Introduction to SIX - SIGMA

Presented by : http://www.QualityGurus.com
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Agenda
0750 - 0800 0800 - 0930 0930 - 0945 0945 - 1200 Participants introduction Introduction to Six Sigma concept Key Concepts Tea / Coffee Break Forms of waste What is Sigma Components of Six Sigma Lunch Break Selecting a Project Open session / Q&A QualityGurus.com

1200 - 0100 0100 - 0200 0200- 0300

Participants Introduction
• • • • Your Name Department Your job profile Your exposure to Quality Management/ Six Sigma

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Ground Rules
• Program success depends on your participation. Actively participate. • Please avoid cross-talks. • Observe specified timings. • Please keep your mobile phones switched off. • Feel free to ask question at any point of time. - Restrict question to specific issue being discussed, while general questions can be discussed during Q & A session. • Enjoy the program ! QualityGurus.com

Introduction to Six Sigma

To make customer happier and increase profits QualityGurus.com

Purpose of six sigma :

Origin of Six Sigma
• 1987 Motorola Develops Six Sigma
– Raised Quality Standards

• Other Companies Adopt Six Sigma
– GE
•Promotions, Profit Sharing (Stock Options), etc. directly tied to Six Sigma training.

– Dow Chemical, DuPont, Honeywell, Whirlpool

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Time Line

Allied Signal Motorola Johnson & Johnson, Ford, Nissan, Honeywell

General Electric

1985

1987

1992 1995

2002

Dr Mikel J Harry wrote a Paper relating early failures to quality

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Pilot’s Six-Sigma Performance

Width of landing 1/2 Width strip of landing strip

If pilot always lands within 1/2 the landing strip width, we say that he has Six-sigma capability.

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• • • • • • • •

Delighting Customers. Reducing Cycle Times. Keeping up with Technology Advances. Retaining People. Reducing Costs. Responding More Quickly. Structuring for Flexibility. Growing Overseas Markets.

Current Leadership Challenges

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Six Sigma— Benefits?
• Generated sustained success • Project selection tied to organizational strategy – Customer focused – Profits • Project outcomes / benefits tied to financial reporting system. • Full-time Black Belts in a rigorous, project-oriented method. • Recognition and reward system established to provide motivation.
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Management involvement?
• Executives and upper management drive the effort through:
– Understanding Six Sigma – Significant financial commitments – Actively selecting projects tied to strategy – Setting up formal review process – Selecting Champions – Determining strategic measures

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Management Involvement?
• Key issues for Leadership:
– How will leadership organize to support Six Sigma ? (6 σ council, Director 6 σ, etc) – Transition rate to achieve 6 σ. – Level of resource commitment. – Centralized or decentralized approach. – Integration with current initiatives e.g. QMS – How will the progress be monitored?
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What can it do?
Motorola:
– 5-Fold growth in Sales – Profits climbing by 20% pa – Cumulative savings of $14 billion over 11 years

General Electric:
– $2 billion savings in just 3 years – The no.1 company in the USA

Bechtel Corporation:
– $200 million savings with investment of $30 million
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GE Six Sigma Economics
(in millions) 2500 2000 1500 Cost 1000 500 0 1996 1998 2000 2002
Source: 1998 GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon total corporation cost/benefits attributable to Six Sigma.

6 Sigma Project Progress

Benefit

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Overview of Six Sigma
6 SIGMA AS A PHILOSOPHY CHANGE THE WORLD TRANSFORM THE ORGANIZATION 6 SIGMA AS A PROCESS GROWTH

6 SIGMA AS A STATISTICAL TOOL

COSTS OUT PAIN, URGENCY, SURVIVAL

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Overview of Six Sigma
It is a Philosophy – Anything less than ideal is an opportunity for improvement – Defects costs money – Understanding processes and improving them is the It is Statistics most efficient way to – 6 Sigma processes will achieve lasting results produce less than 3.4 defects per million opportunities It is a Process – To achieve this level of performance you need to: Define, Measure, Analyse, Improve and Control

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Philosophy
• Know What’s Important to the Customer (CTQ) • Reduce Defects (DPMO) • Center Around Target (Mean) • Reduce Variation (Standard Deviation)
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Critical Elements
• • • • • • Genuine Focus on the Customer Data and Fact Driven Management Process Focus Proactive management Boundary-less Collaboration Drive for Perfection; Tolerance for failure

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Data Driven Decision

Y=
• • • • • • Y Dependent Output Effect Symptom Monitor

f(X)
• • • • • • X1 . . . Xn Independent Input-Process Cause Problem Control

The focus of Six sigma is to identify and control Xs QualityGurus.com

Two Processes
DMAIC • Existing Processes DMADV • New Processes • DFSS • • • • • Define Measure Analyze Design Verify

• • • • •

Define Measure Analyze Improve Control

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Key Concepts

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COPQ (Cost of Poor Quality)
- Inspection - Warranty - Scrap - Rework - Rejects

Traditional Quality Costs: - Tangible - Easy to Measure Hidden Costs: - Intangible - Difficult to Measure

- More Setups - Expediting Costs - Lost Sales - Late Delivery - Lost Customer Loyalty - Excess Inventory - Long Cycle Times - Costly Engineering Changes

Lost Opportunities The Hidden Factory

Average COPQ approximately 15% of Sales

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COPQ v/s Sigma Level
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Cost of Quality % Sales

2

3

4

5

6

Sigma Level

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CTQ (Critical-ToQuality)
• CTQ characteristics for the process, service or process • Measure of “What is important to Customer” • 6 Sigma projects are designed to improve CTQ • Examples:
– Waiting time in clinic – Spelling mistakes in letter – % of valves leaking in operation
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Defective and Defect
• A nonconforming unit is a defective unit • Defect is nonconformance on one of many possible quality characteristics of a unit that causes customer dissatisfaction. • A defect does not necessarily make the unit defective • Examples:
– Scratch on water bottle – (However if customer wants a scratch free bottle, then this will be defective bottle) QualityGurus.com

Defect Opportunity
• Circumstances in which CTQ can fail to meet. • Number of defect opportunities relate to complexity of unit. • Complex units – Greater opportunities of defect than simple units • Examples:
– A units has 5 parts, and in each part there are 3 opportunities of defects – Total defect opportunities are 5 x 3 = 15

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DPO (Defect Per Opportunity) by number of Number of defects divided
– In previous case (15 defect opportunities), if 10 units have 2 defects. – Defects per unit = 2 / 10 = 0.2 – DPO = 2 / (15 x 10) = 0.0133333

defect opportunities • Examples:

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• DPO multiplies by one million • Examples:

DPMO (Defect Per Million Opportunities)

– In previous case (15 defect opportunities), if 10 units have 2 defects. – Defects per unit = 2 / 10 = 0.2 – DPO = 2 / (15 x 10) = 0.0133333 – DPMO = 0.013333333 x 1,000,000 = 13,333

Six Sigma performance is 3.4 DPMO 13,333 DPMO is 3.7 Sigma
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Yield
• Proportion of units within specification divided by the total number of units. • Examples:
– If 10 units have 2 defectives – Yield = (10 – 2) x 100 /10 = 80 %

• Rolled Through Yield (RTY)
– Y1 x Y2 x Y3 x ……. x Yn – E.g 0.90 x 0.99 x 0.76 x 0.80 = 0.54

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Forms of Waste

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1. 2. 3. 4. 5. 6. 7.

What are the forms of waste?

Waste of Correction Waste of Overproduction Waste of processing Waste of conveyance (or transport) Waste of inventory Waste of motion Waste of waiting

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1. Waste of correction
• Repairing a defect wastes time and resources (Hidden factory) Hidden
Rework Failure Investigation Operation 1 Test Operation 2

Factory Rework

Failure Investigation Test

Product

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• Producing more than necessary or producing at faster rate than required
– Excess labor, space, money, handling

2. Waste of Overproduction

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3. Waste of processing
• Processing that does not provide value to the product
– Excess level of approvals – Tying memos that could be handwritten – Cosmetic painting on internals of equipment – Paint thickness more than specific values

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4. Waste of conveyance
• Unnecessary movement of material from one place to other to be minimized because – It adds to process time – Goods might get damaged

• Convey material and information ONLY when and where it is needed.

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5. Waste of inventory
• Any excess inventory is drain on an organization.
– Impact on cash flow – Increased overheads – Covers Quality and process issues

• Examples
– Spares, brochures, stationary, …

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6. Waste of Motion
• Any movement of people, equipment, information that does not contribute value to product or service

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7. Waste of Waiting
• Idle time between operations • Period of inactivity in a downstream process because an upstream activity does not deliver on time. • Downstream resources are then often used in activities that do not add value, or worst result in overproduction.

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• • • • • •

Waste of untapped human potential. Waste of inappropriate systems Wasted energy and water Wasted materials Waste of customer time Waste of defecting customers

Some more sources of Waste

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What is Sigma?

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Have you ever…
• Shot a rifle? • Played darts?

What is the point of these sports? What makes them hard?

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Have you ever…
• Shot a rifle? • Played darts?
Jack

Jill

Who is the better shooter?
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Variability
• Deviation = distance between observations and the mean (or average)
Observations 10 9 8 8 7 averages 8.4 Deviations 10 - 8.4 = 1.6 9 - 8.4 = 0.6 8 - 8.4 = -0.4 8 - 8.4 = -0.4 7 - 8.4 = -1.4 0.0

8 7 10 8 9 Jack

Jill

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Variability
• Deviation = distance between observations and the mean (or average)

Observations 7 7 7 6 6 averages 6.6

Deviations 7 - 6.6 = 0.4 7 - 6.6 = 0.4 7 - 6.6 = 0.4 6 - 6.6 = -0.6 6 - 6.6 = -0.6 0.0

Jack

7 6 7 7 6

Jill

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Variability
• Variance = average distance between observations and the mean squared
Observations 10 9 8 7 averages 8.4 Deviations 10 - 8.4 = 1.6 9 – 8.4 = 0.6 8 – 8.4 = -0.4 7 – 8.4 = -1.4 0.0 Squared Deviations 2.56 0.36 0.16 0.16 1.96 1.0

8 7 10 8 9 Jack

8 8 – 8.4 = -0.4

Jill

Varianc QualityGurus.com

Variability
• Variance = average distance between observations and the mean squared
Observations 7 7 7 6 averages 6.6 Deviations 7 - 6.6 = 0.4 7 - 6.6 = 0.4 7 - 6.6 = 0.4 6 – 6.6 = -0.6 0.0 Squared Deviations 0.16 0.16 0.16 0.36 0.36 0.24

Jack

6 6 – 6.6 = -0.6

7 6 7 7 6

Jill

QualityGurus.com Variance

Variability
• Standard deviation = square root of variance
Average Jack Jill 8.4 6.6 Variance 1.0 0.24 Standard Deviation 1.0 0.4898979
Jill Jack

But what good is a standard deviation QualityGurus.com

Variability
The world tends to be bell-shaped

Even very rare outcomes are possible

Fewer Most in the outcomes “tails” occur in the (lower) middle

Fewer Even very rare in the outcomes are “tails” possible (upper)

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Variability
Here is why: Even outcomes that are equally likely (like dice), when you add them up, become bell shaped
Add up the dots on the dice
0.2 Probability 0.15 0.1 0.05 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Sum of dots 1 die 2 dice 3 dice

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“Normal” bell shaped curve
Normal distributions are divide up into 3 standard deviations on each side of the mean Once your that, you know a lot about what is going on

And that is what a standard deviation is good for QualityGurus.com

Causes of Variability
• Common Causes: – Random variation within predictable range (usual) – No pattern – Inherent in process – Adjusting the process increases its variation • Special Causes – Non-random variation (unusual) – May exhibit a pattern – Assignable, explainable, controllable – Adjusting the process decreases its variation

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Limits
• Process and Control limits: – Statistical – Process limits are used for individual items – Control limits are used with averages – Limits = μ ± 3σ – Define usual (common causes) & unusual (special causes) • Specification limits: – Engineered – Limits = target ± tolerance – Define acceptable & unacceptable QualityGurus.com

Usual v/s Unusual, Acceptable v/s Defective
Another View
Off-Target Large Variation

LSL

USL

LSL

USL

On-Target Center Process
LSL

Reduce Spread
USL

LSL = Lower spec limit USL = Upper spec limit

The statistical view of a problem

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More about limits
Poor quality: defects are common (Cpk<1) Good quality: defects are rare (Cpk>1)
μ target μ target

Cpk measures “Process Capability”
If process limits and control limits are at the same location, Cpk = 1. Cpk ≥ 2 is exceptional.

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Process capability
Good quality: defects are rare (Cpk>1) Poor quality: defects are common (Cpk<1)
= USL – x = 24 – 20 =.667 3σ 3(2) = x - LSL = 20 – 15 =.833 3σ 3(2)

Cpk = min

= = 3σ = (UPL – x, or x – LPL)

14

15

20

24

26

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A Six Sigma Process –
Predictably twice as good as what the customer wants
LSL
−6σ

6σ σ 1 1σ σ 1 σ 1 σ 1

+6σ

USL

1

2

3

4

5

6

7

8

9

10 11

12

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3 σ v/s 6 σ
6 Sigma curve

LSL
3 Sigma curve

USL

1

2

3

4

5

6

7

8

9

10

11 12 13

14

15

16

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Process shift allowed
1.5 SD LSL SD = 1 1.5 SD USL

1

2

3

4

5

6

7

8

9

10

11 12 13

14

15

16

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Six Sigma Measurement
Sigma

7 6 5 4 3
On one condition : Calculate the defects and estimate the opportunities in the same way...
233 6210 66810 3.4 0.02

DPMO

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Six Sigma Measurement
# of Defect per Million

Sigma numbers
1.5s 2.0s 2.5s 3.0s 3.5s 4.0s 4.5s 5.0s 5.5s 6.0s

Defects per million
500,000 308,300 158,650 67,000 22,700 6,220 1,350 233 32 3.4

600,000 500,000 400,000 300,000 200,000 100,000 0

1.5

2.5

3.5 # of Sigmas

4.5

5.5

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Components of Six Sigma

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Components Two components of Six Sigma

1. Process Power
2. People Power
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Process Power

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P-D-C-A
Act
Act on what was learned

A

P

Plan
Plan the change

Check

C

D

Do
Implement the change on a small scale. QualityGurus.com

Check the results

Approach
Practical Problem

Statistical Problem Statistical Solution Practical Solution

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DMAIC - simplified
• Define
– What is important?

• Measure
– How are we doing?

• Analyze
– What is wrong?

• Improve
– Fix what’s wrong

• Control
– Ensure gains are maintained to guarantee performance

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DMAIC approach
D Define M Measure A Analyze I Improve C Control Identify and state the practical problem

Validate the practical problem by collecting data

Convert the practical problem to a statistical one, define statistical goal and identify potential statistical solution Confirm and test the statistical solution

Convert the statistical solution to a practical solution

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Define
D Define M Measure A Analyze I Improve C Control VoC - Who wants the project and why ?

The scope of project / improvement (SMART Objective)

Key team members / resources for the project

Critical milestones and stakeholder review

Budget allocation

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Measure
D Define M Measure A Analyze I Improve C Control Prepare data collection plan
How many data points do you need to collect ? How many days do you need to collect data for ? What is the sampling strategy ? Who will collect data and how will data get stored ? What could the potential drivers of variation be ?

Ensure measurement system reliability
- Is tool used to measure the output variable flawed ?

Collect data

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Analyze
D Define M Measure A Analyze I Improve C Control

How well or poorly processes are working compared with - Best possible (Benchmarking) - Competitor’s Shows you maximum possible result Don’t focus on symptoms, find the root cause

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Improve
D Define M Measure A Analyze I Improve C Control Present recommendations to process owner. Pilot run - Formulate Pilot run. - Test improved process (run pilot). - Analyze pilot and results. Develop implementation plan. - Prepare final presentation. - Present final recommendation to Management Team.

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Control
D Define M Measure A Analyze I Improve C Control

Don’t be too hasty to declare victory.

How will you maintain to gains made?
- Change policy & procedures - Change drawings - Change planning - Revise budget - Training

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Omitting a step in DMAIC? Step Consequences if the step is omitted
1. Define 2. Measure 3. Analyze 4. Improve 5. Control

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Tools for DMAIC
Define
What is wrong?

Measure
Data & Process capability

Analyze
When and where are the defects

Improve
How to get to six sigma

Control
Display key measures

 Benchmark  Baseline  Contract / Charter  Kano Model  Voice of the Customer  Quality Function Deployment  Process Flow Map  Project Management  “Management by Fact” – 4 What’s

 7 Basic Tools  Defect Metrics  Data Collection, Forms, Plan, Logistics  Sampling Techniques

 Cause & Effect Diagrams  Failure Models &  Effect Analysis  Decision & Risk Analysis  Statistical Inference  Control Charts  Capability  Reliability Analysis  Root Cause Analysis  5 Why’s  Systems Thinking

 Design of Experiments  Modelling  Tolerancing  Robust Design  Process Map

Statistical Controls  Control Charts  Time Series Methods Non Statistical Controls  Procedure adherence  Performance Mgmt  Preventive activities  Poke yoke

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Components Two components of Six Sigma 1. Process Power

2. People Power
Tell me, I forget. Show me , I remember. Involve me, I understand.

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6 σ Training
Black Belt

Mentor, trainer, and coach of Black Belts and othe in Master the organization.

Champions

Black Belts

Leader of teams implementing the six sigma methodology on projects.

Delivers successful focused projects usin the six sigma methodology and tools.

Green Belts

Team Members / Yellow Belts

Participates on and supports the project teams, typically in the context of his or her existing responsibilities.

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Six Sigma Organization
Champion Black Belt Green Belt Green Belt Yellow Belt Yellow Belt Black Belt Green Belt Green Belt

Master Black Belt Black Belt Green Belt Yellow Belt Yellow Belt

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6 σ Training
Position in Six Sigma Organisation Senior Executives Champions / Process owners

Typical Training
Executive overview 2/3 Days Champions Training - I 2 days

Expected Role Post Training Provide Leadership

+

Champions Training –II 3 days

Process Mgmt. & Project champion

(Total 5 days) Training / Facilitation skills Project-work

Black-Belt

Week 1

Week 2

Week 3

Week 4

Black-Belt

Master Black-Belt -As Trainer -Coach teams -Facilitate improvement projects

- Part

Green Belt Employees (Yellow-Belt)

1 Week Green-Belt Training 1 / 2 Days core training on Six-Sigma

Project work

of project teams - Sometime lead the teams
- General

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process control & improvement - Project Team Member

Champion
• Plans improvement projects • Charters or champions chartering process • Identifies, sponsors and directs Six Sigma projects • Holds regular project reviews in accordance with project charters • Includes Six Sigma requirements in expense and capital budgets
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Champion
• Identifies and removes organizational and cultural barriers to Six Sigma success. • Rewards and recognizes team and individual accomplishments (formally and informally) • Communicates leadership vision • Monitors and reports Six Sigma progress • Validates Six Sigma project results • Nominates highly qualified Black Belt QualityGurus.com and/or Green Belt candidates

Master Black Belt
Roles Responsibilities - Enterprise Six Sigma expert - Highly proficient in using Six Sigma - Permanent full-time change methodology to achieve tangible business results. agent - Certified Black Belt with - Technical expert beyond Black Belt level additional specialized skills or on one or more aspects of process experience especially useful in improvement (e.g., advanced statistical project management, deployment of Six Sigma analysis, communications, program administration, across the enterprise teaching, project coaching) - Identifies high-leverage opportunities for applying the Six Sigma approach across the enterprise - Basic Black Belt training - Green Belt training - Coach / Mentor Black Belts

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Black Belt
Roles Responsibilities - Six Sigma technical expert - Leads business process improvement projects where Six - Temporary, full-time change Sigma approach is indicated. agent (will return to other duties after completing a two to three - Successfully completes high-impact year tour of duty as a Black projects that result in tangible benefits Belt) to the enterprise - Demonstrated mastery of Black Belt body of knowledge - Demonstrated proficiency at achieving results through the application of the Six Sigma approach - Coach / Mentor Green Belts - Recommends Green Belts for Certification

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Green Belt
Roles Responsibilities - Six Sigma Project originator - Recommends Six Sigma projects - Part-time Six Sigma change - Participates on Six Sigma project agent. Continues to perform teams normal duties while participating - Leads Six Sigma teams in local on Six Sigma project teams improvement projects - Six Sigma champion in local area

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Yellow Belt
Roles Responsibilities - Learns and applies Six Sigma - Actively participates in team tasks tools to projects - Communicates well with other team members - Demonstrates basic improvement tool knowledge - Accepts and executes assignments as determined by team

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Financial Analyst
• Validates the baseline status for each project. • Validates the sustained results / savings after completion of the project. • Compiles overall investment vs. benefits on Six Sigma for management reporting. • Will usually be the part of Senior Leadership Team.
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Thought of the day
• • • • We don't know what we don't know We can't act on what we don't know We won't know until we search We won't search for what we don't question • We don't question what we don't measure • Hence, We just don't know
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Project Selection

The first step to implement Six Sigma

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Sources of Projects
• External Sources:
– Voice of Customer
• What are we falling short of meeting customer needs? • What are the new needs of customers?

– Voice of Market
• What are market trends, and are we ready to adapt?

– Voice of Competitors
• What are we behind our competitors? QualityGurus.com

Sources of Projects
• Internal Sources:
– Voice of Process
• Where are the defects, repairs, reworks? • What are the major delays? • What are the major wastes?

– Voice of Employee
• What concerns or ideas have employees or managers raised? • What are we behind our competitors? QualityGurus.com

Project Selection
• As a team List down at least 20 improvement projects related to your work areas …….

A Problem Statement should be SMART:  Specific - It does not solve world hunger  Measurable - It has a way to measure success  Achievable - It is possible to be successful  Relevant - It has an impact that can be quantified  Timely - It is near term not off in the future QualityGurus.com

Harvesting the Fruit of Six Sigma
Sweet Fruit Design for Repeatability Process Enhancement

Bulk of Fruit Process Characterization and Optimization -----------------------------------Low Hanging Fruit
Seven Basic Tools

-----------------------------------Ground Fruit
Logic and Intuition

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Types of Savings
• Hard Savings:
– Cost Reduction
• Energy Saving • Raw Material saving • Reduced Rejection, Waste, Repair

– Revenue Enhancement
• Increased production • Yield Improvement • Quality Improvement QualityGurus.com

Types of Savings
• Hard Savings:
– Cash flow improvement
• Reduced cash tied up in inventory • Reduced late receivables, early payables • Reduced cycle time

– Cost and Capital avoidance
• Optimizing the current system / resources • Reduced maintenance costs

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Types of Savings
• Soft Savings:
– Customer Satisfaction / Loyalty – Employee Satisfaction

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Cost of implementing
• Direct Payroll
– Full time (Black Belts, Master Black Belts)

• Indirect Payroll
– Time by executives, team members, data collection

• Training and Consulting
– Black Belt course, Overview for Mgmt etc.

• Improvement Implementation Costs
– Installing new solution, IT driven solutions etc.
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What Qualifies as a Six Sigma Project
• Three basic qualifications:
– -There is a gap between current and desired / needed performance. – The cause of problem is not clearly understood. – The solution is not pre-determined, nor is the optimal solution apparent.
How many projects out of 20 now qualify as Six sigma projects? QualityGurus.com

Way forward
• Get Started • Look for low hanging fruits • Even poor usage of these tools will get results • Learn more about Six Sigma

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