# Introduction to Six Sigma. Topics (Session 1)  Understanding Six Sigma  History of Six Sigma  Six Sigma Methodologies & Tools  Roles & Responsibilities.

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• Introduction to Six Sigma

• Topics (Session 1)Understanding Six Sigma

History of Six Sigma

Six Sigma Methodologies & Tools

Roles & Responsibilities

How YOU can use Six Sigma

• Six Sigma is. . .A performance goal, representing 3.4 defects for every million opportunities to make one.

A series of tools and methods used to improve or design products, processes, and/or services.

A statistical measure indicating the number of standard deviations within customer expectations.

A disciplined, fact-based approach to managing a business and its processes.

A means to promote greater awareness of customer needs, performance measurement, and business improvement.

• Whats in a name?Sigma is the Greek letter representing the standard deviation of a population of data.

Sigma is a measure of variation (the data spread)

• What does variation mean?Variation means that a process does not produce the same result (the Y)every time.

Some variation will exist in all processes.

Variation directly affects customer experiences.Customers do not feel averages!

• Measuring Process PerformanceThe pizza delivery example. . .Customers want their pizza delivered fast!

Guarantee = 30 minutes or less

What if we measured performance and found an average delivery time of 23.5 minutes?On-time performance is great, right?Our customers must be happy with us, right?

• How often are we delivering on time?Answer: Look at the variation!

Managing by the average doesnt tell the whole story. The average and the variation together show whats happening.s01020304050

• Reduce Variation to Improve PerformanceHow many standard deviations can you fit within customer expectations?

Sigma level measures how often we meet (or fail to meet) the requirement(s) of our customer(s).s01020304050

• Managing Up the Sigma Scale

• Examples of the Sigma ScaleIn a world at 3 sigma. . .

There are 964 U.S. flight cancellations per day.

The police make 7 false arrests every 4 minutes.

In MA, 5,390 newborns are dropped each year.

In one hour, 47,283 international long distance calls are accidentally disconnected.In a world at 6 sigma. . .

1 U.S. flight is cancelled every 3 weeks.

There are fewer than 4 false arrests per month.

1 newborn is dropped every 4 years in MA.

It would take more than 2 years to see the same number of dropped international calls.

• TopicsUnderstanding Six Sigma

History of Six Sigma

Six Sigma Methodologies & Tools

Roles & Responsibilities

How YOU can use Six Sigma

• The Six Sigma Evolutionary Timeline1736: French mathematician Abraham de Moivre publishes an article introducing the normal curve.1896: Italian sociologist Vilfredo Alfredo Pareto introduces the 80/20 rule and the Pareto distribution in Cours dEconomie Politique.1924: Walter A. Shewhart introduces the control chart and the distinction of special vs. common cause variation as contributors to process problems.1941: Alex Osborn, head of BBDO Advertising, fathers a widely-adopted set of rules for brainstorming.1949: U. S. DOD issues Military Procedure MIL-P-1629, Procedures for Performing a Failure Mode Effects and Criticality Analysis.1960: Kaoru Ishikawa introduces his now famous cause-and-effect diagram.1818: Gauss uses the normal curve to explore the mathematics of error analysis for measurement, probability analysis, and hypothesis testing.1970s: Dr. Noriaki Kano introduces his two-dimensional quality model and the three types of quality.1986: Bill Smith, a senior engineer and scientist introduces the concept of Six Sigma at Motorola1994: Larry Bossidy launches Six Sigma at Allied Signal.1995: Jack Welch launches Six Sigma at GE.

• Six Sigma Companies

• Six Sigma and Financial Services

• TopicsUnderstanding Six Sigma

History of Six Sigma

Six Sigma Methodologies & Tools

Roles & Responsibilities

How YOU can use Six Sigma

• DMAIC The Improvement MethodologyDefineMeasureAnalyzeImproveControl

Objective:DEFINE the opportunityObjective:MEASURE current performanceObjective:ANALYZE the root causes of problemsObjective:IMPROVE the process to eliminate root causesObjective:CONTROL the process to sustain the gains.

Key Define Tools:Cost of Poor Quality (COPQ)Voice of the Stakeholder (VOS)Project CharterAs-Is Process Map(s)Primary Metric (Y)Key Measure Tools:Critical to Quality Requirements (CTQs)Sample PlanCapability AnalysisFailure Modes and Effect Analysis (FMEA)Key Analyze Tools:Histograms, Boxplots, Multi-Vari Charts, etc.Hypothesis TestsRegression AnalysisKey Improve Tools:Solution Selection MatrixTo-Be Process Map(s)Key Control Tools:Control ChartsContingency and/or Action Plan(s)

• What is the problem? The problem is the Output (a Y in a math equation Y=f(x1,x2,x3) etc).What is the cost of this problemWho are the stake holders / decision makersAlign resources and expectationsDefine DMAIC ProjectWhat is the project?Project CharterVoice of the Stakeholder

• Define As-Is ProcessHow does our existing process work?Does EVERYONE agree how the current process works?

Define the Non Value Add steps

• Define Customer RequirementsWhat are the CTQs? What motivates the customer?Voice of the CustomerKey Customer IssueCritical to QualitySECONDARY RESEARCHPRIMARY RESEARCHSurveys OTMIndustry IntelListening Posts

• Measure Baselines and CapabilityWhat is our current level of performance?Sample some data / not all dataCurrent Process actuals measured against the Customer expectationWhat is the chance that we will succeed at this level every time?

• Measure Failures and RisksWhere does our process fail and why? Subjective opinion mapped into an objective risk profile numberX1X2X4X3etc

FMEA

Failure Modes and Effects Analysis (FMEA)

Process or Product Name:Prepared by:Page ____ of ____

Responsible:FMEA Date (Orig) ______________ (Rev) _____________

Process Step/Part NumberPotential Failure ModePotential Failure EffectsSEVPotential CausesOCCCurrent ControlsDETRPNActions RecommendedResp.Actions TakenSEVOCCDETRPN

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&C&A printed on &D

Process/Product

• Analyze Potential Root CausesWhat affects our process?y = f (x1, x2, x3 . . . xn)Ishikawa Diagram (Fishbone)

• Analyze Validated Root CausesWhat are the key root causes?y = f (x1, x2, x3 . . . xn)Critical XsProcess SimulationData StratificationRegression Analysis

• Improve Potential SolutionsHow can we address the root causes we identified?Address the causes, not the symptoms.Decision

• Improve Solution SelectionHow do we choose the best solution?Solution Implementation PlanSolution Selection Matrix

SolutionSigmaTimeCBAOtherScore

Nice TryNice IdeaX

• Control Sustainable BenefitsHow do we hold the gains of our new process?Some variation is normal and OKHow High and Low can an X go yet not materially impact the YPre-plan approach for control exceptions

Sheet1

Process Control System (Business Process Framework)

Process Owner:Direct Process Customer:Date:

Process Description:CCR:

FlowchartMeasuring and Monitoring

Key MeasurementsSpecs &/or TargetsMeasures (Tools) Where & FrequencyResponsibility (Who)Contingency (Quick Fix)Remarks

P1 - activity duration, min.

P2 - # of incomplete loan applications

&LVersion 1.x&RPrinted on &D

MBD000724F7.vsd

• DFSS The Design MethodologyDesign for Six SigmaUsesDesign new processes, products, and/or services from scratchReplace old processes where improvement will not sufficeDifferences between DFSS and DMAICProjects typically longer than 4-6 monthsExtensive definition of Customer Requirements (CTQs)Heavy emphasis on benchmarking and simulation; less emphasis on baseliningKey ToolsMulti-Generational Planning (MGP)Quality Function Deployment (QFD)DefineMeasureAnalyzeDevelopVerify

• TopicsUnderstanding Six Sigma

History of Six Sigma

Six Sigma Methodologies & Tools

Roles & Responsibilities

How YOU can use Six Sigma

• ChampionsPromote awareness and execution of Six Sigma within lines of business and/or functions

Identify potential Six Sigma projects to be executed by Black Belts and Green Belts

Identify, select, and support Black Belt and Green Belt candidates

Participate in 2-3 days of workshop training

• Black BeltsUse Six Sigma methodologies and advanced tools (to execute business improvement projects

Are dedicated full-time (100%) to Six Sigma

Serve as Six Sigma knowledge leaders within Business Unit(s)

Undergo 5 weeks of training over 5-10 months

• Green BeltsUse Six Sigma DMAIC methodology and basic tools to execute improvements within their existing job function(s)

May lead smaller improvement projects within Business Unit(s)

Bring knowledge of Six Sigma concepts & tools to their respective job function(s)

Undergo 8-11 days of training over 3-6 months

• Subject Matter ExpertsProvide specific process knowledge to Six Sigma teamsAd hoc members of Six Sigma project teams

Financial ControllersEnsure validity and reliability of financial figures used by Six Sigma project teamsAssist in development of financial components of initial business case and final cost-benefit analysisOther Roles

• TopicsUnderstanding Six Sigma

History of Six Sigma

Six Sigma Methodologies & Tools

Roles & Responsibilities

How YOU can use Six Sigma

• Questions?

• Topics for Detailed DiscussionProblem IdentificationCost of Poor QualityProblem RefinementProcess UnderstandingPotential X to Critical XImprovement

• Problem IdentificationIf it aint broke, why fix itThis is the way weve always done it

• Problem IdentificationFirst Pass YieldRoll Throughput YieldHistogramPareto

• Problem IdentificationFirst Pass Yield (FPY): The probability that any given unit can go through a system defect-free without rework. Step 1Step 2Step 3Step 4Scrap 10 Units100 Units1009087Scrap 3 UnitsScrap 2 Units85Outputs / Inputs 100 / 100 = 1

90 / 100 = .90

87 / 90 = .96

85 / 87 = .97At first glance, the yield would seem to be 85% (85/100 but.)When in fact the FPY is (1 x .90 x .96 x .97 = .838)

• Problem IdentificationStep 1Step 2Step 3Step 4Re-Work 10 Units100 UnitsRe-Work 3 UnitsRe-Work 2 UnitsRolled Throughput Yield (RTY): The yield of individual process steps multiplied together. Reflects the hidden factory rework issues associated with a process. Outputs / Inputs 90 / 100 = .90

97 / 100 = .97

98 / 100 = .98

.90 x .97 x .98 = .855100 Units100 Units100 Units100 Units

• Problem IdentificationRTY Examples - WidgetsFunction 1Function 2Function 3Function 450510550505050Roll Throughput Yield50/50 = 1(50-5)/50 = .90(50-10)/50 = .80(50-5)/50 = .90

1 x .90 x .80 x .90 = .65

Put another way, this process is operating a 65% efficiency

• RTY Example - Loan UnderwritingRoll Throughput Yield50/50 = 1(50-7-2)/50 = .82(43-6)/43 = .86(43-1-2)/43 = .93

1 x .82 x .86 x .93 = .66

Put another way, this process is operating a 66% efficiencyProblem Identification

• Histogram A histogram is a basic graphing tool that displays the relative frequency or occurrence of continuous data values showing which values occur most and least frequently. A histogram illustrates the shape, centering, and spread of data distribution and indicates whether there are any outliers.Problem Identification

• Histogram Can also help us graphically understand the data Problem Identification

• Pareto The Pareto principle states that 80% of the impact of the problem will show up in 20% of the causes. A bar chart that displays by frequency, in descending order, the most important defects.Problem Identification

• Topics (Session 2)Problem IdentificationCost of Poor QualityProblem RefinementProcess UnderstandingPotential X to Critical XImprovement

• Cost of Poor QualityCOPQ - The cost involved in fulfilling the gap between the desired and actual product/service quality. It also includes the cost of lost opportunity due to the loss of resources used in rectifying the defect.Examples / Buckets Roll Throughput Yield Inefficiencies (GAP between desired result and current result multiplied by direct costs AND indirect costs in the process).Cycle Time GAP (stated as a percentage between current results and desired results) multiplied by direct and indirect costs in the process.Square Footage opportunity cost, advertising costs, overhead costs, etcHard Savings - Six Sigma project benefits that allow you to do the same amount of business with less employees (cost savings) or handle more business without adding people (cost avoidance). Soft Savings - Six Sigma project benefits such as reduced time to market, cost avoidance, lost profit avoidance, improved employee morale, enhanced image for the organization and other intangibles may result in additional savings to your organization, but are harder to quantify.

• Topics (Session 2)Problem IdentificationCost of Poor QualityProblem RefinementProcess UnderstandingPotential X to Critical XImprovement

• Multi Level Pareto Logically Break down initial Pareto data into sub-sets (to help refine area of focus)Problem Refinement

• Problem Statement A crisp description of what we are trying to solve. Primary Metric An objective measurement of what we are attempting to solve (the y in the y = f(x1, x2, x3.) calculation).Secondary Metric An objective measurement that ensures that a Six Sigma Project does not create a new problem as it fixes the primary problem. For example, a quality metric would be a good secondary metric for an improve cycle time primary metric.Problem Refinement

• Fish Bone Diagram - A tool used to solve quality problems by brainstorming causes and logically organizing them by branches. Also called the Cause & Effect diagram and Ishikawa diagramProblem RefinementProvides tool for exploring cause / effect and 5 whys

• Topics (Session 2)Problem IdentificationCost of Poor QualityProblem RefinementProcess UnderstandingPotential X to Critical XImprovement

• SIPOC Suppliers, Inputs, Process, Outputs, CustomersYou obtain inputs from suppliers, add value through your process, and provide an output that meets or exceeds your customer's requirements.

Process Understanding

• Process Map should allow people unfamiliar with the process to understand the interaction of causes during the work-flow. Should outline Value Added (VA) steps and non-value add (NVA) steps.Process Understanding

• Process Understanding

• Topics (Session 2)Problem IdentificationCost of Poor QualityProblem RefinementProcess UnderstandingPotential X to Critical XImprovement

• Potential X to Critical XY is the dependent output of a variable process. In other words, output is a function of input variables (Y=f(x1, x2, x3).Through hypothesis testing, Six Sigma allows one to determine which attributes (basic descriptor (generally limited or binary in nature) for data we gather ie. day of the week, shift, supervisor, site location, machine type, work type, affect the output. For example, statistically, does one shift make more errors or have a longer cycle time than another? Do we make more errors on Fridays than on Mondays? Is one site faster than another? Once we determine which attributes affect our output, we determine the deg...