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SIX SIGMA A PROCESS

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What is Six Sigma? <ul><li>It is a methodology for continuous improvement </li></ul><ul><li>It is a methodology for creating products/ processes that perform at high standards </li></ul><ul><li>It is a set of statistical and other quality tools arranged in unique way </li></ul><ul><li>It is a way of knowing where you are and where you could be! </li></ul><ul><li>It is a Quality Philosophy and a management technique </li></ul><ul><li>Six Sigma is not: </li></ul><ul><li>A standard </li></ul><ul><li>A certification </li></ul><ul><li>Another metric like percentage </li></ul>

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Definition – Six Sigma Six Sigma is the measure of quality that strives for near perfection. It is a disciplined, data-driven methodology focused on eliminating defects. A Six Sigma defect is defined as anything that falls outside of a customer's specifications. Six Sigma is a reference to a statistical measuring system, equivalent to just 3.4 defects per every million opportunities (Snee, 2003). THE THREE FUNDAMENTALS OF SIX SIGMA Six Sigma 3 Robust Methodology 2 Data Driven 1 Customer Focus

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Definition Of Six Sigma Data alone cannot solve all your customer or business issues. A methodology for defect definition, measurement, analysis, improvement and control must be utilized to standardize improvement processes and maximize business productivity. Business processes should be structured around the customer's ideal experience. Data is necessary to identify input, process and output areas for improvement. Quality improvements are not haphazardly implemented. Instead, resources are assigned to projects when it can be shown through data analysis that a difference will be felt by the customer. Ensuring all outputs meet customer specifications. This is very intuitive for manufacturing and industrial businesses; potentially a new concept for transactional businesses. Customer needs must be understood down to the tolerance level. In addition, new products and services should be conceived to meet the needs of customers not currently serviced. 3 Robust Methodology 2 Data Driven 1 Customer Focus

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Two Meanings of Sigma <ul><li>The term “sigma” is used to designate the distribution or spread about the mean (average) of any process or procedure. </li></ul><ul><li>For a process, the sigma capability (z-value) is a metric that indicates how well that process is performing. The higher the sigma capability, the better. Sigma capability measures the capability of the process to produce defect-free outputs. A defect is anything that results in customer dissatisfaction. </li></ul>

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Path to Six Sigma Sigma levels and Defects per million opportunities (DPMO) 4 Sigma 6,210 Defects 2 Sigma 308,537 Defects 3 Sigma 66,807 Defects 5 Sigma 233 Defects 6 Sigma 3.4 Defects

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Six Sigma as a Goal  Defects per Million opportunities Process Capability Sigma is a statistical unit of measure which Reflects process capability. 2 3 4 5 6 308,537 66,807 6,210 233 3.4 .

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Why Six Sigma <ul><li>Intense competitive pressures – especially from rapid globalization. </li></ul><ul><li>Greater consumer demand for high quality products and services, little tolerance for failures of any type. </li></ul><ul><li>Top management (and stockholder) recognition of the high costs of poor quality. </li></ul><ul><li>The availability and accessibility of large data bases and the increasing ability to explore, understand, and use the data. </li></ul>

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Motorola The company that invented Six Sigma <ul><li>The term “Six Sigma” was coined by Bill Smith, an engineer with Motorola </li></ul><ul><li>Late 1970s - Motorola started experimenting with problem solving through statistical analysis </li></ul><ul><li>1987 - Motorola officially launched it’s Six Sigma program </li></ul><ul><li>Motorola saved $17 Billion from 1986 to 2004, reflecting hundreds of individual successes in all Motorola business areas including: </li></ul><ul><ul><li>Sales and Marketing </li></ul></ul><ul><ul><li>Product design </li></ul></ul><ul><ul><li>Manufacturing </li></ul></ul><ul><ul><li>Customer service </li></ul></ul><ul><ul><li>Transactional processes </li></ul></ul><ul><ul><li>Supply chain management </li></ul></ul>

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GE The company that perfected Six Sigma <ul><li>Jack Welch launched Six Sigma at GE in Jan,1996 </li></ul><ul><li>1998/99 - Green Belt exam certification became the criteria for management promotions </li></ul><ul><li>2002/03 - Green Belt certification became the criteria for promotion to management roles </li></ul><ul><ul><li>Saved $750 million by the end of 1998 </li></ul></ul><ul><ul><li>Cut invoice defects and disputes by 98 percent, speeding payment, and creating better productivity </li></ul></ul><ul><ul><li>Streamlined contract review process, leading to faster completion of deals and annual savings of $1 million </li></ul></ul>

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GE Capital At its core, Six Sigma revolves around a few key concepts. Designing to meet customer needs and process capability Design for Six Sigma Ensuring consistent, predictable processes to improve what the customer sees and feels Stable Operations What the customer sees and feels Variation What your process can deliver Process Capability Failing to deliver what the customer wants Defect Attributes most important to the customer Critical to Quality

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Honeywell: Six Sigma Plus <ul><li>“ Six Sigma is one of the most potent strategies ever developed to accelerate improvements in processes, products, and services, and to radically reduce manufacturing and/or administrative costs and improve quality. It achieves this by relentlessly focusing on eliminating waste and reducing defects and variations. </li></ul><ul><ul><li>Initiated Six Sigma efforts in 1992 and saved more then $600 million a year by 1999. </li></ul></ul><ul><ul><li>Reduced time from design to certification of new projects like aircraft engines from 42 to 33 months. </li></ul></ul><ul><ul><li>Increased market value by a compounded 27% per year through fiscal year 1998. </li></ul></ul>

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Six Sigma – Dabbawla <ul><li>A dabbawala is a person in the Indian city of Mumbai whose job is to carry and deliver freshly made food from home in lunch boxes to office workers. </li></ul><ul><li>Dabbawalas pick up 175,000 lunches from homes and deliver to their customers everyday. </li></ul><ul><li>Only one mistake is made in every 6 million deliveries. </li></ul><ul><li>Accuracy rating is 99.999999. More than Six Sigma. </li></ul>

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Bank of America <ul><li>“ Sustaining the intensity of our Six Sigma work is critical for Bank of America to achieve its strategic goals. Six Sigma has enabled us to generate more than $300MM in first-year productivity gains for the company. It has also had a significant impact upon the leadership team with our personal education and certification as Six Sigma Green Belts. As we look to the future, our leadership charge is to keep Six Sigma a top priority and use it to produce organic customer revenue growth.” </li></ul><ul><li>Ken Lewis (10/9/02) </li></ul>

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Overview of Six Sigma PAIN, URGENCY, SURVIVAL COSTS OUT GROWTH TRANSFORM THE ORGANIZATION CHANGE THE WORLD 6 SIGMA AS A STATISTICAL TOOL 6 SIGMA AS A PHILOSOPHY 6 SIGMA AS A PROCESS

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Overview of Six Sigma <ul><li>It is a Philosophy </li></ul><ul><ul><li>Anything less than ideal is an opportunity for improvement </li></ul></ul><ul><ul><li>Defects costs money </li></ul></ul><ul><ul><li>Understanding processes and improving them is the most efficient way to achieve lasting results </li></ul></ul><ul><li>It is a Process </li></ul><ul><ul><li>To achieve this level of performance you need to: </li></ul></ul><ul><ul><li>D efine, M easure, A nalyse, I mprove and C ontrol </li></ul></ul><ul><li>It is Statistics </li></ul><ul><ul><li>6 Sigma processes will produce less than 3.4 defects per million opportunities </li></ul></ul>

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Which Business Function Needs It? As long as there is a process that produces an output, whether it is a manufactured product, data, an invoice, etc…, we can apply the Six Sigma Breakthrough Strategy. For these processes to perform to a customer standard they require correct inputs!!! 6 Sigma Methods MFG. DESIGN SERVICE PURCH. MAINT. ADMIN. QA Marketing

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Philosophy <ul><li>Know What’s Important to the Customer (CTQ) </li></ul><ul><li>Reduce Defects (DPMO) </li></ul><ul><li>Center Around Target (Mean) </li></ul><ul><li>Reduce Variation (Standard Deviation) </li></ul>

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Components <ul><li>Two components of Six Sigma 1. Process Power 2. People Power </li></ul>

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Data Driven Decision <ul><li>Y </li></ul><ul><li>Dependent </li></ul><ul><li>Output </li></ul><ul><li>Effect </li></ul><ul><li>Symptom </li></ul><ul><li>Monitor </li></ul><ul><li>X1 . . . Xn </li></ul><ul><li>Independent </li></ul><ul><li>Input-Process </li></ul><ul><li>Cause </li></ul><ul><li>Problem </li></ul><ul><li>Control </li></ul>f(X) Y= The focus of Six sigma is to identify and control Xs

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COPQ (Cost of Poor Quality) - Lost Opportunities - The Hidden Factory - More Setups - Expediting Costs - Lost Sales - Late Delivery - Lost Customer Loyalty - Excess Inventory - Long Cycle Times - Costly Engineering Changes Average COPQ approximately 15% of Sales <ul><li>Hidden Costs: </li></ul><ul><li>Intangible </li></ul><ul><li>Difficult to Measure </li></ul><ul><li>Traditional Quality Costs: </li></ul><ul><li>Tangible </li></ul><ul><li>Easy to Measure </li></ul>- Inspection - Warranty - Scrap - Rework - Rejects

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CTQ (Critical-To-Quality) <ul><li>CTQ characteristics for the process, service or process </li></ul><ul><li>Measure of “What is important to Customer” </li></ul><ul><li>6 Sigma projects are designed to improve CTQ </li></ul><ul><li>Examples: </li></ul><ul><ul><li>Waiting time in clinic </li></ul></ul><ul><ul><li>Spelling mistakes in letter </li></ul></ul><ul><ul><li>% of valves leaking in operation </li></ul></ul>

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Defective and Defect <ul><li>A nonconforming unit is a defective unit </li></ul><ul><li>Defect is nonconformance on one of many possible quality characteristics of a unit that causes customer dissatisfaction. </li></ul><ul><li>A defect does not necessarily make the unit defective </li></ul><ul><li>Examples: </li></ul><ul><ul><li>Scratch on water bottle </li></ul></ul><ul><ul><li>(However if customer wants a scratch free bottle, then this will be defective bottle) </li></ul></ul>

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Defect Opportunity <ul><li>Circumstances in which CTQ can fail to meet. </li></ul><ul><li>Number of defect opportunities relate to complexity of unit. </li></ul><ul><li>Complex units – Greater opportunities of defect than simple units </li></ul><ul><li>Examples: </li></ul><ul><ul><li>A units has 5 parts, and in each part there are 3 opportunities of defects – Total defect opportunities are 5 x 3 = 15 </li></ul></ul>

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DPO (Defect Per Opportunity) <ul><li>Number of defects divided by number of defect opportunities </li></ul><ul><li>Examples: </li></ul><ul><ul><li>In previous case (15 defect opportunities), if 10 units have 2 defects. </li></ul></ul><ul><ul><li>Defects per unit = 2 / 10 = 0.2 </li></ul></ul><ul><ul><li>DPO = 2 / (15 x 10) = 0.0133333 </li></ul></ul>

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DPMO (Defect Per Million Opportunities) <ul><li>DPO multiplies by one million </li></ul><ul><li>Examples: </li></ul><ul><ul><li>In previous case (15 defect opportunities), if 10 units have 2 defects. </li></ul></ul><ul><ul><li>Defects per unit = 2 / 10 = 0.2 </li></ul></ul><ul><ul><li>DPO = 2 / (15 x 10) = 0.0133333 </li></ul></ul><ul><ul><li>DPMO = 0.013333333 x 1,000,000 = 13,333 </li></ul></ul>Six Sigma performance is 3.4 DPMO 13,333 DPMO is 3.7 Sigma

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Variability The world tends to be bell-shaped Most outcomes occur in the middle Fewer in the “ tails” (lower) Fewer in the “ tails” (upper) Even very rare outcomes are possible Even very rare outcomes are possible

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3  v/s 6  2 3 4 5 6 7 8 9 12 10 16 15 14 13 11 1 LSL USL 6 Sigma curve 3 Sigma curve

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Three Methodologies of Six Sigma BPMS Business Process Management System DMAIC Six Sigma Improvement Methodology DMADOV Creating new process which will perform @ Six Sigma

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BPMS Business Process Management System

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The Need of BPMS <ul><li>To understand the process; it’s mission, flow and scope </li></ul><ul><li>To know the customers and their expectations </li></ul><ul><li>To identify, monitor and improve correct performance measures for the process </li></ul>

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The Methodology Define purpose of the process, its goal and its boundaries Identify Critical to Quality and Critical to process Visual representation of performance Map process steps, identify input/ output measures MSA, DCP, indicators and monitors Service excellence and process excellence The DMAIC cycle Define Process Mission Map Process VOC and VOP Build PMS Develop Dashboards Identify Improvement Opportunities

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DMAIC Six Sigma Improvement Methodology

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What is DMAIC ? <ul><li>A logical and structured approach to problem solving and process improvement </li></ul><ul><li>An iterative process (continuous improvement) </li></ul><ul><li>A quality tool with focus on change management </li></ul>E Effectiveness = Q Quality Improvement x A Acceptance

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The Approach Practical Problem Statistical Problem Statistical Solution Practical Solution

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Methodology D Define M Measure A Analyze I Improve C Control Identify and state the practical problem Validate the practical problem by collecting data Convert the practical problem to a statistical one, define statistical goal and identify potential statistical solution Confirm and test the statistical solution Convert the statistical solution to a practical solution

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Define VoC - Who wants the project and why ? The scope of project / improvement Key team members / resources for the project Critical milestones and stakeholder review Budget allocation D Define M Measure A Analyze I Improve C Control

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Measure Ensure measurement system reliability Prepare data collection plan Collect data - Is tool used to measure the output variable flawed ? - Do all operators interpret the tool reading in the same way ? <ul><li>- How many data points do you need to collect ? </li></ul><ul><li>How many days do you need to collect data for ? </li></ul><ul><li>What is the sampling strategy ? </li></ul><ul><li>Who will collect data and how will data get stored ? </li></ul><ul><li>What could the potential drivers of variation be ? </li></ul>D Define M Measure A Analyze I Improve C Control

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Analyze Understand statistical problem Baseline current process capability Define statistical improvement goal Identify drivers of variation (significant factors) D Define M Measure A Analyze I Improve C Control

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Analyze – Identify Drivers of Variation <ul><li>Root Cause Analysis (fish bone) </li></ul><ul><li>A brainstorming tool that helps define and display major causes, sub causes and root causes that influence a process </li></ul><ul><li>Visualize the potential relationship between causes which may be creating problems or defects </li></ul>Problem Backbone Primary Cause Secondary Cause Root Cause

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Analyze – Identify Drivers of Variation <ul><li>Control – Impact Matrix </li></ul><ul><li>A visual tool that helps in separating the vital few from the trivial many </li></ul>Control Impact Trivial Many Low Control – Low Impact Cost Ineffective High Control – Low Impact Cost Ineffective Low Control – High Impact Vital Few High Control – High Impact

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Analyze – Identify Drivers of Variation <ul><li>Pareto Chart </li></ul><ul><li>Pareto principle states that disproportionately large percentage of defects are caused due to relatively fewer factors (generally, 80% defects are caused by 20% factors) </li></ul>

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Analyze – Identify Drivers of Variation <ul><li>Process Map Analysis </li></ul><ul><li>Visually highlights hand off points / working relationships between people, processes and organizations </li></ul><ul><li>Helps identify rework loops and non value add steps </li></ul>

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Analyze – Identify Drivers of Variation <ul><li>Hypothesis Testing </li></ul><ul><li>A statistical tool used to validate if two samples are different or whether a sample belongs to a given population </li></ul><ul><li>Null Hypothesis (H o ) is the statement of the status quo </li></ul><ul><li>Alternate Hypothesis (H a ) is the statement of difference </li></ul>One way ANOVA Regression Homogeneity of Variance Moods Median Chi-Square

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Improve Map improved process Pilot solution Identify operating tolerance on significant factors D Define M Measure A Analyze I Improve C Control

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Control Ensure measurement system reliability for significant factors Improved process capability Sustenance Plan - Is tool used to measure the input / process variables flawed ? - Do all operators interpret the tool reading in the same way ? - Statistical Process Control - Mistake Proofing - Control Plan D Define M Measure A Analyze I Improve C Control

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Control – Sustenance Plan <ul><li>Control Plan </li></ul><ul><li>Have the new operating procedures and standards been documented ? </li></ul><ul><li>What Statistical Process Control (SPC) tools will be used to monitor the process performance ? </li></ul><ul><li>Who will review the performance of the output variable and significant factors on closure of the project and how frequently ? </li></ul><ul><li>What is the corrective action or reaction plan if any of the factors were to be out of control ? </li></ul>

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Two Processes <ul><li>Define </li></ul><ul><li>Measure </li></ul><ul><li>Analyze </li></ul><ul><li>Improve </li></ul><ul><li>Control </li></ul><ul><li>Define </li></ul><ul><li>Measure </li></ul><ul><li>Analyze </li></ul><ul><li>Design </li></ul><ul><li>Verify </li></ul>DMAIC DMADV <ul><li>Existing Processes </li></ul><ul><li>New Processes </li></ul><ul><li>DFSS </li></ul>

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Six Sigma Organization

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Six Sigma - Three Dimensions Tools Organization Methodology Driven by customer needs Enabled by quality team. Led by Senior Mgmt Define Measure Analyze Improve Control Process Map Analysis Pareto Chart Process variation LSL USL Upper/Lower specification limits Regression • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

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Harvesting the Fruit of Six Sigma - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sweet Fruit Design for Repeatability Bulk of Fruit Process Characterization and Optimization Low Hanging Fruit Seven Basic Tools Ground Fruit Logic and Intuition Process Enhancement - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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Education Master Black Belt Black Belts Green Belts Team Members Quality Fundamentals/ Kaizen Now Champions Mentor, trainer, and coach of Black Belts and others in the organization. Leader of teams implementing the six sigma methodology on projects. Delivers successful focused projects using the six sigma methodology and tools. Participates on and supports the project teams, typically in the context of his or her existing responsibilities. Responsible for supporting the Deployment Strategy within Line of Business/Customer Segment or Golden Thread Deployment Champions

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Sample Project

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Define <ul><li>What is our defect? </li></ul><ul><li>My coffee has never killed anyone. </li></ul><ul><li>As long as I don’t spill any. </li></ul><ul><li>It has to be strong. </li></ul><ul><li>It has to be hot, but not too hot. </li></ul>

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Measure <ul><li>Coffee Temperature is (CTQ) </li></ul><ul><li>CTQ = Critical To Quality. </li></ul><ul><li>Served between 160 and 180 degrees F. </li></ul><ul><li>Measurement System Rev </li></ul>

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Measure <ul><li>Process Flow </li></ul><ul><li>Collect Data!!! </li></ul>

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Analyze

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Analyze

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Analyze

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Analyze

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Analyze

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Analyze

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Improve <ul><li>Replace the decaffeinated coffee pot. </li></ul>

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Improve

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Improve

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Improve <ul><li>Does it need to be better? </li></ul>

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Control <ul><li>Failure Mode Effects Analysis. </li></ul><ul><li>Mistake Proofing. </li></ul><ul><li>Prepare a Launch Plan. </li></ul>

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Monitor

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Happy Customer!

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Group Members: Anubhuti Gupta Kanika Vashishta Soumya Gupta Surya Kanta Jena HR-2