scp six sigma presentation 6.30.2010

Process Consultation: Delivering Value with Six Sigma

Scott Leuchter Pronovo Consulting

June 3, 2010

1

Agenda

• Introduction

• Learning Objectives

• What is Six Sigma?

• The Evolution of Six Sigma

• DMAIC Methodology & Tools

Property Pronovo Consulting. Not to be copied or distributed without written permission. 2

Learning Objectives

Be able to

• Explain the history and evolution of Six Sigma

• Explain in general terms what Six Sigma refers to and the basic terms associated

• Explain the DMAIC methodology and associated tools and techniques

• Demonstrate applicability for process consultation


Relevance for consulting psychologists

• Six Sigma is used in a variety of industries and companies

• Allows measurable tracking of improvement

• Creates a process focus

• Forces a focus on customers through addressing defects

• Accrues many benefits from aligning a process with customers



http://www.youtube.com/watch?v=7rUQbTsc_ms

What is Six Sigma?

6

What is Six Sigma ?

Metric


Methodology

Scientific method applied to executing a business strategy

and process consultation

Management system

Quantifies how well a business is

meeting stakeholder expectations

Aligns core business processes with customer and business

requirements

• Systematically eliminates defects

• Designs new processes, products and services that reliably and consistently meet requirements

Metric

• Sigma = amount of variation in a process relative to customer specifications

• “Six Sigma” = both the statistical measure of variation and an associated improvement methodology


Variation Description Sigma Values

Too much Hard to produce output within customer requirements (specifications)

Low (0-2)

Moderate Most output meets customer requirements Middle (3-5)

Very little Virtually all output meets customer requirements

High (6)

Metric

• Forces focus on customers through addressing defects – Defect = anything that does not meet expectations

• 99% quality = 3,000 misspelled words for every

300,000 words in copy

• Six Sigma = no more than 3.4 defects per million – strives for near perfection (99.99997) – Six Sigma = 1 misspelled word for every 300,000

words


Metric

Process Yield DPMO Sigma Level

75% 250,000 2.150

90% 100,000 2.775

95% 50,000 3.150

98% 20,000 3.550

99% 10,000 3.825

99.38% 6,200 4.0

99.977% 230 5.0

99.99966% 3.4 6.0


Is 99% Good Enough?

3.8 Sigma (99% Good) 6 Sigma (99.99966% Good)

50 newborn babies dropped at birth by doctors each day

3 newborn babies dropped in 100 years

Toxic drinking water for 4.6 hours each month

Unsafe water for one second every sixteen years

5,000 incorrect surgical procedures per week

1.7 incorrect operations per week

Two unsafe landings at Chicago O’Hare One short or long landing every five years

1,240,200 wrong drug prescriptions each year

1 wrong prescription in 25 years

No electricity for almost seven hours each month

One hour without electricity every 34 years


Methodology

3 main frameworks

• DMAIC: reducing defects by reducing variance


Methodology

3 main frameworks


• LEAN: reducing waste by improving efficiency/ reducing cycle time


Methodology

3 main frameworks


• LEAN: reducing waste by improving efficiency/ reducing cycle time

• DFSS (Design for Six Sigma): mapping customer needs and requirements to design of products, processes, service


Methodology

• Incorporates a control phase

• Structured yet flexible process to follow

• Allows measurable tracking of improvement

• Creates a process focus

• Clarifies roles and responsibilities

• Forces a focus on customers through addressing defects

• Attracts, retains and excites talent


• Solves business problems

• Decision-making based on data

• Drives clarity for the business strategy and metrics

• Provides framework for program and project management

• Engages leaders in change management efforts that lead to improved business results

• Benefits clients as they participate in the process of making the diagnosis


Management Philosophy

Evolution of Six Sigma

Carl Gauss introduces concept of the normal curve


Σ Σ Σ Σ Σ

Walter Shewart three sigma = point where a process requires correction

Bill Smith develops Six Sigma

Jack Welch introduces Six Sigma to GE

Over 80% of Fortune 100 companies use Six Sigma

1800’s 1920’s 1980’s 1995 Today

Key Terms

• Sigma: an expression of process yield

– based on number of defects per million opportunities (DPMO)

• Voice of the Customer (VOC): Stated or unstated requirements of the customer

• Critical to Quality (CTQ): Truly critical to customer’s perception of quality; can be measured

• Defect: Any event that does not meet a customer specification


DMAIC Methodology

19

DMAIC

ANALYZE

MEASURE

DEFINE

CONTROL

IMPROVE

20

DEFINE


DEFINE - Approach

Develop Charter

Understand Voice of

Customer

Map the Process


DEFINE - Tools

• Charter

• Voice of the Customer

• SIPOC Analysis

• Customer Research

• Pareto Charts


SIPOC Exercise

Property Pronovo Consulting. Not to be copied or distributed without written permission.

Suppliers Inputs Process Outputs Customer

Providers of Required Resources

Resources required for Process Step

Description of Activity

Deliverables from the Step

Anyone Who Receives a Deliverable

Insert Process Step

1

Insert Process Step

2

Insert Process Step

3

Insert Process Step

4

Insert Process Step

5

MEASURE


MEASURE - Approach

Collect baseline data on defects

and possible causal factors

Plot defect data over time and

analyze for

special causes

Create & stratify

frequency plots and do

Pareto analysis (if

appropriate)

Calculate process sigma

Create detailed process maps


MEASURE - Tools

• Control Charts / Time Plots

• Frequency Plots

• Pareto Charts

• Process Sigma Calculations

• Flowcharts


ANALYZE

28

ANALYZE - Approach

Develop a focused problem

statement

Brainstorm potential

causes

Organize potential

causes

Collect data

Statistical methods to

quantify cause-effect relationships


ANALYZE - Tools

• Cause-and-effect diagram (AKA Fishbone)

• Tree diagram

• Scatter plots

• Stratified frequency plots


Policies Procedures System

People Communication Training


Improve

32

IMPROVE - Approach


Brainstorm Select

Solution(s) Develop Plan(s)

Pilot Plan(s) Implement

Plan(s) Quantify Results

Evaluate Benefit of

Improvement

IMPROVE - Tools

• Prioritization Matrix

• RACI chart

• Gannt chart

• Control charts / time plots

• Revised process sigma calculations

• Cost Benefit analysis


RACI Matrix

• Responsible: Those who do the work to achieve the task.

• Accountable: Those who are ultimately accountable.

• Consulted: Those whose opinions are sought.

• Informed: Those who are kept up-to-date on progress.

35

CONTROL


CONTROL - Approach

Develop and document

standard practices Train

Ongoing monitoring

Build process for updating

procedures

Summarize and communicate

learning

Make recommendations

for future plans


CONTROL - Tools

• Training curriculum/manuals/procedures

• New standards

• Process Management Chart

• Self-Audits


Benefits

• Provides a framework

• Provides common language

• Provides a checklist to prevent skipping critical steps

• Allows clients to improve how they improve

• Integral to organizational assessment and forms of intervention

39


Questions ?

40

scp six sigma presentation 6.30.2010

Business

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metric sigma

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consulting psychologists

process focus

flexible process

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