Purpose of six sigma : Purpose of six sigma : To make customer happier and increase To make customer happier and increase
profitsprofits
Introduction To Six Sigma
Origin 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
Time Line
20021995199219871985
Dr Mikel J Harry wrote aPaper relating early failures to quality
Motorola
Allied Signal
General Electric
Johnson & Johnson,Ford, Nissan,Honeywell
Current 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.
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.
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
• 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?
Management Involvement?
What can it do?Motorola:
– 5-Fold growth in Sales– Profits climbing by 20% pa– Cumulative savings of $14 billion
over 11 yearsGeneral 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
GE Six Sigma Economics
1996 1998 20002002
0
500
1000
1500
2000
2500
1996
CostBenefit
(in millions)
Source: 1998 GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon total corporation cost/benefits attributable to Six Sigma.
6 Sigma Project Progress
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
Overview of Six Sigma
Overview 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
Philosophy• Know What’s Important
to the Customer (CTQ)• Reduce Defects
(DPMO) • Center Around Target
(Mean) • Reduce Variation
(Standard Deviation)
Critical Elements
• Genuine Focus on the Customer• Data and Fact Driven Management• Process Focus• Proactive management• Boundary-less Collaboration• Drive for Perfection; Tolerance for failure
Data Driven Decision
• Y• Dependent• Output• Effect• Symptom• Monitor
• X1 . . . XnX1 . . . Xn• IndependentIndependent• Input-ProcessInput-Process• CauseCause• ProblemProblem• ControlControl
f(X)f(X)Y=Y=
The focus of Six sigma is to identify and control XsThe focus of Six sigma is to identify and control Xs
Two Processes
• Define• Measure• Analyze• Improve• Control
• DefineDefine• MeasureMeasure• AnalyzeAnalyze• DesignDesign• VerifyVerify
DMAICDMAIC DMADVDMADV
• Existing Processes • New ProcessesNew Processes• DFSSDFSS
Key Concepts
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
0%5%
10%15%20%25%30%35%40%45%50%
2 3 4 5 6
Cos
t of Q
ualit
y %
Sal
es
Sigma Level
COPQ v/s Sigma Level
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
Defective 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)
Defect 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
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
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
Yield• Proportion of units within specification
divided by the total number of units.• Examples:
– If 10 units have 2 defectives– Yield = (10 – 2) x 100 /10 = 80 %
• Rolled Through Yield (RTY)– Y1 x Y2 x Y3 x ……. x Yn– E.g 0.90 x 0.99 x 0.76 x 0.80 = 0.54
Forms of Waste
What are the forms of waste?
1. Waste of Correction2. Waste of Overproduction3. Waste of processing4. Waste of conveyance (or transport)5. Waste of inventory6. Waste of motion7. Waste of waiting
1. Waste of correction• Repairing a defect wastes time and
resources (Hidden factory)
Operation Operation 11 TestTest TestTest ProductProductOperation Operation
22
FailureFailureInvestigationInvestigation
ReworkRework
FailureFailureInvestigationInvestigation
ReworkRework
HiddenHiddenFactoryFactory
2. Waste of Overproduction
• Producing more than necessary or producing at faster rate than required– Excess labor, space, money, handling
3. Waste of processing• Processing that does not provide value to
the product– Excess level of approvals– Tying memos that could be handwritten– Cosmetic painting on internals of equipment– Paint thickness more than specific values
4. Waste of conveyance• Unnecessary movement of material from
one place to other to be minimized because -– It adds to process time– Goods might get damaged
• Convey material and information ONLY when and where it is needed.
5. Waste of inventory• Any excess inventory is drain on an
organization.– Impact on cash flow– Increased overheads– Covers Quality and process issues
• Examples– Spares, brochures, stationary, …
6. Waste of Motion• Any movement of people, equipment,
information that does not contribute value to product or service
7. Waste of Waiting• Idle time between operations• Period of inactivity in a downstream
process because an upstream activity does not deliver on time.
• Downstream resources are then often used in activities that do not add value, or worst result in overproduction.
Some more sources of Waste
• Waste of untapped human potential.• Waste of inappropriate systems• Wasted energy and water• Wasted materials• Waste of customer time• Waste of defecting customers
What is Sigma?
Have you ever…• Shot a rifle?• Played darts?
What is the point of these sports?What makes them hard?
Jack
Jill
Who is the better shooter?
Have you ever…• Shot a rifle?• Played darts?
Variability
• Deviation = distance between observations and the mean (or average)
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
Jack
871089
Jill
• Deviation = distance between observations and the mean (or average)
Observations 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
Jack
Jill
76776
Variability
• Variance = average distance between observations and the mean squared
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
Variance
Jack
871089
Jill
Variability
• Variance = average distance between observations and the mean squared
Observations 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
Variance
Jack
Jill
76776
Variability
Variability• Standard deviation =
square root of variance
Jack
Jill
Average Variance Standard Deviation
Jack 8.4 1.0 1.0Jill 6.6 0.24 0.4898979
But what good is a standard deviation
The world tends to be bell-shaped
Most outcomes
occur in the middle
Fewer in the “tails”
(lower)
Fewer in the “tails” (upper)
Even very rare outcomes are
possible
Even very rare outcomes are
possible
Variability
Add up the dots on the dice
0
0.05
0.1
0.15
0.2
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Sum of dots
Prob
abili
ty 1 die
2 dice
3 dice
Here is why: Here is why: Even outcomes that are equally Even outcomes that are equally likely (like dice), when you add likely (like dice), when you add them up, become bell shapedthem up, become bell shaped
Variability
Normal distributions are divide upinto 3 standard deviations on each side of the mean
Once your that, you know a lot about what is going on
And that is what a standard deviation is good for
“Normal” bell shaped curve
Causes 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
Limits• 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
Usual v/s Unusual, Acceptable v/s Defective
Another View
LSL USL USLLSL
Off-Target Large Variation
On-Target
CenterProcess
Reduce Spread
The statistical view of a problem
USLLSL LSL = Lower spec limit
USL = Upper spec limit
More 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. Cpk ≥ 2 is exceptional.
μtarget
μtarget
Process capability
Good quality: defects are rare (Cpk>1)Poor quality: defects are common (Cpk<1)
Cpk = min
USL – x3σ
=
x - LSL3σ
=
3σ = (UPL – x, or x – LPL) = =14 20 26 15 24
24 – 203(2)
= =.667
20 – 153(2)
= =.833
1 122 3 4 5 6 7 8 9 10 11
1 1 1 1 116
LSL USL
A Six Sigma Process –
Predictably twice as good as what the customer wants
3 v/s 6
2 3 4 5 6 7 8 9 1210 16151413111
LSL USL
6 Sigma curve
3 Sigma curve
Process shift allowed
2 3 4 5 6 7 8 9 1210 16151413111
LSL USL
SD = 1
1.5 SD 1.5 SD
Six Sigma Measurement
34
56
7
66810
6210
233
3.4
Sigma
DPMOOn one condition :Calculate the defects and estimate the opportunities in the same way...
Six 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 1.5s 500,000 2.0s 308,300 2.5s 158,650 3.0s 67,000 3.5s 22,700 4.0s 6,220 4.5s 1,350 5.0s 233 5.5s 32 6.0s 3.4
Components of Six Sigma
ComponentsTwo components of Six
Sigma
1. Process Power
2. People Power
Process Power
P-D-C-A
P
DC
APlan
DoCheck
ActAct on what was learned
Check the results
Plan the change
Implement the change on a small scale.
Approach
Practical Problem
StatisticalProblem
Statistical Solution
Practical Solution
DMAIC - 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
DMAIC approach
DDefine
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
Define
DDefine
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
Measure
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 ?
DDefine
MMeasure
AAnalyze
IImprove
CControl
Analyze
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
DDefine
MMeasure
AAnalyze
IImprove
CControl
Improve
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.
DDefine
MMeasure
AAnalyze
IImprove
CControl
Control
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
DDefine
MMeasure
AAnalyze
IImprove
CControl
Omitting a step in DMAIC?
Step Consequences if the step is omitted 1. Define2. Measure3. Analyze4. Improve5. Control
Benchmark Baseline Contract / Charter Kano Model Voice of the Customer Quality Function Deployment Process Flow Map Project Management “Management by Fact” – 4 What’s
7 Basic Tools Defect Metrics Data Collection, Forms, Plan, Logistics Sampling Techniques
Cause & Effect Diagrams Failure Models & Effect Analysis Decision & Risk Analysis Statistical Inference Control Charts Capability Reliability Analysis Root Cause Analysis 5 Why’s Systems Thinking
Design of Experiments Modelling Tolerancing Robust Design Process Map
Statistical Controls Control Charts Time Series Methods Non Statistical Controls Procedure adherence Performance Mgmt Preventive activities Poke yoke
DefineWhat is wrong?
MeasureData & Process
capability
Analyze When and whereare the defects
ImproveHow to get to six sigma
ControlDisplay
key measures
Tools for DMAIC
ComponentsTwo components of Six
Sigma
1. Process Power
2. People PowerTell me, I forget. Show me , I remember. Involve me, I understand.
Master Black Belt
Black Belts
Green Belts
Team Members / Yellow Belts
Cha
mpi
ons
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.
6 Training
Six Sigma Organization
Champion
BlackBelt
BlackBelt
BlackBelt
GreenBelt
GreenBelt
GreenBelt
GreenBelt
GreenBelt
YellowBelt
YellowBelt
YellowBelt
YellowBelt
MasterBlackBelt
SeniorExecutives
Champions /Process owners
Black-Belt
Green Belt
Employees(Yellow-Belt)
Executive overview2/3 Days Provide Leadership
Champions Training - I
2 days
Champions Training –II
3 days
Process Mgmt. & Project champion
Week 2
Week 3
Week 4
Training /Facilitation
skills
Project-work
Master Black-Belt-As Trainer-Coach teams-Facilitateimprovement projects
1 Week Green-Belt Training
- Part of project teams- Sometime lead the
teams
1 / 2 Days core training on Six-Sigma
- General process control &
improvement- Project Team
Member
Black-Belt
Project work
Position in Six Sigma Organisation Typical
TrainingExpected Role Post Training
+
(Total 5 days)
6 Training
Week 1
Champion
• 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
Champion• 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
Master Black BeltRoles Responsibilities
- 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
- Highly proficient in using Six Sigma methodology to achieve tangible business results.
- Technical expert beyond Black Belt level on one or more aspects of process improvement (e.g., advanced statistical analysis, project management, communications, program administration, teaching, project coaching)
- Identifies high-leverage opportunities for applying the Six Sigma approach across the enterprise
- Basic Black Belt training- Green Belt training- Coach / Mentor Black Belts
Roles Responsibilities- 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)
- 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 Belt
Green Belt
Roles Responsibilities- 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
Yellow BeltRoles Responsibilities
- 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 team
Financial 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.
Thought of the day
• We don't know what we don't know• We can't act on what we don't know• We won't know until we search• We won't search for what we don't
question• We don't question what we don't measure• Hence, We just don't know
Project Selection
The first step to implement Six Sigma
Sources 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?
Sources 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?
• As a team List down at least 20 improvement projects related to your work areas …….
A Problem Statement should be SMART: Specific - It does not solve world hunger Measurable - It has a way to measure success Achievable - It is possible to be successful Relevant - It has an impact that can be
quantified Timely - It is near term not off in the future
Project Selection
Harvesting the Fruit of Six Sigma
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Sweet FruitSweet Fruit Design for Repeatability
Bulk of FruitBulk of FruitProcess Characterization and Optimization
Low Hanging FruitLow Hanging FruitSeven Basic Tools
Ground FruitGround FruitLogic and Intuition
Process Enhancement
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Types of Savings
• Hard Savings:– Cost Reduction
• Energy Saving• Raw Material saving• Reduced Rejection, Waste, Repair
– Revenue Enhancement• Increased production• Yield Improvement• Quality Improvement
• Hard Savings:– Cash flow improvement
• Reduced cash tied up in inventory• Reduced late receivables, early payables• Reduced cycle time
– Cost and Capital avoidance• Optimizing the current system / resources• Reduced maintenance costs
Types of Savings
• Soft Savings:– Customer Satisfaction / Loyalty– Employee Satisfaction
Types of Savings
Cost of implementing• Direct Payroll
– Full time (Black Belts, Master Black Belts)• Indirect Payroll
– Time by executives, team members, data collection
• Training and Consulting– Black Belt course, Overview for Mgmt etc.
• Improvement Implementation Costs– Installing new solution, IT driven solutions etc.
What 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.
How many projects out of 20 now qualify as Six sigma projects?
Way forward
• Get Started• Look for low hanging fruits• Even poor usage of these tools will get
results• Learn more about Six Sigma