7. “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
8. 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!
9. 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.”
10. 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
11. 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.).
12. 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
13. …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)
14. 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
15. 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
17. 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
18. 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”
19. 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
22. 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.
24. 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
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.
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.