You are on page 1of 35

# Integrating Six Sigma to

Organization Strategy
Guest Lecture at IIT Roorkee
Naresh Chawla
Six Sigma Master Black Belt
Certified Productivity Practitioner (APO, Japan)

2

Naresh Chawla,

Master Black Belt

Naresh Chawla,

Master Black Belt

Six Sigma can be integrated with
strategic initiative for making
products/services
Faster, Better & Cheaper

4

Naresh Chawla,

Master Black Belt

Motorola – Pioneer of Six Sigma
• One of the proudest American brand
• Car radios (1928) – walkie-talkie (1943) – color
TV (1947) - solid state technology - transistor

5

Naresh Chawla,

Master Black Belt

Motorola Story
• First Mobile phone –weighing 1 kg (1973)
• Commercial cell phone- DynaTAC 8000X –
790 gm (1983)

6

Naresh Chawla,

Master Black Belt

Competitive Pressure of 80s
• American Industry was reeling under the
onslaught of Japan Inc.

• “I'll tell you what's wrong with this
company………..our quality stinks” – Art
Sundry, Vice President of Sales Motorola

7

Naresh Chawla,

Master Black Belt

Competitive Pressure of 80s
• He instituted a goal of improving
every Motorola product by 10x.
• Quality engineer Bill Smith found
that a product found defective and
corrected during manufacturing
has high probability of failing
during early usage of customer
• He coined a new improvement
measurements as “Six Sigma”

8

Naresh Chawla,

Master Black Belt

Product should fall
between ± 3σ
99.73% of
“opportunities” to
meet customer
requirements
3

2

2

1

If a mobile is having 1000 components
then what is the probability that a hand
set will be defect-free?
9

2

Naresh Chawla,

3

Master Black Belt

Six Sigma illustrated
If we can squeeze
six standard
deviations in
between our target
and the customer’s
requirements...
= 0
= 1

Z= x–

=6

6 5 4 3 2 1

1 2 3 4 5 6

then, 2 parts per per billion of “opportunities”
to meet customer requirements are there.
10

Naresh Chawla,

Master Black Belt

Six Sigma illustrated

1.5 

Bill Smith concluded
that ; process will get
shifted by 1.5  in long
term.
Long term variation will
increase and we will be
able to squeeze 1.5 sigma
less
i.e. 6 - 1.5 = 4.5 sigma

6 5 4 3 2 1

1 2 3 4 5 6

Then there will only be 3.4 parts per million of
“opportunities” for not meeting customer
requirements!
10

Naresh Chawla,

Master Black Belt

Garage Door Analogy
Process v/s Customer Requirement

Z = (X-) = Constant
Size of door = Tolerance= VoC
Size of the truck = ±3s = VoP

As Defects
Go Down . . .

-3s1 +3s1
11

s

Z
. . . Sigma
Capability
Goes Up
Naresh Chawla,

Master Black Belt

Achievement - 1987
 Won Malcolm
Baldrige National
Quality Award
 Five-fold growth in
sales, with profits
climbing 20 percent per
year.
 Cumulative savings
pegged at \$14 billion

13

 Stock price gains
compounded to an
annual rate of 21.3
percent.
Naresh Chawla,

Master Black Belt

Motorola used Six Sigma as a strategy
for reducing defects and variation

14

Naresh Chawla,

Master Black Belt

What did happen to Motorola?
Where did they go wrong?

15

Naresh Chawla,

Master Black Belt

 One design to the new GSM
standard opened up a
market in over 14 countries
but for Motorola, each new
analogue market
necessitated a significant
re-design.
 Motorola found their
competitive position
hobbled by the wrong
choice of technology.

16

Naresh Chawla,

Master Black Belt

“I am convinced that if the rate of change inside
the institution is less than the rate of change
outside, the end is in sight. The only question
is the timing of the end.”

Jack Welch

17

nareshchawla@tqmbizschool.org

Integrating Six Sigma with
organizational strategies

- Customer Centricity
- Process Orientation
- Data and fact driven

18

Naresh Chawla,

Master Black Belt

Six Sigma– a strong process
orientation
Views all processes that
can be defined, analyzed,
improved and controlled.
Processes requires inputs
and produce outputs. If
you control the inputs, you
will control the outputs.

Y = ƒ(X1, X2, X3 … Xn) + 
19

nareshchawla@tqmbizschool.org

High Quality

Customer
Requirements

Market Share
RoI
EBITA

Superior
Reliability

Process
Capabilities

Robust
Process

Predictable
Results

Consistent
Performance

Customer
Satisfaction

Results

On-Time
Delivery
Material
Capabilities

21

Lower Costs
Naresh Chawla,

Master Black Belt

Six Sigma Methodology
Define
● Identify &
Define
improvement
opportunity
● Determine
Customer
Requirement
(VoC)
● Develop
Project
Charter
● Map High
Level
Processes
(SIPOC)
21

Measure

Analyze

● Define ‘As is’
Situation
(Detailed
Process Map)

● Identify
patterns
through data
anlysis

● Plan for Data
collection

● Identify
Potential
Causes (x’s)

● Validate
Measurement
Systems
● Quantify
Current
Process
Performance

● Prioritize
possible
root causes
● Validate
possible root
causes

Control

Improve
● Generate
Potential
solutions
● Select Best
Solution
● Test Solution
(Piloting)

● Prepare
and
Implement
Control
Plan
● Implement
Full Scale
Solution

● Statistical
● Statistical
Evidence of
Evidence
improvements
that
improveme
nts are
sustainable
● Validate
Financial
Gains
Naresh Chawla,

Master Black Belt

How Six Sigma is different?
1 Estimating sigma level

8

Normality of Data

2 DPMO

9

Hypothesis testing

3 Rolled through put yield

10 Correlation and
Regression

4 Measurement System
Analysis
5 Process capability
Indices
6 Central Limit Theorem
7 Confidence Interval
23

11 Multi-vari charts
12 Design of Experiment
13 Control Charts
14 Control Plan
Naresh Chawla,

Master Black Belt

Case Study

Integrating Six Sigma to
Organization Strategy

23

Naresh Chawla,

Master Black Belt

• The brand enjoys a strong equity in the market
and commands a market share of close to 12%.
• The brand is known for producing tractors that
are powerful and reliable.
• It has remained at the top position in the
Customer Satisfaction Index (CSI) in the
tractor industry for the last three consecutive
years.

24

Naresh Chawla,

Master Black Belt

Selecting Problem
 Among all failures due to hydraulics, those in

hitch control valves are the most common.
 Six-month data showed that the average inhouse rejection rate for hitch control valves was
3.2%,
 This high internal rejection was also reflected in
external failures. Warranty costs during earlyhour failures are more than 50% of the total
warranty amount.
 Early failures of tractors are most damaging to
customer satisfaction.

29

Naresh Chawla,

Master Black Belt

Problem Definition
 Problem Statement:

Past 6 month data from Jan’13 to Jun’13
indicate on average there is 3% rejection in
Control valves during in house testing result
into COPQ 25 lacs. Warranty cost due to early
hour failures is Rs 15 lacs (appx)
 Goal/Objective:

Reduce in house rejection by 95% & early hour
field failures by 80%
Estimated saving of 35 lakhs/ annum.

26

Naresh Chawla,

Master Black Belt

Application of Tools
Tools Applied

Outcome

Component Search Through
Shainin DOE

Identification & Severity of Defective
Parts in Assy

Fish-Bone Diagram

Possible Root Cause

Production Samples

Base line data Generation

Testing of Hypothesis

Verification of Possible Root Causes

Paired Comparison

Drilling Down Probable Root Causes

Regression Analysis

Confirmation and Further drilling
down to Root Causes

Process Capability

Understand Robustness of Process at
Different Stages

DOE

Strength of Process and Optimized
Global Solution

Cause & Effect Prioritization
Matrix based on CTQ ranking

Prioritization of Possible Root Causes
and possible Solution to Improve
Process Capability

27

Naresh Chawla,

Master Black Belt

Construction of
Hitch Control Valve

X2
D3
D2

X21
X22
X3, X4

X5

X6, X7
X8

Naresh Chawla,

Master Black Belt

DoE
Shortlisted Control Factors

Level 1
(Existing Level)

Level 2
(Proposed)

X1

Clearance (Bush-Spool) ()

10

6

X2.1

Spool L/L Distance (mm)

50.5

51.1

X2.2

Sleeve H/H Distance (mm)

50

49.8

X3

Spool Ovality )

2

4

No. of Factors

=4

No. of Levels

=2

Number of Blocks

= 2 (for each shift)

No. of centre points

= 2 for each block

Experiment replicated

29

Naresh Chawla,

Master Black Belt

Main Effects Plot for Lift Drop Y
Data Means
Clearance

Spool L/L

Point Ty pe
C orner
C enter

12
11
10

Mean

9
8
6

8
Sleeve H/H

10

49.9

50.0

50.5

50.8
Ovality

51.1

3

4

B
E
T
T
E
R

12
11
10
9
8
49.8

30

Solution
Clearance    =      6
Spool L/L    =   51.1
Sleeve H/H   =   49.8
Ovality =      2

2

Naresh Chawla,

Master Black Belt

Changes in Manufacturing
 Sleeve Honing
 Sleeve cross holes
 Radial grinding for Spool Valve

sealing lands (L/L)
 Testing SOP

31

Naresh Chawla,

Master Black Belt

Improvement in lift drop.
15
Improvement
13.2

13

1st phase

12.7
12

2nd phase

11.3

11
10.3

USL 10

Process improvements  introduced in
Jan'14

10.5
9.6
9.6
9.1

9

8.7

8.6

7

6.7
6.4

8.3

8.2

7.4

7.6

7.3

7.2

7.5

8.2

8.1
7.6

7.2
6.5

6.4

5.8

Design optimization
Trial batch of 20, 16 Feb’14

5.8

5.9

5.8

5.3

5.5
5.1

5
4.8

3.6

3.9

1b
2b
3b
4b
5b
6b
7b
8b
9b
10b
11b
11b
12b
13b
14b
15b
16b
17b
18b
19b
20b

1a
2a
3a
4a
5a
6a
7a
8a
9a
10a
11a
12a
13a
14a
15a
16a
17a
18a
19a
20a
21a
22a
23a
24a
25a
26a
27a
28a
29a
30a
30a

5.1

5.1
4.3

3

32

8.3

1
2
3
4
5
6
7
8
9
10
11
12
11
12
13
14
15
16
17
18
19
20
12
13
21
22
23
24
25
26
27
28

Response (mm/3 minutes)

8.5

Naresh Chawla,

Master Black Belt

Results of Rejection Per Hundred
Units (RPH)
14

In Plant rejection

9.4

8.97

10.6

9.12

7.66

8.8

8.65

6
3.37

2.35

3.98

4.9

4.5
3.61

3.78

2.76

63%
improvement

2.24
0.92

1.06

Feb

Jan'14

Dec.

Nov.

Oct.

Sep.

July

June

May

April

March

Feb'13

August

BEFORE

1.11

0.82

0.66

1.69
0.62

0.98

0

33

2.86

3.9

3.14

F15Q3

3.13

4.14

F15 Q2

2

4.19

March

4

3.81

5.6

F15 Q1

8

9.7

8.9

8.4

Better

60.5%
improvement

April

10

LR-RPH

12.5

Supplier end rejection

12

AFTER
Naresh Chawla,

Master Black Belt

Benefits
 Rejections at supplier end were reduced

from 9% to less than 4%.

 The in-plant RPH rate was reduced from

3.2% to 0.65% by June 14

 The average no. of reworks/day

decreased from 8.75 to 2.87.

 Productivity improved at the supplier end by

52%.

 Financial savings to the tune of Rs 15

lakhs (\$25000) were made due to fewer
internal rejections.

34

Naresh Chawla,

Master Black Belt

Thanks

nkchawla@gmail.com
9779070555