Introduction to Six Sigma

• Six Sigma is a disciplined, data-driven methodology to eliminate defects in a process

• A way to assess performance of a process– Devised at Motorola in 1987– Higher the process sigma, the fewer the defects

• Focused on customer requirements– Internal, but especially external customers– Track Defects (aka CTQs) that affect satisfaction,

loyalty, revenue, market share

Origin of Six Sigma

• 1987 Motorola Develops Six Sigma– Raised Quality Standards

• Other Companies Adopt Six Sigma– GE– Dow Chemical, DuPont, Honeywell, Whirlpool

Time Line

2002200219951995199219921987198719851985

Dr Mikel J Harry wrote aPaper relating early failures to quality

Motorola

Allied Signal

General Electric

Johnson & Johnson,Ford, Nissan,Honeywell

A scientific and practical method to achieve improvements in a company

Scientific:• Structured approach.• Assuming quantitative data.

Practical:• Emphasis on financial result.• Start with the voice of the customer.

“Show me the data”

”Show me the money”

Six Sigma

It is a PhilosophyIt is a PhilosophyAnything less than Anything less than ideal is an opportunity ideal is an opportunity for improvementfor improvementDefects costs moneyDefects costs moneyUnderstanding Understanding processes and processes and improving them is the improving them is the most efficient way to most efficient way to achieve lasting resultsachieve lasting results

It is a ProcessIt is a Process To achieve this level of To achieve this level of

performance you need performance you need to: to: DDefine, efine, MMeasure, easure, AAnalyse, nalyse, IImprove and mprove and CControlontrol

It is StatisticsIt is Statistics

6 Sigma processes will 6 Sigma processes will produce less than 3.4 produce less than 3.4 defects per million defects per million opportunitiesopportunities

PhilosophyKnow What’s Know What’s Important to the Important to the Customer (CTQ)Customer (CTQ)

Reduce Defects Reduce Defects (DPMO) (DPMO)

Center Around Center Around Target (Mean) Target (Mean)

Reduce Variation Reduce Variation (Standard Deviation)(Standard Deviation)

Data Driven Decision

• YY• DependentDependent• OutputOutput• EffectEffect• SymptomSymptom• MonitorMonitor

• 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

• DefineDefine• MeasureMeasure• AnalyzeAnalyze• ImproveImprove• ControlControl

• DefineDefine• MeasureMeasure• AnalyzeAnalyze• DesignDesign• VerifyVerify

DMAICDMAIC DMADVDMADV

• Existing ProcessesExisting Processes • New ProcessesNew Processes• DFSSDFSS

Six Sigma Methods Production

DesignService

Purchase

HRM

Administration

QualityDepart.

Management

M & S

IT

Where can Six Sigma be applied?

Is Six Sigma New?

• The basic premise of Six Sigma started in 1600 B.C. by Egyptian physicians and is noted on the Edwin Smith papyrus. It essentially says:

• Make no remedy without first understanding the cause.

Juran, Deming, Shewhart, and Crosby simply restated this principle.Juran, Deming, Shewhart, and Crosby simply restated this principle.

Key Concepts

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

Examples of what Six Sigma means in business

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

Benefits of 6Benefits of 6approach w.r.t. financialsapproach w.r.t. financials

-level Defect rate (ppm)

Costs of poor quality Status of the company

6 3.4 < 10% of turnover World class 5 233 10-15% of turnover 4 6210 15-20% of turnover Current standard 3 66807 20-30% of turnover 2 308537 30-40% of turnover Bankruptcy

Financial Aspects

Statistical background

Target =

Some Key measure

Statistical background

Target =

‘Control’ limits

LSL USL

Statistical background

Required Tolerance

Target =

LSL USL

Statistical background

Tolerance

Target =

Six-Sigma

LSL USL

ppm1350

ppm1350

Statistical background

Tolerance

Target =

LSL USL

ppm0.001

ppm1350

ppm1350

ppm0.001

Statistical background

Tolerance

Target =

LSL

0 ppm ppm3.4

USL

ppm3.4ppm

66807

Statistical background

Tolerance

Performance Standards

23456

30853766807

62102333.4

PPM69.1%93.3%99.38%99.977%99.9997%

Yield

Processperformance

Processperformance

Defects permillion

Defects permillion

Long term yield

Long term yield

Current standardCurrent standard

World ClassWorld Class

The objective is to understand customer requirements and reduce process variation and center of target

Reduce Process Variation & Centering

CenterProcess

ReduceSpread

Off-Target Too Much Variation

Centered On-Target

Critique of ISO 9000

• Bureaucratic, large scale• Focus on satisfying auditors, not customers• Certification is the goal; the job is done when certified • Little emphasis on improvement• The return on investment is not transparent • Main driver is:

– We need ISO 9000 to become a certified supplier, – Not “we need to be the best and most cost effective supplier

to win our customer’s business”• Corrupting influence on the quality profession

Components of Six Sigma

Components

Two components of Six SigmaTwo components of Six Sigma

1. Process Power1. Process Power

2. People Power2. 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.

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

Define

Project CharterProblem Statement:

Goal:

Business Case:

Scope:

Cost Benefit Projection:

Milestones:

VOC Key Issue CTQDelighters

More Is Better

Must Be

Voice of the CustomerBusiness Case

Initial Process Mapping

OutputsProcessInputs

Yield: 60%

Yield: 90%

Yield: 45%

Yield: 98%

CU

ST

OM

ER

SSU

PP

LIER

S

SIPOC

Suppliers Input Process Output CustomerClients Requirements Profile ClientSales People Resumes Interview Summaries Sales PeopleCandidates Profiles Offer Letters Delivery ManagementWeb Site Margin Template Candidate/EmployeeRecruiting Data Base

Get Requirement

Search for Candidate

Screen Candidate

Make Offer Fill RequirementPresent

Candidate

Example - SIPOCA SIPOC will allow your project team to put parameters around the process

being reviewed and identify the areas impacted both up and down stream

Suppliers – who feeds the process Inputs – what do they feed Process – steps in the process Outputs – outputs of the process Customer – who pulls from the process

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

Measure

Col # 1 2 3 4 5 6

Inspector A BSample # 1st Trial 2nd Trial Diff 1st Trial 2nd Trial Diff

1 2.0 1.0 1.0 1.5 1.5 0.02 2.0 3.0 1.0 2.5 2.5 0.03 1.5 1.0 0.5 2.0 1.5 0.54 3.0 3.0 0.0 2.0 2.5 0.55 2.0 1.5 0.5 1.5 0.5 1.0

Totals 10.5 9.5 3.0 9.5 8.5 2.0

Averages 2.1 1.9 0.6 1.9 1.7 0.4

Sum 4.0 Sum 3.6

XA 2.0 XB 1.8RA

RB

Validate MeasurementSystems

Display Data

0

1000

-1000

10 20 30

UCL

X

LCL

D B F A C E Other

Identify the Metrics

Data Collection Plan

Operational Definition and Procedures

Data Collection PlanWhat questions do you want to answer?

DataWhat Measure type/

Data typeHow measured

Related conditions

Sampling notes

How/where

How will you ensure consistency and stability?

What is your plan for starting data collection?

How will the data be displayed?

Prioritize the Metrics

I1I2I3I4

O1 O2 O3 O4

FMEA

Identify Process CapabilityLSL USL

Cp = 0.4s = 2.7

Measurethe

process

I P O

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

Analyze

.

VA NVA

Process Door

Regression Analysis

Chi-Square

c²

Regression

t-testANOVA

X 1

Y

Hypothesis-Testing Design of Experiments

.

Cause & Effect

Data Door22

21

20

19

18

17

16

15

14

13

12

1 2 3 4 5 6 7 8 9 10

X

O

n

X

O

n

X

O

n

X

O

n

X

O

n

X

O

n

X

O

n

X

O

n

O

n

X

O

n

.

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

Perform Cost-Benefit Analysis

Generate Solutions

ABCD

4132

Assess Risks

Run Pilot Test

Full scale

Original

2 4 8 6 10

G

1 3 5 7 9A

B

CD

FE

JIH

G

Plan Implementation

Select the Solution

Improve

FMEA

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

Control

Evaluate Project Results

.

UCL

LCL

Ownership & Monitoring

Before After

Step 4 changes implemented

} Improvement

Target} Remaining Gap

Good

} Improvement

Before After

A1 A2 A3 A4 A2 A1 A3 A4

Process ChangeManagement

Learnings

Recommendations

Results

• • •

next

Key Learnings

QC Process Chart

Work Instructions

Control/Check Points Response to AbnormalityNotesCode # Charac-

teristicsControlLimitsMethodWho Immediate

Fix Permanent

Fix WhoFlowchart

2

12

Product NameProcess NameProcess Code #

Date of Issue: Issued by: Approved by:Revision Date Reason Signature

1

Document &Standardize

Operating Procedures

TrainingCurriculumTraining

Manual Manual

Fill to here

.

Closure

LSL USL

s = 3.7Cp = 1.4

s = 2.7Cp = 0.4

Process Owner

BenchmarkBenchmark BaselineBaseline Contract / Contract / CharterCharter Kano ModelKano Model Voice of the Voice of the

CustomerCustomer Quality FunctionQuality Function

DeploymentDeployment Process Flow MapProcess Flow Map ProjectProject

ManagementManagement ““Management by Management by

FactFact”” –– 4 What 4 What’’ss

7 Basic Tools7 Basic Tools Defect MetricsDefect Metrics Data Collection,Data Collection,

Forms, Plan,Forms, Plan,

LogisticsLogistics SamplingSampling

TechniquesTechniques

Cause & EffectCause & Effect

DiagramsDiagrams Failure Models &Failure Models & Effect AnalysisEffect Analysis Decision & RiskDecision & Risk

AnalysisAnalysis Statistical Statistical InferenceInference Control ChartsControl Charts CapabilityCapability Reliability Reliability AnalysisAnalysis Root Cause Root Cause Analysis Analysis 5 Why5 Why’’ss Systems Systems ThinkingThinking

Design of Design of

ExperimentsExperiments ModellingModelling TolerancingTolerancing Robust DesignRobust Design Process MapProcess Map

Statistical ControlsStatistical Controls Control ChartsControl Charts Time Series Time Series

MethodsMethods

Non Statistical Non Statistical

ControlsControls ProcedureProcedure

adherenceadherence PerformancePerformance

MgmtMgmt Preventive activitiesPreventive activities Poke yokePoke yoke

DefineWhat is wrong?DefineWhat is wrong?

MeasureData & Processcapability

MeasureData & Processcapability

Analyze When and whereare the defects

Analyze When and whereare the defects

ImproveHow to get to six sigma

ImproveHow to get to six sigma

ControlDisplay key measures

ControlDisplay key measures

Tools for DMAIC

Master Black Belt

Black Belts

Green Belts

Team Members / Yellow Belts

Ch

amp

ion

s

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

Champion

Plans improvement projectsPlans improvement projects

Charters or champions chartering Charters or champions chartering processprocess

Identifies, sponsors and directs Six Identifies, sponsors and directs Six Sigma projectsSigma projects

Holds regular project reviews in Holds regular project reviews in accordance with project chartersaccordance with project charters

Includes Six Sigma requirements in Includes Six Sigma requirements in expense and capital budgetsexpense and capital budgets

Champion Cont.

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

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

Communicates leadership visionCommunicates leadership vision

Monitors and reports Six Sigma Monitors and reports Six Sigma progressprogress

Validates Six Sigma project resultsValidates Six Sigma project results

Nominates highly qualified Black Nominates highly qualified Black Belt and/or Green Belt candidatesBelt and/or Green Belt candidates

Master Black BeltMaster Black BeltRolesRoles ResponsibilitiesResponsibilities

- Enterprise Six Sigma Enterprise Six Sigma expertexpert

- Permanent full-time Permanent full-time change agentchange agent

-Certified Black Belt with Certified Black Belt with additional specialized skills additional specialized skills or experience especially or experience especially useful in deployment of Six useful in deployment of Six Sigma across the Sigma across the enterpriseenterprise

- Highly proficient in using Six - Highly proficient in using Six Sigma methodology to achieve Sigma methodology to achieve tangible business results.tangible business results.

- Technical expert beyond Black Belt Technical expert beyond Black Belt level on one or more aspects of level on one or more aspects of process improvement (e.g., process improvement (e.g., advanced statistical analysis, project advanced statistical analysis, project management, communications, management, communications, program administration, teaching, program administration, teaching, project coaching)project coaching)

- Identifies high-leverage Identifies high-leverage opportunities for applying the Six opportunities for applying the Six Sigma approach across the Sigma approach across the enterpriseenterprise

-Basic Black Belt trainingBasic Black Belt training-Green Belt trainingGreen Belt training-Coach / Mentor Black BeltsCoach / Mentor Black Belts

RolesRoles ResponsibilitiesResponsibilities- Six Sigma technical expertSix Sigma technical expert- Temporary, full-time change Temporary, full-time change

agent (will return to other agent (will return to other duties after completing a duties after completing a two to three year tour of two to three year tour of duty as a Black Belt)duty as a Black Belt)

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

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

- Demonstrated mastery of Black Demonstrated mastery of Black Belt body of knowledgeBelt body of knowledge

- Demonstrated proficiency at Demonstrated proficiency at achieving results through the achieving results through the application of the Six Sigma application of the Six Sigma approachapproach

- Coach / Mentor Green BeltsCoach / Mentor Green Belts- Recommends Green Belts for Recommends Green Belts for

CertificationCertification

Black BeltBlack Belt

Green Belt

RolesRoles ResponsibilitiesResponsibilities- Six Sigma Project originatorSix Sigma Project originator- Part-time Six Sigma change Part-time Six Sigma change

agent. Continues to perform agent. Continues to perform normal duties while normal duties while participating on Six Sigma participating on Six Sigma project teamsproject teams

- Six Sigma champion in local Six Sigma champion in local areaarea

- Recommends Six Sigma projectsRecommends Six Sigma projects- Participates on Six Sigma project Participates on Six Sigma project

teamsteams- Leads Six Sigma teams in local Leads Six Sigma teams in local

improvement projects improvement projects

Yellow Belt

RolesRoles ResponsibilitiesResponsibilities- Learns and applies Six Learns and applies Six

Sigma tools to projectsSigma tools to projects- Actively participates in team Actively participates in team

taskstasks- Communicates well with other Communicates well with other

team membersteam members- Demonstrates basic improvement Demonstrates basic improvement

tool knowledgetool knowledge- Accepts and executes Accepts and executes

assignments as determined by assignments as determined by teamteam

Financial Analyst

Validates the baseline status for Validates the baseline status for each project.each project.

Validates the sustained results / Validates the sustained results / savings after completion of the savings after completion of the project.project.

Compiles overall investment vs. Compiles overall investment vs. benefits on Six Sigma for benefits on Six Sigma for management reporting.management reporting.

Will usually be the part of Senior Will usually be the part of Senior Leadership Team.Leadership Team.

Project Selection

The first step to implement Six Sigma

Sources of Projects

External Sources:External Sources:Voice of CustomerVoice of Customer

What are we falling short of meeting customer needs?What are we falling short of meeting customer needs?

What are the new needs of customers?What are the new needs of customers?

Voice of MarketVoice of MarketWhat are market trends, and are we ready to adapt?What are market trends, and are we ready to adapt?

Voice of CompetitorsVoice of CompetitorsWhat are we behind our competitors?What are we behind our competitors?

Sources of Projects Cont.

Internal Sources:Internal Sources: Voice of ProcessVoice of Process

Where are the defects, repairs, reworks?Where are the defects, repairs, reworks?

What are the major delays?What are the major delays?

What are the major wastes?What are the major wastes?

Voice of EmployeeVoice of EmployeeWhat concerns or ideas have employees or managers What concerns or ideas have employees or managers raised?raised?

What are we behind our competitors?What are we behind our competitors?

Project Selection

A Problem Statement should be SMART: SSpecificpecific - It does not solve world hunger - It does not solve world hunger MMeasurable - It has a way to measure easurable - It has a way to measure

successsuccess AAchievable - It is possible to be chievable - It is possible to be

successfulsuccessful RRelevant - It has an impact that can be elevant - It has an impact that can be

quantifiedquantified TTimely - It is near term not off in the imely - It is near term not off in the

futurefuture

Cost of implementingDirect PayrollDirect Payroll

Full time (Black Belts, Master Black Full time (Black Belts, Master Black Belts)Belts)

Indirect PayrollIndirect PayrollTime by executives, team members, Time by executives, team members, data collectiondata collection

Training and ConsultingTraining and ConsultingBlack Belt course, Overview for Mgmt Black Belt course, Overview for Mgmt etc.etc.

Improvement Implementation CostsImprovement Implementation CostsInstalling new solution, IT driven Installing new solution, IT driven solutions etc.solutions etc.

Questions and Answers