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Introduction To Six Sigma

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1 QualityGurus.com Introduction to Six Sigma Introduction to Six Sigma Purpose of six sigma : To make customer happier and increase profits
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Page 1: Introduction To Six Sigma

1QualityGurus.com

Introduction to Six SigmaIntroduction to Six Sigma

Purpose of six sigma :

To make customer happier and increase profits

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Origin of Six SigmaOrigin of Six Sigma

• 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

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Time LineTime Line

2002200219951995199219921987198719851985

Dr Mikel J Harry wrote a paper relating early failures to quality

Motorola

Allied Signal

General Electric

Johnson & Johnson,Ford, Nissan,Honeywell

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Pilot’s Six Sigma PerformancePilot’s Six Sigma Performance

Width of landing strip1/2 Widthof landing

strip

If pilot always lands within 1/2 the landing strip width, we say that he has Six Sigma capability.

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Current Leadership ChallengesCurrent Leadership Challenges

• Delighting Customers.• Reducing Cycle Times.• Keeping up with Technology Advances.• Retaining People.• Reducing Costs.• Responding More Quickly.• Structuring for Flexibility. • Growing Overseas Markets.

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Six Sigma— Benefits?Six Sigma— Benefits?

• Generated sustained success• Project selection tied to organizational strategy

– Customer focused– Profits

• Project outcomes / benefits tied to financial reporting system.• Full-time Black Belts in a rigorous, project-oriented method.• Recognition and reward system established to provide

motivation.

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What can it do?What can it do?

• Motorola: – 5-Fold growth in Sales– Profits climbing by 20% pa– Cumulative savings of $14 billion over 11 years

• General Electric:– $2 billion savings in just 3 years– The no.1 company in the USA

• Bechtel Corporation:– $200 million savings with investment of $30 million

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GE Six Sigma EconomicsGE Six Sigma Economics

1996 1998 20002002

0

500

1000

1500

2000

2500

1996

CostBenefit

(in millions)

Source: GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon total corporation cost/benefits attributable to Six Sigma.

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Overview of Six SigmaOverview of Six Sigma

PAIN, URGENCY, SURVIVAL

COSTS OUT

GROWTH

TRANSFORM THE ORGANIZATION

CHANGE THE

WORLD

6 SIGMA AS ASTATISTICAL

TOOL

6 SIGMA AS APHILOSOPHY

6 SIGMA ASA PROCESS

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Overview of Six SigmaOverview of Six Sigma

It is a Philosophy– Anything less than

ideal is an opportunity for improvement

– Defects costs money– Understanding

processes and improving them is the most efficient way to achieve lasting results

It is a Process– To achieve this level of

performance you need to: Define, Measure, Analyse,

Improve and Control

It is Statistics– 6 Sigma processes will

produce less than 3.4 defects per million opportunities

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Management involvement?Management involvement?

• Executives and upper management drive the effort through:– Understanding Six Sigma– Significant financial commitments– Actively selecting projects tied to strategy– Setting up formal review process– Selecting Champions– Determining strategic measures

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Management involvement?Management involvement?

• Key issues for Leadership:– How will leadership organize to support Six Sigma ? (6 council,

Director 6 , etc)– Transition rate to achieve 6 .– Level of resource commitment.– Centralized or decentralized approach.– Integration with current initiatives e.g. QMS– How will the progress be monitored?

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PhilosophyPhilosophy

• Know What’s Important to the Customer (CTQ)• Reduce Defects (DPMO) • Centre Around Target (Mean) • Reduce Variation (Standard Deviation)

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Critical ElementsCritical Elements

• Genuine Focus on the Customer• Data and Fact Driven Management• Process Focus• Proactive management• Boundary-less Collaboration• Drive for Perfection; Tolerance for failure

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Data Driven DecisionData Driven Decision

Y X1 . . . Xn

Dependent Independent

Output Input-Process

Effect Cause

Symptom Problem

Monitor Control

f(X)f(X)Y=Y=

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Two ProcessesTwo Processes

• DefineDefine• MeasureMeasure• AnalyzeAnalyze• ImproveImprove• ControlControl

• DefineDefine• MeasureMeasure• AnalyzeAnalyze• DesignDesign• VerifyVerify

DMAICDMAIC DMADVDMADV

• Existing ProcessesExisting Processes• New ProcessesNew Processes• DFSSDFSS

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Key ConceptsKey Concepts

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COPQ (Cost of Poor Quality)COPQ (Cost of Poor Quality)

- Lost Opportunities

- The Hidden Factory

- More Setups- Expediting Costs- Lost Sales- Late Delivery- Lost Customer Loyalty- Excess Inventory- Long Cycle Times- Costly Engineering Changes Average COPQ approximately 15%

of Sales

Hidden Costs:- Intangible- Difficult to Measure

Traditional Quality Costs:- Tangible- Easy to Measure

- Inspection- Warranty- Scrap- Rework- Rejects

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COPQ vs. Sigma LevelCOPQ vs. Sigma Level

0%5%

10%15%20%25%30%35%40%45%50%

2 3 4 5 6

Co

st

of

Qu

ali

ty %

Sa

les

Sigma Level

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ProcessProcess

• A Process is a group of steps, tasks, or activities, which take inputs (People, Material, Information …..) and in some way change them to produce an output (Service, Product……)

XsXs YsYsStep-1Step-1 Step-2Step-2 Step-3Step-3

InputInput ProcessProcess OutputOutput

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CTQ (Critical-To-Quality)CTQ (Critical-To-Quality)

• CTQ characteristics for the process, service or process• Measure of “What is important to Customer”• 6 Sigma projects are designed to improve CTQ• Examples:

– Waiting time in clinic– Spelling mistakes in letter– % of valves leaking in operation

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Defective and DefectDefective and Defect

• A nonconforming unit is a defective unit• Defect is nonconformance on one of many possible quality

characteristics of a unit that causes customer dissatisfaction.• A defect does not necessarily make the unit defective• Examples:

– Scratch on water bottle – (However if customer wants a scratch free bottle, then this will be

defective bottle)

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Defect OpportunityDefect Opportunity

• Circumstances in which CTQ can fail to meet.• Number of defect opportunities relate to complexity of unit.• Complex units – Greater opportunities of defect than

simple units• Examples:

– A units has 5 parts, and in each part there are 3 opportunities of defects – Total defect opportunities are 5 x 3 = 15

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DPO (Defect Per Opportunity)DPO (Defect Per Opportunity)

• Number of defects divided by number of defect opportunities

• Examples:– In previous case (15 defect opportunities), if 10 units have 2

defects.

– Defects per unit = 2 / 10 = 0.2

– DPO = 2 / (15 x 10) = 0.0133333

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DPMO (Defect Per Million Opportunities)DPMO (Defect Per Million Opportunities)

• DPO multiplies by one million• Examples:

– In previous case (15 defect opportunities), if 10 units have 2 defects.

– Defects per unit = 2 / 10 = 0.2– DPO = 2 / (15 x 10) = 0.0133333– DPMO = 0.013333333 x 1,000,000 = 13,333 Six Sigma performance is 3.4 DPMO 13,333 DPMO is 3.7 Sigma

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What is Sigma?What is Sigma?

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Have you ever…Have you ever…

• Shot a rifle?

• Played darts?

What is the point of these sports?What makes them hard?

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Have you ever…Have you ever…

• Shot a rifle?

• Played darts?

Who is the better shooter?

Jack

Jill

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Variability - JackVariability - Jack

• Deviation = distance between observations and the mean (or average)

Jill

Jack

871089

Observations Deviations

10 10 - 8.4 = 1.6

9 9 - 8.4 = 0.6

8 8 - 8.4 = -0.4

8 8 - 8.4 = -0.4

7 7 - 8.4 = -1.4

averages 8.4 0.0

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Variability - JackVariability - Jack

• Variance = average distance between observations and the mean squared

Jill

Jack

871089

Observations Deviations

10 10 - 8.4 = 1.6

9 9 - 8.4 = 0.6

8 8 - 8.4 = -0.4

8 8 - 8.4 = -0.4

7 7 - 8.4 = -1.4

averages 8.4 0.0

Squared Deviations

2.56

0.36

0.16

0.16

1.96

1.0

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Variability - JillVariability - Jill

• Deviation = distance between observations and the mean (or average)

Jill

76776

JackObservations Deviations

7 7 - 6.6 = 0.4

7 7 - 6.6 = 0.4

7 7 - 6.6 = 0.4

6 6 - 6.6 = -0.6

6 6 - 6.6 = -0.6

averages 6.6 0.0

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Variability - JillVariability - Jill

• Variance = average distance between observations and the mean squared

Jill

76776

JackObservations Deviations

7 7 - 6.6 = 0.4

7 7 - 6.6 = 0.4

7 7 - 6.6 = 0.4

6 6 - 6.6 = -0.6

6 6 - 6.6 = -0.6

averages 6.6 0.0

Squared Deviations

0.16

0.16

0.16

0.36

0.36

0.24

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Standard deviationStandard deviation

• Standard deviation = square root of variance

Jack

Jill

Average Variance Standard Deviation

Jack 8.4 1.0 1.0

Jill 6.6 0.24 0.4898979

But what good is a standard deviation

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VariabilityVariabilityThe world tends to be bell-shaped

Most outcomes occur in the

middle

Fewer in the “tails” (upper)

Even very rare outcomes are possible

Even very rare outcomes are possible

Fewer in the “tails” (upper)

QualityGurus.com

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““Normal” bell shaped curveNormal” bell shaped curve

Normal distributions are divide up into 3 standard deviations on each side of the mean

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Causes of VariabilityCauses of Variability

• Common Causes:– Random variation within predictable range (usual)– No pattern– Inherent in process– Adjusting the process increases its variation

• Special Causes– Non-random variation (unusual)– May exhibit a pattern– Assignable, explainable, controllable– Adjusting the process decreases its variation

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LimitsLimits

• Process and Control limits: – Statistical– Process limits are used for individual items– Control limits are used with averages– Limits = μ ± 3σ– Define usual (common causes) & unusual (special causes)

• Specification limits:– Engineered– Limits = target ± tolerance– Define acceptable & unacceptable

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Usual vs. Unusual, Acceptable vs. DefectiveUsual vs. Unusual, Acceptable vs. Defective

Another View

LSL USL

Off-Target

USLLSL

Large Variation

CenterProcess

Reduce Spread

The statistical view of a problem

On-Target

USLLSL LSL = Lower spec limit

USL = Upper spec limit

LSL = Lower spec limit

USL = Upper spec limit

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More about limitsMore about limits

Good quality: defects are rare (Cpk>1) Poor quality: defects are common (Cpk<1)

Cpk measuresmeasures “Process Capability”

If process limits and control limits are at the same location, Cpk = 1. LSL and USL = Lower and Upper Specification Limits / LPL and UPL = Lower and Upper Process Limits

μtarget

μtarget

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A Six Sigma Process A Six Sigma Process

• Predictably twice as good as what the customer wants

1 122 3 4 5 6 7 8 9 10 11

1 1 1 1 11

LSL USL

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Process shift allowedProcess shift allowed

2 3 4 5 6 7 8 9 1210 111

LSL USL

SD = 1

1.5 SD 1.5 SD

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Six Sigma MeasurementSix Sigma Measurement

3456

7

668106210

2333.4

Sigma

DPMO

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Six Sigma MeasurementSix Sigma Measurement

0

100,000

200,000

300,000

400,000

500,000

600,000

1.5 2.5 3.5 4.5 5.5

# of Sigmas

# of

Def

ect p

er M

illio

n

Sigma Defects numbers per million

1.5 500,000 2.0 308,300 2.5 158,650 3.0 67,000 3.5 22,700 4.0 6,220 4.5 1,350 5.0 233 5.5 32 6.0 3.4

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Components of Six SigmaComponents of Six Sigma

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Components of Six SigmaComponents of Six Sigma

• Two components of Six Sigma

– Process Power

– People Power

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Process PowerProcess Power

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ApproachApproach

Pra

cti

cal

Pro

ble

m

Sta

tisti

cal

Pro

ble

m

Sta

tisti

cal

Solu

tion

Pra

cti

cal

Solu

tion

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DMAIC - simplifiedDMAIC - simplified

• Define– What is important?

• Measure– How are we doing?

• Analyze– What is wrong?

• Improve– Fix what’s wrong

• Control– Ensure gains are maintained to guarantee performance

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DMAIC approachDMAIC approachD

Define

MMeasure

AAnalyze

IImprove

CControl

Identify and state the practical problem

Validate the practical problem by collecting data

Convert the practical problem to a statistical one, define statistical goal and identify potential statistical solution

Confirm and test the statistical solution

Convert the statistical solution to a practical solution

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DefineDefineD

Define

MMeasure

AAnalyze

IImprove

CControl

VoCVoC - Who wants the project and why ?

The scope of project / improvement (SMART Objective)

Key team members / resources for the project

Critical milestones and stakeholder review

Budget allocation

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MeasureMeasureD

Define

MMeasure

AAnalyze

IImprove

CControl

Ensure measurement system reliability

Prepare data collection plan

Collect data

- Is tool used to measure the output variable flawed ?

- How many data points do you need to collect ?- How many days do you need to collect data for ?- What is the sampling strategy ?- Who will collect data and how will data get stored ? - What could the potential drivers of variation be ?

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AnalyzeAnalyzeD

Define

MMeasure

AAnalyze

IImprove

CControl

How well or poorly processes are working compared with- Best possible (Benchmarking)- Competitor’s

Shows you maximum possible result

Don’t focus on symptoms, find the root cause

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ImproveImproveD

Define

MMeasure

AAnalyze

IImprove

CControl

Present recommendations to process owner.

Pilot run- Formulate Pilot run.

- Test improved process (run pilot).

- Analyze pilot and results.

Develop implementation plan.

- Prepare final presentation.

- Present final recommendation to Management Team.

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ControlControlD

Define

MMeasure

AAnalyze

IImprove

CControl

Don’t be too hasty to declare victory.

How will you maintain to gains made?

- Change policy & procedures

- Change drawings- Change planning- Revise budget- Training

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People PowerPeople Power

Tell me, I forget. Show me , I remember. Involve me, I understand.

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6 6 Training Training

Master Black Belt

Black Belts

Green Belts

Team Members / Yellow Belts

Ch

am

pio

ns

Mentor, trainer, and coach of Black Belts and others in the organization.

Leader of teams implementing the six sigma methodology on projects.

Delivers successful focused projects using the six sigma methodology and tools.

Participates on and supports the project teams, typically in the context of his or her existing responsibilities.

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Ch

am

pio

ns

ChampionChampion

• Plans improvement projects• Charters or champions chartering process• Identifies, sponsors and directs Six Sigma projects• Holds regular project reviews in accordance with project

charters• Includes Six Sigma requirements in expense and capital

budgets

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Ch

am

pio

ns

ChampionChampion

• Identifies and removes organizational and cultural barriers to Six Sigma success.

• Rewards and recognizes team and individual accomplishments (formally and informally)

• Communicates leadership vision• Monitors and reports Six Sigma progress• Validates Six Sigma project results• Nominates highly qualified Black Belt and/or Green Belt

candidates

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Master Black BeltMaster Black Belt

• Enterprise Six Sigma expert• Permanent full-time change agent• Certified Black Belt with additional specialized skills or

experience especially useful in deployment of Six Sigma across the enterprise

Master Black Belt

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Master Black BeltMaster Black Belt

• Highly proficient in using Six Sigma methodology (e.g., advanced statistical analysis, project management, communications, program administration, teaching, project coaching)

• Identifies high-leverage opportunities for applying the Six Sigma

• Basic Black Belt training• Green Belt training• Coach / Mentor Black Belts

Master Black Belt

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Black BeltBlack Belt

• Six Sigma technical expert• Temporary, full-time change agent (will return to other

duties after completing a two to three year tour of duty as a Black Belt)

Black

Belts

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Black BeltBlack Belt

• Leads business process improvement projects where Six Sigma approach is indicated.

• Successfully completes high-impact projects that result in tangible benefits to the enterprise

• Demonstrated mastery of Black Belt body of knowledge• Demonstrated proficiency at achieving results through the

application of the Six Sigma approach• Coach / Mentor Green Belts• Recommends Green Belts for Certification

Black

Belts

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Green BeltGreen Belt

• Six Sigma Project originator• Part-time Six Sigma change agent. Continues to perform

normal duties while participating on Six Sigma project teams• Six Sigma champion in local area• Recommends Six Sigma projects• Participates on Six Sigma project teams• Leads Six Sigma teams in local improvement projects

Green Belts

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Yellow BeltYellow Belt

• Learns and applies Six Sigma tools to projects• Actively participates in team tasks• Communicates well with other team members• Demonstrates basic improvement tool knowledge• Accepts and executes assignments as determined

by teamTeam Members /

Yellow Belts

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Financial AnalystFinancial Analyst

• Validates the baseline status for each project.• Validates the sustained results / savings after completion

of the project.• Compiles overall investment vs. benefits on Six Sigma for

management reporting.• Will usually be the part of Senior Leadership Team.

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Project SelectionProject Selection

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Sources of ProjectsSources of Projects

• External Sources:– Voice of Customer

• What are we falling short of meeting customer needs?

• What are the new needs of customers?

– Voice of Market• What are market trends, and are we ready to adapt?

– Voice of Competitors• What are we behind our competitors?

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Sources of ProjectsSources of Projects

• Internal Sources:– Voice of Process

• Where are the defects, repairs, reworks?• What are the major delays?• What are the major wastes?

– Voice of Employee• What concerns or ideas have employees or managers raised?• What are we behind our competitors?

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Harvesting the Fruit of Six SigmaHarvesting the Fruit of Six Sigma

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Sweet Fruit Design for RepeatabilityProcess Enhancement

Bulk of FruitProcess Characterization and Optimization

Low Hanging FruitSeven Basic Tools

Ground FruitLogic and Intuition

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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What Qualifies as a Six Sigma ProjectWhat Qualifies as a Six Sigma Project

• Three basic qualifications:– There is a gap between current and desired / needed

performance.

– The cause of problem is not clearly understood.

– The solution is not pre-determined, nor is the optimal solution apparent.


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