SIX SIGMA- 6σ

What is the six sigma? Why it’s the best answer to improved business

performance in years How is it put to use in unique environments?

What is the Six Sigma?

“broad and comprehensive system for building and sustaining business performance, success and leadership”

It is a quantitative quality control method that has been successful for many organizations over the years

It is a process that’s more stringent than the three sigma statistical process control.

ContinuousImprovement

StatisticalProcessControl

Process Management

Design Of

Experiments

Creative thinking

Voice of The customer

Balanced scorecards

Analysis of variance

Process design or redesign

Six Sigma Tools and methods

Theme 1:Genuine focus on the customer

Improving understanding of customer requirements

Companies need to look at dynamic changes in customer needs rather than short term initiatives

Measures of the six sigma performance begin with the customer. Six sigma improvements are defined by their impact on customer satisfaction and value

Theme 2:Data and Fact Driven Management

Six sigma helps managers answer the questions: What data/information do I really need? How do we use that data /info to maximize

benefits

Theme 3:Process Focus, Management and Improvement

Process is the key vehicle to success and is the central basis of six sigma

Mastering processes is a way of building competitive advantage in delivering value to customers

Theme 4:Proactive Management

Proactive: acting in advance of events It involves bringing into focus what’s generally

neglected: Defining ambitious goals and their consistent

review Setting clear priorities Focusing on problem prevention Questioning why we do things

Six sigma replaces reactive habits with a dynamic, responsive, proactive style of management

Theme 5:Boundaryless Collaboration

Opportunities available through improved collaboration within companies and with their vendors and customers.

Helps people fit their roles into the big picture and measure interdependence of activities in all parts of a process

Requires an understanding of the real needs of end users and the flow of work through a process or a supply chain

Commitment to using customer and process knowledge to benefit all parties, thereby creating environments that support teamwork.

Theme 6:Drive for perfection, tolerance for failure

The two ideas are complimentary Launching new ideas and approaches involving

some risk gets companies closer to six sigma Fear of risk: stagnation, putrefaction, death A six sigma aspirant needs to constantly redefine

its idea of perfection and be willing to accept and manage occasional setbacks

Six sigma vision of business leadership-Creating a Closed-loop system

Both internal and external sorts of information (feedback and stimuli) tell the manager how to correct course, stay upright and steer successfully

A good closed loop system should work in a treacherous business environment.

Six sigma is based on creating a closed-loop business system that reduces a company’s instability and keep it safe on the path to performance and success.

The vehicle is the process. Internal stimuli are the measures of activities within the process and external stimuli are the ones that tell the company if they’ve met goals etc. they include profits, customer satisfaction etc.

Customer, Market infoProcess Data

Future Insights

Strategic and Operationaldecisions

RESULTS

Closed-Loop System

XInputs

X

X

X

CustomersY

ProductsY

ProfitsY

The Business Process Model

Upstream and downstream variables

Organization/Process

System alignment

From the process flow perspective of a business model, on the far left are inputs to the system, in the middle is the organization itself, and on the far right are customers, end products and profits.

The “Xs” in the process flow are indicators of change or performance in the upstream portions of the system.

The “Ys” represent measures of the business’s performance Y=f(x) is a mathematical way of saying that changes or

variables in the inputs and process of the system will largely determine how the “Ys” turn out.

Six sigma vocabulary

Inconsistency: variation Variation with negative impact: defects Approaches used to create, monitor and improve

the closed loop system: process management, process improvement and process design/redesign

Challenges of a closed-loop business system

To figure out which variables affect the results or outputs the most

To use the changes in overall performance of the process or outputs to adjust the business and keep it on a profitable path.

Y can be: Strategic goal Customer requirement Profits Customer satisfaction Overall business efficiency

X can be: Essential actions to achieve strategic goals Quality of the work done by the business Key influences on customer satisfaction Process variables like staffing, technology etc Quality of the inputs to the process

Six sigma and standard deviation Sigma is a notation used to represent standard deviation in a

population Standard deviation is an indicator of the amount of variation or

inconsistency in any group of items or a process. Variation is a significant part of the six sigma ideology because

variation or inconsistency affects the customer. Looking at variation helps management understand the real

performance of a business and its processes Understanding and addressing variation can benefit both the

business and the customer. The business no longer needs to compensate for unpredictable efforts just to meet customer requirements.

The objective of driving at six sigma performance is to reduce or narrow deviation to such a degree that standard deviations of variation can be fit into limits defined by the customer.

Customers, defects and sigma levels

Fundamental step is to clearly define what the customer wants as an explicit requirement. These are referred to as “CTQs” or Critical To Quality.

Next, count the number of defects that occur. Where a defect is any instance or event in which a product fails to meet customer requirements.

After calculating defects, the yield of the process (percentage of items without defects) can be calculated to determine sigma level based on a simple conversion table.

Sigma levels or performance are expressed in DPMO (defects per million opportunities) which indicated how many defects could come up if an activity was repeated a million times.

If yield is.. DPMO is… Sigma is…

30.969.2

6,90,0003,08,000

1.02.0

93.3 66,800 3.0

99.4 6,210 4.0

99.98 320 5.0

99.9997 3.4 6.0

Sigma measures

For these measures to be applied effectively, guidelines need to be put in place to avoid inconsistent measurement

Measures are not static. Six sigma performance changes with changing customer requirements.

Getting sigma scores on processes throughout an organization takes time and resources. Prioritizing what can and should be measured is important.

Six sigma improvement and management strategies

ProcessImprovement

Process Management

Process design Or redesign

Six sigma strategies

Process Improvement

Strategy of developing focused solutions to eliminate root causes of business performance problems

Also called continuous improvement, incremental improvement or Kaizen.

Aims at fixing a problem while leaving the basic structure of the work process intact.

Emphasis is on finding and targeting solutions to address the vital “Xs” that affect the “Ys” of the business.

Process Design/Redesign: building a better business

Used when continuous improvement is not enough to succeed in a changing environment

Process improvement and design are two complementary strategies for sustained success

In this mode, the objective is not to fix, but to replace the process with a new one.

Process ManagementThe Infrastructure for Six Sigma Leadership

Change in focus from oversight and direction of functions to the understanding and facilitation of processes.

A process is ultimately what delivers value to customers and shareholders

Processes are documented and managed end to end, ensuring cross functional management

Customer requirements are clearly defined and regularly updated

Measures of outputs and activities are meaningful Managers use measures to assess performance in real

time and take action to address problems and opportunities

PDCA

The DMAIC model is based on steps introduced by W. Edwards Deming

Plan-Do-Check-Act: which explains the basic logic of data based process improvement

The DMAIC model of Six Sigma Improvement

2.Measure

5.Control

1.Define

3.Analyse

4.Improve

DMAIC

DMAIC

Define-Measure-Analyze-Improve-Control Applies to both process improvement and

design/redesign efforts

A Six Sigma Organization

“An organization that is actively working to build the themes and practices of Six Sigma into its daily management activities, and its showing significant improvement in process performance and customer satisfaction”

Need not have achieved actual six sigma levels of performance

Mere use of six sigma tools does not qualify Doesn’t have to be called six sigma to be a six

sigma organization

Manufacturing organizations and Six Sigma

Adopting a broader perspective Most problems aren’t manufacturing problems Manufacturing needs to be an active

participant in the actual process Solution: targeting six sigma improvement

projects that require cross functional co-operation

Moving past certification to improvement Six sigma believes certifications like the ISO-

9000 and businesses’ perspective have hampered improvement efforts

Adapting tools to the manufacturing environment

Identify core processes and key customers

Expand and integrateThe six sigma system

Define Customer Requirements

Measure Current Performance

Prioritize, Analyze &

Implement Improvements

The Six Sigma Roadmap