Introduction to Six Sigma Purpose of six sigma : To make customer happier and increase profits

Origin of Six Sigma 1987 Motorola Develops Six Sigma Raised Quality Standards Other Companies Adopt Six Sigma GE Promotions, Profit Sharing (Stock Options), etc. directly tied to Six Sigma training. Dow Chemical, Dupont, Honeywell, Whirlpool

1987 Motorola Develops Six Sigma

Raised Quality Standards

Other Companies Adopt Six Sigma

GE

Promotions, Profit Sharing (Stock Options), etc. directly tied to Six Sigma training.

Dow Chemical, Dupont, Honeywell, Whirlpool

Time Line 2002 1995 1992 1987 1985 Dr Mikel J Harry wrote a paper relating early failures to quality Motorola Allied Signal General Electric Johnson & Johnson, Ford, Nissan, Honeywell

Pilot’s Six Sigma Performance Width of landing strip 1/2 Width of landing strip If pilot always lands within 1/2 the landing strip width, we say that he has Six Sigma capability.

Current Leadership Challenges Delighting Customers. Reducing Cycle Times. Keeping up with Technology Advances. Retaining People. Reducing Costs. Responding More Quickly. Structuring for Flexibility. Growing Overseas Markets.

Delighting Customers.

Reducing Cycle Times.

Keeping up with Technology Advances.

Retaining People.

Reducing Costs.

Responding More Quickly.

Structuring for Flexibility.

Growing Overseas Markets.

Six Sigma— Benefits? Generated sustained success Project selection tied to organizational strategy Customer focused Profits Project outcomes / benefits tied to financial reporting system. Full-time Black Belts in a rigorous, project-oriented method. Recognition and reward system established to provide motivation.

Generated sustained success

Project selection tied to organizational strategy

Customer focused

Profits

Project outcomes / benefits tied to financial reporting system.

Full-time Black Belts in a rigorous, project-oriented method.

Recognition and reward system established to provide motivation.

What can it do? Motorola: 5-Fold growth in Sales Profits climbing by 20% pa Cumulative savings of $14 billion over 11 years General Electric: $2 billion savings in just 3 years The no.1 company in the USA Bechtel Corporation: $200 million savings with investment of $30 million

Motorola:

5-Fold growth in Sales

Profits climbing by 20% pa

Cumulative savings of $14 billion over 11 years

General Electric:

$2 billion savings in just 3 years

The no.1 company in the USA

Bechtel Corporation:

$200 million savings with investment of $30 million

GE Six Sigma Economics Source: GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon total corporation cost/benefits attributable to Six Sigma. 1996 1998 2000 2002 0 500 1000 1500 2000 2500 1996 Cost Benefit (in millions)

Overview of Six Sigma PAIN, URGENCY, SURVIVAL COSTS OUT GROWTH TRANSFORM THE ORGANIZATION CHANGE THE WORLD 6 SIGMA AS A STATISTICAL TOOL 6 SIGMA AS A PHILOSOPHY 6 SIGMA AS A PROCESS

Overview of Six Sigma It is a Philosophy Anything less than ideal is an opportunity for improvement Defects costs money Understanding processes and improving them is the most efficient way to achieve lasting results It is a Process To achieve this level of performance you need to: D efine, M easure, A nalyse, I mprove and C ontrol It is Statistics 6 Sigma processes will produce less than 3.4 defects per million opportunities

It is a Philosophy

Anything less than ideal is an opportunity for improvement

Defects costs money

Understanding processes and improving them is the most efficient way to achieve lasting results

It is a Process

To achieve this level of performance you need to:

D efine, M easure, A nalyse, I mprove and C ontrol

It is Statistics

6 Sigma processes will produce less than 3.4 defects per million opportunities

Management involvement? Executives and upper management drive the effort through: Understanding Six Sigma Significant financial commitments Actively selecting projects tied to strategy Setting up formal review process Selecting Champions Determining strategic measures

Executives and upper management drive the effort through:

Understanding Six Sigma

Significant financial commitments

Actively selecting projects tied to strategy

Setting up formal review process

Selecting Champions

Determining strategic measures

Management involvement? Key issues for Leadership: How will leadership organize to support Six Sigma ? (6  council, Director 6  , etc) Transition rate to achieve 6  . Level of resource commitment. Centralized or decentralized approach. Integration with current initiatives e.g. QMS How will the progress be monitored?

Key issues for Leadership:

How will leadership organize to support Six Sigma ? (6  council, Director 6  , etc)

Transition rate to achieve 6  .

Level of resource commitment.

Centralized or decentralized approach.

Integration with current initiatives e.g. QMS

How will the progress be monitored?

Philosophy Know What’s Important to the Customer (CTQ) Reduce Defects (DPMO) Centre Around Target (Mean) Reduce Variation (Standard Deviation)

Know What’s Important to the Customer (CTQ)

Reduce Defects (DPMO)

Centre Around Target (Mean)

Reduce Variation (Standard Deviation)

Critical Elements Genuine Focus on the Customer Data and Fact Driven Management Process Focus Proactive management Boundary-less Collaboration Drive for Perfection; Tolerance for failure

Genuine Focus on the Customer

Data and Fact Driven Management

Process Focus

Proactive management

Boundary-less Collaboration

Drive for Perfection; Tolerance for failure

Data Driven Decision Control Monitor Problem Symptom Cause Effect Input-Process Output Independent Dependent X1 . . . Xn Y f(X) Y=

Two Processes Define Measure Analyze Improve Control Define Measure Analyze Design Verify DMAIC DMADV Existing Processes New Processes DFSS

Define

Measure

Analyze

Improve

Control

Define

Measure

Analyze

Design

Verify

Existing Processes

New Processes

DFSS

Key Concepts

COPQ (Cost of Poor Quality) - Lost Opportunities - The Hidden Factory - More Setups - Expediting Costs - Lost Sales - Late Delivery - Lost Customer Loyalty - Excess Inventory - Long Cycle Times - Costly Engineering Changes Average COPQ approximately 15% of Sales Hidden Costs: Intangible Difficult to Measure Traditional Quality Costs: Tangible Easy to Measure - Inspection - Warranty - Scrap - Rework - Rejects

Hidden Costs:

Intangible

Difficult to Measure

Traditional Quality Costs:

Tangible

Easy to Measure

COPQ vs. Sigma Level Cost of Quality % Sales Sigma Level

Process A Process is a group of steps, tasks, or activities, which take inputs (People, Material, Information …..) and in some way change them to produce an output (Service, Product……) Xs Ys Step-1 Step-2 Step-3 Input Process Output

A Process is a group of steps, tasks, or activities, which take inputs (People, Material, Information …..) and in some way change them to produce an output (Service, Product……)

CTQ (Critical-To-Quality) CTQ characteristics for the process, service or process Measure of “What is important to Customer” 6 Sigma projects are designed to improve CTQ Examples: Waiting time in clinic Spelling mistakes in letter % of valves leaking in operation

CTQ characteristics for the process, service or process

Measure of “What is important to Customer”

6 Sigma projects are designed to improve CTQ

Examples:

Waiting time in clinic

Spelling mistakes in letter

% of valves leaking in operation

Defective and Defect A nonconforming unit is a defective unit Defect is nonconformance on one of many possible quality characteristics of a unit that causes customer dissatisfaction. A defect does not necessarily make the unit defective Examples: Scratch on water bottle (However if customer wants a scratch free bottle, then this will be defective bottle)

A nonconforming unit is a defective unit

Defect is nonconformance on one of many possible quality characteristics of a unit that causes customer dissatisfaction.

A defect does not necessarily make the unit defective

Examples:

Scratch on water bottle

(However if customer wants a scratch free bottle, then this will be defective bottle)

Defect Opportunity Circumstances in which CTQ can fail to meet. Number of defect opportunities relate to complexity of unit. Complex units – Greater opportunities of defect than simple units Examples: A units has 5 parts, and in each part there are 3 opportunities of defects – Total defect opportunities are 5 x 3 = 15

Circumstances in which CTQ can fail to meet.

Number of defect opportunities relate to complexity of unit.

Complex units – Greater opportunities of defect than simple units

Examples:

A units has 5 parts, and in each part there are 3 opportunities of defects – Total defect opportunities are 5 x 3 = 15

DPO (Defect Per Opportunity) Number of defects divided by number of defect opportunities Examples: In previous case (15 defect opportunities), if 10 units have 2 defects. Defects per unit = 2 / 10 = 0.2 DPO = 2 / (15 x 10) = 0.0133333

Number of defects divided by number of defect opportunities

Examples:

In previous case (15 defect opportunities), if 10 units have 2 defects.

Defects per unit = 2 / 10 = 0.2

DPO = 2 / (15 x 10) = 0.0133333

DPMO (Defect Per Million Opportunities) DPO multiplies by one million Examples: In previous case (15 defect opportunities), if 10 units have 2 defects. Defects per unit = 2 / 10 = 0.2 DPO = 2 / (15 x 10) = 0.0133333 DPMO = 0.013333333 x 1,000,000 = 13,333 Six Sigma performance is 3.4 DPMO 13,333 DPMO is 3.7 Sigma

DPO multiplies by one million

Examples:

In previous case (15 defect opportunities), if 10 units have 2 defects.

Defects per unit = 2 / 10 = 0.2

DPO = 2 / (15 x 10) = 0.0133333

DPMO = 0.013333333 x 1,000,000 = 13,333

What is Sigma?

Have you ever… Shot a rifle? Played darts? What is the point of these sports? What makes them hard?

Shot a rifle?

Played darts?

Have you ever… Shot a rifle? Played darts? Who is the better shooter? Jack Jill

Shot a rifle?

Played darts?

Variability - Jack Deviation = distance between observations and the mean (or average) Jill Jack 8 7 10 8 9 8.4 7 8 8 9 10 Observations 0.0 averages 7 - 8.4 = -1.4 8 - 8.4 = -0.4 8 - 8.4 = -0.4 9 - 8.4 = 0.6 10 - 8.4 = 1.6 Deviations

Deviation = distance between observations and the mean (or average)

Variability - Jack Variance = average distance between observations and the mean squared Jill Jack 8 7 10 8 9 8.4 7 8 8 9 10 Observations 0.0 averages 7 - 8.4 = -1.4 8 - 8.4 = -0.4 8 - 8.4 = -0.4 9 - 8.4 = 0.6 10 - 8.4 = 1.6 Deviations 1.0 1.96 0.16 0.16 0.36 2.56 Squared Deviations

Variance = average distance between observations and the mean squared

Variability - Jill Deviation = distance between observations and the mean (or average) Jill 7 6 7 7 6 Jack 6.6 6 6 7 7 7 Observations 0.0 averages 6 - 6.6 = -0.6 6 - 6.6 = -0.6 7 - 6.6 = 0.4 7 - 6.6 = 0.4 7 - 6.6 = 0.4 Deviations

Deviation = distance between observations and the mean (or average)

Variability - Jill Variance = average distance between observations and the mean squared Jill 7 6 7 7 6 Jack 6.6 6 6 7 7 7 Observations 0.0 averages 6 - 6.6 = -0.6 6 - 6.6 = -0.6 7 - 6.6 = 0.4 7 - 6.6 = 0.4 7 - 6.6 = 0.4 Deviations 0.24 0.36 0.36 0.16 0.16 0.16 Squared Deviations

Variance = average distance between observations and the mean squared

Standard deviation Standard deviation = square root of variance Jack Jill Jill Jack Standard Deviation Variance Average 0.4898979 0.24 6.6 1.0 1.0 8.4 But what good is a standard deviation ?

Standard deviation = square root of variance

Variability The world tends to be bell-shaped Most outcomes occur in the middle Fewer in the “ tails” (upper) Even very rare outcomes are possible Even very rare outcomes are possible Fewer in the “ tails” (upper) Quality Gurus .com

“ Normal” bell shaped curve Normal distributions are divide up into 3 standard deviations on each side of the mean

Causes of Variability Common Causes: Random variation within predictable range (usual) No pattern Inherent in process Adjusting the process increases its variation Special Causes Non-random variation (unusual) May exhibit a pattern Assignable, explainable, controllable Adjusting the process decreases its variation

Common Causes:

Random variation within predictable range (usual)

No pattern

Inherent in process

Adjusting the process increases its variation

Special Causes

Non-random variation (unusual)

May exhibit a pattern

Assignable, explainable, controllable

Adjusting the process decreases its variation

Limits Process and Control limits: Statistical Process limits are used for individual items Control limits are used with averages Limits = μ ± 3σ Define usual (common causes) & unusual (special causes) Specification limits: Engineered Limits = target ± tolerance Define acceptable & unacceptable

Process and Control limits:

Statistical

Process limits are used for individual items

Control limits are used with averages

Limits = μ ± 3σ

Define usual (common causes) & unusual (special causes)

Specification limits:

Engineered

Limits = target ± tolerance

Define acceptable & unacceptable

Usual vs. Unusual, Acceptable vs. Defective Another View Center Process Reduce Spread The statistical view of a problem On-Target USL LSL LSL = Lower spec limit USL = Upper spec limit LSL USL Off-Target USL LSL Large Variation

More about limits Good quality: defects are rare (C pk >1) Poor quality: defects are common (C pk <1) C pk measures “Process Capability” If process limits and control limits are at the same location, C pk = 1. LSL and USL = Lower and Upper Specification Limits / LPL and UPL = Lower and Upper Process Limits μ target μ target

A Six Sigma Process Predictably twice as good as what the customer wants 1 12 2 3 4 5 6 7 8 9 10 11  LSL USL     1  1  1  1  1  1 

Predictably twice as good as what the customer wants

Process shift allowed 2 3 4 5 6 7 8 9 12 10 11 1 LSL USL SD = 1 1.5 SD 1.5 SD

Six Sigma Measurement Sigma DPMO 3 4 5 6 7 66810 6210 233 3.4 

Six Sigma Measurement Sigma Defects numbers per million 1.5  500,000 2.0  308,300 2.5  158,650 3.0  67,000 3.5  22,700 4.0  6,220 4.5  1,350 5.0  233 5.5  32 6.0  3.4

Components of Six Sigma

Components of Six Sigma Two components of Six Sigma Process Power People Power

Two components of Six Sigma

Process Power

People Power

Process Power

Approach Practical Problem Statistical Problem Statistical Solution Practical Solution

DMAIC - simplified D efine What is important? M easure How are we doing? A nalyze What is wrong? I mprove Fix what’s wrong C ontrol Ensure gains are maintained to guarantee performance

D efine

What is important?

M easure

How are we doing?

A nalyze

What is wrong?

I mprove

Fix what’s wrong

C ontrol

Ensure gains are maintained to guarantee performance

DMAIC approach D Define M Measure A Analyze I Improve C Control Identify and state the practical problem Validate the practical problem by collecting data Convert the practical problem to a statistical one, define statistical goal and identify potential statistical solution Confirm and test the statistical solution Convert the statistical solution to a practical solution

Define D Define M Measure A Analyze I Improve C Control VoC - Who wants the project and why ? The scope of project / improvement (SMART Objective) Key team members / resources for the project Critical milestones and stakeholder review Budget allocation

Measure D Define M Measure A Analyze I Improve C Control Ensure measurement system reliability Prepare data collection plan Collect data - Is tool used to measure the output variable flawed ? - How many data points do you need to collect ? How many days do you need to collect data for ? What is the sampling strategy ? Who will collect data and how will data get stored ? What could the potential drivers of variation be ?

- How many data points do you need to collect ?

How many days do you need to collect data for ?

What is the sampling strategy ?

Who will collect data and how will data get stored ?

What could the potential drivers of variation be ?

Analyze D Define M Measure A Analyze I Improve C Control How well or poorly processes are working compared with - Best possible (Benchmarking) - Competitor’s Shows you maximum possible result Don’t focus on symptoms, find the root cause

Improve D Define M Measure A Analyze I Improve C Control Present recommendations to process owner. Pilot run Formulate Pilot run. Test improved process (run pilot). Analyze pilot and results. Develop implementation plan. Prepare final presentation. Present final recommendation to Management Team.

Present recommendations to process owner.

Pilot run

Formulate Pilot run.

Test improved process (run pilot).

Analyze pilot and results.

Develop implementation plan.

Prepare final presentation.

Present final recommendation to Management Team.

Control D Define M Measure A Analyze I Improve C Control Don’t be too hasty to declare victory. How will you maintain to gains made? - Change policy & procedures - Change drawings Change planning Revise budget Training

- Change policy & procedures

- Change drawings

Change planning

Revise budget

Training

People Power Tell me, I forget. Show me , I remember. Involve me, I understand.

6  Training Master Black Belt Black Belts Green Belts Team Members / Yellow Belts Champions Mentor, trainer, and coach of Black Belts and others in the organization. Leader of teams implementing the six sigma methodology on projects. Delivers successful focused projects using the six sigma methodology and tools. Participates on and supports the project teams, typically in the context of his or her existing responsibilities.

Champion Plans improvement projects Charters or champions chartering process Identifies, sponsors and directs Six Sigma projects Holds regular project reviews in accordance with project charters Includes Six Sigma requirements in expense and capital budgets Champions

Plans improvement projects

Charters or champions chartering process

Identifies, sponsors and directs Six Sigma projects

Holds regular project reviews in accordance with project charters

Includes Six Sigma requirements in expense and capital budgets

Champion Identifies and removes organizational and cultural barriers to Six Sigma success. Rewards and recognizes team and individual accomplishments (formally and informally) Communicates leadership vision Monitors and reports Six Sigma progress Validates Six Sigma project results Nominates highly qualified Black Belt and/or Green Belt candidates Champions

Identifies and removes organizational and cultural barriers to Six Sigma success.

Rewards and recognizes team and individual accomplishments (formally and informally)

Communicates leadership vision

Monitors and reports Six Sigma progress

Validates Six Sigma project results

Nominates highly qualified Black Belt and/or Green Belt candidates

Master Black Belt Enterprise Six Sigma expert Permanent full-time change agent Certified Black Belt with additional specialized skills or experience especially useful in deployment of Six Sigma across the enterprise Master Black Belt

Enterprise Six Sigma expert

Permanent full-time change agent

Certified Black Belt with additional specialized skills or experience especially useful in deployment of Six Sigma across the enterprise

Master Black Belt Highly proficient in using Six Sigma methodology (e.g., advanced statistical analysis, project management, communications, program administration, teaching, project coaching) Identifies high-leverage opportunities for applying the Six Sigma Basic Black Belt training Green Belt training Coach / Mentor Black Belts Master Black Belt

Highly proficient in using Six Sigma methodology (e.g., advanced statistical analysis, project management, communications, program administration, teaching, project coaching)

Identifies high-leverage opportunities for applying the Six Sigma

Basic Black Belt training

Green Belt training

Coach / Mentor Black Belts

Black Belt Six Sigma technical expert Temporary, full-time change agent (will return to other duties after completing a two to three year tour of duty as a Black Belt) Black Belts

Six Sigma technical expert

Temporary, full-time change agent (will return to other duties after completing a two to three year tour of duty as a Black Belt)

Black Belt Leads business process improvement projects where Six Sigma approach is indicated. Successfully completes high-impact projects that result in tangible benefits to the enterprise Demonstrated mastery of Black Belt body of knowledge Demonstrated proficiency at achieving results through the application of the Six Sigma approach Coach / Mentor Green Belts Recommends Green Belts for Certification Black Belts

Leads business process improvement projects where Six Sigma approach is indicated.

Successfully completes high-impact projects that result in tangible benefits to the enterprise

Demonstrated mastery of Black Belt body of knowledge

Demonstrated proficiency at achieving results through the application of the Six Sigma approach

Coach / Mentor Green Belts

Recommends Green Belts for Certification

Green Belt Six Sigma Project originator Part-time Six Sigma change agent. Continues to perform normal duties while participating on Six Sigma project teams Six Sigma champion in local area Recommends Six Sigma projects Participates on Six Sigma project teams Leads Six Sigma teams in local improvement projects Green Belts

Six Sigma Project originator

Part-time Six Sigma change agent. Continues to perform normal duties while participating on Six Sigma project teams

Six Sigma champion in local area

Recommends Six Sigma projects

Participates on Six Sigma project teams

Leads Six Sigma teams in local improvement projects

Yellow Belt Learns and applies Six Sigma tools to projects Actively participates in team tasks Communicates well with other team members Demonstrates basic improvement tool knowledge Accepts and executes assignments as determined by team Team Members / Yellow Belts

Learns and applies Six Sigma tools to projects

Actively participates in team tasks

Communicates well with other team members

Demonstrates basic improvement tool knowledge

Accepts and executes assignments as determined by team

Financial Analyst Validates the baseline status for each project. Validates the sustained results / savings after completion of the project. Compiles overall investment vs. benefits on Six Sigma for management reporting. Will usually be the part of Senior Leadership Team.

Validates the baseline status for each project.

Validates the sustained results / savings after completion of the project.

Compiles overall investment vs. benefits on Six Sigma for management reporting.

Will usually be the part of Senior Leadership Team.

Project Selection

Sources of Projects External Sources: Voice of Customer What are we falling short of meeting customer needs? What are the new needs of customers? Voice of Market What are market trends, and are we ready to adapt? Voice of Competitors What are we behind our competitors?

External Sources:

Voice of Customer

What are we falling short of meeting customer needs?

What are the new needs of customers?

Voice of Market

What are market trends, and are we ready to adapt?

Voice of Competitors

What are we behind our competitors?

Sources of Projects Internal Sources: Voice of Process Where are the defects, repairs, reworks? What are the major delays? What are the major wastes? Voice of Employee What concerns or ideas have employees or managers raised? What are we behind our competitors?

Internal Sources:

Voice of Process

Where are the defects, repairs, reworks?

What are the major delays?

What are the major wastes?

Voice of Employee

What concerns or ideas have employees or managers raised?

What are we behind our competitors?

Harvesting the Fruit of Six Sigma - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sweet Fruit Design for Repeatability Process Enhancement Bulk of Fruit Process Characterization and Optimization Low Hanging Fruit Seven Basic Tools Ground Fruit Logic and Intuition - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

What Qualifies as a Six Sigma Project Three basic qualifications: There is a gap between current and desired / needed performance. The cause of problem is not clearly understood. The solution is not pre-determined, nor is the optimal solution apparent.

Three basic qualifications:

There is a gap between current and desired / needed performance.

The cause of problem is not clearly understood.

The solution is not pre-determined, nor is the optimal solution apparent.