o

Greek letter, used

for denoting process variation
What is sigma
Specification is necessary
to know what is
satisfactory.
2.30 0.05 mm C
Meals in hotel room to be served
within 30 minutes of ordering
Specification
Defect
A failure to meet customer/performance
standard
A leaky gear box
A horn failure
A lost reservation at hotel
A statement error
A dimension outside the specification limit
Dinner served beyond the prescribed time limit
Any unit which has one or
more defects is defective
Defective
2.30 2.28 2.30 2.32 2.31 2.32 2.27 2.30 2.31 2.29
2.29 2.28 2.28 2.29 2.29 2.27 2.29 2.30 2.30 2.30
2.30 2.30 2.32 2.30 2.30 2.29 2.32 2.31 2.33 2.29
2.32 2.28 2.31 2.31 2.32 2.30 2.29 2.31 2.30 2.31
2.28 2.29 2.28 2.30 2.30 2.30 2.30 2.33 2.28 2.29
2.27 2.32 2.28 2.29 2.31 2.31 2.31 2.31 2.28 2.29
2.31 2.30 2.29 2.30 2.30 2.31 2.30 2.29 2.32 2.31
2.30 2.31 2.31 2.29 2.29 2.31 2.29 2.28 2.31 2.31
2.33 2.32 2.32 2.30 2.30 2.31 2.30 2.29 2.28 2.31
2.31 2.31 2.30 2.29 2.31 2.30 2.29 2.29 2.29 2.29
Data table
0
5
10
15
20
25
2
.
2
6
7
2
.
2
7
4
2
.
2
8
1
2
.
2
8
8
2
.
2
9
5
2
.
3
0
2
2
.
3
0
9
2
.
3
1
6
2
.
3
2
3
2
.
3
3
0
F
r
e
q
u
e
n
c
y
Pattern of population
30 35 40 45 50 55 60 65 70
Curve spreads from - to +

100% population lies between - to +
Characteristics of normal pattern
Measurement of location
Mean ()

Measurement of spread
Standard deviation (o)
Measurements of location and
variation
Point to note
Since curve extends to - and +
some of the units will have dimensions
outside the specification limits
USL LSL
Measuring quality characteristics
in terms of o distance from target?
30 35 40 45 50 55 60 65 70
o = 3
1o
53
2o
56
3o
59
4o
62
It is the distance from the target to
the upper or lower specification
limits (half the tolerance),
measured in terms of standard
deviation, o, the inherent variation
of process.
Sigma level of quality
Target
LSL
USL
ko
ko
o
A ko process
o 2
) ( LSL USL
K

=
USL
ko
Target
o
A k o process for one side specification
limit
16 17 18 19 20 21 28 23 24 25 26 27 22
LSL USL
% with in specification = 68.27

DPMO without shift = 3,17,310
1o 1o
One Sigma process (o = 2)
16 17 18 19 20 21 28 23 24 25 26 27 22
LSL USL
% with in specification = 95.45

DPMO without shift = 45,500
2o 2o
A two Sigma process (o = 1)
16 17 18 19 20 21 28 23 24 25 26 27 22
LSL USL
% with in specification = 99.73

DPMO without shift = 2,700
3o 3o
Three Sigma process (o = 0.667)
16 17 18 19 20 21 28 23 24 25 26 27 22
LSL
USL
% with in specification = 99.9937

DPMO without shift = 63
4o 4o
Four Sigma process (o = 0.5)
% with in specification = 99.999943

DPMO without shift = 0.52
16 17 18 19 20 21 28 23 24 25 26 27 22
LSL USL
5o 5o
Five Sigma process (o = 0.4)
% with in specification = 99.9999998

DPMO without shift = 0.002
16 17 18 19 20 21 28 23 24 25 26 27 22
LSL USL 6o 6o
Six Sigma process (o = 0.333)
16 17 18 19 20 21 28 23 24 25 26 27 22
LSL USL
1 o
6 o
5 o
4 o
3 o
2 o
Sigma processes at A glance
DPMO - Best
Sigma level DPMO
One 3,17,310
Two 45,500
Three 2,700
Four 63
Five 0.52
Six 0.002
Keeping a process at the target,
all the time, is impossible.

A process shift of 1.5o was observed at
Motorola.

Now widely agreeable.
A practical situation
LSL USL
1.5o 1.5o
16 17 18 19 20 21 28 23 24 25 26 27 22
Allowable shift of 1.5 o
Sigma level DPMO (with shift)
1 697700
2 308700
3 66810
4 6210
5 233
6 3.4
DPMO With shift
Comparison Best VS Worst Possible
Sigma level
DPMO
(without shift)
DPMO
(with shift)
1 3,17,310 6,97,700
2 45,500 3,08,700
3 2,700 66,810
4 63 6,210
5 0.52 233
6 0.002 3.4
What is Six Sigma?
Six Sigma refers itself to a statistically
derived performance target of
operating with only 3.4 defects for
every million activities or
opportunities.
Basic Philosophy of Quality
Whatever measured must be recorded
Records must be analyzed using
statistical techniques.
Information obtained must be acted
upon.
An item being processed or the final
product or service being delivered to
customer.
A dimension
A car
A house loan
A room service for serving dinner
A bank statement
Unit
inspected units of Number
discovered defect of Number
= DPU
Defects per Unit, DPU
Yield
Yield, Y is the measure that tells us
the probability that the process
would have Zero Failure or will
not have any nonconformity.
DPU
Y

=
Y is the probability of getting
a unit right first time
Example - Yield
At station No.1, 5 defects were
observed in 487 units produced.
What is the yield of the process?
98935 . 0
01071 . 0
487
5
01071 . 0
=
=
=
=
=

DPU
Y
DPU
Rolled throughput yield, Y
RT
If focus only on the defect rate at the
end, we lose sight of the rework that
occurs within the process.

Rework means having a
Hidden Factory
Calculation - Rolled throughput yield
Y
1
Y
2
Y
3
Y
n-1
Y
n
[
=

=
=
n
i
i
n n RT
Y
Y Y Y Y Y
1
1 2 1
......
Most products and services have
multiple customer requirements and
therefore there can be several
chances or opportunities for a
defect to appear.
Defect opportunity
A room service can be defective on
account of:
1.Dishes cold
2.Dirty cover on food articles
3.Dinner served late
4.Item served that was not ordered
5.Bland taste.
There are 5 opportunities for a
customer to be unhappy
Example defect opportunity
Defects per Opportunity
ies) opportunit of (# Units) of (#
defects of #
DPO

=
ies) opportunit of (# Units) of (#
defects of #
DPO

=
Example
- # of units = 330
- # of opportunities (type of defects) = 7
- # total number of defects = 59
025 . 0
7
=

=
330
59
DPO
Defects per Opportunity
Defects per Million Opportunities
DPMO = DPO 10
6
ies) opportunit of (# Units) of (#
10 defects) of (#
DPMO
6

=
DPMO
Defects per Million Opportunities

It simply indicates how many errors would
show up if there are one million of
activities where defect can occur.
This way it can equate a car with
simple pin.
Performance measures
Example DPMO, late coming
Number of participants = 32
Number of breaks = 6 per day
Course duration = 6 days
Total number of opportunities = 32 x 6 x 6
Not coming at the agreed time (late) > 5 minutes
Number of occasions participants = 183
failed to come in time (defect)
DPMO =

=
183 10
32 6 6
14120
6
SL=08406 2937 222 . . . ln( ) + DPMO
SL= 1.5 + normsinv(success rate)
= 1.5 + normsinv(1-failure rate)
Formulae for Sigma level
performance
Situation
Baggage handling
at airport
Number of passengers
traveled in week
40, 000
Average number of baggage
per passenger
2
Total number of baggage not
arrived with flight per week
160
Calculate DPMO and Sigma Performance Level
Example
Solution
002 . 0
2000
40000 2
10 160
6
=
=

=
p
DPMO
Units ies Opportunit
defects of Number
Solution
SL DPMO = +
= +
= +
=
08406 2937 222
08406 2937 222 2000
08406 3535
43756
. . . ln( )
. . . ln( )
. .
.
Sigma level = 1.5 + normsinv(1-0.002)
= 4.378
Level of Competition
Sigma DPMO
Cost of poor
quality
(% of sales)
Competitive
level
6
6
3
3
.
.
4
4
<
<
1
1
0
0

5
5
2
2
3
3
3
3
1
1
0
0

1
1
5
5

W
W
o
o
r
r
l
l
d
d
c
c
l
l
a
a
s
s
s
s

4
4
6
6
,
,
2
2
1
1
0
0
1
1
5
5

2
2
0
0

3
3
6
6
6
6
,
,
8
8
0
0
7
7
2
2
0
0

3
3
0
0

I
I
n
n
d
d
u
u
s
s
t
t
r
r
y
y

a
a
v
v
e
e
r
r
a
a
g
g
e
e

2
2
3
3
0
0
8
8
,
,
5
5
3
3
7
7
3
3
0
0

4
4
0
0

1
1
6
6
9
9
0
0
,
,
0
0
0
0
0
0
>
>
4
4
0
0

N
N
o
o
n
n

c
c
o
o
m
m
p
p
e
e
t
t
i
i
t
t
i
i
v
v
e
e


From
sigma
level
To sigma level
3 4 5 6
2 5 55 1485 1,02,465
3 11 297 20,493
4 27 1863
5 69
Times improvement
3o 4o
10
5o
30
6o
70
Improvement times
Event 3-Sigma 6-Sigma
Wrong drug
prescription
54,000/year 1 in 25 years
Unsafe drinking
water
2 hours/month
1 sec in 25
years
Incorrect surgical
operation
1,350 / week 1 in 20 years
Lost article in post
54,000 per
hour
35 in a year


3o VS 6o Supplier
Performance Gap
Bill Smith
Six Sigma Born 0n 15 January 1987
Father of Six Sigma sigma
Number of repairs in factory
F
i
e
l
d

F
a
i
l
u
r
e
s

Discovery of bill smith
To reduce field failures, much higher level
of internal quality is required.
Done right, improving quality will reduce
cost.
Cost of correcting poor quality ranged
$800-$900 million per year.
Realization at Motorola
100 times
4 years
Desire of Bob Galvin
Before manufacturing a product
determine:
The product characteristics that will
satisfy customer.
Decide whether product characteristics
can be met with:
Product design
Manufacturing processes
Material used
Six Sigma approach at Motorola
Six Sigma approach at Motorola
Develop design tolerance to satisfy
customer.
Have measurements to establish
process variation.
Hone product design and manufacturing
to get desired results.
Six Sigma at Motorola
Todays existence due to Six Sigma
Invented for survival
Method for tracking companys
performance vis a vis customer
requirement
Improvement 10X in two years or 100X in
four years
Five fold growth in sales
Annual increase of profit 20%
Cumulative saving $14 Billion
Annual stock price gain 21.3 %
Results of Six Sigma at Motorola
Launched Six Sigma in 1995
Profit by 1998 $750 Million
Profit by 1999 $ 1.5 Billion
Cutting invoice defect by 98%
Streamlining of contract review - $1 Million/year
GE Medical body scan time 3 minutes to 1 minute
GE Mortgage Call reaching person 76% to 99%
Bottom Line Improvement at GE
The best Six Sigma project begin not inside
the business but outside it.
Focused on answering the question how
can we make customer competitive?
Knowing what is critical to customer and
providing it.
Explanation of Jack Welch
One thing we discovered with certainty
is that anything we do that makes the
customer more successful, inevitably
results in financial return to us.
Jack Welchs Important Discovery
Savings of $600 million per year
Reduction in time from drawing to
certification of aircraft engines from 42
months to 33 months.
Increase in productivity by 6 %
Increase in market share 27% annually
Results at Allied Signals
Redefine Six Sigma
Six Sigma provides companies with a
series of interventions and statistical tools
that can lead to breakthrough profitability
and quantum gains in quality, whether the
product of a company are durable goods or
services.
Six Sigma
Six Sigma
The Six Sigma strategy involves the use
of statistical tools within structured
methodology for gaining the knowledge
to achieve better, faster, and lower-
cost products and services.
Another Way of Defining Six Sigma
Six Sigma is a sweeping Cultural
Change effort to position a company
for greater customer satisfaction,
profitability, and competitiveness.
More than just numbers it is a
statement of our determination to
pursue a standard of excellence
using every tool at our disposal and
never hesitating to reengineer the
things we do.
Six Sigma at Allied Signals
Six sigma is driven by close understanding
of the needs of customer, disciplined use
of factual data, and statistical analysis
while paying diligent attention to managing,
improving, and reinventing business
processes.
Driving Force Behind Six Sigma
Six Sigma is a
business initiative,
rather than
quality initiative
How Six Sigma is Different?
With traditional approach
Provide quality in such a way that
creates economic worth for:
customer
employees
share holders
corporation
all at the same time
With Six Sigma Approach
Forces organisations to
Re-examine how the work gets done
Simplify the system and process
Improve the capability of the process
Find ways to control systems and
process permanently.
What Six Sigma Does?
What Mr Welch of GE Says?
Todays paper
is
tomorrows Fish-wrap
P-R Criteria
A B C X
Effort to Improve
Support & Stimulate
P-Criteria
Performance
Control with
Carrot & Stick
R-Criteria
A Process
A product or service is
outcome of a process.
Type of Processes
Type of
process
Industrial
(80% revenue
from machines or
equipment)
Manufacturing
Commercial
(80% revenue
from human
activities)
Material order
Processing
customer order
Payroll
A Process
Key Process Output Variable, Y = f(X)
X1
Input
X2
X3
X4
X5
X6
Value addition
Y
Output
Process Management
Process management involves planning and
administering the activities necessary to:
achieve a high level of performance in a
process
identify opportunities for improving quality
and operational performance.
Process Control Model
Man
Machine
Material
Methods
Measurement
Milieu
Input
Customer
Output
Product
Service
Process
Process
Data
SPC
Voice of
process
Changing
needs
Voice of customer
Cost Mathematics
Selling Price = Cost price + Profit


Profit = Selling price - Cost price

Value Added & Non Value Added
Activities
Cost
Price
Cost of
non value added
activities
Cost of
value added
activities
= +
10% 90%
50% 50%
Non Value Added Activities
Waiting
Transportation
Inventories
Non conforming product
Non involvement of the people
Goal Post Strategy
Sudden
Loss
Sudden
Loss
LSL
USL
Target
Good product
Bad product
Interpretation of Data
Sudden
Loss
Sudden
Loss
LSL
USL
Target
A B C
Taguchis Loss Function
USL LSL
Best
Good Good
Fair Fair
Poor Poor
C
u
s
t
o
m
e
r


D
i
s
s
a
t
i
s
f
a
c
t
i
o
n

Loss to the Society
- increase in deviation from the target
- increase in the variation of the
process
Loss to society increases with
What should be Our Prime Goal?
Reduce
Deviation from target
Variation in the process
Fords Case of Noisy Automatic
Transmission
LSL
USL
American
(75%)
Mazda
(27%)
New Thinking..
Our new quality thinking should be to
reduce variability around the nominal
as operating philosophy for never
ending Quality Improvement.
Benefits of Six Sigma #1
Generates sustained success.
- generally business life of a product
is 3 years.
- To survive we must have double
digit growth.
- constantly innovates and
restructures the organisation.
Benefits of Six Sigma #2
Sets performance goals
for every one
uses common business
frame work
ensures consistency for
meeting customer
requirements.
Benefits of Six Sigma #3a
Enhances value to customer

We want to make our quality so
special, so valuable to customer,
so important to their success that
our products become their only
real choice.
Jack Welch
Benefits of Six Sigma #3b
Good and defect free product
does not guarantee success.
The focus on customers in Six
Sigma means what value means
to customer and planning how to
deliver them profitably.
Benefits of Six Sigma #4
Accelerates the rate of improvement

100 times improvement in four years
at Motorola.
it helps companies not only to
improve performance, but
improve the improvement

Benefits of Six Sigma #5
Promotes Learning and Cross Pollination
Accelerates development and sharing of
new ideas throughout the organisation.
Six Sigma is data based and therefore
applicable to any functional area.
Benefits of Six Sigma #6
Executes Strategic Change
Launching new ventures
Entering new markets
Introducing new product
Acquiring new organisation
are now routine.
Six Sigma facilitates change over.
Proven Benefits of Six Sigma
Cost reduction
Productivity improvement
Market-share growth
Customer retention
Cycle time reduction
Defect reduction
Cultural change
Product / service change
Define
Identify
Customers and their priorities
Projects that meets the business
objective
Critical to quality requirements

Measure
Determine how to measure the
process and how it is performing.

Identify key internal processes
that influences CTQs and their
impact on nonconformance.
Analyse
Determine the most likely causes
of the defect.
Understand impact of key
variables on generation of defect.
Determine key variables that
cause variation
Improve
Identify the means to remove causes of
nonconformance.
Confirm the key variable and quantify their
effects on the CTQ requirements.
Identify the maximum acceptable ranges of
key variables.
Modify the process to stay in acceptable
range.
Control
Determine how to maintain
improvements.

Ensuring key input variable
remain within range.
What is Statistics?
A science that deals with:
Collection of data
Summarization of data
Analysis of data
Drawing information from data
Why statistics?
More economical to assess a sample
and predict the properties of population
from which the sample was drawn.

Prediction can be with degree of
confidence
Population Sample Model
Base
population
Sample
Information
decision
Yes/pass
No/fail
Judgment
Study
Data
Measurement
Process Redesign
Complicated
process
Simplified process
Disconnect
Bottleneck
Redundancy
Rework loop
inspection
CE-Diagram for Defective Items
Defective
Items
Materials
Method
Machine Man
Source
Procedure
Layout
Mood
Attitude
Training
Shape
Wobble
Accuracy
Make
Pareto Analysis For Prioritization
0
50
100
150
200
A B C D E F G H
Events
F
r
e
q
u
e
n
c
y
Histogram
0
5
10
15
20
25
70 72 74 76 78 80 82 84 86 88 88
Bin
F
r
e
q
u
e
n
c
y
Normal Probability Plot
5
7
9
11
13
-3 -2 -1 0 1 2 3
Z
X
Used for assessing:
Normal distribution
Distribution dealing with life of product
Equality of variances of different sample
Gauge Repeatability &
Reproducibility Studies
Reproducibility
Repeatability
Inspector
A
Repeatability
Inspector
B
Variable Scale
Run chart
40
45
50
55
60
0 5 10 15 20
Time Sequence
X
Control chart
46
48
50
52
54
0 5 10 15 20 25
Subgroup No.
M
e
a
n
0.0
2.0
4.0
6.0
8.0
10.0
12.0
0 5 10 15 20 25
Subgroup No.
R
a
n
g
e
Process capability studies
40 42 44 46 48 50 52 54 56 58 60
LSL
USL
Mean T
Scatter Diagram
40
50
60
70
80
90
100
40 50 60 70 80 90 100
Quiz Average
F
i
n
a
l

A
v
e
r
a
g
e
Realistic Tolerance and Realistic
Specification
50.0
55.0
60.0
65.0
70.0
100 105 110 115 120 125 130
Air Pressure
W
a
l
l

T
h
i
c
k
n
e
s
s
Realistic Tolerance

Analysis of Variance
Identifying which of the factors are
responsible for variation in output Quality
characteristics.
One way ANOVA
Two way ANOVA
GRRS, DOE, Process Capability,
Relationship
Correlation & Regression Analysis
X2
X4
Y X3 X1
Y = f(X)
DOE
Cumulative Sum Graph
0
5
10
15
20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Sample No.
C
U
S
U
M