Logistic and SCM , IIPMB

1. Six Sigma
{Quality Management Systems}

2. VGD@IIPM

3. SIX SIGMA
 Statistical concept measures a
process in terms of defects (SIX
sigma) level- 3.4 defects per million
opportunities
But, it is much more!
("Delivering Tomorrow's Performance Today“)

4. VGD@IIPM

5. VGD@IIPM
Philosophy
 Reduce variation in business and
make customer-focused, data
driven decisions
 Translate customer
needs into operational
measurements

6. Six Sigma
 Customer first & uses facts and
data to derive better solution
 Target:
•Improving customer satisfaction
•Reducing cycle time
•Reducing defects

7. VGD@IIPM

9. Objectives of Six Sigma
 Critical to quality (CTQ): attributes important to customer
 Defect (D): failure to deliver a product/service as required by
customer
 Process Capability (PC): process can deliver the quality
 Variation (V): perception of the customer, how he/she sees
and feels about the quality of the product
 Stable Operations (SO): guarantee a process consistent and
predictable with recued variation

10. Six Sigma
Methods Production
Design
Service
Purchase
HRM
Administration
Quality
Depart.
Management
M & S
IT
Where can Six Sigma be applied?

11. 3 Sigma Vs. 6 Sigma
3 Sigma Company 6 Sigma Company
• Spends 15-25% of sales dollars on
cost of failure
• Spends 5% of sales dollars on cost of
failure
• Inspection to find defects • don’t produce defects
• Does not have a disciplined approach
to gather and analyze data
• Use Measure, Analyze, Improve,
Control (MAIC) and Measure, Analyze,
Design (MAD)
• Benchmarks against their competition • Benchmarks against the best in the
world
• Believes 99% is good enough • Believes 99% is unacceptable
• Define CTQs internally • Defines CTQs externally

12. Non-Liner Decrease
2
3
4
5
6
308,537
66,811
6,210
233
3.4
s PPM
Process
Capability
Defects per Million
Opportunities
* Includes 1.5s shift
Focusing on s requires thorough process
understanding and break-through thinking
Focusing on s requires thorough process
understanding and break-through thinking
0
10
20
30
40
50
60
70
80
1 2 3 4 5 6
Process Sigma
%Change
0
100000
200000
300000
400000
500000
600000
700000
800000
PPM
From 1 to 2
From 3 to 4
From 4 to 5
From 5 to 6
% ChangePPM

13. WHEN SIX SIGMA BE USED?
 Depends on the type of business,
“Processes generate lot of negative (customer)
feedback,
 Customers internal or external, components of
Six Sigma considered to study and rectify
problem.”

14. Change Management: Two Alternative
Approaches
Activity Centered
Programs
Result Oriented
Programs
Change
Management
Source: Schaffer and Thomson, HBR, Jan-Feb. 1992

15. μ
σ
What’s in a name?
 Greek letter representing standard deviation of
population of data.
 Measure of variation
(data spread)

16. Variation
 Process does not produce
same result (“Y”) every time.
 Appear in all processes.
 Directly affects customer
Customers do not feel averages!
-10
-5
0
5
10
15
20

17. Measuring Process
Performance
(Pizza delivery example. . .)
 Customers want pizza
delivered fast!
 Guarantee = “30 minutes or less”
 Measured performance found an average delivery
time of 23.5 minutes?
 On-time performance is great, right?
 Customers must be happy with us, right?

18. How often delivering on time?
Answer: Look at
the variation!
 Managing by average doesn’t tell the whole story.
 Average and variation together show what’s
s
x
30 min. or less
0 10 20 30 40 50

19. Process Improvement Goals
 Companies want to increase Return On
Investment (ROI)

21. DMAIC
Six-Sigma - A “Roadmap” for improvement

22. Training (1 week)Training (1 week)
Work on project
(3 weeks)
Work on project
(3 weeks)
ReviewReview
Define
Throughput time projectThroughput time project
4 months (full time)4 months (full time)
Example of a Classic Training strategy

23. DMAIC?
(Define, Measure, Analyze, Improve, Control)
 Logical and structured approach to
problem solving and process
improvement.
 Iterative process (continuous
improvement)
 Quality tool focus on change management

24. Implementation of Six Sigma
 Greek letter Sigma σ - Standard deviation.
 Standard deviation: How much variation exists in a set of data, a
group of items, or a process/service.
 Deliver: 68 percent of service on time, process at "2 sigma" level.
 Deliver: 93 percent on time, sounds goods, but operating at only "3
sigma" level of performance.
 99.4 percent on time, operating at "4 sigma" level
 Six Sigma performed service at 99.9997 percent of the time.

25. VGD@IIPM
Learning from ManufacturingLearning from Manufacturing

26. Relevance of Six Sigma in Industry
Companies Advantage
Citibank
General
Electric
Wipro Corp.
Cost reduction from 5 to 10
times
$ 400 - 500 million savings
Eight fold gain over the
investment
Other Companies
Allied Signal, Kodak, Motorola, Texas, Cisco /
Telco,
Taj Hotels

27. Six Sigma in Banks
ICICI
HDFC
• Customer deliveries
• Account opening
• Turnaround time
• Card / Cheque
• Time taken for credit
approval

28. Difference between Sigma’s
Cases
1. Wrong drug
prescriptions in
Hospitals
2. Unsafe
drinking water
supply by
Water Supply
Board
99.73 (4.2 sigma)
54000/yr
2 hrs/month
99.9997 (6 Sigma)
One/25 yrs
One second / 16
yrs

29. 99.9% is already VERY GOOD
But what could happen at a quality level of 99.9% (i.e., 1000 ppm),
in our everyday lives (about4.6 )?
• More than 3000 newborns accidentally falling
from the hands of nurses or doctors each year
• 4000 wrong medical prescriptions each year
• 400 letters per hour which never arrive at their destination
•
Two long or short landings at American airports each day
How good is good enough?

30. Six Sigma Levels
 Identified at three levels:
 Metric
 Methodology
 Philosophy
M2P

31. Six Sigma Metrics
Defects Per Unit (DPU):Total number of defects / total number
of product units
Total Opportunities (TO): Total number of Units X
Opportunities
Defects Per Opportunities (DPO): Total number of defects /
total opportunity
Defects Per Million Opportunities (DPMP):

32. Metric
 3.4 Defects Per Million Opportunities
(DPMO)
 DPMO allows to take complexity of
product/process into account
 Refers to statistics. The +-6 standard
deviations (sigmas) away from the
standard mean
 Most companies are within 3 standard
deviations of mean

33. Methodology
 Higher the sigma
value, better
process is
capable of
producing defect
free results.
• Six sigma range must have a quality product
99 . 9999998 % of time.

34. Six Sigma Companies

35. Six Themes of Six Sigma
• Genuine Focus on the Customer
• Data and Fact-Driven Management
• Process are where the Action is
• Proactive Management
• Boundaryless Collaboration
• Drive for Perfection

36. 1. Genuine Focus on the Customer
• Understanding reality of customer
• Customer focus is top priority
• "Sigma" improvement developed on customer satisfaction and
value
2. Data and Fact-Driven Management
• Management by fact than opinions and assumptions
• Measures key variable for better performance
3. Process are where the Action is
• Manager to master in process dimension to build competitive
advantage in delivering value to customer

37. 4. Proactive Management
• Acting in advance of events than reacting to it (e.g.,
HACCP)
5. Boundaryless Collaboration
• Break down barriers and improve team work up, down and
across organization
6. Drive for Perfection
• Aim for perfection and tolerate failure

38. Six Sigma Roles

39. Define Measure Analyze Improve Control
• Establish
Team Charter
• Identify
Sponsor and
Team
Resources
• Administrator
Pre-Work
• Confirm
Team Goal
• Define
Current
State
• Collect and
Display
Data
• Determine
Process
Capability
and Speed
• Determine
Sources of
Variation and
Time
Bottlenecks
• Generate
Ideas
• Conduct
Experiments
• Create Straw
Models
• Conduct B’s
and C’s
• Develop
Action Plans
• Implement
• Develop
Control Plan
• Monitor
Performance
• Mistake-
Proof
Process
DMAIC Process and Its Tools
{Define phase for formation of project team}

40. DMADV
{Methodology for new product or
service}
 Define the project
 Measure the opportunity
 Analyze the process
options
 Design the process
 Verify the performance

41. Six Sigma Roles
 Champion: Business leader rovides overall strategic direction for
Six Sigma project team. Individual serves as liaison between
management and project team; facilitates the acquisition of
resources and support for the project.
 Master Black Belts: Quality leaders responsible for strategy,
training, mentoring and deployment of Six Sigma.
 Black Belts: Six Sigma experts who work projects across the
business.
 Green Belts: Fully-trained individuals work projects in their job.

42. Definitions and Tools
Six Sigma: Coined by Motorola describe improvement initiatives which express process
capability in parts per million. Process with a sigma level of six generates a maximum
defect probability of 3.4 parts per million.
Champions: Executives and managers with significant overall business responsibility.
Selection of individuals with ultimate responsibility for the business ensures black belts
to support they need to succeed.
Black belt (BB): Process improvement team leader who is trained and certified in Six
Sigma methodology and tools who is responsible for successful project execution.
Master black belt (MBB): An expert in Six Sigma techniques and application. MBBs play
a key role in training and coaching of BBs.
Green belt (GB): Like black belt but not a full-time role.
DMAIC: Acronym describing the phases of a Six Sigma project – define, measure,
analyze, improve and control.

43. Who are the Players ?
 Consultants (e.g., Six Sigma Academy) did initial training which is all done
internally now.
 Six Sigma Leaders: Champions responsible for selection and monitoring of
projects and delivering support to the belts.
 Master Black Belts (MBBs): Black belts with a minimum of one extra year of
advanced tool learning, business/leadership training, and teaching experience.
 Black Belts (BBs): Professionals who lead major projects
 Green Belts (GBs): Professionals receive fundamental learning's in the six
sigma tools and specify tool training that relate to their project or functional
processes.

44. TechnicalTechnical
SkillsSkills
SoftSoft
SkillsSkills
StatisticiansStatisticians
MasterMaster
BlackBlack
BeltsBeltsBlackBlack
BeltsBelts
Quality ImprovementQuality Improvement
FacilitatorsFacilitators
BBBBBBBB
MBBMBB

45. Key Concepts of Six Sigma
• Critical to Quality: Attributes most important to the customer
• Defect: Failure to deliver what the customer wants
• Process Capability: What your process can deliver
• Variation: What the customer sees and feels
• Stable Operations: Ensuring consistent, predictable processes to improve
what the customer sees and feels
• Design for Six Sigma: Designing to meet customer needs and process
capability

46. Six Sigma Breakthrough Strategy Players for
RBEDS
Six Sigma Title
Executive Team
Champion
Master Black Belt
Black Belt
Green Belt
Leaders of Extension
RPC & Rubber Board Experts
Deputy RPC
Development Officers
Assistant Development Officer
Senior Field Officer / Field
Officer
One champion
per group
One master black
belt for every 30
black belt

47. Six Sigma Quality?
 Originated at Motorola in early 80’s
 Motorola win the 1988 MBNQA
 Methodology for disciplined quality improvement
 Juran principles apply
 Doesn’t use “Quality” in name
 With the inclusion of Six Sigma into a sound business system,
the major ingredients of a Total Quality Management System are
usually in place
 Uses a modified Deming Wheel (PDCA)

48. VGD@IIPM

49. Six Sigma Process Capability
SIGMA DPMO* COPQ** CAPABILITY
6 sigma 3.4 <10% of sales World Class
5 sigma 230 10 to 15% of sales
4 sigma 6200 15 to 20% of sales Industry average
3 sigma 67,000 20 to 30% of sales
2 sigma 310,000 30 to 40% of sales Noncompetitive
1 sigma 700,000
* Defects Per Million Opportunities
** Cost of Poor Quality

50. Measurement System:
How Do We Arrive At Sigma Level ?
Identify the CTQs
Define Defect
Opportunities
Look for Defects in
Products or Services
Arrive at DPO
Convert DPMO to
Sigma Level
Sigma Level
Defects Per
Million of
Opportunity
2 308,537
3 66,807
4 6,210
5 233
6 3,4
DPMOZ

51. Refer Sigma
Table
Z
%
Measurement System:
How Do We Arrive At Sigma Level ?
Identify the
CTQs
Points or steps
that effects
Product Quality
Define Defect
Opportunities
CTQs if not
followed will
become
defects
Look for Defects in
Products or
Services
Number of defects
per opportunity
Arrive at DPO
Sigma
= Total No. of
defects
Total Product x Type of
defects
Convert DPMO
to Sigma Level
DPO x
10,00,000
How to Calculate Six Sigma ?
CTQ=Critical to Quality

52. Measurement System:
How Do We Arrive At Sigma Level ?
Identify the CTQs
• “Critical to Quality”
characteristics or the
Customer Requirements
for a Product or Service
Define Defect
Opportunities
• Any step in the
process where a
Defect could
occur in a CTQ
Look for Defects in
Products or Services
•Count Defects or failures
to meet CTQ
requirements in all
process steps
Arrive at DPO
• Defects Per Million
Opportunities
Convert DPMO to
Sigma Level
•Use the SIGMA
TABLE
Sigma
level
Defects per
Million of
Opportunity
2 308,537
3 66,807
4 6,210
5 233
6 3,4
DPMOZ

53. VGD@IIPM
Measurement System:
How Do We Arrive At Sigma Level for Improving Film Industry in India
No. of Films = 2000
Identify the CTQs
• Quality of film
• Acceptability of all types
of audience
• Limited no. of films per
year
• Different subjects
• Cost-effective film making
Define Defect
Opportunities
• Promoting violence
(sex & communal
social disturbance)
• Limited audience
• Films on same subject
• High ticket cost
• Unhealthy competition
Look for Defects in
Products or Services
• Promoting violence - 200
• Limited audience - 500
• Films on same subject-250
• High ticket cost -100
• Unhealthy competition-100
Total - 1150
Arrive at DPO
= 1150/2000 * 5
= 1150/10,000
= 0.115
Convert DPMO to
Sigma Level
0.115 * 10,00,000
= 1,15,000
2.75 89 %
%Z
Refer Sigma
Table

54. Measurement System:
How Do We Arrive At Sigma Level for Transport Service in Bangalore ?
No. of Buses = 2000
Identify the CTQs
• Timeliness
• Comfort
• Safety
• Cost
• Travel Time
Define Defect
Opportunities
• Late arrival
• Crowd
• Rash driving
• Variations in cost
• Improper time
Management
Look for Defects in
Products or Services
• Late arrival - 50
• Crowd - 100
• Rash driving - 15
• Variations in cost- 20
• Improper time - 200
Management
Total - 385
Arrive at DPO
Sigma= 385/2000 * 5
= 385/10,000
= 0.0385
Convert DPMO to
Sigma Level
0.0385 * 10,00,000
= 38,5001.8 38,500 %
Sigma Level
Defects Per
Million of
Opportunity
DPMOZ

55. VGD@IIPM
• Maturity at harvest e.g.,
Gladiolus (1-5 buds showing
colour)
• Care at transportation
• Storage at cool temperature (5-
120
c)
• Water balance (time between
harvesting & place in the water)
Measurement System:
How Do We Arrive At Sigma Level for Floriculture Export ?
Total cut flower = 10,000/day
Identify the CTQs
Define Defect
Opportunities
• Less freshness or
failure to bloom
• Physical damages
• Low storage life
• Wilt
Look for Defects in
Products or Services
• Less freshness - 200
• Physical damages - 400
• Low storage life - 300
• Wilt - 200
--------
1100
--------
Arrive at DPO
Sigma
= 1100 = 0.0275
4 x 10000
Convert to DPMO
0.0275 x 10,00,000
= 27,500
Refer Sigma Table
96.96 3.375
Z %

56. VGD@IIPM
Measurement System:
How Do We Arrive at Sigma Level for Rubber Producer’s Society?
Total growers = 120
Total No. of sheets = 12,000
Identify the CTQs
• Frequent washing of
utensils with formalin or
lysol
• Avoid prolonged dripping
of wet sheet before smoke
• Use of exact quantity of
sodium bisulphide
• High temperature in
smoke house
Define Defect
Opportunities
• Inadequate washing leads
to pinhead bubbles
• Prolonged dripping leads to
rust formation
• Storing in humid
atmosphere or concrete
floor leads to mould growth
• Excessive use of sodium
bisulphide
• High temperature in smoke
house
Look for Defects in Products
or Services
.Inadequate washing - 15
.Prolonged dripping - 10
.Stored in humid - 25
atmosphere
.Excessive use of sodium - 25
bisulphide
.High temperature -10
in smoke house
Total = 85
Arrive at DPO
Sigma
= 15+10+25+25+10 = 85
12,000x5 60000
=0.0014
Convert DPMO to
Sigma Level
= 0.0014 x 10,00,000
= 1416.6
4.5 99.87
Refer Sigma Table
Z %
B.N. The overall sigma percentage is 99.87. Refer sigma column on the Table no. 1 to identify the level of six
sigma (i.e., Z value). For example, level of six sigma for 99.87 is 4.5.

57. VGD@IIPM
Measurement System:
How Do We Arrive At Sigma Level by PGDM-ABPM students

58. VGD@IIPM

59. VGD@IIPM

60. Six Sigma for IIPM Housekeeping Services
Define
Measure
Analysis
Improve
Control
Figure out what a defect would be
• Leaving streaks on the window
• Not cleaning the doors/window properly
Find out why, how & how often this defects occur
• Less time given for cleaning doors, window, floor (8.30
a.m. to 9.30 a.m.)
• Workers are not very effective
Time taken and efficiency of each worker was measured
• Identify particular employee is better at cleaning
Better employee’s working process was taken as standard
Company teaches new employees the correct techniques
to wash the windows

61. The Six Sigma Players...
High Level Roll-Out Guidelines
Phase One
Phase Two
Phase Three
Phase Four
Phase Five
Phase Six
Business units select champions and Master black
belts. The number identified depends on the
business priorities, but the rule of thumb is 1
champion per business group and 1 master black
belt for every 30 black belts.
Champions and master black belts are trained in
six sigma breakthrough strategy. A deployment
plan is developed and presented by each business
group.
Champions and master black belts identify the first
“wave” of projects, and select black belts and
cross-functional teams.
Master black belts receive additional training.
They are “trained to train” black belts and others
who will be applying the breakthrough strategy.
Black belts begin training and the first wave of
projects is launched.
Experienced black belts being training green belts.
General
Awareness
Training and
Communica-
tion

62. CHAMPIONS
Create the vision of six sigma for the company
Define the path to implement six sigma across
the organization
Develop a comprehensive training plan for
implementing the breakthrough strategy
Carefully select high-impact projects
Support development of ‘statistical thinking’
Ask black belts many questions to ensure that
they are properly focused
Realize the gains by supporting six sigma
projects through allocation of resources and
removal of roadblocks
Hold the ground by implementing black belt
recommendations
Make sure that project opportunities are acted
upon by the organization’s leadership and the
finance department
Recognize people for their efforts
Champion training is one week
MASTER BLACK BELTS
Understand the big business picture
Partner with the champions
Get certified as master black belts
Develop and deliver training to various
levels of the organization
Assist in the identification of projects
Coach and support black belts in project
work
Participate in project reviews to offer
technical expertise
Help train and certify black belts
Take on leadership of major programs
Facilitate sharing of best practices across
the corporation
Master black belt training consists of two
one-week sessions
The Roles of Six Sigma Breakthrough Strategy Players

63. BLACK BELTS
Act as breakthrough strategy experts and be
breakthrough strategy enthusiasts
Stimulate champion thinking
Identify the barriers
Lead and direct teams in project execution
Report progress to appropriate leadership
levels
Solicit help from champions when needed
Influence without direct authority
Determine the most effective tools to apply
Prepare a detailed project assessment
during the measurement phase
Get input from knowledgeable operators,
first-line supervisors, and team leaders
Teach and coach breakthrough strategy
methods and tools
Manage project risk
Ensure that the results are sustained.
GREEN BELTS
Function as green belts on a part-time
basis, while performing their regular duties
Participate on black belt project teams in
the context of their existing
responsibilities
Learn the six sigma methodology as it
applies to a particular project
Continue to learn and practice the six
sigma methods and tools after project
completion
Green belt training consists of two three-
day sessions with three weeks in between.
The Roles of Six Sigma Breakthrough Strategy Players

64. Black Belts Perform the Following Tasks
Mentor
Teach
Coach
Transfer
Discover
Identify
Influence
Cultivate a network of six sigma individuals
at the local organization or site
Provide formal training of local personnel in
new strategies and tools
Provide one-to-one support to local
personnel
Pass on new strategies and tools in the form
of training, workshops, case studies, and
local symposia
Find application opportunities for six sigma
strategies and tools, both internal and
external (e.g., suppliers and customers)
Highlight/surface business opportunities
through partnerships with other
organizations
Sell the organization on the use of six sigma

65. Summary
 Process methodology focus on quantitatively
measuring a process in order to control and
improve upon it
 Strives for 3.4 Defects Per Million
Opportunities (DPMO) within six standard
deviations of mean

66. What is Six Sigma Quality?
 Goal is near elimination of defects from any process,
product, or service.
 Numerical goal 3.467 defects per million opportunities.
 Juran once concluded that in the US, close to 1/3 of the
work done consisted of redoing what had already been
done.
 Depending on the industry, ost of Poor Quality (COPQ)
could be 20 to 40% of total effort!

68. Six Sigma
 Improvement projects integrated with the goals of the organization.
 “divide and conquer” approach as opposed to Continuous Process
Improvement.
 Implementation is top-down.
 Uses concept of “belts” for levels of competency in Six Sigma
implementation:
 MBB = Master Black Belt
 BB = Black Belt
 GB = Green Belt
Strategy includes:
Define
Measure
Analyze
Improve
Control

69. Importance of Six Sigma
Focus on improving productivity and quality by
reducing impact of “Hidden Factor” leads to high
Cost of Poor Quality (COPQ).
Statistical and quality tool to increase capacity,
reduce cost and improve yields without spending
significant capital.

70. 2 Sigma Level Service Efficiency
AfterBefore
AfterBefore
4 Sigma Level Service Efficiency
AfterBefore

71. Six Sigma Breakthrough Strategy Players for
RBEDS
Six Sigma Title
Executive Team
Champion
Master Black Belt
Black Belt
Green Belt
Leaders of Extension
RPC & Rubber Board Experts
Deputy RPC
Development Officers
Assistant Development Officer
Senior Field Officer / Field
Officer
One champion per
group
One master black
belt for every 30
black belt