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
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
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 companies operate at a level between 3 and 4 sigma. Why is Six Sigma Important?
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.
However , improved profit margins allow companies to create products & services with added features and functions that result in greater market share.
What Does Six Sigma Tell Us?
What it means to be @ Six Sigma Example quoted from GE Book of Knowledge - copyright GE Is 99% (3.8 ) good enough? 99.99966% Good – At 6 20,000 lost mails per hour 7 lost mails per hour Unsafe drinking water almost 15 minutes each day One minute of unsafe drinking water every seven months 5,000 incorrect surgical operations per week 1.7 incorrect surgical operations per week 2 short or long landings at most major airports daily One short or long landing at major airports every five years 200,000 wrong drug prescriptions each year 68 wrong drug prescriptions each year
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. C pk ≥ 2 is exceptional. μ target μ target
Six Sigma Measurement On one condition : Calculate the defects and estimate the opportunities in the same way... 3 4 5 6 7 66810 6210 233 3.4 Sigma DPMO
Six Sigma Measurement Sigma Defects numbers per million 1.5s 500,000 2.0s 308,300 2.5s 158,650 3.0s 67,000 3.5s 22,700 4.0s 6,220 4.5s 1,350 5.0s 233 5.5s 32 6.0s 3.4
$200 million savings with investment of $30 million
GE Six Sigma Economics Source: 1998 GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon total corporation cost/benefits attributable to Six Sigma. 6 Sigma Project Progress 1996 1998 2000 2002 0 500 1000 1500 2000 2500 1996 Cost Benefit (in millions)
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
Ensure gains are maintained to guarantee performance
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?
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 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 ?
D Define M Measure A Analyze I Improve C Control
Analyze 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 D Define M Measure A Analyze I Improve C Control
Control Don’t be too hasty to declare victory. How will you maintain to gains made?
- Change policy & procedures
- Change drawings
D Define M Measure A Analyze I Improve C Control
Tools for DMAIC Define What is wrong? Measure Data & Process capability Analyze When and where are the defects Improve How to get to six sigma Control Display key measures
Cause & Effect
Failure Models &
Decision & Risk
Root Cause Analysis
7 Basic Tools
Contract / Charter
Voice of the
Process Flow Map
“ Management by
Fact” – 4 What’s
Design for Six Sigma Applications of Six Sigma that focus on the design or significant redesign of products and services and their enabling processes so that from the beginning customer needs and expectations are fulfilled are known as Design for Six Sigma or DFSS . The focal aim of DFSS is to create designs that are resource efficient, capable of exceptionally high yields, and are robust to process variations. This aim leads to the DFSS algorithm D efine- M easure- A nalyze- D esign- V erify (DMADV).
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?
DFSS is changing GE. With it GE can build on all of its Capabilities and take all of its product and process designs to a new level of world-class performance and quality. The essence of DFSS is predicting design quality up front and driving quality measurement and predictability improvement during the early design phases-a much more effective and less expensive way to get to Six Sigma quality than trying to fix problems further down the road. What We Do . GE Corporate Research and Development Design for Six Sigma at GE:
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.
Six Sigma Organization Champion Black Belt Black Belt Black Belt Green Belt Green Belt Green Belt Green Belt Green Belt Yellow Belt Yellow Belt Yellow Belt Yellow Belt Master Black Belt
- Highly proficient in using Six Sigma methodology to achieve tangible business results.
Technical expert beyond Black Belt level on one or more aspects of process improvement (e.g., advanced statistical analysis, project management, communications, program administration, teaching, project coaching)
Identifies high-leverage opportunities for applying the Six Sigma approach across the enterprise
Basic Black Belt training
Green Belt training
Coach / Mentor Black Belts
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
General Electric CEO, Jack Welch, describes Six Sigma as “the most important initiative GE has ever undertaken.” GE’s operating income, a critical measure of business efficiency and profitability, hovered around 10% for decades.
In 1995 Welch mandated that each GE operation from credit card services to aircraft engine plants to NBC-TV work toward achieving Six Sigma. GE was averaging about 3.5 when it introduced the program.
One of the flaws at Allied is that we had too much vertical mobility . Managers inch up the same smokestack, learning more and more about less and less. But companies that train promising individuals as Black Belts circumvent the vertical flow and move people around horizontally, having them serve time in as many major businesses or divisions as possible to give them a kaleidoscopic view of the organization and the benefit of being mentored by a variety of new blood.