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Background of Six Sigma Concept
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19History of Six Sigma . . . Credit for coming out with the term "Six Sigma" goes to a Motorola engineer named Bill Smith. (Incidentally, "Six Sigma" is a federally registered trademark of Motorola).
In the early and mid-1980s, Motorola wanted to set new statistical quality control standards to reduce defects in their manufacturing processes using defects per million opportunities. They soon discovered that it had wider applicability.
$8 Billion through 2001
Average of $600MM/year since 1995
$3 Billion in savings since 1995
$1.5 Billion in 1999; since 1987
$2.5 Billion in 2004
$1.9 Billion through 2002
¥130 Billion in 2000/2001
Since then, hundreds of companies around the world have adopted Six Sigma as a way of doing business including Honeywell, GE (1995) and financial services companies such as Citicorp, American Express (1998), JP Morgan Chase ( mid 1998), Bank One (2000), Merrill Lynch (2001), BOA (2001), HSBC, etc.
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20What is Six Sigma ?Six Sigma is a comprehensive and flexible improvement methodology for achieving, sustaining and maximizing business success. It is uniquely driven by close understanding of customer needs, disciplined used of facts, data and statistical analysis, and diligent attention to managing, improving and reinventing business processes.
“It is now the Way We Work — in everything we do and in every product we design” - GE
The real benefit of Six Sigma is the culture change to becoming a customer-focused, fact-based, data-driven organization.
It provides businesses with the tools to improve the capability of their business processes. Improved Processes = Increased Performance + Decrease Variation
It leads to defect reduction and vast improvement in profits, employee morale and quality of product.
If no one puts defects in, then no one has to find them or fix them. Hence everyone can focus on meeting the customer needs instead of fixing customer complaints.
S I G M A3
21More simply . . .
Six Sigma has evolved over the last two decades and so has its definition. Six Sigma has literal, conceptual, and practical definitions. Six Sigma can be viewed at three different levels:
σ As a Metric
σ As a Management system
σ As a Methodology
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22Six Sigma as a MetricStatistically
σ "Sigma" is often used as a scale for levels of "goodness" or quality. Using this scale, the sigma capability indicates how well a process is performing i.e to produce defect-free work.
σ The higher the sigma capability, the better. To achieve Six Sigma quality, a process must produce no more than 3.4 defects per million opportunities (DPMO). .
σ An "opportunity" is defined as a chance for non-conformance, or not meeting the required client specifications.
Comparing Six Sigma performances –is 99% good enough ?
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23Six Sigma as Six Sigma as a Management Disciplinea Management Discipline
Six Sigma is a basic management discipline -- and a mindset:
FOCUS on clients and their requirements
Uncover FACTS about profitability, shareholder value and employee
satisfaction
Track progress through powerful METRICS
Work ACROSS organisational boundaries
Get it right the FIRST time
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24Six Sigma Methodology Overview - DMAIC
Client-driven, consistent,
metrics focused, results oriented
Define the customer opportunity
Measure thecurrent performance
Improve processDelivery to the customer
Problem Statement:Goal:Business Case:Scope:Cost Benefit Projection:Milestones:
Problem
D B F A C E Other
UCL
LCL
Analyze thecurrent processes
Control and maintain the gains
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Why use Six Sigma to improve our customer experience ?
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26Focus on Customer View
Customer View of our process
Initial Contact
A/C Opening & Fulfillment
Servicing Contact
Relationship Building
End of Relationship
RM RM / Call Center Marketing / Ops
t1 t2 t3
Quality requires us to look at our business from the customer’s perspective, not ours. i.e we must look at our processes from the outside-in. By understanding the transaction lifecycle from the customer’s needs and processes – “the Client Experience”, we can discover what they are seeing and feeling.With this knowledge, we can identify areas where we can add significant value or improvement from their perspective.
Customer does not see or care what we do.But feels the impact when we do it wrong.
How customer measure us
How we measure ourselves
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27Process Variation Affects Our Client
Our Customers feel the Variance, Not the MeanOften, our customers are impacted by our variation / inconsistency in the service quality we provided.
However, our inside-out view of the business is based on average or mean-based measures of our recent past / historical measurements. Customers don't judge us on averages, they feel the variance in each transaction, each product we deliver.
Six Sigma focuses first on reducing process variation and then on improving the process capability.
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30Six Sigma Benefits The Customer
The following benefits may be achieved from the successful implementation of project leveraging six sigma tools and approach:
Improved Customer LoyaltyGreater knowledge of Customer PreferencesImproved Customer RelationsGreater ability to capture the true voice of customers right first timeImproved Market Position relative to CompetitorsLong-term Competitive AdvantageReduced Cost of Poor QualityIncreased Reputation of your organization
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31Six Sigma links CE to EEClient LevelA methodology we use to improve existing processes and build new ones that strengthen client relationships.
8 Six Sigma raises performance by bringing clients into vivid focus8 Measurement helps us see what clients really care about8 Clients get happier as we start ‘getting it right’
Employee LevelGives employees the tools to measure quality consistently, regardless of what kind of work they do.
8 As you improve your work environment, you get happier too!8 Using Six Sigma tools, employees manage by facts, rather than by
assumptions
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326 Sigma in a nutshellTypical Goals
Improve customer satisfactionDramatically lower costsShorten time to marketReduce defects, scrap and re-workSimplify operationsImprove competitive position
The PrinciplesFocus on the customer Continuous process improvementCompany wide implementationBusiness strategy integrationDecision making using statistical analysis
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Methodologies & Tools
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35How do we achieve results ?
Essentially, the Six Sigma project methodology / approach that can be applied to help you deliver your projects is:
The DMAIC method –for improvement to existing processes that require significant incremental improvement: Define-Measure-Analyze-Improve-Control.
Occasionally, we may have a process that is non-existent ( such as new processes) or a process that is so broken that we will need to add a DESIGN step in the methodology in order to have quantum level improvements and toensure we can fulfill our customer needs and expectations.
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37DMAIC
Develop a Problem Statement. Define CTQ criteria from client’s point of view.
Measure clients’ requirements (“VOC”) and the current process performance (in terms of cycle time, sigma or other useful metrics)
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38DMAIC Roadmap
30. Prepare Process Control Plan
31. Implement Solution
32. Validate Improved Performance
32. Standardize and Document new process
33. Develop Feedback Mechanisms
34. Transition to process owners
23. Develop Improvement Solutions
24. Select best solution
25. Cost & Benefit Analysis
26. Perform Risk Analysis
27. Pilot Solution
28. Determine Improvement Plan
29. Prepare change management strategy
15. Document all causes that impact the Main Problem
16. Determine Critical Root Causes
17. Collect Additional Data
18. Determine Failure Modes
19. Assess Risk
7. Select Key Measures/ Performance Metrics
8. Collect Performance Data
9. Identify Potential Sources of Variation
10. Developed Detailed Process Map
11. Validate Measurement System
12. Perform Graphical Analyses
13. Check Process Stability
14. Determine Current Process Capability
1. Select Project
2. Write Problem Statement
3. Develop Charter
4. Develop Project Plan
5. Determine Customer Requirements (CTQs)
6. Obtain Approval to Proceed
Define Measure Analyze Improve Control
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39Detailed Project Selection Criteria
Achieving breakthroughs requires prioritization of opportunities. There are many more opportunities than there is time and resources to work on them.When selecting a process, we are trying to prioritize exactly which problem to solve. If the problem is clear we move on to define the problem.In selecting a project, consider these issues:
a. Financial and strategic benefitsb. Improved customer satisfaction or CE scorec. Compatible with current goals and objectivesd. Translatable to other areas of the businesse. Probability of successf. Level of effort, amount of resources needed to complete
project
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