Learning Agenda

1
Learning Agenda

• Define Six Sigma and its key elements
• The Case for Six Sigma
• The Six Sigma process DMAIC
• Exercise to learn
• Process variability
• Process capability
• Six Sigma Players
• Implementation Issues

2
Operational Systems The Basics

• The operational system transforms inputs into
  goods services.

• Improvement objectives
• Be more efficient in use of resources in the
  process
• Create outputs that lead to greater effectiveness
  in the market

3
What is Six Sigma?

• Measurement of variability
• Program for quality improvement
• Fact-based
• Customer-driven
• Management system to achieve sustainable
  competitive advantage
• Set of tools for improvement efforts

4
What is Six Sigma?

• A comprehensive and flexible system for
  achieving, sustaining and maximizing business
  success. Six Sigma is uniquely driven by close
  understanding of customer needs, disciplined use
  of facts, data and statistical analysis, and
  diligent attention to managing, improving and
  reinventing business processes.
• The Six Sigma Way, by Pande, Newman and Cavanaugh

5
Six Sigma according to Jack Welch

• A highly disciplined process that helps us focus
  on developing and delivering near-perfect
  products and services.
• The word Six Sigma is a statistical term that
  measures how far a given process deviates from
  perfection.
• The central idea behind Six Sigma is that if you
  can measure how many defects you have in a
  process, you can systematically figure out how to
  eliminate them and get as close to zero defects
  as possible.
• Six Sigma has changed the DNA at GE it is the
  way we work in everything we do and in every
  product we design.

6
Lean Six Sigma at Xerox

• By creating a culture that strives to constantly
  improve and eliminate waste, event-driven major
  restructurings can be avoided.
• -- Anne Mulcahy, CEO Xerox

7
Six Sigma Philosophy

• Customer Focused Build to Critical To Quality
  (CTQ) criteria determined through listening to
  Voice of the Customer
• Top-down approach
• Fact-driven, measurement-based
• Project Oriented
• Structured problem solving approach
• Widespread
• Improvement projects become part of everyones job

8
Whos Practicing 6 Sigma?

• Avery Dennison
• Dow
• DuPont
• Foxboro
• Sony
• Deere Co.
• Delphi
• Allied Signal
• Ford
• Bose

• Johnson Johnson
• Caterpillar
• Lockheed Martin
• IBM
• CitiGroup (Visa/MasterCard)
• G.E.
• J.P. Morgan
• ServiceMaster
• Eaton

9
Six Sigma Players

• Senior Management
• Openly commit to support the process!
• Champions
• Manager in the project area
• Master Black Belts
• Mentors the project teams
• Black Belts
• Full time team leader, trainer, facilitator
• Green Belts
• Team members

10
Does 6 Sigma matter?
11
Cost of Poor Quality (COPQ)
Sigma Level
Defects per Million Opportunities
Cost of Poor Quality
2
398,537 (Noncompetitive Companies)
Not applicable
3
66,800
25-40 of sales
4
6,210 (Industry Average)
15-25 of sales
5
233
5-15 of sales
6
3.4 (World Class)
lt 1 of sales
Each sigma shift provides a net income
improvement which equals 10 of sales.
Six Sigma, by Harry and Schroeder, p. 17
12
Jurans Cost of Quality Accounting
Internal Failures
External Failures
Prevention
Appraisal

• Costs to prevent failures
• Training
• 6 Sigma program management
• Experiments
• Testing

• Costs to measure quality levels
• Inspections
• Audits

• Costs of failures caught before shipment
• Scrap
• Rework
• Equipment down time

• Costs of failures in customers hands
• Warranty repairs
• Complaint Handling
• Support
• Expediting
• Recalls
• Law Suits
• Reputation

13
Cost of Quality

• How to get people thinking about costs of poor
  quality
• Suppose all the defects disappeared.
• Would the costs in question also disappear?
• What other costs would disappear or be reduced?

14
Organization Within the Organization

• The primary operation that produces your products
  and services
• Fix-IT operation that cleans up the defects
  caused by the primary
• Need to fire the Fix-It factory!

15
What is Sigma and why Six?

• Lower case, Greek letter S
• In statistics, the standard deviation of a
  distribution of data
• Measures the variability, dispersion, or spread
  of the data around the mean (average) of the data

• Sigma

16
Variability explained

• Look at the bottle of water (or soda) in front of
  you (Lets assume its a 12-ounce bottle.)
• Is it exactly 12.00000000000000000 ounces????
• No, its probably slightly above or slightly
  below 12 ounces
• Take all the bottles in the room and weigh the
  contents. We would have a set of data with
• Mean or average around 12
• Distribution of the data around the mean
• And a wet room

17
Variability explained with pictures
The lower the s value, the more tightly clustered
the values around the mean
s measures the spread of the distribution
X or sample mean
12.0 ounces
18
Variability explained with pictures
Lets assume s 0.05 oz.
99.74
3s12.15 oz.
-3s11.85 oz.
X
12.0 ounces
19
Describing a distribution
-6? -5? -4? -3? -2? -1? x 1?
2? 3? 4? 5? 6?
68.26
95.44
99.74
99.993
99.9993
99.99966
20
Lets Switch Gears from the observed result to
the goal

• Who cares about the distribution?
• The customer! (And probably The Government!)
• Therefore, so does (should!) the bottler
• Implications for business practice
• Design Specification Limits Upper and Lower
  for the amount of water that should be in each
  bottle. (Lets assume its 12 /- 0.1 oz)

Target12.0 ounces
UDS12.1 oz
LDS11.9 oz
21
Compare Design Specifications to Process
Variability
s 0.05 oz. Design Spec 12 /- 0.1 oz.
Conclusion A 3-sigma process is not capable of
meeting specifications
3s12.15 oz.
-3s11.85 oz.
X
12.0 ounces
LDS11.9 oz
UDS12.1 oz
22
3 Sigma versus 6 Sigma
A 6s process is more capable and thus more likely
to be defect free
3s compared to specs
6s compared to specs
X or sample mean
LDS
UDS
12.0 ounces
23
Inherent Capability Analysis

• Determine the inherent capability of the process
  to produce goods at some quality level.
• Gather historical data on a process
• By convention, if most output (99.74 /-3s)
  falls within Design Specs, then process is deemed
  capable
• But good can get better!
• Six-Sigma Quality Level
• When 12s output (/- 6s) falls within Design Specs

24
Process Capability Ratio
Upper specification - Lower specification Cp
--------------------------------------------------
6s
This works fine if the mean of the output is
the same as the target specification.
25
Compare Design Specifications to Process
Variability
s 0.05 oz. Design Spec 12 /- 0.1 oz.
Note that mean of the output does not match the
target specification.
3s12.07 oz.
-3s11.77 oz.
X
11.92 oz.
LDS11.9 oz
target12.0 oz
UDS12.1 oz
26
Process Capability Index
Cpk Minimum of
X-double-bar mean output of the process, not
the target specification
27
Six Sigmas 2 Key Methodologies DMAIC DMADV
D M A I C
ControlSustain
DefineOpportunity
AnalyzeCauses
ImproveSolutions
MeasureSymptoms
Charter Performance Drivers
Actions Controls
D M A D V
MeasureNeeds Reqts
AnalyzeHigh LevelDesign
DesignDetailedDesign
VerifyRoll-Out Control
Define Program Description
28
Why Two Methodologies?

• Six Sigma initially focused on current processes
• DMAIC
• A variation of the Deming Wheel Plan Do
  Check - Act
• Yet
• The design phase drives life-cycle costs
• DMADV
• Sometimes called Design for Six Sigma (DFSS)

29
DMAIC Step 1 Define

• Identify our internal and external customers
• Determine what our customers want
• Critical To Quality (CTQs) characteristics
• Identify our suppliers
• Determine what we need from our suppliers
• Identify problems
• Identify the process that contributes to the
  problems

• Identify improvement opportunities
• Pareto Analysis
• Scope the improvement project
• Select the right players
• Set goals and objectives

30
DMAIC Step 2 Measure

• Review the current process
• Process mapping
• Develop metrics for that best describe the
  current and desired states
• Performance
• Cost
• Metrics must align with indicators of business
  success

• Train team members on data collection and
  analysis
• Collect data
• Organize data
• Evaluate the performance of the process
• Defects
• Cycle time
• Other relevant measures
• Determine degree of process variation

31
DMAIC Step 3 Analyze

• Identify issues that occur at each step in the
  process
• Assess customer impact of problems
• Root Cause Analysis ? improvement opportunities
• Methods (processes)
• Machines (technology)
• Manpower (people)
• Materials (data, instructions)

• Assess the effect on outputs or performance
• Generate potential solutions
• Target best candidates
• Tools
• Control Charts
• Cause-and-Effect Diagrams
• Flowcharts
• Run Charts
• Scatter Diagrams, etc.

32
Fishbone Cause-and-Effect Diagram
Organizational tool for approaching the problem
Method
Machines
Method
Problem Outcome
Materials
Manpower
33
DMAIC Step 4 Improve

• Develop Action Items
• Prioritize areas to attack
• Pilot test solutions

• Refine solutions
• Document solutions
• Implement solutions

34
DMAIC Step 5 Control

• Beware of lapses!
• Measure progress
• Quantify benefits of the improvements in
  financial terms by the bean counters
• Document the project debrief for learning
  experiences

• Communicate for organizational learning
• Recognize the teams efforts and success
• Monitor and manage to hold gains
• Adjust for continuous improvement

35
Statistical Process Control Charts

• Capable processes also must be controlled
• SPC attempts to distinguish 2 types of
  variability
• Normal (Random) variability
• Abnormal (Structural) variability
• How to apply SPC
• Construct charts (and update occasionally!)
• Collect data regularly applying sampling plan
• Observations outside of limits indicate the
  process potentially is out of control-
  statistically speaking
• Find Assignable Causes to improve operation

36
Control Charts

• Attribute Control Charts (assumes normal
  distribution)
• Variability of some physical measure (weight,
  distance, time)
• Mean
• Range Chart ? standard deviation
• p - chart (assumes binomial distribution), More
  applicable to services.
• Proportion or fraction defective
• ? SQRT p(1 - p)/n
• c chart (assumes Poisson distribution)
• Characteristics, also known as defective chart
• ? SQRT (mean)

37
Developing Control Charts

• Identify the process you want to study
• Check whether the process is running OK
• Collect sample data (more is better)
• For each sample, calculate the Mean and the Range
• After taking sufficient samples, calculate mean
  of the sample means and the ranges
• Upper Control Limit (UCL) Mean 3Std.Dev.
• Lower Control Limit (LCL) Mean 3Std.Dev.

38
Statistical Process Control Charts
These are out of control search for
Assignable Causes
x
x
Upper Control Limit
x
x
Center line
x
x
x
x
Lower Control Limit
1
2
3
4
5
6
7
8
Observation Number over time ?
39
Product Reliability

• Reliability product of reliability of
  components
• rs (r1)(r2) . . . (rn)
• where
• rs reliability of the complete product
• n number of subsystems
• rn reliability of the subsystem or component
  n

40
Lets Build a Product
5

• Production Process
• One person cuts strips for each color
• One person glues each color strip onto graph
  paper in order shown
• Measurements
• Length width of green strips (at midpoint)
• Placement of red strip

2
1
2
4
3
41
Tools Tasks

• Tools
• Paper 4 colors
• Graph paper photocopied with outlines
• Scissors
• Glue stick
• Ruler for measuring results

• Tasks
• Cut and glue strips
• Measure results
• Enter data
• Length Width of Green
• Distance of red edge from reference point
• Calculate
• Mean
• Standard deviation
• Compare distribution to specs

42
The Results
43
Six Sigma Organizational Fit

• Ready for Six Sigma
• Willingness to change
• Healthy self-criticism
• Flat organization structure
• Rewards for intelligence and creativity
• Rigorous strategic planning
• Ability to measure client satisfaction, market
  share, cost, and productivity

• Not Ready for Six Sigma
• Resistance to change
• Blame/credit mentality
• Rigid, hierarchical organization structure
• Low appreciation of staff
• Inability to dedicate project resources
• Inability to measure

44
Where do you Start?

• Processes/operations with
• Impact of the process on customer satisfaction
• Current wide variance
• Ease of defining opportunity and defect
• Clear improvement opportunities
• Ease of measurement

45
Total Quality Management

• TQM is a management approach to long term success
  through customer satisfaction
• TQM is based on the participation of all members
  of an organization in improving processes,
  products, services, and the culture they work in.
• TQM benefits all organization members and
  society.
• American Society of Quality

46
Six Sigma vs. Lean Complementary

• Six Sigma
• Remove variation from processes to achieve
  uniform flow
• Problem/project focus
• Research projects with longer timeline (3-4
  months)
• Higher complexity with root cause unknown

• Lean
• Remove waste, rework, inventory to reduce flow
  time
• Flow focused
• Remove bottlenecks
• Material velocity
• Immediate results(1-2 weeks)
• Low complexity with known solutions

47
Lean Production

• JIT production (cellular manufacturing)
• Heijunka Level workloading
• Pursuit of perfection
• Visual process management
• Empowered teams
• Kaizen Continuous improvement involving everyone
• Poka Yoke mechanism to stop defects or make
  errors obvious

48
Other Kaizen Tools 5 Ss
Source http//www.kaizen-consulting.com/training_
5s.htm
49
Mudas 7 Wastes
Source www.Gemba.Com
50
Bibliography

• The Six Sigma Way (ISBN 0-07-135806-4) by Pande,
  Neuman, and Cavanaugh
• The Power of Six Sigma (ISBN 0-7931-4434-5) by
  Subir Chowdhury
• Six Sigma (ISBN 0-385-49437-8) by Harry and
  Schroeder.
• The Six Sigma Handbook (ISBN 0-07-137233-4) by
  Pyzdek is more technical and becoming the
  'handbook' for Black Belts.
• The Machine that Changed the World, James Womack

• www.6-sigma.com
• www.sixsigma.co.uk
• www.sixsigmasystems.com
• www.isixsigma.com
• www.shawresources.com/pdf/Choosing20a20Quality2
  0Improvement20Methodology.pdf
• www.ge.com/en/commitment/quality/whatis.htm
• http//www.swmas.co.uk/Lean_Tools/The_7_Wastes.php
  
• http//www.kaizen-consulting.com/training_7w.htm

51
More References

• http//www.strategosinc.com/just_in_time.htm
• A GREAT summary of manufacturing improvement
  concepts from Ford to lean. A MUST READ.
• http//hbswk.hbs.edu/item.jhtml?id2646toperatio
  ns
• http//www.kaizen-consulting.com/training_5s.htm
• http//www.kaizen-consulting.com/training_7w.htm
• This site from Gemba Research does a nice job of
  summarizing lots of the TPS tools and concepts.