Six sigma introduction & tu tor

Prof. Pawan Gupta, 09372404408 –pawan@softtech-engr.com,pawan@covisible.com
Educational & Management Consultants

Why Quality? And

Why are we here today?

What are
our benchmarks
for Quality?
Whom should we follow?
The KOREA
And The Japanese .
Why are they so quality conscious?
Some common factors –
• Poor with little natural resources

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• Land and sea locked
• Mountains with little fertile land
• Harsh and hostile environment
• Survival at stake
• Export a must to survive
• Lower costs a must to be able to
export
And what gave them low costs?
Quality
Quality
Quality
With Quality products and services,

They not only survived but became prosperous
as well.

Thus Quality is directly linked
To
our prosperity and survival.

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Can we then learn, what they have learned
& Practice what they are practicing?

Higher Q implies lower costs.

It also implies higher sales price and hence margins.

In turn it means higher profit to the organization.

And higher returns to employees.

Broadly, it means higher standard of living
and prosperity in general.

This is the secret of the Swiss and the Japanese.

BETTER Q
MEANS
LOWER COSTS

L = A * d*d

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Where

L is loss / A is a constant / d is deviation from the
target
A simple example would be weight of one kg of sugar
bought at a grocer.

Higher than 1000 g will mean loss to the supplier and
less than 1000 g will mean loss to the customer.

overall loss to the society is proportional to square of
the deviation from the target or specification.

Productivity and Quality

Are

2 sides of the same coin.

If Q improves,
P improves too.

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Productivity is proportional to minimum quality

Improved Quality improves Productivity also

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Q and P Are like Brake and Accelerator in a car.

Unless you have good brakes (Quality), you
cannot drive at high speed (Productivity).

High speed (P), without good brakes (Q) is
a sure recipe for disaster.

Thus good Q leads you to high P and lower
costs.

In a documented example of a Hospital,

Time for a Gall Bladder Removal operation
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dropped from
180 To 10 minutes;
At the same time
Complication rate (equivalent to Rejection)
Dropped from 5 % to 0.1 %.

Competitive Advantage
With improved quality
Existing customers will give more share
Competitor’s customers will move to you
For New customers you will be the first choice

Let us state only one simple reason for
Why we should strive to improve Quality?
Because
Quality is the most significant single factor
affecting the performance of a business
Unit’s products and services.
Let us see only one example to illustrate this point -

ZENITH VS SONY, TV Manufacturers - Old and
New–
This story dates back to fifties. Zenith was an entrenched brand in US.
Unquestionably number one. Everybody bought Zenith TV. Sony was an
upstart Japanese company, had just come into the US market and trying to
sell TVs.

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The picture below shows graphically the general quality of Zenith and Sony
TVs. It is just a histogram of a typical quality parameter. The Zenith
histogram is a nice rectangle, whereas Sony is a peaky curve. Say X axis is
sharpness of the picture and Y-axis is number of units having that
particular sharpness value, from a large number of televisions….

In those days, the standard procedure for buying a TV was an elaborate one.
The whole family used to visit the big showroom. The Zenith TVs were
arranged in neat row facing the family, seated comfortably, eating ice cream.
All TVs were switched ON and the family used to watch and after
considerable discussion and arguments - someone used to say, I like this
picture in TV no 1; another, I like the finish of this cabinet TV no 2; a third,
Sound from this TV no3 is really good; and so on. Ultimately, the father used
his veto power, and selected the TV he liked best.

For Sony, they started with similar fashion, but they had a hard time in
figuring out which TV to buy – Sony No 1 or Sony No 2 or Sony No 3…soon
enough they found out that it is useless to figure out which is best. Slowly the
procedure for buying Sony TV changed. They simply telephoned the dealer
to send them a TV. As simple as that. No one realized, what is
happening……

After some time, Sony had considerable market share. Zenith did not realize
what hit them – they were doing everything right…

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Where are they now?
ZENITH no more exists.
It become extinct.
SONY Is No 1 in TV
All over the world.
Obviously we too want to be a Sony in our
particular business. We too would like to pay
attention to Six Sigma of our products and processes.

Strategic Six Sigma
Business Improvement using
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Strategic Six Sigma

Goals.
At the end of this presentation the audience
should be able to:

Explain how Six Sigma can be used to improve
business results

Explain how Strategic Six Sigma can help
implement a strategic or operational plan

Explain how Strategic Six Sigma incorporates
other management initiatives.

Six Sigma

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Six Sigma is a methodology for pursuing continuous
improvement in customer satisfaction and profit

Six Sigma

All work we perform is a process
The important outputs are called Key Process Output
Variables or KPOVs
The important inputs are called Key Process Input
Variables or KPIVs
Six Sigma is a Process for identifying factors, KPIVs,
that drive KPOVs
Six Sigma

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Design for six sigma

Design for Six Sigma (DFSS)
New Product/Process Development
Deliver a product that is right the first time

Six Sigma

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Six Sigma

High Level Business Metrics

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Capital Utilization
Growth
Revenue
Profit
Return on Assets

Operational Metrics
Quote Time
Quoting Margin
Close Rate

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Defect Rates
Cycle Time
Waste
Days Sales Outstanding
On-Time Delivery
Product Dimensional
Inventory

Head Count
Etc.

Strategic Six Sigma
The use of Business, Lean, TOC, Six Sigma and
DFSS tools to develop and implement a strategic plan
to achieve the goals of the company

Strategic Six Sigma
. Operational Metric

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Product Yield Loss

Strategic Six Sigma
. High Level Business Metric
Economic Profit

Strategic Six Sigma
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.

Use Corporate Supply Chain map to identify:
High Potential areas for strategies
Lean Enterprise can be used as a
high potential way to satisfy
strategies; reduce cost, retain and gain new customers

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Strategic Six Sigma
More detailed Supply Chain map to identify logistical
issues between plants and customers

Time from Raw Material to Customer:
A + B + C2 + C3 + D5
Bottom Up Operational
Forecasting

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Bottom Up Operational
Forecasting

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Strategic Six Sigma :Strategic Six Sigma develops
a business plan, executes and provides feedback to the
Planning

process

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Six Sigma focuses on putting results on
financial statements
Metrics – customer and internal Infrastructure

Strategic Six Sigma can help implement a
strategic or operational plan
Control Charts for Business metrics
Strategic Six Sigma incorporates other
management initiatives

Six Sigma at General Electric
We bring good things to life

What Is Six Sigma?

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The Roadmap
to Customer
Impact

Making Customers Feel Six Sigma Quality

Globalization and instant access to information, products
and services have changed the way
our customers conduct business — old business models no
longer work. Today’s competitive environment leaves no room
for error. We must delight our customers and relentlessly look
for new ways to exceed their expectations. This is why Six
Sigma Quality has become a part of our culture.
What is Six Sigma?
First, what it is not. It is not a secret society, a slogan or a
cliché. Six Sigma is a highly disciplined process that helps us
focus on developing and delivering near-perfect products
and services. Why ”Sigma“? The word is a statistical term that
measures how far a given process deviates from perfection.
The central idea behind Six Sigma is that if you can

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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. Six Sigma has changed
the DNA of GE — it is now the way we work — in everything
we do and in every product we design.

GE’s Evolution Towards Quality
GE began moving towards a focus on quality in the late ‘80s.
Work-Out®, the start of our journey, opened our culture to
ideas from everyone, everywhere, decimated the bureaucracy
and made boundaryless behavior a reflexive, natural part of
our culture, thereby creating the learning environment that led
to Six Sigma. Now, Six Sigma, in turn, is embedding quality
thinking — process thinking — across every level and in every
operation of our Company around the globe.
Work-Out® in the 1980s defined how we behave. Today, Six
Sigma is defining how we work and has set the stage for
making our customers feel Six Sigma.

Key Elements of Quality...Customer, Process and
Employee
There are three key elements of quality: customer, process and employee. Everything we
do to remain a world-class quality company focuses on these three essential elements.
...the Customer

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Delighting Customers
Customers are the center of GE’s universe: they define
quality. They expect performance, reliability, competitive
prices, on-time delivery, service, clear and correct transaction
processing and more. In every attribute that influences
customer perception,
we know that just being good is not enough. Delighting our
customers is a necessity.
Because if we don’t do it, someone else will!

...the Process

Outside-In Thinking
Quality requires us to look at our business from the customer’s
perspective, not ours. In other words, we must look at our
processes from the outside-in.By understanding the
transaction lifecycle from the customer’s needs and
processes, we can discover what they are seeing and feeling.
With this knowledge, we can identify areas where we can add
significant value or improvement from their perspective.

...the Employee

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Leadership Commitment
People create results. Involving all employees is essential to
GE’s quality approach. GE is
committed to providing opportunities and incentives for
employees to focus their talents and
energies on satisfying customers.
All GE employees are trained in the strategy, statistical tools
and techniques of Six Sigma
quality. Training courses are offered at various levels:
Quality Overview Seminars: basic Six Sigma
awareness.
Team Training: basic tool introduction to equip
employees to participate on
Six Sigma teams.

Master Black Belt, Black Belt and Green Belt Training:
in-depth quality training that includes high-level statistical
tools, basic quality control tools, Change Acceleration
Process and Flow technology tools.
Design for Six Sigma (DFSS) Training: prepares teams for the
use of statistical tools to design it right the first time.
Quality is the responsibility of every employee. Every
employee must be involved, motivated and knowledgeable if
we are to succeed.

The Six Sigma Strategy
To achieve Six Sigma quality, a process must produce no more than 3.4 defects per
million opportunities. An “opportunity” is defined as a chance for nonconformance, or not
meeting the required specifications. This means we need to be nearly flawless in
executing our key processes. Six Sigma is a vision we strive toward and a philosophy that
is part of our business culture.

Key Concepts of Six Sigma
At its core, Six Sigma revolves around a few key concepts.

Critical to Quality: Attributes most important to the customer
Defect: Failing to deliver what the customer wants
Process Capability: What your process can deliver
Variation: What the customer sees and feels

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Stable Operations: Ensuring consistent, predictable processes to improve
what the customer sees and feels
Design for Six Sigma: Designing to meet customer needs and process capability

Our Customers Feel the Variance, Not the Mean
Often, our inside-out view of the business is based on average or mean-based measures
of our recent past. Customers don’t judge us on averages, they feel the variance in each
transaction, each product we ship. Six Sigma focuses first on reducing process variation
and then on improving the process capability.Customers value consistent, predictable
business processes that deliver world-class levels of quality. This is what Six Sigma
strives to produce.

GE’s Commitment to Quality
GE’s success with Six Sigma has exceeded our most optimistic predictions. Across the
Company, GE associates embrace Six Sigma’s customer-focused, data-driven
philosophy and apply it to everything we do. We are building
on these successes by sharing best practices across all of our businesses, putting the full
power of GE behind our quest for better, faster customer solutions.

Glossary of Terms and Definitions
Quality Approaches and Models
DFSS – (Design for Six Sigma) is a systematic methodology utilizing tools, training and
measurements to enable us to design products and processes that meet customer
expectations and can be produced at Six Sigma quality levels.
DMAIC – (Define, Measure, Analyze, Improve and Control) is a process for continued
improvement. It is systematic, scientific and fact based. This closed-loop process
eliminates unproductive steps, often focuses on new measurements, and applies
technology for improvement.
Six Sigma – A vision of quality which equates with only 3.4 defects per million
opportunities for each product or service transaction. Strives for perfection.

Quality Tools
Associates are exposed to various tools and terms related to quality. Below are just a few
of them.
Control Chart – Monitors variance in a process over time and alerts the business to
unexpected variance which may cause defects.

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Defect Measurement – Accounting for the number or frequency of defects that cause
lapses in product or service quality.
Pareto Diagram – Focuses on efforts or the problems that have the greatest potential for
improvement by showing relative frequency and/or size in a descending bar graph. Based
on the proven Pareto principle: 20% of the sources cause 80% of any problems.
Process Mapping – Illustrated description of how things get done, which enables
participants to visualize an entire process and identify areas of strength and
weaknesses. It helps reduce cycle time and defects while recognizing the value of
individual contributions.
Root Cause Analysis – Study of original reason for nonconformance with a process.
When the root cause is removed or corrected, the nonconformance will be
eliminated.
Statistical Process Control – The application of statistical methods to analyze data,
study and monitor process capability and performance.
Tree Diagram – Graphically shows any broad goal broken into different levels of detailed
actions. It encourages team members to expand their thinking when creating
solutions.

Quality Terms
Black Belt – Leaders of team responsible for measuring, analyzing, improving and
controlling key processes that influence customer satisfaction and/or productivity
growth. Black Belts are full-time positions.
Control – The state of stability, normal variation and predictability.Process of regulating
and guiding operations and processes using quantitative data.
CTQ: Critical to Quality (Critical “Y”) – Element of a process or practice which has a
direct impact on its perceived quality.
Customer Needs, Expectations – Needs, as defined by customers, which meet their
basic requirements and standards.
Defects – Sources of customer irritation. Defects are costly to both customers and to
manufacturers or service providers. Eliminating defects provides cost benefits.
Green Belt – Similar to Black Belt but not a full-time position.
Master Black Belt – First and foremost teachers. They also review and mentor Black
Belts. Selection criteria for Master Black Belts are quantitative skills and the ability
to teach and mentor. Master Black Belts are full-time postions.
Variance – A change in a process or business practice that may alter its expected
outcome.

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QUALITY MANAGEMENT PRINCIPLES

A quality management principle is a comprehensive and fundamental rule or belief,
for leading and operating an organisation, aimed at continually improving
performance over the long term by focusing on customers while addressing the
needs of all other stakeholders.

Principle 1 — Customer-Focused Organisation

Organizations depend on their customers and therefore should understand current and
future customer needs, meet customer requirements and strive to exceed customer
expectations.

Principle 2 — Leadership

Leaders establish unity of purpose and direction of the organisation. They should create
and maintain the internal environment in which people can become fully involved in
achieving the organisation's objectives.

Principle 3 — Involvement of People

People at all levels are the essence of an organisation and their full involvement enables
their abilities to be used for the organisation's benefit.

Principle 4 — Process Approach

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A desired result is achieved more efficiently when related resources and activities are
managed as a process.

Principle 5 — System Approach to Management

Identifying, understanding and managing a system of interrelated processes for a given
objective improves the organisation’s effectiveness and efficiency.

Principle 6 — Continual Improvement

Continual improvement should be a permanent objective of the organisation.

Principle 7 — Factual approach to decision making

Effective decisions are based on the analysis of data and information.

Principle 8 — Mutually beneficial supplier relationships

An organisation and its suppliers are interdependent, and a mutually beneficial
relationship enhances the ability of both to create value.

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Quality Management Principles and Guidelines For
Their Application

2.0 Quality Management Principles

A quality management principle is a comprehensive and fundamental rule or belief, for
leading and operating an organisation, aimed at continually improving performance over
the long term by focusing on customers while addressing the needs of all other
stakeholders.

Principle 1 - Customer-Focused Organisation

"Organisations depend on their customers and therefore should
understand current and future customer needs, meet customer
requirements and strive to exceed customer expectations".

Applying the principle of customer-focused organisation leads to the following actions:

• understanding the whole range of customer needs and expectations for products, delivery,
price, dependability, etc.

• ensuring a balanced approach among customers and other stakeholders (owners, people,
suppliers, local communities and society at large) needs and expectations.

• communicating these needs and expectations throughout the organisation,

• measuring customer satisfaction and acting on results, and

• managing customer relationships.

Beneficial applications of this principle include:

• for policy and strategy formulation, making customer needs and the needs of other
stakeholders understood throughout the organisation;

• for goal and target setting, ensuring that relevant goals and targets are directly linked to
customer needs and expectations;

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• for operational management, improving the performance of the organisation to meet
customer needs;

• for human resources management, ensuring the people have the knowledge and skills
required to satisfy the organisation's customers.

• Principle 2 - Leadership

"Leaders establish unity of purpose and direction of the organisation.
They should create and maintain the internal environment in which people
can become fully involved in achieving the organisation's objectives."

Applying the principle of leadership leads to the following actions:

• being proactive and leading by example,

• understanding and responding to changes in the external environment,

• considering the needs of all stakeholders including customers, owners, people, suppliers,
local communities and society at large,

• establishing a clear vision of the organisation's future,

• establishing shared values and ethical role models at all levels of the organisation,

• building trust and eliminating fear,

• providing people with the required resources and freedom to act with responsibility and
accountability,

• inspiring, encouraging and recognizing people's contributions,

• promoting open and honest communication,

• educating, training and coaching people,

• setting challenging goals and targets, and

• implementing strategy to achieve these goals and targets.


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• for policy and strategy formulation, establishing and communicating a clear vision of the
organisation's future;

• for goal and target setting, translating the vision of the organisation into measurable goals
and targets;

• for operational management, empowered and involved people achieve the organisation's
objectives;

• for human resource management, having an empowered, motivated, well informed and
stable workforce.

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Principle 3 - Involvement of People

"People at all levels are the essence of an organisation
and their full involvement enables their abilities to
be used for the organisation's benefit".

Applying the principle of involvement of people leads to the following actions by the
people:

• accepting ownership and responsibility to solve problems,

• actively seeking opportunities to make improvements,

• actively seeking opportunities to enhance their competencies, knowledge and experience,

• freely sharing knowledge and experience in teams and groups,

• focusing on the creation of value for customers,

• being innovative and creative in furthering the organisations objectives,

• better representing the organisation to customers, local communities and society at large,

• deriving satisfaction from their work, and

• be enthusiastic and proud to be part of the organisation.


• for policy and strategy formulation, people effectively contributing to improvement of the
policy and strategies of the organisation;

• for goal and target setting, people sharing ownership of the organisation's goals;

• for operational management, people being involved in appropriate decisions and process
improvements;

• for human resource management, people being more satisfied with their jobs and being
actively involved in their personal growth and development, for the organisation's benefit.

• Principle 4 - Process Approach

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"A desired result is achieved more efficiently when related
resources and activities are managed as a process."

Applying the principle of process approach leads to the following actions:

• defining the process to achieve the desired result,

• identifying and measuring the inputs and outputs of the process,

• identifying the interfaces of the process with the functions of the organisation,

• evaluating possible risks, consequences and impacts of processes on customers, suppliers and
other stakeholders of the process,

• establishing clear responsibility, authority, and accountability for managing the process,

• identifying the internal and external customers, suppliers and other stakeholders of the
process, and

• when designing processes, consideration is given to process steps, activities, flows, control
measures, training needs, equipment, methods, information, materials and other resources to
achieve the desired result.


• for policy and strategy formulation, utilizing defined processes throughout the organisation
will lead to more predictable results, better use of resources, shorter, cycle times and lower
costs;

• for goal and target setting, understanding the capability of processes enables the creation of
challenging goals and targets;

• for operational management, adopting the process approach for all operations results in
lower costs, prevention of errors, control of variation, shorter cycle times and more
predictable outputs;

• for human resource management establishing cost efficient processes for human resource
management, such as hiring, education and training, enables the alignment of these processes
with the needs of the organisation and produces a more capable workforce.

Principle 5 - System Approach to Management.

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"Identifying, understanding and managing a system of
interrelated processes for a given objective improves the
organisation's effectiveness and efficiency."

Applying the principle of system approach to management leads to the following actions:

• defining the system by identifying or developing the processes that affect a given objective,

• structuring the system to achieve the objective in the most efficient way,

• understanding the interdependencies among the processes of the system,

• continually improving the system through measurement and evaluation, and

• establishing resource constraints prior to action.


• for policy and strategy formulation, the creation of comprehensive and challenging plans
that link functional and process inputs;

• for goal and target setting, the goals and targets of individual processes are aligned with the
organisation's key objectives;

• for operational management, a broader overview of the effectiveness of processes which
leads to understanding the causes of problems and timely improvement actions;

• for human resource management, provides a better understanding of roles and
responsibilities for achieving common objectives thereby reducing cross functional barriers
and improving teamwork.

Principle 6 - Continual Improvement

"Continual improvement should be a permanent
objective of the organisation."

Applying the principle of continual improvement leads to the following actions:

• making continual improvement of products, processes and systems an objective for every
individual in the organisation,

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• applying the basic improvement concepts of incremental improvement and breakthrough
improvement,

• using periodic assessments against established criteria of excellence to identify areas for
potential improvement,

• continually improving the efficiency and effectiveness of all processes,

• promoting prevention based activities,

• providing every member of the organisation with appropriate education and training, on the
methods and tools of continual improvement such as:
- the Plan-Do-Check-Act cycle,
- problem solving,
- process re-engineering, and
- process innovation,

• establishing measures and goals to guide and track improvements, and

• recognizing improvements.


• for policy and strategy formulation, creating and achieving more competitive business
plans through the integration of continual improvement with strategic and business planning;

• for goal and target setting, setting realistic and challenging improvement goals and
providing the resources to achieve them;

• for operational management, involving people in the organisation in the continual
improvement of processes;

• for human resource management, providing all people in the organisation with the tools,
opportunities, and encouragement to improve products, processes and systems.

Principle 7 - Factual approach to decision making

"Effective decisions are based on the
analysis of data and information."

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Applying the principle of factual approach to decision making leads to the following
actions:

• taking measurements and collecting data and information relevant to the objective,

• ensuring the data and information are sufficiently accurate, reliable and accessible,

• analysing the data and information using valid methods,

• understanding the value of appropriate statistical techniques, and

• making decisions and taking action based on the results of logical analysis balance with
experience and intuition.


• for policy and strategy formulation, strategies based on relevant data and information are
more realistic and more likely to be achieved;

• for goal and target setting, using relevant comparative data and information to set realistic
and challenging goals and targets;

• for operational management, data and information are the basis for understanding both
process and system performance to guide improvements and prevent future problems;

• for human resource management, analysing data and information from sources such as
people surveys, suggestions and focus groups to guide the formulation of human resource
policies.

Principle 8 - Mutually beneficial supplier relationships

"An organisation and its suppliers are interdependent,
and a mutually beneficial relationship enhances
the ability of both to create value."

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Applying the principle of mutually beneficial supplier relationships leads to the following
actions:

• identifying and selecting key suppliers,

• establishing supplier relationships that balance short-term gains with long-term considerations
for the organisation and society at large,

• creating clear and open communications,

• initiating joint development and improvement of products and processes,

• jointly establishing a clear understanding of customers' needs,

• sharing information and future plans, and

• recognizing supplier improvements and achievements.


• For policy and strategy formulation, creating competitive advantage through the
development of strategic alliances or partnerships with suppliers;

• For goal and target setting, establishing more challenging goals and targets through early
involvement and participation of suppliers;

• For operational management, creating and managing supplier relationships to ensure
reliable, on-time, defect-free delivery of supplies;

• For human resource management. developing and enhancing supplier capabilities through
supplier training, and joint improvement efforts

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