15. six sigma basics pgp
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15. six sigma basics pgp
- 1. Professor & Lawyer Puttu Guru Prasad VVIT-Nambur 9394969898 puttuvvit@gmail.com Six Sigma as a Quality Initiative
- 2. Professor & Lawyer Puttu Guru Prasad VVIT-Nambur 9394969898 puttuvvit@gmail.com
- 3. “Six Sigma” coined at in the 1980s Adopted by Allied Signal (Honeywell) with great success Later adopted by Jack Welch (GE) and further developed into a true management system
- 4. A philosophy that underlies efforts to improve business performance and customer satisfaction Using facts and data to eliminate waste (muda) and variation Eliminating activities that don’t add value!
- 5. 1. The term “Sigma” is a measurementmeasurement of how far a given process deviates from perfection – a measure of number of “defects”. “Six Sigma” implies near zero defects. 2. “A quality improvement methodology that applies statistics to measure and reduce variation in processes.” 3. A management systemmanagement system that is “comprehensive and flexible for achieving, sustaining, and maximizing business success.”
- 6. Critical to Quality (CTQ)Critical to Quality (CTQ):: Attributes most important to the customer DefectDefect:: Failing to deliver what the customer wants Process CapabilityProcess Capability:: What your process can deliver Stable OperationsStable Operations:: Ensuring consistent, predictable processes to improve what the customer perceives
- 7. Measurement:Measurement: Variance is the Enemy Time Intervals Time Intervals Mean Mean W I D E Variation Slim Variation Ex: MRI TAT Project Time (Min.). Target Target Customer Upper Limit Customer Upper Limit DEFECTS ZERO DEFECTS Time (Min.).
- 8. Measurement:Measurement: Six Sigma as a Quality Goal The higher the sigma, the fewer the defects. A increase from 3 to 6 Sigma represents a 20,000 fold improvement in quality. 3 697,672.15 308,770.21 66,810.63 6,209.70 232.67 3.40 1 2 3 4 5 6 Defects Per Million Opportunities σ 697,672.15 308,770.21 66,810.63 6,209.70 232.67 3.40 1 2 3 4 5 6 Defects Per Million Opportunities σ 99% “Good” (3.8 Sigma) No electricity for 7 hours per month 5,000 incorrect operations per week 20,000 wrong prescriptions per year 99.99966% “Good” (6 Sigma) No electricity for 1 hour every 34 years 1.7 incorrect operations per week 68 wrong prescriptions per year
- 9. IRS - Tax Advice (phone-in) (140,000 PPM) 7 Sigma 1,000,000 100,000 10,000 1,000 100 10 1 DPMO • Restaurant Bills Doctor Prescription Writing Payroll Processing Order Write-up Journal Vouchers Wire Transfers Airline Baggage Handling Purchased Material Lot Reject Rate Domestic Airline Flight Fatality Rate (0.43 PPM) Best-in-Class Average Company 3 4 5 621 © 1994 Dr. Mikel J. Harry - V4.0 Measurement:Measurement: Comparative Analysis of Process Capability
- 10. …the current process capability (get the data!) …the problem in a measurable way …and validate root cause(s) Devise solution(s) and implement Performance Improvement Benchmarking Control Tools DEFINE MEASURE ANALYZE IMPROVE CONTROL Sustain improvement Project Timeline ReturnonInvestment(ROI)
- 11. Team Members: Individuals who receive specific Six Sigma training and who support projects in their areas Champions/Sponsors: Trained business leaders who lead the deployment of Six Sigma in a significant business area Black Belts: Fully-trained Six Sigma experts who lead improvement teams, work projects across the business and mentor Green Belts Green Belts: Fully-trained individuals who apply Six Sigma skills to projects in their job areas Master Black Belts: Fully-trained quality leaders responsible for Six Sigma strategy, training, mentoring, deployment and results
- 12. Customer Focus Data- and Fact-Driven Management Process is Key Proactive Management “Boundaryless” Collaboration Drive for Perfection; Tolerate Failure Source: Adopted from “The Six Sigma Way” by P. Pande, R. Neuman, and R. Cavanagh
- 13. Problem Solving Strategic Improvement Full-Scale Business Transformation Source: Adopted from “The Six Sigma Way” by P. Pande, R. Neuman, and R. Cavanagh
- 14. Six Sigma • Driven by the customer • Targets variation • Focuses on processes • Prospective; prevents defects • Focuses on quality & ROI • Attentive to total business • Training is integral to management system Other Quality Programs • Driven internally • Looks at averages • Focuses on outcomes • Retrospective; fixes defects • Focuses on quality • Attentive to production • Training is separate from management system
- 15. In a study of Motorola, Allied Signal, GE, and Honeywell -- companies with mature Six Sigma deployments and associated culture changes -- savings as a percentage of revenue were observedsavings as a percentage of revenue were observed to vary between 1.2% and 4.5%.to vary between 1.2% and 4.5%. Charles Waxer (2003), “Six Sigma Costs And Savings”
- 16. General ElectricGeneral Electric - Reduced invoice defects and disputes with a key customer by 98%98% - Improved a key call center performance measure from 76% to 99%76% to 99% - Reduced vibrations in Power System rotors by 300%300% - Developed breakthrough technology that reduced medical scan times from 3from 3 minutes to 30 secondsminutes to 30 seconds Allied Signal (Honeywell)Allied Signal (Honeywell) - Reduced defects by 68% in 4 months68% in 4 months Texas Instruments - Improved yield from 84.3% to 99.8%84.3% to 99.8% since 1998
- 17. FedEx Sony Toshiba Nokia American Express Oracle Amazon.com Texas Instruments Hitachi Honda Raytheon Lockheed Martin Siemens Honeywell Kodak Dupont Bank of America IBM Bombardier Maytag Canon
- 18. Carolyn Plexton GE Healthcare Director of Communications, Performance Solutions
- 19. 44,000 to 98,000 Preventable Hospital Deaths (IOM study, 1999) In-Hospital Deaths from Medical Errors at 195,000 per Year. Patient Safety Incidents In Hospitals Account for $6 Billion per Year in Extra Costs (HealthGrades - July, 2004) How Safe is Healthcare? Defects in healthcare are costly -- unlike manufacturing, you can’t simply shut down the line until you find and fix the problem.
- 20. 210,000 580,000 790,000 0 100000 200000 300000 400000 500000 600000 700000 800000 DefectsperMillionOpportunities 66 SigmaSigma Hospitalized Patients Injured by Negligence Treatment of Ambulatory Patients with Antibiotics for Viral Respiratory Conditions Appropriate Identification & Treatment of Patients with Clinical Depression Administration of Beta Blockers to Elderly Patients Following Heart Attack Source: Chassin, Milbank Quarterly, 11/4/98. Healthcare Fails to Deliver Six Sigma 2 Sigma 1 Sigma 3 Sigma3.4 10,000 5 Sigma
- 21. Improving process/safety for medication administration Reduction in Blood Stream Infections in ICU Reducing ventilator acquired pneumonia Stroke Patient Length of Stay Reduced Number of Inpatient Transfers Emergency Department Patient Wait Time Improved Patient Throughput in Radiology Reduction in Lost Films MR Exam Scheduling Improvement Staff Recruitment and Retention Operating Room Case Cart Accuracy Physician (Professional Fee) Billing Accuracy Appointment Backlog for Hospital-Based Orthopedic Clinic Quality of Care and Satisfaction of Families in Newborn ICU Healthcare Project Examples
- 22. Increase compliance with care protocols Improve medication administration Remove conflict in coordinating care Reduce post-surgical infections Focus areas include: Clinical outcomes Infection control Case management Patient safety
- 23. Betterpatient safety with 91% improvement in post-surgery antibiotic use, delivering annual savings over$1 million at Charleston Area Medical Center, WV. Achieving 35% higher “take home baby” rate with increase in successful implantation at Women & Infant’s Hospital, RI. The Big “Why” ShorterEDwait times allow 28 more patients perday to be seen, with potential financial impact over $13 million annually at Verdugo Hills Hospital, CA.
- 24. Supporting Major Initiatives IHI’s 100k Campaign Baldrige Award Projects to improve patient safety in key areas: • Deployment of Rapid Response Teams • Delivery of Reliable, Evidence-Based Care for Acute Myocardial Infarction • Prevention of Adverse Drug Events • Prevention of Central Line Infections • Prevention of Surgical Site Infections • Prevention of Ventilator-Associated Pneumonia Six Sigma helps to identify the right opportunities, target critical underlying factors and maintain measurable improvement
- 25. Key Success Factors CEO must own it and must have a clear vision for the initiative Invest in resources and make a long term commitment Dedicate “best and brightest” Measure and hold people accountable Change the systems and structures to support the effort Establish early, ongoing and clear communications Be flexible and patient Select and scope projects carefully: Focus on critical issues tied to business priorities, with measurable and manageable parameters Use change management tools to identify cultural barriers, gain acceptance and build momentum Establish shared need, values and vision Recognize, reward and celebrate successes
- 26. A journey rather than a destination Six Sigma is a solid approach, but not a “magic bullet” -- Transforming healthcare will also likely require changes in technology, legislation/regulation, transparency and culture. Over 60% of quality efforts fail. To be among the successful 40%, pay attention to the people side of change. The Effectiveness (E) of the result is equal to the Quality (Q) of the solution times the Acceptance (A) of the idea.
- 27. Expectations and Questions?Additional Resources Eckes, G. (2001) The Six Sigma Revolution. John Wiley and Sons, NY. Pande, P., R. Neuman, and R. Cavanagh. (2000) The Six Sigma Way. McGraw-Hill, NY Pande, P., Holpp, L. (2002) What is Six Sigma? McGraw-Hill, NY Snee, R., Hoerl, R. (2003) Leading Six Sigma. FT Prentice Hall, NY. iSixSigma Healthcare Portal – www.healthcare.isixsigma.com International Society of Six Sigma Professionals – www.isssp.com Inside Quality – www.insidequality.com GE Healthcare’s Performance Solutions – www.gehealthcare.com/hcs
Editor's Notes
- The term "Six Sigma" goes to a Motorola engineer named Bill Smith. In the early and mid-1980s with Chairman Bob Galvin at the helm, Motorola engineers decided that the traditional quality levels -- measuring defects in thousands of opportunities -- didn't provide enough granularity. Instead, they wanted to measure the defects per million opportunities. Motorola developed this new standard and created the methodology and needed cultural change associated with it. Six Sigma helped Motorola realize powerful bottom-line results in their organization - in fact, they documented more than $16 Billion in savings as a result of our Six Sigma efforts. Before, January 15, 1987, Six Sigma was solely a statistical term. While it is progressing, it has extended and evolved from a problem-solving technique to a quality strategy and ultimately into a sophisticated quality philosophy. However, this unique philosophy only became well known after GE’s Jack Welch made it a central focus of his business strategy in 1995. There are two important contributions from GE’s way of implementation to the evolution of Six Sigma. First, Welch demonstrated the great paradigm of leadership. Second, Welch backed the Six Sigma program up with a strong rewards system to show his commitment to it. GE changed its incentive compensation plan for the entire company so that 60 percent of the bonus was based on financials and 40 percent on Six Sigma results. The new system successfully attracted GE employees’ attentions to Six Sigma. Moreover, Six Sigma training had become a prerequisite for advancement up GE’s corporate ladder. Welch insisted that no one would be considered for a management job without at least a Green Belt training by the end of 1998. Today, Six Sigma is the fastest growing business management system in industry. Motorola engineer/statistician Mikel Harry used Deming’s focus on process variation as a means of improving performance. The CEO recognized the success of this approach and applied it to every area of the business to improve performance.1 In 1991, Allied Signal (now Honeywell) became the second company to implement SS and experienced consistent double-digit sales growth.2 A few years later GE implemented six sigma, experiencing significant improvements in business performance such as increased inventory turns and improved operating profit margin.3 Jack Welch (GE CEO) gave SS notoriety because of his commitment and because he made strong public statements about the savings generated through SS programs at GE. SS has become, perhaps, the most successful quality management philosophy offering a thorough approach to continuous quality improvement encompassing leadership, strategy, organizational learning, measures, project management and a customer focus.4 Utilizing many of the statistical quality tools, and a fact-based decision-making process SS is an effective continuous improvement philosophy for manufacturing as well as services firms.5
- Operating Margins Consistently above 15% (5+ percent increase from historic average) 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.
- Operating Margins Consistently above 15% (5+ percent increase from historic average) 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.
- 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.
- How good is good? Why "Sigma"? The word is a statistical term that measures how far a given process deviates from perfection – a measure of number of “defects”. Goal is to achieve “zero defects” Six Sigma is a management philosophy aimed at customer satisfaction. If a corporation is producing a product or service which does not meet the customer’s needs, then they will not be competitive or profitable. Reworking a product or service as a result of inefficient processes results not only in cost of material, labor and time but also in lost customers and poor reputation. It is key to involve the customer to determine what is important to them. It is not only important to gain a customer but also to retain the customer. From here the corporation should go backwards and look at their processes to improve the product based on the customers requirements. Once these processes are identified, then there must be a numerical, objective approach to evaluate current practices and future goals. Six Sigma is not only the processes involved to improve practices but also the statistical measurement to do this. The goal is to improve processes to achieve only 3.4 defects in one million opportunities.
- Framework, common language, checklist To define the problem a numerical parameter must be used. There must be an objective way to measure the problem. In addition, the goal is not to manage the problem but to solve the problem. Therefore, there must be a focus on the problem not on the outcome. Again, a numerical measurement of the current process is necessary in order to change the process. What is the results of the current process? What are the competitor’s processes? A focus must be on the critical to quality issues that the customer finds important. Once measurements are available, it is necessary to analyze this data. This will eliminate the gap between the current practice and the desired goal. The whole goal in the Six Sigma program is to improve processes to achieve 3.4 defects in one million opportunities. After analysis, changes need to be implemented to achieve this goal. Everyone should be involved in suggesting ways to improve the process, especially those that work directly with the process. The Green Belts and Black Belts act on these suggestions. Once changes have been made to the process to achieve new operating limits then the Black Belt must oversee measures to keep these operating limits in place. And then on to the next project in order to achieve the six sigma goal. This project is only one in several to incrementally achieve the six sigma goal.
- Executive Leader!!! Steering committee!!!
- Many recall TQM of the 1980s… System of Management = management philosophy
- In short, TQM proponents argue that--properly implemented--TQM could achieve the same results as Six Sigma. Six Sigma proponents argue that, although Six Sigma utilizes most, if not all, of TQM's tools, it has a much more narrowly defined objective: money! Six Sigma advocates claim that TQM's weakness is that the initial motivation for TQM projects is to improve quality not to make or save money. There are times when these two objectives are not mutually compatible, our consultants argue. "Six Sigma has a much stronger project focus," says Kullmann. "It's not quality for quality's sake. It has a return on investment. It's all hard-number-based, as opposed to 'soft' numbers. I don't think the tools are revolutionary; its application is the bigger issue." TQM provides a good base, asserts Brue, but there is a clear distinction between TQM and Six Sigma: tracking the money saved. "If you asked some of the TQM companies how much money they saved, they couldn't tell you. But with Six Sigma, you track it project by project," says Brue. Pyzdek and Brue also point out that TQM doesn't require a workforce dedicated to attacking issues.
- Motorola reduced manufacturing costs by $1.4 billion from 1987 to 1994 and saved Motorola $15 billion over the last 11 years. GE saved $12 billion over five years and added $1 to its earnings per share. This translated to annual benefits of over $2.5 billion across the organization. GE’s operating margins have been consistently above 15%, a 5+ percent increase from historic averages.
- GE: Operating Margins Consistently above 15% (5+ percent increase from historic average)
- Patient safety remains a serious concern – but instead of being primarily a “bad people” issue – i.e., negligence on the part of nurses or physicians -- evidence has shown that medical errors are usually caused by underlying flaws in the system. Healthcare has been described as a “swiss cheese” system that too often fails to protect patients from harm. Excessive process variation and inefficiencies are often to blame for errors and near misses. Six Sigma can be useful as part of an overall approach to reducing variability and making it easier to do the right thing when it comes to patient care.
- With Six Sigma, there’s a tendency sometimes to get caught up in the tools, the training, the certification, the statistics…but the really big WHY behind any improvement initiatives in healthcare is the ability to deliver better care and better service for patients. So on this slide I just wanted to provide a few more examples to show how this approach can be translated into results that have a positive impact on the patients coming through the system everyday, and for the professionals caring for those patients.
- Also supports JCAHO survey process, magnet status, national patient safety or performance awards.
- This is a list of factors that seem to be consistent and present in healthcare organizations that are successful implementing Six Sigma or other major change initiatives. You may hear some of these concepts echoed by other speakers, and they are really drawn from the experiences of many hospitals and health systems. Some learned these lessons the hard way, and our hope is that others can learn from their trials and avoid some of the common pitfalls.
- Q x A = E Transformation begins with transparency Transparency can’t happen without culture change Culture change requires common tool set and language Don’t reinvent the wheel, leverage proven strategies
- Breyfogle, F.W., III, Cupello, J.M., & Meadows, B. (2003). Managing Six Sigma: A Practical Guide to Understanding, Assessing, and Implementing the Strategy that Yields Bottom-Line Success. New York, New York: John Wiley & Sons. Eckes, George. (2001) The Six Sigma Revolution: How General Electric and Others Turned Process into Profits. New York, New York: John Wiley & Sons. Eckes, George. (2003) Six Sigma for Everyone. New York, New York: John Wiley & Sons. Foster, S. Thomas. (2004). Managing Quality: An Integrative Approach. Upper Saddle River, New Jersey: Pearson Prentice Hall. Kerzner, Harold. (2003). Project Management: a systems approach to planning, scheduling, and controling. Upper Saddle River, New Jersey: Pearson Prentice Hall. Kinicki, A, & Kreitner, R. (2003). Organizational Behavior: key concepts, skills & best practices. New York, New York: McGraw Hill. Pande, P.S., Neuman, R.P., & Cavanagh, R.R. (2000). The Six Sigma Way: How GE, Motorola and other Top Companies are Honing Their Performance. New York, New York: McGraw Hill.