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# Six Sigma Overview

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

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### Six Sigma Overview

1. 1. Six Sigma Overview www.optimumfx.com
2. 2. Objective Customer Satisfaction Cost Capability (Six Sigma) Capacity (Lean)
3. 3. Approaches to Process Improvement High Hanging Fruit Low Hanging Fruit Ground Fruit Six Sigma Lean Common Sense and Intuition
4. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 16. Process Variation & COPQ
17. 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. 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. 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. 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. 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. 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. 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. 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. 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. 26. Using the Right Methodology
27. 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. 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.