LEAN SIX SIGMA: DEFINE AND MEASURE TOOLS

I. Lean Six Sigma overview

1. Lean

- Lean: elimination of waste and maximizing value to customers. 

- Waste is anything that's of no value or adds no value for

customers. Waste comes in many forms. There are eight types of
waste. 
 T for transport
 I for inventory
 M for motion
 W for waiting
 O of overproduction
 O for overprocessing
 D for defects 
 S for skills underutilized

- Lean targets the elimination of waste to improve efficiency, flow

and speed. 
- Key concepts of lean:
 Value is defined by the customer. Value is what customers
need and expect and are willing to pay for. This includes
receiving the right product and services at the specified
price, time and place.
 Value stream is all those processes, activities and
resources including information used to transform
inputs into outputs that are saleable to customers. The
elimination of waste will improve the efficiency, speed and
flow of the value stream. 
 Bottlenecks and constraints. The output of a value

stream's only as fast as the slowest processing step,
bottleneck or constraint. To improve the rate of output or
throughput, focus on improving the constraint until it is no
longer a limiting factor. 
 Pull versus push. Traditionally products have been pushed
to customers by suppliers or producers regardless of
whether they're wanted or not or if they're ready to receive
it or not. That is why you see year-end clearance
sales. They're clearing out products that were pushed
through from the factories to the stores. Pull, on the other
hand, is about customer demand pulling and authorizing
work and delivery as and when it is needed. 
 Just-in-time flow of value to the pace of customer
demand. Items or transactions should be
produced, processed or delivered just in time as it is
needed at the same rate as customer demand. If goods or
services are produced to the drum beat or rate of customer
demand, where demand for an item signals the
production and delivery of that itemfrom the next upstream
workstation, then there is no need for inventory. 
 To summarize, lean is all about the elimination of waste  and
maximizing value to customers.  Lean eliminates waste and
improves efficiency,  flow and speed in the delivery of value to
customers.
2. Six sigma:

- Six Sigma is very useful when the root causes or factors driving
performance are unknown. 
- The underlying premise of Six Sigma is the equation Y equals f of
x. Or Y is a function of x. Data is used to understand, analyze,and
 the determine the key Xs that have the biggest impact on the
performance of Y. In other words, what are the key Xs in the
equation Y is a function of x? By knowing which Xs impact
outcome Y, you can control the Xs to achieve the outcome you
want. 
3. Lean Six sigma:

- Lean is all about the elimination of waste and maximizing value

to customers. Lean eliminates waste and improves
efficiency, flow, and speed, in the delivery of value to customers. 
- Six Sigma DMAIC is very useful for determining the root causes
or factors driving performance and variation. By determining the
Y equals f of x, you can proactively and effectively control the
Xs to achieve the outcome Y that's important to
customers, consistently, with little or no variation. 
- The primary focus of Lean is efficiency and waste
reduction. While the primary focus of Six Sigma, is effectiveness
in producing and delivering what's important to customers. 
- Lean Six Sigma can be characterized by: 
 Customer focus
 Knowing and delivering on what's of value and critical to
customers. 
 Effective and efficient processes that are consistent and
predictable to any availability of value to customers. Proactive
prevention and control, instead of reactive detection and fire
fighting. This is accomplished by determining, improving, and
controlling the key X factors that drive performance outcome Y. 
- The application of Lean Six Sigma results in superior quality, cost,
and time performance. 
II. Define phase

1. Overview

- The champion and the project leader will launch the project with
the kick-off meeting. The charter is presented and expectations
for project participation and support are established. 
- The team will be involved with developing or confirming the
SIPOC diagram. The SIPOC diagram identifies and illustrates at a
high level processes relevant to the project, inputs and outputs
involved, those that supply those process inputs and those who
receive processed outputs as customers. Some SIPOC diagrams
include a list of CTQs or critical to quality requirements relevant
to processes within the scope of the project. 
- The project leader will then conduct a stakeholder analysis to
identify whose support and buy-in are critical during the course
of the project and how best to involve them. A communication
plan will also be developed to engage process owners and other
key stakeholders.
-The project leader will need your help to quantity the cost of
waste, COPQ, or the cost of poor quality that is targeted by the
project. 
+ Quantify the expected benefits of the project or the
operational impact and the financial impact. 
+ Have someone from the accounting or finance department to
help monetize the expected one-time cost savings and any
recurring savings. 
 Deliverables in the defined phase:
- Project charter
- SIPOC diagram

- Stakeholder analysis

- Communication plan

- COPQ or cost of poor quality reduction to be achieved by the

project.
- Project plan with DMAIC milestones. 
2. Project charter

- The Project Charter is a document that provides direction and

focus to the project team. It is management's authorization for
the project. It spells out the purpose, goals and scope of the
projectand management's assignment of resources to the
project. In short, it provides legitimacy to the project's existence. 
- Project charter containing these key components:
 Project name. The project is given a name by the Champion
and Project Leader. 
 Problem or opportunity statement. This statement describes
the opportunity or problem to be addressed. A good
problem statement is one that describes a specific,
recurring, chronic problem that is measurable, relevant and
significant to the organization. 
 Goal statement. This states the goal or target result to be
accomplished and by when. A goal statement should
improve what was described in the problem statement. The
goal should be SMART, S-M-A-R-T. Specific, Measurable,
Attainable, Relevant, and Time-bound. All team members
should review the goal statement and use the team's
collective expertise and experience to ensure that the goal
 is attainable within the time frame of the project. As a rule
of thumb, the duration of Lean Six Sigma projects should
not exceed six months. 
 Key metric. The key metric is the metric or performance
measure to be improved. This is the Project Y in y equals f
of x, or y is a function of x.
 Expected benefits. These are the expected operational and
financial benefits from the project. For financial benefits,
calculations of COPQ, or Cost of Poor Quality reduction, is
used to quantify the cost of waste targeted by the
project. Expressing the project benefits in monetary terms is
importantbecause that's the language of management. And
the language of management is money. 
 Project scope. States what's in scope and, equally
important, what's out of scope. This provides project
boundaries and helps prevent scope
creep. Milestones. Shows the checkpoint dates for project
progress and expected completion date. The completion
date of each phase of DMAIC are the usual milestones. 
 Signatures. Typically, there are three signatures. Project
Leader, someone from Finance and the Champion. The
Project Leader agrees to take on the project, the Finance
person validates the expected financial benefits and the
Champion approves the launch of the project as described
in the Project Charter. 
3. SIPOC Diagram

- SIPOC is an acronym for Supplier, Input, Process, Output,

Customer. 
- A SIPOC diagram is a diagram that provides an overall view of
the process, what's involved and who is involved, but at the very
high level, it's a bird's eye view. 
- The purpose of the SIPOC diagram is to help the lean six sigma
project team document and communicate the overall scope of
the processes related to the project on one page. 
- There are several advantages to the SIPOC. You get a high-level
view of the process. You get a list of the inputs and outputs. It
also identifies the stakeholders of the process, the suppliers who
provide the inputs, and the customers who receive the outputs. 
- Draw? The SIPOC diagram has five columns with the headings of
supplier, input, process, output, and customer. So you can just
write those headingsacross the top of your page. 

- Then you wanna start with the middle column, the P or Process

column.Starting at the top of this column, write in major steps of
the process relevant to the project. Draw each one as a
 rectangular box and start with the first step in the
process. Connect each box with vertical arrows going down the
column. The process is usually documented as three to six major
steps. For example, for a pizza delivery restaurant, the major
steps are take order, prepare pizza,bake, box, and deliver to
customer. 
- In the supplier column, list the people, departments, or
companies who supply the process. The term supplier is not
limited to outside vendors. Suppliers can be any person or
department upstream who provides inputs to the process in the
P column.Suppliers to the pizza restaurant include the flour
manufacturer and food processing companies that provide the
ingredients and even the customers who call in to place the
orders. 
- Next, in the input column, list the inputs that go into the process
to be transformed. An input can be materials, people, items,
information, or data. For the pizza restaurant, it is flour, water,
and other ingredients, as well as the order information provided
by customers. 
- The process column has been completed. 

- Next, in the output column, list the outputs produced by the

process. An output can be completed forms, issued
checks, product or a pizza. 
- Finally in the customer column, list the people, departments, or
companies who receive what the process produces. The term
customer is not limited to customers of the company. It can also
include people or departments downstream who receive what
the process produced. For the pizza restaurant, it's home delivery
and carryout customers. 
4. VOC and CTQ
- To collect the voice of the customer or VOC. First identify and list
your customers. 
- A customer is anyone who benefits from using your
product, services, or the output of your process. In this sense, we
don't want to limit our idea of customers to people who buy an
end product or service. 
- Customers can be internal or external, meaning internal or
external in respect to your company, function, or department.
Once identified, customers should be grouped into
segments, because of the different needs based on sales,
industry, location, demographics, or use. 

- For example the HR on-boarding process has two

customer segments, the new employees and the hiring
managers. And the needs of new employees are quite
different from the needs of hiring managers. So once you've
 identified and segmented customers we need to collect data on
the needs and wants, the voice of the customer. 
- Methods for collecting include surveys, focus groups, interviews,
and observations. For Lean Six sigma projects your customers are
most likely internal customers, which are fellow employees in the
same company. In my experience the most effective method for
capturing the voice of internal customers is to use
observation and focus groups. 
- These focus groups can be organized as workouts, Kaizen or
Lean events. These events are typically three hour or one day
sessions. In these events there are three basic parts:
- Capturing the voice of the customer,

- Translating them into CTQ's 

- Turning CTQ's into process metrics. And the reason for arriving at

process metrics is to enable people working in the process to
know what is important, customers are usually invited in to
participate in this event together with a project team and some
of you may be customers of the process. 
- What are CTQs? CTQs are the performance characteristics of a
process, product, or service that are critically important to
customers. 
- CTQs are measurable and how good they need to be in order to
satisfy the needs and expectations of customers can be
determined and established. 
- Let's go back to our airline example to apply these steps. What
many customers are saying or more accuratelywhat the VOC is
 telling us might be, I don't want to miss this flight. I don't want to
miss my connecting flight. I don't want to miss my meeting. 
-

- We can translate these customer needs into CTQs. Here's what

that would look like. Without impacting on-time arrival, depart as
late as possible so that passengers don't miss the flight. On-time
arrival at destination. 
- So then what are the CTQ or process metrics? Number of
passengers who miss the flight, percent on-time arrival, so these
are the process metrics that an airline should monitor and report
on. 

5. Cost of poor quality (COPQ)

- Every Lean Six Sigma project has an operational and financial
impact. The elimination of poor performance and reduction
 of waste can be monetized by quantifying COPQ, or the cost
of poor quality. 
- The cost of poor quality, or COPQ, are the costs associated
with poor performance. And if things were done right the
first time, all those costs need not be incurred. 
- COPQ has three categories:
 Appraisal costs, 
 Internal failure costs
 External failure costs
 Appraisal costs are unnecessary costs because if things
were done right, there is no need for the
checks, rechecks, inspections, or reviews. Examples
include rechecking and reviews, inspection to assure
quality, activities and costs associated with
appraisals that are needed because the process is not
good enough to produce defect-free outputs. 
 Internal failure costs are costs associated with
failures that occur within your organization, before the
service output or product is sent to your customer. For
example, re-doing it because it failed the first time due
to poor first-time yields, defects in processing the
transaction or product, defective outputs on non-
conforming product,rework, scrap, second-grade
product, activities and costs associated with addressing
internal failures. 
 External failure costs are costs associated with
failures that occur after the service output or product
has left your organization. External failure costs could
be returns from customers, customer credits, warranty
 claims, products recalls, activities and costs
associated with addressing external failures. 
- To quantify the expected project benefits, make a list of the
relevant COPQ items. Then quantify the cost of each item on
an annualized basis. For example, let's say 10% of the
product is scrap. The annual cost of the scrap can be
calculated. Another example, say every week five meetings
take place to resolve problems in the value stream. These
two-hour meetings are attended by 10 people, such as
managers, engineers, and supervisors. These meetings are
considered COPQ. Why? Because if things were done right
the first time, these meetings need not take place. So take
the average hourly labor cost of each of those
personnel, then multiply by 10 people, multiple by two hours
and the five meetings per week, and then multiple by 48
weeks per year, and you have the annual COPQ for those
firefighting meetings. 

- And if your project improvements eliminate four of those five

meetings each week, then expected project benefits is 80%
of the annual COPQ. 
To summarize, COPQ enables the project team to monetize
the cost of poor performance and waste targeted by the
project. And this will help the team monetize the expected
project benefits and state it in a language of management so
that you get their attention and priority. Remember now, the
language of management is money.
III. Measure phase
1. Overview
- The main focus of the measure phase is to measure the Y in Y
equals F of X. 
- Steps in the measure phase are:
i) Confirm the Y in Y equals F of X by reviewing all outputs from
the define phase. 
ii) Describe and map the current as is process. Start with a high
level process map then decompose the process as needed using
detailed process maps or swim lane deployment maps. 
iii) Determine what's critical to customers, in other words CTQs
are critical to quality requirements. A voice of the customer or
VOC analysis can be carried out to identify, prioritize and
translate customer needs to CTQs. 
iv)Develop a data collection plan for measuring Y. The project
team will develop a data collection plan to identify what
 questions need to be answered. What data and how much data
needs to be collected, by whom, from where and by what
means? The focus is on measuring Y. 
v) Validate the measurement system to ensure data integrity.  An
MSA ensures that any data used or to be collected is valid. 
vi) Measure the baseline performance of Y. 
 Tools to be used include sampling, process capability
analysis, descriptive statistics such as mean and standard
deviation, and various graphs and charts including pareto
charts and variation plots such as histograms and box
plots. This will enable team members to assist the project
leader in measuring Y. Whether the key metric is present
on time arrivals, processing times or defect rates.Process
capability, DPMO and sigma levels are then determined
to establish baseline performance.
vii) Identify key areas to focus the project. The project leader
will stratify the data to provide focus on who, what, when and
where to focus the analysis efforts in the next phase. By stratify
I mean you divide and group the data in meaningful categories,
by location, by product, by shift, by team and so on. Tools that
can help stratify data depend on the type of data:
 Pareto charts are very useful for stratification if the data is
discreet or categorical. For example, number of
complaints. 
 Box plots and dot plots are useful for stratification if the
data is continuous data. 
To summarize at the end of the measure phase, the project team
will have a baseline performance of Y and the team knows where
to focus its efforts in the analyze phase.
2. Process Mapping
- A process map is a diagram that provides a visual representation
of the process flow or sequence of activities or steps that take
place in a process from start to finish. 
- There are different types of process maps:

 High level process map

 Provides a view of the process at 10,000 feet
 Displays the main activities or major steps in a
process, usually showing the process in 10 or fewer
major steps. 
 Should not contain all the details of every process
step. That would make for a busy and unproductive
mess. Instead, it should be a bird's eye view of the
entire process

 If any of these major process steps needs more

granularity to be better understood, then drill
down or decompose those steps into more
detail using separate individual detailed process
maps. This is called process decomposition.
 Detailed process map
 Provides sufficient granularity to enable the project
team to understand what is going on, not going on,
 and display where the decisions, rework loops, delays,
bottlenecks, and workarounds occur. 
 This is where you display the nitty-gritty detail. It's
important to be comprehensive here so you can see
exactly what is actually going on today. It's a map
describing the process as it is currently, not what it
should be.

 By documenting the details of the process in this

visual form, your team can analyze and identify
opportunities for improvement. If multiple groups or
departments are involved in the process, then a
swimlane process map will be useful to map the
cross-functional process.
 Swimlane or deployment process map
  Detailed process map that has been allocated into the
respective lanes where the activities are performed. 
 A swimlane process map is also called a deployment
map, because it shows where the work is deployed.
 shows which group or department is performing each
process step, and, where the handoffs occur. Handoffs
are the weak links in a process where things can fall
through the cracks due to miscommunication
between departments resulting in delays, mistakes,
and defects. Being able to see these weak links is very
useful. 
 Value stream map 
3. Value stream mapping
-A value stream is all the end-to-end process
activities, resources, and information used to transform
inputs into outputs that are salable to customers. 
- A graphical visual representation of the value stream is called the
value stream map. It's a diagram that shows all the steps
 involved in getting a product or service from supplier to
customer. It shows the material and information flows from order
to delivery. Think of a value stream map as a type of high level
process map showing the end-to-end process. But then also
including customer data,processing data, and information
flows pertinent to the value stream. 
- The important thing is you get a sense for where value is added
and where waste occurs. 
- To map it start at the customer end, walk upstream on the
processing path from a customer to supplier and draw a diagram
to show every processin the material and information
flow. Always start with a customer end and work upstream. 
- Draw in the following, starting with customer and customer
information, delivery transport to customer,major process steps
and process data, any backlog or work in process between the
processes,supplier and supplier information, transport deliver
from supplier, information flow, material flow, timelines showing
probable lead time and processing time at the bottom of the
diagram.The completed process map of the coffee stand is
shown here. 
- At a glance we can see the end-to-end process from order to
delivery to customers. Information and material flows are
shown, including the process steps and relevant process
data, such as processing time, cycle time, and the number of
service. In this case, one cashier, one barista, and one helper. Any
backlog or work in process inventory in front of each process
step are shown. The timeline at the bottom of the map shows the
lead time and actual processing times. We can see that the total
lead time is 24 minutes, but the actual processing time is only 3.5
minutes. We can definitely improve that lead time. 
- The main benefit of a value stream map is that at a glance we
can see the process from end to end, including information and
material flow, inventory, and processing data. We can see the
delays, bottlenecks, and identify where time is spent or
wasted. Now this is different from a detailed process map. A
detailed process map contains a granular list of activities, but
does not contain all this other specific data on wait times,
 number of customers, and so on. However, if you find a place in
your value stream that requires a detailed look this is the time to
create a detailed process map for that particular process block.In
the coffee shop example we see there is a 10 minute wait time
for Order and Pay and Make Coffee. A detailed process map of
these process blocks will help uncover waste and
inefficiencies. The value stream map enables a project team to
capture the current state of the value stream during the measure
phase. During the analyze and improve phases the team can
evaluate the value stream for improvement
opportunities, brainstorm to improve upon it, and then visualize
the future by developing a future state value stream map. 
4. Lean and Process metrics
- Case study? When I stand in line to go through airport
security, there is usually a long queue, and a long wait. And the
wait is even more frustrating if I see airport security personnel
milling around, not operating the available, unused scanners. In
this common experience, we see many opportunities for
measuring and improving the process. 
- There are metrics to measure how well any process flows. Lean
and process flow metrics include, Work In Process, or WIP, or
whip. Processing Time, Lead Time, Cycle Time, Throughput, and
Pack Rate. 
 Work In Process, or WIP, are all the items being
processed, and the items between processing steps, waiting
to be processed. For example, if you are in line, the WIP is a
total count of the number of travelersbeing processed, plus
those standing in line, waiting to be processed. It is the
total number of travelers at the airport security checkpoint. 
 Processing Time is the time that an item or transaction is
actually being worked on, or processed. In our example,
processing time is the time when your identification is
checked against your boarding pass, and the time when
you and your carryon bag are scanned. Of course,
processing time is a small fraction of the total time you
spend to go through airport security. That total time spent,
or elapsed time, going through security, waiting in line, any
delays during processing and processing times, is called the
Lead Time, or Throughput Time. 
 Lead Time is elapsed time required for an item or
transaction to move all the way through its process from
start to finish. 
 Cycle Time is the average time between the completion of
successive units. Those units can be units of product,orders,
transactions, or customers in services. Cycle Time includes
operating time, plus the time taken to prepare, load and
unload, before the whole cycle is repeated. This sounds like
Processing Time, but there is an important difference. 
 While Processing Time is the actual time the
machine or employee works on an item
 Cycle Time is the time taken to prepare, load, and
process, and unload. 
 So if a machine or employee needs to cool down before
processing the next item, that cooldown period is part of
Cycle Time. So basically, Processing Time is a subset of
Cycle Time. 
 In our example, Cycle Time would then be the average
time between departures of successive customers. For a
scanning machine in airport security, scanning Cycle Time
 includes the time taken by the person entering the
scanning chamber, the actual operation of the scanner, and
a person leaving the chamber. Cycle Time for the whole
security process is called System Cycle Time. It is the
average time between the completion of successive
travelers going through security. If a traveler completes the
security process every 30 seconds, then the System Cycle
Time is 30 seconds. 

 Throughput Rate, or Throughput, is the reciprocal of Cycle

Time. So Throughput is one traveler every 30
seconds, which translates to two travelers per minute, or
120 travelers per hour. Think of Throughput as the average
completion rate, or exit rate. Now, it would be great if
Throughput can keep up with the rate of customer
demand, so that there is no delay or buildup of WIP. The
rate of customer demand is called the Takt Rate, or Takt.
Originally from the German language, Takt means musical
beat, or drumbeat. Takt or Takt Rate is the drumbeat of
 customer demand. If we convert rate to time, we get Takt
Time. 

 Takt Time is the time between units that customers demand. In

our example, customer demand rate, or Takt Rate, is the arrival
rate. If travelers arrive at a rate of 10 travelers per minute, that is
the Takt or Takt Rate. The Takt Time is the reciprocal of that
rate. 10 travelers every 60 seconds,translates to Takt Time of six
seconds. Let's say in our example the system throughput is only
two travelers per minute, while the Takt Rate is 10 travelers per
minute. No wonder there are long lines at a security
checkpoint, and, long Lead Time to go through security. To reduce
Lead Time, airport security should increase Throughput Rate to
match the Takt Rate. They can speed up Cycle Time by working
faster, with faster conveyors and scanners, or, put those personnel
standing around to work, and open up those unused available
scanners to screen more travelers.

5. Data collection planning

- To make data collection worthwhile, efficient and effective, it has
to be guided by well-crafted questions.  I recommend the
following five steps. 
 Step one, make a list of specific questions you want
answered regarding Y in Y equals F of X. 
 Step two, for each question listed, decide how you want the
answers presented and displayed. 
 Step three, based on that, decide what tools are needed to
make that possible. 
 Step four, for each question, determine what type of
data and how much data are required by that tool. 
 Step five, determine from where and from whom the data
should be collected. 
- Here are a couple of tips I share with my clients. 
 Do not fall into the temptation and common pitfall of
collecting data on both Y and Xs. During the measure
phase, focus on collecting data on just the Y, not the Xs. Xs
are dealt with in the next phase, the analyze phase, after
the measure phase uncoverswhere to focus your analysis. A
separate data collection plan will be developed at that
time. 
 Start by making a list of questions that need to be
answered. Ask questions such as how big, how bad, how
widespread is the problem or poor performance? For
example, how many customer complaints are there? And
the followup question is, where do we have the highest
number of complaints such as which locations or which
types of defect account for the majority of the complaints? 
 Using the right chart: A Pareto chart is what's needed to
plot that data and answer those questions. On the other
hand, if the project team is trying to measure variation in
processing times, then a box plot or histogram should be
used. Specific questions will result in specific
strategies. They help focus your data collection effort and
later your analysis. 
6. Measurement system analysis (MSA)
- The measurement system includes the entire system, including
the measurement instrument, the operator, and the procedures
used for collecting, measuring, and recording data. In Lean Six
Sigma projects this is done using a technique called
measurement system analysis, or MSA for short. 
- MSA is done early during the measure phase so that any data to
be collected or any measurement used is valid. 
- Repeatability measures the ability of themeasurement system to
be consistent when the same item is measured repeatedly under
the same conditions. How likely will the reading be the
same when the same item is measured again by the same person
using the same methods and tools? 
- Reproducibility measures the ability of the measurement system
to be consistent or reproducible across individuals. How likely is
a reading the same when the same item is measured by
someone else using the same methods and tools?
- Repeatability and reproducibility are MSA for continuous data
such as my weight, product dimensions, or processing times. 
- But what if your project is measuring categorical or attribute data
such as types of customer complaints? If a customer calls into
customer service with a complaint,the customer service rep,
John, may classify it as reason Code A. If that same caller calls
again, and if another customer service rep, say Mary, picks up the
call, she may classify it as reason Code B.
- Hmmm, we say that a measurement system is not reproducible
or there is a lack of agreement between appraisers. 

- And if the same customer calls again the next day and not
recognizing that it's the same caller, John may classify the
complaint as reason Code L. 

- John is not consistent. The level of consistency within each

person is called agreement within each appraiser. We say that
John is not repeatable.
- And by the way, we should also consider other classifications
even correct when compared to an expert. We call this measure
appraiser agreement with the expert.

- Now we have all these metrics at our disposal. How do we

actually start analyzing the measurement system? To carry out an
MSA, 20 to 25 known items are selected. And in a blind study,
each item is measured twice by at least two appraisers. This
evaluation is called Measurement System Analysis For
Attributes or Attribute Agreement Analysis. Three calculations
are evaluated:
 Percent agreement between appraisers, which measures
reproducibility
  Percent agreement within appraisers, which measures
repeatability
 Percent agreement with the expert. 
- All agreements should be at least at 90% or higher, otherwise the
measurement system should be improved before data can be
collected or used. 
7. Descriptive statistics
- Similarly, in Lean Six Sigma projects, descriptive statistics are
used to baseline and track performance. There are two types of
descriptive statistics: 
 Measures of central tendency 
 Measures of spread, or dispersion. 

- Let's discuss measures of central tendency.B These measures

summarize whether values in a set of data are
centered. Measures of central tendency include the mean,
median, and mode. 
- The mean is simply the average. For example, if there are seven
delivery times in hours, 30, 20, 20, 25, 27, 28, and 31, then the
mean is a sum of all these values divided by seven. Using this
calculation, the mean is 22 hours. 
- Mathematically, the mean is a sum of all numbers in a set, one to
n divided by n. Sometimes the mean is not always a good
measure of central tendency, especially if there are outliers, such
as the three in this case. 
- A better measure is the median. The median is the value of the
midpoint in a ranked order set of data.To obtain the median,
arrange the data in rank order, either in ascending or descending
order. If there's an odd number of items, the median is the value
of the middle item. If there's an even number of items, the
median is the average value of the two middle items. In our
example, the numbers are already in ascending order. Since there
are seven items, an odd number, the median is the value of the
fourth item, so the median is 25 hours. Quite different from the
mean of 22 hours. The median was not easily affected by the
outlier, three hours. 
- The third measure of central tendency is the mode. The mode is
the most frequently occurring value. In our example, the mode is
20 hours. Think of the mode as the most popular value. It is
possible to have more than one mode. If there are two modes,
then we say it is bimodal. 
- Next, let's discuss measures of spread, or dispersion. These
measures summarize the amount of spread in the values found
in a set of data. Measures of spread include range, variance, and
standard deviation. 
- Range is the difference between the largest valueand the
smallest value in a set of numbers, or maximum minus
minimum. In this example, the range is 31 minus three equals
28. 
- How about a spread or deviation of each data point from the
mean? In our example, the deviation of each item from the mean
is shown here. If we calculate the mean or average of these
deviations, the addition will cancel out to zero, so each deviation
is squared and we take the mean of the squared deviations
instead. This is called the variance. 
- If a sample is used to estimate the population variance, then the
formula for the sample of variance is very similar, except that we
divide by n minus one to obtain an unbiased estimate of the
population variance. In our sample, variance is a sum of all these
divided by six and the result is 86.657 squared hours. Since we
squared the deviations and calculated in variance, we ended up
with squared hours. In order to bring it back to hours, the square
root is applied. The end result is called the standard
deviation. Standard deviation is the square root of the
variance. In this example, the standard deviation is 9.31 hours.
- Standard deviation is a very popular and very helpful indicator of
variation, and remember, we don't want variation in our
processes. 
- So, descriptive statistics for this data set are mean equals 22,
median, 25, mode, 20, range, 28, variance, 86.67, and standard
deviation, 9.31. 
- If the data follows a normal distribution perfectly, then the mean,
median, and mode are equal. Knowing the range, variance, and
standard deviation in addition to mean, median, and mode is
important. How often do companies focus and report on means
only? In our example, the mean is 22 hours. If guaranteed
delivery time is 24 hours or less, then everyone in the company
may jump for joy, but wait, why are there unhappy
customers? Because of the variation. As you can see, there's a
wide variation in delivery times, it ranges from three to 31, and in
four out of seven times, the 24-hour guarantee was
violated. That is why there are so many unhappy customers. If
you only rely on the mean, you don't get the whole picture and
you'll likely set yourself up for failure, so the next time you report
 a performance, don't forget to report both measures of central
tendency and measures of dispersion.
8. Pareto chart
- During the measure phase, stratify the data on the key metric to
focus the problem. In addition by stratifying by what and
where, you can also stratify using who and when such as using a
Pareto chart of complaints by teamor by day of week. Here's a tip
on stratification. 
- Apply the four Ws, who, what, where, when. Notice the fifth W of
why is missing from this list during the measure phase. The why
is reserved for the analyze phase. That's when you want to
analyze and determine the root causes or key axis driving the
performance of why. The Pareto chart is appropriate when the
data type is categorical count data. In our example, the total
count or percentage of complaints can be divided into
categoriessuch as by location, type, teams, day of week. Simply
put, Pareto charts help your team focus your project efforts.
9. Variation: Dotplot, Histogram, Boxplot
- Which graph is the best one to use? It depends. The rule of
thumb is that histograms require at least 45 data points so that
the pattern of variation can be displayed properly. As for
dotplots, the rule of thumb is not unlike that of histograms, but it
can do with fewer data points than histograms. On the other
hand, boxplots are very economical. As a rule of thumb it is a
minimum of only eight to 10 data points. Of course, the more
data points you have, the better you can display the pattern of
variation. All of these charts were created using the software
Minitab. If you go to my course, Learning Minitab, you can see
how to create these exact graphs and charts and others as
 well. Knowing how to use Minitab or any statistical software can
make you a very valuable asset to your team. To summarize,
dotplots, histograms, and boxplots are used for continuous
data. And Pareto charts are used for discrete or categorical
data. These graphical displays help the Lean Six Sigma project
team measure, understand, and focus its analysis, as well as
improvement efforts.
10. Process capability, DPMO, and Sigma
level
- What is process capability? Process capability refers to how
capable or how well the process performs against customer
requirements or specifications. 
- Potential process capability, Cp, for a normal curve, the process
spread is six standard deviations. Three to the left and three to
the right of the mean. Potential process capability, Cp, equals
upper specification limit minus lower specification limit divided
by six standard deviations. In other words, specification's width
divided by process spread. 
- When Cp is equal to or greater than one, we say the process is
potentially capable. Cp measures the best case process
capability. The best possible process capability that can be
achieved assuming that process mean is always on target. But
your aim may be off target, the middle of your car, or mean of
the process, is not always centered at the middle of a
doorway, or middle of the specification width. In actuality, when
you drive into a garage, you and your car may not always be
centered. Sometimes aim is off center, veering to the left or to
the right of the midpoint of the doorway, or specification
width. Processes shift too. 
- To account for actual performance, there is another index
called the actual process capability index, Cpk.It factors in where
the process mean is in relation to the upper and lower
specification limit, respectively. Actual process capability, Cpk, is
a minimum of two numbers. Upper spec limit minus process
mean, divided by half process spread, and process mean minus
lower spec limit, divided by half process spread. 
- When Cpk is equal to or greater than one, the process is
capable. Cpk shows the actual location of the process spread in
relation to the upper and lower specs. Cpk is never greater than
Cp. Best case scenario, Cp equals Cpk. And this happens when
the process mean is centered in the middle of the spec's
width. Exactly in between lower spec limit and upper spec
limit. When the process mean is centered on target. 
-
- If Cpk equals two, the spec width is twice the process
spread.Since the process spread is always six standard deviations
wide, then the specification width has to be 12 standard
deviations. The distance between the process mean to either
specification limit is six standard deviations. That makes it a six
sigma
 process. 

- If you recall from your Six Sigma Foundations,sigma level is a

number of standard deviations between the process mean and
the nearest specification limit. Generally, to convert Cpk to sigma
level simply multiply it by three. Using this formula with a Cpk
equals two, sigma level is three times two equals six. Therefore,
Cpk of two is a six sigma level of performance. To summarize, the
most commonly used process capability indexes are Cp and
Cpk. Cp measures potential process capability and Cpk measures
actual process capability.Sigma level is three times Cpk. Now,
hopefully you can make sense of all those terms and numbers
used by your green belt or black belt project leader.