Satyendra K Singh, IISE1WHAT IS SIX SIGMA ?2Basics A new way of doing business Wise application of statistical tools within a structured methodology Repeated application of strategyto individual projects Projects selected that will have a substantial impact on the bottom line 3Page I 2 Guaranteed Success4Page I 2 Define the Problem5Six Sigma DefinitionsBusiness Definition-A break through strategy to significantly improve customer satisfaction and shareholder value by reducing variability in every aspect of business.Technical Definition-A statistical term signifying 3.4 defects per million opportunities.6Alternative Six Sigma DefinitionsSix Sigma is a business improvement approach that seeks to find and eliminate causes of mistakes or defects in business processes by focusing on process outputs that are of critical importance to customers. (Snee, 2004).Six Sigma is a useful management philosophy and problem-solving methodology but it is not a comprehensive management system. (McAdam & Evans, 2004)7Alternative Six Sigma DefinitionsA Six Sigma initiative is designed to change the culture in an organisation by the way of breakthrough improvement in all aspects of the business. (Breyfogle III et al., 2001) Six Sigma is a programme that combines the most effective statistical and non-statistical methods to make overall business. (Pearson, 2001)8Alternative Six Sigma DefinitionsSix Sigma is a highly disciplined process that helps us focus on developing and delivering near-perfect products and services. The central idea behind Six Sigma is that you can measure how many defects you have in a process, you can systematically figure out how to eliminates them and get as close to zero defects as possible. Six Sigma has changed the DNA of GE it is the way we work - in everything we do in every product we design (General Electric at www.ge.com)9A scientific and practical method to achieve improvements in a companyScientific: Structured approach. Assuming quantitative data.Practical: Emphasis on financial result. Start with the voice of the customer.Show me the dataShow me the moneySix Sigma10Six Sigma MethodsProductionDesignServicePurchaseHRMAdministrationQualityDepart.ManagementM & SITWhere can Six Sigma be applied?1112OverviewVision and motivationWhat is Six Sigma?World Class PerformanceWith 99 % QualityWith Six SigmaQualityFor every 300000 letters delivered3,000 misdeliveries 1 misdeliveryFor every week of TV broadcasting per channel1.68 hours of dead air1.8 seconds of dead airOut of every 500,000 computer restarts4100 crashes Less than 2 crashesSource: The Six Sigma Way by Peter Pande and Others1314Based on teachings of Dr. Walter Shewhart, Dr. W. E. Deming & Dr. J. Juran.Process Control;Plan Do Check Act;Common and Special Causes;Improvement can be done project by projectStatistical toolsHawthorne Plant ExperiencesDeveloped by Bill Smith at Motorola in 1980sWhat is Six Sigma ?What Is Six Sigma? Degree of variation;Level of performance in terms of defects;Statistical measurement of process capability;Benchmark for comparison;Process improvement methodology;It is a Goal;Strategy for change;A commitment to customers to achieve an acceptable level of performanceSigma is a letter in the Greek Alphabet15Sigma LevelDefects Per Million OpportunitiesRate of Improvement 1 690,0002 308,000 2 times3 66,800 5 times4 6,210 11 times5 230 27 times6 3.4 68 times16MetricBenchmarkVisionPhilosophyMethodToolSymbolGoalValueThe Many Facets of Six Sigma17Six Sigma is a Process for ImprovementSix Sigma is different than the procedures that preceded itEmphasizes that you must have top management involvement from the startAlways has a limited time frameHas a written goalHas determined a means to measure success18Six Sigma is about MeasuringSix Sigma is all about measuring to prove results and improved profit.It is also about shaking things up.An organization not willing to change is not prepared to start a Six Sigma project 19Make no Arbitrary DecisionsSix Sigma is based on measured valuesMany of those measurements are statistical there are many degrees of probability, some nearer the truth than others QChristian Huygen 17 century fromQAbsolute Zero, Shachtman, 1979 20Not every problem is a Six Sigma issueDaily issues are no Six Sigma issuesOpened ended problems are not Six Sigma issues21Six Sigma issues have defined periodsPart of defining a Six Sigma issues is setting a time limit for the Six Sigma effort.Typical time period is 3 monthsSome have less timeRarely does a Six Sigma effort have more than 9 months22Where to StartLook for KIPV (Key Input Variables)That effect KOPV (Key Output Variables)KIPVThings that influence KOPVKOPVThings that are important to your customers2324External Six Sigma ResultsCompany Annual SavingsGeneral Electric $2.0+ billionJP Morgan Chase *$1.5 billion (*since inception in 1998)Texas Instruments $600 millionJohnson & Johnson $500 millionHoneywell$600 millionSun has launched a Six Sigma program SunSigma focused on improving product quality and reliability (software & hardware)25What Is Six Sigma?Six Sigma is a project based problem solving approach that focuses on reducing/preventing defects resulting in increased customer satisfaction and lower costs. Key components are:Project SelectionPeopleDisciplined project methodology QDMAIC- Problem solvingQDMADI- Product design and PreventionData analysis and collection tools 26Project SelectionAttributes of a good Six Sigma project:Strong tie to business deliverablesQEnhances customer satisfaction and loyaltyQStrategic importanceQImpact on profit (hard and soft benefits)Results are visible or easily link to a key executive metricQMeaningful results within 6 months (DMAIC only)QGoals can be quantified and measuredProject is feasibleQTeam can commit time to projectQPotential solutions are relatively low cost27Six Sigma PeopleExecutive sponsorshipQClear link between project and critical business goalQExecutive is visible and supportive of team effortsQExecutive breaks down barriers to improvementDedicated project managerQBlack Belt for large or difficult projects, or projects that require statistical analysisQGreen Belt for a smaller project within her/his teamVirtual teamQRepresents the people directly impacted by the problem and will be involved in the improvementsQCross-discipline and cross-group as neededQData driven decisions greatly enhance cross-group work28 Six Sigma Project MethodologyControl ControlDefine Define Measure Measure Analyze Analyze Improve ImproveLock in the results (control plan)Mistake proofingControl pointsMonitoring PlanPositive hand off of control planFinancial impact of the projectProject selectionProject charterCritical to Customer (CTQ) needsHigh level process mapKey output variables (metrics or Ys)Possible causes of defects (Xs)Data collection and presentation planCurrent PerformanceInternal/ external benchmarkingKey causes (vital few) of defects (Xs)Improvement strategyPrioritize solutionsTested & measuredsolutionsFinal solutionsProject Phases and Deliverables29Design for Six Sigma MethodologyImplement ImplementDefine Define Measure Measure Analyze Analyze Design DesignImplement product/ serviceValidated product/ serviceProject closureFinal control planProduct opportunityProject charter/goalsProject planSecondary and primary customer researchCritical customer requirements Key Product/Service requirementsProduct performanceCompetitive benchmarksConceptual design(s)Risk assessmentCustomer ImplementationHigh level implementation processFunctional designResource planSimulationDesign ScorecardTDPUControl planTest planRisk mitigation Project Phases and Deliverables30Six Sigma ToolboxGreen Belt toolsBenchmarkingBrainstormingCause- Effect diagramsCritical to CustomerTreeData Collection PlanFMEA( Failure modes and effect)Improvement strategyInterviews/ Precision questioningPrioritization matricesProject CharterProject plan templateSIPOC- Process flowSurveysWorkflowmappingBlack Belt toolsActivity analysis Affinity diagramData PresentationQHistogramQBox PlotQLine GraphsQRun ChartsQControl ChartsQPareto ChartQBar GraphsQStacked Bar GraphsQPie ChartsDesign of experimentsQFull factorialQReduced fractionsQScreening designsHypothesis testsQt- testQPaired t-testQANOVAQChi SquareProcess sigmaKano modelingQuality Functional Deployment(QFD)RegressionRolled throughput and final yieldSamplingStratification31Project Best PracticesProjects impact the business scorecard, key initiative, lowlightsExecutive sponsor status updates at the end of each project phaseWeekly updates with Business Process owner and teamDedicated resources (Black/Greenbelts) to manage the projectDetailed project plans developed and communicated to team and sponsorsProject status on a website to share learningProcess Philosophy4Know Whats Importantto the Customer (CTQ)4Reduce Defects (DPMO)4Center Around Target(Mean)4Reduce Variation (Standard Deviation)?GE Company ProprietaryNovember 1998What Is Six Sigma?3223456308,53766,8076,210Defects per Million opportunitiesDefects per Million opportunities2333.4.ProcessCapabilityProcessCapabilitySigma is a statistical unit of measure whichReflects process capability.Six Sigma as a Goal3399.99966% 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 years99% Good (3.8 Sigma)Six Sigma -- Practical Meaning34Dissecting Process CapabilityDefectsProcess CapabilityInadequate Design MarginInadequate Process CapabilityUnstable Parts & MaterialsDefects AcceptablePremise of 6Sources of variation can be:QIdentifiedQQuantifiedQEliminated or ControlledLSL USL35The Strategy Characterize Optimize BreakthroughUSLTLSLUSLTLSLTUSLLSLUSL LSLCustomer Focused - Both Internally & Externally36What is Cost of Poor Quality?In addition to the direct costs associated with finding and fixing defects, Cost of Poor Quality also includes: The hidden cost of failing to meet customer expectations the first time The hidden opportunity for increased efficiencyThe hidden potential for higher profitsThe hidden loss in market shareThe hidden increase in production cycle timeThe hidden labor associated with ordering replacement materialThe hidden costs associated with disposing of defectsFor most companies today, the cost of poor quality is likely to be 25 % of sales. In almost every company where the COPQ is unknown, the COPQ exceeds the profit margin.37Which Business Function Needs It?As long as there is a process that produces an output, whether it isa manufactured product, data, an invoice, etc, we can apply the Six Sigma Breakthrough Strategy.For these processes to perform to a customerstandard they require correct inputs!!!6 SigmaMethodsMFG.DESIGN SERVICEPURCH.MAINT.ADMIN.QAMarketing38Why Six Sigma?Six Sigma will enable Bank of America to make the breakthrough improvements in customer satisfaction and shareholder value that we must achieve to reach our goal of becoming one of the worlds most admired companies.Thats why Im committed to using it as a performance management discipline throughout our company. Ken Lewis,Chairman and Chief Executive Officer Bank of AmericaKen Lewis Vision39 Pr iori ti z ation& Root Cause Counte r Meas ures &Act ivi ti es Who When Pr o ces sC ap abil i tyExp ecte d Benef its/ Imp actTarge t Ach i eved ?/ I mp a ct1.Valuef orMo ney 1.De cli ni ng ma rketperc ep ti on c ompa redtoc ompe tit io n. 1. In cr eas e cu sto mer perc e pt io n ofv al uep rovi ded C I, KPRO, EI , HI t hru2.Inadequa tema r gi ns,di scou nt s,pr o fi t abi li ty , p romot i on s, aspe rcei v edbycust o mers /channelpartn er s2. Of fer s i mpli f ie d/comp et iti ve pri ce/pa ymen tp la ns C I, KPRO,EI,D I3. Of fer di ffe rent iate d le ad er sh ip p roducts KPR O,D&AI ,C I 12 pp. 4. Imp rov e e ffe cti ve nes s o f p romo ti ons , adve r ti s i ng C I,D I5. Imp rov e o pe r at in g co stsa nde f fi ci enci es C &GS 20 002.Cus to mer Ser vi ce /T e chni ca l Sup po rt 1.Pr oce ssno t c u stomer - fo cuse d 1. Re-s tr u ct ure /re - en gi ne er or g. t omeet needs;cus to mer foc us ed i nt egr ate d pro cess i mpro vement s KPR O,D&AI ,D I,H I t hru2.La ckof c los ed l oo p proc es s t o c orr ec t cust omer pr o bl ems 2. Addi tio nalte chnic al su ppo rtH I,D &AI,GC SS3.Un sat isf a ctor y r esp on se time , pr obl em re sol ut ion 3. Cus to meresca la t ion pr oc ess ;pr o bl emres olu tion; tec hn ica l tr ain in g EI 20 003.Prod uct Pe rf or mance1.Pr od uct s/ serv ice s do no t p erf orm to VOC re qu ir e ment s 1. Imp rov e p rod uc tpe r for manc e a ndre li ab il ity; dri vetosixsig ma qual ityst and ards C I,KPR O, C &GS, D&AI, D I,EI on-g oi ng2.Pr od uct /ser vi ce p erformanc emo ni t ori ngvs . VOC do esno to cc ur2. In sti tut e pos t-la un ch moni tor i ng fo r al l majo r pro duc t int rod uc tions C I,KPR O t hr u 20003.Pr od uct s/ serv ice s per f o rmanc e arenotea s y tou se 3. Foc uson ea se ofus e a spec ts for pr o duct de sig n D &AI ,C I on-g oi ng4.Sales /Mar ketin g Su ppor t1.Ins uf fici en t b usi ne ssgro wt h s up po rt 1. Red esi gn /r estr uct ure SF, trai ni ng,tar get k ey,cus to mer rel ati ons hipmanagemen t C I,EI,KPRO,DI,H I, t hru2.Inadequa tec ont a c t- newpr oduct /pr ogra m info rmatio n, merc handi sin g,IM 2. Expand al tern ativ eveh icl esof del i very C I,H I,KPRO 10p p3.Ins uf fici en t kn ow le dge :Bu s.- Te ch. 3. Cus to mertr ai ni ng EI4. Cus to mercommu ni cati ons D I, EI,C &GS 20 005.Easeof Do ingBu sines s 1.Cu tsa c ross p er for ma nc e a rea s (Sal es, O&D,Bil li ng &Cr e di t , Cu st. Sv c.,Te ch. S upport)1. Imp rov e s upplych ai n man agemen t ( see I SC MBFforde ta il s) Al l BU 's ( &Regi on s) t hru U S&CR o rde rtra ns act ion s ur vey ss how~9pp i mpro veme nt ( 1Q00 )2.Un respons ive , l ackof fol low -t hr o ugh ,funct ional sil os wi th li mit edsc op e2. Res pon si bil ity/ acco unta bi li ty , T rai ni ng, Commun ica tion s D I,C I,EI,GC SS 3.Un sat isf a ctor y pr o bl emres olu tion 3. Re-e ng in ee r, re -s tructur e org an iza ti ont o me etcust ome r nee ds C I,KPR O,US&CR , EAM ER11p p4. Simpl if y/imp rov epro cesse s,i ncl ud e pro bl em resol ut ion , co nt ra c ts,ac c ount s ma na ge ment H I,D I,U S&CR,EAME R, GC SS20 006.Prod uct Av ailab ili ty1.No n- i ntegr ated sup pl y c hai n r e s ul tsi n sub- op ti malo rder/ de li v ery1. See ISC MBF f or de ta il s Al l BU 'sthr u20 00PROBLEM STATEMENT: Kodak's aggregatecorporate cust omer satisfaction i s at 76%, which is lower than world class benchmarks of 90%+.This gap of 15-20 pp represents a $1B-2B revenue opportunity for the company.Benchmark: 9 0%+72 % 69%0 %50 %1 00%YE 99 1Q00 2 Q0 0 3 Q0 0 4Q00% Satisfaction 8 1. 0%0%50%1 00 %YE99 1Q0 0 2Q00 3Q00 4 Q0 0% SatisfactionNotPlannedOver allC us tome r Sati sf ac t ion ( Key Drivers )0%25%50%75%100%Value/PriceCust.Svc./Tech.Supp.Prod. Perf.Sales/Mktg.Supp.Ease DoingBus.Prod. Avail(O&D)Percent of BU's 78 %0%5 0%10 0%Y E9 9 1Q00 2Q00 3Q00 4Q00% SatisfactionNotPlannedOverallProduct Quality/Per f. Overall Service Quality Overall CustomerSatisfactionWt. 0.50 Wt. 0.25Cu st omerSat isfa ct ion B enchmark69% 68%76% 77%50%60%70%80%90%100 %EK 97* E K 98* EK 99** E K 1Q00Percent Satisfaction*O l dM etr ic :O ve ra l l C u s t o m erS a t **N e wM et r i c :Cu s to m e rS a tis fa cti onSc or eOp port unityGa pWt. 0.25Benchmark Benchmark Benchmark79.7% 71. 3% 65.1%93.2%64. 6% 70.4% 81.6% 76. 5% 80. 0% 71.8% 65.5%9 3.2%64.9% 70.4% 82.5% 76. 9%0 %50 %100 %CI HI KPRO EI DI D&A I C&GS E K Ove ral l% SatisfactionYE9 9 1Q00 Improv ementNo rdst r om, Lex us92%BMW Mer ce des86%Co ke 84 %Customer Satisfaction ScoreCustomer Segment MBF Priori tization &Root Cause Counter Measures & Activi ti es Who When Process CapabilityExpectedBenefits/ImpactTarget Achieved?/Impact1. Value for Money 1.Decli ni ng market percepti on compared to c ompet ition. 1.Increasecustomer perceptionofval ue provi ded CI , KPRO, EI, HI t hru2.Inadequate margi ns,di scount s, profi tabi li ty, promoti ons, aspercei vedby customers/channelpart ners2.Offer si mpli f ied/ competiti ve pri ce/ payment plans CI , KPRO,EI, DI3.Offer di fferentiated leadershipproduct s KPRO,D&AI,CI 12 pp. 4.Improve effect ivenessof promoti ons,adverti si ng CI ,DI5.Improve operating costs and ef fi cienci es C&GS 20002. Customer Service/Techni cal Support 1.Process not customer-focused 1.Re-s tructure/re-engi neer or g. to meetneeds; customer focused int egrated process i mprovements KPRO,D&AI,DI,HI t hru2.Lack of c losed l oop process to correct cust omer probl ems 2.Addi t ionaltechnical supportHI ,D&AI ,GCSS3.Unsat isf actory response time, pr obl emresol ut ion 3.Customer escalation process; probl em resolution; technical tr aining EI 20003. Product Performance1.Products/ serv icesdo not performt o VOC requirements 1.Improve productperformanceand reli abil ity; drive to six sigma qual ity standards CI ,KPRO, C&GS,D&AI,DI ,EI on-goi ng2.Product/ servi ce perf ormancemoni t ori ng vs.VOC does not occur 2.Insti tute post-launch monit ori ngfor al l major product introductions CI ,KPRO thru 20003.Products/ serv icesperf ormance are not easy to use 3.Focus on ease ofuse aspects for product design D&AI,CI on-goi ng4. Sales/Marketing Support1.Insuf fici ent busi ness growth support 1.Redesi gn/r estructure SF, t rai ni ng, tar getkey,cus tomer rel ati onship management CI ,EI ,KPRO, DI,HI, t hru2.Inadequate contact- new product /program information,merchandi sing,IM 2.Expandal ternat ive vehicl es ofdeli very CI ,HI, KPRO 10 pp3.Insuf fici ent knowledge:Bus.-Tech. 3.Customer t rai ni ng EI4.Customer communi cations DI , EI,C&GS 20005. Ease of Doing Business 1.Cuts across perf ormanceareas (Sal es,O&D, Bil li ng& Credi t , Cust .Svc.,Tech. Support)1.Improve supply chai nmanagement (see ISC MBF for detail s) Al l BU's (&Regi ons) t hru US&CR order transact ionsurveysshow~9pp i mprovement ( 1Q00)2.Unresponsive, l ack offol low-t hrough, functional sil os wi th li mited scope2.Responsibil ity/ accountabi li t y, Trai ni ng, Communications DI ,CI,EI,GCSS3.Unsat isf actory probl em resolut ion 3.Re-engineer, re-structur e organizati on to meetcust omer needs CI ,KPRO,US&CR, EAMER11 pp4.Simpl ify/improve processes, incl udeprobl em resolut ion,cont racts, account smanagement HI ,DI,US&CR,EAMER,GCSS20006. Product Avail abili ty1.Non-i ntegrated suppl ychai n resul ts i n sub-opti malorder/deli very 1.See I SCMBF for detail s Al l BU'st hru 2000PROBLEMSTATEMENT: Kodak's aggregate corporate customer satisfact ion isat 76%, which is lower than world class benchmarks of 90%+.This gap of 15-20 pp represents a $1B-2B revenue opportunity for the company.Benchmark: 90%+72% 69%0%50%100%YE99 1Q00 2Q00 3Q00 4Q00% Satisfaction81. 0%0%50%100%YE99 1Q00 2Q00 3Q00 4Q00% SatisfactionNotPlannedOverallCustomer Satisfaction (Key Dri vers)0%25%50%75%100%Value/PriceCust.Svc./Tech.Supp.Prod. Perf.Sales/Mktg.Supp.Ease DoingBus.Prod. Avail(O&D)Percent of BU's 78%0%50%100%YE99 1Q00 2Q00 3Q00 4Q00% SatisfactionNotPlannedOverallProduct Quality/Per f. Overall Service Quality Overall Customer SatisfactionWt. 0.50 Wt. 0.25Customer Satisfaction Benchmark69% 68%76% 77%50%60%70%80%90%100%EK 97* EK98* EK 99** EK 1Q00Percent Satisfaction*O l d M etr i c:Ove ra llC us to merSa t **Ne w Me tr i c:Cu sto m erSa ti s fa cti on Sc or eOpportunity GapWt. 0.25Benchmark Benchmark Benchmark79.7% 71.3% 65.1%93.2%64.6% 70.4% 81.6% 76. 5% 80.0% 71.8% 65.5%93.2%64.9% 70.4% 82.5% 76.9%0%50%100%CI HI KPRO EI DI D&AI C&GS EK Overall% SatisfactionYE99 1Q00 ImprovementNordstrom, Lexus 92%BMWMercedes 86%Coke 84%Customer Sat isfaction ScoreDeposits Golden Thread MBFGreen Belt Project Application Problem Definition(What is the Defect? What is the magnitude of the defect? What is the improvementgoal (at least 50% improvement) and timeframe for this project?) : Primary Metric(measure of defect): SecondaryMetric(counterbalancing measure):

What will be the impact of the improvement froma customers standpoint? What is the expected savings or revenue increase? High Level Process Map and Multilevel Pareto areattached._______ Financial Director Sign ature: _____________________________________________________________ Date:(Agrees that the potential financial benefits can be achieved and measured) Customer Segment Leader Signature_______________________________________________________ Date: Champ ions Signature: ___________________________________ _______________________________ Date: Complete after project is approvedforclass enrollment Name of Green Belt Candidate: Project TeamMembers: Green Belt ProjectCustomer Segment Root Cause1. Too many problems (error free banking)Assigned to Payment and Deposits Golden Thread TeamsDeposit Golden Thread Root Cause2.1 Complexity of Teller Processes contributes to processing errorsGreen Belt Project Definition Improve number of counter deposit slips presented for processing but did not post in time in _____________ (Mid-Atlantic, Kansas City, or Tampa) from ________% to ______%.Strategic Alignment - From Strategy to Action Bank of America Ken Lewi s, Chairman and CEO 1.1 Provide a world-class customer/client experiencethrough easy access and efficient, error -free service C. Goslee / B. Desoer1.2 Attract and retain prof itable customers/clientsand continuously reward them for keeping and bringing more of their business tousG. Taylor / R. DeMartini / A. BrinkleyE. Br own1.3 Become the trusted advisor for financial solutions R. DeMartiniE. Brown1.4 Develop and deliver innovative new products and solutions which make financial services work in ways it never has before A. Br inkley/ B. Desoer E. BrownBe Recognized As One of the Worlds Most Admired CompaniesVISION Breakthrough Strategies GOALS ASSOCIATE Provider of Choice 92% Customer Satisfaction Employer of Choice 90% Associate Satisfaction 2nd DraftCUSTOMER 2.1 Attract and retain a world -class work force S. Alphin2.2 Define and align Associate roles, measures and rewardsto our strategy S. Alphin2.3 Provide the support and tools Associates need to excel B. Desoer2.4 Enable Associates to achieve professional growth balanced with personal goalsB. Desoer2.5 Reflect the diversity of the communities and customerswe serve in our work forceS. AlphinHoshin PlanHoshin Strategy1.1Provide a world-class customer/client experience through easyaccess and efficient, error-free service Six Sigma Change Process40A Common Tollgate Approach A Common Tollgate ApproachA Common Tollgate Approach A Common Tollgate ApproachProject ManagementOwnership & CommitmentChange Integration DefineDefineMeasureMeasureAnalyzeAnalyzeImproveImproveControlControlImprovement (Current) Development (New)Two approaches to reaching the Six Sigma goal:- Improving existing products and processes- Developing new products and processes

Different tools and steps, but focus and flow is the sameDFSS DFSS$ $GB/BB GB/BBTwo Approaches41Leadership Commitment, Competence, & InvolvementMethodology & ToolsData DrivenStatistically ValidatedBest People 100% Dedicated to Defect Reduction Project FocusedAligned to Strategic Goals (Hoshin, MBF)High ROI ExpectationsWhat Makes Six Sigma Different?42Six Sigma & Leadership Six Sigma only works when Leadership is passionate about excellence and willing to change. Fundamentals of LeadershipQChallenge the processQInspire a shared visionQEnable others to actQModel the wayQEncourage the heartSix Sigma is a catalyst for leaders43Bank of America Executive Officer team Ken Lewis certified Green Belt Jim Hance certified Green Belt Amy Brinkley certified Green Belt Ed Brown certified Green Belt Rich DeMartini certified Green Belt Barbara Desoer certified Green Belt Gene Taylor certified Green BeltThe Bank of America executive officer team are allcertified Green BeltsExecutive Commitment44Sustaining the intensity of our Six Sigma work is critical for Bank of America to achieve its strategic goals. Six Sigma has enabled us to generate more than $300MM in first-year productivity gains for the company. It has also had a significant impact upon the leadership team with our personal education and certification as Six Sigma Green Belts. As we look to the future, our leadership charge is to keep Six Sigma a top priority and use it to produce organic customer revenue growth.Ken Lewis (10/9/02)Results4546InitiativeBreakthrough Improvement Systematic, Focused Approach Projects Linked to Business Strategy Key People Selected & Trained Project Management & Reviews Results QStrategic Process Improvement QFinancial Results Sustain the Gains47Method and ToolsProcess Thinking Process Variation Facts, Figures, Data Critical Few Drivers Customer Satisfaction Cycle Time 48Six Sigma Applies to All Processes in All IndustriesCustomer Service Design Purchasing Manufacturing Sales Marketing AdministrationManufacturing Financial Telecommunications Health Care Government Education49What is Different? Why Does Six Sigma Work?Driven by top leadership Top-down deployment - integrated with business strategies Bottom-line cost-benefit Disciplined approach (Define-Measure-Analyze-Improve-Control)Sense of urgency (4-6 month projects) Well defined roles & infrastructure (Champion, MBB, BB, GB, etc) Statistical and data based decisions Customer and process focus50Define-Measure-Analyze-Improve-ControlDefine: Define the problem, measures and process associated with the problem; quantify benefits; and identify project team. Measure: Determine the capability of the current process and the measurement system.Analyze: Analyze data to assess patterns and trends between inputs and outputs. Improve: Verify critical inputs and determine optimum settings. Implement. Control: Implement controls to sustain the gains.51DMAIC DMAIC is an acronym that stands for the 5 major steps within the Six Sigma program.D -DefineM MeasureA -AnalyzeI - ImproveC -Control52DMAICDMAIC is a structured, disciplined and aggressive approach to process improvement that consists of the above five phases. Each phase is linked logically to the previous phase, and to the next phase at the same time. The purpose of this rigorous methodology is to achieve the overall goal of Six Sigma, which is 3.4 defects per million parts, or opportunities. 53PHASE ONE - DEFINEIn this phase, the project's purpose and scope are defined. Customer information and background information on the process is collected. The output of this phase is: 1. A clear statement of the intended improvement.2. A high-level map of the process (SIPOC - defined further later).3. A list of what is important to the customer (Voice of the customer). 54PHASE TWO - MEASUREThe goal of the Measure phase is to focus the improvement effort by gathering information on the current situation. The output of Measure is: 1. Baseline data on current process performance.2. Data that pinpoints problem location or occurrence.3. A more focused problem statement. 55PHASE THREE - ANALYZEThe goal of the Analyze phase is to identify root cause(s) and confirm those with data. The output is a theory that has been tested and confirmed. The verified cause(s) will form the basis for solutions in the next phase. 56PHASE FOUR - IMPROVEThe goal of the Improve phase is to do trials and implement solutions that address the identified root cause(s). The output is planned, tested actions that should eliminate or reduce the impact of the identified root cause(s). A plan is also created as to how the results will be evaluated in the next phase. 57PHASE FIVE - CONTROLThe goal of the Control phase is to evaluate the solutions and the plan, maintain the gains accomplished by standardizing the process, and outline steps for on-going improvements including opportunities for replication. 58It is also important to consider if this improvement affects similar lines of production. The output is: 1. Before and after analysis.2. A monitoring system.3. Completed documentation of results, learning's, and recommendations. Customer FocusedOur Performance Compared to CompetitorsImportance to CustomersWere BetterTheyre BetterHighModerate-to-Low Price Complaints OTD Quality Training Complete Shared GoalsTop 5 Action ItemsDriver Action Description Status Status Description OwnerOriginal Due DateCurrent Due DateLate Supplier Deliveries Monthly reporting to suppliers on delivery & quality metrics.OntrackReport Cards Implemented. Adam 5/21 5/21Late Supplier Deliveries Arrange face to face meetings with topoffenders.OntrackMeetings Complete with top 10Suppliers.Beth 6/15 6/15Late Supplier Deliveries Review and approve supplier's corrective actionplan.Caution Corrective Action Plan in Place for 2major SuppliersCarlos 7/15 9/15xyz Cell Always Late Kaizen Event to focus on improving throughput by 40% and improve labor efficiency by 35%OntrackEvent held 5/1. 25% throughput improvement in May.Labor Efficiency Increase of 30%Doreen 5/21 5/21Unrealistic Promise Date Focus on custom products to provide realistic ATP based on inventory and leadtime ofcomponents.Problem Continued lack of progress.Re-structured and focused team.Developing detailed plan.Earnest 6/15 8/15ON TIME DELIVERY (sample)The percentage of sales order line items that ship complete on or before the original customer promise date, forall line items shipped in the month.On-Time Delivery0%10%20%30%40%50%60%70%80%90%100%Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecTargetPareto of Drivers0%25%50%75%100%LateSupplierDeliveriesxyz CellAlwaysLateUnrealisticPromiseDateOrders onCredit HoldLow Yieldon part abcEngineeringChangeOrdersReason% Impact59Data Driven DecisionsWhy should we test or inspect Y, if we know this relationship?Y Dependent Output Effect Symptom Monitor Response X1 . . . XN Independent Input-Process Cause Problem Control FactorTo get results, should we focus our behavior on the Y or X ?f (X)f (X)Y=Y=602 308,5373 66,8074 6,2105 2336 3.42 308,5373 66,8074 6,2105 2336 3.4PPMPPMBreakthrough performance gainsSigma is a statistical unit of measure which reflects process capability.The sigma scale of measure is perfectly correlated to such characteristics as defects-per-unit, parts-per million defective, and the probability of a failure/error.(Distribution Shifted 1.5 )ProcessCapabilityProcessCapabilityDefects per Million OpportunitiesDefects per Million Opportunities61Basic ImplementationRoadmapUnderstand and DefineEntire Value StreamsDeploy Key Business Objectives- Measure and target (metrics)- Align and involve all employees- Develop and motivateDefine, Measure, Analyze, ImproveIdentify root causes, prioritize, eliminate waste,make things flow and pulled by customersControl-Sustain Improvement-Drive Towards PerfectionIdentify Customer RequirementsVision (Strategic Business Plan)Continuous Improvement (DMAIC)Identify Customer Requirements62Top 5 Action ItemsDriver Action Description Status Status Description OwnerOriginal Due DateCurrent Due DateLate Supplier Deliveries Monthly reporting to suppliers on delivery & quality metrics.On trackReport Cards Implemented. Adam 5/21 5/21Late Supplier Deliveries Arrange face to face meetings with top offenders.On trackMeetings Complete with top 10 Suppliers.Beth 6/15 6/15Late Supplier Deliveries Review and approve supplier's corrective action plan.Caution Corrective Action Plan in Place for 2 major SuppliersCarlos 7/15 9/15xyz Cell Always Late Kaizen Event to focus on improving throughput by 40% and improve labor efficiency by 35%On trackEvent held 5/1. 25% throughput improvement in May.Labor Efficiency Increase of 30%Doreen 5/21 5/21Unrealistic Promise Date Focus on custom products to provide realistic ATP based on inventory and leadtime of components.Problem Continued lack of progress.Re-structured and focused team.Developing detailed plan.Earnest 6/15 8/15ON TIME DELIVERY (sample)The percentage of sales order line items that ship complete on or before the original customer promise date, for all line items shipped in the month.On-Time Delivery0%10%20%30%40%50%60%70%80%90%100%Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecTargetPareto of Drivers0%25%50%75%100%LateSupplierDeliveriesxyz CellAlwaysLateUnrealisticPromiseDateOrders onCredit HoldLow Yieldon part abcEngineeringChangeOrdersReason% Impact63Does it work?.Source:American Customer Satisfaction Index, U Michigan, HBR, 2001 199973 companies Ralston PurinaQuaker OatsHilton HotelsCoca-ColaUnileveretc.The top companies in Customer Satisfaction grow MVA atnearly twice the rate of their poor-performing counterparts.$23$4201020304050Low HighCustomer Satisfaction Index ScoreMarket Value AddedIn Billions $64What about Lean, TOC, TQMSix SigmaRemove defects, minimize varianceLeanRemove waste, shorten the flowTOCRemove and manage constraintsTQMContinuous Improvement65Making it happenThree major rolesImplementerLearns the toolsWorks the processSolves day to day problemsManagerLearns the methodologyManages a value streamReviews project teamsLeaderEstablishes the vision for the futureSets prioritiesEncouragesWhere do you need to focus?66Six Sigma What It isHow It Affects Human Resources67What is Six Sigma ? Measure of how well a process is performing - Six Sigma process produces 3.4 defects per million opportunities - Most companies are at 3-4 sigma levelPhilosophy of reducing defects so we can improve customer satisfaction and reduce costsBusiness Strategy that increases process performance resulting in enhanced customer satisfaction and improved bottom line ($$). 68What is Six Sigma?ImprovementBreakthroughSystematic, Focused ApproachRight Projects - Linked to Business GoalsRight People- Selected & TrainedProject Management- Management ReviewsSustaining Gains- Identify New ProjectsRight Results- Process & Financial($$)Process ThinkingProcess VariationFacts, Figures, DataDefine, Measure, Analyze, Improve, Control8 Key Tools- Linked and SequencedStatistical ToolsMinitabCritical Few VariablesINITIATIVE METHODS & TOOLS69ROLES OF LEADERSManagement TeamProjectChampionMaster Black BeltGreenBeltBlack BeltandTeamFunctional GroupsHR, Finance, ITEngg, QA, etc.70Six Sigma ImprovementStrategyPhase 0: Process DefinitionPhase I:Process MeasurementPhase II: Process AnalysisPhase III:Process ImprovementPhase IV:Process Control718 Key Six Sigma ToolsMaps and MetricsCause and Effect MatrixGage R&R StudyCapability AnalysisFailure Mode and Effects AnalysisMulti-Vari AnalysisDesign of ExperimentsControl Plans including Statistical Process ControlAdvanced tools are used as needed to speed up improvement72Some Manufacturing Black Belt ProjectsIncrease process yield $300kIncrease process capacity$400kIncrease dryer throughput $130kReduce process downtime and scrap $320kReduce caustic use of Process Z$2000kMaterial loss: Reduce scrap & increase yield$150kReduce wet milling operations costs $300k73Topics of Non-Manufacturing ProjectsBilling Energy Reduction Engineering EnvironmentalFinance & Accounting Human ResourcesInformation TechnologyInternal AuditsInventory ReductionLegalLogistics - Transportation Customer ServiceMaintenancePlanning and SchedulingProduct DesignPurchasingQC LabSafety SalesShipping74Projects in Human ResourcesReduce cycle time on hiring process Increase hit rate on job applicantsEmployee turnover reductionOvertime reductionReducing staffing shortagesCycle Time Reduction for Long-Term Disability Application Process75Long Term Disability Application ProcessSite Determines Condition Prevents Employee from Returning to Work IndependentMedicalEvaluationEmployeeSiteMedicalSiteHuman ResourcesMedicalAuthorizationMedical Evaluation ReportMedicalAuthorizationCase Determination LetterEnter Total & Permanent CodeBenefits Supplier Review ProcessApproval / DenialEmployee Requests Site to Initiate an ApplicationAlternativeSupportingMedical InfoTransferrable Skills Analysis & Labor Market SurveyWeekly Disability Claim Notification Process76ImprovementsSupplier Processes- Renegotiate sub-contractors terms- New case management reporting- Review of case turn-around time performanceDupont Processes- Greater use of email and intranet- Case tracking and reporting database added- Use of performance metrics at SBU and sites- Ongoing communication, training and education77BenefitsAverage Cycle Time reduced 50-70%Process performance now meeting customer requirements of decisions in 50% QFinancial impact QPeople will support a project they understand and see as important 97Characteristics of a Good Project (contd.)Clear quantitative measures of success Reasonable scope 4-6 months Has the support and approval of management needed to get resources and remove barriers Champions or enablers High-level managers who champion Six Sigma projects they have direct support from an executive management committee orchestrate the work of Six Sigma Black Belts provide Black Belts with the necessary backing at the executive level98Further down the line - after initial Six Sigma implementation package Master Black Belts Black Belts who have reached an acquired level of statistical and technical competence Provide expert advice to Black Belts Green Belts Provide assistance to Black Belts in Six Sigma projects Undergo only two weeks of statistical and problem solving training99Black Belt RecognitionSelection - Six Sigma PinCertification - $5,000 Certification Bonus - Six Sigma Diploma/PlaqueProject Completion Bonus Awards - $500 to $5,000 in cash or stock options available> Granted by Project Champion > Approved by Six Sigma Recognition Committee100Black Belt Recognition (cont.)Six Sigma Spirit Awards - Made by Project Champion - Recognizes and rewards efforts and achievements during projects with individual and team awards > theater/movie tickets,dinners, t-shirts, spot cash bonuses, etc. Six Sigma Success Plaque - Awarded at completion of first project > Engraved placard for project> Plaque designed to add multiple projects as completed101Company K - Recognition Program(Contd)Green Belt Recognition- Similar to Black Belt recognition - No certification bonusProject Team Member Recognition- Similar to BB and GB Recognition- No certification awardsAnnual Six Sigma Recognition event- Presentation of key projects- Dinner reception with senior leadership102Master Black BeltBlack BeltsGreen BeltsTeam MembersQuality Fundamentals/ Kaizen NowChampionsMentor, 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.Responsible for supporting the Deployment Strategy within Line of Business/Customer Segment or Golden ThreadDeploymentChampionsEducation103SummarySix Sigma - It is different - It works if you follow the process- Produces significant bottom line resultsChange is required by all persons who get involved with the initiativeSix Sigma will last as long as it produces bottom line results ($$) SHOW ME THE MONEY($$)104Show Me The Money ($$)105Knowledge KnowledgeManagement ManagementThe Six Sigma InitiativeThe Six Sigma Initiativeintegrates these effortsintegrates these efforts106Six Sigma companies Companies who have successfully adopted Six Sigma strategies include:107GE Service company - examplesApproving a credit card applicationInstalling a turbineLending moneyServicing an aircraft engineAnswering a service call for an applianceUnderwriting an insurance policyDeveloping software for a new CAT productOverhauling a locomotive108the most important initiative GE has ever undertaken.Jack WelchChief Executive OfficerGeneral Electric In 1995 GE mandated each employee to work towards achieving 6 sigma The average process at GE was 3 sigma in 1995 In 1997 the average reached 3.5 sigma GEs goal was to reach 6 sigma by 2001 Investments in 6 sigma training and projects reached 45MUS$ in 1998, profits increased by 1.2BUS$ In 1995 GE mandated each employee to work towards achieving 6 sigma The average process at GE was 3 sigma in 1995 In 1997 the average reached 3.5 sigma GEs goal was to reach 6 sigma by 2001 Investments in 6 sigma training and projects reached 45MUS$ in 1998, profits increased by 1.2BUS$General ElectricGeneral Electric109At Motorola we use statistical methods daily throughout all of our disciplines to synthesize an abundance ofdata to derive concrete actions.How has the use of statistical methods within Motorola Six Sigma initiative, across disciplines, contributed to our growth? Over the past decade we have reduced in-process defects by over 300 fold, which has resulted in cumulative manufacturing cost savings of over 11 billion dollars*.Robert W. GalvinChairman of the Executive CommitteeMotorola, Inc.MOTOROLAMOTOROLA*From the forward to MODERN INDUSTRIAL STATISTICS by Kenett and Zacks, Duxbury, 1998 *From the forward to MODERN INDUSTRIAL STATISTICS by Kenett and Zacks, Duxbury, 1998 *From the forward to MODERN INDUSTRIAL STATISTICS by Kenett and Zacks, Duxbury, 1998 *From the forward to MODERN INDUSTRIAL STATISTICS by Kenett and Zacks, Duxbury, 1998110Positive quotations If youre an average Black Belt, proponents say youll find ways to save $1 million each yearRaytheon figures it spends 25% of each sales dollar fixing problems when it operates at four sigma, a lower level of efficiency. But if it raises its quality and efficiency to Six Sigma, it would reduce spending on fixes to 1%The plastics business, through rigorous Six Sigma process work , added 300 million pounds of new capacity (equivalent to a free plant), saved $400 million in investment and will save another $400 million by 2000111Negative quotations Because managers bonuses are tied to Six Sigma savings, it causes them to fabricate results and savings turn out to be phantomMarketing will always use the number that makes the company look best Promises are made to potential customers around capability statistics that are not anchored in reality Six Sigma will eventually go the way of the other fads112Barrier #1: Engineers and managers are not interested in mathematical statisticsBarrier #2: Statisticians have problems communicating with managers and engineersBarrier #3: Non-statisticians experience statistical anxiety which has to be minimized before learning can take placeBarrier # 4: Statistical methods need to be matched to management style and organizational cultureBarrier #1: Engineers and managers are not interested in mathematical statisticsBarrier #2: Statisticians have problems communicating with managers and engineersBarrier #3: Non-statisticians experience statistical anxiety which has to be minimized before learning can take placeBarrier # 4: Statistical methods need to be matched to management style and organizational cultureBarriers to implementation113TechnicalTechnical Skills SkillsSoft Skills Soft SkillsStatisticians StatisticiansMaster BlackMaster Black Belts BeltsBlack Belts Black BeltsQuality ImprovementQuality Improvement Facilitators FacilitatorsBB BB BB BBMBB MBB114Reality Six Sigma through the correct application of statistical tools can reap a company enormous rewards that will have a positive effect for yearsor Six Sigma can be a dismal failure if not used correctly ISRU, CAMT and Sauer Danfoss will ensure the former occurs115BANK OF AMERICA SS ExperienceGoalsQ# 1 in Customer SatisfactionQWorlds most admired companyQWorlds largest bankStrategy - Develop business processexcellence by applying voice of the customer to identify and engineer critical few business processes using Six SigmaCreated Quality & Productivity DivisionSource: Best Practices Report116Bank of America SS Experience Wanted results in 1 year;Hired more than 225 MBB & BBs from GE, Motorola, Allied Signal for rapid deploymentDeveloped 2 week Green Belt training programsIntroduced computer simulation of processesTrained 3767 Green Belts, certified 1230 - Minimum value target per GB project $ 250KTrained 305 Black Belts, certified 61 - Minimum value target per BB project $ 1 millionTrained 43 MBB, 1017 in DFSS 80 % of Executive Team trained in GB and 50 % Certified117Bank of America SS ExperienceResults of first 2 years:Reduced ATM withdrawal losses by 29.7 % Reduced counterfeit losses in nationwide cash vaults by 54%Customer delight up 20%;Added 2.3 million customer households1.3 million fewer customer households experienced problemsStock value up 52%Y 2002 BOA named Best Bank in US & Euro money's Worlds Most Improved Bank118 Revenue Capital Utilization Return on Assets Profits Quote Time Defect Rate Waste On Time Delivery Inventory; Machine UtilizationStrategically: Used by Leadership as a vehicle to develop sustainableculture of Customer, Quality, Value and Continuous improvement. Operationally: By Quality Managers to reduce cycle times, costs, errors, rework, inventory, equipment downtime.Deployment across all types of processes and industries - worldwide119Six Sigma & EFQM/ DQA FrameworkResultsInnovation and LearningEncouraging & enabling people To participate inImprovementPersonallyactively Involved in improvementRecognizing Individual &Team effortIdentifying & designing processes to deliverstrategyDeveloping Team skillsAligning Individual &OrganizationGoalsRecognizing PeopleEstablishing Process managementSystem to beusedImplementingProcess MeasuresImproving processesto satisfy andGenerate valueFor customers Delivery, Value,reliabilityRepurchasesatisfactionResponse Time tocustomersTime to MarketSatisfactionInvolvementRecognitionCompetencyProductivityUtility consumptionTimeliness InventoryProcess cycle timeProcess costsDefect ratesProductivityCash flowMaintenance costReturn on assetsGross marginsNet profitSalesMarket ShareLeadershipPolicy & StrategyPeopleProcessesPeopleResultsSociety ResultsPartnershipsResourcesKey PerfResultsCustomer ResultsEnablers120121Who is Implementing Six SigmaAt least 25% of the fortune 200 claim to have a serious six sigma program - Michael Hammer. Financial - Bank of America, GE CapitalElectronics - Allied Signal, Samsung, SonyChemicals - Dupont, Dow ChemicalsManufacturing - GE Plastics, Johnson and Johnson, Motorola, Nokia, Microsoft, Ford.Airline - Singapore, Lufthansa, BombardierAnd hundreds of others in Americas, Europe, Sub Continent.Six Sigma ResultsCompany Annual SavingsGeneral Electric $2.0+ billionJP Morgan Chase *$1.5 billion (*since inception in 1998)Motorola $ 16 billion (*since inception in 1980s)Johnson & Johnson $500 millionHoneywell$600 millionSix Sigma Savings as % of revenue vary from 1.2 to 4.5 %For $ 30 million/yr sales Savings potential $ 360,000 to $ 1.35 million.Investment: salary of in house experts, training, process redesign.122Six Sigma The precise definition of Six Sigma is not important; the content of the program is A disciplined quantitative approach for improvement of defined metrics Can be applied to all business processes, manufacturing, finance and services 123Focus of Six Sigma*Accelerating fast breakthrough performance Significant financial results in 4-8 monthsEnsuring Six Sigma is an extension of the Corporate culture, not the program of the month Results first, then culture change!*Adapted from Zinkgraf (1999), Sigma Breakthrough Technologies Inc., Austin, TX.124Six Sigma: Reasons for SuccessThe Success at Motorola, GE and AlliedSignal has been attributed to:QStrong leadership (Jack Welch, Larry Bossidy and Bob Galvin personally involved)QInitial focus on operations QAggressive project selection (potential savings in cost of poor quality > $50,000/year)QTraining the right people125The right way!Plan for quick winsQFind good initial projects - fast winsEstablish resource structureQMake sure you know where it isPublicise successQOften and continually - blow that trumpetEmbed the skillsQEveryone owns successes126CMMI Technology Conference and User Group (17-20 November 2003)127128What is the Essence of Level 4?In our last Peer Review, we:QReviewed 40 SLOC / Review HourOthers have been able to review >100 SLOC/hourQFound 15 defects with 1 hours of prep time and 4 reviewersQReviewed 75 SLOCAs a manager, do I make any changes???200150100500SLOC/Prep. Hour25040.0 (current review)135.8 (previous review)What is the Essence of Level 4?71% reduction in # of SLOC reviewed per prep hour0CL = 53.71Average # of SLOC reviewed / hour is about 545 10 15 20 25 30Run of data from previous 15 reviewsLCL = 0UCL = 145.48Control chart with control limitsThis is Level 4 knowledge!As a manager, do I make any changes yet???129What Kind of Skills are Needed?To accomplish Levels 4 and 5, you must be capable of:QStatistical thinkingQAnalyzing causesQProcess thinkingQFocusing on what is important to the customerQUnderstanding capabilityQAffecting improvementThese skills are essential for successfully implementing Levels 4 and 5Six Sigma provides the foundation for how to solve relevant problems!!130CMMI Levels 4 and 5 (Required Skills)Level 41) Projects process capabilities based on process performance baselines2) Control process variation (removing assignable causes)3) Predict results using process performance models4) Manage to achieve goalsLevel 51) Improvement goals based on future business needs2) Eliminate problem and defect causes (common causes)3) Select, predict, and measure improvements to change the process performance baselines- Shift the mean; tighten the variance4) Manage change1 2 3 4 5 6 7 7C 8B 8B 8C 8D 8F 20 21 22 230246810121416ActualExpected95%limits024681012Projects Audited in First QuarterNumber of NoncompliancesUCL_XProcess variationProcess performance

Side effects ofregister usageCant keep trackPoordocumentationRegisterallocationdefectIncorrect processorregister usageLack ofprocessorknowledgeCant isolatePass 1architectureProcess knowledgeUCL 1 LCL 1 UCL 2 LCL 2Control Predict ImproveESSENCE OF LEVELS4 AND 5:131What is Six Sigma??Six Sigma:A best-in-class change strategy for accelerating improvements in processes, products, and servicesWhat Six Sigma is: Method/tools Mindset/way of thinking A way of doing business1326DMAIC ProcessDevelop Charter and Business CaseMap Existing ProcessCollect Voice of the CustomerSpecify CTQs / RequirementsMeasure CTQs / RequirementsDetermine Process StabilityDetermine Process CapabilityCalculate Baseline SigmaRefine Problem StatementIdentify Root CausesQuantify Root CausesVerify Root CausesInstitutionalize ImprovementControl DeploymentQuantify Financial ResultsPresent Final Project Resultsand Lessons LearnedClose ProjectSelect Solution (Including Trade Studies, Cost/Benefit Analysis)Design Solution Pilot SolutionImplement SolutionDefineMeasureAnalyzeImproveControlDMAIC = Define, Measure, Analyze, Improve and Control133Aligning the 6DMAIC Process with the CMMIDefineMeasureAnalyzeImproveControlLevel 4 Establishing CapabilityObjectivesDataBaselinesModelsLevel 5 Improving CapabilityProblemsRoot CausesImproved ProcessesImproved Capability134Aligning the 6DMAIC Process with CMMI Practices for the Project DefineMeasureAnalyzeImproveControlQPM SP 1.1Establish the Projects ObjectivesQPM SP 1.3Select the Subprocesses that Will Be Statistically ManagedQPM SP 1.2Compose the Defined ProcessQPM SP 1.4Manage Project PerformanceQPM SP 2.1Select Measures and Analytic TechniquesQPMCARQPM SP 2.2Apply Statistical Methods to Understand VariationQPM SP 2.4Record Statistical Management DataQPM SP 2.3Monitor Performance of the Selected SubprocessesCAR SP 1.1Select Defect Data for AnalysesCAR SP 2.1Implement the Action ProposalsCAR SP 1.2Analyze CausesCAR SP 2.2Evaluate the Effect of ChangesCAR SP 2.3Record Data6technologies (noted in Red) assist with these activitiesIllustrated examples135Special Cause Analysis(QPM SP 2.2) System EngineeringCostdata seems to vary normally in the period under studySystem Engineering Schedule data appears abnormal, and needs more special cause study.Project proposal periods in both charts had no assigned budgets. These gaps show where this special cause data was removed as it did not represent the Sys Eng process.Example Data136Control Charts (QPM SP 2.3) Tool:Minitab used across 6and CMMI projects137CAR Watchlist (CAR SP 1.1)Causal Analysis & Resolution (CAR) Watch ListSP 1.1aSP 1.1bSP 1.2aSP 1.2b SP 2.1 SP 2.2 SP 2.3 # Orig.Date Title Disposition Defect Data Gathered Defect Types Selected Causes Analyzed Actions Proposed Actions Implemented Effects Evaluated Final Results Submitted Comments11/10/03Reliability Closed - - - - - - - 6 project done.23/14/03Test PlanningClosed - - - - - - - 6 project done.32/18/03Late CDRL Delivery Open- - - - - Collecting data fromimproved delivery process.48/24/03SRS Requirements in Test Procedures Open- J ust starting 138CAR Worksheet (CAR SP 2.3) CAR briefing template accompanies this CAR worksheet Can be used in lieu of a Six Sigma tollgate briefing for CAR status Organized by CAR specific practicesCausal Analysis & Resolution (CAR) WorksheetCAR IDENTIFICATIONCAR Problem Short TitleSPR DefectsCAR Problem DescriptionQuantity of SPRsprevents working off enough SPRsbefore scheduled CM turnoverPoint of Contact/ProjectProject ManagerWORK STEPS EVIDENCESP 1.1a:Gather relevant problem dataSPR Defect_Type field dataSP 1.1b:Determine which defects and other problems will be analyzed (pareto chart) Pareto chart showing distribution of SPR defect types counted so far, and showingprogramming language misuse caused the majority of SPRsSP 1.2a:Analyze causes (Fishbone)Fishbone Diagram for programming language misuse, showing Trai ning caused most of the costlySPRsSP 1.2b:Propose actions addressing root causes Procure advanced PL training Increase mentoring by SPMs Institute code inspectionsSP 2.1:Implement action proposal(s) Training bought from Abs SW Corp. 3/12/03SP 2.2:Evaluate effect of changesProportion of SPRswhich areprogramming language misuse decreases 39% to 19% (4/12/03)SP 2.3:Submit final resultsData sent to organizationCAR STATISTICSActual Hours Spent1300 hours139Six Sigma TrainingExcerpts from standard Green Belt Six Sigma training:QBusiness Case developmentQVoice of the Customer (Critical to Quality items)QBasic Statistics and SamplingData distributionsRepresentative samplesQPatterns in Data VariationSpecial vs common causesStratification of dataRun charts, control chartsQOrganizing CausesQHypothesis Testing / Regression AnalysisUse of statistical analysis tools are included throughout this training!140Using the Six Sigma FundamentalsThe fundamentals of Six Sigma can be used without running a formal Six Sigma projectQStatistical analysis and control of Level 3 dataCapabilityStatistical controlRegressionQImprovement in capability can be identifiedQRoot cause analysis techniques can be appliedRegressionFishbone diagramsPareto analysisAffinity diagrams141The Bottom LineNorthrop Grumman was able to accelerate achievement of Levels 4 and 5 using Six Sigma Six Sigma training was essential to changing the culture of process improvementQSix Sigma methodology was institutionalized5months after achieving their Level 3 rating, Northrop Grumman achieved their Level 4 rating4 months after achieving their Level 4 rating, Northrop Grumman achieved their Level 5 rating 142Six Sigma for the Organizational Process AreasOrganizational Process AreasQLevel 4:Organizational Process Performance (OPP)QLevel 5:Organizational Innovation and Deployment (OID)The same Six Sigma methodology was used by Northrop Grumman for the OPP and OID process areas143SIX SIGMA CASE STUDY SERVICE ORGANISATIONBackground M/s Alpha Inc. manages out bound cargo from a distribution centre to different stores.Deliveries made on trucks - owned and hired. Customers dissatisfied at delivery schedules. Leadership decision to deploy Six Sigma;Team of 1 Black Belt and 3 Green Belts formed Sponsor of the project Distribution Manager144Achieving Performance Improvement in Service OrganizationsThe Recipe for Implementing Performance Improvement Efforts in Service OrganizationsQ x A = EQuality MethodologyAcceptance And SupportEffective ResultsWork-Out145Define - Critical to Quality (CTQ) Focus on customers generating annual revenue of USD 400,000/-. Customer needsImproved delivery performanceLevel 1 CTQTimely deliveryLevel 2 CTQOn time delivery to scheduleLevel 3 CTQDelivery within +/- 1 hour of scheduled delivery timeCurrent process sigma level - 2.43 or 175889 DPMO146147Define - Goal StatementReduce number of delayed deliveries by 50 % by 31st December Y 2002 to better meet customer requirement of timely delivery defined as within +/- 1 hour of scheduled delivery. Define - Performance StandardsOutput unit A scheduled delivery of freightOutput characteristic Timely deliveryProject Y measure Process starts when an order is received Ends when goods are received & signed for at customers desk.Process measurement Deviation from scheduled delivery time in minutes.Specification limits LSL = -60 minutesUSL= +60 minutesTarget Scheduled time or zero minutes deviationDefect Delivery earlier or later than 1 hour.No. of defect opportunities per unit1 opportunity for a defect per scheduled delivery of freight.148149Define - SIPOC DiagramSupplierStores ManagerInputStores OrderProcess Steps (high level)Receive orderPlan deliveryDispatch Driver with goodsDeliver goods to storesReceive deliveryOutputReceived freight with DocumentsCustomerStore Manager Detailed process maps drawn150Measure and AnalyzeDriver and Distance identified as key factors influencing delivery performance. Driver selected for focus. Potential root causes as to why Driver influenced the time:QSize of the vehicleQType of engineQType of tyresQFuel capacity 151Experiments designed and conducted using truck type and tyre size. Findings:QLarger tyres took longer time at certain routes where area was cramped and time lost in maneuvering. QHigh incidence of tyre failures since tight turns led to stress on tyres thus increasing number of flat tyres. Team modified planning of dispatch process by routing smaller trucks at more restrictive areas.Improve152Test implementation.Process sigma level up from 2.43 or 175889 DPMO to 3.94 or 7353 DPMO. Performance still fell short of best in class4.32 or 2400 DPMO. Improvement led to significant customer satisfaction. Process continually monitored and data on new cycle times, tyre failure collected as per defined methods and frequency, analysed and monitored.Customer satisfaction measured and monitored.Control 153Key Lessons Learnt DefineQDifficulty in identifying the right project anddefining the scope;QDifficulty in applying statistical parameters to Voice of the Customers;QTrouble with setting the right goals;MeasureQInefficient data gathering;QLack of measures;QLack of speed in execution;154Key Lessons LearntAnalyseQChallenge of identifying best practicesQOveruse of statistical tools/ under use of practical knowledgeQChallenge of developing hypothesesImproveQChallenge of developing ideas to remove root causesQDifficulty of implementing solutions ControlQLack of follow up by Managers/ Process OwnersQLack of continuous Voice of the Customer feedbackQFailure to institutionalize continuous improvement.155Key Lessons Learnt Define ranked most important step but gets the lowest resource allocationProject scoping and its definition is critical to its success/ failure;Measure is considered most difficult step and also gets the highest resourcesSource: Greenwich Associates Study Y 2002156VersatileBreakthrough improvementsFinancial results focusProcess focusStructured & disciplined problem solving methodology using scientific tools and techniquesCustomer centeredInvolvement of leadership is mandatory.Training is mandatory; Action learning (25% class room, 75 % application)Creating a dedicated organisation for problem solving (85/50 Rule).What Makes Six Sigma Different?157Benefits of Six SigmaGenerates sustained successSets performance goal for everyoneEnhances value for customers;Accelerates rate of improvement;Promotes learning across boundaries;Executes strategic changeTHE SIX SIGMA METRIC158Consider a 99% quality level 5000 incorrect surgical operations per week! 200,000 wrong drug prescriptions per year! 2 crash landings at most major airports each day! 20,000 lost articles of mail per hour!159Not very satisfactory! Companies should strive for Six Sigma quality levels A successful Six Sigma programme can measure and improve quality levels across all areas within a company to achieve world class status Six Sigma is a continuous improvement cycle 160161Improvement cycle PDCA cyclePlanDoCheckActPrioritise (D)Measure (M)Interpret (D/M/A)Problem (D/M/A)solveImprove (I)Holdgains (C)Alternative interpretation162 Statistical backgroundTarget = Some Key measure163+/ 3 Statistical backgroundTarget = Control limits164+/ 3 LSL USLStatistical backgroundRequired ToleranceTarget = 165+/ 3+/ 6LSL USLStatistical backgroundToleranceTarget = Six-Sigma166+/ 3+/ 6LSL USLppm1350ppm1350Statistical backgroundToleranceTarget = 167+/ 3+/ 6LSL USLppm0.001ppm1350ppm1350ppm0.001Statistical backgroundToleranceTarget = 168Statistical background Six-Sigma allows for un-foreseen problems and longer term issues when calculating failure error orre-work ratesAllows for a process shift169LSL0 ppmppm3.41. 5USLppm3.4ppm66803+/ 6Statistical backgroundTolerance170Performance Standards234563085376680762102333.4 PPM69.1%93.3%99.38%99.977%99.9997%YieldProcessperformanceProcessperformanceDefects permillionDefects permillionLong term yieldLong term yieldCurrent standardCurrent standardWorld ClassWorld Class171Number of processesNumber of processes3344556611010050010002000295511010050010002000295593.3250.090.1000093.3250.090.1000099.37993.9653.644.440.20099.37993.9653.644.440.20099.976799.7797.7089.0279.2462.7550.2799.976799.7797.7089.0279.2462.7550.2799.9996699.996699.96699.8399.6699.3299.099.9996699.996699.96699.8399.6699.3299.0First Time Yield in multiple stage processPerformance standards172Benefits of 6Benefits of 6approach w.r.t. financialsapproach w.r.t. financials-level Defect rate(ppm) Costs of poor qualityStatus of the company 63.4< 10% of turnoverWorld class 523310-15% of turnover 4621015-20% of turnoverCurrent standard 36680720-30% of turnover 230853730-40% of turnoverBankruptcy Financial Aspects173SIX SIGMA AND OTHER QUALITY PROGRAMMES174Comparing three recent developments in Quality Management ISO 9000 (-2000) EFQM Model Quality Improvement and Six Sigma Programs175ISO 9000 Proponents claim that ISO 9000 is a general system for Quality Management In fact the application seems to involveQan excessive emphasis on Quality Assurance, and Qstandardization of already existing systems with little attention to Quality Improvement It would have been better if improvement efforts had preceded standardization176Critique of ISO 9000Bureaucratic, large scaleFocus on satisfying auditors, not customersCertification is the goal; the job is done when certified Little emphasis on improvementThe return on investment is not transparent Main driver is:QWe need ISO 9000 to become a certified supplier, QNot we need to be the best and most cost effective supplier to win our customers businessCorrupting influence on the quality profession177EFQM ModelA tool for assessment: Can measure where we are and how well we are doingAssessment is a small piece of the bigger scheme of Quality Management:QPlanning QControl QImprovementEFQM provides a tool for assessment, but no tools, training, concepts and managerial approaches for improvement and planning178The Success of Change Programs?Performance improvement efforts have as much impact on operational and financial results as a ceremonial rain dance has on the weatherSchaffer and Thomson,Harvard Business Review (1992)179Change Management:Two Alternative ApproachesActivity Centered ProgramsResult Oriented ProgramsChangeManagementReference: Schaffer and Thomson, HBR, Jan-Feb. 1992180Activity Centered ProgramsActivity Centered Programs: The pursuit of activities that sound good, but contribute little to the bottom line Assumption: If we carry out enough of the right activities, performance improvements will followQThis many people have been trainedQThis many companies have been certifiedBias Towards Orthodoxy: Weak or no empirical evidence to assess the relationship between efforts and results181An Alternative:Result-Driven Improvement ProgramsResult-Driven Programs: Focus on achieving specific, measurable, operational improvements within a few monthsExamples of specific measurable goals:QIncrease yieldQReduce delivery timeQIncrease inventory turnsQImproved customer satisfactionQReduce product development time182Result Oriented Programs Project based Experimental Guided by empirical evidence Measurable results Easier to assess cause and effect Cascading strategy183Why Transformation Efforts Fail!John Kotter, Professor, Harvard Business SchoolLeading scholar on Change Management Lists 8 common errors in managing change, two of which are: Not establishing a sense of urgencyNot systematically planning for and creating short term wins184Six Sigma Demystified*Six Sigma is TQM in disguise, but this time the focus is:QAlignment of customers, strategy, process and peopleQSignificant measurable business resultsQLarge scale deployment of advanced quality and statistical toolsQData based, quantitative*Adapted from Zinkgraf (1999), Sigma Breakthrough Technologies Inc., Austin, TX.185Keys to Success* Set clear expectations for results Measure the progress (metrics) Manage for results*Adapted from Zinkgraf (1999), Sigma Breakthrough Technologies Inc., Austin, TX.186SIX SIGMA TRAINING PACKAGE187Aim of training packageTo successfully integrate Six Sigma methodology into Sauer Danfoss culture and attain significant improvements in quality, service and operational performance188DMAIC DefineMeasureAnalyzeImproveControl189DMAICDefineSelect a projectMeasurePrepare for assimilating informationAnalyzeCharacterise the current situationImproveOptimize the processControlAssure the improvementsSix-Sigma - A Roadmap for improvement190Training (1 week)Training (1 week)Work on project(3 weeks)Work on project(3 weeks)ReviewReviewDefineMeasureAnalyzeImproveControlThroughput time projectThroughput time project4 months (full time)4 months (full time)Example of a Classic Training strategy191MeasureMeasureAnalyzeAnalyzeImproveImproveControlControlDefineDefine5 weeks of training192Roadmap ExampleNext ProjectDefineCustomers, Value, Problem StatementScope, Timeline, TeamPrimary/Secondary& OpEx MetricsCurrent Value Stream MapVoice Of Customer (QFD)MeasureAssess specification / DemandMeasurement Capability (Gage R&R)Correct the measurement systemProcess map, Spaghetti, Time obs.Measure OVs & IVs / QueuesAnalyze (and fix the obvious)Root Cause (Pareto, C&E, brainstorm)Find all KPOVs & KPIVsFMEA, DOE, critical Xs, VA/NVAGraphical Analysis, ANOVAFuture Value Stream MapImproveOptimize KPOVs & test the KPIVsRedesign process, set pacemaker5S, Cell design, MRSVisual controlsValue Stream PlanControlDocument process (WIs, Std Work)Mistake proof, TT sheet, CI ListAnalyze change in metricsValue Stream ReviewPrepare final reportValidate Project $Validate Project $Validate Project $Validate Project $CelebrateProject $193 Develop a focused Problem Statement and Objective Develop a Process Map and/or FMEA Develop a Current State Map Identify the response variable(s) and how to measure them Analyze measurement system capability Assess the specification (Is one in place? Is it the right one?)Practical ProblemProblemDefinition Characterize the response, look at the raw data Abnormal? Other Clues? Mean or Variance problem? Time Observation Spaghetti DiagramTakt Time Future State MapsPercent Loading Standard Work Combination Use Graphical Analysis, Multi-Vari, ANOVA and basicstatistical tools to identify the likely families of variabilityProblemSolution Identify the likely Xs 5SSet Up Time Reduction (SMED) Material Replenishment Systems Level Loading / Line Leveling Cell DesignVisual Controls Use Design of Experiments to find the critical few Xs Move the distribution; Shrink the spread; Confirm the resultsProblemControl Mistake Proof the process (Poka-Yoke) Tolerance the process Measure the final capability Place appropriate process controls on the critical Xs Document the effort and results Standard WorkTPM IdentifyProblem Strategic Link to Business Plan defined in Project Selection Process Defined Business Impact with Op Ex Champion support Structured Brainstorming at all organizational levels Cause and Effect Diagrams identifying critical factors Primary and Secondary Metrics defined and charted Multi-Level Pareto Charts to confirm project focusO What do you want to know?O How do you want to see what it is that you needto know?O What type of tool will generate what it is that youneed to see?O What type of data is required of the selected tool?O Where can you get the required type of data?Problem SolvingPlan ExecuteExecute PlanCrane Co. Op. Ex. Methodology Originated by MBBs; D. Braasch, J. Davis, R. Duggins, J. OCallaghan, R. Underwood, I. WilsonOperational Excellence MethodologyBased in part on Six Sigma Methodology developed by GE Medical Systems and Six Sigma Academy, Inc.194Draft training schedule N o . B la c k B e lt w o r k p a c k a g e t a s k s S t a r t E n d D u r a t io nJ a n 2 0 0 3 F e b 2 0 0 3 M a r2 0 0 3 A p r 2 0 0 3 M a y 2 0 0 3 J u n 2 0 0 3 J u l 2 0 0 31 / 5 1 / 1 2 1 / 1 9 1 /2 6 2 / 2 2 / 9 2 / 1 6 2 / 2 3 3 / 2 3 / 9 3 / 1 6 3 / 2 3 3 / 3 0 4 / 6 4 / 1 3 4 / 2 0 4 /2 7 5 / 4 5 /1 1 5 / 1 8 5 / 2 5 6 / 1 6 / 8 6 / 1 5 6 / 2 2 6 / 2 9 7 / 6 7 /1 3 7 / 2 0 7 / 2 71 1 d 0 3 / 0 2 / 0 3 0 3 / 0 2 / 0 3 C h am p ion s D ay2 3 d 0 6 / 0 2 / 0 3 0 4 / 0 2 / 0 3 I n t i al3 - d ay B l ac k b el t s es s i on s3 1 d 0 7 / 0 2 / 0 3 0 7 / 0 2 / 0 3 A d m in i s t r at ion D ay5 1 w 2 1 / 0 2 / 0 3 1 7 / 0 2 / 0 3B l ac kB el tt r ai n in g ( M eas u r em en tp h as e)1 2 2 d 3 0 / 0 7 / 0 3 2 9 / 0 7 / 0 3 P r oj ec ts u p p or t( F oll ow u p )7 1 w 1 8 / 0 4 / 0 3 1 4 / 0 4 / 0 3 B l ac kB el tt r ai n in g ( A n a lys is p h as e)91 11 w 3 0 / 0 5 / 0 3 2 6 / 0 5 / 0 3 B l ac kB el tt r ai n in g ( Im p r ove m en t p h as e)1 w 1 1 / 0 7 / 0 3 0 7 / 0 7 / 0 3 B l ac kB el tt r ai n in g ( C on t r olp h as e)6 1 d 2 5 / 0 3 / 0 3 2 5 / 0 3 / 0 3 P r oj ec ts u p p or t( W or k s h op 2 )8 1 d 0 6 / 0 5 / 0 3 0 6 / 0 5 / 0 3 P r oj ec ts u p p or t( W or k s h op 3 )4 1 d 1 1 / 0 2 / 0 3 1 1 / 0 2 / 0 3 P r oj ec ts u p p or t( W or k s h op 1 )1 0 1 d 1 7 / 0 6 / 0 3 1 7 / 0 6 / 0 3 P r oj ec ts u p p or t( W or k s h op 4 )195Training programme delivery Lectures supported by appropriate technology Video case studies Games and simulations Experiments and workshops Exercises Defined projects Delegate presentations Homework!196Deployment (Define) phase Topics covered include Team Roles Presentation skills Project management skills Group techniques Quality Pitfalls to Quality Improvement projects Project strategies Minitab introduction197Measurement phaseTopics covered include: Quality Tools Risk Assessment Measurements Capability & Performance Measurement Systems Analysis Quality Function Deployment FMEA198Example - QFDA method for meeting customer requirementsUses tools and techniques to set product strategiesDisplays requirements in matrix diagrams, including House of QualityProduces design initiatives to satisfy customer and beat competitors199House Of Quality6. Technical assessment and target values1. Customerrequirements4. Relationship matrix3. ProductcharacteristicsImportance2. Competitiveassessment5. Tradeoffmatrix200Lead-times - the time to market and time to stable productionStart-up costsEngineering changesQFD can reduce201Analysis phaseTopics include: Hypothesis testing Comparing samples Confidence Intervals Multi-Vari analysis ANOVA (Analysis of Variance) Regression202Improvement phase Topics include: History of Design of Experiments (DoE) DoE Pre-planning and Factors DoE Practical workshop DoE Analysis Response Surface Methodology (Optimisation) Lean Manufacturing 203Example - Design of ExperimentsWhat can it do for you?Minimum cost Maximum output204What does it involve?Brainstorming sessions to identify important factorsConducting a few experimental trialsRecognising significant factors which influence a processSetting these factors to get maximum output205Control phase Topics include: Control charts SPC case studies EWMA Poka-Yoke 5S Reliability testing Business impact assessment206Example - SPC (Statistical Process Control) - reduces variability and keeps the process stableDisturbed processNatural processTemporary upsetsNatural boundaryNatural boundary207Results of SPCAn improvement in the processReduction in variationBetter control over processProvides practical experience of collecting useful information for analysisHopefully some enthusiasm for measurement!208Project support Initial Black Belt projects will be considered in Week 1 by Executive management committee, Champions and Black Belt candidates Projects will be advanced significantly during the training programme via: continuous application of newly acquired statistical techniques workshops and on-going support from ISRU and CAMT delivery of regular project updates by Black Belt candidates209Black BeltBlack BeltTrainingTrainingApplicationApplicationReviewReviewISRUISRUISRU,ChampionISRU,ChampionISRU,ChampionISRU,ChampionProject execution210Traditional Six Sigma-Project leader is obliged to make an effort.-Set of tools.-Focus on technical knowledge.-Project leader is left to his own devices.-Results are fuzzy.-Safe targets.-Projects conducted on the side.-Black Belt is obliged to achieve financial results.-Well-structured method.-Focus on experimentation.-Black Belt is coached by champion.-Results are quantified.-Stretched targets.-Projects are top priority.Conducting projects211The right right support+The rightright projects +The rightright people +The rightright tools+The rightright plan = The rightright results212Champions Role Communicate vision and progressCommunicate vision and progress Facilitate selecting projects and Facilitate selecting projects and peoplepeople Track the progress of Black BeltsTrack the progress of Black Belts Breakdown barriers for Black BeltsBreakdown barriers for Black Belts Create supporting systemsCreate supporting systems213Champions Role Measure and report Business Impact Lead projects overall Overcome resistance to Change Encourage others to Follow214DefineSelect:- the project - the process- the Black Belt- the potential savings- time schedule- teamProject selection215Projects may be selected according to:1. A complete list of requirements of customers.2. A complete list of costs of poor quality.3. A complete list of existing problems or targets.4. Any sensible meaningful criteria5. Usually improves bottom line - but exceptionsProject selection216Key Quality Characteristics CTQsHow will you measure them?How often?Who will measure?Is the outcome critical or important to results?217Outcome ExamplesReduce defective parts per millionIncreased capacity or yieldImproved qualityReduced re-work or scrapFaster throughput218Key QuestionsIs this a new product - process? Yes - then potential six-sigmaDo you know how best to run a process? No - then potential six-sigma219Key CriteriaIs the potential gain enough - e.g. - saving > $50,000 per annum?Can you do this within 3-4 months?Will results be usable?Is this the most important issue at the moment?220221Why is ISRU an effective Six Sigma practitioner?Six Sigma instructors (ISRU) Aim: Successfully integrate the Six Sigma methodology into a companys existing culture and working practices Key traits Knowledge of statistical techniques Ability to manage projects and reach closure High level of analytical skills Ability to train, facilitate and lead teams to success, soft skills 222ISRU program content Week 1 - Six Sigma introductory week (Deployment phase) Weeks 2-5 - Main Black Belt training programme Week 2 - Measurement phase Week 3 - Analysis phase Week 4 - Improve phase Week 5 - Control phase Project support for Six Sigma Black Belt candidates Access to ISRUs distance learning facility223Because we are experts in the application of industrial statistics and managing the accompanying change We want to assist companies in improving performance thus helping companies to greater successWe will act as mentors to staff embarking on Six Sigma programmesReasons224INDUSTRIAL STATISTICSRESEARCH UNITAtSchool of Mechanical and Systems EngineeringUniversity of Newcastle upon Tyne, England225Mission statement "To promote the effective and widespread use of statistical methods throughout European industry."226The work we do can be broken down into 3 main categories: Consultancy Training Major Research ProjectsAll with the common goal of promoting quality improvement by implementing statistical techniques227ConsultancyWe have long term one to one consultancies with large and small companies, e.g. TranscoPrescription Pricing AgencySilverlink228TrainingIn-House coursesSPCQFDDesign of ExperimentsMeasurement Systems AnalysisOn-Site coursesAs above, tailored courses to suit the companySix Sigma programmes229European projectsThe Unit has provided the statistical input into many major European projects Examples include -Use of sensory panels to assess butter qualityUsing water pressures to detect leaksAssessing steel rail reliabilityTesting fire-fighters boots for safety230European projectsEurostat - investigatingthe multi-dimensional aspects of innovation using the Community Innovation Survey (CIS) II-17 major European countries involved -determining the factors that influence innovationCertified Reference materials for assessing water quality - validating EC LaboratoriesNew project - Effect on food of the taints and odours in packaging materials231Typical local projectsAssessment of environmental risks in chemical and process industriesIntroduction of statistical process control (SPC) into a micro-electronics companyHelping to develop a new catheter for open-heart surgery via designed experiments (DoE)Restaurant of the Year & Pub of the Year competitions!232BenefitsBetter monitoring of processesBetter involvement of peopleStaff morale is raisedThroughput is increasedProfits go up233Examples of past successesDown time cut by 40% - Villa soft drinksWaste reduced by 50% - Many projectsStock holding levels halved - Many projectsMaterial use optimised saving 150k pa - BootsExpensive equipment shown to be unnecessary - Wavin234Examples of past successesFaster Payment of Bills (cut by 30 days)Scrap rates cut by 80%New orders won (e.g 100,000 for an SME)Cutting stages from a processReduction in materials use (Paper - Ink)235Distance Learningyour timeyour placeyour study patternyour paceor Flexible trainingor Open Learning236Distance Learninghttp://www.ncl.ac.uk/blackboardClear descriptionsStep by step guidelinesCase studiesWeb links, referencesSelf assessment exercises in Microsoft Excel and MinitabHelp line and discussion forumEssentially a further learning resource for Six Sigma tools and methodology237CASE STUDY238RoastRoastCoolCoolGrindGrindPackPackCoffeebeansSealed coffeeMoisture contentMoisture contentSavings:-Savings on rework and scrap-Water costs less than coffeePotential savings:500 000 EurosCase study: project selection239RoastRoastCoolCoolGrindGrindPackPackCoffeebeansSealed coffeeMoisture contentMoisture contentSavings:-Savings on rework and scrap-Water costs less than coffeePotential savings:500 000 EurosCase study: project selection2401. Select the Critical to Quality (CTQ) characteristic2. Define performance standards3. Validate measurement systemCase study: Measure241Moisture contents of roasted coffee1. CTQ- Unit: one batch- Defect: Moisture% > 12.6%2. StandardsCase study: Measure242Gauge R&R studyGauge R&R study3. Measurement reliabilityMeasurement system too unreliable!Case study: MeasureSo fix it!!243Analyse4. Establish product capability5. Define performance objectives6. Identify influence factorsCase study: Analyse244USLUSLUSLUSLImprovement opportunities245CTQCTQCTQCTQDiagnosis of problem246-Brainstorming-Exploratory data analysis6. Identify factorsMaterial Machine ManMethodMeasure-mentMotherNatureAmount ofadded waterRoastingmachinesBatchsizeReliabilityof Quadra BeamWeatherconditionsMoisture%Discovery of causes247Control chart for moisture%Discovery of causes248- Roasting machines (Nuisance variable)- Weather conditions (Nuisance variable)- Stagnations in the transport system (Disturbance)- Batch size (Nuisance variable)- Amount of added water (Control variable)Potential influence factorsA case studyA case study249Improve7. Screen potential causes8. Discover variable relationships9. Establish operating tolerancesCase study: Improve250- Relation between humidity and moisture% not established- Effect of stagnations confirmed- Machine differences confirmed7. Screen potential causesDesign of Experiments (DoE)8. Discover variable relationshipsCase study: Improve251Experiment:Y: moisture%X1: Water (liters)X2: Batch size (kg)A case study: ExperimentA case study: Experiment252Feedback adjustments for influence of weather conditionsA case studyA case study9. Establish operating tolerances253A case study: feedback adjustmentsA case study: feedback adjustmentsMoisture% without adjustments254A case study: feedback adjustmentsA case study: feedback adjustmentsMoisture% with adjustments255Control10. Validate measurement system (Xs)11. Determine process capability12. Implement process controlsCase study: ControlCase study: Control256long-term < 0.280Objectivelong-term = 0.532Beforelong-term < 0.100ResultResultsResults257Benefits of this projectlong-term < 0.100Ppk = 1.5This enables us to increase the mean to 12.1% Per 0.1% coffee: 100 000 Euros savingBenefits of this project:1 100 000 Euros per yearBenefitsBenefitsApproved by controller258- SPC control loop- Mistake proofing- Control plan- Audit schedule12. Implement process controlsCase study: controlCase study: control- Documentation of the results and data.- Results are reported to involved persons.- The follow-up is determinedProject closure259- Step-by-step approach.- Constant testing and double checking.- No problem fixing, but: explanation control.- Interaction of technical knowledge and experimentation methodology.- Good research enables intelligent decision making.- Knowing the financial impact made it easy to find priority for this project.Six Sigma approach to this projectSix Sigma approach to this project260Re-cap I!Structured approach roadmapSystematic project-based improvementPlan for quick winsQFind good initial projects - fast winsPublicise successQOften and continually - blow that trumpetUse modern tools and methodsEmpirical evidence based improvement261Re-cap II!DMAIC is a basic training structureEstablish your resource structure- Make sure you know where external help isKey ingredient is the support for projects- Its the project that wins not the training itselfFit the training programme around the company needs - not the company around the trainingEmbed the skills- Everyone owns the successes262Who is the customerThe person outside your company who buys your productThe person inside your company who uses your product next Both263Voice of the CustomerKOPV is the voice of the customerIf it is important to the customer it is a KOPVQAppearanceQOn time deliveryQMeet its requirementsQsupport264The Purpose of BusinessTake a productPerform your procedures on itIncrease the value of the productHave a customer (internal or external) who is willing to buy that increase value265Where did Six Sigma BeginMotorola made Quasar TVs in ChicagoQLost money on every set that left the plantQProblems with quality of setsQProblems with worker motivationSold Manufacturing plant to a Japanese firmQGot workers involved in manufacturing processQReduce defect to 1/20 of former levelQSame plant, same workersQMade big profitsMotorola was embarrassedQCEO swore never to let this happen againQStarted people on the path that became Six Sigma266GE gets into Six SigmaUnder Jake Walsh GE starts to use Six Sigma methodsOne of the biggest money savers was in reports.QPeople went around and talked to managers about the mountain of reports they got every monthQFound that only a few of the reports were actually usedQEliminated unused reportsQEstimated savings about $1 billion per year267TQMWho remembers TQMIt tended to be a top down systemUpper management demanded better quality from the people who worked for themWho remembers Quality is our businessTQM tended to be short term attentionQAs soon as quality problem solved move onto next projectQLack of follow up268Six Sigma is Long TermGet top management involved from the beginningClearly define the problemMeasure performanceMeasure results of improvementsQReport on $$ saved by improvementsSet up system to monitor results after project is concluded269The Cost of Poor QualityMany companies operate at 3-4 levels25%-40% of revenue used for fixing defectsQRework partsQSorting out defective partsQScrapeQExtra employeesMost of these companies dont realize what poor quality is costing themCompanies working at 6 level typically spend 5%270Probability and Central TendancyTypical show single probability curveThe central tendency can shift from the ideal positionThis increases the area in the tail regions which is a measure of defects 271Six Sigma Defects per MillionAllow the central tendency move by 1.5 standard deviations either side of theoretical perfectionQPage II-3272Defects per Million OpportunitiesDPP Defects per partQDPP = defects / partsO Number of opportunities for a defect per partDPMO = DPP / O * 1,000,000273Six Sigma 3.4 DPMO Achieving Six Sigma level is having 3.4 DPMOMeasure defects at start of processQConvert to levelMeasure defects after improvementQConvert to level274Six Sigma is more than DPMODPMO in manufacturingDFSS Design for Six SigmaQNew process designed to meet Six Sigma from the beginningLean ManufacturingIn general almost anything that significantly improves profits275Punch Press ProblemBid on project based on 100 parts per minuteBest they can achieve is 80 parts per minuteThey were going to loose a lot of money on the 3 year contract276Hand placedThe pieces over lap each otherMust be precisely placed for machine pickup at customerNO DEFECTS allowed in trays27780 Pieces Per MinutePunch press no defective partsOperators must untangle parts on round tableOperators barely keep up with flow of partsUnstack tray for parts278Process FlowchartPreli mi nary Flowchart - Si x Si gma Project Wauconda Tool & Eng. 10 20 30 40 50 60 70Le a dFra mePa cka gi ng Fl owRec eive Tray sDel i vert o Pres sUnpac kTray sSt ageTray sPac kpart s i n Tray sPl ac e19 t ray s per box (54 part s / t ray1)Tapebox2)Part onSk i d 3)AddCont rolt ape10 20 30 40 50Sta mpi ng Fl owRet ri eve c oi lfrom s t oc k CoilDel i ver t woc oi l st opres sFeedc oilt opres s1)Feedc oi l2)St amp3) QAChec kSt amp Part s10 20 30 40Te rmi na lPa cka gi ngRec ei ve box esDel i vert o Pres sBulkPac k1)TapeBox2)Color c odeTapeSendt o Shi ppingSaturday , January 7,2006Quant it y b yPres sc ount279Things Under ConsiderationProcess IssuesQImproving manual packing methodsQUn-stacking of delivered traysQRunning machine at 180 SPMQmaintain current qualityQUsing 2 inch or 3 inch stroke pressQStaging and storage of traysQAnalyzing cost of materials280Change PackingReceive 1,000 trays to a boxQHard to unpack from shipping boxQTrays cling togetherQMust be separated without distorting boxQCome from PhoenixSend 16 trays out in special boxesArrange for local manufacture of traysQReceive in the same boxes used to ship product281Change Personnel LayoutTests showed that packers on linear conveyor packed fasterQParts did not stack on each other21432314Original personnel layout Improved personnel layout282Original Costs80 Strokes/Minute Cost/K % TCMaterial Cost $105.89Scrap Reclaim -$57.94Total Mat'l Cost $47.95 42.2%Processing Cost $25.56 22.5%Packaging Material $9.22 8.1%Packaging Labor $23.11 20.4%Set-up Cost $0.32 0.3%Changeover Cost $0.32 0.3%Die Maintenance Cost $7.05 6.2%Total Cost $113.5280 100.0%283Improved Costs180 Strokes/Minute Cost/K % TCMaterial Cost $105.89Scrap Reclaim -$57.94Total Mat'l Cost $47.95 48.3%Processing Cost $11.36 11.4%Packaging Material $9.22 9.3%Packaging Labor $23.11 23.3%Set-up Cost $0.32 0.3%Changeover Cost $0.32 0.3%Die Maintenance Cost $7.05 7.1%Total Cost $99.3280 100.0%284Improved ProfitsTotal Cost w/ Recommended Changes $81.2680Total Cost Now $113.5200Savings per Thousand -$32.2520Year 1 Savings (1.8M) -$60,311Year 2 Savings (4.3M) -$154,165Year 3 Savings (9.3M) -$300,589Total Three Year Savings -$515,064285Some KeywordsDMAICVoice of the CustomerKIPVKOPVDPMO286High Definition Television287HD TV on a computerATI makes a HD tuner for PCI slot HDTV WonderWorks only with broadcast HD signalMinimum standards do not come close to descr