SIX SIGMA

OVERVIEW

Six Sigma

Six Sigma refers to tools, processes and

cultures made famous by Motorola and
General Electric in the 1980s and are aimed
at reducing variability and defects.

Six Sigma Origins

Motorola deployed Six Sigma Methodology in

80s
In1981, Motorola set out to improve the
quality of their products and services tenfold.
In 1988, accepted Malcolm Baldrige National
Quality Award, and began the Six Sigma
Quality movement.

Motorola Experience

Between 1983-87: spent $70 Million on quality

related education.
Productivity increased average of 12.3%/yr.
Cost of Quality reduced by more than 84%.
99.7% of in-process defects eliminated.
$11 Billion in manufacturing costs saved.
Average annual compounded growth rate of
17% in earnings, revenues and stock prices.

Six Sigma Applications

Manufacturing , Service, Chemical, Financial..

High or low volume.
Thousands, Millions or Billions in Revenue.
Even Non-Profit Organizations.

GE Experience

Integral Management and Quality

Solutions

GE Experience

Capacity improvements of 12-18%.

Rise in operating margin to 16.7%.
$750 millions in savings.

GE plastics

Reduced color variation in plastic products.

Raised quality from 2 sigma to 4.9 sigma
over 4 months.
Saved $400,000 a year for one plant. (ref
GE Way).
In 1996, first year of Six Sigma deployment,
GE Plastics achieved benefits of $20 million

GE Medical Systems

Developed a new Ultrasound technology

which allows medical personnel to more
Cleary diagnose risk factors contributing to
stroke.
Technology became available two years
earlier than otherwise possible, due to GE's
Design for Six Sigma deployment.

Other Six Sigma Industry

Leaders

Boeing, IBM, Bombardier, Asea Brown

Boveri, DuPont, Kodak, Compaq and Texas
Instruments.
GMAC Mortgage, Citibank, JP Morgan and
Cendant Mortgage.

Integral MQS
Achievements
Sample of Six Sigma Projects
Implemented

Integral Management and Quality

Solutions

11

Project 1:
Optimization of Calcium
Addition

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Project 1:
Optimization of Calcium Addition
Opportunity Statement: (Problem Definition)

EFS loss of 1,481,544 L.E per year due to the uses of the heated
Calcium-wire after Calcium optimization.
The process current sigma level is 2.15

Goal Statement:

Reduce defects percentage from 25% to 11% by July 2006.

Reduce revenue losses by 740,772 L.E.
Improve process Sigma level to 3.69 sigma.

Project 2:
Reduce Casting Time

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Project 2:
Reduce Casting Time
Opportunity Statement: (Problem
Definition)

Currently the Variable operation process current sigma level is

2.49, if it increased to 3; So there will be 0.51 increase in sigma
level.

Goal Statement

Achieve the average process time

Save annual revenue loss of LE 20,000,000.
Increase productivity.
Improve On-Time Delivery.
Improve Employee Morale.
Improve Flexibility & Reduce Production Interruption.

Project 3: Width Drop

Defect
(Project Charter)

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Project 3: (Project Charter)

Width Drop Defect
Business Case:
The Width Drop defect beside causing an annual
revenue loss of 6,704,422.50 L.E., it causes rework
and production disturbance and it might cause a
delay in finished product delivery. By reducing this
defect, the company will improve its financial
performance, increase productivity and deliver
finished product on time.

Opportunity Statement:
Currently, in EFS, there are 0.62% defective
Coils due to width drop after the hot strip
Mill process. This represents a revenue loss
of 6,704,422.50 L.E. per year. The process
current sigma level is 3.76

Project Goal :

Project Scope:

Reduce

the cost of width drop defect by 6,033,979 LE

Improve process Sigma level from 3.76 to 4.54 sigma.
Improve Delivery on time.
Reduce production interruption.
Improve employee morale.
Increase Customer satisfaction.

HSM Operation Process:

1.
HSM: Start with slabs and ends with Hot
Rolled Coils (HRC).
2.
The Project scope is to control the width
drop which occurred in the Hot Strip Mill.

Time Schedule & Project Plan:

Team Selection:

Activity

Define Phase
Measure Phase
Analyze Phase
Improve Phase
Control Phase

From

15/01/2006
15/02/2006
01/05/2006
15/05/2006
01/07/2006

To

15/02/2006
30/04/2006
15/05/2006
30/06/2006
10/07/2006

Dr.Gamal Megahed
Nabil Douban
Ahmed Nabil
Usama Ahmed
Mohammed Awad
Mohammed Ibrahim
Ahmed Attala
Niraj Singh

Sponsor
Black Belt
Adhoc
Member
Member
Member
Member
Member

TD Manager
Financial Manager
HSM Process Engineer
HSM Production Eng.
Quality Control Eng.
Automation Engineer
SKP in Charge

Improve Sales Order cycle and

Scrap Products Due To Expiry

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Solutions

18

1- Definition of key terms

Return Goods:

Returns Invoices:

The Returned Products which is stayed on the customer shelf until

expiration or any kind of defect.
The invoices which are totally returned, the customer did not accept any

of its contents.

Partial R. Invoices:

Contract :

The invoices which are partially returned, the customer accepted some
of its contents and returned the others.
Local or exportation tenders.

Sales : The Net sales (Total Sales Returns)

Sale order cycle: From Salesman visits schedule, physical visit, order taking,
order follow-up, order delivery to on shelf products follow-up
Scrap : The Executed Finished Products
Scrape due to expiry date: The scraped products due to exceeding the
expiration date at the customer place.
Rework: The needed work on returned products to reuse them
Customers: Pharmacies, Distributors, and others like hospitals, Health
insurance, Etc.

2- Project Selection
Work Break Down Structure
Sales
Net Sales
Other
Customer

Distributors

Returns

Pharmacies

Distributors

Pharmacies

Invoice Returns

Other
customers

Return Goods
Scrape

Rework

Due to Expiration
Others
At Pharmacy

At Company

Returned Products
Returned products

Contract R. partially

Contract R. Invoice

Contract Returns

Invoice R. partially

Invoice Returns

Returned Goods

Why is this so important?

Sales Transaction % 2006
Category
Net Sales
Samples
Returns

6.0%
2.0%

92.0%

The Total returns represent 6 % from The Total Sales

while the samples represent 2 %

Returned Goods (A Closer Look)

92%

Sales
Samples
Returns

6%

100%
80%
60%
40%
20%
0%

2%

18%

41%
7%

11%

21%
0.00%

Contract R. Contract R. Contract R Invoice R.

partially
Invoice
Partially

Invoice R.

Return
Goods

Facts
Pareto Chart of Customer Type ( Returned Goods Units 2004 - 2006)
100
2000000
80
60
1000000

40

500000

0
Customer Type
Count
Percent
Cum %

20

Pharmacies
1221801
56.8
56.8

Distributers
910889
42.4
99.2

Other
16881
0.8
100.0

Almost 57% of Returned goods are from the

pharmacies

Percent

Count

1500000

Business Case

The defect of returned products based on

expiry date cause loss of about 3,000,000 LE
per year.
The current sale order form not adequate for
sales man requirements.

Opportunity Statement

Currently ,the returned products

represent 18% from all returned Products.
But 82 % from them goes to scrap This
represent loss of about
2.5 - 3 Million - L.E. per year.

Facts

The Company gives about 2 % form sales value

as
A Samples , so there is an opportunity to reuse
the
Returned products if we have control on the
products in the market

Project Scope

The Sales Cycle From Getting the

Customer Order until The
Expired product Execution

Project Objectives

1- Reduce the Expired products by

1,000,000 L.E. per year.
2- Improve process sigma level from
0.6 to 1.6 Sigma.
3- Improve the return cycle.
4- Improve Sales order cycle
5- Increase the customer satisfaction.

Project Charter
Business Case
The defect of returned products
Based on expiry date cause loss of about
3,000,000 LE per year.

Opportunity Statement
Currently ,the returned products
due to expiry date represent 18% defect from all
returned Products The Company Scrape about 82%
from them. This represent loss of about
3 M L.E. per year. The current sigma level 0.6

Project Goal
1- Reduce the cost of returned products by
1,000,000 L.E. per year.
2- Improve process sigma level from
0.6 to 1.6 Sigma.
3- Improve the return cycle.
4- Increase the customer satisfaction.

Project Scope
The Sales From Getting the Customer Order until The
Expired product Execution.

Time Schedule
Define 2 Weeks
Measure 2 Weeks
Analyze 2 Weeks
Improve 1 Month
Control 1 Month

Thank You

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