Six Sigma - University of Idaho


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Six Sigma - University of Idaho

  1. 1. C ollaborating A round S ix Sigma Innovation & Design … and … D epartment of S tatistics S ix S igma I nformation T echnology: Averting Disaster in Washington, DC D r. R ick Ed geman, P rofessor & C hair and S ix S igma B lack B elt Tel. +1 208-885-4410 Fax. +1 208-885-7959 Email:
  2. 2. Six Sigma is … … a highly structured strategy for acquiring, assessing, and applying customer, competitor, and enterprise intelligence for the purposes of product, system or enterprise innovation and design. Innovation Algorithm DMAIC ( D efine- M easure- A nalyze- I mprove- C ontrol) Design for Six Sigma Algorithm DMADV ( D efine- M easure- A nalyze- D esign- V erify) Makes Integrative Use Of : Various strategies and tools from Statistics, Quality, Business, Engineering and … ???
  3. 3. S ix S igma O rganizations <ul><li>GE … All 300,000+ GE employees must be Six Sigma certified. All new GE products developed using the “Design for Six Sigma” (DFSS) approach . </li></ul><ul><li>3M … New CEO (from GE) requires all 3M employees to become Six Sigma certified. </li></ul><ul><li>Dupont </li></ul><ul><li>AlliedSignal </li></ul><ul><li>Sun Microsystems </li></ul><ul><li>Raytheon </li></ul><ul><li>Motorola </li></ul><ul><li>Boeing </li></ul><ul><li>Lockheed-Martin </li></ul><ul><li>Bank-of-America </li></ul><ul><li>American Express </li></ul><ul><li>HSBC </li></ul><ul><li>SAS Institute </li></ul><ul><li>Rapidly Increasing Areas of Application. </li></ul><ul><ul><li>Healthcare – GE Heathcare - SLC </li></ul></ul><ul><ul><li>Financial, </li></ul></ul><ul><ul><li>Military – NSWC, Pentagon, etc. </li></ul></ul><ul><li>Fueled by : </li></ul><ul><li>Strategic Contexts. </li></ul><ul><li>Notorious bottom-line orientation & results. </li></ul><ul><li>Adaptable to multiple bottom lines. </li></ul><ul><li>Process orientation: rigorous and systematic approaches to innovation and design. </li></ul><ul><li>Focus on the customer. </li></ul><ul><li>Successful track record elsewhere. </li></ul><ul><li>“ Industry Buzz”. </li></ul>While Six Sigma is new at, for example, 3M – its benefits at others of these organizations is measured in the multi-billions of US dollars.
  4. 4. The Villain Cost of Poorly Performing Processes  level DPMO CP 3 2 308,537 Not Applicable 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 Cost of Poorly Performing Processes (CP 3 ) Sigma (  ) 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. 5. … and the Hero <ul><li>We don’t know what we don’t know. </li></ul><ul><li>We can’t do what we don’t know. </li></ul><ul><li>We won’t know until we measure. </li></ul><ul><li>We don’t measure what we don’t value. </li></ul><ul><li>We don’t value what we don’t measure. </li></ul><ul><li>Typical Results : companies that properly implement Six Sigma have seen profit margins grow 20% year after year for each sigma shift (up to about 4.8s to 5.0s. Since most companies start at about 3s, virtually each employee trained in Six Sigma will return on average $230,000 per project to the bottom line until the company reaches 4.7s. After that, the cost savings are not as dramatic. </li></ul><ul><li>However , improved profit margins allow companies to create products & services with added features and functions that result in greater market share. </li></ul>What Does Six Sigma Tell Us?
  6. 6. Six Sigma COPIS M odel C ustomers S uppliers O utputs I nputs P rocess Steps The Voice of the Customer (VOC) is aggressively sought and rigorously evaluated and used to determine needed outputs and hence the optimal process configuration needed to yield those outputs and their necessary inputs for which the best suppliers are identified and allied with. From Concept to Market: the Voice of the Customer How does Six Sigma Work?
  7. 7. D efine C ontrol I mprove A nalyze M easure S ix S igma I nnovation & the DMAIC Algorithm D efine the problem and customer requirements. M easure defect rates and document the process in its current incarnation. A nalyze process data and determine the capability of the process. I mprove the process and remove defect causes. C ontrol process performance and ensure that defects do not recur. “ Common sense” doesn’t mean “commonly done” or when done, done well. Six Sigma: How Do We Innovate?
  8. 8. D efine V erify D esign A nalyze M easure D esign for S ix S igma (DFSS) All new products at GE are designed using a DFSS algorithm. D efine customer requirements and goals for the process, product or service. M easure and match performance to customer requirements. A nalyze and assess the design for the process, product or service. D esign and implement the array of new processes required for the new process, product or service. V erify results and maintain performance. Six Sigma: How Do We Design?
  9. 9. A Specific Example Six Sigma Innovation & Design for Information Technology: Averting Disaster in Washington, DC D r. R ick L . E dgeman, P rofessor & C hair, D epartment of S tatistics, U niversity of I daho D r. D avid B igio, A ssociate P rofessor of M echanical E ngineering, U niversity of M aryland T homas E . F erleman, I nformation T echnology C onsultant, O ffice of the C hief T echnology O fficer, G overnment of the D istrict of C olumbia
  10. 10. Magdalena Forsberg – Swedish Olympian - 2002 waking up and being able to simply do nothing. Not having to train. Jumping in the car and driving to the country. Making it through a whole day without feeling any pain.” “ Goldfinger”, January-February 2002, Scanorama, pp. 22-27. Imagine … … Working toward an IT future at OCTO where …
  11. 11. Imagine what was once Unthinkable … Imagine the potential implications of a well-timed and successful terrorist strike initiated by crippling or otherwise compromising the integrity of the information technology infrastructure of the government of Washington, DC – tourist haven; within 100 kilometers of three major international airports; home of key defense, biotechnology, and information technology firms; host to diplomats; the military and political capitol of the free world. Truly the potential impact on the world order is staggering and likely well beyond what the majority of us are reasonably able to guess. Goal : to immunize / protect the IT infrastructure of the government of the District of Columbia. Means : Six Sigma Innovation and Design applied to critical IT functions.
  12. 12. Agencies of the District of Columbia provide services that simply must be operational at some minimal level or – having failed – must quickly recover . The Office of the Chief Technology Officer (OCTO) is the primary provider of information technology (IT) services to all 68 agencies of the government of the District of Columbia (Washington, DC). This includes, for example, police, fire and other emergency response, public education, fire, public utilities, and Department of Motor Vehicles. Service availability was promised to client agencies was well in excess of OCTO’s ability to deliver. Moreover, the harsh reality of September 11, 2001 underscored the critical role of OCTO. Much of OCTO’s funding comes from the United States Congress with a large amount of funding from the Department of Homeland Security.
  13. 13. <ul><li>Five Critical Areas of Information Technology Service to OCTO Client Agencies were examined and methods of improvement, design, and integration explored. These areas were: </li></ul><ul><ul><li>Service Level Management (SLM) </li></ul></ul><ul><ul><li>Capacity Management (CaM) </li></ul></ul><ul><ul><li>Availability Management (AM) </li></ul></ul><ul><ul><li>IT Service Continuity, a.k.a., Disaster Recovery (SCM), and </li></ul></ul><ul><ul><li>Financial Management (FM) </li></ul></ul><ul><li>These are detailed on the following slide. </li></ul>
  14. 14. Service Level Management (SLM) ensures that SLAs are met and that adverse impacts on service quality are minimized, assessing the impact of changes on service quality and SLAs, both when changes are proposed and after their implementation. Key targets set in SLAs relate to service availability thus requiring incident resolution within agreed periods. SLM is the hinge of service support and delivery and relies on the effective and efficient working of underpinning support processes, without which an SLA is useless, since these are foundational to content agreement. Capacity Management (CM) ensures constant availability of adequate capacity to meet agency business requirements. CM involves incident resolution and problem identification for those difficulties related to capacity issues and generates requests for change (RFCs) that ensure sufficient capacity. RFCs are subject to a change management process and implementation often affects hardware, software and documentation and requires effective release management. Availability Management (AM) concerns design, implementation, measurement and management of IT services to ensure that stated availability requirements are met and requires IT service FMEA and the understanding the time taken to resume service. Incident management and problem management provide key inputs ensuring that appropriate corrective actions occur. Availability targets specified in SLAs are monitored as part of the AM process that also supports the SLM process by providing measurements and reporting to support service reviews. IT Service Continuity Management (SCM) or “Disaster Recovery” manages an organization’s ability to provide a pre-determined agreed upon level of IT services to support minimum business requirements. Among the means used are resilient systems and recovery options such as back-up facilities. Configuration management data is required to facilitate this prevention and planning. Infrastructure and business changes need to be assessed for their potential impact on continuity plans, and IT and business plans are then subject to change management procedures. Financial Management (FM) accounts for costs and returns of IT service investments and cost recovery from clients. FM requires interfaces with CM, configuration management, and SLM to identify the true costs of service. FM works together with business relationship management and the IT organization during the negotiation of IT budgets and client IT expenditures. KEY : SLA = Service Level Agreement. FMEA = Failure Modes and Effects Analysis. RFC = Request for Change. Definitions
  15. 15. Table 1 . Examples of Approaches and Their Use in the OCTO DC Project A = Availability Management, CaM = Capacity Management , CtM = Continuity Management, FM = Financial Management, SLM = Service Level Management ITIL Areas Total Savings Estimated by Deputy Director = $2M to $3M from 2003-2007. RESULTS AM House of Quality / Quality Function Deployment. Integrated use of Matrix Diagrams and NGT to assess internal and external customer needs and deploy solutions. HOQ / QFD AM, CtM Failure Modes & Effects Analysis. FMEA All Process-Product Drill Down Tree. Drill Down Trees All Approaches included surveys, focus groups, customer complaints, and interviews. VOC Tools All Included high-level COPIS maps and detailed process maps. Both “before” and “after” improvement versions were used. Process Maps All Specific, Measurable, Attainable, Relevant, and Time-Bound goals and problem statements. SMART Goals All Various uses including distribution of tasks to team members and relating OCTO needs (CTQs) to enablers (“hows”) in QFD. Matrix / Priority Matrix Diagrams All Nominal Group Technique used as part of QFD / HOQ to prioritize OCTO needs. Nominal Group Technique: NGT AM, CtM Primarily used to explore causal relationships between enablers (“hows”) to capture correlations and form the roof in the HOQ. Interrelationship Digraph All Uses included associations among OCTO needs (CTQs) Affinity Diagram All Uses included cause identification and solution generation. Brainstorming All Purpose is to define the business case; project goals and limits; way of working together; and conflict resolution plan. Charter 1 ITIL Areas Description or Example Use Approach
  16. 16. Table 1. Examples of Approaches and Their Use in the OCTO DC Project (continued) A = Availability Management, CaM = Capacity Management , CtM = Continuity Management, FM = Financial Management, SLM = Service Level Management ITIL Areas Total Savings Estimated by Deputy Director = $2M to $3M from 2003-2007. RESULTS AM, CaM, CtM, SLM Statistical Process Control Charts recommended or used included p charts, I-MR charts, and X-bar and R charts to (directly) control the X’s, hence indirectly the CTQs. SPC Charts AM, CtM, SLM DOE approaches included experiments with operating parameters, critical elements, or both. Operating parameters are enablers (X’s) that vary in amount while critical elements are enablers (X’s) that differ in type or categorically. Screening and factorial designs were used. Design of Experiments (DOE) SLM Used to explore, assess, characterize and exploit CTQ-Enabler relationships. Correlation & Regression AM, CaM, CtM, SLM Tests of homogeneity examined whether differing approaches yielded similar results and tests of independence explored CTQ-Enabler relationships. Chi-Square CtM Benchmarking of South Dakota Bureau of Information Technology and private sector ISPs. Benchmarking All All ITIL areas were assessed for strengths, weaknesses, opportunities and threats with motivations being improvement or leverage of strengths, diminution of weaknesses, welcoming opportunities, and countermanding threats. SWOT All Also called Cause-and-Effect Diagrams display “effects” representing a problem or an opportunity with the “causes” being real or potential drivers of the effect. Fishbone Diagram All Used to identify dominant issues / defect causes. Pareto Chart 1 ITIL Areas Description or Example Use Approach
  17. 17. References on Six Sigma at OCTO : Mission Critical: Six Sigma and Business Excellence for Information Technology. Rick L. Edgeman, David I. Bigio, and Thomas A. Ferleman (2005 expected) World Class Applications of Six Sigma: Case Studies from Manufacturing and Service Industries Elsevier Science, Oxford, UK. Jiju Anthony & Mohammed Zairi, Editors. – BOOK CHAPTER Six Sigma or Business Excellence: Strategic and Tactical Examination of IT Service Level Management at the Office of the Chief Technology Officer of Washington, DC. (Invited Contribution) Quality & Reliability Engineering International , Vol. 21, No. & pp. pending, 2005 Rick L. Edgeman, David Bigio and Thomas Ferleman Six Sigma Availability Management of Information Technology in the Office of the Chief Technology Officer of Washington, DC. Total Quality Management , Vol. 15, No. 5/6, 2004. David Bigio, Rick L. Edgeman and Thomas Ferleman General Six Sigma References : Edgeman, R. and Bigio, D. (2004). “Six Sigma as Metaphor: Heresy or Holy Writ?” Quality Progress , Vol. 37, No. 1, 25-30. Six Sigma in Communities of Care: Improved Care via Institutionalized Genius Business Briefing: Global Healthcare 2002, Vol. 2, 46-49 (Invited Contribution) World Medical Association – 53rd General Assembly. London, UK. – Rick L. Edgeman – BOOK CHAPTER Klefsjö, B., Wiklund, H., and Edgeman, R. (2001). “Six Sigma Seen as a Methodology for Total Quality Management”, Measuring Business Excellence , Vol. 5, No. 2, 31-35. The Six Sigma Handbook Expanded and Revised. Thomas Pyzdek (2003). McGraw-Hill, New York.