Overview_of_Six_Sigma.ppt

1
The Six Sigma approach

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Time
Elapsed
time
of
call
Upper control limit (UCL)
Lower control limit (LCL)
Key: reduce process variability
Moreover, eliminate the assignable causes of variation

3
Normal Distribution
40 100 160
Frequency
68% of points
–2 standard
deviations
+2 standard
deviations
95.4% of points
–3 standard
deviations
+3 standard
deviations
99.7% of points
–1 standard
deviation
+1 standard
deviation
A standard
deviation
 =
sigma
Six Sigma = 6 Standard Deviations

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USL
LSL
Process
variation
Process
variation
Process
variation
Process
variation
3 sigma process
variation
= 66800 defects per
million opportunities
4 sigma process
variation
= 6200 defects per
5 sigma process
variation
= 230 defects per
6 sigma process
variation
= 3.4 defects per
Process variation and its effect on process defects
per million opportunities (DPMO)
USL
LSL USL
LSL USL
LSL
99.9997%
93.32% 99.38% 99.977%

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Worked Example – Lunchtime Pizzas Delivery
• Between 11:45am and 12:15pm.
• 50% discount on next order if delivered
before 11:45am or after 12:15pm.

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• 68% on time – 2 sigma
• 95% on time – 3 sigma
• 99.4% on time – 4 sigma
• 99.9997% on time – 6 sigma (3 or 4 late
deliveries for every million pizzas you
make)

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• When a business violates important
customer requirements, it is generating
defects, complaints and cost.
• The greater the number of defects that
occur, the greater the cost of correcting
them as well as the risk of losing the
customers.
• Ideally, your company wants to avoid any
defects and the resulting cost in money
and customer satisfaction.
Six Sigma As a Goal

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A New Criterion for Measurement: Customer
Satisfaction
Peter Drucker: “A company's primary
responsibility is to serve its customers, to
provide the goods or services which the
company exists to produce. Profit is not the
primary goal, but rather an essential condition
for the company's continued existence. Other
responsibilities, e.g., to employees and society,
exist to support the company's continued ability
to carry out its primary purpose”.

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• Far broader than a simple
examination of process variation.
• An important part of process
control, learning and improvement.
The Six Sigma Approach

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Cycle time
WIP = 10
M1
Arrival
Processing
time
The process variability

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10 20 30 40 50 60 70 80 90 100
0
Utilization
Average
number
of
units
waiting
to
be
processed
Decreasing
variability
10 20 30 40 50 60 70 80 90 100
0
Utilization
Average
number
of
units
waiting
to
be
processed
X
Y Z
High utilization
but long waiting
time
Reduction in
process
variability
Short waiting
time but low
utilization
(a) Decreasing variability allows higher
utilization without long waiting times
(b) Managing process capacity
and/or variability
The relationship between process utilization and number of units
waiting to be processed for variable arrival and activity times

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• Far broader than a simple
examination of process variation.
• An important part of process
control, learning and improvement.
The Six Sigma Approach

15

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GE’s Story
• In 1996, costs of $200 million and
returns of $150 million.
• In 1997, costs of 400 million and returns
of $600 million.
• In 1998, costs of 400 million and returns
of more than $1 billion.
• GE’s CEO, Jack Welch, wrote in the
annual report that in just three years, Six
Sigma had saved the company more than
$2 billion.

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Six Sigma Management
Includes all parts of the organization
Includes all staff of the organization
Includes consideration of all costs
Includes every opportunity to get things right
Never stops
Source: Corbis/Richard T Nowitz

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The Implementation
• Top-management support
• A steering group
• Group-based improvement
• Training is the heart of the improvement
- A specially trained cadre of practitioners, many
of whom should be dedicated full time to
improving processes as internal consultants
– Master Black Belt: experts
– Black Belt: training + projects, full-time
– Green Belt: training

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Tools and methods used
in Six Sigma

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DMAIC – the problem solving model

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The DMAIC Team Life Cycle
• Phase 1: Identifying and selecting
the project
• Phase 2: Forming the team
• Phase 3: Developing the charter
• Phase 4: Training the team
• Phase 5: Doing DMAIC and
implementing solutions
• Phase 6: Handing off the solution

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DMAIC
Data-driven,
quantitative
analysis

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The Six Sigma Toolkit
1. For generating ideas and organizing
information
2. For data gathering
3. For process and data analysis
4. For statistical analysis
5. For implementation and process
management

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Tools for Generating Ideas and Organizing
information
1. Flowchart
2. Process mapping
3. SIPOC diagram (Supplier, Input,
Process, Output, Customer)
4. Cause-and-Effect (Fishbone) Diagram
5. Why Diagram (or Tree Diagram). In the
1950's, Toyota came up with the five
"Whys“.

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SIPOC diagram (Supplier, Input, Process,
Output, Customer)

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Cause-effect Diagrams
• Ishikawa diagram
• Fishbone diagram

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Figure 13.13 Cause–effect diagram of unscheduled
returns at KPS

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Figure 13.15 Why–why analysis for ‘failure wrongly
predicted’

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Tools for Data Gathering
1. Sampling
2. Operational definitions
3. Voice of the Customer (VOC)
methods
4. Checksheets ans spreadsheets
5. Measurement Systems Analysis
(MSA)

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Tools for Process and Data Analysis
1. Process analysis
2. Value and Non-value-added analysis
3. Control Charts/ Statistical Process
Control
• Pareto Diagram
• Histogram (Frequency Plot)
• Scatter Plot (Correlation) Diagram

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• ‘Value stream’ mapping, a technique
focuses on value-adding activities.
• It is similar to process mapping.
• But the emphasis is on
– distinguishing between value-adding and
non-value-adding activities;
– working out the improved process, operation
or supply chain;
– and finally supporting the implementation of
the changes.
‘Value stream’ mapping

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‘Value stream’ map for an industrial
air-conditioning installation service
T/T = Task time
TTT = Total throughput time
V-A T = Value-added time
C/T = Cycle time
Survey Order Assemble Frame
Wait in
branch
Wait for
assembly
Ship to
branch and
wait
Wait for
installers
Install
T/T = 0.5
Avail = 100%
C/T = 30
T/T = 0.5
Avail = 100%
C/T = 10
T/T = 5.0
Avail = 100%
C/T = 12.5
T/T = 0.75
Avail = 100%
C/T = 17
T/T = 0.75
Avail = 100%
C/T = 35
Cash
management
Completion
confirmation
Operations
planning
Job tracking confirmations
Sales
office
Forecasts Invoice
status
30 mins
58 hrs
30 mins
96 hrs
5 hrs
48 hrs
60 mins
48 hrs
60 mins
TTT = 258 hrs
V-A T = 8 hrs

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Pareto Diagrams
The bars display the values in descending order, and the line graph
shows the cumulative totals of each category, left to right.

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Figure 13.14 Pareto diagram for causes of
unscheduled returns

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Scatter Diagrams
The data is displayed as
a collection of points,
each having the value of
one variable determining
the position on the
horizontal axis and the
value of the other
variable determining the
position on the vertical
axis.

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Figure 13.12 Scatter diagrams for customer satisfaction versus (a) number of
preventive maintenance calls and (b) number of emergency service calls

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Tools for statistical analysis
1. Tests of statistical significance
2. Correlation and regression
3. Design of experiments

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Tools for implementation and process
management
1. Project management methods
2. Potential problem analysis
3. Stakeholder analysis
4. Force field diagram (to show the
relationship between factors that help
promote a change and those that
oppose or create resistance to it).
5. Process documentation

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• Far broader than a simple examination of
process variation.
• An important part of process control,
learning and improvement.
• A specially trained cadre of practitioners,
many of whom should be dedicated full
time to improving processes as internal
consultants.
• Data-driven, quantitative analysis
Concluding Remarks

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Operations strategy
Design Improvement
Planning and
control
Operations
management
Recap - Overview

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Operations improvement

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“Buzzwords”
• Theory of Constraints (TOC),
– Optimized Production Technology (OPT)
• Lean,
– JIT (Just-in-time), VSM (Value Stream
Mapping), Kanban, Pull
• Business Process Re-engineering (BPR)
• Total Quality Management (TQM)
• Six Sigma
• The Balanced Scorecard

44
Lean: Schematic of the issues covered under Lean

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Total quality management
Prevents ‘out of
specification’ products and
services reaching market
Solves the root
cause of quality
problems
Broadens the
organizational responsibility
for quality
Makes quality central
and strategic in the
organization
•Quality is strategic
•Teamwork
•Staff empowerment
•Involves customers and suppliers
•Quality systems
•Quality costing
•Problem solving
•Quality planning
•Statistics
•Process analysis
•Quality standards
•Error detection
•Rectification
Inspection
Quality
control
Quality
assurance
Total Quality
Management

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Six Sigma Management
Includes all parts of the organization
Includes all staff of the organization
Includes consideration of all costs
Includes every opportunity to get things right
Never stops
Source: Corbis/Richard T Nowitz

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The Six Sigma Implementation
• Top-management support
• A steering group
• Group-based improvement
• Training is the heart of the improvement
- A specially trained cadre of practitioners, many
of whom should be dedicated full time to
improving processes as internal consultants
– Master Black Belt: experts
– Black Belt: training + projects, full-time
– Green Belt: training

48
Lean: Schematic of the issues covered under Lean

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Very relevant subjects
• Change Management
– Organizational design
– Organizational changes
• Project management

Overview_of_Six_Sigma.ppt

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