Six Sigma Overview

Six Sigma Overview
Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04
Section 1 / Slide No : 1
What Is Six Sigma ?

Effective Improvement Approach
+ Proper Deployment
BETTER BUSINESS RESULTS

Results - Examples
AlliedSignal Turn around from weak financial position in late 80s. US$3.2B cost savings during 1996 and 1997. General Electric Achieve 40% increase in operating margin. Develop a better leadership for todays more competitive world. Fort Wayne City Saved or avoided the need to spend nearly $3 million. Has made numerous other changes that have meant better service for city residents.
Six Sigma Approach - Key Components

Problem Solving Process
Define Measure Analyze Improve Control
Improvement Tools
Comprehensive and Integrated Set
of Useful Improvement Tools
Quality Principles
A Set of Sound Underlying Concepts
The Origin of Six Sigma 1979

The Real Problem At Motorola Is That Our Quality Stinks!
Art Sundry
(Former Motorolas Executive)
Source: Six Sigma, Mikel Harry and Richard Schroeder
1981
Tenfold Improvement Over

A Five Year Period
Robert Galvin
(Former Motorolas President)
1980s
At Government Electronics Group, under the leadership of Mikel Harry, experiments with problem solving through statistical analysis began to show dramatic results.
Mikel Harry began to formulate a method for applying Six Sigma throughout the company. His work culminated in a paper titled The Strategic Vision for Accelerating Six Sigma Within Motorola.
1990
Robert Galvin asked Mikel Harry to start up and lead Motorolas Six Sigma Research Institute.
The mission was to develop Six Sigma implementation strategies, deployment guidelines, and advanced statistical tools that would work in a variety of companies and industries.
Adoption of Six Sigma

- Seagate - Caterpillar - 3M - Dupont - Citibank - Bank One - Fort Wayne City - Sony - Toshiba - Shimano - Matsushita 2000
General Electric AlliedSignal Motorola 1987

1992
1995
Evolution of Quality Practices

DFSS, Lean Six Sigma Six Sigma 2000s Lean Manufacturing Business Process Reengineering ISO9000 Total Quality Management Just in Time
1980s
1960s
TQC (Total Quality Control)
SQC (Statistical Quality Control)
1930s Testing and Inspection

Six Sigma As Improvement Management System

Roles
Senior Management
Approach
Business Goals Focus Areas & Measures
Skills
Define-MeasureAnalyze-Improve-Control (DMAIC) Process Define-MeasureAnalyze-Design-Verify (DMADV) Process Data Analysis Skills Process Mapping, Analysis & Redesign Skills Team Facilitation Skills
Middle Management (Champions)
Dashboard Improvement Projects

Bottom Line Improvement
Process Owners (Black Belts & Green Belts

Dashboard Example
Six Sigma starts with metrics - measuring the things that matter.
Source: Six Sigma, Mikel Harry and Richard Schroeder
x x x x
Current Month Year-to-Date
Customer Complaint (%)

Projects 1. Project A 2. Project B 3. Project C
Business Y Customer Complaint Inventory Turns Manufacturing Loss

Performance Measures - Examples

Motorola
Sigma Capability / Defect Per Million Opportunities (DPMO)
AlliedSignal Laminate System

Capacity Utilization Cost of Poor Quality (COPQ) Process Yield Project Financial Benefits Order To Remittance Inventory Turns Span / On Time Delivery
General Electric Aircraft Engine Services
Six Sigma As Problem Solving Process

Phases Key Tasks
Define Focus Areas Set Up Projects & Define Teams Establish Data Collection Plan Determine Process/System Capability Brainstorm Possible Causes Verify Root Causes Identify Improvement Solutions Validate Effectiveness Establish Control System Share Lessons Learned
Responsibility Champion
DEFINE
MEASURE ANALYSE IMPROVE CONTROL
Black Belt
Green Belt
The DMAIC Toolkit

Define
Process Map Brainstorming Dashboard CTQ Tree Diagram Cause & effect analysis Pareto diagram Selection Matrix Project Charter
Measure
Data collection plan Histogram Distribution Measurement System Analysis Descriptive statistics Run charts Control Charts Process Capability
Analyze
Improve
Control
Pareto diagram Creativity Control plan Brain storming Techniques Documentation Nominal group Selection matrix system technique Design of Control charts Scatter plot experiments On-the-job Box plot Force field training Stratification analysis Storyboard FMEA Potential risks Process C&E assessments matrix Stakeholder Interval Estimate analysis Hypothesis test Process mapping MOT action planning and analysis
A] Soft Tools (Team Problem Solving Facilitation) Brainstorming Affinity Diagram Nominal Group Technique Decision Matrix Effectiveness / Practicality Matrix Quality Function Deployment Failure Mode and Effect Analysis Force Field Analysis
B] Hard Tools (Quantitative Data Analysis) Graphical Tools Process Capability Study Measurement System Analysis Hypothesis Testing Design of Experiments Control Charts
Input Process Output
C] Work Process Redesign Process Mapping Value Add Analysis 7 Principles of Process Redesign Technology Enabler Process Streamlining Should Be Process Map
D] LEAN - Value Stream Mapping - Seven Major Wastes
- Flow-based Processing - Kanban System - Set-up Reduction - Mistake Proofing - Visual Management - Takt Time - Total Productive Maintenance
What is Sigma?
The meaning of Sigma in statistics:
Sigma (Greek letter ) is a symbol for a measurement unit called standard deviation that describes the variability of data from the mean.
The meaning of Sigma in Motorolas Six Sigma Program:

Sigma is an index for measuring the capability of a process / system to produce defect free products or operations. A defect is any mistake that results in customer dissatisfaction. The higher the sigma level, the less likely a process / system will produce defects. As process sigma level increases, costs go down, and customer satisfaction goes up.
Process / System Variation

Inputs Process / System Outputs
Variations exist in all processes / systems. Variations in a process / system will result in outputs variability.
Understanding and reducing process/system variability is the key to improving the capability of a process/system to produce defect free products or services.
Process / System Output Variability

Example: Call waiting time for a call transaction
Cycle time for taking X-ray at a hospital
0
Issue : 1.0/09-04
10
20
30
40
50
60 (minutes)
Copyright Pera Neville Clarke Pte Ltd, 2004
Variability and Capability Relationship

Process Output Variability Customer Requirements
Defects
Less variability means less defects will be produced. Less defects means better capability in meeting customer requirements.
Process / System Sigma
2 3
308,538 66,807
69.2% 93.3%
Noncompetitive
Average
4
5
6,210
233
99.4%
99.98%
Above Average World Class
3.4
99.9997%
Adapted from Six Sigma, Mikel Harry and Richard Schroeder

Sigma
DPMO
Percent Good
Sigma
DPMO
Percent Good
6 5.9 5.8 5.7 5.6 5.5 5.4 5.3 5.2 5.1
3.4 5.4 8.5 13 21 32 48 72 108 159
99.99966% 99.99946% 99.99915% 99.99866% 99.9979% 99.9968% 99.9952% 99.9928% 99.9892% 99.984%
2.9 2.8 2.7 2.6 2.5 2.4 2.3 2.2 2.1 2
80,757 96,801 115,070 135,666 158,655 184,060 211,855 241,964 274,253 308,538
91.9% 90.3% 88.5% 86.4% 84.1% 81.6% 78.8% 75.8% 72.6% 69.1%
5 4.9
4.8 4.7 4.6 4.5 4.4 4.3 4.2 4.1 4 3.9 3.8 3.7 3.6 3.5 3.4 3.3 3.2 3.1 3
233 337
483 687 968 1,350 1,866 2,555 3,467 4,661 6,210 8,198 10,724 13,903 17,864 22,750 28,716 35,930 44,565 54,799 66,807
99.977% 99.966%
99.952% 99.931% 99.90% 99.87% 99.81% 99.74% 99.65% 99.53% 99.38% 99.18% 98.9% 98.6% 98.2% 97.7% 97.1% 96.4% 95.5% 94.5% 93.3%
1.9 1.8
1.7 1.6 1.5 1.4 1.3 1.2 1.1 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1
344,578 382,089
420,740 460,172 500,000 539,828 579,260 617,911 655,422 691,462 725,747 758,036 788,145 815,940 841,345 864,334 884,930 903,199 919,243
65.5% 61.8%
57.9% 54.0% 50.0% 46.0% 42.1% 38.2% 34.5% 30.9% 27.4% 24.2% 21.2% 18.4% 15.9% 13.6% 11.5% 9.7% 8.1%
Process Sigma Calculation (Discrete Data)

1. Determine an appropriate process output unit. 2. Decide the definition for defect. 3. Determine the number of opportunity for defect.
4. Count the number of units and defects.

5. Calculate defect per unit and defect per million opportunities. 6. Correlate the figure to the Sigma level using the Sigma conversion table.
Process Sigma Calculation (Discrete Data)

Example: Pizza home delivery. Defect Definition : 1. Incorrect order 2. Late delivery 3. Cold pizza 4. Damaged pizza
Process output unit: a home delivery order Defect opportunities per unit: 4
If out of 200 orders delivered, Incorrect orders = 5 Cold pizzas = 2 Late = 10 Damaged pizzas = 0
Defect per unit = (5 + 2 + 10 + 0) / 200 = 0.085 Defect per opportunity = 0.085/4 = 0.02125 Defect per million opportunity = 0.02125 x 106 = 21,250
Process sigma = 3.5
Process Sigma Calculation (Continuous Data)

Example: A restaurant Critical Customer Requirement : Fast service Measure: Cycle time from order taken to serving the food (minutes). Service standard: Not more than 15 minutes Process output unit: An order chit
Process Data USL 15.0000 Target * LSL 0.0000 Mean 15.3836 Sample N 99 Shape 1.7385 Scale 17.2663 Overall (LT) Capability Pp 0.30 PPU 0.04 PPL Ppk 2.40 0.04
Process Capability Analysis for Total Cycle Time

Calculations Based on Weibull Distribution Model
LSL USL
The expected number of defect per million = 457,032
Number of opportunities for defect in a unit = 5 (average number food items in a chit)
DPMO = 457,032/5
Observed LT Performance PPM < LSL 0.00 PPM > USL 373737.37 PPM Total 373737.37 Expected LT Performance PPM < LSL 0.00 PPM > USL 457032.00 PPM Total 457032.00
10
20
30
40
50
60
= 91,406 Process sigma = 2.8
Is Three Sigma Performance Acceptable?

Example: Assume processes in GE Plastics were average before Six Sigma implementation 95% compounded product first pass yield 3 million pounds of rework every week. 90% on-time delivery 1 missed shipment every 30 minutes. 98% billing accuracy . 1 billing error every 3 hours. 98% capacity utilization .. 20 million pounds of lost opportunity. 95% meetings start on time (5% with a 10-minute delay) 1,000 work-hours lost each day.
Variability and Cost of Poor Quality (COPQ)

The Costs of NOT Doing Things Right the First Time
Activity 1
Re-do
Re-check
Activity 2
Re-do
Re-check
Activity 3
Re-do
Re-check
Re-Scheduling Lost Customer Service Recovery Goodwill Additional Corrective Actions Ad-hoc Meetings Handling
COPQ of an Average Organization

4 - 8% of Sales
Direct Loss Re-do Re-check
20 - 25 % of Sales
Opportunity For Increasing Profit Margin
Indirect Loss Expediting Costs Ad-hoc meetings Service Recovery Corrective Actions Lost Customer Goodwill Longer Cycle Time
Variability and COPQ

Correlation between an organizations COPQ and variability of its key processes
COPQ (% of Sales)
40
30 20 10
(308538dpm) (66807dpm) (6210dpm)
5
(233dpm)
Sigma
(3.4dpm)
Adapted from Six Sigma, Mikel Harry and Richard Schroeder

Six Sigma and Other Improvement Approaches

High Hanging Fruits (~ 6 Sigma) Bulk of Fruits (~ 5 Sigma) Design for Six Sigma (DMADV)
Six Sigma (DMAIC)
Low Hanging Fruits (~ 4 Sigma) Ground Fruits (~ 3 Sigma)

QCC & 7 Basic Tools
Common Sense & Intuition

Six Sigma Roles - Overview

Senior Executives Deployment Committee
Set direction and provide resources Plan and lead organization-wide implementation Set up projects and deploy teams Coach and support team leaders Execute projects
Project Champions
Master Black Belts and Black Belts
Black Belts, Green Belts and Project Teams

Project Champions
Select projects and deploy project teams.
Management representative for the project team.

A Project Driver: Make sure project teams put in the necessary efforts and insist the team use the process and necessary tools. Make sure the project dont stall. Provide resources needed by the project team. Help project team overcome barriers to improvements. Recognize team efforts and contributions.
Six Sigma Skill Levels and Belts

Opportunity To Apply (Cumulative) ~95% ~75% Black Belt
Advanced Level
Basic Intermediate Level Level
Efforts Needed To Acquire The Tools

Yellow Belt
Green Belt
~50%
Black Belts
Role
Serve as an expert who has in-depth knowledge of Six Sigma methodology and tools. Lead Six Sigma projects. Coach green belts on their projects. Trainers of certain Six Sigma tools.
Profile University education, 5 years working experience. Respected by peer and management. Good interpersonal and analytical skills.
Green Belts
Role
Serve as a trained person who is able to lead Six Sigma projects.

Participate effectively in Black Belts projects as team member.
Profile
Issue : 1.0/09-04
Higher education level. 3 years working experience. Respected by peer.

Copyright Pera Neville Clarke Pte Ltd, 2004
Six Sigma - Summary

A management program aiming at improving processes to achieve operational excellence. It provides a comprehensive methodology and tools on how to achieve sustainable breakthrough improvements.
Through Six Sigma program, management, - makes known the intention to achieve excellence, - provides the enabling skills and knowledge, - creates the supporting infrastructures and mindset, and makes breakthrough improvement possible.

Six Sigma Overview

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Six Sigma Overview

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

What Is Six Sigma ?

BETTER BUSINESS RESULTS

Six Sigma Approach - Key Components

The Origin of Six Sigma 1979

Tenfold Improvement Over

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Adoption of Six Sigma

General Electric AlliedSignal Motorola 1987

Evolution of Quality Practices

TQC (Total Quality Control)

SQC (Statistical Quality Control)

1930s Testing and Inspection

Six Sigma As Improvement Management System

Middle Management (Champions)

Dashboard Improvement Projects

Process Owners (Black Belts & Green Belts

Current Month Year-to-Date

Customer Complaint (%)

Business Y Customer Complaint Inventory Turns Manufacturing Loss

Performance Measures - Examples

AlliedSignal Laminate System

General Electric Aircraft Engine Services

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Six Sigma As Problem Solving Process

The DMAIC Toolkit

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

D] LEAN - Value Stream Mapping - Seven Major Wastes

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

The meaning of Sigma in Motorolas Six Sigma Program:

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Process / System Variation

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Process / System Output Variability

Cycle time for taking X-ray at a hospital

Copyright Pera Neville Clarke Pte Ltd, 2004

Variability and Capability Relationship

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Process / System Sigma

Adapted from Six Sigma, Mikel Harry and Richard Schroeder

6 5.9 5.8 5.7 5.6 5.5 5.4 5.3 5.2 5.1

3.4 5.4 8.5 13 21 32 48 72 108 159

2.9 2.8 2.7 2.6 2.5 2.4 2.3 2.2 2.1 2

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Process Sigma Calculation (Discrete Data)

4. Count the number of units and defects.

Process Sigma Calculation (Discrete Data)

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Process sigma = 3.5

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Process Sigma Calculation (Continuous Data)

Process Capability Analysis for Total Cycle Time

The expected number of defect per million = 457,032

= 91,406 Process sigma = 2.8

Copyright Pera Neville Clarke Pte Ltd, 2004 Issue : 1.0/09-04

Is Three Sigma Performance Acceptable?

Variability and Cost of Poor Quality (COPQ)

COPQ of an Average Organization

Variability and COPQ