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Introduction to Six Sigma

Applying Statistical Analysis to Business Issues

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Objectives
Understand Six Sigma Gain a high-level understanding of the tools methods and application of Six Sigma Learn the basic vocabulary of Six Sigma Understand the roles and responsibilities of Six Sigma practitioners Identify the benefits of Six Sigma as a business improvement methodology

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Agenda
Introduction Methodology Roles and Responsibilities Why Six Sigma How to Implement Six Sigma

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Introduction
What Six Sigma means What Six Sigma is The concept of variation Performance and defects

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What Six Sigma Means

Past definitions of quality focused on conformance to standards, as companies strived to create products and services that fell within certain specification limits. -Mikel Harry and Richard Schroeder

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What Six Sigma Means

...this Six Sigma journey will change the paradigm from fixing products so they are perfect to fixing processes so that they produce nothing but perfection, or close to it. - Jack Welch

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What Six Sigma is

Goal Benchmark Metric Philosophy

Value

Vision

Symbol Tool

Method

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The Concept of Variation

Variety may be the spice of life but, for customers, consistency is King!

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The Concept of Variation

Every Everyrepeatable repeatableprocess processexhibits exhibitsvariation variation

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Measuring Variation

We )) Wemeasure measurevariation variationusing usingstandard standarddeviation deviation((

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Performance and defects

LSL Defects USL Defects

Reducing ReducingVariability VariabilityIs IsThe TheEssence Essenceof ofSix SixSigma Sigma

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Performance and Yield

2 3 4 5 6
Defects Defectsper per Million Million opportunities opportunities Yield Yield

308,537 66,807 6,210 233 3.4

69.20% 93.32% 99.38% 99.98% 99.99%

3 3 to to6 6 20,000 20,000X XImprovement...A Improvement...ATrue TrueQuantum QuantumLeap Leap

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Performance in Context
99% Good (3.8 Sigma) 99.99966% Good (6 Sigma)

20,000 lost articles of mail per hour Unsafe drinking water for almost 15 minutes each day 5,000 incorrect surgical operations per week 340 Passengers with Misplaced Luggage every day 200,000 wrong drug prescriptions each year

Seven articles lost per hour One unsafe minute every seven months 1.7 incorrect operations per week 6 Passengers with Misplaced luggage each month 68 wrong prescriptions per year

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Methodologies
Two distinctly different methodologies
DMAIC
Define Measure Analyze Improve Control When a process needs to be improved

DMADV
Define Measure Analyze Design Verify When a process needs to be invented (aka. DFSS-Designed For Six Sigma)

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The Improvement Methodology

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Define
Define Define
Measure Measure Analyze Analyze Improve Improve Control Control

Deliverables 1. Identify customer wants 2. Project charter 3. High-level process map

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Define Define

Identify Customer Wants

Who are your customers?

Internal vs. external customers

Collect VOC-Voice Of Customer data

Interviews Surveys Complaints Focus groups

Define CTQs-Critical To Quality measures

How does the customer judge your product or service?

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Define Define

Project Charter

Project scope Business case Cost benefit Roles & responsibilities Milestones Deliverables

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Define Define
1) 2) 3) 4) 5) INPUTS Part Request Physical Inventory Call Transfers Parts Customer/Equipment data
Create Part Request

High-level Process Map

PROCESS

SIPOC / COPIS
OUTPUTS 1) Part Usage 2) Inventory 3) Credit/Debit to P&L 4) Part 5)
Fulfill & Ship Part to Vendor / NPC

Part Required for a Service Call

Action Part Request

Receive Part into WIP

Use / Consume Part

Part Removed from WIP

1) 2) 3) 4) 5) 6)

SUPPLIERS Technicians Buyers NPC Refurb Vendors NSC

CUSTOMERS 1) 2) 3) 4) 5) Finance Technicians Buyers NPC Vendors

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Measure
Define Define

Measure Measure

Analyze Analyze

Improve Improve

Control Control

Deliverables 1. Identify CTQ characteristic 2. Collect data 3. Calculate sigma

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Measure Measure

Identify CTQ Characteristic

Getting down to the thing that the project will target using tools like:
Detailed process mapping QFD-Quality Functional Deployment Cause & effect analysis FMEA-Failure Modes & Effects Analysis

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Measure Measure
Some Technicains update part receipt through Antennea

Identify CTQ Characteristic

Consumable Dispose of part, part out of WIP Some Technicians update part usage Some Technicians update part receipt NonConsumable GE owned Return to NPC/ branch logistics (A) NPC/branch logistics fulfill part from WIP

Page 1

SomeTechnicains call NSC to have part receipt updated

Technician Performs service

Was part used?

Yes Technician holds part - Part still in WIP

X-ship? No Some Technicians continue on call W/O updating part receipt Part received by NPC/branch logistics (A) Return part direct to vendor

Return part?

Yes

No Technician holds part - Intransit / Open P/O

Ship part to NPC/ branch logistics

Physically ship part w/ no update, part still in WIP

Technicain advises P/E or Logistics of part return

Part received by NPC/branch logistics

Detailed Process Mapping

P/E or logistics fulfill part from WIP

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Measure Measure

Identify CTQ Characteristic

Quality Functional Deployment (QFD)

http://www.npdsolutions.com

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Measure Measure

Identify CTQ Characteristic

Cause & Effect Analysis, or Fishbone, or Ishikawa diagram

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Measure Measure
S ys t e m S u b s ys t e m C o m po ne nt D e s ig n Le a d C o re T e a m

Identify CTQ Characteristic

Potential Failure Mode and Effects Analysis (Design FMEA)
Ke y D a t e F M EA N um be r P re p a re d B y F M EA D a te R e v is io n D a t e P age

Design Verification Process

Houston Mayer See Project III R1 Report

Project III Houston Mayer 22/10/1999 21/08/2000

1 of 6

A c t io n R e s u lt s P o t e n t ia l F a ilu re M o d e ( s ) P o t e n t ia l Effe c t(s ) o f F a ilu re S e v P o t e n t ia l C a us e (s )/ M e c h a n is m ( s ) o f F a ilu re P r o b C u rre n t D e s ig n C o n t ro ls D e t R P N R e c o m m e nde d A c t io n ( s ) R e s p o n s ib ilit y & T a rg e t C o m p le t io n D a te

It e m / F u n c t io n

A c t io n s T a k e n

Customer sends in a quote request for product.

System, Softw are, Integration and Shipping requirements overlooked by Data entry error

Customer needs not fully met by delivered system. System compatability requirements not evaluated by config. tool. On time delivery and integraty of the product may be compramised

7 Human error

1 Design configuration tool.

21 Use configuration tool w hen available.

Closed 10/21/99

Requirement entered and verified by Inside Sales in config. tool. Sales

3 Human error

1 Order verified by a configuration tool.

9 Continue order Closed verification by 10/21/99 configuration tool.

Specific

7 Requirements Overlooked.

3 Customer Inspection Instruction/ Special Handling Codes P rocess

identifies need packing, for CII or SHC labeling and shipping requirements may not be

Jun-00 63 P ublish comprehensive procedure for the 1st Article P rocess.

Customer shipping requirements review ed by quality assurance in

FMEA-Failure Modes & Effects Analysis

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Measure Measure

Collect Data

Create a data collection plan Perform a MSA

Measurement Systems Analysis
Gage R & R Attribute R & R Test re-test study

Collect data

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Measure Measure

Calculating Sigma
X

Calculate process capability

Short term (ZST=ST) Long term (ZLT=LT) The 1.5 Shift
LSL Defects

USL Defects

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Analyze
Define Define Measure Measure

Analyze Analyze

Improve Improve

Control Control

Deliverables 1. Identify possible causes 2. Narrow down to root cause 3. Confirm the benefit

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Analyze Analyze

Identify Possible Causes

Identify sources of variation using:

Process map analysis Graphical analysis Brainstorming

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Analyze Analyze

Narrow To Root Causes

Regression Plot
Y = 1026.02 + 98.0500X R-Sq = 87.9 %

Confirm statistically significant factors through:

Hypothesis testing DOE-Design Of Experiment

P value = 0.000

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Analyze Analyze

Confirm The Benefit

Ensure that the effort needed to rectify the issues identified are financially feasible
Basic ROI-Return On Investment or cost benefit analysis

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Improve
Define Define Measure Measure Analyze Analyze

Improve Improve

Control Control

Deliverables 1. Generate and select solution 2. Implement solution 3. Confirm results

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Improve Improve

Generate & Select Solution

Pugh Matrix
Solution Alternatives
Benchmark Option Importance Rating Alternative 1 Alternative 2 Alternative 3 Alternative 4 Alternative 5

Solution generation through structured brainstorming Solution Selection based upon viability and trade-offs

Concept Selection Legend Better + Same S Worse -

Key Criteria Criteria 1 Criteria 2 Criteria 3 Criteria 4 Criteria 5 Criteria 6 Criteria 7 Criteria 8 Sum of Positives Sum of Negatives Sum of Sames Weighted Sum of Positives Weighted Sum of Negatives Totals 4 2 3 2 5 6 10 8 + S + S + S 3 2 3 16 9 7 S + S + S 2 3 3 13 13 0 + S + S + S 3 2 3 16 9 7 + + + + S + S 5 1 2 21 6 15 + S + + S 3 3 2 17 12 5 + S + S + S 3 2 3 14 10 4

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Improve Improve

Implement Solution

Comprehensive pilot planning

Detailed process maps SOP-Standard Operating Procedures Monitoring plans Contingency planning Risk management plan

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Improve Improve

Confirm Results

Ensure that an improvement has been made and is consistent with expectations
Learn and adapt Re-assess measurement systems Adjust improvements as required Re-calculate sigma Confirm improvement is statistically significant

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Control
Define Define Measure Measure Analyze Analyze Improve Improve

Control Control

Deliverables 1. Standardization and documentation 2. Process monitoring and control 3. Closing the project

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Control Control

Standardize and Document

Rollout confirmed solution across business with updated information from pilot
Detailed process maps SOP-Standard Operating Procedures Monitoring plans Contingency planning Risk management plan

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Control Control Ensure project xs and ys remain in statistical control

SPCStatistical Process Control

Monitoring and Control

I and MR Chart for Days
60 50 40 30 20 10 0 10 20 30 40 50 60 70 LCL=14.77 222 Mean=34.19 22 66 UCL=53.62

Subgroup 40

Individual Value

Moving Range

30 20 10 0

UCL=23.86

R=7.303 2 2 2 LCL=0

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Control Control

Close the Project

Complete project documentation Complete project sign-off Handoff documentation to process owner Celebrate!

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Roles and Responsibilities

Champions Master Black Belts

Quality Leader & BQC Green Belts Black Belts

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Champions & Master Black Belts

Champions
Create the vision of Six Sigma Define the path to implement Six Sigma across the organization Carefully select high-impact projects Develop a comprehensive training plan for implementing the Six Sigma strategy Ask Black Belts and Green Belts many questions to ensure that they are properly focused Make sure that project opportunities are acted upon by organizations leadership and the finance department Recognize people for their efforts

Master Black Belts

Understand the big business picture Develop and deliver training to various levels of the organization Assist in the identification of projects Coach and support Black Belts in project work Participate in project reviews to offer technical expertise Take on leadership of major programs Facilitate sharing of best practices across the corporation

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Black Belts & Green Belts

Black Belts Act as Six Sigma experts Lead and direct teams in project execution Coach and Mentor Green Belts Ensure that the results are sustained Identify potential barriers to project completion Report progress of both BB and GB projects to appropriate leadership Green Belts Function as Green Belts on a part-time basis Participate on Black Belt projects as content experts Lead Green Belt projects Identify potential Six Sigma projects

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Return on Investment
In 2000 GEs gross annual benefit was $6.6 billion. CEO Larry Bossidy brought AlliedSignal back from the verge of bankruptcy. Cumulative benefits $2 billion in direct savings Raytheon improved its cost of doing business by more than $1 billion annually in 2001. Average financial benefit per project $120,000

Motorola claims a Six Sigma ROI of between 10:1 & 50:1

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Performance Improvements
Increased profits Decreased operating costs Improved customer satisfaction Decreased cycle-time in processes Increased employee morale

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How To Implement Six Sigma

Factors for success
Leadership Communication Rewards & recognition Training Launching the initiative Implementation Sustaining the effort and return

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Leadership Buy-in
Clear, unwavering direction on deploying Six Sigma Development of a strategy for deployment Personal involvement Willingness to revise company policies and procedures to be supportive Insistence on tangible results

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Communication
Clear and precise communication when launching the initiative Frequent updates on initiative status Consistent communication plan

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Rewards and Recognition

Rewarding Green Belts for project completion Recognizing team members for working on projects Recognizing major milestones in project progress

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Training Black Belt Champion Green Belt Awareness

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Launching the Initiative

1. 2. 3. 4. 5. 6. 7. Set vision and goals for Six Sigma initiative Develop deployment plan Develop clear implementation plan Develop Six Sigma budget Train Champions and BQC members Select Green Belts for first round of training Select Six Sigma Leader

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Implementation
1. 2. 3. 4. 5. Select first round of projects Develop reward and recognition strategy Train Green Belts Develop project review system Identify potential Black Belts within the organization

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Continue Momentum
Well defined training strategy Monitoring system to ensure gains are sustained Management review of Initiative Continue to have projects ready to start Recruit and train Black Belts

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Sustaining the Return

Continue to budget for Six Sigma Constant communication strategy Continuous training and improvement

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Information Sources

Six Sigma Software

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