Six Sigma Executive Overview

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VALUE-DELIVERY BUSINESS STRATEGY

Overview ofOverview ofSix SigmaSix Sigma

Business StrategyBusiness Strategy

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OverviewOverview

Six Sigma as a Business Strategy Critical Success Factors Roles Structured Problem Solving

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Six Sigma Business StrategySix Sigma Business Strategy

““Sometimes your greatest Sometimes your greatest obstacle is the view of your obstacle is the view of your

own future.”own future.”

““Begin with the end in mind.”Begin with the end in mind.” Dr. Stephen CoveyDr. Stephen Covey

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• Can your business survive without customers?Can your business survive without customers?• What is your customer’s mindset?What is your customer’s mindset?• Does the customer Does the customer havehave to buy from you? to buy from you?• How do you deliver value to your customer?How do you deliver value to your customer?

Value-Delivery as a Business Strategy?Value-Delivery as a Business Strategy?

““If a person charges too much for the work he If a person charges too much for the work he does, the bread he makes, the money he lends, does, the bread he makes, the money he lends, others will enter the market and drive prices others will enter the market and drive prices down toward the cost of production where no down toward the cost of production where no excess profits exist.”excess profits exist.”

Adam Smith, Scottish Economist Adam Smith, Scottish Economist (1723-1790)(1723-1790)

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Developing a Business StrategyDeveloping a Business Strategy

CustomersThe Business

Business Strategy

“We want VALUE!”

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What is Value?What is Value?

• Value is simply something the customer Value is simply something the customer is willing to buy from you, the supplieris willing to buy from you, the supplier• Value can be tangibleValue can be tangible• Value can be perceivedValue can be perceived• Value can be provided in terms of:Value can be provided in terms of:

• CostCost• Availability of the product or serviceAvailability of the product or service• Quality of the product or serviceQuality of the product or service• DeliveryDelivery

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What is Valued?What is Valued?

QualityQuality

CostCost

DeliveryDelivery

NeededNeededProduct orProduct or

ServiceServiceLOW COST!LOW COST!

ON TIME-ON TIME-WHEN NEEDED!WHEN NEEDED!

ZERO DEFECTS!ZERO DEFECTS!

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Quality

Cost

Delivery

NeededProduct or

ServiceLOW COST!

ON TIME-ON TIME-WHEN NEEDED!WHEN NEEDED!

ZERO DEFECTS!ZERO DEFECTS!

TangibleIntangible

We also need to consider what kind We also need to consider what kind of FEEDBACK we get from the of FEEDBACK we get from the

customer…customer…

What is Valued?What is Valued?

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Business StrategyWe want a means to

deliver value to our customers!


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Business Strategy

In addition…We have

TARGETS!•Greater profits•Increased market share•Lower operating costs•Better cycle times•Increased capacity


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Business Strategy Process based value delivery

system


Business Processes which are focused on

delivering value in terms of quality, cost

& delivery.

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Business Strategy




& delivery.

Critical Questions:•Are our processes focused on the customer?•Are our processes defect free?

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Defects in Business ProcessesDefects in Business Processes

RequirementRequirement

A process may be described by statistics based parameters which reflect process accuracy (mean) and precision or variation (standard deviation).

DefectsDefects

AverageAverage

VariationVariation

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Defects in Business ProcessesDefects in Business Processes

RequirementRequirement

A process may be described by statistics based parameters which reflect process accuracy (mean) and precision or variation (standard deviation).

DefectsDefects

AverageAverage

VariationVariation

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Business Strategy




& delivery.

Goal:Reduce defects caused by variation in those processes which are most important to the customer and deliver value.

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Business Strategy


Reduce DEFECTS & VARIATION in

Business Processes which deliver value to

customers.

Supports our business

strategy and targets.

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Business Strategy




customers.

Makes the business

stronger, more competitive, supplier of

choice.

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Business Strategy




customers.

Satisfies the customer in

terms of cost, delivery and

quality…delivers value!

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Business Strategy

Implementing a Business StrategyImplementing a Business Strategy



customers.

How do we accomplish this?

What resources are required?

How do we support this as an on going

initiative?What are the

critical success factors?

What are the benefits?

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Business Strategy: Reduce DEFECTS & VARIATION in Business Processes which deliver

value to customers.

Implementing a Business StrategyImplementing a Business Strategy

Exec

utiv

eEx

ecut

ive

Com

mitm

ent

Com

mitm

ent

Bus

ines

s

Bus

ines

s

Alig

nmen

t A

lignm

ent

D

edic

ated

D

edic

ated

P

eopl

e

Peop

le

Stro

ng L

ink

Stro

ng L

ink

to C

usto

mer

to C

usto

mer

Stru

ctur

edSt

ruct

ured

Prob

lem

sol

ving

Prob

lem

sol

ving

F

ocus

ed

Fo

cuse

d

Proj

ects

Proj

ects

Process based, customer focused projects being lead by Process based, customer focused projects being lead by dedicated team leaders whose goal is to reduce variation dedicated team leaders whose goal is to reduce variation

and eliminate defects.and eliminate defects.

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Is not:• just another program• a way to please the boss• automatic• easy

Is:• a disciplined understanding of processes• a methodology to measure those processes• a deliberate approach to managing processes• an application of structured problem solving

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RequiresRequires::• strong leadership commitmentstrong leadership commitment• customer focuscustomer focus• focused goals & stretch goalsfocused goals & stretch goals• disciplined, structured problem solvingdisciplined, structured problem solving• thinking about causes not symptomsthinking about causes not symptoms• deliberate selection of focused projectsdeliberate selection of focused projects• dedicated resourcesdedicated resources• persistence, tenacity & patience persistence, tenacity & patience

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Six sigma summarySix sigma summary

• Executive Executive Commitment & Commitment & ParticipationParticipation• Organizational Organizational AlignmentAlignment• Focus on the right Focus on the right problemsproblems• Engage the right Engage the right peoplepeople• Provide the tools & Provide the tools & resourcesresources• Motivate the Motivate the organizationorganization• Establish rewardsEstablish rewards• Establish financial Establish financial accountabilityaccountability

• Increased Increased customer valuecustomer value• Market growthMarket growth• Better quality of Better quality of product and serviceproduct and service• Bottomline Bottomline profitabilityprofitability• Shareholder Shareholder satisfactionsatisfaction• Lasting Lasting organizational organizational culture changeculture change

Implementation of defectImplementation of defect focused, structuredfocused, structured

problem solvingproblem solving

Better QualityBetter QualityLower CostLower Cost

Faster DeliveryFaster DeliveryGreater CapacityGreater Capacity

Customer FocusedCustomer FocusedProcess BasedProcess Based

IMPLEMENTATIONIMPLEMENTATION REALIZATIONREALIZATIONOFOF

IMPROVEMENTSIMPROVEMENTSENABLERSENABLERS

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The StrategyThe Strategy

Development Deployment Execution


INPUTS:INPUTS:Shareholders MarketShareholders MarketCustomers TechnologyCustomers Technology

•Make the commitmentMake the commitment•Identify resourcesIdentify resources•Establish timelinesEstablish timelines•CommunicationsCommunications•HR involvementHR involvement•FinancialsFinancials•Select the right peopleSelect the right people•Select the right projectsSelect the right projects•Project database (STARS)Project database (STARS)

•Train the leadersTrain the leaders•Recognition, reward, Recognition, reward, roles & roles & responsibilitiesresponsibilities•Training scheduleTraining schedule•Orchestrate visible Orchestrate visible launch (new areas)launch (new areas)

•Conduct the trainingConduct the training•Progress projectsProgress projects•Capture improvementsCapture improvements•Celebrate successesCelebrate successes•Leverage knowledgeLeverage knowledge•Assess effectivenessAssess effectiveness•Update project listsUpdate project lists

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Strong leadershipStrong leadership

Alignment of the businessAlignment of the business

Dedicated resourcesDedicated resources

Proper selection & scoping of projectsProper selection & scoping of projects

Strong link to the customerStrong link to the customer

Structured problem solving disciplineStructured problem solving discipline

Critical Success Factors:Critical Success Factors:

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Strong, visible leadershipStrong, visible leadership

CommitmentCommitment ConsistencyConsistency Visible involvementVisible involvement Active leadership versus authoritative Active leadership versus authoritative managementmanagement AccountabilityAccountability Establish an environment for successEstablish an environment for success

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Business alignmentBusiness alignment

Clear, consistent vision Clearly defined roles & responsibilities Consistent rewards & recognition Well defined financial model Team verses individual successes Consistent benchmarks, metrics, & goals

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Why dedicated resources?Why dedicated resources?

Programs don’t get results…Programs don’t get results…people do!people do!

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Dedicated ResourcesDedicated Resources

BlackbeltsBlackbeltsSMSM

Early identification of prerequisites Early identification of prerequisites Capable problem solvers Capable problem solvers

Master BlackbeltsMaster BlackbeltsSMSM

Future leadersFuture leaders Capable communicatorsCapable communicators

Tools for individual successTools for individual success Tools for team successTools for team success Time investmentTime investment

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The need for dedicated resourcesThe need for dedicated resources

Better return on investment Focused cadre of highly trained & motivate people Not fighting fires Focused on specific projects Benefits stem from project completion No excuses for dragging projects out Keeps teams focused

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Proper project selectionProper project selection

Important to the business Provides a team focus Strengthens business strategy

Important to the customer Process based Defect oriented Data driven Provide opportunity for successProvide opportunity for success

Incremental verse quantum leapIncremental verse quantum leap Appropriate taskingAppropriate tasking

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Strong link to the business needsStrong link to the business needs

Corporate Business StrategyCorporate Business Strategy

Business Unit StrategyBusiness Unit Strategy

Divisional StrategyDivisional Strategy

Department StrategyDepartment Strategy

Focused ProjectsFocused Projects

Driv

e Pr

ojec

tSe

lect

ion

Support Reaching

Business G

oals

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CTQ FLOWDOWNCTQ FLOWDOWN

Problem: Problem: John is a Golf Pro who currently earns John is a Golf Pro who currently earns 250K/yr. His business goal is to earn 5M/yr.250K/yr. His business goal is to earn 5M/yr.

Target - 5 million/yr Target - 5 million/yr

Project selection strategy: Link the critical Project selection strategy: Link the critical business goal with those factors and business goal with those factors and opportunities which help support the goalopportunities which help support the goal

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PossibilitiesPossibilities WinningsWinnings EndorsementsEndorsements InstructingInstructing

Output (Y)Output (Y) $$$$$$ $$$$$$ $$$$$$

CurrentCurrentBaselineBaseline

$250,000$250,000

CurrentCurrentBenchmarkBenchmark

$1.5MM$1.5MM $3-10MM$3-10MM $500K$500K

BenchmarkBenchmarkOpportunityOpportunity

GoodGood BestBest MeagerMeager

Support Support StrategyStrategy

SomeSome BestBest LittleLittle

BreakdownBreakdownLevelsLevels

BreakfastBreakfastCerealCereal

Golf ClothingGolf ClothingLineLine

Name brandName brandequipmentequipment

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PossibilitiesPossibilities BreakfastBreakfastCerealCereal



Output (Y)Output (Y) $$$$$$ $$$$$$ $$$$$$


$0$0 $0$0 $0$0


$400K-$1MM$400K-$1MM $1-5MM$1-5MM $1-3MM$1-3MM


MeagerMeager BestBest LittleLittle


NoneNone BestBest LittleLittle


ImageImage NameNameRecognitionRecognition

DomesticDomesticMarketMarket

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PossibilitiesPossibilities ImageImage NameNameRecognitionRecognition

WinWinTournamentsTournaments

Output (Y)Output (Y) PollsPolls PollsPolls ##


GoodGood NoneNone <3<3rdrd place place


ProfessionalProfessional HouseholdHouseholdrecognitionrecognition

1st place1st place


SomeSome SomeSome EntryEntryrequirementrequirement


ContributorContributor ContributorContributor MustMust


LuckLuck Lower ownLower ownscorescore

IncreaseIncreaseOther’s scoreOther’s score

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WinningsWinnings EndorsementsEndorsements InstructingInstructing

BreakfastBreakfastCerealCereal



ImageImage NameNameRecognitionRecognition

WinWinTournamentsTournaments

LuckLuck Lower ownLower ownScoreScore

IncreaseIncreaseOther’s scoreOther’s score

DrivingDriving Short GameShort Game PuttingPutting

John is a Golf Pro who currently earns John is a Golf Pro who currently earns 250K/yr. His business goal is to earn 5M/yr.250K/yr. His business goal is to earn 5M/yr.

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Lower John’s Lower John’s ScoreScore


DriveDrive ShortShortGameGame PuttingPutting

Project: Reduce the number of total putts Project: Reduce the number of total putts while on the green.while on the green.

Project: Reduce variation during chip shots optimizing Project: Reduce variation during chip shots optimizing distance to the hole when ball lands on the green.distance to the hole when ball lands on the green.

Project: Optimize/reduce variation of the distance between the Project: Optimize/reduce variation of the distance between the Tee and the final ball position when Tee-ing off at each hole.Tee and the final ball position when Tee-ing off at each hole.

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Well defined customer Internal or externalInternal or external Define a need/do relationshipDefine a need/do relationship

Understanding & defining customer Understanding & defining customer requirementsrequirements Linking customer requirements to Linking customer requirements to quality requirements & critical process quality requirements & critical process stepssteps Establishing meaningful measurements Establishing meaningful measurements which allow improvements to be visiblewhich allow improvements to be visible

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Need to understand customer needsNeed to understand customer needs Need to translate needs to requirementsNeed to translate needs to requirements Need to prioritize these requirementsNeed to prioritize these requirements Need to recognize those factors which are Need to recognize those factors which are critical to the satisfaction of the customercritical to the satisfaction of the customer Need to link critical satisfaction criteria to Need to link critical satisfaction criteria to specific processesspecific processes Need to identify those process parameters Need to identify those process parameters which affect customer satisfaction the mostwhich affect customer satisfaction the most

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CTSCTS

CTQCTQCTCCTCCTDCTD

CTPCTP

Critical to SatisfactionCritical to Satisfaction

Critical to QualityCritical to Quality - critical to qualitycritical to quality - critical to cost - critical to cost - critical to deliverycritical to deliveryCritical to ProcessCritical to Process

SPEC

PRODUCTCAPABILITY

PROCESSCAPABILITY

YY YY YY

XX XX XX

Select projects which support the customerSelect projects which support the customer

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Structured problem solvingStructured problem solving

Data drivenData driven Focused on process variation/defectsFocused on process variation/defects DisciplinedDisciplined

Specific deliverables for each phaseSpecific deliverables for each phase Milestone driven scheduleMilestone driven schedule Specific goals identifiedSpecific goals identified

Validation of measurement systemsValidation of measurement systems Use of statistics to validate decisionsUse of statistics to validate decisions Applied controls to ensure Applied controls to ensure improvements are permanent improvements are permanent

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Focus on DataFocus on Data

ObjectiveObjective not subjective not subjective Data is Data is quantifiablequantifiable Establish Establish baselinebaseline information information A basis for A basis for cost-benefitcost-benefit analysis analysis Used to make Used to make informed decisionsinformed decisions

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Roles and Roles and ResponsibilitiesResponsibilities

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Deliver results on timeDeliver results on time Breakthrough StrategyBreakthrough Strategy SystemsSystems

expertexpert Document learningDocument learning Attend all the trainingAttend all the training Show the dataShow the data Identify barriersIdentify barriersLead and direct the team to executeLead and direct the team to execute

projectsprojects Report progress to appropriateReport progress to appropriate

leadership levelsleadership levels Solicit help from Champions whenSolicit help from Champions when

neededneeded Influence without direct authorityInfluence without direct authority Be a Be a Breakthrough StrategyBreakthrough Strategy

enthusiastenthusiast Present final presentationPresent final presentation Stimulate Champion thinkingStimulate Champion thinking

Determine most effective tools to applyDetermine most effective tools to applyPrepare a detailed project assessmentPrepare a detailed project assessmentduring the Measurement Phaseduring the Measurement Phase

Identify project resources (projectIdentify project resources (projectmanagement)management)

Get input from knowledgeable operatorsGet input from knowledgeable operatorsand First Line Supervisors/Teamand First Line Supervisors/TeamLeaders/CoachesLeaders/Coaches

Lead the way by setting the directionLead the way by setting the directionthrough breakthrough strategythrough breakthrough strategy

Teach and Coach Teach and Coach BreakthroughBreakthroughStrategyStrategy methods and toolsmethods and tools

Manage project riskManage project risk Insure the results are sustainedInsure the results are sustained

Roles of a Black BeltRoles of a Black Belt

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Problem solving skills

Numeric/analytic horsepowerNumeric/analytic horsepower Knowledge of applying statistical and Knowledge of applying statistical and

quality conceptsquality concepts Ability to structure and simplify complex Ability to structure and simplify complex

issues issues

Black Belt RequirementsBlack Belt Requirements

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Teaching/coaching capabilities

Experience solving a variety of Experience solving a variety of quality/process problemsquality/process problems

Experience in developing and delivering Experience in developing and delivering training programstraining programs


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Influence/people skills

Ability to disagree with a more senior Ability to disagree with a more senior managersmanagers

Overall tone and demeanor (e.g. lack of Overall tone and demeanor (e.g. lack of arrogance)arrogance)

Open minded (a learning orientation)Open minded (a learning orientation) Facilitation skillsFacilitation skills Mindset to see others succeed, not build-up Mindset to see others succeed, not build-up

one’s own “empire” one’s own “empire”


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Energy, leadership, and achievement

Able to deal with ambiguityAble to deal with ambiguity Ability to get things doneAbility to get things done Ability to build “followership”Ability to build “followership” Considered the most valuable person in Considered the most valuable person in

their area (indispensable)their area (indispensable)


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Project Champions Project Champions

Master Black BeltsMaster Black Belts

Black BeltsBlack Belts

Green BeltsGreen Belts

Project TeamsProject Teams

• Create the VisionCreate the Vision• Approve the resourcesApprove the resources• Remove the Barriers Remove the Barriers • Manage projects across Business UnitsManage projects across Business Units

• Assist the ChampionAssist the Champion• Teach Tools & MethodologyTeach Tools & Methodology• Review Project StatusReview Project Status• Develop Road MapsDevelop Road Maps

• Lead ProjectsLead Projects• Train TeamsTrain Teams• Apply the methodologyApply the methodology• Drive projects to completionDrive projects to completion

• Similar to Black Belts (but done in Similar to Black Belts (but done in conjunction with other full time job conjunction with other full time job responsibilities)responsibilities)

• Gather DataGather Data• Implement process improvementsImplement process improvements

Summary: Roles & ResponsibilitiesSummary: Roles & Responsibilities

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Six SigmaSix SigmaStructuredStructured

Problem SolvingProblem Solving

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• Customer identificationCustomer identification• Select focused, well defined project related to strategySelect focused, well defined project related to strategy• Team organization & management buy-inTeam organization & management buy-in• Define the critical process output variable ( Y )Define the critical process output variable ( Y )• Validate the measurement systemValidate the measurement system• Baseline the current process capabilityBaseline the current process capability• Establish defect reduction goalsEstablish defect reduction goals• Identify critical process input variables ( x’s )Identify critical process input variables ( x’s )• Screen major sources of variationScreen major sources of variation• Identify those critical input variables which affect the Identify those critical input variables which affect the process output variationprocess output variation• Rank critical input variables in order of importanceRank critical input variables in order of importance• Identify & evaluate interactions between high impact Identify & evaluate interactions between high impact input variablesinput variables• Quantify the relationship between critical input variables Quantify the relationship between critical input variables with the process output by establishing a transfer function with the process output by establishing a transfer function • Identify optimum settings for critical input variablesIdentify optimum settings for critical input variables• Validate the process improvementValidate the process improvement• Implement & institutionalize permanent controls to Implement & institutionalize permanent controls to ensure sustained process improvementensure sustained process improvement• Leverage the learning Leverage the learning

Structured Problem Solving: OverviewStructured Problem Solving: Overview

DEFINEDEFINE

MEASUREMEASURE

ANALYZEANALYZE

IMPROVEIMPROVE

CONTROLCONTROL

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MeasureMeasure

AnalyzeAnalyze

ImproveImprove

ControlControl

The Goal: Solving the Problem!

Practical ProblemPractical Problem

Statistical ProblemStatistical Problem

Statistical SolutionStatistical Solution

Practical SolutionPractical Solution

ProblemProblemSolvingSolving

FlowFlow

The key to a successful project is to establish The key to a successful project is to establish controls which prevents the controls which prevents the reoccurrencereoccurrence of the of the

problem or future problem or future variationvariation in the process in the process

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Distribution One

Distribution Two

Distribution Three

Understand the processUnderstand the process

Data allows us to Data allows us to characterizecharacterize our processesour processes

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Distributions allow us to analyze data.

Key to understandingKey to understanding: Observed : Observed changes over time and changes over time and comparisonscomparisons

with with targets and limits.targets and limits.

The distribution of observationsThe distribution of observations

meanmean

StandardStandarddeviationdeviation

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Accuracy describes “Accuracy describes “centering” centering” around a target around a target value. Precision describes “value. Precision describes “spread”!spread”!

PrecisionAccuracy

Accuracy & Precision:Accuracy & Precision:

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1st distribution

2nd distribution

Lower specLower spec Upper spec.Upper spec.

DefectsDefects

p(d)

center

As a distribution shifts away from it’s targeted As a distribution shifts away from it’s targeted average value, it loses accuracy and generates average value, it loses accuracy and generates

more defects the further away it gets.more defects the further away it gets.

The effects of accuracyThe effects of accuracy

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1st distribution

2nd distribution

3rd distribution

Lower specLower spec Upper spec.Upper spec.

DefectsDefects

The effects of precisionThe effects of precision

p(d)

As a distribution spreads out, it lacks precision As a distribution spreads out, it lacks precision and generates more defects outside of a given and generates more defects outside of a given

requirementrequirement

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A six sigma process is defined as achieving A six sigma process is defined as achieving six standard deviations between it’s mean six standard deviations between it’s mean

and the closest requirement.and the closest requirement.

Defining a “Six Sigma” ProcessDefining a “Six Sigma” Process

MeanMean

LSLLSL USLUSL

6 standard deviations between the 6 standard deviations between the mean and the closest specificationmean and the closest specification

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VALUE-DELIVERY BUSINESS STRATEGY(DPMO Distribution Shifted ± 1.5)

22 308,537308,53733 66,80766,80744 6,2106,21055 23323366 3.43.4

Parts perMillion

Sigma: A metric for defectsSigma: A metric for defects

Sigma is a statistical unit of Sigma is a statistical unit of measure which reflects the measure which reflects the ability of the process to ability of the process to avoid defects. avoid defects.

The sigma score also is a The sigma score also is a predictor of future process predictor of future process performance.performance.

THE SIGMA METRIC IS FOCUSED ON THE SIGMA METRIC IS FOCUSED ON DEFECTS!DEFECTS!

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Conversion ChartConversion Chart

0.00

0.01

0.10

1.00

10.00

100.00

1000.00

10000.00

100000.00

1000000.00

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

AA

BBZ or “Sigma” ScaleZ or “Sigma” Scale

CenteredCentered

Sigma levels are determined by Sigma levels are determined by DefectsDefects

6 Sigma generates only 3.4 defects permillion opportunities

over long term examination

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f (x)Y =The causal relationshipThe causal relationship

Typically the output of a process. VariationVariation here tends to generate waste

in terms of scrap, rework, customer

complaint, or warranty cost.

Typically key control characteristics of a

process which may be known or unknown.

Changes here will cause a change in Y leading to

output variationvariation.

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Causal thinking: breaking it downCausal thinking: breaking it down

X 1

X 2

X 3

X 4

X 5

y1

X 1

X 2

X 3

X 4

X 5

y2

X 1

X 2

X 3

X 4

X 5

y3

X 1

X 2

X 3

X 4

X 5

y4

X 1

X 2

X 3

X 4

X 5

y5

B IGY

Q: What is driving the variation in Y?Q: What is driving the variation in Y?

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Pareto’s 80/20 RulePareto’s 80/20 Rule

X 1

X 2

X 3

X 4

X 5

y1

X 1

X 2

X 3

X 4

X 5

y2

X 1

X 2

X 3

X 4

X 5

y3

X 1

X 2

X 3

X 4

X 5

y4

X 1

X 2

X 3

X 4

X 5

y5

B IGY

Typically, only 20% of the independent x’s drives 80% of the variation in Y.

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YY = f (x = f (x11, x, x22, x, x33, x, x44, x, x55, x, x66,…x,…xnn))

The Focus of Six SigmaThe Focus of Six Sigma

Define Phase:Define Phase:To ensure that the process defect is focused and well defined. Should be To ensure that the process defect is focused and well defined. Should be

linked to customer requirements, business strategy, cost savings or quality issues.linked to customer requirements, business strategy, cost savings or quality issues.

ProcessProcess YY55

xx11

xx22

xx33

xxnn

YY = f (y = f (y11, y, y22, y, y33, y, y44, , yy55, y, y66,…y,…ynn))

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Y = f (xY = f (x11, x, x22, x, x33, x, x44, x, x55, x, x66,…x,…xnn))

Measure Phase:Measure Phase:Validates the ability to truly measure the Y and make the defect visible. Validates the ability to truly measure the Y and make the defect visible.

This ensure that the observed variation is not caused by the measurement system.This ensure that the observed variation is not caused by the measurement system.

ProcessProcess YY55

xx11

xx22

xx33

xxnn

YY = f (y = f (y11, y, y22, y, y33, y, y44, , yy55, y, y66,…y,…ynn))


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Two types of data:Two types of data:Attribute Data Attribute Data (Qualitative)(Qualitative)

• Go – No goGo – No go• Yes - NoYes - No• Good - BadGood - Bad• Pass – FailPass – Fail• On - OffOn - Off• Line 1, Line 2, Line 3 Line 1, Line 2, Line 3 • Regions, CitiesRegions, Cities• General labels General labels

Variable Data Variable Data (Quantitative)(Quantitative)• Continuous DataContinuous Data

• RatiosRatios• ScalesScales

• Discrete DataDiscrete Data• Number of childrenNumber of children• Fingers on 1 handFingers on 1 hand

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Variance Component AnalysisVariance Component Analysis

TT SS mm

22 22 22

We wantWe wantTo minimizeTo minimize

MeasurementMeasurementVariation!Variation!

Total Total observed observed variationvariation

Process Process variationvariation

Measurement Measurement variationvariation

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Example: Cycletime Analysis

TIMETIMEINVESTMENTINVESTMENT

PROCESS STEPSPROCESS STEPS

STEP1STEP2

STEP3

STEP4

STEP5STEP6

STEP7

PARETO

Component Analysis: what is currentComponent Analysis: what is currentperformance?performance?

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Y = f (Y = f (xx11, x, x22, x, x33, x, x44, x, x55, x, x66,…x,…xnn))

Analyze Phase:Analyze Phase:Begins to identify and screen key process input variables and rank order Begins to identify and screen key process input variables and rank order

them according to how much they affect the process output.them according to how much they affect the process output.

ProcessProcess YY55

xx11

xx22

xx33

xxnn

YY = f (y = f (y11, y, y22, y, y33, y, y44,, y y55, y, y66,…y,…ynn))


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Identification of Variation SourcesIdentification of Variation Sources

X 1

X 2

X 3

X 4

X 5

y1

X 1

X 2

X 3

X 4

X 5

y2

X 1

X 2

X 3

X 4

X 5

y3

X 1

X 2

X 3

X 4

X 5

y4

X 1

X 2

X 3

X 4

X 5

y5

B IGY

WHERE DO WE START?WHERE DO WE START?

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Typical Methodology:Typical Methodology:

X 1

X 2

X 3

X 4

X 5

y1

X 1

X 2

X 3

X 4

X 5

y2

X 1

X 2

X 3

X 4

X 5

y3

X 1

X 2

X 3

X 4

X 5

y4

X 1

X 2

X 3

X 4

X 5

y5

B IGY

We need to use DATA!We need to use DATA!

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Variation Sources: Identify/PrioritizeVariation Sources: Identify/Prioritize

Focus efforts on XFocus efforts on X77!!

Y = f (xY = f (x11, x, x22, x, x33, x, x44, x, x55, x, x66, x, x77…x…xnn))

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

x7 x4 x2 x5 x1 Others

XX77 contributes contributes approximately 82% or approximately 82% or

the variation to Ythe variation to Y

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Y = f (Y = f (xx11, x, x22, x, x33,, x x44, x, x55, x, x66,…x,…xnn))Improve Phase:Improve Phase:

Identifies the relationship between key input variables and how they Identifies the relationship between key input variables and how they affect the variation of the process output variable as they interact together. The affect the variation of the process output variable as they interact together. The goal is to define the exact transfer function which relates x’s to the Y and goal is to define the exact transfer function which relates x’s to the Y and determine the optimum setting of the vital x’s.determine the optimum setting of the vital x’s.

ProcessProcess YY55

xx11

xx22

xx33

xxnn

Y = f (yY = f (y11, y, y22, y, y33, y, y44, y, y55, y, y66,…y,…ynn))


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Improve Phase: Understanding x’sImprove Phase: Understanding x’s

Q: What is the relationship Q: What is the relationship between Xbetween X77 and X and X44??

Y = f (xY = f (x11, x, x22, x, x33, x, x44, x, x55, x, x66, x, x77…x…xnn))

0.00%

20.00%

40.00%

60.00%

x7 x4 x2 x5 x1 Others

XX77 and X and X44 contribute contribute approximately 82% or approximately 82% or

the variation to Ythe variation to Y

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Y = f (Y = f (xx11, x, x22, x, x33,, x x44, x, x55, x, x66,…x,…xnn))

Control Phase:Control Phase:Ensure that the inputs levels are controlled such that variation in the Ensure that the inputs levels are controlled such that variation in the

output is minimized…reducing defects in the process.output is minimized…reducing defects in the process.

ProcessProcess YY55

xx11

xx22

xx33

xxnn

Y = f (yY = f (y11, y, y22, y, y33, y, y44, y, y55, y, y66,…y,…ynn))


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Aspects of Control:Aspects of Control:

AMOUNT OF CONTROLAMOUNT OF CONTROL

Verb

al In

stru

ctio

nsVe

rbal

Inst

ruct

ions

Writ

ten

Inst

ruct

ions

Writ

ten

Inst

ruct

ions

Ope

ratio

nal M

etho

dO

pera

tiona

l Met

hod

She

ets

(OM

S)Sh

eets

(OM

S)

SPC

SPC

Poka

- Yo

kePo

ka -

Yoke

(Mis

take

Pro

ofin

g)(M

ista

ke P

roof

ing)

Proc

ess

rede

sign

Pr

oces

s re

desi

gn

Amount of Effort Expended

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Choosing the Right Type of ControlChoosing the Right Type of Control

Y = f (x)Y = f (x)

CTQCTQ(critical to quality)(critical to quality) CTPCTP

(critical to process)(critical to process)

SPMSPMStatistical Statistical Process Process

MonitoringMonitoring

SPCSPCStatistical Statistical Process Process ControlControl

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Choosing the Right Type of ControlChoosing the Right Type of Control

Before implementing SPC charts, you must understand just what it is you are charting…

BEWARE OF CHARTS THAT JUST LOOK GOOD!

Which one?Which one?

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ExampleExample

Problem: Optimize winnings at Black Jack by Problem: Optimize winnings at Black Jack by reducing variation and eliminating lossesreducing variation and eliminating losses

Data: Record $$$ levels after a set duration (ie an Data: Record $$$ levels after a set duration (ie an evening of playing)evening of playing)

Collecting Data:Collecting Data:

Break even $0Break even $0

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Example: Process ExaminationExample: Process Examination

Variables examined: Variables examined: Betting StyleBetting StyleBet sizeBet sizeAlcoholAlcoholTippingTippingClothingClothingLucky CharmLucky CharmSeatingSeating

Break even $0Break even $0

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Example: Process AnalysisExample: Process Analysis

Variables examined: Variables examined: Betting StyleBetting StyleBet sizeBet sizeAlcoholAlcoholTippingTippingClothingClothingLucky CharmLucky CharmSeatingSeating

0.40.35

0.22

0%

10%

20%

30%

40%

50%

Alcohol Seating CHARM

Q: What is the relationship between Q: What is the relationship between alcohol, seating & the charm?alcohol, seating & the charm?

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Example: Variable RelationshipExample: Variable Relationship

Variables levels:Variables levels:HighHigh LowLow

Alcohol: Alcohol: MartinisMartinis BeerBeerSeating:Seating: EndEnd MiddleMiddleCharm:Charm: LuckyLucky LuckyLucky

CoinCoin Rabbit’s FootRabbit’s Foot

This allows us to examine the This allows us to examine the effects that each x has on Yeffects that each x has on Y

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QUANTIFY THE ANALYSIS!QUANTIFY THE ANALYSIS!

Collected Data:Collected Data:Coin Rabbit’s Foot

Mid

e

nd

m

id

end

BEER

MARTINI

$520 $475$525 $460

$500 $435$510 $425

$450 $600$440 $590

$425 $575$400 $560

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QUANTIFY THE ANALYSIS!QUANTIFY THE ANALYSIS!

ANOVA: RESPONS versus SEATING, ALCOHOL, CHARMANOVA: RESPONS versus SEATING, ALCOHOL, CHARM

Analysis of Variance for RESPONS Analysis of Variance for RESPONS

Source DF SS MS F PSource DF SS MS F P

SEATING 1 3306.3 3306.3 35.27 0.000SEATING 1 3306.3 3306.3 35.27 0.000

ALCOHOL 1 2256.3 2256.3 24.07 0.001ALCOHOL 1 2256.3 2256.3 24.07 0.001

CHARM 1 7656.3 7656.3 81.67 0.000CHARM 1 7656.3 7656.3 81.67 0.000

SEATING*ALCOHOL 1 6.3 6.3 0.07 0.803SEATING*ALCOHOL 1 6.3 6.3 0.07 0.803

SEATING*CHARM 1 56.3 56.3 0.60 0.461SEATING*CHARM 1 56.3 56.3 0.60 0.461

ALCOHOL*CHARM 1 47306.3 47306.3 504.60 0.000ALCOHOL*CHARM 1 47306.3 47306.3 504.60 0.000

SEATING*ALCOHOL*CHARM 1 156.3 156.3 1.67 0.233SEATING*ALCOHOL*CHARM 1 156.3 156.3 1.67 0.233

Error 8 750.0 93.8Error 8 750.0 93.8

Total 15 61493.8 Total 15 61493.8 P-values less than .05 P-values less than .05 indicates significance.indicates significance.

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ANALYZE THE INTERACTION!ANALYZE THE INTERACTION!

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ANALYZE THE REMAININGANALYZE THE REMAININGMAIN EFFECTMAIN EFFECT

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Example: Verbalize the ResultsExample: Verbalize the Results

RESULTS: Always sit on the end Drink beer with the lucky coin Drink martinis with the lucky rabbit’s foot

EQUATION:Y = 493.13 – 21.87(charm) + 14.37(seating) + 11.87(alcohol) – 1.88 (charm&seating) – 54.38 (charm&alcohol)…

Always Validate the Solution!Always Validate the Solution!

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Comparing Before and AfterComparing Before and After

BaselineBaseline ImprovementImprovement

Once the improvement is validated, ensure that the vital factors are controlled…at the right

levels!

CharmAlcoholSeating

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Structured Problem Solving ToolsStructured Problem Solving Tools

- High level process mappingHigh level process mapping- Voice of the customerVoice of the customer- CTQ FlowdownCTQ Flowdown- Well defined business strategyWell defined business strategy- Follow-on projectsFollow-on projects

- Continuous Gage R&RContinuous Gage R&R- Attribute Gage R&RAttribute Gage R&R- Detailed process mapDetailed process map- Descriptive statisticsDescriptive statistics- FMEAFMEA- Fishbone diagramsFishbone diagrams- Cause & Effect MatrixCause & Effect Matrix- Graphic presentationGraphic presentation

- Multi variMulti vari- Statistical testingStatistical testing- CorrelationCorrelation- Simple regressionSimple regression

- Design of ExperimentsDesign of Experiments- Response SurfacesResponse Surfaces- Transfer functionsTransfer functions- InteractionsInteractions- Main effectsMain effects- ValidationValidation

Define Measure Analyze Improve Control

- SPCSPC- Control PlanControl Plan- Poka-YokePoka-Yoke- LeverageLeverage- $ Verification$ Verification

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Typical project timelineTypical project timeline

DefineDefineMeasureMeasure

AnalyzeAnalyzePhasePhase

4 Weeks4 Weeks 8 Weeks8 Weeks 12 Weeks12 Weeks

16 Weeks16 Weeks

ImproveImprovePhasePhase

ControlControlPhasePhase

RO

RO

RO

RO

RO

RO

RO

RO

RO

RO

RO

RO

RO

RO

RO

RO

MidpointMidpointReport Report

OutOutHighHighLevelLevel

FINALFINALReport Report

OutOutHighHighLevelLevel

RO = Report Out

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12 Months12 Months

90% Defect 90% Defect ReductionReduction90% Defect 90% Defect

ReductionReduction90% Defect 90% Defect ReductionReduction90% Defect 90% Defect

ReductionReduction90% Defect 90% Defect ReductionReduction90% Defect 90% Defect

ReductionReduction

$X Cost$X CostSavingsSavings$X Cost$X Cost

SavingsSavings$X Cost$X CostSavingsSavings$X Cost$X Cost

SavingsSavings$X Cost$X CostSavingsSavings$X Cost$X Cost

SavingsSavings

CustomerCustomerValueValueCustomerCustomer

ValueValueCustomerCustomer

ValueValueCustomerCustomerValueValue

CustomerCustomerValueValueCustomerCustomer

ValueValue

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12 Months12 Months

90% Defect 90% Defect ReductionReduction



$X Cost$X CostSavingsSavings



CustomerCustomerValueValue



The benefits roll up withThe benefits roll up withproject completion!project completion!

90% Defect 90% Defect ReductionReduction$X Cost$X Cost

SavingsSavingsCustomerCustomerValueValue 90% Defect 90% Defect

ReductionReduction$X Cost$X CostSavingsSavingsCustomerCustomer

ValueValue 90% Defect 90% Defect ReductionReduction$X Cost$X Cost

SavingsSavingsCustomerCustomerValueValue


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12 Months12 Months










Hold benefits accountableHold benefits accountableWith regular reportsWith regular reports

90% Defect 90% Defect ReductionReduction$X Cost$X Cost

SavingsSavingsCustomerCustomerValueValue 90% Defect 90% Defect

ReductionReduction$X Cost$X CostSavingsSavingsCustomerCustomer

ValueValue 90% Defect 90% Defect ReductionReduction$X Cost$X Cost

SavingsSavingsCustomerCustomerValueValue

FIN

AL

R/O

FIN

AL

R/O

FIN

AL

R/O

FIN

AL

R/O

FIN

AL

R/O

FIN

AL

R/O


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LEADERSHIPLEADERSHIP COMMITMENT, COMPETENCE, COMMITMENT, COMPETENCE, INVOLVEMENTINVOLVEMENT UNDERSTANDING THE STRATEGYUNDERSTANDING THE STRATEGY

PROJECTS PROJECTS KEYED TO DEFECT REDUCTIONKEYED TO DEFECT REDUCTION SCOPED FOR SUCCESSSCOPED FOR SUCCESS

STRUCTURED PROBLEM SOLVING METHODSSTRUCTURED PROBLEM SOLVING METHODS ENHANCED TOOLS THROUGH TOTAL ENHANCED TOOLS THROUGH TOTAL INTEGRATIONINTEGRATION DRIVEN BY STATISTICALLY VALIDATED DRIVEN BY STATISTICALLY VALIDATED DATADATA INTEGRATED WITH CRITICAL PROCESSESINTEGRATED WITH CRITICAL PROCESSES

FOCUS ON THE CUSTOMERFOCUS ON THE CUSTOMER DEDICATED RESOURCESDEDICATED RESOURCES

What makes a difference?What makes a difference?

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Data is not effected by Data is not effected by youryour past past experience!experience!

Without data, you are just Without data, you are just another person with an opinion.another person with an opinion.

How do we review current issues?How do we review current issues?

Date post:	02-May-2017
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Six Sigma Executive Overview

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