Six Sigma In Manufacturing In India.

Slide 1: Six Sigma in Manufacturing – Introduction Svelte Information Systems Pvt. Ltd.

Slide 2: What is Six Sigma? Sigma is a yardstick on which the performance of the process and improvements can be gauged upon. Six Sigma is an Improvement methodology which uses a structured approach to drive business improvement. Six Sigma is a - Measure for Quality - Process For Continuous Improvement - Enabler for Culture Change. Svelte Information Systems Pvt. Ltd. 2

Slide 3: What is Six Sigma?  Six Sigma tools apply a refined methodology of measurement and discovery to gain a comprehensive understanding of performance and key variables affecting the quality of a company' products and services. s  Six Sigma is the disciplined application of statistical problem-solving tools that show you where wasteful costs are and points you toward precise steps to take for improvement.  Six Sigma is a process for mathematically analyzing specific problems in manufacturing or other aspects of a company' operations. Through a s methodical system, it drills into the problem to find the best solution, and then locks in that solution. Six Sigma thus is a business philosophy to improve customer satisfaction, a tool for eliminating process variation, a metric of world class companies allowing process comparisons Svelte Information Systems Pvt. Ltd. 3

Slide 4: Benefits of Six Sigma Six sigma is a business strategy which deploys various set of tools, techniques & methodologies to bring in – 4) Rapid & Breakthrough process improvement. 5) Enhanced customer focus. 6) Data & Fact based decision making. 7) Creating culture for continuous & tangible improvements. 8) Structured problem solving. Svelte Information Systems Pvt. Ltd. 4

Slide 5: Breakthrough performance gains (Distribution Shifted ± 1.5)  PPM 2 308,537 3 66,807 4 6,210 5 233 6 3.4 Process Defects per Million Capability Opportunities Sigma is a statistical unit of measure which reflects process capability. The sigma scale of measure is perfectly correlated to such characteristics as defects-per-unit, parts-per million defective, and the probability of a failure/error. Svelte Information Systems Pvt. Ltd. 5

Slide 6: Pr Impact on Bottom Line ic e In cr ea se Vo M lu at m er ia e l In Co c. w st s it h Le ve ra g e M an u fa ct ur in g Vo lu m e SG In c. &A No Le ve ra g e Ta Svelte Information Systems Pvt. Ltd. Factors xe s La G W bo en or r er k in al g -5 Ca % pi Pr ta ic l e Assuming a 10% change in the factor Re du ct io n 6 Validated bottom line results

Slide 7: How Six Sigma works? A six sigma project accelerates the performance of the CTQ in a comparatively smaller span of time. CTQ Performance The unit of deployment of six sigma in an organization is the number of six sigma projects. A six sigma project is executed in a time frame of 5-6 months by a task force type Current Six Sigma Future Performance Project Performance team of 4-5 members. CTQ – The parameter chosen to make improvement through a Six Sigma project

Slide 8: Six Sigma as a Process Improvement Methodology Six Sigma is a structured problem solving tool which deploys Brainstorming & Statistical tools to identify the vital root causes and finding a solution so as to optimize the Output. It follows DMAIC approach for problem solving. Define Measure Analyze Improve Control Define the Measure the Analyze and Improve the Control the project process to determine the process by improved ( Assignment ) determine root causes of working on the process goals and current the defects. validated root performance to customer performance. causes ensure (internal and sustainable external) results. deliverables. Svelte Information Systems Pvt. Ltd. 8

Slide 9: Roadmap Example Define Next Project Customers, Value, Problem Statement Validate Scope, Timeline, Team Project $ Celebrate Primary/Secondary & OpEx Metrics Project $ Current Value Stream Map Measure Voice Of Customer (QFD) Control Assess specification / Demand Document process (WIs, Std Work) Measurement Capability (Gage R&R) Mistake proof, TT sheet, CI List Correct the measurement system Analyze change in metrics Process map, Spaghetti, Time obs. Value Stream Review Measure OVs & IVs / Queues Prepare final report Validate Project $ Validate Project $ Improve Analyze (and fix the obvious) Optimize KPOVs & test the KPIVs Root Cause (Pareto, C&E, brainstorm) Redesign process, set pacemaker Find all KPOVs & KPIVs Validate 5S, Cell design, MRS FMEA, DOE, critical Xs, VA/NVA Project $ Visual controls Graphical Analysis, ANOVA Value Stream Plan Future Value Stream Map Svelte Information Systems Pvt. Ltd. 9

Slide 10: Impact of Six Sigma The Classical View of Quality The Six Sigma View of Quality “99% Good” (3.8) “99.9997% Good” (6) 20,000 lost articles of mail per hour Seven lost articles of mail per hour Unsafe drinking water almost 15 One minute of unsafe drinking water every minutes each day seven months 5,000 incorrect surgical operations per 1.7 incorrect surgical operations per week week 2 short or long landings at most major One short or long landing at most major airports daily airports every five years 200,000 wrong drug prescriptions each 68 wrong drug prescriptions per year year One hour without electricity every 34 No electricity for almost 7 hours each years month Svelte Information Systems Pvt. Ltd. 10

Slide 11: Types of Work – Identifying Waste Value Adding (VA): Any activity that directly adds value to the product Incidental Work (NVA), but unavoidable with current technology or methods. Any work carried out that does not increase product value Waste An activity that does not add value to the product and hence something that you don’t want to be doing, hence ‘Waste’. Svelte Information Systems Pvt. Ltd. 11

Slide 12: Waste Elimination Traditional Focus Lean Six Sigma • Work Longer-Harder- Faster • Improve the Value Stream to Eliminate • Add People or Equipment Waste Value Waste Add Non-Value Adding,but unavoidable with current technology or methods. Any work carried out that does not increase LEAD TIME product value Svelte Information Systems Pvt. Ltd. 12

Slide 13: The 7 Wastes MUDA is the Japanese word for WASTE. An 8th waste is the wasted potential of people 5 7 2 1 4 3 6 Overproduction Seek it out and get rid! To produce sooner, faster or in greater quantities than customer demand. Over Processing 1 Inventory Processing beyond the standard required by the customer. 7 2 Raw material, work in progress or finished goods which is not having value added to it. Rework Non right Waiting first time. Repetition or correction 6 3 People or parts of a process. that wait for a work cycle to be completed. Transportation 5 4 Motion Unnecessary movement of people, parts or Unnecessary movement of people machines within or parts between processes. a process. Svelte Information Systems Pvt. Ltd. 13

Slide 14: Basic Implementation Roadmap Identify Customer Requirements Understand and Define Entire Value Streams Vision (Strategic Business Plan) Deploy Key Business Objectives - Measure and target (metrics) - Align and involve all employees - Develop and motivate Continuous Improvement (DMAIC) Define, Measure, Analyze, Improve Identify root causes, prioritize, eliminate waste, make things flow and pulled by customers Control -Sustain Improvement -Drive Towards Perfection Svelte Information Systems Pvt. Ltd. 14

Slide 15: Six Sigma in Steel Industry “With increasing globalization, every steel company must innovate to prosper and compete in this new environment. POSCO was in a difficult situation – you might also say a crisis – a few years ago as we faced this new global competitive threat. As a management team, we felt that Six Sigma was a good vehicle to change all employees’ way of thinking, current working styles and mind-sets.” - Ku-taek Lee, Chairman and CEO, POSCO Svelte Information Systems Pvt. Ltd. 15

Slide 16: Six Sigma roadmap for POSCO Steel Svelte Information Systems Pvt. Ltd. 16

Slide 17: Six Sigma projects taken up by POSCO steel POSCO steel executed over 1800 Lean Six Sigma projects to reduce costs, increase productivity and quality, some of them are: 4. Reduce finished steel inventory. 5. Reduce lead time of delivery by 50% from 28 days to 14 days. 6. On-time delivery performance from 65% to 92% 7. Reduce coil damage by 86% 8. Scrap reduction from 15% to 1.5%. 9. Improve furnace life. 10.Reduce energy consumption in blast furnace by 15%. Svelte Information Systems Pvt. Ltd. 17

Slide 18: POSCO & SAIL sign MoU to form strategic alliance New Delhi, August 16, 2007: POSCO, the fourth largest steel maker in the world and Steel Authority of India Ltd (SAIL), India’s largest steel company, signed a landmark memorandum of understanding (MoU) today, to establish a strategic alliance for aligning and cooperating with each other in a wide range of strategic business and commercial interest areas. Mr. Soung-sik Cho, Senior Executive Vice President & Member of the Board, POSCO and Mr. G. Ojha, Director (Personnel), SAIL, signed the MoU on behalf of POSCO and SAIL respectively. SAIL Chairman Mr. S.K. Roongta and officials of both POSCO & SAIL were present during the ceremony held at SAIL’s Corporate Office in New Delhi. The MoU states that the alliance partners have agreed to cooperate in the following areas of business: Ø Information sharing in the area of corporate strategy planning; Ø Exchange of engineers, technicians and other professionals; Ø Sharing of know-how and expertise in the areas of development of mines and business practices such as ERP, PI and Six Sigma; Ø Joint usage of each other’s existing marketing and warehousing network; and Ø Coordination in procurement of coking coal, nickel and ferro-alloys and engagement of transportation vessels. Svelte Information Systems Pvt. Ltd. 18

Slide 19: 19000 Six Sigma in POSCO $ 450 Million 2054 240 $ 35 Million 63 Total MBBs BBs GBs Cost of Benefits Employees Implementation POSCO steel created a highly In the year 2004, POSCO steel spent innovative pool of trained six sigma $35 Million to created the Six Sigma practitioners who executed multiple infrastructure and generated a massive projects sum of $ 450 Millions as savings from Six Sigma projects Svelte Information Systems Pvt. Ltd. 19

Slide 20: TATA Steel Initiates Six Sigma • TATA Steel has initiated the Six Sigma Black Belt system, a methodology that focuses on moving every process, product and service towards near perfect quality.  According to Tata Steel, this methodology will help the company reduce mistakes in every aspect - product defects, incorrect billing, wasted materials and inefficient production processes.  Tata Steel selected Mr Niloy Mitter for the Six Sigma Black Belt training at Texas, US.  "Six Sigma is the disciplined application of statistical problem-solving tools that show you where wasteful costs are and points you toward precise steps to take for improvement. These tools apply a refined methodology of measurement and discovery to gain a comprehensive understanding and key variables affecting the quality of a company's products and services,'' Tata Steel said in a press release. Svelte Information Systems Pvt. Ltd. 20

Slide 21: Process Improvement in Tata Steel Svelte Information Systems Pvt. Ltd. 21

Slide 22: Contact Us Atul Kumar Jha Sr. Business Development Manager 37 SCO, Sec 15 Part-II, HUDA Market, Gurgaon – 122001 Haryana, INDIA Ph: +91 124 - 4271990-93 Fax: +91 124 - 4271989 Email: atul@sveltesystems.com Svelte Information Systems Pvt. Ltd. 22