SQC& OR UNIT, PUNE

Course
Course Material
Material of
of
Six
Six Sigma
Sigma Black-belt
Black-belt
-- Recognise
Recognise && Define
Define
 EXPECTATIONS
EXPECTATIONSFROM
FROMPARTICIPANTS?
PARTICIPANTS?
SQC& OR UNIT, PUNE

We
Weexpect
expectthe
theparticipants
participantsto
tohave:
have:
 Basic Computer Literacy

 Basic Statistical Knowledge

 Defined Improvement Project

 Total Commitment for the Project

to Complete
 TABLE
TABLEOF
OFCONTENT
CONTENT
SQC& OR UNIT, PUNE
SQC& OR UNIT, PUNE

CHAPTER
CHAPTER--11
RECOGNISE
RECOGNISEPHASE
PHASE
 RECOGNISE
RECOGNISEPHASE
PHASE
SQC& OR UNIT, PUNE

Purpose: Link Six Sigma to Business As-usual

Steps:
1. Create organisation for Six Sigma:
- Leadership team
- Champion
- Master Black-belt
- Black-belt
- Green-belt
- Yellow-belt
2. To link Six sigma to Business objective
- Business level dashboard
3. Create Project hopper
- Project hopper
4. Select a project
- Project Prioritisation Matrix
SQC& OR UNIT, PUNE

CHAPTER
CHAPTER––1.1
1.1
INTRODUCTION
INTRODUCTION
 HISTORY
HISTORYOF
OFSIX
SIXSIGMA
SIGMA
SQC& OR UNIT, PUNE

 Conceptualized
Conceptualizedat
atMotorola
Motoroladuring
during1979
1979when
whenin
inaa
management
managementmeeting
meetingan
anexecutive
executiveproclaimed.
proclaimed.
 “The
“Thereal
realproblem
problemat
atMotorola
Motorolaisisthat
thatour
ourquality
quality
stinks
stinks.”.”
 Chief
ChiefExecutive
ExecutiveBob
BobGalvin
Galvinthrew
threwaachallenge
challengeinin1981
1981
to
toachieve
achieve10
10fold
foldimprovement
improvementininaaspan
spanof
offive
fiveyears.
years.
 Bill
BillSmith,
Smith,an
anengineer
engineerof
ofMotorola
Motorolapresented
presentedaapaper
paper
in
in1985,
1985,established
establishedin
inaacorrelation
correlationbetween
betweenthe
theextent
extentofof
repair
repairaaproduct
productunderwent
underwentduring
duringmanufacturing
manufacturingand
andits
its
field
fieldlife.
life.
 Michel
MichelHarry,
Harry,subsequently
subsequentlydeveloped
developedaastructured
structuredSix
Six
Sigma
Sigmaapproach.
approach.
 WHAT
WHATIS
ISSIX
SIXSIGMA?
SIGMA?
SQC& OR UNIT, PUNE

• An aggressive campaign to boost profitability,

increase market share and improve customer
satisfaction using quality as the strategic business
focus.
• Six Sigma aims at progressively, aggressively and
incessantly keep on adding value or reducing
variability.
• Six Sigma is just not customer satisfaction alone, it is
not just cost reduction, neither it is to ensure legal
compliance for any Organisations.
 WHAT
WHATIS
ISSIX
SIXSIGMA?
SIGMA?
SQC& OR UNIT, PUNE

•Six Sigma is centered around the customer and governments (law)

and many others having different types of stakes such as owners
will look for short-term profit and profitability, society will expect
value addition from the Organisation, Suppliers will have their
aspirations to do business, etc.
• Anybody who is impacted by the products and processes is
termed as Stakeholder.
• Six Sigma calls for overall sensitivity to all the stakeholders.

• Six Sigma, as a benchmark, calls for pursuing to the extent to

reach to maximum 3.4 defects per million opportunity in a process.
 WHAT
WHATIS
ISSIX
SIXSIGMA?
SIGMA?
SQC& OR UNIT, PUNE

• Typically stakeholders of an Organisation include:

 Customer

 Government

 Design Collaborator

 Owner and shareholders

 Employee

 Supplier

 Society

 Intellectual community

 Financial/ leasing institutes etc.

 Exercise
Exerciseof
ofStakeholder
StakeholderIdentification
Identification
SQC& OR UNIT, PUNE

• You are an employee of TechNova in a region/ area. Identify the

stakeholders in your area who can influence the business of TechNova.

Exercise-1
Stakeolders Stakes/ Requirements/ Impact/ Side effect

Customer

MLP

etc.
 BUSINESS
BUSINESS&&SIX
SIXSIGMA
SIGMA
SQC& OR UNIT, PUNE

6 Increase Profit (Hard) + Ability (Soft)

Existing Resources More Resources

More output from Less More output from same More output from more
resources resources resources/ investments

More output from Less

investment
Expand capacity Increase Market
share
Reducing opportunities Reducing defects
for defects (Waste)
New Product

Value Stream Mapping, Problem Solving

Kaizen (DMAIC –Lean Prevent defects so that output Six Sigma from
Six Sigma) (DMAIC – the beginning
Six Sigma) (DFSS- DMADV)

CASH FLOW MARGINS REVENUE

BOTTOM LINE TOP LINE

 BUSINESS
BUSINESS&&SIX
SIXSIGMA
SIGMA
SQC& OR UNIT, PUNE

6 Increase Profitability (Soft) - Non-financial metrics e.g. Customer Satisfaction Index,

Employee satisfaction index, Image etc.
Existing Resources More Resources

Better sensitivity from Better sensitivity from Better sensitivity from more
Less resources same resources resources/ investments

Better sensitivity from

Less investment
Customer looks for New market
more & more customers enjoying
Reducing defects
Reducing opportunities come in- Expand
for defects (Waste) capacity
New Product

Value Stream Mapping, Problem Solving

Kaizen (DMAIC –Lean Prevent defects & waste so that output Six
Six Sigma) (DMAIC – Sigma from the beginning
Six Sigma) (DFSS- DMADV)
Employee, Mgmt,
Supplier, Society Customer & Govt. All the stakeholders
 RISK
RISKOR
ORUNCERTAINTY
UNCERTAINTYIS
ISNATURAL
NATURALPHENOMENON
PHENOMENON
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When the Lord created the world and people to live in it - an enterprise
which, according to modern science, took a very long time - I could well
imagine that he reasoned with himself as follows:

“If I make everything predictable, these human beings, whom I have

endowed with pretty good brains, will undoubtedly learn to predict
everything, and they will thereupon have no motive to do anything at all,
because they will recognize that the future is totally determined and cannot
be influenced by any human action.

On the other hand, if I make everything unpredictable, they will gradually

discover that there is no rational basis for any decision whatsoever and,
as in the first case, they will thereupon have no motive to do anything at
all.

Neither scheme would make sense. I must therefore create a mixture of

the two. Let some things be predictable and let others be unpredictable.
They will then, amongst many other things, have the very important task
of finding out which is which.” E.F. SCHUMACHER
From Small is Beautiful
 STATISTICAL
STATISTICALTHINKING
THINKINGIS
ISESSENTIAL
ESSENTIAL
SQC& OR UNIT, PUNE

1. All works are carried out in a system of inter-

connected processes.

2. Variability of the output of any process is

unavoidable.

3. Understanding and reducing variation of the

process output is the key to success.
 SIX
SIXSIGMA
SIGMA--THE
THEFACT
FACTSHEET
SHEET
SQC& OR UNIT, PUNE

Allied Signal ROI(1992-1996)

 $1.4 Billion cost reduction.

 14% growth per quarter.

 520% price/share growth.

 Reduced new product introduction time by 16%.

 24% bill/cycle reduction.

 SCENERIO
SCENERIO--11
SQC& OR UNIT, PUNE

Organization : Motorola
Turnover : $ 4000 million Man Power : 1 lakh
Locations : 30

1979 : Quality was stinking

Stiff competition especially from Japanese Companies.

To become world leaders in manufacturing of

communication products such as pagers, mobile
phones etc.
 SCENERIO
SCENERIO--22
SQC& OR UNIT, PUNE

Organization : ABB Power Transfer (TPT) plant

Turnover : 1000 million Man Power : over 500

Urgent need for major improvement

 Below average performance

 Well below world class performance
 Defect level over 60% higher then
competitors
 Competitors profits 10% more them ABB
 SCENERIO
SCENERIO--33
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Organization : GE Medical Systems (GEMS)

Turnover : 4500 million Man Power : over 300

CAT scanner speed and life need to be

substantially improved to stand in the market

 Scanner speed 3 minutes as compared to

faster scanners (10 to 30 seconds)
 Due to low bulb life 20 million bulbs failing
pre shipment tests annually.
 High replacement cost of the bulb ($ 60,000)
 SUCCESS
SUCCESSSTORIES
STORIES
SQC& OR UNIT, PUNE

Motorola
Savings over 2.2 billion dollars every year
and 1 billion dollars savings potential in
non-manufacturing costs
Returns in Training 1:10
 SUCCESS
SUCCESSSTORIES
STORIES
SQC& OR UNIT, PUNE

ABB

68 % Reduction in defect Levels

30 % Reduction in production cost
898 million dollars savings each year
 SUCCESS
SUCCESSSTORIES
STORIES
SQC& OR UNIT, PUNE

GE
Goal
Spending 500 million dollars expects
to get back 2 billion dollars in one
year 8 to 12 billion dollars in 5
years
SQC& OR UNIT, PUNE

CHAPTER
CHAPTER––1.2
1.2
ORGANISATION
ORGANISATIONFOR
FORSIX
SIXSIGMA
SIGMA
 SIX
SIXSIGMA
SIGMAORGANIZATION
ORGANIZATION- -AAROLE
ROLEFOR
FOREVERYONE
EVERYONE
SQC& OR UNIT, PUNE

Monumental Task…….Everyone’s involvement critical

Six Sigma Leadership Team

SSLT

Leaders Champion

Team Coaches Master Black Belt

Team Leaders Black Belt/Green Belts

Team Members Yellow Belt

All Associates Awareness

Roles, Skills at Different Levels are Very Different

 SIX
SIXSIGMA
SIGMAORGANIZATION
ORGANIZATION- -AAROLE
ROLEFOR
FOREVERYONE
EVERYONE
SQC& OR UNIT, PUNE

Champion- Green Belt (Part time) /

(Owner of business level Black Belt (Full time)
processes) (Project Leaders)
• Leads projects
• Define Project
• Help champion to
• Select MBB, BB and team
select team members
members
• Plan team meetings
• Determine needed resources
• Lead meetings
• Orient teams
• Handle meeting logistics
• Review Progress
• Make recommendation or changes

Master Black Belt Yellow-belt (Team members)

• Strategic alignment of projects • Participate in the meeting

• Observe team performance • Help with administrative tasks
• Coach the team if required • Meet with project leaders for reviews
• Make recommendations or
changes
 Exercise
Exerciseof
ofRoles
Rolesof
ofSix
SixSigma
Sigma
SQC& OR UNIT, PUNE

• Identify the Roles in your area:

Exercise-2
Role Designation & Name

Champion Area Head

Master Black-belt

Black-belt You

Yellow-belts (Team
Members)
SQC& OR UNIT, PUNE

CHAPTER
CHAPTER––1.3
1.3
BUSINESS
BUSINESSLEVEL
LEVELDASHBOARD
DASHBOARD
 BUSINESS
BUSINESSLEVEL
LEVELDASHBOARD
DASHBOARD
SQC& OR UNIT, PUNE

• Six Sigma is a top-driven initiative. Organisation will articulate its vision and device
strategies to achieve the vision. There are many initiatives to do these jobs which include
Hosin Kanrie (Policy Deployment), Balance Scorecard etc. Six Sigma should be driven by
an apex level dashboard, named as Business Level Dashboard.
• Construction of the dashboard is as under:

 Do a SWOT analysis of the Organisation and create a shared Vision based on the
analysis.
 Device strategies, Strategic Business Objectives (SBOs), Apex level measurements
to represent .
 Past performance of the measurements, current year plan/ targets, future years
plans/ targets will appear in the dashboard.
 A Dashboard is a scoreboard along with commentaries, observations, strategies,
causes etc.
 BUSINESS
BUSINESSLEVEL
LEVELDASHBOARD-
DASHBOARD-AN
ANEXAMPLE
EXAMPLE
SQC& OR UNIT, PUNE

Champions
 BUSINESS
BUSINESSLEVEL
LEVELDASHBOARD-
DASHBOARD-Execise
Execise
SQC& OR UNIT, PUNE

Vision StrategiesStrategic Measures Unit of Freque Responsibility Apr-03 May-03

Business Measur ncy
Objectives e
SQC& OR UNIT, PUNE

CHAPTER
CHAPTER––1.4
1.4
PROJECT
PROJECTHOPPER
HOPPER&&
PROJECT
PROJECTSELECTION
SELECTION
 PROJECT
PROJECTHOPPER
HOPPER
SQC& OR UNIT, PUNE

• Business level dashboard furnishes a good platform to identify

organisation-specific high level projects. However, still there are issues
which offer improvement opportunities in the form of DMAIC, or LSS or
DFSS categories. These issues are usually accumulated deficiencies
from the regular operations of an Organisation. These issues are
difficult to capture from business level dashboard.
• If projects of apex level of organizational importance are identified
through Business Level Dashboard as a part of top-down initiatives,
projects of operational excellence usually are identified through
bottom-up project hopper initiative.
• Usually each SBU, or Division, or Dept. to create improvement issues
in the form of a project hopper.
 PROJECT
PROJECTHOPPER
HOPPER--AN
ANEXAMPLE
EXAMPLE
SQC& OR UNIT, PUNE
 PROJECT
PROJECTHOPPER
HOPPER––Exercise-4
Exercise-4
SQC& OR UNIT, PUNE

Exercise-4: Project Hopper

DEPTT./PROCESS/FUNCTION: AREA OWNER:
ISSUES
SAVING AVAILA OTHER
WHICH
POTENTIAL BILITY FUNCTION PART OF THE
MAY
ISSUES PER ANNUM OF S EXISTING REMARKS
BE
(IN LAKH OF DATA CONCERN PROJECT (Y/N)
IMPAC
RUPEES) (Y/N) ED
TED

TOTAL 0
 PROJECT
PROJECTSELECTION
SELECTION
SQC& OR UNIT, PUNE

Projects will likely have greater success if…

 The problem is related to a key business issue.

 The problem is linked to a clearly defined

process

 The internal or external customers who use or

receive the output from this process, are clearly
identified.

 It important to know what is critical to the

customer about the output.
 PROJECT
PROJECTSELECTION
SELECTION
SQC& OR UNIT, PUNE

 Defects are clearly identifiable and measurable.

 Projects will have impact on enhance financial

performance

 There is appropriate organizational support

- The champion cares about this work
and wants to make it happen
- The champion has the authority to
commit time and resources
- A process owner has been identified
 PROJECT
PROJECTSELECTION
SELECTION
SQC& OR UNIT, PUNE

 Many projects encounter one or more of the following

problems:
– Not relevant to customers or to business needs
– Project scope too large; won’t have authority to
commit time/resources or to make changes in the
process; can’t easily identify starting and ending
points
– Relevant data hard to collect or too much data
– Can’t define what a defect is
– Process doesn’t cycle often enough
– Problem written as solution
– Recent changes in the process
 PROJECT
PROJECTSELECTION
SELECTIONMECHANISM
MECHANISM
SQC& OR UNIT, PUNE
Criteria Rating

The process or project is related to a key business issue 1 2 3 4 5 Don’t Know

No A lot
We have or can get customer input on this issue 1 2 3 4 5 Don’t Know
Easy
Hard
Management does or would give this project high priority 1 2 3 4 5 Don’t Know
Likely Unlikely
I can easily identify starting and ending points for the 1 2 3 4 5 Don’t Know
process Easy Hard

Collecting data on this process is relatively easy 1 2 3 4 5 Don’t Know

Easy Hard
The process completes one cycle at least every day or so
Yes No Don’t Know
(if not more frequently)

I can identify what a “defect” is for this process Yes No Don’t Know

The problem I need to investigate or improve is stated as

Yes No Don’t Know
a target or need, not a solution

The process is within my scope of knowledge/authority Yes No Don’t Know

I know who the process owner is Yes No Don’t Know

The sponsor of this project has the ability to commit time

Yes No Don’t Know
and resources

The process will not be changed by another initiative any

Yes No Don’t Know
time in the near future
 PROJECT
PROJECTPRIORITISATION
PRIORITISATION--AN
ANEXAMPLE
EXAMPLE
SQC& OR UNIT, PUNE

Increasing production
SQC& OR UNIT, PUNE

CHAPTER
CHAPTER--22
DEFINE
DEFINE
 OVERVIEW
OVERVIEWOF
OFDEFINE
DEFINEPHASE
PHASE
SQC& OR UNIT, PUNE

• Purpose of Define Phase are as under:

 ensure that the project is important.

 Identify the stakeholders and understand their concerns/

requirements connected to the problems.
 define the measures to represent the concerns/ requirements in
terms of Critical to Quality (CTQs) in terms of problem of the project
(Y) and its consequences (Zs).
 Map the macro-level process which consists of the causes and
the effect in terms of Ys and the consequences of Y’s in terms of Zs.
 OVERVIEW
OVERVIEWOF
OFDEFINE
DEFINEPHASE
PHASE
SQC& OR UNIT, PUNE
Steps:
5. Ensure that the project is important.
- Project Charter
6. Identify the stakeholders and understand their concerns/
requirements connected to the problems.
- VoC/ VoS
- Kano Model
- VoS Template
7. Define the measures to represent the concerns/ requirements in
terms of Critical to Quality (CTQs) in terms of problem of the
project (Y) and its consequences (Zs).
- VoS template
- CTQ Tree
4. Map the macro-level process which consists of the causes and
the effect in terms of Ys and the consequences of Y’s in terms of Zs.
- SIPOC
SQC& OR UNIT, PUNE

CHAPTER
CHAPTER--2.1
2.1
PROJECT
PROJECTCHARTER
CHARTER
 IMPORTANCE
IMPORTANCEOF
OFAAPROJECT
PROJECTCHARTER
CHARTER
SQC& OR UNIT, PUNE

 A Project charter is an agreement between

management and the team about what is
expected.

 The charter:
– Clarifies what is expected of the team.
– Keeps the team focused.
– Keeps the team aligned with organizational
priorities.
– Transfer the project from the champions to
the project team.
 ELEMENTS
ELEMENTSOF
OFAAPROJECT
PROJECTCHARTER
CHARTER
SQC& OR UNIT, PUNE

 Project Description
 Scope
 Goal and Measures (indicators)
 Expected Business Results
 Team Members
 Support Required
 Expected Customer Benefits
 Schedule
 PROJECT
PROJECTSELECTION
SELECTION: :FINANCIAL
FINANCIALPERSPECTIVES
PERSPECTIVES
SQC& OR UNIT, PUNE

 Express the financial benefits in

terms that make sense for your
business:
– Return on Capital
– Return on Equity
– Return on Investment
– Economic Value Added
– Cash Flow
– Payback Period
– Net Present Value
 PROJECT
PROJECTSELECTION
SELECTION: :FINANCIAL
FINANCIALPERSPECTIVES
PERSPECTIVES
SQC& OR UNIT, PUNE

 Express non-financial improvements* in terms

that make both sense for the customer and your
business:
– Reduced cycle time
– Improved on-time delivery
– Increased flexibility
– Faster response
– Reduced effort
– Increased availability
– Fewer defects

* Includes customer service and quality.

 COST
COSTANALYSIS
ANALYSIS
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 When analyzing the costs it is important to distinguish

between the design/implementation and the operation
phase.
– Cost associated with design and implementation:
• Training Cost
• System Cost
• Design and Development Cost
• Cost of Change
– Cost of Goods Shipped impact:
• Resource Consumption
• Rework Cost
• Cost of Capital
• Maintenance Cost
 FINANCIAL
FINANCIALPERSPECTIVES
PERSPECTIVES
SQC& OR UNIT, PUNE

 Revenue Generation- Add to the Top line

 Cost Savings- Add to the Bottom line
 Cost Avoidance- Estimation of Future Cost
Savings
 Opportunity Loss- Secondary Estimate to
Estimate Revenue and/or Savings
 Cost Impact Not Known- Make Cost Impact
More Known
 REVENUE
REVENUEGENERATION
GENERATION- -ADD
ADDTO
TOTHE
THETOP
TOPLINE
LINE
SQC& OR UNIT, PUNE

 Usually DFSS kind of Projects leads to such

perspective.
 Through DFSS Projects, Time to Market/Use of a
product/ process is shorter and leads to:
- Additional revenue over and above the present
revenue by means of:
 Expanding capacity,
 De bottlenecking,
 Increasing market share,
 Alternative applications, etc.
- A DFSS outfit also leads to avoidance of future
DMAIC cost
 REVENUE
REVENUEGENERATION
GENERATION- -ADD
ADDTO
TOTHE
THETOP
TOPLINE
LINE
SQC& OR UNIT, PUNE

 E.g. A New Draw Line in a Fiber Plant was

designed and commissioned in such a way
that after it is installed for the first three
months from the line:
– Volume was record high
– Best efficiency ever
– Least Customer complaints
– Least breakdown
 COST
COSTSAVINGS
SAVINGS- -ADD
ADDTO
TOTHE
THEBOTTOM
BOTTOMLINE
LINE
SQC& OR UNIT, PUNE

 Usually DMAIC or Lean Six Sigma sort of

Projects leads straight to Cost savings.
 Historically a process has been working with
certain chronic waste level.
 Reduction in this chronic level straight adds
to the bottom line.
 Issues to deal with this perspective are:
Rejections, Reworks, Defect-level, Resource
Utilization level, Compensation, Cycle time
reduction etc.
 COST
COSTADOIDANCE
ADOIDANCE- -AVOID
AVOIDFUTURE
FUTURECOST
COST
SQC& OR UNIT, PUNE

 Applicable to all DFSS, DMAIC or Lean Six Sigma

Projects
 Most important aspect of Six Sigma initiative.
 Unfortunately, this estimation does not form part
of the balance sheet or income statement effect.
 However, if the underlying issue/s are not
addressed, then it may incur future cost.
 Estimation does require techno-commercial
estimation of future cost with certain
assumptions.
 COST
COSTAVOIDANCE
AVOIDANCE- -AVOID
AVOIDFUTURE
FUTURECOST
COST
SQC& OR UNIT, PUNE

 A material need be developed. If it is purchased

from the market, then the cost is so much. If it is
developed in-house the cost is lesser; difference
is cost avoidance.
 Top management approved a sum of so-much to
improve quality. A study team worked out an
alternative way using Six Sigma approach to
improve quality in lesser cost; difference is cost
avoidance.
 A process has chronically incurred 2.5% wastage.
A new line of this process to be introduced where
this wastage will be less than 1% from the very
beginning.
 OPPORTUNITY
OPPORTUNITYLOSS
LOSS
SQC& OR UNIT, PUNE

 Need Secondary Measure to Estimate Revenue

and/or Savings
 There are some parameters/ aspects, if improved
may not directly attribute to revenue generation or
cost savings or cost avoidance; but, indirectly yes.
Usually, a secondary measure need be developed to
correlate to financial measurement.
 Improving planning accuracy may not necessarily
lead to cost savings or revenue. But if associated
inventory, material handling and market share are
tracked for a little longer time, then one can find its
contribution to liquidity, cash-flow etc.
 COST
COSTIMPACT
IMPACTNOT
NOTKNOWN
KNOWN- -MAKE
MAKEITITMORE
MOREKNOWN
KNOWN
SQC& OR UNIT, PUNE

There are issues which are not known to have

impact on cost or revenue. E.g.
 An weighing balance was previously weighing
with +/- 5% inaccuracy. Hence, given a weight
figure, we really do not know what is the true
weight of the unit/s.
 Now, when it is working with +/- 2% inaccuracy,
one usually argue who wins or loose.
 Fact of the matter is in the process if customer
looses, then also strategically the value supplier
is loosing.
 Over years, if cost impact not known are made
cost impact more known then it will show
reduction in Overheads.
 CATEGORIES
CATEGORIESOF
OFBUSINESS
BUSINESSIMPACT
IMPACT
SQC& OR UNIT, PUNE

Potential Improvement Potential Impact

Reduce inventory levels Reduce capital investment in inventory

Reduce time-to-market Increase revenues through increased sales

Reduce equipment downtime Increase capacity

Reduce rejects/rework Decrease material costs; greater ROI

Speed up delivery time Increase revenues

 EXAMPLES
EXAMPLESOF
OFPROBLEM
PROBLEM&&IMPACT
IMPACT
SQC& OR UNIT, PUNE

Expected Benefit of that Expected Business

Improvement Improvement Impact

Reduce errors in Less time spent fixing 5% increase in

processing errors; able to speed monthly revenues
up flow of work (Rs.40,50,000 annually)

Increase on-time Increase customer 20% increase in

delivery from 80% satisfaction; increase repeat business
to 90% customer retention (Rs.10 crores annual impact)

Cut product defects Reduce scrap, less Cut material costs by 25%;
in half time needed to increase capacity by 17%
rework (Rs.20,75,000 annual savings)
 EXAMPLES
EXAMPLESOF
OFAAPROJECT
PROJECTCHARTER
CHARTER
SQC& OR UNIT, PUNE
Project Tittle Reduction of oil loss from 1.1% to 0.59% by Jan'12
Business case Financial benefits - 13.2L saving per Annum 13.20

Problem statement Oil loss in Marico Goa filling section is 1.1% from Apr'11 to Sep'11

Goal statement To reduce the oil loss from 1.1% to 0.59% by Jan'12

Financial results 2011-12 2012-13

Revenue Addition To be estimated in the real time
Savings/Experedure reduction 13.2 L savings per annum
Cash Flow
Over Heads
Avoidance of future revenue loss NA
Avoidance of future savings loss NA
Opportunit loss NA
Cost impact not known NA
Stakeholder Benefit
Scope
InscopeOil storage places & filling
Inductive Scope ( Horizonal
Deploymnt)Filling Line #3,4,5,6,7
Out of scopeOther than Oil storage & filling
Process Starts with Taking the Dip reading before transfer of oil from Storage tank
Process ends with Filling
Team
ChampionP P Ganapathi
MBBVyankatesh
FBBGaneshan R
GBRohan
YBAmey,Devki & Mahindra
Schedule Planned( As per Tollgate review) Actual
Define10th Nov'11
Measure25th Nov'11
Analyse10th Dec'11
Improve10th Jan'12
Control30th Jan'12
FBB MBB Champion CFO/Stake
holder
Signature
Ganeshan R Vynkatesh PPG Sarvesh
NameKulkarni
Date of Signature
 EXERCISE-5:
EXERCISE-5:PROJECT
PROJECTCHARTER
CHARTER
SQC& OR UNIT, PUNE

Project Tittle
Business case

Problem statement

Goal statement

Financial results 2012-13 2013-14

Revenue Addition
Savings/Experedure reduction
Cash Flow
Over Heads
Avoidance of future revenue loss
Avoidance of future savings loss
Opportunit loss
Cost impact not known
Stakeholder Benefit
Scope
Inscope
Inductive Scope ( Horizonal
Deploymnt)
Out of scope
Process Starts with
Process ends with
Team
Champion
MBB
FBB
GB
YB
Schedule Actual
Define
Measure
Analyse
Improve
Control

Signature
Name
Date of Signature
SQC& OR UNIT, PUNE

CHAPTER
CHAPTER--2.2
2.2
VOICE
VOICEOFOFTHE
THESTAKEHOLDERS
STAKEHOLDERS
INCLUDING
INCLUDINGCUSTOMERS
CUSTOMERS
 WHO
WHOARE
ARESTAKEHOLDERS?
STAKEHOLDERS?
SQC& OR UNIT, PUNE

STAKEHOLDERS - Those who have got stakes in the

business in some manner
Can be broadly classified into External CUSTOMERS
& INTERESTED PRTIES (like Govt., Society including
Neighbors, Employees, Owner, Supplier, Scientific
Community etc.)
It is important to identify the stakeholders in the
process in connection with the project before we
listen their voices.
In broader sense, Customer is anybody who is
impacted by the product and processes (As per Dr.
Juran’s Definition in `Quality by Design’)
 IDENTIFY
IDENTIFYCUSTOMER
CUSTOMERREQUIREMENTS
REQUIREMENTS
SQC& OR UNIT, PUNE

 Who are the customers of the service?

 Who are the most important customers?
 Do all the customers have the same need?
 How can customers be segmented?
 How do we collect data on customers’ needs?
 How do we understand customer’s most
important needs?
 What are the critical design requirements to
meet the customers’ needs?
 What performance targets should design meet
to satisfy customers?
 VOICE
VOICEOF
OFCUSTOMER
CUSTOMER::KANO
KANOMODEL
MODEL
SQC& OR UNIT, PUNE
Satisfaction

… Linear satisfier
…Delighter

Low High
Fulfillment Fulfillment

…Basic need

Dissatisfaction
 CRITICAL
CRITICALTO
TOQUALITY
QUALITY--CTQ
CTQ
SQC& OR UNIT, PUNE

 Translate VoC Needs into Measurable

Requirements (CTQs)
 For any Six Sigma Projects, it is necessary to
identify the CTQ’s.
 The CTQ which is key to the project is often
termed as Big-Y or Project CTQ or Principal
Response which are drilled down to Intermediate
responses (called CTQ Drill-down).
 Consequences (often termed as Business CTQ) or
responses which can be influenced by the project
CTQ are being defined as Auxiliary responses.
 VOICE
VOICEOF
OFEXTERNAL
EXTERNALCUSTOMER
CUSTOMER
SQC& OR UNIT, PUNE

 Voice of the
Customer
(VOC) is
used to
describe
customers’
needs and
their
perceptions
of the
product or
service.
 VOC
VOCIS
ISCRITICAL
CRITICAL
SQC& OR UNIT, PUNE

 VOC data helps an organization to:

- decide what products and services to offer.
- identify critical features and specifications for
those products and services.
- decide where to focus improvement efforts.
- get a baseline measure of customer satisfaction
to measure improvement against.
- identify key drivers of customer satisfaction.
 BASIC
BASICVOC
VOCSYSTEM
SYSTEM
SQC& OR UNIT, PUNE

1. Reactive systems 2. Proactive systems

- Information comes to you - You need to put effort into
whether you take action or not gathering the information
 TYPICAL
TYPICALREACTIVE
REACTIVESYSTEM
SYSTEMELEMENTS
ELEMENTS
SQC& OR UNIT, PUNE

 Customer complaints (phone or written)

 Problem or service lines
 Technical support calls
 Customer service calls
 Claims, credits payments
 Sales reporting
 Product return information
 Warranty claims
 Web page activity
 LEVELS
LEVELSOF
OFFIXING
FIXINGVOC
VOC
SQC& OR UNIT, PUNE

Example: Toaster Manufacturing Corrosion Problem

Level 1 Level 2 Level 3

Fix the toasters that Fix the process for Fix the system that
have corrosion handling corrodible produced changes
problems: material: in designs that have
problems like these.
a) units in the field a) in house
b) units still in house b) at suppliers

How?? How?? How??

Replace Use “no touch” Incorporate as a
damaged parts handling part of all design
reviews a check
for possible
corrosion
problems.
 CTQ
CTQIDENTIFICATION
IDENTIFICATIONFROM
FROMVoS
VoS
SQC& OR UNIT, PUNE

Voice of the Stakeholders

PROJECT To improve OTP to 90%through traceability
Nature of Stakeholders Sample Comments CTQ Co Response
Stakeholders de s
External Customer Buyer-Marlboro Your shipments are late by 30 days and yu OTP Y Principal
are always shipping less than 100% goods,
please improve QTY Z1 Auxiliary

Internal Customer Marketing Please ship the goods in time we do not OTP Y Principal
want to loose this buyer
Internal Customer Dye house We are trying to improve the quality for SHRINKA Z2 Auxiliary
shade variation and shrinkage GE
TAILING Z3 Auxiliary
Internal Customer Buying house Why yu hv called if the goods are not ready OTP Y Principal
Internal Customer HR Department Yu hv the required manpower ,will not give OTP Y Principal
more ,your shipment is your concern
Man Z4 Auxiliary
power
Internal Customer GMT staff I hv to ship the goods today please provide OTP Y Principal
me more manpower, otherwise it will be
aired
Internal Customer Commercial Please ship the good today as cut off date is OTP Y Principal
tomorrow evening
Internal Customer President How will you improve your OTP ? OTP Y Principal
Supplier Sourcing Goods has offloaded due to failure OTP Y Principal
Internal Customer Planning Orders are getting delay due to lower QTY Z1 Auxiliary
production rate, fabric & embellishment
delays Embellish Z5 Auxiliary
ment
Fabric Z6 Auxiliary
 EXERCISE-6:
EXERCISE-6:CTQ
CTQIDENTIFICATION
IDENTIFICATIONFROM
FROMVoS
VoS
SQC& OR UNIT, PUNE

Voice of the Stakeholders

PROJECT
Nature of Respons
Stakeholders Sample Comments CTQ Code
Stakeholders es
SQC& OR UNIT, PUNE

CHAPTER
CHAPTER--2.3
2.3
CTQ
CTQTREE
TREE
 DERIVE
DERIVECTQ
CTQFROM
FROMVOC
VOC
SQC& OR UNIT, PUNE

VOC CTQ Tree

CTQ
CTQ

I want CTQ

need CTQ

CTQ
CTQ

(CTQ = Critical to Quality)

 DERIVE
DERIVECTQ
CTQFROM
FROMVOC
VOC
SQC& OR UNIT, PUNE

1st Level 2nd Level

VOC CTQ
CTQ

Skill level of Operators

Operational convenience
Difficulty level of set-up

Level of automation /Digital Control

Time between failure
Ease of Operation Ease of Maintenance
Error-proof machineries
and Maintenance
Skills level of mechanics/ operators

Ease during Modification Level of flexibility

Minimum special tools /
equipment required

Generic Specific

Hard to measure Easy to measure

 CTQ
CTQTREE
TREE––AN
ANEXAMPLE
EXAMPLE
SQC& OR UNIT, PUNE

Process: Send letter from the customer to the customer desired destination

Project: Reducing cycle time of dispatch

CTQ Tree
Supplier Customer who wishes to send

Input Letter at start

Process P
Code
Process Dispatch from start to destination

Output Letter at destination

Customer Person who is intended to get the letter

Code--> Y Y1 Y2 Y3 Y4
CTQ--> Cycle time Start to Insort Outsort Error
Insort- Clerk to Clerk to committe
clerk Outsort destinati d
Clerk on
Unit of Sec. Sec. Sec. Sec. Sec.
Measure
Target <1 Min.
Date
&Time
 Exercise-7:
Exercise-7:CTQ
CTQTREE
TREE
SQC& OR UNIT, PUNE

Process:
Project:
CTQ Tree
Supplier
Input
Process Code
Process
Output
Customer
Code--> Y Y1 Y2 Y3 Y4
CTQ-->
Unit of
Measure
Target
Date &Time
SQC& OR UNIT, PUNE

CHAPTER
CHAPTER--2.4
2.4
PROCESS
PROCESSMAP
MAP
SQC& OR UNIT, PUNE

THE
THEPROBLEM
PROBLEM
SQC& OR UNIT, PUNE
SQC& OR UNIT, PUNE
SQC& OR UNIT, PUNE
SQC& OR UNIT, PUNE
SQC& OR UNIT, PUNE
 Process Map
SQC& OR UNIT, PUNE

Process- Process converts input to output using

resources.
e.g. Training as a process converts the existing
knowledge of an individual to be with added knowledge
using book, training hall, faculty member, training
gadgets etc.

Process has got two kind of output parameters.

Process Effectiveness- Customer perceived or realised

gain is called the Effectiveness of a process.

Ineffectiveness is termed as defect.

 Process Map
SQC& OR UNIT, PUNE

Process Effectiveness- (contd…)

e.g. Stress less learning by the participants, Feedback
rating, Test score, Projects completed by the participants
after the training are the examples of effectiveness.

Process Efficiency:
Just required resources engaged to reach to the
effectiveness of the process is called as the Efficiency of a
process.

Inefficiency is termed as waste which can be defined as

`More than just required resources engaged to reach to the
effectiveness of the process is called as the Efficiency of a
 Process Map
SQC& OR UNIT, PUNE

Process Efficiency (contd…):

e.g. Time taken to complete the training, Cost of the
training, Number of faculty members in the training are
few efficiency parameters of a process.

Effectiveness can not be compromised; Efficiency has

to be optimised.
SQC& OR UNIT, PUNE

“There is nothing so useless as

doing efficiently that which should
not be done at all.”

Peter F. Drucker
SQC& OR UNIT, PUNE

 Processes are at different levels

 Level 1: Over all business processes
 Example:
 New housing schemes
 Financial packages
 Order generation
 Order fulfillment
 Outsourcing
 Collection
SQC& OR UNIT, PUNE

 Level 2 processes:

 Any one of the elements of

level 1 process can be mapped
as level 2 process.

Example: Order fulfillment

process
SQC& OR UNIT, PUNE

HOW DO WE JUDGE THE EFFICACY OF OUR

PROCESSES?
Meets customer demands
(Process Effectiveness)

and
PROCESS
PROCESS

Meets business objectives

(Process Efficiency)
SQC& OR UNIT, PUNE

Measuring Customer Expectations of the Order

Fulfillment Process Perfect Order Rate
On-time Delivery
Order fill rate

Ease of doing
Business
Order Fulfillment
Billing Accuracy

Performance

Demand Project Sourcing & Project After-sales Customer

Delivery
Forecasting Planning Purchasing execution servicing acquisition

Projects
Projectsare
areto
tobe
befound
foundininLevel
Level33and
and44processes,
processes,but
butwe
wedo
donot
notwant
want
to lose sight of the high -level process measures we are trying to impact.
SQC& OR UNIT, PUNE

Measuring the Business Demands of the Order

Fulfillment Process Non-value to
Process Cycle time value added ratio
Order fill rate

Left-out flats
Order Fulfillment

Inventory turns

Safety incidents

Final yields

Demand Project Sourcing & Project After-sales Customer

Delivery
Forecasting Planning Purchasing execution servicing acquisition

Projects
Projectsareareto
tobe
befound
foundininLevel
Level33and
and44processes,
processes,but
butwe
wedodonot
notwant
want
to
tolose
losesight
sightof
ofthe
thehigh
high-level
-levelprocess
processmeasures
measuresweweare
aretrying
tryingto
toimpact.
impact.
SQC& OR UNIT, PUNE

GETTING THE BUSINESS RESOURCES FOCUSED

Order Fulfillment

Demand Project Sourcing & Project After-sales Customer

Delivery
Forecasting Planning Purchasing execution servicing acquisition

Arrange
Project Out-
Architecture Material & Execution Inspection Liasoning
Planning sourcing
machineries

Which sub-processes are most in need of our attention?

 SIPOC–
SIPOC–AN
ANEXAMPLE
EXAMPLE
SQC& OR UNIT, PUNE

Example Process Map for Assembly and Packaging Process

Start boundary:
Run initiated per End boundary:
production schedule Liasoning Approval from
regulatory bodies

Inputs:
• Design &
Suppliers: Architecture Outputs:
• Architect • Inspection • Approval papers Customers:
• Contractors) reports • Occupancy • Occupiers
• Land owners • Compliance certificates
• Govt. bodies records
• Standards
 Exercise-8:
Exercise-8:SIPOC
SIPOC
SQC& OR UNIT, PUNE

Supplier Input Code of the Process Process Output Customers

P
P1
P2
P3
P4
P5
…