Copyright © 2002 Aon Consulting. All rights reserved. 1

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MANAGEMENTWelcome

toSix Sigma

Lean Green belt training

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MANAGEMENT1. Introduction 2. Six sigma phases

2.1 Define phase2.2 Measure phase2.3 Analyse phase2.4 Improve phase2.5 Control phase

3. Six Sigma roles – different belts4. How to identify six sigma projects5. Typical Lean six sigma projects 5.1 Case study 1 5.2 Case study 2

Agenda

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MANAGEMENT1. Introduction 2. Six sigma phases

2.1 Define phase2.2 Measure phase2.3 Analyse phase2.4 Improve phase2.5 Control phase

3. Six Sigma roles – different belts4. How to identify six sigma projects5. Typical Lean six sigma projects 5.1 Case study 1 5.2 Case study 2

Module 1

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Six sigma has been around for more than a decade and has been tremendously successful in increasing profits in businesses.

How?

What is six sigma?Different people provide different definitions about six sigma

Introduction to Six Sigma

Six Sigma is a rigorous process improvement method for achieving customer satisfaction by focusing on what is

important to the customer.

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What is Six Sigma?

Six Sigma statistically implies a process with only 3.4 defects per million

But it is beyond just statistics …….

Six Sigma is a management philosophy and problem-solving method focussing on

a) increasing customer satisfaction

b) improvements supported by data

c) permanent solutions

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How is Six Sigma useful?What can Six Sigma do for your organization?

By using six sigma, you do six sigma projects for your organization periodically.This will result in customer satisfaction and repeat business - and growth in profits.

Also, improvements will naturally reduce costs and contribute to profits.

PROFIT = Sale price – Cost priceThis is the simple formula for PROFIT.

How will Six sigma improve PROFIT?

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Approach of Six SigmaWhat is the approach of “Six Sigma” anyway?

Six sigma adopts a two-pronged approach towards process improvement

1. To accurately meet customer needs.

2. To reduce variation in a process

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Six Sigma methodology identifies processes that are off-target, and/or have a high degree of variation, and corrects the process

Off-Target Variation

On-Target

CenterProcess

Reduce Spread

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Six Sigma Problem Solving Approach

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What is ‘Sigma’ in Six Sigma

What is the Sigma of “Six Sigma” anyway?

Sigma

Is the symbol for a statistical measure of variation in a processcalled the standard deviation.

When one knows the average ( X) and standard deviation (σ) of a process, one can describe that process quantitatively.

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What is ‘Six’ in Six Sigma

What is the six in “Six Sigma” anyway?

This six in six sigma implies that there are six standard deviations (also called sigma) between the average of the process and the allowed service level limits by customer.

This translates in simple terms to less than 3.4 defects in a million.

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Defects per millionopportunities

2 308,537

3 66,807

4 6,210

5 233

6 3.4

What is the rigor of ‘Six’ in Six Sigma

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Compare normal vs Six Sigma process

99.99966% Good (6 Sigma)

• 20,000 lost articles of mail per hour

• Unsafe drinking water for almost 15 minutes each day

• 5,000 incorrect surgical operations per week

• Two short or long landings at most major airports each day

• 200,000 wrong drug prescriptions each year

• No electricity for almost seven hours each month

• Seven articles lost per hour

• One unsafe minute every seven months

• 1.7 incorrect operations per week

• One short or long landing every five years

• 68 wrong prescriptions per year

• One hour without electricity every 34 years

99% Good (3.8 Sigma)

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A Scientific Management Tool & Philosophy, One Of Its Kind

Six Sigma - Approach

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MANAGEMENT“Eighty-five percent of the reasons or failure to meet customer expectations are related to deficiencies in systems and process… rather than the employee. The role of management is to change the process rather than badgering individuals to do better.”

- W. Edwards Deming

What experts said that supports Six Sigma

“If we can’t express what we know in the form of numbers, we really don’t know much about it. If we don’t know much about it, we can’t control it. If we can’t control it, we are at the mercy of chance.”

-Mikel J. Harry

“ Six Sigma will bring GE to a whole new level of quality in a fraction of the time it would have taken to climb the learning curve on our own.”

-Jack Welch

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Success figures of leading six sigma organisations

Motorola, which saved $2.2 billion in a four-year time frame as a result of applying Six Sigma to improve the quality of many products.

Asea Brown Boveri, which achieved a 68 percent reduction in defect levels and a 30 percent reduction in product costs - resulting in an $898 million savings each year for two years.

AlliedSignal, which achieved record operating margins and a savings of more than $2 billion in direct costs.

General Electric, which generated $2 billion in financial benefit by year-end 1999 -five years after it initiated Six Sigma. While no numbers have been published by GE since 1999, former CEO Jack Welch once estimated $5 billion in savings due to Six Sigma for year-end 2000.

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What is Lean six sigma?

• Eliminate waste• Increase speed

LEAN

• Meet customer needs with fewest errors• Reduce variation

SIX SIGMA+

=

LEAN SIX SIGMA

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Lean & Six Sigma Work Together

Process varies too much Too much rework Poor quality Process not in control Unexplainable shifts Ineffective inspection

Poor delivery Long customer lead

times Capacity problems Too much downtime

Long internal lead times Changeover time too long Inventories too high Frequent bottlenecks Process doesn’t add value

Reduce Unwanted Variation Improve Process Flow

Many Issues Require Both Approaches

LeanSix Sigma

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What is DMAIC approach of six sigma?

DMAIC stands for the different phases in six sigma.

DEFINE the problem of the customer (who could be internal/external)

MEASURE the current performance of the process

ANALYZE and determine the root causes of the defects

IMPROVE the process to eliminate the defects

CONTROL the performance of the improved process.

DMAIC approach of six sigma is used when there is an existing process with problems and needs improvement.

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DMAIC explained at a glance

1. Define• Define the Problem• Capture Voice of Customer • Map the Process

2. Measure• Gather & Display Data

• Time Series Plots• Histograms• Box plot• Process sigma3. Analyze

• Analyze the Process• Brainstorm Root Causes• Pareto Charts• Analyze Cause & Effect

4. Improve• Generate & Select Solutions • Pilot & Implement Solutions

5. Control• Standardize & Document• Evaluate Results & Monitor

Performance

DMAIC