Lean intro

1. © Max Zornada Slide 1
Introduction to Six SigmaIntroduction to Six Sigma
Business Process Improvement through Six
Sigma

2. © Max Zornada Slide 2
What is Six Sigma?What is Six Sigma?
Six Sigma is a statistical measure of quality:
It is based on rigourous process based performance
measures.
A Process for Continuous Improvement:
Six Sigma is a “generic” structured methodology for
continuous improvement, that can be used to improve any
process in any business.
An Enabler of Cultural Change:
Six Sigma changes the way organisations work and the way
they think.
A disciplined process focussed on delivering near
perfect products and services.

3. © Max Zornada Slide 3
Six SigmaSix Sigma: A Definition: A Definition
“A comprehensive and flexible system for achieving,
sustaining and maximising business success. Six
Sigma is uniquely driven by close understanding of
customer needs, disciplined use of facts, data and
statistical analysis, and diligent attention to
managing, improving and reinventing business
processes.”
The Six Sigma Way,
by Pande, Newman and Cavanaugh

4. © Max Zornada Slide 4
Six Sigma is a measure of excellenceSix Sigma is a measure of excellence
Six Sigma is a statistical measure of quality, which
reflects process capability;
It set the goal of achieving capability levels of 3.4
defects per million opportunities.
Focuses on driving out variation in business
processes - this is what the customer feels!
Sigma is the Greek symbol used for Standard
Deviation of a population.
Why Six Sigma? σ

5. © Max Zornada Slide 5
A 6 Sigma ProcessA 6 Sigma Process
Customer target
Lower Specification Limit Upper Specification Limit
6σ6σ
0.00034% of points will be outside of the specification limits ie. defects
(= 3.4 parts per million out of spec.)
= 99.7966% of data inside the limits (Cp = 2)
0.00017%
1.7 ppm
0.00017%
1.7 ppm

6. © Max Zornada Slide 6
9
Relating Sigma to Defect LevelsRelating Sigma to Defect Levels
Six SigmaSix Sigma 3.43.4 99.9997%99.9997%
Five SigmaFive Sigma 233233 99.977%99.977%
Four SigmaFour Sigma 6,2106,210 99.4%99.4%
Three SigmaThree Sigma 66,81066,810 93%93%
Two SigmaTwo Sigma 308,500308,500 69%69%
One SigmaOne Sigma 691,500691,500 31%31%
DPMO (Defects PerDPMO (Defects Per
Million Opportunities)Million Opportunities) Error Free RateError Free Rate

7. © Max Zornada Slide 7
Putting Six Sigma in Perspective!Putting Six Sigma in Perspective!
If you played 100 rounds of golf per year, and
played at:
• 2 sigma - you'd miss 6 putts per round
• 3 sigma - you'd miss 1 putt per round
• 4 sigma - you'd miss 1 putt every 9 rounds
• 5 sigma - you'd miss 1 putt every 2.33 years
• 6 sigma - you'd miss 1 putt every 163 years!

8. © Max Zornada Slide 8
History of Six SigmaHistory of Six Sigma
1985 1990 1995 2000
Motorola launches its
Six Sigma program
Allied Signal introduces
its Six Sigma program
GE introduces its Six Sigma
program and adds the “D” in
DMAIC
1987
Dupont, 3M, Sun Microsystems, Raytheon, Boeing, Lockheed-
Martin, Bank-of-America, American Express, HSBC, SAS
Institute … the list keeps growing every day.
Who Else?GE - All 300,000+ GE employees must be Six Sigma
certified. All new GE products developed using the
“Design for Six Sigma” approach.
3M - CEO (from GE) requires all employees to
become Six Sigma certified.

9. © Max Zornada Slide 9
Six Sigma at DupontSix Sigma at Dupont
Many companies consider productivity to be a cost-saving operational issue. We at DuPont
have elevated productivity to the strategic level because we believe that it is central to our
efforts in sustainability. As a sign of our commitment in this area, we have adopted six-
sigma methodology, a stringent approach that strives to reduce manufacturing defects to just
several per million. At the end of last year, we had 1,100 black belts and 1,700 green belts
(employees who have undergone weeks of training in the six-sigma methodology) working
on 4,200 projects.
In one of them, DuPont was able to increase the production rate of its plant in Buffalo, New
York, by 10% –without any capital investments. … The result: $26 million in additional
revenue last year. This number might not seem huge for a company with $30 billion in sales,
but DuPont has thousands of such projects, and we are adding 200 new ones each month.
Altogether, our projects using six-sigma methodology are responsible for savings of more
than $1 billion a year.
Source: Holliday, C. (2001). Sustainable growth the DuPont way. Harvard Business Review, Sept, pp 132

10. © Max Zornada Slide 10
Bottom Line Impact of Six SigmaBottom Line Impact of Six Sigma
In dollar amounts, Six Sigma delivered more than
$300 million to GE’s 1997 operating income and
more than $600 million in 1998;
Raytheon - Six Sigma has generated a net benefit of
$776 million for 1999-2003;
Honeywell:
1998--$500 Million
1999--$600 Million
2000--$700 Million+

11. © Max Zornada Slide 11
Six Sigma in the Services SectorSix Sigma in the Services Sector
“Sustaining the intensity of our Six Sigma work is critical
for Bank of America to achieve its strategic goals. Six Sigma
has enabled us to generate more than $300MM in first-year
productivity gains for the company. It has also had a
significant impact upon the leadership team with our
personal education and certification as Six Sigma Green
Belts. As we look to the future, our leadership charge is to
keep Six Sigma a top priority and use it to produce organic
customer revenue growth.” - Ken Lewis (10/9/02)
Failing to implement Six Sigma in commercial areas with
the same force that the company implemented it in its
industrial sectors cost Motorola $5 billion over a four-year
period.

12. © Max Zornada Slide 12
A Timeline of Key Events leading up to Six SigmaA Timeline of Key Events leading up to Six Sigma
19941920's 1931 1940's 1943 1950 1960 1970 1980 1990 2000
Shewhart's studies into variation at Bell Telephone Labs
Shewhart publishes book, "Economic Control of Quality of Manufactured Product
Widespread adoption of Shewhart's principles for War-time Production in the US
Ishikawa develops Ishikawa diagram and pioneers use of 7-tools
Widespread abandonment of Shewhart's principles in Post-War US.
Deming teaches Shewhart principles to Japanese
Deming develops management philosophy based on Shewhart concepts own ideas
Japanese extend Deming's teachings, develop the "Total Quality” concept
USA starts to copy Japan, called TQC (Total Quality Control) eventually
the term TQM (Total Quality Management) is used as the label.
US discovers Deming
Rapid spread TQM principles to US service industries
Pacific basin countries, excluding Australia commence adopting TQM
Western Europe discovers TQM
Developing countries rapidly adopting TQM
Australian services sector copies US with adoption of TQM
Australian manufacturing commences with TQM
Benchmarking emerges as a supporting practice
Business Process Reengineering
Team based approaches to work gaining
broad acceptance in industry
Organisational learning emerging
as a key competitive issue
1996
Renewed focus on Process Management
Widespread emergence of
Balanced Scorecard
6-sigma goes mainstream
2002

13. © Max Zornada Slide 13
Key Elements of Six SigmaKey Elements of Six Sigma
Process Orientation
Customer Focus
Y = f(X)
Data and Measurement Driven
Focus on Variation Reduction
Statistical Rigour
Project Orientation
The DMAIC Process Improvement/Problem Solving Process
Dedicated Personnel
Bottom Line Results Focussed
Data Driven Culture (In God we trust, all others bring Data)

14. © Max Zornada Slide 14
The Six Sigma ApproachThe Six Sigma Approach
DMAICDMAIC
Define the problem or
opportunity.
Measure the current
performance and
capability
Analyse to identify root
causes.
Improve by
implementing potential
solutions.
Control by standardising
solution and monitoring
performance. Define
Measure
Analyse
Improve
Control
6σ

15. © Max Zornada Slide 15
The Role of Statistics in Six SigmaThe Role of Statistics in Six Sigma
Define
Measure
Analyse
Improve
Control
6σ
Practical Problem
Statistical Problem
Statistical Solution
Statistical Control
Practical Solution

16. © Max Zornada Slide 16
Six Sigma Support StructureSix Sigma Support Structure
Champions: Business leaders who lead the implementation of Six Sigma
within the business;
Sponsors/Process Owners: Business leaders responsible for the
implementation of process improvements and monitoring process
performance;
Master Black Belts: Fully trained quality leaders responsible for Six
Sigma strategy, training, mentoring, deployment and results;
Black Belts: Fully trained Six Sigma experts who lead improvement
teams, work on Six Sigma projects and mentor Green belts;
Green Belts: Fully trained individuals who apply Six Sigma skills to
improvement projects;
Team Members: (Yellow Belts) Individuals who support projects in their
areas.

17. © Max Zornada Slide 17
Implementing Six SigmaImplementing Six Sigma
Strategic Level
Tactical Level
Operational Level
Executive Steering Committee
Master Black Belts
Champions
Black Belts
Team Members
Stakeholders
Green Belts
Yellow Belts

18. © Max Zornada Slide 18
Relationship between Quality, Market ShareRelationship between Quality, Market Share
and ROI -and ROI - The Business Case for Six SigmaThe Business Case for Six Sigma
Relative Market Share
Relative
Quality
Low 25% 60% High Inferior
Superior
33 %
67%
Return on Investment (ROI) %
21
38
20
29
27
20
13
7
14
Source: Buzzell, R.D. & Gales, B.T. (1987) The PIMS Principles

19. © Max Zornada Slide 19
Six Sigma Competitive Advantage
Improve
Quality
External
Quality
Customer
Satisfaction
Market
Share
Revenue
Internal
Quality
Operating
Costs
Capital
Costs
Economies of
Scale
Higher Profit
Higher ROI
Products &
Services
Processes &
People

20. © Max Zornada Slide 20
How did leaders become leaders ……How did leaders become leaders ……
A accumulation of competenciesA accumulation of competencies
Quality
Delivery
Cost
Flexibility
Nakane and Hall (1994)
Define
Measure
Analyse
Improve
Control
6σ
Six Sigma provides the on-ramp and the
mechanism to progress up the steps.

21. © Max Zornada Slide 21
In god we trust, all others bring data.In god we trust, all others bring data.
Grade your organisation on its use of dataGrade your organisation on its use of data
Our organisation uses only tribal knowledge i.e. people experience
and “the way we do things around here”. We do not use data.
Our organisation collects data so as to say “we collect data” but
the data is not used.
Our organisation collects data and we sometimes look at the
numbers and use them to support problem solving and decision
making.
Our organisation logically groups the data. We report it in the form
of charts.
Our organisation uses sample data along with basic statistics.
Our organisation uses sample data along with inferential statistics.
Our organisation quantifies processes via predictive equations.
F
E
D
C
B
A
A +

22. © Max Zornada Slide 22
Conclusion of introductionConclusion of introduction