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Industrial Engineering 361

Six SigmaBreakthroughs in Quality

Trent LewisKim Martin

Matt Grennan

September 28, 2001

Steve Vardemanvardeman@iastate.edu304 – D Snedecor

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.........“One thing that the truly great companies of the world have in common, regardless of

the diversity of their industries, is total business focus on servicing customers. With

Six sigma as the enabler, we intend to meet that standard.”

- GE 1999 Annual Report

Six Sigma

So, what is six sigma? The Greek letter Sigma, σ, is used by statisticians to measure the

variability in any process. Six sigma is a philosophy, or journey, of doing business with a focus

to achieve an optimized level of performance approaching zero-defects in a process producing a

product, service or transaction within a company. The term six sigma was conceived at Motorola,

Inc. in the late 1980’s as a way to achieve the company’s goal of a hundred-fold improvement in

quality within a five year time span. (www.mu.motorola.com/sigma.shtml) Motorola adapted the

six sigma processes for “survival” within the competitive marketplace, to produce higher quality

products at a lower cost.

The sigma level of a business process measures a company’s performance. Six sigma

also denotes a specific measure of how well a process or transaction is performing, the six sigma

process produces extremely few defects, 3.45 per million opportunities (99.9997% defect-free).

A defect is something that results in customer dissatisfaction.

(www.pyzdek.com/whatiissixsigma.htm).

Six sigma programs are implemented in five phases: (I) Scope (II) Measure, (III)

Analyze, (IV) Improve, and (V) Control. The Scope step defines and identifies variables and

CTQs (Critical to Quality) for every transactional process. The Measure step draws up a process

map that details the problem areas, redundancies, and waste. The data on response variables

collected are required to establish the current capability of the transactional process, one mush

rely on the analysis of a small subset, called a sample, to infer the defect levels of the population.

The measurement system validated (Gage R&R), and baselines are also established. The Analyze

step identifies the vital causes of variation that are responsible for much of the variation in the

response variables. The Improve step is to work on the vital causes of variation so that they

contribute as little as possible to the variability in the response variables. And, the Control step

objective is to ensure the problems once fixed, stay fixed. This can be done with statistical

monitoring using control charts. Once the programs have been successfully implemented, the

defect rates will decline, customer satisfaction will increase and financial benefits will incline

from one year to the next. (www.sixsigmaquality.com).

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.........Table 1: MAIC and Statistics

Element Statistical Topics

Measure

-Measurement Concept - Regression &

Linear Calibration

-Data Collection - Modeling

Measurement Error

-Inference in Measurement Precision Studies

-Descriptive statistics -Normal

Plotting & Capability Indices

-Statistical Intervals & Testing -Confidence

Intervals & Testing

Improve -Regression Analysis & Response Surface Methods -

Probabilistic Tolerancing

-Confidence Intervals & Testing -Factorial &

Factorial Factorial analysis

Control -Shewhart Control Charts

(www.public.iastate.edu/~vardeman/stat531/sixsigma.pdf)

The Advantages of Six Sigma

Now that six sigma has clearly been defined in the quality realm, the question arises, how

does this phenomenon translate into actual advantages for a given process or company? Again,

the basic idea of virtually eliminating errors or defects in a process is at the root of all advantages.

At first, this may seem inherently cost-prohibitive; especially for those processes and companies

well entrenched in wasteful and inefficient cultures. Many would wonder if the cost savings

would ever surpass the incredible expenditure of whittling away at the extremes of un-quality.

But looking clearly at the numbers would indicate another story.

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.........A process that is operating in the more traditional three or four sigma range is producing

somewhere between 6,200 and 67,000 defective parts per million. This is far from an

insignificant number, especially when considering the increasing demands of the customer and

the continuing complexity of today’s modern parts. The advantages of a six sigma system begin

to come to light when the cost of this poor quality is brought to light. The following chart shows

very clearly the cost of poor quality to a company operating a different sigma levels

(http://www.pyzdek.com/whatissixsigma.htm).

In a three sigma level environment, poor quality is responsible for consuming one-fourth

of the revenue. In a four sigma environment, the cost is still nearly 15% of the total revenue.

These costs come in the form of sorting and the extensive efforts needed to weed-out the good

product from the bad. The more defects, the more that need to be captured before making it to

the customer, but also, the more that still slip through. And thus, a large cost associated with

appeasing and righting the mistakes that make it to customers. But there are even more costs than

these. The cost of reputation or goodwill, which is hard to calculate, must be included and

deteriorates mightily if numerous customers are receiving faulty product.

In a six sigma process the defects have been brought down to a level that eliminates the

need for extensive screening or “weeding-out” procedures. This itself reduces an entire step or

department in a process or company. Also, backtracking and correcting costs are significantly

reduced and goodwill remains intact. Ultimately, customer satisfaction is the goal of six sigma

initiatives. While this is only a partial explanation, it points to the direct cost advantages of

attacking the outer edges of the normal distribution. General Electric estimates that, “the gap

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.........between three or four sigma and six sigma was costing [them] between $8 billion and $12 billion

per year in inefficiencies and lost productivity” (http://www.pyzdek.com/whatissixsigma.htm).

As proof of the viable advantages associated with a six sigma mentality, one merely has

to look at the list of companies adopting six sigma practices. They include General Electric,

Texas Instruments, Allied Signal, Citibank, Du Pont, Dow Chemical, J. P. Morgan, 3M

Company, Conseco Financial Services, GlaxcoSmithKline, Johnson & Johnson, Air Products &

Chemicals, Praxair, AIG Financial Services, among numerous others, and the list is rapidly

growing (sixsigmaquality.com/sixsigma.html).

Those providing six sigma consulting want to make it very clear that these advantages are based

on fundamental principles; this is not just a fad. Six sigma is problem solving at its best and

incorporates the leading approaches to quality over the last century into a practical methodology.

In manufacturing environments these advantages look like increased capacity, decreased costs,

reduced energy consumption, and a better handle on quality control. In service sectors, the

advantages can be just as effective as defects are attacked, cycle times increased, costs thinned,

and customer satisfaction solidified as the goal.

Who is Six Sigma for?

The six sigma concepts of eliminating waste and adding value, of an unrelenting

commitment to quality, and of total company focus, apply to all organizations and all processes.

From manufacturing to banking, companies have profited immensely from the implementation of

six sigma quality standards.

There are, however, some instances in which six sigma may not be the preferred, or most

feasible, option. If a project involves a relatively simple fix (“low hanging fruit”), then six

sigma’s stringent approach may take up unnecessary time and resources. In other instances,

smaller companies must make decisions about the high cost of training and implementation

versus the rewards that six sigma quality can offer it.

Implementing Six Sigma?

From Pyzdek’s Breakthrough Strategy’s eight fundamental stages, to Six Sigma

Qualtec’s specialized assessment and program development tailored for a client’s specific needs,

the implementation methods for a six sigma quality program can be as varied as the consultants

who provide them. With all of these choices, companies can find the exact methods and training

that work for their specific financial, time, and change goals.

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.........No matter what package a company chooses, however, all six sigma experts agree on the

core changes that the organization must be prepared to undergo. Implementing six sigma quality

standards requires a serious commitment of time, effort, and resources. Initially, company

leadership must be trained as six sigma black belts and master black belts (These programs varyas

well—Six Sigma and Advanced controls recommends a two-week program, whereas Six Sigma

Qualtec’s training takes four weeks interrupted by structured six sigma projects). These trained

individuals start the wave through the organization, with master black belts acting as internal

trainers, continuously training employees, and with black belts heading up projects to achieve

better quality levels. Eventually, a six sigma program must permeate all levels of an

organization. It must start with a commitment from the highest levels of management and filter

outward, providing understanding and commitment to everyone, changing the way that the entire

company goes about doing business.

(http://www.isixsigma.com/sixsigma/six_sigma.asp)

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.........References:

Advanced Systems Consultants—Six Sigma Quality Program:

http://www.mpcps.com/SIX0.html

American Society for Quality: http://www.asq.org/info/glossary/definition.html#s

i Six Sigma: http://www.isixsigma.com/sixsigma/six_sigma.asp

Motorola University: http://mu.motorola.com/sigma.shtml

Six Sigma Academy: http://6-sigma.com/Bts1.htm

Six Sigma and Advanced Controls, Inc.: http://www.sixsigmaquality.com/sixsigma.html

Six Sigma and Beyond, Pyzdek Consulting: http://www.pyzdek.com/whatissixsigma.htm

Six Sigma Qualtec: http://www.sixsigmaqualtec.com/Products/sixsigma/