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SIX SIGMA COMPANIES

DEFINITION OF SIX SIGMA
 Six Sigma is a data driven philosophy and process resulting in dramatic improvement in products/service quality and customer satisfaction. • Six Sigma is the team approach to defining, measuring, analyzing, improving and controlling processes. • Six Sigma is a set of tools aimed at reducing variability in the inputs and in the process to increase predictability of outputs.

DEFINITION OF SIX SIGMA  Six Sigma as a metric • Sigma as a way to measure quality .a standard that reflects the degree of control over any process to meet the standard of performance established for that process Sigma as a yardstick – allows to compare very different business processes in terms of the capability of the process to stay within the quality limits established for that process Sigma measures defects per million opportunities (DPMO) • • .

DEFINITION OF SIX SIGMA .

0 s 99.DEFINITION OF SIX SIGMA 4.99966% Good 13 3.000 Product or Service Wrong medical prescriptions each year 6. 000 Newborns being dropped by doctors/nurses per year Lost letters per hour 10 400 1 2 per day Short or long landings at major airports 2 per year .6 s 99.90000% Good 4.

DEFINITION OF SIX SIGMA “Reduce Variation and Center Process” Outputs are off specs which require inspection and added cost Within Specs and Centered. Which doesn’t need Inspection resulting to savings .

IMPORTANCECost OF SIX SIGMA of Poorly Performing Processes The Villain s level 2 3 4 5 6 DPMO 308.537 66. companies operate at a level between 3 and 4 sigma.4 defects per million opportunities (DPMO) for a defect.4 CP3 Not Applicable 25%-40% of sales 15%-25% of sales 5%-15% of sales < 1% of sales Each sigma shift provides a 10% net income improvement Cost of Poorly Performing Processes (CP3) Sigma (s) is a measure of “perfection” relating to process performance capability … the “bigger the better. Without dedication of significant and appropriate attention to a process.210 233 3. .807 6.” A process operating at a “Six Sigma” level produces only 3. most processes in leading U.S.

virtually each employee trained in Six Sigma will return on average $230. • However. improved profit margins allow companies to create products & services with added features and functions that result in greater market share. the cost savings are not as dramatic. .7s.… and the Hero • • • • • What Does Six Sigma Tell Us? We don’t know what we don’t know.0s. We don’t measure what we don’t value. We won’t know until we measure. We don’t value what we don’t measure.8s to 5. We can’t do what we don’t know. After that. • 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. Since most companies start at about 3s.000 per project to the bottom line until the company reaches 4.

PROCESS MODEL INPUTS X1 X2 X3 PROCESS for the creation of a product or service PERFORMANCE MEASURES Y1 Y2 etc... . etc.

Set up control systems to prevent recurrence of a problem . select the appropriate response (the Y’s) to be improved and ensure that they are quantifiable and can be accurately measured M Measure A Analyze I Improve C Control Analyze the preliminary data to document performance of baseline process capability. Several rounds of improvement may be required. Begin identifying root causes of defects (the X’s or independent variables) Determine how to intervene in the process to significantly reduce the defect levels.PROCESS METHODOLOGY D Define Identify and state the practical problem Based on customer input.

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Kano Model 3. Process Map 7.SCOPING TOOLS 1. Fruits of Six Sigma 9.Check Sheets 12. SIPOC Diagram 5. Pareto Chart 6.Value Stream Map 11. Critical to Satisfaction Tree (CTS) 2.Activity Network Diagram . Cause-and-Effect Matrix 10. Quality Function Deployment (QFD) 4. Fish Bone Diagram 8.

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MEASURE / ANALYZE TOOLS • Correlation and Simple Regression • Attribute Agreement Analysis • Gage Repeatability and Reproducibility (GR&R) • Design on Experiments • Analysis of Variance (Anova) • Multiple Regression Analysis • Others… .

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HYPOTHESIS TEST

 Null Hypothesis = Ho: No Significant Change:
 For Tests Of Process Mean: H0: m = m0  For Tests Of Process Variance: H0: s2 = s20

 Alternate Hypothesis = Ha: Has Significant Change:

IMPROVE PHASE

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CONTROL CHART SELECTION PROCESS Characteristic Selected Variable Data Yes Variable Data? No Discrete or Attribute Data No Proportions Counts Constant sample size No u Chart Yes Homogeneous or NOT able to subgroup data? No Yes Yes Individuals Chart (I-MR) Subgroup size > 9 No Average Chart (Xbar-R) Constant sample size No p Chart c or u Chart Yes Yes Ability to calculate s for each subgroup No np or p Chart Yes Average Chart (Xbar-s) .

DMAIC Process Define Measure YES Process Capability OK? NO Analyze Redesign Modify design? YES NO Improve NO Process Capability OK? YES Control TEAMING ▪ LEARNING AGILITY ▪ MARKET FORESIGHT .

Outline  Purpose of the Define Phase  Deliverables of the Define Phase  Key Steps in the Define Phase  The Project Charter  Tools for the Define Phase  Deliverables from the Class  Groupwork (Project Charter and CTC Tree of a Fictitious Company)  Groupwork (Project Charter and CTC Tree of chosen company) .

and management of the reach project. performance targets. .1 1 modified from the main text.The Purpose of the DEFINE Phase To have the team and its sponsor agreement on the scope. goals. financial targets.

.  PERFORMANCE TARGETS  Key metrics and their corresponding baseline and targets (may be completed in the Measure Phase depending on the availability of initial data).  Client segments / Stakeholders to be affected.  SCOPE  Product or Process to be improved. and the desired future state.  GOALS  Gap between requirements and process outputs.The Purpose of the DEFINE Phase  AGREEMENT  A contract / charter.

The Purpose of the DEFINE Phase  FINANCIAL TARGETS  Preliminary estimates of monetary benefits of the project. preferably computed directly from the improvement in the performance targets..  PROJECT MANAGEMENT  Project Member Roles  Schedule and Milestones  Communication Plan  Budget and Other Resources .

Project Objectives Goals Performance Targets Financial Targets Business Impact approved by a Representative of Accounting Gantt Charts (Milestones) Team Members Communication Plan Budget Project Management . Project Goals CTC Tree.Deliverables of DEFINE Phase PURPOSE Agreement Scope DELIVERABLES Project Charter SIPOC Client Types / Segments Problem Statement.

timing and schedule. and Preliminary Schedule.Key Steps of the DEFINE Phase  REVIEW DRAFT PROJECT CHARTER  Champion drafts an initial charter. resources needed.  Deliverables: Statement of the Problem.  Deliverables: Initial Statement of the Problem.  Define who the clients are.  VALIDATE PROBLEM STATEMENT AND GOALS  Validate existence of the problem. Initial Team Composition. . Client Types / Segments. and members. Project Goals.  Preliminary team negotiates the scope.

 Deliverables: Kano Analysis.  (may be done in the measure phase).  Deliverables: Baseline data and Target Data. CTC specifications.Key Steps of the DEFINE Phase  CAPTURE VOICE OF THE CUSTOMER (optional)  Conduct necessary tools to identify customer needs and priorities.  CAPTURE VOICE OF THE PROCESS (optional)  Determine Baseline data for the CTCs  Establish targets. CTC Tree. .

 CREATE PROCESS MAP  Develop high-level process maps that provides the scope the processes being improved. .  Deliverables: SIPOC.Key Steps of the DEFINE Phase  VALIDATE FINANCIAL BENEFITS  Estimate cost savings and/or increase in revenue assuming targets are met.  Deliverables: Business Impact.

milestones. Note that the charter may be updated throughout the project duration (subject to approval). Communication Plans. project facilitators) and team members. communication plans  Deliverables: Gantt Charts (Milestones). managers.Key Steps of the DEFINE Phase  FINALIZE PROJECT PLANS  Identify stakeholders (sponsors. process owners. customers. Budget. Final Team Members. . Complete Project Charter signed by appropriate executives. budget.  Develop schedule.

DEFINE – M – A – I – C The Project Charter or Team Charter The Customer The Voice of the Customer (VOC) Critical to Quality Supplier-Input-Process-Output-Customer (SIPOC) .

time) that will be deployed for the project. It is a living document. It is updated as more pieces of information are known as the project progresses. • Project Title • What is the specific defect? • What is the improvement goal? Example: Square Nano Quality Project Team of Littelfuse Project Title: Reduction of Loose Caps in Square Nano Fuses .DEFINE – M – A – I – C The Project Charter or Team Charter • A project charter or team charter is a team contract that summarizes the goal of the team and the resources (people.

delivery)? Example of a Bad Opportunity/Problem Statement • The Package Delivery process needs to be improved. 000. Improving the process will increase the Customer Satisfaction scores. ABC employees also confirm there is a problem. cost. period covered. many of which were late (what).2 million of products in April. ABC Company has received numerous customer complaints. metrics)? • What is the effect of the problem (quality. . 520. Data collected from customers for the last 5 months (when) indicates that an average of 44% of southern customers (where) experienced problems but only 8% of others customers experienced problems. During the month of April. ABC had 40 late shipments (extent) to the southern customers worth P1. Example of a Good Opportunity/Problem Statement • The ABC Company shipped P8.DEFINE – M – A – I – C The Project Charter or Team Charter Problem Statement • What is the problem (name of the process/product/line.

70% break through improvement . monthly)? Goal Statement • What is the defect that needs to be reduced? • What is the baseline and the objective? • What is the expected date the target will be achieved? • 30% .DEFINE – M – A – I – C The Project Charter or Team Charter Business Case • A clear and common understanding of “why we should do the project”. and “what it will cost us” • Why is this project prioritized over other possible projects? Quality/Delivery/Financial Benefits • What is the expected savings for this project? • For what period will the savings be realized (annual.

DEFINE – M – A – I – C The Project Charter or Team Charter Scope and Limitations • What process will the project focus on? • What processes will be excluded from the project? Stakeholders • Who or which specific function will be directly affected by the project (management. suppliers. customers)? Team Members and Project Champion • Who will be able to contribute to the project? • Who will remove roadblocks and allocate resources? .

He/She should have enough influence to remove obstacles or provide resources without having to go higher in the organization • Process Owner – manager of the process.provides the impetus.keeper of the 6sigma process and advisor to senior executives or business unit managers • Black belt – a full-time change agent and improvement leader who may not be an expert in the process under study • Green belt – works on the project part time .takes a very active sponsorship and leadership role in conducting and implementing 6sigma projects. direction and alignment necessary for 6sigma’s ultimate success • Champion . Has the responsibility for the process ad has the authority to change the process on his or her signature • Master Black Belt .DEFINE – M – A – I – C The Project Charter or Team Charter Team Members and Project Champion • Senior Executive -.

Goal Statement Project Scope • Order Processing – Core Process • Start: Call entered into system • Stop: Product in customer’s hands • Involve all Department • Core process – related • Enabling process – related • Reduce cycle time from call by customer to receipt by customer to 48 hours by fourth quarter.000/month). • Reduce number of defects 10 fold. Our process is currently operating at a 2. • Increase process sigma to 3.DEFINE – M – A – I – C Project Charter: Customer Delivery Cycle Time Improvement Business Case Our current delivery time average is 72 hours for Product X.000). As a result. Our customers require it within 48 hours. Our competitors are meeting the 48-hour requirement.5% of our customer base per month for the last 10 months ($75. Project Plan Activity • Form Team • Finalize Charter • Gather Data • Analyze Data • Select Solution • Meet Management • Develop Plan to Implement • Closure & Recognition wk 1 wk 2 Time wk 3 wk 4 wk 5 Team Selection Albert Barry Carrie Denise Eric Frank Gwen Hillary Sponsor Master Black Belt Black Belt Dispatch Supervisor Senior Dispatcher Administrative Manager Truck Loader Truck Loader . By decreasing our delivery time we anticipate the loss of the current customer base to drop below 0. Customers are requiring delivery in 48 hours. new sales are down 10% for the same 10 months ($60.1 sigma level.3% (savings=$60.000 to 2. Opportunity Statement We currently have an average ‘deliver orders’ cycle of 72 hours. from 20.000/month).000 by the end of the year.000/month) and new sales will increase 18% above their original base ($108. we are losing 1.5.

establish a baseline and set targets for improvement? • Does it relate to a business objective? • Is the goal achievable? Is the project completely realistic? • Have we set a date for completion? Attainable Relevant Time bounded .DEFINE – M – A – I – C The Project Charter or Team Charter • Another way to evaluate a Charter’s completeness is through an evaluation methodology called “SMART” • This acronym is a checklist to ensure that the charter is effective and thorough Specific Measurable • Does it address a real business problem? • Are we able to measure the problem.

org/2009/team-competition/index.DEFINE – M – A – I – C Project Charter Source: www.asq.wcqc.html .

The Project Charter .

The Project Charter (Image Source: Keller. 2011) .

com) .Tools for the DEFINE Phase  GANTT CHART  Shows the schedule of each of the project phase/activity.advsofteng. (Image Source: www.

 Visually presents prerequisite activities of a task.  Provides slack times for other non-critical activities.Tools for the DEFINE Phase  PERT-CPM  Emphasizes critical activities that may increase project duration if not properly followed. (Image Source: .

.Tools for the DEFINE Phase  SIPOC  A high-level process map that captures information critical to the project  Helps a team and its sponsors agree on project boundaries and scope  Helps verify that process inputs match outputs of upstream process and the inputs/expectations of downstream processes.

DEFINE – M – A – I – C SIPOC Diagram -.a tool used by a process improvement team to identify all relevant elements of a process improvement project before work begins S Suppliers The provider of inputs to your process I Inputs Materials. resources or data required to execute your process P Process A structured set of activities that transform a set of inputs into specified outputs. providing value to customers and stakeholders O Outputs The products of services that result from the process C Customers The recipients of the process output .

DEFINE – M – A – I – C .

asq. SIPOC (Image Source: www.org) .

asq.DEFINE – M – A – I – C Source: www.wcqc.org/2009/team-competition/index.html .

DEFINE – M – A – I – C The Customer • The Customer is a recipient of a product or service • A customer may be internal or external • An internal customer is in the next process of department within the same company • An external customer of end customer is the final recipient of the finished product or service .

Cpk .DEFINE – M – A – I – C Voice of the Customer (VOC) Critical to Quality (CTQ) • Voice of the Customer (VOC) – actual needs as expressed by the customer • Critical to Quality Characteristics – product or service specification quantified and translated from the VOC • Operational Definition (OD) – allows only one interpretation of the VOC Illustration: VOC • • • • Safety Delivery Quality Cost CTQ • Cycle time • yield OD • Time study • ppm.

QFD Approach Customer Requirements Functional Measures Parts Characteristic Manufacturing Process Production Requirements .

Voice of the Customer “I hate dealing with your company. CTC Requirement 10 day lead time (+/.1 day) Specific Types of CTC/CTS.Tools for the DEFINE Phase  CRITICAL-TO-CUSTOMER (CTC) or CRITICAL-TOSATISFACTION (CTS) TREE  Can help convert vague needs and wants of the customers into precise functional requirements.  CTQ – critical-to-quality  CTD – critical-to-delivery  CTC – critical-to-cost Special Types of CTC Trees  CTX – Product Tree  CTY – Process Tree .” The Why (After Clarification) Products are not delivered on time.

uk) .org. CTC TREE (Image Source: www.sixsigma-traning.

operations-excellence. CTC TREE (Image Source: www.com) .blogspot.

net) .tebyan. CTC TREE (Image Source: www.

.convert customer needs/wants to measurable requirements for the business to implement.DEFINE – M – A – I – C Critical-to-Quality (CTQ)Tree-.

Summarized VOC data told them that when customers order-in pizza. now. with my choice of toppings and crusts.” .DEFINE – M – A – I – C Critical-to-Quality (CTQ)Tree Example: Ben-Hur’s Pizza wishes to add home delivery to their services in order to expand their business. they want “hot pizza. They have surveyed current and potential customers to determine what would make them order Ben-Hur pizza instead of a competitor’s or instead of a different kind of food. at a reasonable cost.

DEFINE – M – A – I – C Critical-to-Quality (CTQ)Tree CTQ Tree for VOC “NOW” .

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