basic Stats Step 7: Theories Tools: Inferential Stats, Analogy, FMEA, Impact/Control Matrix IMPROVE PHASE – Create Solutions, Test & Optimize Step 8: Causation Tools: Anti-solution, Pilot Studies, DOE Step 9: Performance Tools: Confirmation Runs, Tolerancing, Re-baselining CONTROL PHASE – Sustain the Gains Step 10: Methods Tools: 5-S‟s, Mistake-Proofing, SPC Step 11: Closure Tools: Control Plan 9
  10. 10. Quantifying ‘Six Sigma’ (Defects Per Million Opportunities) Sigma Level DPMO Yield 1.5 500,000 50% 2 308,537 69% 3 66,807 93.3% 4 6,210 99.379% 5 233 99.9767% 6 3.4 99.9997% Process Process ‘Capability’ ‘Performance’ (DPMO Distribution Shifted 1.5s) 10
  11. 11. The Mechanics of Six Sigma THE OUTPUT IS A FUNCTION OF THE INPUT (‘y = f(x)’) INPUT OUTPUT X’s Y’s Independent f = Process Dependent variables variables CAUSES EFFECTS Noise Three Basic Strategies: 1. Control the X‟s (DMAIC) 2. Change the Process 3. Reduce the Noise ‘Process’: a sequence of steps that produces an output 11
  12. 12. Control the X’s • The „y‟ is the OUTPUT . . . It depends on the INPUT (the x‟s) • Trying to control the output is a reactive approach that doesn‟t work – it‟s too late • By the time you take action on process output that has gone bad, the customer has already felt the „pain‟ Trying to control the output is like closing the doors after the horse has already left the barn . . . Proactive Approach: CONTROL the x’s, monitor the ‘y’ 12
  13. 13. Order Entry Process Map Start Point: Customer calls to place order End Point: Call is ended by customer New Enter Customer call Y demographic Model # Y Check answered customer known Availability info ? ? N N Access Look up demographic model #’s database Are models Y Request Check Credit Y available delivery loc, OK Verify order credit ? date, time ? N N Is Transfer to B/O Y Submit Customer OK order Service ? N END CALL END CALL 13
  14. 14. Understanding the Process What you What it actually What you think it is . . . is . . . would like it to be 14
  15. 15. Basic Process Issues From a statistical point of view, there are only two problems with any process . . . xx x x x xxx x xxxx xxx x xx x x x x x xx It needs centering - It has too much spread - off target too variable 15
  16. 16. Concept Focus: Measurement Validation How many ‘f’s do you see? The necessity of training farm hands for first-class farms in the fatherly handling of farm livestock is foremost in the minds of farm owners. Since the forefathers of the farm owners trained the farm hands for first-class farms in the fatherly handling of farm livestock, the farm owners feel they should carry on with the family tradition of training farm hands of first-class farms in the fatherly handling of farm livestock because they believe it is the basis of good fundamental farm management. Measurement systems can be extremely variable 16
  17. 17. Six Sigma Advantages • The methodology is „closed loop‟, not one-way . . . It begins and ends with the customer • The Six Sigma methodology requires valid measurement of quantifiable results that are tied to business strategies • Implementation of the methodology instills a disciplined approach to problem-solving and process improvement • Because of the required team approach, functional „silos‟ in an organization are bridged by doing projects • When done correctly, the fix stays fixed Six Sigma can be used anywhere a process can be defined (ANYWHERE!) 17
  18. 18. Six Sigma Project Examples PROCUREMENT SERVICE CALL CENTERS Blocked Invoice Speed of Answer Increase Service Call Completion Reduction Rate Improvement % of Calls Answered Increase Late Payment Reduction Repeat Call Reduction Claim Cycle Time Reduction Parts Availability MANUFACTURING Service Call Scheduling Cycle Time Improvement ORDER-TAKING Waste Reduction Fill Rate Improvement HUMAN Defect Elimination Order Accuracy RESOURCES Invoice Error Reduction INVENTORY Attendance Improvement Speed of Order Improvement Forecasting Accuracy Employee Retention Open Position Fill Time Warehouse Availability Improvement Inventory Aging Reduction Inventory Turns Improvement LOGISTICS On-time Delivery FINANCE Pick/Pack Accuracy DSO Reduction IT Returns Reduction System Downtime Reduction Quarter Close Efficiency Damage Reduction Code Error Reduction 18
  19. 19. Project Benefits Quantifying project benefits is a critical success factor The 3 ‘Benefit Buckets’: 1 2 3 Customer Revenue Cost Out Satisfaction Growth • „Hard‟ savings • „Soft‟ savings • „Soft‟ savings • Direct budget • Indirect budget • Indirect budget impact impact impact • Internal focus • External focus • External focus (typically) • „Top Line‟ or • „Top Line‟ • „Bottom Line‟ „Bottom Line‟ 19
  20. 20. Six Sigma Linkages For maximum effectiveness, ‘traditional’ Six Sigma is blended with concepts from other disciplines • Vision Change • Stakeholders Mgmt • Communication • Elimination of waste Six Sigma: Lean • Cycle time DMAIC • Continual improvement Project • Scope Mgmt • Schedule • Cost 20
  21. 21. Six Sigma Trends • Customization for business needs o Transactional vs. manufacturing o Naming („BPM‟, „BPI‟, „PDO‟, „PIDEAS‟, „VDS‟ . . . etc.) • Benefits are not just cost-out; more direct customer focus • Emphasis on DFSS – Design for Six Sigma – designing in quality for both new products and new processes • Practitioner collaboration (not Lean vs. PMP® vs. Belt) • Lean first, then Six Sigma; project and change management throughout • Recognition that “the soft stuff is the hard stuff” – Michael Hammer (the need for effective change management) • The methodology is the power, not the tools 21
  22. 22. The 10 Questions 10 questions that must be answered satisfactorily to successfully implement any improvement project: DEFINE Phase: 1. Who is (are) the customer(s)? 2. What does the customer care about? (or, What „pain‟ is the customer is having with the process output you provide?) 3. How should we measure what the customer cares about? MEASURE Phase: 4. Is the measurement system acceptable/valid? 5. How are we performing today, relative to what the customer cares about? ANALYZE Phase: 6. What are all of the potential causes of the process problems? 7. What is the proof (data) that shows that the things we think need fixing really should be fixed? (are these really the causes of the problem?) IMPROVE Phase: 8. Have we tested the proposed solution to be sure that it really fixes the problem? (without unintended consequences) CONTROL Phase: 9. What provisions have been made to keep the fix fixed? (sustainability) ALL Phases: 10. How will we communicate the changes made and the results of the project outside of the project team? 22
  23. 23. PART 2: Training and Certification Copyright 2010 CGM Associates, LLC – All Rights Reserved
  24. 24. Typical Six Sigma Green Belt Curriculum DEFINE MEASURE ANALYZE IMPROVE CONTROL Deliverables required for Certification: Define: Measure: Analyze: Improve: Control: Assess stakeholder Create detailed process map  Conduct Process Analysis with Brainstorm list of Develop and implement impact Define a defect in „y‟ supporting in-depth process potential solutions Control Plan Translate VOC to maps Develop operational Select the potential Document new process CTQ to Project y definition for „y‟ Conduct Data Analysis with solution(s) that optimize Summarize and validate Create Project supporting graphs and/or performance Validate measurement business benefits with Charter statistics system Pilot improvements Champion Develop Provide a summarized list of Brainstorm list of potential Collect data to verify Transition to Process communication plan screened potential Vital x‟s x‟s performance with Owner Create high-level Review, sign-off of Analyze comparison of before & Develop data collection plan Review, sign-off of process map Phase by Certification Board after Baseline process performance Control Phase by  Review, sign-off of Implement improvements Certification Board – graphical presentation Define Phase by Review, sign-off of Complete project closure Review, sign-off of Measure Certification Board Improve Phase by documentation Phase by Certification Board Certification Board Optional Tools to Support Each Phase: Define: Measure: Analyze: Improve: Control: Stakeholder Analysis Process Map Process Analysis: Analogy, 5 Solution Brainstorming: FMEA (on improved process) CTQ Tree MSA (Measurement System Why?s, Walk the Process, Anti-solution, Chain Change Sustainability Model SIPOC Map Analysis) Value-Adding Analysis, FMEA Letter,5S, Mistake-Proofing Control Plan Risk Mitigation Plan Brainstorming Tools: Fishbone, Graphical Analysis: Boxplot, Solution Selection: Process Monitoring: Control Cost of Poor Quality Affinity diagram, Multi-Voting Scatterplot, Dotplot, Pareto Selection Matrix , Pugh Charts, Dashboards and/or Communication Plan Data Collection Plan Chart, Multi-vari chart Matrix, Cost-Benefit Scorecards Baseline Performance Tools: Statistical Analysis: Analysis Training Plan Roles & Responsibilities Chart Histogram, Pie Chart, Bar Hypothesis Testing Process Map (To Be) Change Management Plan Elevator Speech Chart, Run Chart, Individuals Team Effectiveness Pilot Study Project closure and team Chart, DPMO, Sigma Quality Evaluation DOE (Design of recognition Quick Wins (if applicable) Level, Capability Analysis, Experiments) MGPP (Multi-Generational Benchmarking Re-Baseline, Interval Plots Project Plan 24
  25. 25. Typical BB/MBB Training Enhancements The training content at each Belt level builds upon the previous level (although the basic project deliverables remain the same) Black Belt (BB) = Green Belt (GB), PLUS • Higher-order statistical tools • Lean applications, details • DFSS (Design for Six Sigma) elements, including NOTE: the modeling elements • Mentoring skills (BBs provide mentoring for GBs) described here are recommended, but illustrative only – there may be significant Master Black Belt (MBB) = Black Belt (BB), PLUS variation in course content from one • Financial analysis training provider • Leadership skills to another • Mentoring skills • Program management skills • Other technical tools, such as TRIZ, Theory of Constraints, Systems Theory, etc. • High-level statistical tools, statistical theory 25
  26. 26. Training – Providers, Costs Where? How Much? • Corporations – Six Sigma Belt Level Approximate Cost* o Internal training Yellow Belt (awareness) $1,000 • Open Enrollment Each level Providers Green Belt (GB) $3,500 is a pre- requisite o Air Academy o ASQ (American Black Belt (BB) $8,000 for the next – costs Society for Quality) are o BMG Master Black Belt (MBB) $8,500 additive o Juran Institute *Costs based upon iSixSigma magazine survey, March, 2009 – value represents at o Motorola University least 14 open-enrollment providers at each belt level o SSA & Co. o Stat-a-Matrix How Long? o Others . . . • Universities Approximate Six Sigma Belt Level o NC State Duration (Hrs) o Rutgers o UT-Austin Yellow Belt (awareness) 24 o Villanova Each level is a pre- o Others . . . Green Belt (GB) 60 requisite for the Black Belt (BB) 120 next – durations Master Black Belt (MBB) 80 are *Duration based upon iSixSigma magazine survey, March, 2009 – value represents additive at least 14 open-enrollment providers at each belt level 26
  27. 27. Other Considerations • Green Belt (GB) classes may be 5 or 10 days in duration; the 10-day courses are typically separated by 4-6 weeks to allow application of concepts to a project • Black Belt (BB) classes are typically one week per month over approximately four months • Most providers require participants to bring a laptop; a few provide software . . . Most do not • There are 3 statistical software packages widely used for Six Sigma training: 1. Minitab (currently version 15) - $1,195 2. JMP (pronounced “Jump” – from SAS) - $1,595 3. SigmaXL (Excel add-in) - $249 • Specialization – some providers offer differentiated courses for finance, healthcare, IT, manufacturing and service • Training Project – courses which do not require participants to work on their own projects as part of the course are not viewed favorably . . . Six Sigma proficiency requires practical application (some courses provide simulations, but these are still considered sub-standard for certification purposes) • Certification - typically requires successful course completion, passing a certification exam, and completion of at least one project (BB and MBB requirements are more extensive – see the example on the next slide) 27
  28. 28. Typical Certification Requirements Green Belt Black Belt Master Black Belt • One completed, certified • Two completed, certified • Two completed, certified project projects projects (in addition to GB, BB) • Minimum score of 80% on • Minimum score of 80% on certification exam certification exam • Successful leadership of a program aligned to a • Mentor/Certification Board • Mentor at least four business metric approval projects to completion • Minimum score of 80% on • Mentor/Certification Board MBB certification exam approval • Mentor at least ten projects to completion. (Mentored projects must be led by different GBs and BBs, and are in addition to the projects mentored as a BB) • Lead a Six Sigma discussion forum, or teach or develop a GB training module • Mentor/Certification Board approval 28
  29. 29. Successful Belt Characteristics • Willing to serve as a contributing project team member Yellow Belts • Able to gather data for the team • Willing to actively participate in brainstorming and other team tool sessions • Good project management skills, capable of directing team activities according to a budget and schedule Green Belts • Able to successfully lead 1-2 projects/year within their current job role • Proficiency in graphical tools and basic statistics • Capable of successfully leading 4-5 projects/year, typically in a full- time process improvement role Black Belts • Comfortable and proficient in Six Sigma methodology and higher- level statistical tools • Good presentation skills • Able to effectively coach and mentor multiple GBs simultaneously • Methodology expert in Six Sigma, Lean, Change Management, Project Management Master Black Belts • Expert in Six Sigma tools, software and statistics • Capable of developing and delivering all levels of training • Excellent coach and mentor • Strategic focus; able to lead programs of multiple BB and GB projects • Able to interact effectively with upper management and customers 29
  30. 30. Successful Deployment Characteristics • The Quality organization reports directly into the CEO leadership team • Six Sigma project selection flows down from the business strategy; senior executives are responsible for project identification • Belt candidates are formally screened and/or nominated for admission to training • Belt progression is reflected in formal HR career path documentation • Dedicated mentors (MBBs, BBs) are available inside the organization • Projects are formally tracked and reviewed at phase tollgates • Belts are encouraged to participate in Best Practice Sharing sessions • Certification is a big event 30
  31. 31. Resources Websites: Other References: 1. American Society for Quality (ASQ) 2. ‘The Power of Six Sigma’ – Subir Chowdhury (Dearborn Trade, 2001) 3. ‘The Goal’ – Eliyahu M. Goldratt (North River Press, 2nd Ed., 1992) 4. ‘Six Sigma’ – Mikel Harry and Richard Schroeder (Doubleday, 2000) 5. ‘The Six Sigma Way’ – Peter Pande, Robert Neuman, Roland Cavanagh (McGraw-Hill, 2000) 6. ‘Lean Thinking’ – James P. Womack and Daniel T. Jones (Simon & Schuster, 1996) 7. ‘Lean Six Sigma for Service’ – Michael L. George (McGraw-Hill, 2003) 31
  32. 32. PART 3: Benefits and Value Copyright 2010 CGM Associates, LLC – All Rights Reserved
  33. 33. Career Value • Expanded business opportunities across companies o 82% of Fortune 100 companies use Six Sigma o 53% of Fortune 500 companies use Six Sigma* • Cross-functional career paths within companies o Concepts apply to all functions o Expertise in Six Sigma creates functional bridges and career vistas • Promotion potential within companies o Effective problem-solvers are valued managers, executives • Salary impact − Belt level − Black Belt – US average: $90,600 + $13,600 bonus ** − Master Black Belt – US average: $122,500 + $22,000 bonus** − Certification − 89% of Black Belts are „certified‟ (caveat emptor) − 73% of Master Black Belts are „certified‟ * From iSixSigma magazine, Jan ‟07 ** From iSixSigma magazine, Mar/Apr „10 33 Copyright 2010 CGM Associates, LLC – All Rights Reserved
  34. 34. Personal Value • The gift of choice − Many applications, including non-profits − Continuing evolution generates a huge range of specialization possibilities • The confidence to solve problems − Fear of the unknown is minimized − The roadmap is always the same − This stuff works at home, too • Respect − Funny titles aren‟t laughed at any more 34 Copyright 2010 CGM Associates, LLC – All Rights Reserved
  35. 35. Closing • Other Questions? • Evaluation Form Goodbye . . . And, Thank You! 35 Copyright 2010 CGM Associates, LLC – All Rights Reserved