Six Sigma Introduction

Supply Chain Leadership Committee

Nashville, TN

November 4, 2005

Steve FreudenthalMilliken & Company

Six Sigma Introduction

1.Six Sigma Definition2.Evolution of Six Sigma3.The Six Sigma Process Today4.The DMAIC Process5.Consultant Selection

Everything starts with the customer. The infrastructure for cultural change is the most powerful contribution of Six Sigma. Decisions about which projects to pursue must be based at least in part on the potential impact on net present value. Sustained improvement is possible only with management engagement. CEO goals are translated to frontline projects and coordinated through an organization of people and technical resources. A standard problem-solving process and associated tool set provides the means for basing decisions on data.

Key Principles of Six Sigma at XeroxKey Principles of Six Sigma at Xerox

Statistical Quality Control

Continuous Improvement/Kaizen

Malcolm Baldrige National Quality Award

Total Productive MaintenanceSupply Chain Management

Quality CirclesISO 9000 Standards

ReengineeringTheory of Constraints

Lean ManufacturingSix Sigma Quality

?

ISO 9000:2000

Quality Initiatives

What does “Six Sigma” mean? 

Phase I1. Early 1980’s2. Pioneered at Motorola3. Statistical approach4. Measured DPMO5. Variation is the enemy6. Focused on:

1. Elimination of defects2. Improving product and service quality3. Reducing cost4. Continuous process improvement

Phase II1. Mid 1990’s2. Revised by Jack Welch at General Electric3. Linked Six Sigma to business strategy and customer

needs4. Strong measurement on bringing dollars to the bottom

line5. Strong financial community involvement6. Project driven7. High potentials selected to be Black Belts8. Black Belts expected to deliver $250,000/year to bottom

line (hard dollars)9. Black Belts promoted up after two years10.All senior leaders trained (Green Belt)11.Projects are sponsored by business leadership (Top

Down)12.2% of management committed full-time

What does “Six Sigma” mean? 

What does “Six Sigma” mean? 

Phase III1. 2000’s2. Lean Six Sigma3. Caterpillar, Xerox, DuPont4. Combined lean manufacturing techniques and Six

Sigma5. Benefit: High speed, low cost

Six Sigma Savings Averages by Six Sigma Savings Averages by AreaArea

0

100

200

300

400

500

ManufacturingProject

PDfSS Project Back OfficeProject

SSA Project DfSS Project Global Project

$35K

$100K

$180K

$450K

$500K$480K

Roles and ResponsibilityDeploymentManager

Champions/Sponsors

Black Belts

Master Black Belts

Green Belts

• Identification and Prioritization of Projects by Division

• Assign and Review Activities of Black Belts

• Facilitate Project Implementation• Key Stakeholder in Project Success

• Lead 4-6 strategic improvement projects each year

• Expert in Six Sigma techniques• Help local organization in Six Sigma disciplines• Full-Time Position

• Mentor/coach Black Belts• Teach Six Sigma techniques• Full-time Corporate Position

• Domain Experts• 20-30% on one Project

Six Sigma Project Prioritize/ Select Scoring RulesScore $ Savings

(Hard/Annual

Time

(Duration)

Effort

(# people & $; Expense $; Cap $)

Success factor

(1 – risk)

9 >$250 K

(High)

< 4 months

(short)

< 3

(Small)HighNo capital; No IT; No Suppliers

Small work group affected; Short Duration; Small Project Team

7 $100 – $250 K

(Moderate)

4 - 8 months

(moderate)

4 – 6

(Moderate)ModerateNo capital; No IT; Some Suppliers

Multiple work groups affected;

Moderate Duration; Small Project Team

3 $50 - $100 K

(Okay)

8 – 12 months

(long)

6 – 10

(large)SmallSome capital; Some IT;

Numerous Suppliers; Many work groups;

Long Duration; Moderate Project Team Size

1 <$50K

(Small)

> 12 months

(very long)

> 10

(very large)LowSignificant capital; Significant IT;

Very many Suppliers Very Many work groups

Very Long Duration; Large Project Team SizeExample Total Score

Project A 9 7 3 3 22

$300 K 7 months 8 person team Some capital, some IT, many work groups affected, moderate duration

Project B 3 9 9 9 30

$ 75K 4 months 2 person team No capital, no IT, small project team

Johnson Controls Inc.

Improvements Start with High Value Projects

Prioritized by Management

Team

ProjectCandidates

• Customer Issues / Opportunities• Business Strategy• Goals / Objectives• Priorities

BE

NE

FIT

Lo

wM

ed

Hig

h

EFFORTLow Med High

Structured approach to project selection

Project Selection • Structured Process

• Links Business Strategy & Priorities

• Led by Deployment Managers

• Based on Benefit / Effort Analysis

• Leadership Accountable for Prioritization

Xerox

Six Sigma Improvement Model

“DMAIC” Process

• Define – describe the process, problem, opportunity

• Measure – gather data• Analyze – listen to the data• Improve – develop solutions,

design processes • Control – plan for stability

Six Sigma Design Model

“DMADV” Process

• Define – describe the process, problem, opportunity

• Measure – gather data• Analyze – listen to the data• Develop – create the solution• Verify – does the solution work?

Define

1.0 Define

Opportunities

2.0 Measure

Performance

3.0 Analyze

Opportunity

4.0 Improve

Performance

5.0Control

Performance

ObjectiveMain Activities Potential Tools and Techniques

•To identify and/or validate the improvement opportunity, develop the business processes, define critical customer requirements, and prepare themselves to be an effective project team.

•Validate/ Identify Business Opportunity

•Validate/ Develop Team Charter

•Identify and Map Processes

•Identify Quick Win and Refine Process

•Translate VOC •Develop Team Guidelines & Ground Rules

Business Case

Goal Statement

Project Plan

Opportunity Statement

Project Scope

Team Selection

Team CharterTASKS ACTIVITIES RESP. START DUE STATUS &ACTIONS

TASKS ACTIVITIES RESP. START DUE STATUS &ACTIONS

Action Plan

Sigma Goal (CCR)

GapProject Focus

$$

CCRs

Tools* are EssentialMeasureMeasure

•Operational Definitions

•Data Collection Plan

•Pareto Chart•Histogram•Box Plot•Statistical Sampling

•Measurement System Analysis

•Setup Reduction

•Generic Pull•Kaizen•Control Charts•Process Capability, Cp & Cpk

AnalyzeAnalyze

•Pareto Charts•C&E Matrix•Fishbone Diagrams

•Brainstorming•Detailed ‘As-Is’ Process Maps

•Basic Statistical Tools

•SupplyChainAccelerator Analysis

•Non Value-Added Analysis

•Hypothesis Testing

•Confidence Intervals

•FMEA•Simple & Multiple Regression

•ANOVA•Queuing Therory•Analytical Batch Size

ImproveImprove

•Brainstorming•Benchmarking•Process Improvement Techniques

•Line Balancing•Process Flow Improvement

•Constraint Identification

•Replenishment Pull

•Sales & Operations Planning

•Poka-Yoke•FMEA•Solution Selection Matrix

•‘To-Be’ Process Maps

•Piloting and Simulation

ControlControl

•Control Charts

•Standard Operating Procedures (SOP’s)

•Training Plan•Communication Plan

•Implementation Plan

•Visual Process Control

•Mistake-Proofing

•Process Control Plans

•Project Commissioning

•Project Replication

•Plan-Do-Check-Act Cycle

* Tool array adapted from Lean Six Sigma for Service by Michael George

•Value Stream Map

•Various Financial Analysis

•Charter Form•Multi-Generational Plan

•Stakeholder Analysis

•Communication Plan

•SIPOC Map•High-Level Process Map

•Non-Value Added Analysis

•VOC and Kano Analysis

•Lean Quality Function Deploy-ment (QFD)

•RACI & Quad Charts

DefineDefine

, but Not Sufficient

Xerox

Measure

1.0 Define

Opportunities

2.0 Measure

Performance

3.0 Analyze

Opportunity

4.0 Improve

Performance

5.0Control

Performance

Objective Main Activities Potential Tools and Techniques

•To identify critical measures that are necessary to evaluate the success, meeting critical customer requirements and begin developing a methodology to effectively collect data to measure process performance.

•To understand the elements of the six sigma calculation and establish baseline sigma for the processes the team is analyzing.

•Identify Input, Process, and Output Indicators

•Develop Operational Definition & Measurement Plan

•Plot and Analyze Data

•Determine if Special Cause Exists

•Determine Sigma Performance

•Collect Other Baseline Performance Data

Input Process Output CCR

Process Indicator

Process Indicator

Output Indicator

Input Indicator

A B

A1

D1

D2

A2

A B

A1

D1

D2

A2

A B

A1

D1

D2

A2

Checksheets

CCR

Gap

Sigma=

X

UCL

LCL

Sigma=

X

Analyze

1.0 Define

Opportunities

2.0 Measure

Performance

3.0 Analyze

Opportunity

4.0 Improve

Performance

5.0Control

Performance

Objective Main Activities Potential Tools and Techniques

• To stratify and analyze the opportunity to identify a specific problem and define an easily understood problem statement.

• To identify and validate the root causes that assure the elimination of “real” root causes and thus the problem the team is focused on.

• To determine true sources of variation and potential failure modes that lead to customer dissatisfaction.

•Stratify Process•Stratify Data & Identify

Specific Problem•Develop Problem

Statement• Identify Root Causes•Design Root Cause

Verification Analysis•Validate Root Causes•Comparative Analysis•Sources of Variation

Studies•Failure Modes & Effects

Analysis•Regression Analysis•Process Control•Process Capability•Design of Experiments

Indicators & Problem Statement

(effect)

Problem Statement

Quantified Root Causes

25%

50%

Total Risk Priority Resulting Risk Priority

Process/Product: FMEA Date: (original)

FMEA Team: (Revised)

Black Belt: Page: of

Process Actions Results

Item Process Steps

Potential Failure Mode

Potential Effects of Failure

Sev

erit

y

Potential Cause(s) of Failure

Occ

urre

nce

Current Controls

Det

ecti

on

Ris

k P

rior

ity

Recom-mended Action

Responsibility and Target Completion Date

Action Taken

Sev

erit

y

Occ

urre

nce

Det

ecti

on

Ris

k P

rior

ity

Total Risk Priority Resulting Risk Priority

Process/Product: FMEA Date: (original)

FMEA Team: (Revised)

Black Belt: Page: of

Process Actions Results

Item Process Steps

Potential Failure Mode

Potential Effects of Failure

Sev

erit

y

Potential Cause(s) of Failure

Occ

urre

nce

Current Controls

Det

ecti

on

Ris

k P

rior

ity

Recom-mended Action

Responsibility and Target Completion Date

Action Taken

Sev

erit

y

Occ

urre

nce

Det

ecti

on

Ris

k P

rior

ity

Process/Product: FMEA Date: (original)

FMEA Team: (Revised)

Black Belt: Page: of

Process Actions Results

Item Process Steps

Potential Failure Mode

Potential Effects of Failure

Sev

erit

y

Potential Cause(s) of Failure

Occ

urre

nce

Current Controls

Det

ecti

on

Ris

k P

rior

ity

Recom-mended Action

Responsibility and Target Completion Date

Action Taken

Sev

erit

y

Occ

urre

nce

Det

ecti

on

Ris

k P

rior

ity

0 5 10 15

0

10

20

30

Approval Time

Cyc

le T

ime

0 5 10 15

0

10

20

30

Approval Time

Cyc

le T

ime

4.0 Improve Performance

1.0 Define

Opportunities

2.0 Measure

Performance

3.0 Analyze

Opportunity

4.0 Improve

Performance

5.0Control

Performance

Objective Main Activities Potential Tools and Techniques

• To identify, evaluate, and select the right improvement solutions. To develop a change management approach to assist the organization in adapting to the changes introduced through solution implementation.

•Response Surface Methods

•Generate Solution Ideas

•Determine Solution Impacts: Benefits

•Evaluate and Select Solutions

•Develop Process Maps & High Level Plan

•Develop and Present Storyboard

•Communicate Solutions to all Stakeholders

Control

ObjectiveMain Activities

Potential Tools and Techniques

1.0 Define

Opportunities

2.0 Measure

Performance

3.0 Analyze

Opportunity

4.0 Improve

Performance

5.0

ControlPerforman

ce

• To understand the importance of planning and executing against the plan and determine the approach to be taken to assure achievement of the targeted results. To understand how to disseminate lessons learned, identify replication and standardization opportunities/processes, and develop related plans.

•Develop Pilot Plan & Pilot Solution

•Verify Reduction in Root Cause Sigma Improvement Resulted from Solution

• Identify if Additional Solutions are Necessary to Achieve Goal

• Identify and Develop Replication & Standardization Opportunities

• Integrate and Manage Solutions in Daily Work Processes

• Integrate Lessons Learned

• Identify Teams Next Steps & Plans for Remaining Opportunities

Error Modes and Effects Analysis

Error Mode Effect Analysis(EMEA)

Description:

Degree of Effect

Ste

p#

ProcessStep

Error Cause Effect

Fre

qu

en

cy

Sev

eri

ty

Dete

cti

on

To

tal

Occurrence Prevention(Countermeasure)

4.2.1

Assemble alloutboundcontainers instaging area

• Back injuryduring lift

• Foot and toeinjury fromdroppedcont.

• Carry-allnot available

• Liftingguidelinesnot followed

• Backinjuries,lost time,insuranceexpense

0+22 4 3 9

• Purchase two new carry-alls formailroom

• Include topic in new safety film

4.2.2

Determinecorrectpallet size

• Non-standardpallet used

• Vendorpallets kept

• Containerstack overend ofpallet andfall whenbeing lifted

2+24 1 1 6

• Inspect for non-standard pallets andreturn to vendors

4.2.3

Positionempty palletin markedarea ofloading dock

• Full palletsare rotated90° by hand

• Pallet set 90°off whenpositioned -lift truckcan’t access

• Back andhand injuries,lost time,insuranceexpense andrework

2+35 4 1 10

• Update and clarify pallet placementprocedures

• Include topic in new safety film

4.2.4

Stackoutboundcontainers onpallet not toexceed twohigh

• First layernotcompletedbeforestartingsecond layer

• Stackguidelinesnot used

• Containersfall whilebeing lifted

0+11 1 1 3

• Update and clarify loading guidelines

4.2.5

Load pallets invehicle withlift truck andsecure

• Tie downlinesdamage bulkmail whentightened

• Tie downguidelinesnot clear

• Injuredfingers,damagedoutboundmail

0+11 2 1 4

• Update and clarify loading guidelines

Error Modes and Effects Analysis

Sigma Goal (CCR)

Gap

Implemented Solution

CCR

Gap

X

Process Control System

Project Workplan

CCR

1.0 Define

Opportunities

2.0 Measure

Performance

3.0 Analyze

Opportunity

4.0 Improve

Performance

5.0

ControlPerforman

ce

5.0Control

Performance

1.0 Define

Opportunities

2.0 Measure

Performance

3.0 Analyze

Opportunity

4.0 Improve

Performance

5.0

ControlPerforman

ce

5.0Control

Performance

Process cannot be improved:1. Abort project2. Recharter as Design Project

Six Sigma DMAIC Projects

Fu

lly

Dep

loye

dN

o M

ajor

Gap

sW

ell

Dep

loye

dM

ajor

Gap

sN

oth

ing

•Nothing •Buzz (10+)•Push (5)•Skeptics (50%)•Pilots are Positive (80%)

•Some Momentum•Balance of Push/Pull•Not at Tipping Point

•More Pull Than Push•Internal & External Positioning•Past the Tipping Point

•Thriving•PULL!•Drives the Way We Work•Ubiquitous

Build on Energy

Build on Energy

Room toInject New

Energy

Room toInject New

Energy

“ENERGY & WILL”

DEPLOYMENT

Business Processes are here

Manufacturing Performance is here

50% of all companies attempting to implement Six Sigma failed after the first two years of implementation.

Key Learnings

Sustained Commitment

Long Term Goal – Sustained Commitment & Results

Six Sigma Net

Business Benefit

1 2 3 4Year

Initial LeadershipCommitment

0

C

A

F As many as 50% end up here at “F”

Key factors differentiating

“A” curve from “F” curve Business integration into

“how we work”

Project selection link to business strategies

Project selection link to Customer Value

Ability to change Culture & Leadership Behavior

Full Value-Chain engagement

Ability to track results

Integrating DfLSS

* Chart adapted from Strategic Six Sigma: Best Practices from the Executive Suite by Dick Smith and Jerry Blakeslee

*

Xerox

1. Apathy from senior leadership2. Training not connected to projects3. Projects not connected to strategy4. Projects only focused internally5. Selecting “available” people6. Part time Black Belts7. No financial validation to bottom line8. People not recognized for their

contributions

Reasons Six Sigma Deployments Fail

A Six Sigma Deployment Cannot Be Done Without Consultants

• Training Materials• Testing Materials• Professional Educators• Six Sigma Project Management Expertise

(Master Black Belts)• Credibility With Top Management• Can “Jump Start” The Deployment

If properly driven by Top Management, Six Sigma can have a dramatic impact

on a company’s culture and how it aligns itself with its customers

Thank Thank You!!You!!