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Six Sigma Overview

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Six Sigma Overview in detail

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Six Sigma Overview

  1. 1. 1/16/2012 Origins of Six Sigma Six Sigma Overview  1987 Motorola Develops Six Sigma  Raised Quality Standards  Other Companies Adopt Six Sigma  GE  Promotions, Profit Sharing (Stock Options), etc. directly tied to Six Sigma training  Dow Chemical, DuPont, Honeywell, Whirlpool 1 2 What is Six Sigma? What is Six Sigma?  Normal distribution  Standard Normal distribution  Mean (m) X m z  Standard deviation (σ) 1 1 X m  ( )2  1 1  2 ( z )2 Y  f ( x)  e 2  Y e  2 2 1 1  2 ( z )2 Pr n  z  n    Ydz   n n e dz n n 2 3 4 What is Six Sigma? What is Six Sigma? Standard Normal  Assumes 1.5 sigma process drift distribution  Defect levels decrease exponentially as sigma levels increase from one value to the next  Six sigma is 3.4 defects per million 5 6 1
  2. 2. 1/16/2012 Sigma Significance Sigma Defects numbers per million 600,000 500,000 # of Defect per Million 1.5 500,000 2.0 308,300 400,000 2.5 158,650 300,000 3.0 67,000 200,000 3.5 22,700 100,000 4.0 6,220 0 4.5 1,350 1.5 2.5 3.5 4.5 5.5 5.0 233 # of Sigmas 5.5 32 6.0 3.4 7 8Costs/Benefits to GE Commitment Required  Example: GE Incentives  GE ties 40% of executive incentives to Six Sigma achievements  GE requires Black Belt training to be considered for promotion  GE puts Master Black Belts in variable incentive compensation plans  Resources  Black Belt project leaders are assigned full time to improvement efforts 9 10 Why do Six Sigma? “The central idea behind Six Sigma is that 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. Six Sigma has changed the DNA of GE in everything we do and in every product we design.” GE 11 12 2
  3. 3. 1/16/2012How to implement Six Sigma? How to implement Six Sigma?  Who is involved?  Where is it applied?  Improving customer satisfaction  Reducing cycle time  Reducing defects 13 14How to implement Six Sigma? How to implement Six Sigma?  DMAIC  How to do?  Define numerical definition of project scope,  Identify customer-driven critical-to- objectives, resources and constraints quality (CTQ) characteristics.  Measure capability of current process performance, comparing with the benchmark --critical customer  Identify key processes that cause requirements defects in a CTQ characteristic.  Analyze the problems to find out root causes Create the opportunity for project.  Improve… identify potential solutions and begin to  For each process project – DMAIC implement them  Control the performance to continue to achieve higher results 15 16Example: Shipping Logistics Success story: Shipping Logistics  Situation:  Product arrives in the US at Los Angeles  From the port, the product is taken either to a GE distribution center or to a  Situation: customer designated  GE Appliance products, such as microwave ovens and air forwarder conditioners, are being produced in Asia and shipped to US  Product is then cross docked customers, such as Wal-Mart and sent on to final distribution centers via rail,  Delivery performance is very erratic and the average on- truck-on-rail, or truck time delivery is about 85% 17 18 3
  4. 4. 1/16/2012Example: Shipping Logistics Example: Shipping Logistics  Process Mapping  DMAIC Steps Define Phase: • A team is assembled to attack this problem. The team includes suppliers, 3rd party vendors, GE logistics people, finance, sales, and customers • Tthe supply chain process is mapped from the supplier to the end customer Measure Phase:  The current performance is measured by looking at data from the previous 6 months. Capability of this process is 1.5 sigma currently Analyze Phase:  All of the many inputs are examined and it appears that 2 areas are the vital inputs, the shipping decision by the supplier and getting the product through the port of LA Improve Phase:  Further investigation by the team yields some changes in procedure that reduces the problem Control Phase:  Documentation and procedures are updated 19 20Example: Shipping Logistics Example: Shipping Logistics  Procedure improvement Old Procedure New Procedure GE specifies when products produced and GE specifies when products produced and  Results: shipped delivered to US  On time delivery increased to 97% Supplier would comply by selecting first ship going to the US Supplier complies by selecting the “right” ship  Transportation costs reduced by $300,000  Inventory (cash flow) reduced by $1,000,000 Shipping time 8 to 18 days Shipping time 8 days  Capability Raised to 3.5 Sigma Supplier notifies GE system (often delayed) and Supplier notifies freight forwarder with freight forwarder with paperwork paperwork, and freight forwarder communicates through GE system 21 22 4

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