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Six Sigma Management slides

  1. 1. Six Sigma Overview The Pennsylvania State University Frank L. Chelko October 9, 2006
  2. 2. Six Sigma <ul><li>A rigorous, focused and highly effective implementation of proven quality principles and techniques that aims for virtually error free business performance. </li></ul>
  3. 3. Further Defined? <ul><li>A statistical approach to problem solving </li></ul><ul><li>A management culture </li></ul><ul><li>A way of thinking </li></ul><ul><li>A set of new behaviors </li></ul><ul><li>Synonymous with: </li></ul><ul><ul><li>Improving quality </li></ul></ul><ul><ul><li>Reducing cost </li></ul></ul><ul><ul><li>Improving customer loyalty/customer satisfaction </li></ul></ul><ul><ul><li>Achieving bottom-line results </li></ul></ul>
  4. 4. The Six Sigma Methodology <ul><li>Six Sigma is a structured, DATA DRIVEN management methodology that can be applied to all aspects of business. </li></ul><ul><li>The application of this methodology eliminates the use of opinion - “I think” and “I feel” - and drives the organization to a more scientific means of decision-making. </li></ul><ul><li>Six Sigma is not a statistics program. Statistics are used solely as tools for interpretation and clarification of data. </li></ul>
  5. 5. Six Sigma’s Modern Evolution <ul><li>1980 </li></ul><ul><ul><li>Established by Motorola in response to foreign competition and Baldridge Quality Award goal. </li></ul></ul><ul><li>1990’s </li></ul><ul><ul><li>Focus on process improvement using statistical tools. </li></ul></ul><ul><li>2005 </li></ul><ul><ul><li>“ Lean Six Sigma” combines the structured management methodology and problem solving tools of Six Sigma with the business strategy, objectives and goals of “Lean Enterprise”. </li></ul></ul>
  6. 6. The Business Experience <ul><li>Reduced cycle times, defects and costs </li></ul><ul><li>Reduction/elimination of waste </li></ul><ul><li>Improved productivity and efficiency </li></ul><ul><li>Measurable financial results </li></ul><ul><li>Increased product quality and reliability </li></ul><ul><li>Significant improvement in customer satisfaction! </li></ul><ul><li>Directly supports World Class performance goals. </li></ul>
  7. 7. Cost Benefit 1996 Cost Benefit 1997 Cost Benefit 1998 Cost Benefit 1999 Cost Benefit 2000 GE Results from 6 Sigma $3.5B $3.4B Cost Benefit 2001 $3.4 Billion in 2001 … Customers & Shareholders Love It! $ in Millions Unless Otherwise Stated $600 $500 $450 $380 $200 $2.5B $1.2B $700 $170 6 Sigma Cost 6 Sigma Productivity Delighting Customers $500 $3.0B $600 $2.5B $900
  8. 8. The Business Experience <ul><li>*Six Sigma is currently active in over 80% of Fortune 500 companies. </li></ul><ul><li>* Masset, LLC Consulting </li></ul><ul><li>Motorola </li></ul><ul><li>Johnson & Johnson </li></ul><ul><li>Honeywell </li></ul><ul><li>TRW </li></ul><ul><li>Merrill Lynch </li></ul><ul><li>Xerox </li></ul><ul><li>McKesson </li></ul><ul><li>Sony </li></ul>
  9. 9. Management and Project Support Executives Senior Deployment Champion Deployment Champion Project Champion Process Owner Finance Champion Information Technology Champion Human Resources Champion
  10. 10. Management and Project Support <ul><li>Executives </li></ul><ul><ul><li>Create the Six Sigma vision and company environment. </li></ul></ul><ul><ul><li>Define strategic and business goals. </li></ul></ul><ul><li>Senior Deployment Champions </li></ul><ul><ul><li>Day-to-Day management of Six Sigma throughout the business. </li></ul></ul><ul><ul><li>Reports to and updates the executives on the progress of deployment. </li></ul></ul><ul><ul><li>Liaison between the executives and deployment champions. </li></ul></ul><ul><li>Deployment Champions or Sponsors </li></ul><ul><ul><li>Responsible for the deployment of Six Sigma within the division or business unit. </li></ul></ul><ul><ul><li>Facilitates the identification and prioritization of projects assuring alignment with the business goals. </li></ul></ul><ul><ul><li>Establishes and executes training plans. </li></ul></ul><ul><ul><li>Selects the project champions. </li></ul></ul><ul><ul><li>Removes barriers for the project team. </li></ul></ul>
  11. 11. Management and Project Support <ul><li>Project Champion </li></ul><ul><ul><li>Selects and mentors the Black Belts </li></ul></ul><ul><ul><li>Leads in project identification, prioritization, and defining the project scope. </li></ul></ul><ul><ul><li>Removes barriers for Black Belts and aligns resources. </li></ul></ul><ul><li>Process Owner </li></ul><ul><ul><li>Is a team member </li></ul></ul><ul><ul><li>Takes ownership of a project when it is complete </li></ul></ul><ul><ul><li>Responsible for maintaining the project’s gain </li></ul></ul><ul><li>Finance Champion </li></ul><ul><ul><li>Estimates and certifies project savings </li></ul></ul><ul><ul><li>Works with deployment champions to identify potential project opportunities. </li></ul></ul><ul><ul><li>Assigns a finance representative on to each project team. </li></ul></ul><ul><li>Information Technology Champion </li></ul><ul><ul><li>Insures computer and software resourcing. </li></ul></ul><ul><ul><li>Works with project teams to access data from existing databases </li></ul></ul><ul><li>HR Champion </li></ul><ul><ul><li>Works with Black Belts to develop a MBB, BB, and GB selection process. </li></ul></ul>
  12. 12. Six Sigma Roles and Responsibilities
  13. 13. Yellow Belt Green Belt Black Belt MBB <ul><li>Data Collection Experts </li></ul><ul><li>Assist in Measure & Control . </li></ul><ul><li>Part-Time 6 Sigma Leaders </li></ul><ul><li>Run Mini 6 Sigma Projects </li></ul><ul><li>Full or Part Time 6 Sigma Leaders </li></ul><ul><li>Manage 6 Sigma Projects </li></ul><ul><li>Instruct & Train GBs & YBs </li></ul><ul><li>Full Time 6 Sigma Leaders </li></ul><ul><li>Manage BB Projects & Plant 6 Sigma </li></ul><ul><li>Run 6 Sigma Projects </li></ul><ul><li>Instruct & Train BB, GBs, & YBs </li></ul>Six Sigma Project Teams define Measure Analyze Improve Control
  14. 14. Belt Structure Green Belts: Lead and execute process-level improvement projects. Yellow Belts: Entry Level team member. Understands the fundamentals of Six Sigma. Data collection.
  15. 15. Belt Structure Master Black Belts: Successfully completed 20 or more Six Sigma projects. Black Belts: Implement the principles, practices, and techniques of Six Sigma for maximum cost reductions. (Lead the project teams)
  16. 16. The Methodologies
  17. 17. Six Sigma Methodologies D efine M easure A nalyze I mprove C ontrol DMAIC (dee-may-ic) Improvement Model: D efine M easure A nalyze D esign V erify DMADV (dee-mad-v) (Re)Design Model:
  18. 18. Six Sigma Methodologies D efine M easure A nalyze I mprove C ontrol DMAIC (dee-may-ic) Improvement Model: D efine M easure A nalyze D esign V erify DMADV (dee-mad-v) (Re)Design Model:
  19. 19. The DMAIC Model At the heart of Six Sigma is a systematic method for analyzing and improving business processes called DMAIC . The model includes five elements:   D efine opportunities  M easure performance  A nalyze opportunity  I mprove performance  C ontrol performance
  20. 20. DMAIC and DMADV By Thomas Pyzdek Copyright © 2003 by Thomas Pyzdek, all rights reserved. Reproduction permitted providing copyright notice remains intact. For more information visit http://www. pyzdek .com . The tools of Six Sigma are most often applied within a simple performance improvement model known as Define-Measure-Analyze-Improve-Control, or DMAIC. DMAIC is summarized in Figure 1. DMAIC is used when a project’s goal can be accomplished by improving an existing product, process, or service. Figure 1–Overview of DMAIC Define   What is the business case for the project?   Identify the customer   Current state map   Future state map   What is the scope of this project?   Deliverables   Due date Measure   What are the key metrics for this business process?   Are metrics valid and reliable?   Do we have adequate data on this process?   How will I measure progress?   How will I measure project success? Analyze   Current state analysis   Is the current state as good as the process can do?   Who will help make the changes?   Resource requirements   What could cause this change effort to fail?   What major obstacles do I face in completing this project? Improve   What is the work breakdown structure?   What specific activities are necessary to meet the project's goals?   How will I re - integrate the various subprojects? Control   During the project, how will I control risk, quality, cost, schedule, scope, and changes to the plan?   What types of progress reports should I create?   How will I assure that the business goals of the project were accomplished?   How will I keep the gains made? Next Project   Design for Six Sigma Project Framework Another approach, used when the goal is the development of a new or radically redesigned product, process or service, is Define-Measure-Analyze-Design-Verify, or DMADV. DMADV is part of the design for Six Sigma (DFSS) toolkit.   Figure 3–Overview of DMADV   Figure 4 illustrates the relationship between DMAIC and DMADV. Figure 4–DMADV and DMAIC Next Project D Define the goals of the improvement activity. The most important goals are obtained from customers. At the top level the goals will be the strategic objectives of the organization, such as greater customer loyalty, a higher ROI or increased market share, or greater employee satisfaction. At the operations level, a goal might be to increase the throughput of a production department. At the project level goals might be to reduce the defect level and increase throughput for a particular process. Obtain goals from direct communication with customers, shareholders, and employees. M Measure the existing system. Establish valid and reliable metrics to help monitor progress towards the goal(s) defined at the previous step. Begin by determining the current baseline. Use exploratory and descriptive data analysis to help you understand the data. A Analyze the system to identify ways to eliminate the gap between the current performance of the system or process and the desired goal. Use statistical tools to guide the analysis. I Improve the system. Be creative in finding new ways to do things better, cheaper, or faster. Use project management and other planning and management tools to implement the new approach. Use statistical methods to validate the improvement. C Control the new system. Institutionalize the improved system by modifying compensation and incentive systems, policies, procedures, MRP, budgets, operating instructions and other management systems. You may wish to utilize standardization such as ISO 9000 to assure that documentation is correct. Use statistical tools to monitor stability of the new systems. D Define the goals of the design activity. What is being designed? Why? Use QFD or Analytic Hierarchical Process to assure that the goals are consistent with customer demands and enterprise strategy. M Measure. Determine Critical to Stakeholder metrics. Translate customer requirements into project goals. A Analyze the options available for meeting the goals. Determine the performance of similar best-in-class designs. D Design the new product, service or process. Use predictive models, simulation, prototypes, pilot runs, etc. to validate the design concept’s effectiveness in meeting goals. V Verify the design’s effectiveness in the real-world.
  21. 21. Project Phase Candidate Six Sigma Tools Define        Project charter        VOC tools (surveys, focus groups, letters, comment cards)        Process map        QFD, SIPOC (suppliers, inputs, process, outputs, customers)        Benchmarking Measure        Measurement systems analysis        Exploratory data analysis        Descriptive statistics        Data mining        Run charts        Pareto analysis Analyze        Cause-and-effect diagrams        Tree diagrams        Brainstorming        Process behavior charts (SPC)        Process Maps        Design of Experiments        Enumerative statistics (hypothesis tests)        Inferential statistics (Xs and Ys)        FMEA (failure mode effects analysis)        Simulation Improve        Force field diagrams        7M tools        Project planning and management tools        Prototype and pilot studies Control        SPC        FMEA        ISO 900x        Change budgets, bid models, cost estimating models        Reporting system
  22. 22. Six Sigma Methodologies D efine M easure A nalyze I mprove C ontrol DMAIC (dee-may-ic) Improvement Model: D efine M easure A nalyze D esign V erify DMADV (dee-mad-v) (Re)Design Model:
  23. 23. The DMADV Model <ul><li>Systematic method for creating or reinventing business processes is DMADV . Typically use: </li></ul><ul><ul><ul><ul><li>New designs </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Existing product or process was optimized however continues not to meet Six Sigma objectives. </li></ul></ul></ul></ul><ul><li>The model also includes five elements: </li></ul><ul><li>D efine opportunities  </li></ul><ul><li>M easure performance  </li></ul><ul><li>A nalyze opportunity  </li></ul><ul><li> (Re) D esign opportunity  </li></ul><ul><li>V erify performance </li></ul>
  24. 24. DMADV vs. DMAIC D efine M easure Existing Process V erify D esign A nalyze Develop M easurement Criteria Remove Special Causes I mprove C ontrol Capable? In Control? Does a process exist? NO YES A nalyze NO DMADV DMAIC
  25. 25. Tollgate Reviews <ul><li>Another component of DMADV and DMAIC that helps to ensure that the requirements of all customers are met is the tollgate review. </li></ul><ul><li>At the end of each phase of the DMADV or DMAIC process, all stakeholders meet to ensure that: </li></ul><ul><ul><li>The requirements have not changed </li></ul></ul><ul><ul><li>What is being designed still addresses the requirements. </li></ul></ul><ul><ul><li>The measurements really address the requirements. </li></ul></ul><ul><li>The tollgate review is an excellent tool for keeping all customers on the same page, involved in the process and communicating requirements. </li></ul>
  26. 26. The Six Sigma Project
  27. 27. Typical “Project” Examples $1,100,000 Computer storage component test $194,000 Reduce brazing costs of tail cone assy. $408,000 Reducing dppm of cell phone mfg. $83,690 Wash water generation reduction $119,000 Reduce cycle time of paint batches $900,000 Reduction of job change down time $635,046 Reduction of forge cracks $1,040,000 Reduce past due orders, delivery $500,000 Laser test time cycle reduction $207,000 Thermal insulator pad improvement
  28. 28. Six Sigma Pitfalls <ul><li>Companies that adopt Six Sigma as there quality improvement strategy believe that e very problem should be resolved by a Six Sigma project team. </li></ul><ul><li>Insufficient cross-functional team representation. </li></ul><ul><li>Inadequate participation by executive management. </li></ul><ul><li>Initially a part-time BB requires significant start-up time to achieve success and may conflict with other duties. </li></ul><ul><li>Unrealistic Goals. 3.4 parts per million on Every Process, Excessive Time and Cost to Gather Performance Data, etc. </li></ul>
  29. 29. Questions???
  30. 30. Six Sigma Process and the Statistical Tools <ul><li>Voice of the Customer (VOC) </li></ul><ul><li>- QFD </li></ul><ul><li>XY Matrix </li></ul><ul><li>Process Analysis and FMEA </li></ul><ul><li>Data Collection Methods </li></ul><ul><li>Data Integrity and Accuracy </li></ul><ul><li>Basic Statistics </li></ul><ul><li>- Common Distributions </li></ul><ul><li>- Central Limit Theorem </li></ul><ul><li>- Sampling Distribution of Mean </li></ul><ul><li>- Basic Probability Concepts </li></ul><ul><li>Decision-Making </li></ul><ul><li>Non-Normal Data Graphical </li></ul><ul><li>Short vs. Long Term Capability </li></ul><ul><li>Data Analysis (B7) </li></ul><ul><li>- Cause and Effect Diagram </li></ul><ul><li>- Check Sheets </li></ul><ul><li>- Control Charts </li></ul><ul><li>- Flowcharts </li></ul><ul><li>- Histogram </li></ul><ul><li>- Pareto Chart </li></ul><ul><li>- Scatter Diagram </li></ul><ul><li>Measurement System </li></ul><ul><li>(Gage) Analysis </li></ul><ul><li>Process Capability Assessment </li></ul><ul><li>Graphic Data Analysis </li></ul><ul><li>Multi-Vari Analysis </li></ul><ul><li>Inferential Statistics </li></ul><ul><li>- Confidence Intervals </li></ul><ul><li>- Sample Size </li></ul><ul><li>Hypothesis Tests </li></ul><ul><li>- Means, Variances and Proportions </li></ul><ul><li>- ANOVA </li></ul><ul><li>- T-Tests </li></ul><ul><li>- Test for Equal Variance </li></ul><ul><li>- Paired Comparison Tests </li></ul><ul><li>- Chi-Square </li></ul><ul><li>- Proportion </li></ul><ul><li>- Contingency Tables </li></ul><ul><li>- Point and Interval Estimation </li></ul><ul><li>- Non-Parametric Tests </li></ul><ul><li>Simple Linear Correlation </li></ul><ul><li>Regression-Simple and Multiple </li></ul><ul><li>- Measure and Model Relationships </li></ul><ul><li>Between Variables </li></ul><ul><li>- Binary Logistics </li></ul><ul><li>Process Modeling and Simulation </li></ul><ul><li>Hypothesis Tests </li></ul><ul><li>- ANOVA </li></ul><ul><li>- Non-Parametric tests </li></ul><ul><li>- Contingency Tables </li></ul><ul><li>Design of Experiments </li></ul><ul><li>- Terminology </li></ul><ul><li>- Plan and Organize Experiments </li></ul><ul><li>- Design Principles </li></ul><ul><li>- One Factor </li></ul><ul><li>- Full-Factorial </li></ul><ul><li>- Two Level Fractional </li></ul><ul><li>- Mixture Experiments </li></ul><ul><li>- Taguchi Robustness Concepts </li></ul><ul><li>Response Surface Methodology </li></ul><ul><li>- Steepest Ascent/Decent </li></ul><ul><li>- High Order Experiments </li></ul><ul><li>Evolutionary Optimization (EVOP) </li></ul><ul><li>Control Charts </li></ul><ul><li>- Theory, Objectives, Benefits </li></ul><ul><li>- Variable Selection </li></ul><ul><li>- Rational Sub-grouping </li></ul><ul><li>- Selection/Application </li></ul><ul><li>- Analysis </li></ul><ul><li>- Moving Average </li></ul><ul><li>- Exponentially Weighted </li></ul><ul><li>Moving Average (EWMA) </li></ul><ul><li>- CuSum </li></ul><ul><li>Process Capability Assessment </li></ul><ul><li>Design for Six Sigma </li></ul><ul><li>Quality Function Deployment (QFD) </li></ul><ul><li>Robust Design and Process </li></ul><ul><li>- Functional Requirements </li></ul><ul><li>- Noise Strategies </li></ul><ul><li>- Tolerance Design </li></ul><ul><li>- Tolerance and Process Capability </li></ul><ul><li>Design Analysis and FMEA </li></ul><ul><li>Reliability Fundamentals </li></ul>Analyze A Measure M Define D Improve I Control C
  31. 31. Six Sigma Process and the Management Tools <ul><li>Business Case </li></ul><ul><li>Problem/Objective Statement </li></ul><ul><li>Project Scope </li></ul><ul><li>Project Goals </li></ul><ul><li>Project Definition </li></ul><ul><li>Project Charter </li></ul><ul><li>Identify Owners and Stakeholders </li></ul><ul><li>Identify Customers </li></ul><ul><li>Financial Benefits </li></ul><ul><li>Benchmarking </li></ul><ul><li>Team Leadership </li></ul><ul><li>Team Dynamics and Performance </li></ul><ul><li>Change Agent </li></ul><ul><li>Performance Measurements </li></ul><ul><li>Gap Analysis </li></ul><ul><li>High Level Process Mapping/ SIPOC </li></ul><ul><li>( Suppliers, Inputs, Process, Output, and Customers) </li></ul><ul><li>Design for Six Sigma </li></ul><ul><li>Design for (X) </li></ul><ul><li>- Manufacturing (DFM) </li></ul><ul><li>- Cost (DFC) </li></ul><ul><li>- Test (DFT) </li></ul><ul><li>- Maintainability (DFMA) </li></ul><ul><li>- Quality/Reliability (DFQ) </li></ul><ul><li>Special Design Tools </li></ul><ul><li>- Inventive Problem Solving </li></ul><ul><li>- Axiomatic Design </li></ul><ul><li>Lean Enterprise </li></ul><ul><li>- Lean Thinking </li></ul><ul><li>- Theory of Constraints </li></ul><ul><li>- Continuous Flow Manufacturing </li></ul><ul><li>- Non-Value Added Activities </li></ul><ul><li>- Cycle Time Reduction </li></ul><ul><li>- Cost of Quality </li></ul><ul><li>- Tools </li></ul><ul><li>Visual Factory, Kanban, Poka-Yoke </li></ul><ul><li>Solution Implementation </li></ul><ul><li>- Mistake-Proofing (Poka-Yoke) </li></ul><ul><li>- Visible Enterprise </li></ul><ul><li>The Six Sigma Journey </li></ul><ul><li>Enterprise View </li></ul><ul><li>Leadership </li></ul><ul><li>Business Strategy </li></ul><ul><li>Organizational Goals/Objectives </li></ul><ul><li>Project Management Tools (N7) </li></ul><ul><li>- Activity Network Diagram </li></ul><ul><li>- Affinity Diagram </li></ul><ul><li>- Interrelationship Digraph </li></ul><ul><li>- Matrix Diagram </li></ul><ul><li>- Prioritization Matrix/Grid </li></ul><ul><li>- Tree Diagram </li></ul><ul><li>- Process Decision Program Chart </li></ul><ul><li>What’s Next-Six Sigma Evolution </li></ul><ul><li>Control Plans </li></ul><ul><li>- Training </li></ul><ul><li>- Documentation </li></ul><ul><li>- Monitoring </li></ul><ul><li>- Response </li></ul><ul><li>- Systems and Structures </li></ul><ul><li>Total Productive Maintenance (TPM) </li></ul><ul><li>Best Practice Sharing/Translation </li></ul>Analyze A Measure M Define D Improve I Control C