A methodology, philosophy and approach to achieve predictable and stable results by managing, controlling and reducing variations in a process

1. Six Sigma Overview
www.optimumfx.com

2. Objective
Customer Satisfaction
Cost
Capability
(Six Sigma)
Capacity
(Lean)

3. Approaches to Process Improvement
High Hanging Fruit
Low Hanging Fruit
Ground Fruit
Six Sigma
Lean
Common Sense
and Intuition

4. What is Six Sigma?
Six Sigma is a:
1. Philosophy
• Everything is delivered via a process
• All processes have inherent variations
• Variations can be measured, understood and controlled
• All processes can be predictable
2. Measurement
“Without data, you are just another person with an opinion” Lao Tzu
• What gets Measured gets Managed
• What gets Managed gets Improved
3. Methodology
• Define-Measure-Analyse-Improve-Control

5. Where should we focus?
To improve, we should not focus on the output (“Y”), but on the
factors (“X”) that create the output.
What are the outputs (“Y”) ?
• End Results
• Symptoms
• Monitor
• Outputs
• Dependents
What are the factors (“X”) ?
• Independent activities
• Input for the process
• Causes
• Problems
• Controls
• Behaviour
• Environment
• Etc…
We need to follow this equation: F (x) = ( X1, X2, X3, …. Xn)
Focus on the “X”s instead of the traditional method of focusing on the “Y”s

6. Definitions
• Mean:
– Average = Sum / Number of samples
– Used for capability and average and range charts
• Median:
– Middle when put in order smallest to largest
• Range
– Difference between highest and lowest value
– Used in average and range charts
• Variance:
– The average squared difference of each individual point from the
mean
• Standard Deviation:
– The square root of the variance
– Used in capability studies
PositionSpread

7. Sigma Value
+/- 1 
+/- 2 
+/- 3 
68.3%
96%
99.7%
Point of Inflexion
X
Standard Deviation
The measure of variation in the process

8. Sigma Level
X 
Lower Spec
Limit
Upper Spec
Limit
Defects
The number of standard deviations that can be fitted into the space
between the process centre and the nearest specification limit

9. Short Term vs Long Term
• Studies have shown that a mean for any given process will shift by
1.5 over time
• Long term data accounts for these shifts
Sigma Levels DPMO DPMO
Without Shift With Shift
1 158,655 697,700
2 45,400 308,537
3 2,700 66,807
4 63 6,210
5 0.57 233
6 0.002 3.4
Defects Per Million Opportunities (DPMO) for Shift and Drift

10. Six Sigma as a Measure
Six Sigma (6) is:
• a designation to demonstrate the distribution, or the
spread, about the mean (average) of any process or
procedure.
• the process capability (represented by the Z- Value).
It is also used as the process sigma value. It
represents how well a specific process is performing.
The higher the sigma value, the better the process.

-1 +1-6 +6
+6
-6
12
Process Defects per Million of Capability
Opportunities (DPMO)
2  308,537
3  66,807
4  6,210
5  233
6  3.4
* 6  Real 2 parts per billion.
No variation included

11. What does this mean?
Classical View of Quality (99.9%)
“Good enough” or 4.6 
 2 long or short landings at every European
airport each day
 400 letters per hour which never arrive at
their destination
 500 incorrect surgical operations each
week
 4,000 incorrect drug prescriptions per year
 22,000 checks deducted from the wrong
bank account each hour
 100,000 wrong telephone number dialed
every day
Six Sigma Quality (99.99966%)
“ New Standard” or 6 
 1 long or short landing at every World
airport every 5 years
 7 letters per hour which never arrive at
their destination
 1.7 incorrect surgical operations each
week
 68 incorrect drug prescriptions per year
 78 checks deducted from the wrong bank
account each hour
 300 wrong telephone number dialed
every day

12. Process Improvement
Keep in mind, you can have two processes that are linked to each other, with two
different process capabilities!
Airplanes have less than half failure (1/2)
per one million flights ……..
However, airlines lose approximately
30,000 to 50,000 pieces of luggage per
one million pieces checked at the
airport!

13. Why do we need Quality?
• To deliver to our customer expectations
• To have a strong industry reputation for product
value
• To differentiate ourselves from our competitors
• To improve all aspects of our organisation
• To reduce base cost and improve productivity
• To eliminate process redundancy and re-work
across the process/operation
• To create fewer warranty claims, scrap, and
inspections
• No lost customers, smaller cycles and no fire
fighting!!!
Results from Poor Quality
Improvement in Quality

14. How is Quality Perceived?
Classic vision of Quality New vision of Quality
Facts:
• Quality saves money!
• All processes can be perfect
• 100% Quality is necessary
Perception:
• Quality costs money!
• Nothing can be perfect
• 100% Quality is prohibitive!

15. Cost of Poor Quality
4-8% of
Sales
20-25% of Sales
Direct COPQ
• Scrap
• Rework
• Waste
• Warranty
• Inspection
Indirect COPQ
• More Setups
• Expediting Cost
• Loss of Customer Loyalty
• Late Delivery

16. Process Variation & COPQ

17. Six Sigma Terminology
• Critical To Quality (CTQ) What the customer finds important and what we need to achieve.
• Opportunity Any event, process or part that we can measure which relates to the selected
CTQ.
• Defect Everything that is against, does not conform to, or does not meet the CTQ.
• DPMO Defect Per Million Opportunities. All of our calculations are based on a
standardized one million opportunities.
• Sigma Capability The probability of a defect. It is measured in units of a standard deviation.
This is also called the Z-Value.
• Accuracy The difference between the standard and the observed average measurement.
• Repeatability (EV) The capability for one person or process to repeat the same operation or
measurement again and again.
• Reproducibility (AV) The capability for two or more people or processes to measure or do the same
operation again and again.
• Stability The measurement of one person or process that accomplishes the same
action with the same equipment again and again.
• Linearity The consistency of the process or measurement system over the complete
measurement system.

18. The Nature of Variation and Control
To improve our processes, we need to control our variation. One of Six Sigma’s goals is to
reduce variation. Unfortunately, we rarely control the variation of our processes. There is
always a factor that causes deviation in our process from the normal activities.

19. Defects and the Hidden Factory
Each defect must be detected, repaired and placed back in the
process. Each defect costs time and money.
90% Customer
Quality
Manufacturing Variation Causes A “Hidden Factory”
Increased Cost – Lost Capacity

20. Unmasking the Hidden Factory
• Traditional Measures
– First time yield
– First time pass
– Final yield
After hidden factory
• 6 Sigma
– Throughput yield
– Rolled throughput yield
– Normalised yield
Before hidden factory

21. First Time Yield
Traditional - First Time Yield
Product 101 102 103 104
Inspection (Defects) 0 2 0 4
Total Defects per Unit 0 1 0 1
Repair Cost 0 1 0 1
First Time Yield 100% 50% 0 75%
First time yield does not equate to cost
It only considers units not defects or complexity

22. 6 Sigma measures defined
• Throughput yield
– Probability that a unit produced at a particular process step will conform
to CTQ standard
• Rolled throughput yield
– Probability that a unit will get through a sequence of process steps
defect free
• Normalised yield
– Average or base-line throughput expected at each process step to
achieve a given rolled throughput
– kth root of rolled throughput yield where k = no. of steps

23. Throughput Yield
Six Sigma
Process Steps for a product 1 2 3 4 5
Products 100
Defects 5
First Time Yield 95-99%
Throughput Yield 95%
Rolled Throughput Yield 98% 93% 95% 98% 94% 79.76%
Normalised Yield 95.58% 95.58% 95.58% 95.58% 95.58% 95.58%
X X X X =
5 79.76% =
The range is because
the number of defects
can vary between 1
product to 5 products

24. Quality without speed – not an option
• Fast processes with high variation cannot deliver quickly due to
mistakes, inspection, rework and scrap
• Low variation but slow processes cannot deliver quickly due to
excessive queues and non value adding steps
Six Sigma Quality
Creates Speed
Less defects equals less
rework time
Lean Speed Creates Quality
Faster cycle times create
quicker feedback

25. Rigorous Methodology
Key Activities
• Identify Focus Areas
• Create Projects
• Verify Measurement System
• Measure Current Performance
• Brainstorm Possible Causes
• Validate Root Causes
• Identify Improvement Measures
• Verify Effectiveness
• Establish Control System
• Disseminate Lesson Learnt
Define
Measure
Analyse
Improve
Control
Phases

26. Using the Right Methodology

27. Project Selection Objectives
Some criteria for project selection:
1) Customer complaints about deliveries, quality, errors, etc.
2) We never seem to be on time for anything
3) Our current process or product is too costly
4) We have components in our inventory too long
5) Our cycles are longer than our competitors
6) Our products do not function they are intended
7) Our products fail at the customer site
8) We have non-added value tasks currently being followed
9) Too many people doing the same things
10) We are not efficient in producing our components, or in our process
Tips for a successful project:
1) Clearly define the project with achievable objectives.
2) Do not try to fix all problems at once.
3) Smaller, more efficient projects are better controlled than projects with a larger scope.
4) Align with current business problems/issues
5) The customer (internal or external) should feel your project outcome and results.
6) Work on projects that will have an impact for the larger FWG, not just for the local business
7) Complete the project locally and leverage globally after completion, if applicable
Your Project Should Involve Your Daily Activities

28. Project Characteristics
Repetitive Defect? Is the problem repetitive or did this happen only once? Project should focus on issues that occur
numerous times instead of problems that only happen once or twice
Significance How significant do you expect the results to be? The result of the project should be worth the effort and
the resources have been invested. This can be measured financially, through the Cost Of Quality,
customer satisfaction or productivity.
Size Is the project the right size? All projects should be completed under 6 months. If the project takes longer
or is too big, it should be sub-divided into smaller ones so each has only one defect.
Measure of impact The project impact needs to be measured in these categories:
» Retain customer / gain new ones
» Reduce the Cost Of Quality (COQ)
» Provide a rapid Return On Investments (ROI)
» Enhance customer satisfaction
» Enhance employee satisfaction
» Reduce cost, scrap, inventory, etc.
» Improve productivity (your own or the team)
Urgency How important is this project? Do we need to this project completed now or can it wait?
Risk What are the risks for this project? If we put in place something that doesn’t work or has a delay, we need
to fully be aware of the consequences and have contingency plans in place
Potential resistance What kind of resistance will I get to the project? Who will be affected by the change? Will you get the buy
to change in from the affected resources? To reduce this risk, all participantsshould be included in the project
process.
Sure to work Each project might not work, however it should be attempted if it’s the “right” one. If the payback is there,
a project will be started and then evaluated through each step to observe progress.
Problem must be Each project must be measured. Every project must have an opportunity and a defect. Even if a project
measurable is on a new process and data cannot be retrieved.