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CUSTOMER &S

Cix SigmaINTELLIGENCE
OMPETITIVE

S S IX
FOR SYSTEMS INNOVATION & DESIGN
IGMA

DEPARTMENT OF STATISTICS
REDGEMAN@UIDAHO.EDU OFFICE: +1-208-885-4410
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
DR. RICK EDGEMAN, PROFESSOR & CHAIR – SIX SIGMA BLACK BELT
Dr. Rick L. Edgeman, University of Idaho
S S
Six Sigma
IX IGMA
Introduction to Six Sigma

DEPARTMENT OF STATISTICS
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
S S
Six Sigma
IX IGMA
a highly structured strategy for acquiring, assessing, and
applying customer, competitor, and enterprise
intelligence for the purposes of product, system or
enterprise innovation and design.

DEPARTMENT OF STATISTICS
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
“Often, problems are knots with
many strands, and looking at
those strands can make a problem
seem different.”

Mr. Rogers

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma is …
a highly structured strategy for acquiring, assessing, and applying
customer, competitor, and enterprise intelligence for the purposes
of product, system or enterprise innovation and design.
Innovation Algorithm
DMAIC (Define-Measure-Analyze-Improve-Control)
Design for Six Sigma Algorithm
DMADV (Define-Measure-Analyze-Design-Verify)
Makes Integrative Use Of:
Various strategies and tools from Statistics, Quality, Business,
Engineering and … ???

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
SixO
Sigma
rganizations
• GE … All 300,000+ GE employees must Rapidly Increasing Areas of Application.
be Six Sigma certified. All new GE
products developed using the “Design for – Healthcare – GE Heathcare - SLC
Six Sigma” (DFSS) approach.
• 3M … New CEO (from GE) requires all – Financial,
3M employees to become Six Sigma – Military – NSWC, Pentagon, etc.
certified.
• Dupont • Fueled by:
• AlliedSignal • Strategic Contexts.
• Sun Microsystems • Notorious bottom-line orientation & results.
• Raytheon • Adaptable to multiple bottom lines.
• Motorola • Process orientation: rigorous and systematic
• Boeing approaches to innovation and design.
• Lockheed-Martin • Focus on the customer.
• Bank-of-America • Successful track record elsewhere.
• American Express • “Industry Buzz”.
• HSBC
• SAS Institute

While Six
Client, Enterprise Sigma is new
& Competitive at, for example,
Intelligence 3M
for Product, – its benefits
Process & SystemsatInnovation
others of& Design
these organizations is measured
Dr. Rick L. Edgeman,in University
the multi-billions
of Idaho of US dollars.
Six Sigma
Quality is a state in which value entitlement is realized for the
customer and provider in every aspect of the business relationship.

Business Quality is highest when the costs are at the absolute


lowest for both the producer & consumer.

Six Sigma provides maximum value to companies in the forms of


increased profits and maximum value to consumers with high-
quality products and services at the lowest possible cost.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
SixSigma
Why is Six SigmaImportant?
Cost of Poorly Performing
The Processes
σ level DPMO CP3
Villain
2 308,537 Not
Applicable
3 66,807 25%-40% of sales
4 6,210 15%-25% of sales
5 233 5%-15% of sales
Sigma (σ ) is6 a measure 3.4 < 1% relating
of “perfection” of salesto process
performance capability
Each sigma shift provides… the net
a 10% “bigger the
income better.” A process
improvement
operating at a “Six Sigma” level produces only 3.4 defects
per million opportunities (DPMO) for a defect. Without
dedication of significant and appropriate attention to a
process, most processes in leading companies operate at a
level between 3 and 4 sigma.
Cost of Poorly Performing Processes (CP3)
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Cost of Poorly Performing Processes
 The cost to deliver a quality product can account for as much as
40% of the sales price.
 For example, a laser jet printer purchased for $1,000 may have
cost the manufacturer $400 in rework just to make sure that you
took home an average-quality product.
 For a company whose annual revenues are $100 million and
whose operating income is $10 million, the cost of quality is
roughly 25% of the operating revenue, or $25 million.
 If this same company could reduce its cost of achieving quality by
20%, it would increase its operating revenue by $5 million – or
50% of the current operating income.
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
What Does Six Sigma
Six Sigma Tell Us?

… and the Hero •



We don’t know what we don’t know.
We can’t do what we don’t know.
• We won’t know until we measure.
• We don’t measure what we don’t value.
• We don’t value what we don’t measure.
• Typical Results: companies that properly implement
Six Sigma have seen profit margins grow 20% year after
year for each sigma shift (up to about 4.8s to 5.0s. Since
most companies start at about 3s, virtually each
employee trained in Six Sigma will return on average
$230,000 per project to the bottom line until the
company reaches 4.7s. After that, the cost savings are
not as dramatic.
• However, improved profit margins allow companies to
create products & services with added features and
functions that result in greater market share.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
 Six Sigma Affects Six Areas Fundamental
to Improving a Company’s Value:
1. Process Improvement
2. Product & Service Improvement
3. Investor Relations
4. Design Methodology
5. Supplier Improvement
6. Training & Recruitment

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Six Sigma vs. TQM
TQM Terminology Six Sigma Improvement Terminology

•Identify the Project •Define


•Establish the Cause
•Diagnose the Cause •Measure
•Analyze
•Remedy the Cause •Improve
•Hold the Gains •Control
•Replicate Results •Replicate
•Nominate New Projects

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Values of Six Sigma Organizations
Issue Classical Focus Six Sigma Focus
Analytical Perspective point estimate variability
Management cost & time quality & time
Manufacturability trial & error robust design
Variable Search one-factor-at-a-time design of experiments
Process Adjustment tweaking process control charts
Problems fixing prevention
Problem solving expert based system based
Analysis experience data
Focus product process
Behavior reactive proactive
Suppliers cost relative capability
Reasoning experience based statistically based
Outlook short-term long-term
Decision Making intuition probability
Approach symptomatic problematic
Design performance producibility

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Values of Six Sigma Organizations
Issue Classical Focus Six Sigma Focus
Aim company customer
Organization authority learning
Training luxury necessity
Chain-of-command hierarchy empowered teams
Direction seat-of-the-pants benchmarking/ metrics
Goal setting realistic perception reach out & stretch
People cost asset
Control centralized localized
Improvement automation optimization

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
The SIPOC Model
Inputs Process Outputs

Suppliers Customers

Steps

Inform Loop

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Six Sigma COPIS Model
Outputs Process Inputs

Customers Suppliers

Steps How does Six Sigma Work?


The Voice of the Customer (VOC) is aggressively sought and rigorously
evaluated and used to determine needed outputs and hence the optimal
process configuration needed to yield those outputs and their necessary
inputs for which the best suppliers are identified and allied with.

From Concept to Market: the Voice of the Customer


Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Voice of the Customer

Measure Analyze Improve

Define Control

Institutionalization

The DMAIC Model


Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Kano Customer Need Model
Dissatisfiers Those needs that are EXPECTED in a product or service.
These are generally not stated by customers but are
assumed as given. If they are not present, the customer
is dissatisfied.

Needs that customers SAY THEY WANT. Fulfilling these


Satisfiers needs creates satisfaction.

New or Innovative features that customers do not expect.


Exciters / The presence of such unexpected features leads to high
Delighters perceptions of quality.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Kano Customer Need Model
Delighted
TI
M
Degree of
E
Execution

Fully
Absent
Implemented

Disgusted
Stakeholder Satisfaction
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Dimensions of Quality- Garvin’s Eight
• Quality is usually a bundle of characteristics
• We need to disaggregate this composite notion
• This decomposition will help us to
– make our notion of quality more precise
– make comparisons possible
– facilitate measurement
• Only the customer determines the relative
importance of these dimensions
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Garvin’s Eight Dimensions
• Performance • Reliability
• Features • Durability
• Conformance • Serviceability
• Aesthetics • Perceived Quality

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
What the Terms Mean (1)
• PERFORMANCE
– Primary operating characteristics of a product
• FEATURES
– bells & whistles
– secondary characteristics that supplement the basic functioning
• CONFORMANCE
– degree to which product meets pre-established standards
(meeting specs)

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
What the Terms Mean (2)
• RELIABILITY
– Probability of product remaining functional over a
specified period of time
• DURABILITY
– amount of use one gets out of a product before it
physically deteriorates
• SERVICEABILITY
– speed and ease of repairs (or resolution of problems)

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
What the Terms Mean (3)
• ASTHETICS
– look, feel, and sound of a product
– reflects individual preferences
• PERCEIVED QUALITY
– perceptions of quality based on other cues and indirect
measures
– reputation or affiliation often key

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Competing on Quality
• It is not often feasible to pursue all 8 dimensions
• Trade-offs are necessary
• Quality niches can be defined and defended
• A firm can define what quality means for its
product
• Must focus on the right quality measure: those
one(s) that matter to the consumer

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Dimensions of Service Quality
• RELIABILITY: consistency, error-free dependability
• RESPONSIVENESS: willingness to help the customer
• TANGIBLES: environment for the service presented
• COMPETENCE: the right skills and knowledge required

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Service Quality (cont.)
• COURTESY: supplier’s behavior
• SECURITY: freedom from danger or risk
• ACCESS: ease of making contact
• COMMUNICATION: understandable to the customer
• EMPATHY: adopting the customer’s viewpoint

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Aggregation
• Often need to reduce the number of
dimensions. Reduced list is:
– Reliability
– Responsiveness
– Empathy
– Tangibles
– Assurance

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Six Sigma Road Map: R DMAIC SI
Breakthrough
Stage Strategy Phase Objective
Identification Recognize Identify Key Business
Breakthrough Strategy

Define Issues

Black Belt Projects


Characterization Measure Understand Current
Analyze Performance Levels

Optimization Improve Achieve Breakthrough


Control Improvement

Institutionalization Standardize Transform How Day-to


Integrate Day Business is
Conducted
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Define Six Sigma: How Do We Innovate?
Define the problem and customer
requirements.

Control Measure M easure defect rates and document


the process in its current incarnation.

Analyze process data and determine


the capability of the process.

Improve the process and remove


defect causes.

Control process performance and


ensure that defects do not recur.
Improve Analyze
“Common sense” doesn’t mean “commonly done” or when done, done well.

Six Sigma Innovation the DMAIC Algorithm


Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, &University of Idaho
Six Sigma
Six Sigma from the GE Perspective
Six Sigma is a highly disciplined process that helps a company focus on developing
and delivering near-perfect products and services. Why “sigma”? The word is a
statistical term that measures how far a given process deviates from perfection.

The central idea behind Six Sigma is that if you can measure how many
“defects” you have in a process, you can systematically determine how to
eliminate those and approach “zero defects”.

Six Sigma has changed the DNA at GE – it is the way that GE works – in
Everything that GE does and in every product GE designs.

“What is Six Sigma? The Roadmap to Customer Improvement”


www.ge.com/sixsigma/makingcustomers.html

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Design for Six Sigma
Applications of Six Sigma that focus on the design or significant
redesign of products and services and their enabling processes so that
from the beginning customer needs and expectations are fulfilled
are known as Design for Six Sigma or DFSS.

The focal aim of DFSS is to create designs that are resource efficient,
capable of exceptionally high yields, and are robust to process
variations. This aim leads to the DFSS algorithm

Define-Measure-Analyze-Design-Verify (DMADV).

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Define Six Sigma: How Do We Design?
Define customer requirements and
goals for the process, product or service.

Verify Measure M easure and match performance


to customer requirements.

Analyze and assess the design for


the process, product or service.

Design and implement the array of


new processes required for the new
process, product or service.

Verify results and maintain


Design Analyze performance.

All new products at GE are designed using a DFSS algorithm.

Design for Six Sigma (DFSS)


Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Design for Six Sigma at GE:
DFSS is changing GE. With it GE can build on all of its capabilities and take
all of its product and process designs to a new level of world-class
performance and quality.

The essence of DFSS is predicting design quality up front and driving quality
measurement and predictability improvement during the early design phases-
a much more effective and less expensive way to get to Six Sigma quality
than trying to fix problems further down the road.

What We Do. GE Corporate Research and Development


Formerly posted at: www.crd.ge.com/whatwedo/sixsigma.html

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Another View of Design for Six Sigma:
DFSS is the change in the product design organization from a deterministic to a
probabilistic culture. Our people were trained to incorporate statistical analysis of
failure modes, both in products and processes. They began to incorporate design
changes that modify & eliminate design features with a probability of failure within a
predefined range of operating environments and conditions. The design organization
changed from a “factor-of-safety” mentality to one in which there was a quantitative
assessment of design risk. Four elements of design are most critical to the effort:
•Design for producibility (design for manufacturing and assembly);
•Design for Reliability;
•Design for Performance (technical requirements); and
•Design for Maintainability.

“Design for Six Sigma: 15 Lessons Learned”,


Quality Progress, Vol. 35, No. 1, pp. 33-42, January 2002.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
 Improvement & Innovation – Focuses on high priority problems in
business processes. This uses the DMAIC methodology: Define,
Measure, Analyze, Improve, and Control.
 Design–Design For Six Sigma (DFSS) addresses new or
fundamentally poor processes. The methodology is called the DMADV
or DMADOV model: Define, Measure, Analyze, Design, Optimize, and
Verify.
 Business Process Management –aids in definition and management
of operations and activities in terms of core and enabling processes. The
resulting process management systems provide a foundation of process
definition and baseline data for all process design and improvement
activities.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma

Six Sigma Strategy & Methods


Appendix 1: Corporate Leadership

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Six Sigma and General Electric
 General Electric CEO, Jack Welch, describes Six Sigma as “the most
important initiative GE has ever undertaken.” GE’s operating income, a
critical measure of business efficiency and profitability, hovered around
10% for decades. In 1995 Welch mandated that each GE operation from
credit card services to aircraft engine plants to NBC-TV work toward
achieving Six Sigma. GE was averaging about 3.5σ when it introduced the
program.
 With Six Sigma embedding itself deeper into GE’s processes, they achieved
the previously “impossible” operating margin of 16.7% in 1998 – up from
13.6% in 1995.
 In dollar amounts, Six Sigma delivered more than $300 million to GE’s
1997 operating income and more than $600 million in 1998.
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Six Sigma and Raytheon
 Former AlliedSignal executive Daniel P. Burnham, who
became Raytheon’s CEO in 1998, has made Six Sigma a
cornerstone of the company’s strategic plan.
 By pursuing Six Sigma quality levels throughout the
company, Burnham expects Raytheon to improve its cost of
doing business by more than $1 billion annually by 2001.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Six Sigma and the Service Sector
Robert Galvin: Former Motorola CEO
 Failing to implement Six Sigma in
commercial areas with the same force
that the company implemented it in its
industrial sectors cost Motorola $5 billion
over a four-year period.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
How Big is the Service Sector?
 79% of the U.S. Workforce is employed by commercial businesses.
 90% of those employed in manufacturing are actually doing service work – such as
finance, marketing, sales, distribution and purchasing.
 So: 79% + (.9)*(21%) = 98% of the U.S. Workforce is involved in “service work”.
 MISTAKEN BELIEFS:
 Some companies still believe that improving commercial processes is less important than
improving industrial processes or that seemingly intangible commercial processes can’t be
controlled.
 BOTH ARE WRONG:
 Customers are more likely to take their business elsewhere because of poor service than
poor products.
 Companies like GE have shown that improving internal and external commercial
processes adds to the bottom line and to customer satisfaction significantly

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
AlliedSignal
 70,000 Employees
 Chemicals, Fibers, Plastics, Aerospace Products,
Automotive Products.
 Larry Bossidy came from GE to become CEO in 1991
 Market Value = $4 billion in 1991
 Market Value = $29 billion by the end of 1998
 Market Value = $38 billion by 2000.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
AlliedSign


TODAY’S GOALS: al
6% productivity increase
• BY END OF 1998:
• Total Impact of Six Sigma
• Reduced Inventory Within AlliedSignal
Reached $2 Billion.
• Full-Capacity Utilization
• Little or no Overtime • Six Sigma Profits in
Service Areas including:
• Reliable Products – Order Processing
• 5s Manufacturing – Shipping
• 5s Designs – Procurement
• Predictable Cash Flow – Product Innovation
• 5s Suppliers

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
We can’t tell other organizations how to do Six Sigma, but we can tell
them how not to do it. Allied has made mistakes along the way and, in the
process, learned some tremendous lessons.

 Lesson 1: The Organization’s Leadership Must Own Six Sigma


 Upper management supported Six Sigma, managers below those at the top saw it as
a “flavor of the month”.
 Black Belts seen as a nuisance.
 Black Belts were using “Six Sigma jargon” while managers were using business
vocabulary. This led to confusion.
 SOLUTION: Introduce ALL levels of management to Six Sigma.
 Management had weeklong training sessions to understand the methods of the
Breakthrough Strategy and how Black Belt training and experience could be
leveraged. ALSO … how various initiatives “fit together”.
 BEGAN TO FOCUS ON PROCESSES – NOT PEOPLE as the source of problems.
Also, understanding of the Breakthrough Strategy provided a “plan of action”, rather
than just a “command” to make something happen.
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Six Sigma Changed the Company Culture and

 One of the flaws at Allied is that we had too much vertical mobility.
Managers inch up the same smokestack, learning more and more
about less and less. But companies that train promising individuals
as Black Belts circumvent the vertical flow and move people around
horizontally, having them serve time in as many major businesses
or divisions as possible to give them a kaleidoscopic view of the
organization and the benefit of being mentored by a variety of new
blood.

Linked AlliedSignal’s Goals, Vision & Activities.


Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Lesson Two: A Beginning Without an End
 Having recognized the need to train managers in the Six Sigma Breakthrough Strategy, Allied
dedicated the next year to training 1,000 leaders in the organization in how Six Sigma
worked, and in its potential financial impact.
 Training sessions lasted 3.5 days and emphasized Six Sigma’s impact on:
 Profitability through improved processes;
 The Crucial role of Black Belts, RATHER THAN teaching statistical processes involved
in achieving Six Sigma.
 Initially trained top managers at each of Allied’s 11 Strategic Business Units and gradually
worked their way down the organization to middle management, line supervisors, and so on.
 COMPLAINTS FROM BLACK BELTS WITHIN SIX MONTHS: Management turnover and
too much promotion of Black Belts into management before benefit from the training and
skills could be realized. SO … training had to be ongoing.

Allied is not in the business of measuring activity. We are in the business of measuring results.
IF something doesn’t have a positive impact on customer satisfaction, our shareholders, and employees,
and in the process makes a lots of money, THEN we just flat out aren’t going to do it.”
RICHARD A. JOHNSON, Director of Six Sigma at AlliedSignal

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Lesson Three: Black Belt Retention
 AlliedSignal’s goal: send Black Belts with a minimum of 18-24 months
experience mastering the Breakthrough Strategy back into the organization to
create Six Sigma behavior & thinking.
 40% of Black Belts were promoted to departmental or plant managers. Others
left AlliedSignal for higher-paying jobs at suppliers. Others completed only one
or two projects before they were pulled back into their previous assignments with
leadership not properly reviewing projects and properly acting upon financial
opportunities created by Black Belts so that managers felt that Six Sigma wasn’t
particularly important.
 50% of Black Belts were absorbed back into the organization within six months.
 NOW … BLACK BELTS must work at least 18-24 months on a series of Six Sigma
projects prior to a change of roles. TIME & EXPERIENCE ARE VIEWED AS
CRITICAL TO SIX SIGMA SUCCESS AND THE MATURITY OF THE BLACK
BELT.
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Lesson Three - Continued
 AlliedSignal’s Champions & Master Black Belts
 3.5 Day Executive Overview followed by the traditional Four-Month Black
Belt training process.
 MASTER BLACK BELTS are selected from the best of the Black Belts.
 Each of these trains and mentors 10 Black Belts
 Each Black Belt trains and mentors 10 Green Belts.
 NOW: All Salaried Employees are Expected to Undergo the 26 Hours of
Training Required for Green Belt Certification by 2000.
 CHAMPIONS 20
 Master Black Belts 70
 Black Belts 2000+
 Green Belts 18,000
 Total # of Employees 70,000
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Lesson Four: Supplier Capability is Critical to
the Success of the Breakthrough Strategy
 The Majority of AlliedSignal’s Suppliers were operating at about three sigma.
 This prevented the company from realizing the full benefits of Six Sigma.
 AlliedSignal recognized that they needed to view suppliers as their partners.
 AlliedSignal began TRAINING its suppliers and offering other technical assistance.
 To achieve Six Sigma it is important to minimize the number of suppliers, limiting
these to those that have been trained in the Breakthrough Strategy.
 Not only does AlliedSignal provide training, BUT then follows up by dedicating ITS
OWN BLACK BELTS to mentor and work with critical suppliers. AlliedSignal
estimates that for every 300 Black Belts it trains, 100 are either customers or
suppliers.

W. Edwards Deming:
End the Practice of Awarding Business on Price Tag Alone.
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Lesson Five:
There is No Such Thing as Operator Error
 It is PROCESSES – not PEOPLE that Fail.
 This maps to one of Deming’s 14 Points for
Management: “DRIVE OUT FEAR”.
 Focus on Processes implies that people are not accused,
but rather, that they are able to investigate processes and
be “part of the solution.”

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Lesson Six:
Focus on Bottom-Line Improvement
 The number one source of failure in deploying Six Sigma is the result of Lack
of Commitment FROM THE Organization’s Leadership.
 The Finance Department must be involved so that the impact of Six Sigma
Projects on the Bottom-Line is apparent.
 Black Belts, the Finance Department, and Executive Leadership must work
in tandem.
 While Black Belts create opportunities for cost reduction and increased
profitability, the company’s Leadership must make sure that Black Belts
focus on the right projects and take action on the savings opportunities they
generate. Finance provides closure to the effort by ensuring that the savings
are returned to the organization’s bottom line.
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Lesson Seven: Initiative Overload
LARRY BOSSIDY, CEO: One of the things I have trouble with is … non-financial
objectives. Often they’re just as obscure and vacuous as they sound.
• FIVE ACTIONS TO PERPETUATE SIX SIGMA:
1. TRAINING: Allied’s employee base changes enough every nine to ten months that
maintenance of Six Sigma culture requires that new employees be trained in the
Breakthrough Strategy.
2. Senior management involvement.
3. Continued on-site leadership training, and alignment of goals among divisions to
reinforce Breakthrough Strategy thinking and goals.
4. Requiring Black Belts to dedicate a minimum of two years to working on Six Sigma
projects.
5. Supplier involvement and improvement in Six Sigma initiatives.
Products and services should be improved ONLY to the degree that customer value is increased.
Six Sigma is a program designed to generate money for the company, either through savings
resulting from reduced costs, or from boosting sales by increasing customer satisfaction.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
AlliedSignal:
Hindrances to Six Sigma Success
 Working on too many improvements at the same time.
 Not having someone accountable for the problem.
 Not being a process-based company.
 A lack of trained and experienced people.
 Middle managers who fear uncertainty about future roles.
 Lack of metrics focused on customer value-added processes.
 Lack of integrated information and financial systems.
 Fragmented, staff-driven approaches.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma

Six Sigma Strategy & Methods


Appendix 2: People of Six Sigma

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Six Sigma
Champions
 Create the vision of Six Sigma for the company.
 Define the path to implement Six Sigma across the organization.
 Develop a comprehensive training plan for implementing the Breakthrough
Strategy.
 Carefully select high-impact projects.
 Support development of “statistical thinking”.
 Ask Black Belts many questions to ensure that they are properly focused.
 Realize the gains by supporting Six Sigma projects through allocation of resources
and removal of roadblocks.
 Hold the ground by implementing Black Belt recommendations.
 Make sure that project opportunities are acted upon by the organization’s
leadership and the finance department.
 Recognize people for their efforts.
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Master Black
 Belts
Understand the big business picture.
 Partner with the Champions.
 Get certified as Master Black Belts.
 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.
 Help train and certify Black Belts.
 Take on leadership of major programs.
 Facilitate sharing of best practices across the corporation.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma

Black Belts
Act as Breakthrough Strategy experts and be Breakthrough Strategy enthusiasts.
 Stimulate Champion thinking.
 Identify the barriers.
 Lead and direct teams in project execution.
 Report progress to appropriate leadership levels.
 Solicit help from Champions when needed.
 Influence without direct authority.
 Determine the most effective tools to apply.
 Prepare a detailed project assessment during the Measurement phase.
 Get input from knowledgeable operators, first-line supervisors, and team leaders.
 Teach and coach Breakthrough Strategy methods and tools.
 Manage project risk.
 Ensure that the results are sustained.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Green Belts
 Function as Green Belts on a part-time basis, while
performing their regular duties.
 Participate on Black Belt project teams in the context of
their existing responsibilities.
 Learn the Six Sigma methodology as it applies to a
particular project.
 Continue to learn and practice the Six Sigma methods and
tools after project completion.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Black Belt Activities
 MENTORS: Cultivates a network of Six Sigma individuals at the local
organization or site.
 TEACH: Provides formal training of local personnel in new strategies and
tools.
 COACH: Provides one-on-one support to local personnel.
 TRANSFER: Passes on new strategies and tools in the form of training,
workshops, case studies, and local symposia.
 DISCOVER: Finds application opportunities for Six Sigma strategies and
tools, both internal and external (e.g. suppliers and customers).
 IDENTIFY: Highlights / surfaces business opportunities through
partnerships with other organizations.
 INFLUENCE: Sells the organization on the use of Six Sigma strategies and
tools.
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Personal & Professional Characteristics of a Black Belt
 Highly respected by superiors, peers, and subordinates.
 Understands the “big picture” of the business.
 Focuses on results and understands the importance of the bottom line.
 Speaks the language of management (money, time, organizational dynamics, etc.)
 Committed to doing whatever it takes to excel.
 Sponsored by a vice president, director, or business unit manager.
 Is an expert in his or her specific field.
 Possesses excellent communication skills, both written and verbal.
 Inspires others to excel.
 Challenges others to be creative.
 Capable of consulting, mentoring, and coaching.
 Drives change by challenging conventional wisdom, developing and applying new
methodologies, and creating innovative strategies.
 Possesses a creative, critical, out-of-the-box intellect.
 Allows room for failures and mistakes with a recovery plan.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Personal & Professional Characteristics of a Black Belt
 Accepts responsibility for choices.
 Views criticism as a kick in the caboose that moves you a step forward.
 Encourages commitment, dedication, and teamwork.
 Unites and inspires a team to a core purpose.
 Able to communicate all sides of an issue.
 Solicits diverse ideas and viewpoints.
 Empathizes.
 Promotes win-win solutions.
 Disagrees tactfully and does not overreact.
 Acts decisively under pressure.
 Anticipates and confronts problems early and corrects causes..
 Effectively identifies priorities from a business standpoint.
 Manages limited resources in a highly efficient and effective manner.
 Careful not to assign an unrealistic number of tasks to any team member.
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
Six Sigma
Personal and Professional Characteristics of a Black Belt
 Understands and respects that people have limitations.
 Displays a genuine concern and sensitivity toward others.
 More concerned about business success than personal gain.
 Does not lord her or his expertise over others.
 Recognizes that results count more than fancy titles.

How Many Black Belts Does an Organization Need?


• Revenues/(1 million) = Number of Black Belts
• Number of Black Belts/(10) = Number of Master Black Belts
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
S S
Six Sigma
IX IGMA
End of Session

DEPARTMENT OF STATISTICS
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho
S S
Six Sigma
IX IGMA
Client, Competitive and Enterprise Intelligence
for
Product, Process and Systems Innovation & Design

End of Session
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
Dr. Rick L. Edgeman, University of Idaho

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