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Six sigma


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Six sigma

  1. 1. SIX SIGMA –Relevance to the Economic Development Of India Presentation by : YOGENDRA RAGHAV At Raffles University Neemrana
  2. 2. Agenda  Relevance to India’s GDP.  History Of Six Sigma.  What is Six Sigma.  Six Sigma Methodology.  When To Use Six Sigma?  Different Six Sigma belts.  Application of Six Sigma.
  3. 3. Relevance to India’s GDP     Growth of GDP has increased from 7.5 % to 8 % (2004-05 to 2005-06) with an expected growth of 9.5 % in the manufacturing sector. India needs to grow atleast by 10% every year to join the big boys of the global economy by 2020. In 2000, Average per capita income in India was $500 compared to U.S.A was $32000. Considering our population growth of about 2% per year, India’s economy must grow nearly by 23% and sustain this growth for the next 25 years if the Average Indian is to become as rich as Average American having average income of $52500 in 2025 (based on conservative growth of 2% per year).
  4. 4. Relevance to India’s GDP…2  • • • For moving in the direction to achieve the above, we need to adopt Best governance Good business practices Unimaginable productivity jumps. Six Sigma is one of the important and useful tool of the good management practices The other tools include such as TQM, ISO, Benchmarking, Balanced, Scorecard, SEI-CMM and the Balridge Award etc.
  5. 5. History Of Six Sigma  Six Sigma Was Developed at Motorola in the 1980’s as a Method to Improve Process Quality i.e. recognizing that products with high first pass yield rarely failed in use.  Companies that have deployed Six Sigma: Bank of America Motorola GE IBM Kodak Wipro and Many More • • • • • •
  6. 6. What is Sigma? σ Sigma - the lower case Greek letter that denotes a statistical unit of measurement used to define the standard deviation of a population. It measures the variability or spread of the data.
  7. 7. What is Six Sigma  It is a statistical term that measures how far a given process deviates from perfection.  Central idea behind Six Sigma - if you can 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.  A defect can be anything from a faulty part to an incorrect customer bill.  To achieve Six Sigma quality, a process must produce no more than 3.4 defects per million opportunities.  An "opportunity“ is - a chance for nonconformance, or not meeting the required specifications.
  8. 8. What is Six Sigma…2 This means organizations need to be nearly flawless in executing their key processes. 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 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
  9. 9. Cost of Quality at various levels of Six Sigma Sigma Defect Rate (DMPO) Cost of Quality 6 5 4 3 3.4 233 6210 66807 <10% 10-15% 15-20% 20-30% 2 1 308537 6,90000 30-40% >40% World Class Industry Average NonCompetitive level
  10. 10. What is Cost of Poor Quality? • For a decrease of one sigma the manufacturing cost of the product increases by about 10%. • Companies operating at 3 or 4 sigma spend b/w 25 & 40 % of their revenues in fixing the defects or problems- Cost of Quality. • In almost every company where the COPQ is unknown, the COPQ exceeds the profit margin.
  11. 11. Six Sigma Methodology  Six Sigma focuses on improving quality (i.e. reducing waste) by helping organizations to produce products & services better, faster & cheaper.  It focuses on defect prevention, cycle time reduction, & cost savings.  Two approaches for achieving the Six Sigma goal: - Improving existing products and processes. - Developing new products and processes.
  12. 12. When To Use DMAIC The DMAIC methodology should be used when a product or process is in existence at your company but is not meeting customer specification or is not performing adequately Define Measure Analyze Improve Control •Define the project goals and customer (internal & external) deliverables •Measure the process to determine current performance •Analyze and determine the root causes of the defects •Improve the process by eliminating defects •Control future process performance
  13. 13. When To Use DMADV The DMADV methodology should be used:• When a product or process is not in existence at your company and one needs to be developed • The existing product or process exists and has been optimized (using either DMAIC or not) and still doesn't meet the level of customer specification or six sigma level •Define the project goals and customer (internal and external) deliverables Measure •Measure and determine customer needs and specifications Analyze •Analyze the process options to meet the customer needs Design •Design (detailed) the process to meet the customer needs Verify •Verify the design performance and ability to meet customer needs Define
  14. 14. Why Organizations are embracing Six Sigma  Six Sigma is about improving profitability, although improved quality & efficiency are immediate by-products of six-sigma. Organization that implement six sigma do so with the goal of improving their margins.  Organizations that implement-six sigma-have profit margins grow 20 % year after year for each sigma shift (up to 4.8 to 5 sigma).  Organizations operating at three sigma levels that marshal all their resources around six sigma can expect to make one sigma shift improvement each year, these Organizations will experience: • • • • 20 % margin improvement 12 to 18% increase in capacity 12% reduction in the number of employees 10 to 30 % capital reduction
  15. 15. It’s not all Plain Sailing!  Adoption requires a cultural change in order to gain best results. Six Sigma has changed the DNA of many organizations — it is now the way they work — in everything they do and in every product they design  Top management must be patient- there is no quick fix.  Six Sigma is about getting the right answer, not just any answer.
  16. 16. Six Sigma Belts Champions Master Black Belt Black Belts Mentor, trainer, and coach of Black Belts and others in the organization, leads project reviews. Leader of teams implementing the six sigma methodology on projects. Green Belts Team Members Quality Fundamentals/ Kaizen Now Delivers successful focused projects using basic analytical tools, works on less complex projects Participates on and supports the project teams, typically in the context of his or her existing responsibilities.
  17. 17. Six Sigma - Practical Meaning 99% Good (3.8 Sigma) 99.99966% Good (6 Sigma) • 20,000 lost articles of mail per hour • Seven articles lost per hour • Unsafe drinking water for almost 15 minutes each day • One unsafe minute every seven months • 5,000 incorrect surgical operations per week • 1.7 incorrect operations per week • Two short or long landings at most major airports each day • One short or long landing every five years • 200,000 wrong drug prescriptions each year • 68 wrong prescriptions per year • No electricity for almost seven hours each month • One hour without electricity every 34 years
  18. 18. Case Study: Impact of Six Sigma Implementation at General Electric Results achieved over the first two years (1996-1998): • Revenues have risen to $100 billion, up 11% • Earnings have increased to $9.3 billion, up 13% • Earnings per share have grown to $2.80, up 14% • Operating margin has risen to a record 16.7% • Working capital turns have risen sharply to 9.2%, up from 1997's record of 7.4 %
  19. 19. Application Of Six Sigma  Supply Chain Management-Suppliers have to adopt Six Sigma quality because the overall quality of the product will be as good as its weakest link.  Inventory Control-Discussing the main Customer’s needs(CTQ’s) and creating a system that linked forecast and order data and streamlined the various production and planning processes.  Technology Vs Control-Process control keeps the process variation to a minimum, thereby maintaining high sigma capability.  R&D Project Selection-The define phase of DFSS methodology has the ARMI(Approval,Resources, members of the team and interested party) tool that is best suited during the project selection phase.  Team Selection-the tool GRPI is suitable for identifying the members of a team and their tasks.  Process Optimization & Debottelnecking-The analyze and improve phases contain many tools which help in sorting bottlenecks and optimization.
  20. 20. END