Six Sigma

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What is Six Sigma

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Six Sigma

  1. 1. Six Sigma – A Strategy for Achieving World Class Performance 1
  2. 2.  Share concepts and application of Six Sigma with a case study; Deployment of Six Sigma as a strategy to achieve World Class Performance; Integration of Six Sigma with EFQM framework; Lessons Learnt 2
  3. 3. With 99 % With Six Sigma Quality QualityFor every 300000 3,000 misdeliveries 1 misdeliveryletters deliveredFor every week of TV 1.68 hours of dead air 1.8 seconds of deadbroadcasting per airchannelOut of every 500,000 4100 crashes Less than 2 crashescomputer restarts Source: The Six Sigma Way by Peter Pande and Others 3
  4. 4. • Based on teachings of Dr. Walter Shewhart, Dr. W. E. Deming & Dr. J. Juran. • Process Control; • Plan Do Check Act; • Common and Special Causes; • Improvement can be done project by project • Statistical tools • Hawthorne Plant Experiences• Developed by Bill Smith at Motorola in 1980s 4
  5. 5. σ • Degree of variation;Sigma is a letter • Level of performance in terms of defects; • Statistical measurement of process capability; • Benchmark for comparison; • Process improvement methodology; in the Greek • • • It is a Goal; Strategy for change; A commitment to customers to achieve an acceptable level of performance Alphabet 5
  6. 6. • Business Definition  A break through strategy to significantly improve customer satisfaction and shareholder value by reducing variability in every aspect of business.• Technical Definition  A statistical term signifying 3.4 defects per million opportunities. 6
  7. 7. Sigma Defects Per Million Rate ofLevel Opportunities Improvement 1σ 690,000 2σ 308,000 2 times 3σ 66,800 5 times 4σ 6,210 11 times 5σ 230 27 times 6σ 3.4 68 times 7
  8. 8.  Goals  # 1 in Customer Satisfaction  Worlds’ most admired company  Worlds’ largest bank Strategy - “ Develop business process excellence by applying voice of the customer to identify and engineer critical few business processes using Six Sigma Created Quality & Productivity Division Source: Best Practices Report 8
  9. 9.  Wanted results in 1 year; Hired more than 225 MBB & BBs from GE, Motorola, Allied Signal for rapid deployment Developed 2 week Green Belt training programs Introduced computer simulation of processes Trained 3767 Green Belts, certified 1230 - Minimum value target per GB project – $ 250K Trained 305 Black Belts, certified 61 - Minimum value target per BB project – $ 1 million Trained 43 MBB, 1017 in DFSS 80 % of Executive Team trained in GB and 50 % Certified 9
  10. 10. Results of first 2 years: Reduced ATM withdrawal losses by 29.7 % Reduced counterfeit losses in nationwide cash vaults by 54% Customer delight up 20%; Added 2.3 million customer households 1.3 million fewer customer households experienced problems Stock value up 52% Y 2002 – BOA named Best Bank in US & Euro moneys Worlds Most Improved Bank 10
  11. 11. • Revenue• Quote Time • Capital Utilization• Defect Rate • Return on Assets• Waste • Profits• On Time Delivery• Inventory;• Machine Utilization Strategically: Used by Leadership as a vehicle to develop sustainable culture of Customer, Quality, Value and Continuous improvement. Operationally: By Quality Managers to reduce cycle times, costs, errors, rework, inventory, equipment downtime. Deployment across all types of processes and industries - worldwide 11
  12. 12. Six Sigma & EFQM/ DQA Framework Enablers Results Personally People Recognizing Establishing People Competency Key Perf Productivity actively People Process Results Results Involved in management improvement Aligning System to be Developing Individual & used Satisfaction Gross margins Team skills Organization Involvement Recognition Net profit Goals Sales Market Share Customer Results Implementing Identifying & Process Delivery, Response Encouraging Process cycle time& enabling people designing Measures Value, Time to customers Process costs To participate in processes to deliver reliability Defect rates Improvement strategy Productivity Time to Repurchase satisfaction Market Policy & Strategy Cash flow Maintenance cost Improving Return on assets processes Recognizing to satisfy and Individual & Generate value Team effort For customers Partnerships Society Utility consumption Resources Results Timeliness InventoryLeadership Processes Innovation and Learning 12
  13. 13.  At least 25% of the fortune 200 claim to have a serious six sigma program - Michael Hammer. Financial - Bank of America, GE Capital, Electronics - Allied Signal, Samsung, Sony Chemicals - Dupont, Dow Chemicals Manufacturing - GE Plastics, Johnson and Johnson, Motorola, Nokia, Microsoft, Ford. Airline - Singapore, Lufthansa, Bombardier And hundreds of others in Americas, Europe, Sub Continent. 13
  14. 14. Company Annual Savings General Electric $2.0+ billion JP Morgan Chase *$1.5 billion (*since inception in 1998) Motorola $ 16 billion (*since inception in 1980s) Johnson & Johnson $500 million Honeywell $600 millionSix Sigma Savings as % of revenue vary from 1.2 to 4.5 %For $ 30 million/yr sales – Savings potential $ 360,000 to $1.35 million.Investment: salary of in house experts, training, processredesign. 14
  15. 15. Project Phases Define Measure Analyze Improve Control Identify,  Collect data  Analyze  Improvemen  Establish evaluate on size of data, t strategy standards to and select the selected establish  Develop maintain projects for problem, and confirm ideas to process; improvemen  identify key the “ vital remove root  Design the t customer few “ causes controls, Set goals requirement determinant  Design and implement Form teams. s, s of the carry out and  Determine performance experiments monitor. key product . ,  Evaluate and process  Validate  Optimize financial characteristi hypothesis the process. impact of c.  Final the project solutions 15
  16. 16. Background M/s Alpha Inc. manages out bound cargo from a distribution centre to different stores. Deliveries made on trucks - owned and hired. Customers dissatisfied at delivery schedules. Leadership decision to deploy Six Sigma; Team of 1 Black Belt and 3 Green Belts formed Sponsor of the project – Distribution Manager 16
  17. 17.  Focus on customers generating annual revenue of USD 400,000/-. Customer Improved delivery needs performance Level 1 CTQ Timely delivery Level 2 CTQ On time delivery to schedule Level 3 CTQ Delivery within +/- 1 hour of scheduled delivery timeCurrent process sigma level - 2.43 or 175889 DPMO 17
  18. 18.  Reduce number of delayed deliveries by 50 % by 31st December Y 2002 to better meet customer requirement of timely delivery defined as within +/- 1 hour of scheduled delivery. 18
  19. 19. Output unit A scheduled delivery of freightOutput Timely deliverycharacteristicProject Y measure Process starts when an order is received Ends when goods are received & signed for at customers desk. Process measurement – Deviation from scheduled delivery time in minutes.Specification limits LSL = -60 minutes USL= +60 minutesTarget Scheduled time or zero minutes deviationDefect Delivery earlier or later than 1 hour.No. of defect 1 opportunity for a defect per scheduledopportunities per delivery of freight.unit 19
  20. 20. Supplier Stores ManagerInput Stores OrderProcess Steps Receive order(high level) Plan delivery Dispatch Driver with goods Deliver goods to stores Receive deliveryOutput Received freight with DocumentsCustomer Store Manager• Detailed process maps drawn 20
  21. 21.  Driver and Distance identified as key factors influencing delivery performance. Driver selected for focus. Potential root causes as to why Driver influenced the time:  Size of the vehicle  Type of engine  Type of tyres  Fuel capacity 21
  22. 22.  Experiments designed and conducted using truck type and tyre size. Findings:  Larger tyres took longer time at certain routes where area was cramped and time lost in maneuvering.  High incidence of tyre failures since tight turns led to stress on tyres thus increasing number of flat tyres. Team modified planning of dispatch process by routing smaller trucks at more restrictive areas. 22
  23. 23.  Test implementation. Process sigma level up from 2.43 or 175889 DPMO to 3.94 or 7353 DPMO. Performance still fell short of best in class 4.32 or 2400 DPMO. Improvement led to significant customer satisfaction. Process continually monitored and data on new cycle times, tyre failure collected as per defined methods and frequency, analysed and monitored. Customer satisfaction measured and monitored. 23
  24. 24.  Define  Difficulty in identifying the right project and defining the scope;  Difficulty in applying statistical parameters to Voice of the Customers;  Trouble with setting the right goals; Measure  Inefficient data gathering;  Lack of measures;  Lack of speed in execution; 24
  25. 25.  Analyse  Challenge of identifying best practices  Overuse of statistical tools/ under use of practical knowledge  Challenge of developing hypotheses Improve  Challenge of developing ideas to remove root causes  Difficulty of implementing solutions Control  Lack of follow up by Managers/ Process Owners  Lack of continuous Voice of the Customer feedback  Failure to institutionalize continuous improvement. 25
  26. 26.  “ Define “ ranked most important step but gets the lowest resource allocation Project scoping and its definition is critical to its success/ failure; “Measure” is considered most difficult step and also gets the highest resources Source: Greenwich Associates Study Y 2002 26
  27. 27.  Versatile Breakthrough improvements Financial results focus Process focus Structured & disciplined problem solving methodology using scientific tools and techniques Customer centered Involvement of leadership is mandatory. Training is mandatory; Action learning (25% class room, 75 % application) Creating a dedicated organisation for problem solving (85/50 Rule). 27
  28. 28.  Generates sustained success Sets performance goal for everyone Enhances value for customers; Accelerates rate of improvement; Promotes learning across boundaries; Executes strategic change 28
  29. 29. Thank you Q&A 29

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