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Six Sigma Definition - What Is Six Sigma ?

Six Sigma stands for Six Standard Deviations (Sigma is the Greek letter used to represent standard deviation in statistics) from mean. Six Sigma methodology provides the techniques and tools to improve the capability and reduce the defects in any process. It was started in Motorola, in its manufacturing division, where millions of parts are made using the same process repeatedly. Eventually Six Sigma evolved and applied to other non manufacturing processes. Today you can apply Six Sigma to many fields such as Services, Medical and Insurance Procedures, Call Centers. Six Sigma methodology improves any existing business process by constantly reviewing and re-tuning the process. To achieve this, Six Sigma uses a methodology known as DMAIC (Define opportunities, Measure performance, Analyze opportunity, Improve performance, Control performance). Six Sigma methodology can also be used to create a brand new business process from ground up using DFSS (Design For Six Sigma) principles. Six Sigma Strives for perfection. It allows for only 3.4 defects per million opportunities for each product or service transaction. Six Sigma relies heavily on statistical techniques to reduce defects and measure quality. Six Sigma experts (Green Belts and Black Belts) evaluate a business process and determine ways to improve upon the existing process. Six Sigma experts can also design a brand new business process using DFSS (Design For Six Sigma) principles. Typically its easier to define a new process with DFSS principles than refining an existing process to reduce the defects. Six Sigma incorporates the basic principles and techniques used in Business, Statistics, and Engineering. These three form the core elements of Six Sigma. Six Sigma improves the process performance, decreases variation and maintains consistent quality of the process output. This leads to defect reduction and improvement in profits, product quality and customer satisfaction. Six Sigma methodology is also used in many Business Process Management initiatives these days. These Business Process Management initiatives are not necessarily related to manufacturing. Many of the BPM's that use Six Sigma in today's world include call centers, customer support, supply chain management and project management.

Six Sigma Tutorials

Key Elements of Six Sigma

Customer requirements, design quality, metrics and measures, employee involvement and continuous improvement are main elements of Six Sigma Process Improvement. The three key elements of Six Sigma are: Customer Satisfaction Defining Processes and defining Metrics and Measures for Processes

Using and understanding Data and Systems Setting Goals for Improvement Team Building and Involving Employees

Involving all employees is very important to Six Sigma. The company must involve all employees. Company must provide opportunities and incentives for employees to focus their talents and ability to satisfy customers. Defining Roles: This is important to six sigma. All team members should have a well defined role with measurable objectives.

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Common Misspelling of Six Sigma: Our logs indicate that sixsigma, six-sigma, Six Stygma, Six Stigma, Six Segma, Six Sogma, stigma six, stygma six, six sigman, Six Sigmaintroduction, six sigms, Six Sigam, six sigmajobs, Six signma are some of the common misspellings of six sigma.

Six Sigma in Business

Even though Six Sigma was initially implemented at Motorola to improve the manufacturing process, all types of businesses can profit from implementing Six Sigma. Businesses in various industry segments such as Services industry (Example: Call Centers, Insurance, Financial/Investment Services), Ecommerce industry (Example: B2B/B2C websites), Education can definitely use Six Sigma principles to achieve higher quality. Many big businesses such as GE and Motorola have successfully implemented Six Sigma but the adaptation by smaller businesses has been very slow. GE is a pioneer in using Six Sigma. This article on Six Sigma GE Experiences explains how various GE divisions adopted and benefited from Six Sigma. Here are some of the reasons to consider:

Bigger companies have resources internally who are trained in Six Sigma and also have 'Train the Trainer' programs using which they churn out many more Six Segma instructors. Also many bigger companies encourage the employees to learn Six Sigma process by providing Green Belts/Black Belts as mentors. Effectively applying the Six Sigma techniques is difficult compared to actually learning the techniques in a class. Big companies make Six Sigma as part of the Goals for employees and provide incentives for employees who undergo training and mentor colleagues. Many assume that that Six Sigma works for bigger companies only as they produce in volumes and have thousands of employees. This notion is not true and Six Sigma can be effectively applied for small businesses and even companies with fewer than 10 employees.

Six Sigma Engineering

A Six Sigma Engineer develops efficient and cost effective processes to improve the quality and reduce the number of defects per million parts in a Manufacturing/Production environment. Six Sigma Engineers determine and fine tune manufacturing process. Once a process is improved, they go back and re-tune the process and reduce the defects. This cycle is continued till they reach 3.4 or less defects per million parts. Six Sigma is all about knowledge sharing. If a company has more than one manufacturing unit/plant, its more than likely that one of the plants produces better quality than others. The Six Sigma team should visit this higher quality plant and learn why its performing better than others and implement the techniques learned across all other units. Research/Design department within a company can use the above techniques to learn from another R&D departments in the same company or affiliate companies and implement those techniques. Motorola developed a five phase approach to the Six Sigma process called DMAIC.

DMAIC

Define opportunities Measure performance Analyze opportunity Improve performance Control performance

Six Sigma Statistics

Six Sigma uses a variety of statistics to determine the best practices for any given process. Statisticians and Six Sigma consultants study the existing processes and determine the methods that produce the best overall results. Combinations of these methods will be tested and upon determining that a given combination can improve the process, it will be implemented. Six Sigma stands for "Six Standard deviations from the arithmetic mean". Six Sigma statistically ensures that 99.9997% of all products produced in a process are of acceptable quality. Six Sigma allows only 3.4 defects per million opportunities. If a given process fails to meet this criteria, it is re-analyzed, altered and tested to find out if there are any improvements. If no improvement is found, the process is re-analyzed, altered and tested again.

This cycle is repeated until you see an improvement. Once an improvement is found, its documented and the knowledge is spread across other units in the company so they can implement this new process and reduce their defects per million opportunities.

Six Sigma Confidence Intervals

Confidence intervals are very important to Six Sigma methodology. To understand Confidence Intervals better, consider this scenario: Acme Nelson, a leading market research firm conducts a survey among voters in USA asking them whom would they vote if elections were to be held today. The answer was a big surprise! In addition to Democrats and Republicans, there is this surprise independent candidate, John Doe who is expected to secure 22% of the vote. We asked Acme, how sure are you? In other words how accurate is this prediction? Their answer: "Well, we are 95% confident that John Doe will get 22% (plus or minus 2%) vote" In the statistical world, they are saying that John Doe will get a vote between 20% to 24% (also known as Confidence Range) with a probability of 95% (Confidence Level). Definition of Confidence Interval According to University of Glasgow Department of Statistics, Confidence Interval is defined as: A confidence interval gives an estimated range of values which is likely to include an unknown population parameter, the estimated range being calculated from a given set of sample data. If independent samples are taken repeatedly from the same population, and a confidence interval calculated for each sample, then a certain percentage (confidence level) of the intervals will include the unknown population parameter. Confidence intervals are usually calculated so that this percentage is 95%, but we can produce 90%, 99%, 99.9% (or whatever) confidence intervals for the unknown parameter. In our Acme Nelson survey example The confidence interval is the range 20 to 24 The confidence level is 95% The confidence limits are 20 (lower limit) and 24 (upper limit) The unknown population parameter is the 'percentage of the total vote' John Doe is expected to Get

Confidence Intervals Contd.

The width of the confidence interval, in our case 24-20=4 is a measure that is directly proportional to the precision. Consider this scenario.. What if Acme Nelson's survey predicted that John Doe will get 22% plus or minus 20% vote. In other words Acme is saying John Doe will get between 2% and 42% of the vote. How good is this number? Even a monkey can predict that. This is a very wide confidence range and in order to reduce the Confidence Interval, Acme needs to collect more samples.

Confidence Limits
Confidence limits are the lower and upper boundaries of a confidence interval. In our Acme example, the limits were 20 and 24.

Confidence Level

The confidence level is the probability value attached to a given confidence interval. It can be expressed as a percentage (in our example it is 95%) or a number (0.95).

Confidence Interval for a Mean

A confidence interval for a mean is a range of values within which the mean (unknown population parameter) may lie. Examples of Confidence Interval for a Mean

A Web master who wishes to estimate her mean daily hits on a certain webpage. An environmental health and safety officer who wants to estimate the mean monthly spills.

Confidence Interval for the Difference Between Two Means

A confidence interval for the difference between two means specifies a range of values within which the difference between the means of the two populations may lie. Examples of Confidence Interval for the Difference Between Two Means

A Web master who wishes to estimate her difference in mean daily visitors between two websites. An environmental health and safety officer who wants to estimate the difference in mean monthly spills between two production sites.

Confidence Intervals Summary

Confidence intervals are very crucial to Six Sigma. Confidence intervals provide crucial information as they give us a range of possible values and attach a confidence level to the interval.

Confidence Intervals in Six Sigma

When we calculate a statistic for example, a mean, a variance, a proportion, or a correlation coefficient, there is no reason to expect that such point estimate would be exactly equal to the true population value, even with increasing sample sizes. There are always sampling inaccuracies, or error. In most Six Sigma projects, there are at least some descriptive statistics calculated from sample data. In truth, it cannot be said that such data are the same as the population's true mean, variance, or proportion value. There are many situations in which it is preferable instead to express an interval in which we would expect to find the true population value. This interval is called an interval estimate. A confidence interval is an interval, calculated from the sample data that is very likely to cover the unknown mean, variance, or proportion. For example, after a process improvement a sampling has shown that its yield has improved from 78% to 83%. But, what is the interval in which the population's yield lies? If the lower end of the interval is 78% or less, you cannot say with any statistical certainty that there has been a significant improvement to the process. There is an error of estimation, or margin of error, or standard error, between the sample statistic and the population value of that statistic. The confidence interval defines that margin of error. The next page shows a decision tree for selecting which formula to use for each situation. For example, if you are dealing with a sample mean and you do not know the population's true variance (standard deviation squared) or the sample size is less than 30, than you use the t Distribution confidence interval. Each of these applications will be shown in turn. Decision Tree for selecting What Formula to use:

Six Sigma Z Confidence Intervals for Means

Z Confidence Interval for Means applies to a mean from a normal distribution of variable data. Use the normal distribution for the confidence interval for a mean if the sample size n is relatively large ( 30), and is known. The confidence interval (C.I.) includes the shaded area under the curve in between the critical values, excluding the tail areas (the risk). The entire curve represents the most likely distribution of population means, given the sample's size, mean, and the population's standard deviation.

Here we are making an assumption that the underlying data we are working with is distributed like the bell curve shown. The most common confidence interval used in industry is probably the 95% confidence interval. If we were to use its formula on many sets of data from the population, then 95% of the intervals would contain the unknown population mean that we are trying to estimate. And 5% of the intervals would not contain the population mean. 2.5% of the time, the interval would be low, and 2.5% of the time, the interval would be too high. The probability is 95% that the interval contains the population parameter. The 95% value is the confidence coefficient, or the degree of confidence. The end points of the interval are called the confidence limits. In the graphic on the previous page, the endpoints are defined by

Example - Z Confidence Interval for Means

Calculate a 95% C.I. on the mean for a sample (n = 35) with an x-bar of 15.6" and a known of 2.3 "

This interval represents the most likely distribution of population means, given the sample's size, mean, and the population's standard deviation. 95% of the time, the population's mean will fall in this interval.

Six Sigma t Confidence Interval for Means

Use the t distribution for the confidence interval for a mean if the sample size n is relatively small (< 30), and/or is not known. The confidence interval (C.I.) includes the shaded area under the curve in between the critical values, excluding the tail areas (the risk). The entire curve represents the most likely distribution of population means, given the sample's size, mean, and standard deviation.

Six Sigma t Confidence Interval for a Variance

Use the 2 (chi-squared) distribution for the confidence interval for the variance

The confidence interval (C.I.) includes the area under the curve in between the critical values, excluding the tail areas (the risk). The entire curve represents the most likely distribution of population variances (sigma squared), given the sample's size and variation.

Six Sigma t Confidence Interval for a Variance Example

Calculate a 95% C.I. on variance for a sample (n = 35) with an S of 2.3"

This interval represents the most likely distribution of population variances, given the sample's size and variance. 95% of the time, the population's variance will fall in this interval

Z Confidence Intervals for Proportions

This Z Confidence Interval for Proportions applies to an average proportion (which is from a binomial distribution).

Example - Z Confidence Interval for Proportions

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DPO, DPMO, PPM, DPU Definitions - Six Sigma Defect Metrics

What Is DPO? What Is DPMO? A unit of product can be defective if it contains one or more defects. A unit of product can have more than one opportunity to have a defect.

Determine all the possible opportunities for problems Pare the list down by excluding rare events, grouping similar defect types, and avoiding the trivial Define opportunities consistently between different locations

Proportion Defective (p): p = Number Of Defective Units / Total Number of Product Units

Yield ( Y1st-pass or Yfinal or RTY)

Y=1-p The Yield proportion can converted to a sigma value using the Z tables

Defects Per Unit - DPU, or u in SPC

DPU

Number

Of

Defects

Total

Number

Of

Product

Units

The probability of getting 'r' defects in a sample having a given dpu rate can be predicted with the Poisson Distribution Defects Per Opportunity - DPO DPO = no. of defects / (no. of units X no. of defect opportunities per unit) Defects Per Million Opportunities (DPMO, or PPM) DPMO = dpo x 1,000,000 Defects Per Million Opportunities or DPMO can be then converted to sigma & equivalent Cp values (see sigma table)

Six Sigma Capability Improvement

Defect Based Six Sigma Metrics - Example
If there are 9 defects among 150 invoices, and there are 8 opportunities for errors for every invoice, what is the dpmo? dpu = no. of defects / total no. of product units = 9/150 = .06 dpu

dpo = no. of defects / (no. of units X no. of defect oppurtunities per unit) = 9/(150 X 8) = .0075 dpo dmpo = dpo x 1,000,000 = .0075 X 1,000,000 = 7,500 dpmo

What are the equivalent Sigma and CP values? See Sigma Table.

Converting Yield to sigma & Cp Metrics - Example

Given: a proportion defective of 1%

Yield = 1 - p = .990 Z Table value for .990 = 2.32 Estimate process capability by adding 1.5 to reflect the 'real-world' shift in the process mean

2.32 + 1.5 = 3.82

This value can be converted to an equivalent CP by dividing it by 3 : CP = 3.82/3 = 1.27 Note: Cpk cannot be estimated by this method

Six Sigma Capability Improvement

Sigma Table
Yield .840 .870 .900 .930 .935 .940 .945 .950 .955 .960 .965 .970 .975 .980 .985 .990 .995 .998 .999 .9995 .99975 .9999 .99998 dpmo 160,000 130,000 100,000 70,000 65,000 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 2,000 1,000 500 250 100 20 Sigma () Cp Equiv. COPQ (Cost of Poor Quality) 2.50 2.63 2.78 2.97 3.01 3.05 3.10 3.14 3.20 3.25 3.31 3.38 3.46 3.55 3.67 3.82 4.07 4.37 4.60 4.79 4.98 5.22 5.61 0.83 0.88 0.93 0.99 1.00 1.02 1.03 1.05 1.06 1.08 1.10 1.13 1.15 1.18 1.22 1.27 1.36 1.46 1.53 1.60 1.66 1.74 1.87 5% 10% 20% 30% 40%

.9999966

3.4

6.00

2.00

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