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SIX SIGMA –Relevance to the Economic
Development Of India
Presentation by : YOGENDRA RAGHAV
Relevance to India’s GDP.
History Of Six Sigma.
What is Six Sigma.
Six Sigma Methodology.
When To Use Six Sigma?
Different Six Sigma belts.
Application of Six Sigma.
Relevance to India’s GDP
Growth of GDP has increased from 7.5 % to 8 % (2004-05 to
2005-06) with an expected growth of 9.5 % in the
India needs to grow atleast by 10% every year to join the big
boys of the global economy by 2020.
In 2000, Average per capita income in India was $500
compared to U.S.A was $32000.
Considering our population growth of about 2% per year,
India’s economy must grow nearly by 23% and sustain this
growth for the next 25 years if the Average Indian is to become
as rich as Average American having average income of
$52500 in 2025 (based on conservative growth of 2% per
Relevance to India’s GDP…2
For moving in the direction to achieve the above, we need to
Good business practices
Unimaginable productivity jumps.
Six Sigma is one of the important and useful tool of
the good management practices
The other tools include such as TQM, ISO, Benchmarking, Balanced,
Scorecard, SEI-CMM and the Balridge Award etc.
History Of Six Sigma
Six Sigma Was Developed at Motorola in the 1980’s as a
Method to Improve Process Quality i.e. recognizing that
products with high first pass yield rarely failed in use.
Companies that have deployed Six Sigma:
Bank of America
Wipro and Many More
What is Sigma?
Sigma - the lower case Greek letter that
denotes a statistical unit of measurement
used to define the standard deviation of a
population. It measures the variability or
spread of the data.
What is Six Sigma
It is a statistical term that measures how far a given process
deviates from perfection.
Central idea behind Six Sigma - if you can measure how
many "defects" you have in a process, you can systematically
figure out how to eliminate them and get as close to "zero
defects" as possible.
A defect can be anything from a faulty part to an incorrect
To achieve Six Sigma quality, a process must produce no
more than 3.4 defects per million opportunities.
An "opportunity“ is - a chance for nonconformance, or not
meeting the required specifications.
What is Six Sigma…2
This means organizations need to be nearly
flawless in executing their key processes.
Critical to Quality:
Attributes most important to the customer
Failing to deliver what the customer wants
What your process can deliver
What the customer sees and feels
Ensuring consistent, predictable processes to
improve what the customer sees and feels
Design for Six Sigma: Designing to meet customer needs and process
Cost of Quality at various levels
of Six Sigma
Cost of Quality
What is Cost of Poor Quality?
• For a decrease of one sigma the manufacturing cost of the
product increases by about 10%.
• Companies operating at 3 or 4 sigma spend b/w 25 & 40 % of
their revenues in fixing the defects or problems- Cost of
• In almost every company where the COPQ is unknown, the
COPQ exceeds the profit margin.
Six Sigma Methodology
Six Sigma focuses on improving quality (i.e. reducing
waste) by helping organizations to produce products &
services better, faster & cheaper.
It focuses on defect prevention, cycle time reduction, & cost
Two approaches for achieving the Six Sigma goal:
- Improving existing products and processes.
- Developing new products and processes.
When To Use DMAIC
The DMAIC methodology should be used when a product or process is in
existence at your company but is not meeting customer specification or is
not performing adequately
•Define the project goals and customer (internal & external)
•Measure the process to determine current performance
•Analyze and determine the root causes of the defects
•Improve the process by eliminating defects
•Control future process performance
When To Use DMADV
The DMADV methodology should be used:• When a product or process is not in existence at your company and
one needs to be developed
• The existing product or process exists and has been optimized (using
either DMAIC or not) and still doesn't meet the level of customer
specification or six sigma level
•Define the project goals and customer (internal and external)
Measure •Measure and determine customer needs and specifications
Analyze •Analyze the process options to meet the customer needs
Design •Design (detailed) the process to meet the customer needs
•Verify the design performance and ability to meet customer
Why Organizations are embracing
Six Sigma is about improving profitability, although improved quality &
efficiency are immediate by-products of six-sigma. Organization that
implement six sigma do so with the goal of improving their margins.
Organizations that implement-six sigma-have profit margins grow 20
% year after year for each sigma shift (up to 4.8 to 5 sigma).
Organizations operating at three sigma levels that marshal all their
resources around six sigma can expect to make one sigma shift
improvement each year, these Organizations will experience:
20 % margin improvement
12 to 18% increase in capacity
12% reduction in the number of employees
10 to 30 % capital reduction
It’s not all Plain Sailing!
Adoption requires a cultural change in order to gain best
results. Six Sigma has changed the DNA of many
organizations — it is now the way they work — in
everything they do and in every product they design
Top management must be patient- there is no quick fix.
Six Sigma is about getting the right answer, not just any
Six Sigma Belts
Mentor, trainer, and coach of Black Belts
and others in the organization, leads project
Leader of teams implementing the
six sigma methodology on projects.
Quality Fundamentals/ Kaizen Now
Delivers successful focused projects
using basic analytical tools, works
on less complex projects
Participates on and supports the
project teams, typically in the
context of his or her existing
Six Sigma - Practical Meaning
99% Good (3.8 Sigma)
99.99966% Good (6 Sigma)
• 20,000 lost articles of mail per
• Seven articles lost per hour
• Unsafe drinking water for
almost 15 minutes each day
• One unsafe minute every seven
• 5,000 incorrect surgical
operations per week
• 1.7 incorrect operations per week
• Two short or long landings at
most major airports each day
• One short or long landing every
• 200,000 wrong drug
prescriptions each year
• 68 wrong prescriptions per year
• No electricity for almost seven
hours each month
• One hour without electricity
every 34 years
Case Study: Impact of Six Sigma
Implementation at General Electric
Results achieved over the first two years (1996-1998):
• Revenues have risen to $100 billion, up 11%
• Earnings have increased to $9.3 billion, up 13%
• Earnings per share have grown to $2.80, up 14%
• Operating margin has risen to a record 16.7%
• Working capital turns have risen sharply to 9.2%, up from
1997's record of 7.4 %
Application Of Six Sigma
Supply Chain Management-Suppliers have to adopt Six Sigma quality because the
overall quality of the product will be as good as its weakest link.
Inventory Control-Discussing the main Customer’s needs(CTQ’s) and creating a
system that linked forecast and order data and streamlined the various production
and planning processes.
Technology Vs Control-Process control keeps the process variation to a minimum,
thereby maintaining high sigma capability.
R&D Project Selection-The define phase of DFSS methodology has the
ARMI(Approval,Resources, members of the team and interested party) tool that is
best suited during the project selection phase.
Team Selection-the tool GRPI is suitable for identifying the members of a team and
Process Optimization & Debottelnecking-The analyze and improve phases contain
many tools which help in sorting bottlenecks and optimization.