Six Sigma

Nature of Variables

Nature of Variables
The objective of any business is to maximize profit. This is largely achieved by satisfying customers, and to the extent that we satisfy our customers we ensure our future survival and prosperity. The expression "Y is a function of X" reflects the fact that a causal relationship exists in any process or action that we perform. We know that, in reality, a result is seldom defined by a single input, so we would extend this concept to say "Y is a function of one or many Xs" where Y is the dependent variable and the Xs are the independent variables. Customer satisfaction is a function of the quality, delivery time and cost of the product and/or service that we provide. The term Critical-to-Satisfaction refers to any variable(s) that bears significant influence on any of the three determinants of customer satisfaction. The products and/or services that suppliers provide fulfill customer needs in terms of defect-free products, cycle time and cost. The terms Critical-to-Quality, Critical-to-Delivery and Critical-to-Cost refer to any variable(s) that bears significant influence on any of these characteristics. Quality, cost and cycle time are controlled by process capability and, in turn, this is limited by variation. The expression "Y is a function of X" allows us to explain and ultimately control variation. Some practices have a direct influence over cycle time and cost without necessarily having an impact on our processes (e.g. reductions in costs/hour through a focus on overhead reduction). However, Six Sigma focuses on improving the quality of our processes that will, in turn, improve cycle time and cost. In the equation Y=f(x), the dependent variables are expressed in our processes as process accuracy, precision, time to fulfill requests, orders, designs, tests, etc. Independent variables are expressed as causes, inputs to the processes, or any variable that bears influence on the outcome. We must also recognize that not all independent variables (Xs) equally affect the dependent variable (Y) or the result. Some variables exert greater influence over the outcome than others. This is known as the "Pareto principle" which suggest that 80 percent of the total error or variance can be accounted for by 20 percent of the variables. The variables that account for 80% of the outcome are called "Vital Few," whereas the rest are called "Trivial Many." The tool Design of Experiments constitutes a powerful tool to identify and control these vital few variables. The purpose of Process Optimization in the Breakthrough Strategy is to identify and contain the vital few variables. When this is done the variability of Y decreases, probability for defects decreases, yield

increases, rolled throughput yield increases, mean time between failure (MTBF) increases, product reliability increases, work-in-process inventory decreases, quality improves, cycle time decreases, cost decreases, customer satisfaction improves and, ultimately, we as a business grow and prosper.

Key Questions
What is meant by the term variables? What is a dependent variable? What is an independent variable? What other labels are synonymous with dependent and independent variables? What is meant by the phrase leverage variable? What strategies can be used to isolate leverage variables?

Key Questions Variables are the elements subject to variation that describe a cause and effect system. The value taken by a dependent variable (Y) depends on the state or condition of other variables within the system. In a cause and effect system there might be one or more independent variables (X 1 Xn). The value they take does not depend on the state or value of the dependent variable (Y). A dependent variable is also known as a response variable and can be seen as the output of a process, the effect is a cause and effect system or the symptom of a problem. Independent variables are also known as the input of a process, the cause of the system, or the underlying problem. "Leverage variables" exert a disproportionately large influence on the dependent variable (Y). According to the Pareto principle, these variables represent 20% of the variables and contribute 80% to the variation in Y. The objective of Process Optimization in the Breakthrough Strategy is to identify and contain these vital few variables. When this is achieved, the variability of Y is minimized, probability of a defect goes down, yield goes up and so on. An important tool used to find these variables is a Design of Experiment (DOE).

CT Concept
Customer Satisfaction Quality Defect-free Delivery Cycle time Price/value Cost/function

Need Do

CTQ1-Critical to Quality CTQ2 CTQ3

CTD-Critical to Delivery CTC-Critical to Cost

Processes
CTP1-Critical to Process CTP2
Nature of Variables

CT Concept During a conversation between a group of managers following a review meeting, one of the managers said: "Hmm, I wonder how the CT concept relates to our activities and to customer satisfaction." "I dont exactly know," said one of his colleagues, "but I know a Master Agent who could meet with us to clarify this concept." The following week the same group of managers got together with the Master Agent. "The CT characteristic levels are like the branches of a tree and customer satisfaction is at the top of the tree," explained the Master Agent. "Customer needs are defined in terms of quality, delivery and price, and these variables constitute the Critical-to-Satisfaction characteristics." "Suppliers provide products and/or services to satisfy these specific needs through defect-free deliverables, shortest possible cycle time and lowest possible cost. Now, to supply these products and/or services, organizations perform processes which contain characteristics that directly affect each of the customer's needs. Some characteristics are then identified as Critical-to-Quality, whereas others are identified as Critical-to-Delivery or Critical-to-Cost." "In Six Sigma, we focus on improving the quality of our processes which, in turn, improves cycle time and cost," says the Master Agent.

DEFINE
4

1_02_01_002

CTQ and CTP Characteristics

CTQ1-Critical to Quality CTQ2 CTQ3

Output

Processes
CTP1-Critical to Process CTP2

Input

= f (x)

Nature of Variables

CTQ and CTP Characteristics A manager asked a Master Agent: "How do Critical To Quality (CTQ) characteristics and Critical To Process (CTP) characteristics apply to our business?" "We refer to Critical to Quality and Critical to Process characteristics as variables, and we use them to describe the cause and effect system that exists in any process. Critical to Process (CTP) characteristics are the inputs or independent variables (Xs) and Critical to Quality (CTQ) is the dependent variable (Y)," said the Master Agent. "Moreover, process capability is limited by variation. Therefore, to improve process capability we should start by controlling the variation of the process inputs." He then continued: "A fundamental notion in Six Sigma is that "Y is a function of X." However, nothing in this world is simple enough to be determined by only one input. In reality there are many independent variables that affect an output. The Six Sigma journey begins when we define the equation Y = f (X 1, X2 Xn) and use it to reduce variation and improve process quality."

DEFINE
5

1_02_01_003

The Focus of Six Sigma

Y=

Nature of Variables

f (X)

The Focus of Six Sigma A Master Agent explained to a manager that a few examples of causal systems in our organization include the following: Y (dependent variable) Etch rate in a chemical milling process Time to fulfill a job requisition X (independent variable) Bath temperature, metal alloy, dissolved aluminum in the bath, etc. Accurate job profile, interviewing availability, supply of qualified candidates, internal posting, external advertising, interviewing process, etc. Quality of cutting tool, metal alloy, feed rate, quality of the cutting program, environmental conditions of the plant, etc. Type of part, supplier, value of the part, geographical location, time of day when order is received, etc. Designer's experience, complexity of the

Machining precision

Time to fulfill an order from an Aircraft On Ground (AOG) No. of errors in an engineering drawing

DEFINE
6

1_02_01_004

Y Dependent Output Effect Symptom Monitor

X1 . . . XN Independent Input-Process Cause Problem Control

drawing, training, availability of manuals, etc. "I see," said the manager, "the strength of the coffee is a function of the number of spoonfuls of coffee grounds that we use, the amount of water that we pour into the coffee maker, and so on."

The Leverage Principle

Trivial Many

Vital Few

Nature of Variables

The Leverage Principle A manager then asked a Master Agent: "Do all independent variables affect the outcome equally? I am sure that some variables bear greater weight on the outcome of a process than others." "That's exactly right," replied the Master Agent, "and in Six Sigma we first identify the system of causation and then we identify and control the variables that exert more influence on the outcome of a process." According to the Pareto principle, 20% of the variables contribute 80% to the output or variation in Y. We even have a name for these variables. The variables that exert undue influence over the outcome of a process are called "vital few," whereas the ones that have a lesser impact are called "trivial many". This is known as the "leverage principle."

DEFINE
7

Three Variation Reduction Strategies

Xs Strategy
Baseline Reduce each by 1 Reduce all to 0 except 2

1 2 3 4 5 6
4 3 0 11 10 11 8
+ ... +

Total Reduction Effort

0 6 11 3

Y
** 12.33 10.68 11.00 9.75

tot

Change Over Baseline (%)

N/A 13.4 10.8 20.9

3 2 0 3

2 1 0 2

1 0 0 1

1 0 0 1

Reduce 2 by 3 4
**

tot

+
2 1 tot

2 2

Ex. for Baseline = 4 + 11 + 3 + 2 + 1 + 1 = 152 = 12.33

2 2 2 2 2 2

Note: Table relates to tolerance stack-ups

Nature of Variables

Three Variation Reduction Strategies "Trivial many, leverage principle can you explain to me realistically how that applies to our processes," a manager asked a Master Agent. The Master Agent drew the calculations presented on the graphic and said: "Let us illustrate the concept of leverage variables. We all know that the total variance of an output is the addition of the individual variances of the independent components. Now, let's imagine that we have a process with six independent variables (Xs) and one Critical to Quality characteristic or dependent variable (Y). Expressed in equation form we would write: Y = f (X1, X2, X6). Moreover, let's say that we take some measurements and determine the baseline condition of total variance presented on the first line. Since the objective is to reduce variability, we would ask ourselves the following question: What combination of individual variation minimizes total output variability? To illustrate how each variable influences the result we could try three strategies: a) reduce the variation of all Xs by one unit; b) Reduce the variation of all Xs to zero except for X 2; and c) reduce the variation of X2 by three units. As we can see, the third strategy is superior to the other two because with a change of only three units in total reduction we obtain a 20.9% improvement over the baseline condition. X 2 exerts an undue influence in the total cause system; therefore, it is leverage in nature.

DEFINE
8

Process Optimization
Phase 1: Measure Characterization Breakthrough Strategy Optimization
Optimization

Phase 2: Analyze Phase 3: Improve Phase 4: Control

Commitment

Region of Success = Current Level

PPM 1,000,000 100,000 10,000 1,000 100 10 1

The Basic Objective

Characterization Commitment

Average Company World-Class 2 3 6 4 5 Sigma Scale of Measure 7

Nature of Variables

Process Optimization The purpose of Process Optimization in the Breakthrough Strategy is to identify and contain the vital few or leverage variables. When this is done the variability of Y decreases, probability for defects decreases, yield increases, rolled throughput yield increases, mean time between failure (MTBF) increases, product reliability increases, work-in-process inventory decreases, quality improves, cycle time decreases, cost decreases, and customer satisfaction improves. A manager asked a Master Agent: "How do we identify the vital few? Do we perform trial and error calculations? "Fortunately, no," replied the Master Agent. "We use systematic tools such as Design of Experiments (DOE). However, since it is a more complex tool, I recommend that you wait until you attend your Six Sigma training course to learn about these tools."

Lessons Learned
A system of causation reflects the function or relationship that exists between a cause and its effect.

DEFINE
9

A dependent variable (Y) is the result of the value or state of one or more independent variables (Xs) included in the system of causation. Independent variables (Xs) take on values that do not depend on the state or value of any other variable included in the system of causation. Customer satisfaction is a function of needs, and are expressed in terms of Quality, Delivery time and Cost of the products and/or services that we provide. Suppliers meet customers' needs through Quality, Cycle time and Cost. These are a function of the level of performance of our processes. Process performance is a function of probability for defects and this, in turn, is a function of variability. The Pareto principle states that 20% of the variables in a system of causation contribute 80% to the outcome or result. These are known as "leverage" or "vital few" variables. The remaining 80% of the variables that contribute 20% to the outcome or result are known as "trivial many" variables;. The purpose of Process Optimization in the Breakthrough Strategy is to identify and contain the vital few variables. Six Sigma focuses on improving processes by identifying and controlling the "vital few" variables. A powerful tool used to achieve this objective is Design Of Experiments (DOE).