SIX SIGMA NOTES (Instructor- Manish Jha)

 Objective is to reduce variation

 Types of variation:
o Common cause variation (CCV):
 causes influenced by factors internal to system
 high occurrence and low impact
o Special cause variation (SCV):
 causes influenced by factors external to system
 rare event
 process detoriates more (maybe)
 rare occurrence high impact
 should be the first focus point
 Total variation = CCV + SCV
o Classify internal and external factors
o First focus on SCV
o When one eliminates SCV process becomes STABLE
o After that focus on reducing CCV
 How to identify CCV & SCV?
o Use Central limit theorem to invariably prove that the frequency distribution of
mean of samples is normal, given the sample size is adequate.
o Any collected data will have central tendency (mean, median, mode) and spread
(variation, range, IQT-inter quartile range)
 For measuring performance one needs to collect data. Two data types- Discrete and
continuous. Discrete- by count (how many?). Continuous- by measurement (how much?)
 Sigma level- customer satisfaction level. Voice of customer = voice of process. Process can be
defined by efficiency and effectiveness. Effectiveness can be measured in terms of customer
satisfaction and efficiency as capacity utilization. Sigma level need to be calculated for
effectiveness. 6 sigma – effectiveness, lean – efficiency.
 For continuous data- Cp or Cpk i.e. process capability index
o Cp= VOC/VOP=comparison of spread of customer requirement and spread of
process
Required length- 10+/-3=VOC
For e.g. if mean =10 and σ=2
Cp= USL-LSL/6 σ=13-7/6
But if mean = 20 and σ=0.5
Even though Cp is 1 but process is not capable. As mean is very far.

Cpk= Min ((USL-X_bar)/3* σ, (X_bar-LSL)/3* σ)

=Min ((VOC/VOP) right-hand side, (VOC/VOP) left-hand side)

For mean =12 and σ=1

Cpk=0.33 which is very low.

Cp=Cpk when target of process is at same as mean of process.

And Cp > = Cpk ALWAYS

 For stable process one can say that data follows normal distribution. Before
calculating Cp/Cpk one should check whether data is normal by employing test of
normality.

The test of normality would help one identify outliers and take action on
them/remove them so that they do not affect the final result.
It is done by BOXPLOT diagram.

 For Discrete-
o Defects-Measured using DPMO (defects per millions of opportunities (of defect i.e
maximum possible count of defect)- Count of Defects in a sample due to process.

For e.g. If there are 5 samples and there are 2,3,4,0 and 1 defects in each samples.
Also the maximum defects in a part is 5. Hence opportunity = 5*5 =25. Total count of
defects= 10.
DPMO= (10 * 10^6)/25 =4,00,000
From the table you can get the sigma level of the process. For e.g. in above example
sigma level is 1.75 sigma.
Process would be 6σ when DPMO= 3.4
In any SOP, there would be critical to quality (CTQ) parameters and these CTQ’s
would be the possible defects/ opportunity of defects

In some literature, 3.4 ppm is also considered as 6sigma. In above example, 4

defective parts out of 5, hence ppm= (4*10^6)/ 5= 8,00,00. WHICH IS RIGHT? PPM IS
WRONG AND DPMO IS CORRECT

When say 6 sigma you want to improve quality of process. Ppm is a business metric
whereas DPMO is quality metric.
E.G.

Sample 1 2 3 4 5
1st instance 2 3 4 0 1
2nd instance 5 5 0 0 0
 Here the number of defects is same, but number of satisfied customers is different.
Hence DPMO to improve quality of process.

o Defectives- Measured using Yield-Defective is the bad output of the process. It

should contain alteast 1 defects.
(Zerodefect Outputs+ Rework components)
Overall yield =
Total components produced
Zero defect Outputs
First time yield (FTY) =Throughput yield =
Total components produced
FTY is also known as first pass yield, right first time, first time issue resolution

Overall yield hides inefficiencies due to rework. Hence FTY is the right measure.

Overall yield = Zero defect outputs/ total components produced

= 1- Defective parts/ Total components produced

Overall yield * 10^6= (10^6- PPM)

6σ process is where FIRST TIME YIELD IS 99.99966%

Choice of going for defects or defectives depends upon resources you have.

More priority on defects- DPMO. If not possible, go for defectives and look for FTY.
 When a company promotes itself as a 6σcompany, then certain processes/ KPI are 6σ.
 Frame work –
o PDCA-Plan-Do-Check-Act
o DMAIC framework for 6σ -Define-Measure-Analyse-Improve-Control
 6σ cannot be achieved in each industry. There are industry benchmarks for every industry.
For some industries 3σ is enough, but in certain industry even 6σ is not enough. E.g.
hospital, space missions, aviation. For Heathrow airport they follow 14σ.
 How to capture VOICE OF CUSTOMER? --- KANO MODEL
o What are customer requirement?
 Must be needs (functional)- Basic needs
 More the better-for gaining competitive advantage
 Delighter (innovative)- needs that customer also doesn’t know he/she needs
o Company needs to understand and align according to rate of change of customer
needs.
 o
o CTQ (Critical to quality)-Measurement formula for that CTQ and a target that one
wants to achieve.
 How to engage a 6σ project?
o Due Diligence/Feasibility study
I. Capture VOC/VOB (Voice of Business) ----Using KANO MODEL—Figure out
the delighter, must be, more the better needs
II. Create CTQ and set a target for the identified needs.
o Comparative analysis – Compare average performance of CTQ actual vs target,
prioritize and proceed accordingly.
o Identify SCV and take necessary action
o Apply DMAIC
 DMAIC- Can applied only when process is STABLE
o Define –Can be used to define CCV only as process is stable here.
i. Problem Statement: Define the problem statement. For e.g. problem of low
efficiency of a process in a certain duration. For these problems the cause
might be unknown.
ii. Goal statement:

Project CTQ Baseline Project target (Realistic)

Efficiency 49% 70%

Goal should be SMART

S-Specific
M-Measureable
A-Attainable
R- Relevant
T- Time Bound
iii. Make a business case/financial benefit: Understand/calculate the per unit
impact of cost savings on top line and bottom line of company. PUTTING A
$VALUE TO PROJECT.
iv. Define Project Scope: Define in scope and out of scope work areas for the
project. These work areas may be like location of plant, customer, products
v. Timeline/ phases
o Define (summary)-
I. Project Charter
II. Process mapping
a. Flowchart
b. SIPOC: Helps in reviewing the fundamentals of the process and
process CTQ.
Supplier-Input-Process-Output-Customers

Supplier Input Process Output Customers

I1 P1 O1 C1
I2 P2 O2 C2
I3 P3 O3 C3

c. Value stream mapping (VSM)

o Measure: Total Variation = Process Variation + Measurement Variation
I. List potential causes and accordingly collect data for them. For collecting
data one can prioritise data collection for major potential causes by using
CONTROL IMPACT MATRIX

Target the high impact high control segment.

II. Take a potential cause. From law of diminishing returns, it is said that 25-30
samples are statistically significant sample size. (Don’t know if it true!). After
this calculate standard deviation and by using hypothesis testing classify the
potential cause as significant cause or non-significant cause.
III. Data collection plan-sampling plan, sample size. To reduce measurement
variation (MV), there should be SOP having an operational definition which
should followed to reduce measurement variation.
IV. Measurement system analysis (MSA)- there would be some error in the
measurements. There are two types: Repeatability error and Reproducibility
error.
Repeatability error- Same sample measured using same instrument and by
same person if produces different errors, then it is repeatability error.
Reproducibility error- Same sample, same measurement instrument given
to two different people if yields different measurements, that is
reproducibility error.
For Discrete data type MSA used is – Attribute Agreement Analysis
Attribute Agreement Analysis: In this one looks at4 things Repeatability,
Repeatability against standard, reproducibility and reproducibility against
standard. There are indicators for each and they should be observed during
the course of project
 Repeatability-Kappa1
Repeatability against standard- Kappa2
reproducibility Kappa3
Reproducibility against standard- Kappa4

For Continuous data type MSA used is – Gage R&R (Repeatability and
reproducibility)

Total Variation = Process Variation + Measurement Variation

= Part to part variation + Gage RR
For continuous data
GRR <=10%---- acceptable.
10%< GRR<=30% -----Conditionally acceptable
GRR> 30%-------Not acceptable
Part length = 10+/-3
Sample 1 original length=10
Sample 2 original length=13

Sample Operator1 Repeatability Operator2 Repeatability

Sample1 10 No 12 Yes
12 12
Sample2 13 Yes 13 No
13 14
Average length for sample 1= (10+12+12+12)/4= 11.5
Average length for sample 2= (13+13+13+14)/4= 13.25
Part to part variation=13.25-11.75=1.75
o Analyse: In the measurement part, one collects data for potential causes. In the
analyse aspect by the use of hypothesis testing one can classify the potential cause
into significant cause or non-significant cause.
Descriptive statistics- Population parameters
Inferential statistics- Deriving inference about population from sample parameters.
E.g. Hypothesis testing (HT)
 Data Analysis -HYPOTHESIS TESTING: 4 STEPS to help in decision making.
1. STEP 1 - Set up your hypothesis based on limited data/ evidence.
Initial hypothesis (NULL Hypothesis-HO) – Assume the potential cause to be
non-significant. If this is true then process is stable, CCV, status quo, data
will be normally distributed, state of equality

Alternate hypothesis (H1 OR Ha)- Assume the potential cause to be

significant. If this is true, then process is unstable which is caused by SCV
and data will not be normally distributed, state of inequality. Any word
with prefix “significant” goes into alternate hypothesis. E.g. significant
improvement, factor, relation, difference.
 4 outcomes
Right Decision Wrong decision
NSC  NSC NSC  SC (HO True but Ha accepted)

GP  BP

SC  SC SC  NSC (Ha True but HO accepted)

BP  GP

Confidence Level- Probability of identify NSC as NSC.

Power of Test- Probability of identifying SC as SC.

Probability of Right Decision + Probability of Wrong Decision=1

CL + α = 1

Similarly,
Power of test + β= 1

α and β are inversely proportional as one denotes production risk whereas

other denotes consumer risk. If one makes α zero, then β will become very
high. How do you assign αand β?

2. STEP 2 – Build intelligence in Hypothesis/ Setup the level of Risk.

Imperially it is found that α=0.05 and β=0.1

3. STEP 3 – Perform hypothesis/ Make decision.

Test statistics- How far is your evidence (response) from mean.
Hence
if Test statistics< 2 then it is NSC (non-significant cause)
If 2< Test statistics< 3 then it is SC but under High impact CCV
If Test statistics> 3 then it is SC which is due to new SCV because we have
taken care of old SCV in due diligence.
 α is the area outside +/- 2* σ
P-value- Probability of significance.
P-area- Area outside +/- Test statistics
Test statistics< 2 then P > α
If 2< Test statistics< 3 then P < α

Hence (IMPORTANT)
if P > α then NSC
If P < α then SC
4. STEP 4 – Make inference.

One sample T test: To make inference about population mean from sample
mean.
One sample Variance test: To make inference about population variance
from sample variance.
One sample proportion test: To make inference about population
proportion from sample proportion.

Two sample T test: Comparing mean from two datasets or two samples.
Two sample Variance test: Comparing variance from two datasets or two
samples.
Two sample Proportion test: Comparing proportion from two datasets or
two samples.

Analysis of Variance (ANOVA) : It contains one way ANOVA, two way

ANOVA, test for equal variance, ANOM (Analysis of Mean), MANOVA.

One way ANOVA-For one respone(dependant variable) and one factor

(independent variable).
Two way ANOVA-For one respone(dependant variable) and two factors
(independent variable). The depeandant variable can vary because of factor
1 or factor 2 or interaction of 2 factors. The individual is main plot and
interaction is called interaction plot.

MANOVA- 2 RESPONSE AND ONE FACTOR.

There are also tests for checking proportions like test of multiple
proportions, CHI square test.

Before performing two sample T test, or one way ANOVA , one needs to
check whether the variance for the different samples is equal/similar. This is
done by Two sample Variance test or test for equal variance respectively.
Once it is confirmed that variance is same, then one can go ahead with
comparing means.
 The analysis for variances and means can be done if the data is following
normal distribution. To check this one can use “TEST OF NORMALITY”
Exercises
One sample T test
To check whether the difference between means of 221 is significant or not.
hence as p< alpha , it is significant
Now we want to check how far the mean is away from hypothesized mean
in this case t value shows that
T value shows that is the difference due to high impact CCV or new SCV
T value is inversely proportional to P-value

When two potential causes are there, one can prioritise by selecting one
with higher T value.

T statistics = X-X_bar/ SE mean= (1301-1080)/59.6

As confidence level increases, confidence interval also increases.

One can take several samples. So one can also calculate the range of sample
mean. That is measured by “Standard Error of Mean”. By central limit
theory,
SE Mean = Std Dev S1/ Sqrt(n)

Hence for 95% confidence interval, range for sample mean is

(sample mean – 2* SE Mean, sample mean + 2* SE Mean)
 Regression
Fix the dependent variable. Find the significant factors (look at p values low
values mean significant and high values means non-significant). Create
regression model. Understand predictability of your regression model by
calculating R2 i.e. coefficient of determination.
R2= Explained variation/ total variation

Explained variation –variation explained by +/- 3*sigma.

Total variation – total variation of the data.

Correlation test: used to only linear correlations and can be performed when
variables are continuous
HO- No correlation between salary & YOE
Ha- Significant correlation between salary & YOE

r- correlation coefficient for linear relationship

-1<= r <= 1
For strong + correlation –r> 0.8
For strong - correlation –r<-0.8

r=0 means there is no linear relationships

CHI SQUARE TEST : To check association between two categorical variables.

 If before GP=80 out of 100 and after 65 out of 78

HO- actual count= ideal count

Ha- actual count=/ ideal count

Good Before After Total

Part Actual 80 65 145
Ideal 81.46 =145*100/17 63.54 =145*78/178
8
Bad Actual 20 13 33
part
Ideal 18.54 = 33*100/178 14.46 =33*78/178
total 100 78 178

 Process Analysis- RCA, Cost effect diagram, why- why analysis, Pareto:
o IMPROVE:
 Generate solution
i. Brain storming
ii. To be stable
iii. Design of experiments
iv. Simulation
 Select best possible solution
i. Screen it against KANO model- Must be needs
ii. Effort benefit matrix---select solution with low efforts and high
benefits

Benefits High Sol 1 Sol 2

Low Sol 4 Sol 3
Low High
Efforts

iii. Criteria based matrix (CBM)- Taking acceptance with business owner
and process owners

Criteria Weightage (0- Votes for Sol Votes for

(Establish 10) 1 Sol 2
criteria) (team of 5 (team of
6sigma 5 6sigma
experts) experts)
Low cost 7 3 2
Ease of use 8 2 3
Total =37 =38
Sol 2 prevails

 Conduct Failure Mode and effect analysis (FMEA)

 i. Three types of FMEA- Process (P- FMEA), design (D- FMEA) and system
(S- FMEA)
ii. Failure modes –primary causes

iii. Effects of failure modes-

 Affecting Customers (VOC)
 Affecting business (VOB)
 Affecting work force (HR)
iv.

Failure Effect Severit Cause Occurrence Contro Detectio

Mode y (8-10) s s l check n

Late Miss 8
comin imp
g stuff
Lose 10
marks
scoldin 1
g
From this matrix, select top two effects based on severity. Then for a
effect select top five causes based on occurrences.
Then create risk priority number (RPN). There would be 10 RPN. For
the highest RPN create actionplan.

Risk Priority No. = Severity * occurrence* Detection

= S*O*D
o CONTROL:
 Types of control chart:

No. of sub- For Continuous Sub-group size For Discrete data

groups data Defects Defectives
n=1 IMR CHART n=equal C Chart n P chart
2<=n<=10 X_bar, R chart n= unequal u chart p chart
N=>10 X_bar, S chart

 Control chart for central tendency and spread:

For X-bar chart

For R-bar chart

Constants dependant on sample size.

IMR (Individual moving chart):

For single