GB - 2 - Define - Six Sigma Fundamentals PDF

Lean Six Sigma Green Belt
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Exam Feedback
Course Presentation
Define Phase
Six Sigma Fundamentals
Official
Understanding Six Sigma
Process Maps
Voice of the Customer
Cost of Poor Quality
Process Metrics
Selecting Projects
Elements of Waste
Wrap Up & Action Items
LSS Green Belt v12 MT - Define Phase 7 © Open Source Six Sigma, LLC
Official
What is a Process?
Why have a process focus?
– So we can understand how and why work gets done

– To characterize customer & supplier relationships
– To manage for maximum customer satisfaction while utilizing
minimum resources
– To see the process from start to finish as it is currently being
performed
– Defects: Blame the process, not the people
proc•ess (pros′es) n. – A repetitive and systematic series

of steps or activities where inputs are modified to
achieve a value-added output
Official
Examples of Processes
We go through processes every day. Below are some examples of those

processes. Can you think of other processes within your daily environment?
• Injection molding • Recruiting staff

• Decanting solutions • Processing invoices
• Filling vial/bottles • Conducting research
• Crushing ore • Opening accounts
• Refining oil • Reconciling accounts
• Turning screws • Filling out a timesheet
• Building custom homes • Distributing mail
• Paving roads • Backing up files
• Changing a tire • Issuing purchase orders
Official
Process Maps
The purpose of a Process Map is to:

– Identify the complexity of the process
– Communicate the focus of problem solving
Process Maps are living documents and must be changed as the process is
changed:
– They represent what is currently happening not what you think is happening
– They should be created by the people who are closest to the process
Process Map
Start Step A Step B Step C Step D Finish
Official
Process Map Symbols
Standard symbols for Process Mapping:

(available in Microsoft Office™, Visio™, iGrafx™ , SigmaFlow™ and other products)
A RECTANGLE indicates an A PARALLELOGRAM shows that

activity. Statements within the there are data
rectangle should begin with a
verb
A DIAMOND signifies a decision point. An ELLIPSE shows the start and

Only two paths emerge from a end of the process
decision point: No and Yes
An ARROW shows the A CIRCLE WITH A LETTER OR

1 NUMBER INSIDE symbolizes the
connection and direction of
continuation of a flowchart to
flow
another page
Official
High Level Process Map
One of the deliverables from the Define Phase is a high level Process Map
which at a minimum must include:
– Start and stop points
– All process steps
– All decision points
– Directional flow
– Value categories as defined here:
• Value Added:
– Physically transforms the “thing” going through the process
– Must be done right the first time
– Meaningful from the customer’s perspective (is the customer willing to pay
for it?)
• Value Enabling:
– Satisfies requirements of non-paying external stakeholders (government
regulations)
• Non-Value Added:
– Everything else
Official
Process Map Example
Process Map for a Call Center -

START B Z
REVIEW CASE LOGOFF PHONE, CHECK

LOGON TO PC &
TOOL HISTORY & MAIL,E-MAIL,VOICE MAIL
APPLICATIONS
TAKE NOTES
E
C Y
SCHEDULED
N PHONE TIME?
A
SCHEDULED
PHONE TIME? Z TRANSFER Y
TRANSFER
APPROPRIATE?
CALL
D N
Y
A EXAMINE NEXT NOTE
N OR RESEARCH ITEM
LOGON
TO PHONE IMMEDIATE PROVIDE
Y RESPONSE Y RESPONSE
ACCESS CASE TOOL F
D PHONE
TIME AVAILABLE? PHONE&
WALK-IN NOTE
N CALL or ENTER APPROPRIATE
DATA ENDS
WALK-IN? N SSAN (#,9s,0s)
Z CALL PUT ON HOLD,
REFER TO IF EMP DATA NOT
PHONE DATA REFERENCES POPULATED, ENTER
CAPTURE BEGINS
CREATE A CASE
Y INCL CASE TYPE
ANSWER? OLD N
DETERMINE WHO DATE/TIME, &
CASE
IS INQUIRING N NEEDED BY
Y
QUERY INTERNAL UPDATE ENTRIES
ACCESS CASE TOOL HRSC SME(S) INCL OPEN DATE/TIME AUTO Y
ROUTE
ROUTE
DETERMINE NATURE N
OF CALL & CONFIRM Y
ANSWER?
UNDERSTANDING
CASE Y CLOSE CASE
N CLOSED W/ E
DATE/TIME
CASE TOOL N OFF HOLD AND ADD TO N
RECORD? C ARRANGE CALL RESEARCH
BACK PHONE DATA LIST GO TO E
TAKE ACTION
Y ENDS F or E NEXT
or
DEPENDING ON
DO RESEARCH F
B CASE
Official
Cross Functional Process Map
When multiple departments or functional groups are involved in a complex process

it is often useful to use Cross Functional Process Maps.
– Draw in either vertical or horizontal Swim Lanes and label the functional groups then
draw the Process Map
Sending Wire Transfers

Department
Attach ACH ACH – Automated

Request
Start transfer
form to Clearing House.
Invoice
Fill out ACH Receive

Vendor
Produce an No End
enrollment payment
Invoice
form
Match against
Accounting
Maintain database
Financial
Vendor Yes Input info into bank batch to balance ACH

info in web interface and daily cash transfers
FRS? batch
Accepts transactions,
Bank
transfer money and

provide batch total
Accounting
Review and
General
21.0
Process 3.0
Bank
transfer in Journey Entry
Reconciliation
FRS
Official
Process Map Exercise
Exercise objective: Using your favorite Process Mapping

tool create a Process Map of your project or functional
area.
1. Create a high level Process Map, use enough detail to

make it useful.
• It is helpful to use rectangular post-its for process steps
and square ones turned to a diamond for decision
points.
2. Color code the value added (green) and non-value
added (red) steps.
3. Be prepared to discuss this with your mentor.
Official
Do you know your Customer?
Knowing your customer is more than just a handshake. It is necessary to

clearly understand their needs. In Six Sigma we call this “understanding
the CTQ’s” or Critical to Customer Characteristics.
Voice Of the Customer Critical to Customer

Characteristics
Official
Voice of the Customer
Voice of the Customer or VOC seems obvious; after all, we all know
what the customer wants. Or do we??
The customer’s perspective has to be foremost in the mind of the Six Sigma
Belt throughout the project cycle.
1. Features
• Does the process provide what the customers expect and need?
• How do you know?
2. Integrity
• Is the relationship with the customer centered on trust?
3. Delivery
• Does the process meet the customer’s time frame?
4. Expense
• Does the customer perceive value for cost?
Official
What is a Customer?
Different types of customers dictate how we interact with them in the process.
In order to identify customer and supplier requirements we must first define
who the customers are:
External
– Direct: those who receive the output of your services, they generally are
the source of your revenue
– Indirect: those who do not receive or pay for the output of your services
but have a vested interest in what you do (government agencies)
Internal
– those within your organization
who receive the output of your
work
Official
Value Chain
The relationship from one process to the next in an organization creates a “Value
Chain” of suppliers and receivers of process outputs.
Each process has a contribution and accountability to the next to satisfy the external
customer.
External customers needs and requirements are best met when all process owners
work cooperatively in the Value Chain.
Careful – each
move has many
impacts!
Official
What is a CTQ?
Critical to Quality (CTQ’s) are measures we use to capture VOC properly.

(also referred to in some literature as CTC’s – Critical to Customer)
CTQ’s can be vague and difficult to define.

– The customer may identify a requirement that is difficult to measure directly
so it will be necessary to break down what is meant by the customer into
identifiable and measurable terms
Product: Service:
• Performance • Competence
• Features • Reliability
• Conformance • Accuracy
• Timeliness • Timeliness
• Reliability • Responsiveness
• Serviceability • Access
• Durability • Courtesy
• Aesthetics • Communication
• Reputation • Credibility
• Completeness • Security
• Understanding
Official
Developing CTQ’s
Identify Customers
Step 1 • Listing
• Segmentation
• Prioritization
Capture VOC
Step 2 • Review existing performance
• Determine gaps in what you need to know
• Select tools that provide data on gaps
• Collect data on the gaps
Validate CTQ’s
Step 3 • Translate VOC to CTQ’s
• Prioritize the CTQ’s
• Set Specified Requirements
• Confirm CTQ’s with customer
Official
Cost of Poor Quality (COPQ)
• COPQ stands for Cost of Poor Quality
• As a Six Sigma Belt one of your tasks will be to estimate COPQ for your
process
• Through your process exploration and project definition work you will
develop a refined estimate of the COPQ in your project
• This project COPQ represents the financial opportunity of your team’s

improvement effort (VOB)
• Calculating COPQ is iterative and will change as you learn more about the
process
No, not that kind of
cop queue!
Official
The Essence of COPQ
• The concepts of traditional Quality Cost are the foundation for COPQ.
– External, Internal, Prevention, Appraisal
• A significant portion of COPQ from any defect comes from effects that are
difficult to quantify and must be estimated.
• COPQ helps us understand the financial impact of problems created by

defects.
• COPQ is a symptom, not a defect

– Projects fix defects with the intent of improving symptoms.
Official
COPQ - Categories
Internal COPQ Prevention

• Quality Control Department • Error Proofing Devices
• Inspection • Supplier Certification
• Quarantined Inventory • Design for Six Sigma
• Etc… • Etc…
External COPQ Detection

• Warranty • Supplier Audits
• Customer Complaint Related • Sorting Incoming Parts
Travel • Repaired Material
• Customer Charge Back Costs • Etc…
• Etc…
Official
COPQ - Iceberg
Inspection
Warranty Recode
Rework
Rejects
Visible Costs
(Hard Costs)
Engineering change orders Lost sales
Time value of money (less obvious) Late delivery

Expediting costs
More set-ups
Excess inventory
Working Capital allocations

Long cycle times
Excessive Material
Orders/Planning
Hidden Costs Lost Customer Loyalty
(Soft Costs)
Official
COPQ and Lean
Waste: that which does not add, subtract or otherwise modify the
output in a way that is perceived by the customer to add value.
• In some cases waste may be

necessary but should be recognized Lean Enterprise
and explored: Seven Elements of Waste *
– Inspection, Correction, Waiting in  Correction
suspense  Processing
– Decision diamonds, by definition,  Conveyance
are non-value added  Motion
 Waiting
• Often waste can provide
 Overproduction
opportunities for additional defects
 Inventory
to occur.
*Womack, J. P., & Jones, D. T. (1996). Lean
• We will discuss Lean in more detail Thinking. New York, NY: Simon & Schuster
later in the course.
Official
COPQ – Hard and Soft Savings
While Hard Savings are always more desirable because they are
easier to quantify it is also necessary to think about Soft Savings.
COPQ – Hard Savings COPQ – Soft Savings
• Labor Savings • Gaining Lost Sales

• Cycle Time Improvements • Missed Opportunities
• Scrap Reductions • Customer Loyalty
• Hidden Factory Costs • Strategic Savings
• Inventory Carrying Cost • Preventing Regulatory Fines
Official
COPQ Exercise
Exercise objective: Identify current COPQ

opportunities in your direct area.
1. Brainstorm a list of COPQ opportunities.
2. Categorize the top three sources of COPQ for the

four classifications:
• Internal
• External
• Prevention
• Detection
Official
The Basic Six Sigma Metrics
In any process improvement endeavor the ultimate objective is to

make the process:
• Better: DPU, DPMO, RTY (there are others, but they derive from these basic
three)
• Faster: Cycle Time
• Cheaper: COPQ
If you make the process better by eliminating defects you will make it faster.
If you choose to make the process faster you will have to eliminate defects to be as
fast as you can be.
If you make the process better or faster you will necessarily make it cheaper.
The metrics for all Six Sigma projects fall into one of these
three categories.
Official
Cycle Time Defined
Think of Cycle Time in terms of your product or transaction in

the eyes of the customer of the process:
– It is the time required for the product or transaction to go through the entire
process from beginning to end
– It is not simply the “touch time” of the value-added portion of the process
What is the cycle time of the process you mapped?

Is there any variation in the cycle time?
Why?
Official
Defects Per Unit (DPU)
Six Sigma methods quantify individual defects and not just defectives ~
– Defects account for all errors on a unit

• A unit may have multiple defects
• An incorrect invoice may have the wrong amount due and the wrong due date
– Defectives simply classifies the unit bad
• Does not matter how many defects there are
• The invoice is wrong, causes are unknown
– A unit:
• Is the measure of volume of output from your area
• Is observable and countable. It has a discrete start and stop point
• It is an individual measurement and not an average of measurements
Two Defects One Defective
Official
First Time Yield
FTY is the traditional quality metric for yield

– Unfortunately it does not account for any necessary rework
Total Units Passed

FTY = Total Units Tested
Units in = 100 Units in = 100 Units in = 100 Units Tested = 100

Units Out = 100 Units Out = 100 Units Out = 100 Units Passed = 100
Process A (Grips) Process B (Shafts) Process C (Club Heads) Final Product (Set of Irons)
Defects Repaired Defects Repaired Defects Repaired

40 30 20 FTY = 100 %
*None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept.
Official
Rolled Throughput Yield
RTY is a more appropriate metric for problem solving

– It accounts for losses due to rework steps
RTY = X1 * X2 * X3
Units in = 100 Units in = 100 Units in = 100
Units W/O Rework = 60 Units W/O Rework = 70 Units W/O Rework = 80 Units Passed = 34
RTY = 0.6 RTY = 0.7 RTY = 0.8 Units Tested = 100
Process A (Grips) Process B (Shafts) Process C (Club Heads) Final Product (Set of Irons)
Defects Repaired Defects Repaired Defects Repaired

40 30 20 RTY = 33.6 %
Official
RTY Estimate
• In many organizations the long term data required to

calculate RTY is not available. We can however estimate RTY
using a known DPU as long as certain conditions are met.
• The Poisson distribution generally holds true for the random
distribution of defects in a unit of product and is the basis for
the estimation.
– The best estimate of the proportion of units containing no
defects, or RTY, is:
RTY = e -dpu
The mathematical constant e is the base of the natural logarithm.

e ≈ 2.71828 18284 59045 23536 02874 7135
Official
Deriving RTY from DPU
The Binomial distribution is the true model for defect data but the Poisson is the
convenient model for defect data. The Poisson does a good job of predicting when the
defect rates are low.
Probability Yield Yield % Over
Poisson VS Binomial (r=0,n=1)
120% of a defect (Binomial) (Poisson) Estimated
0.0 100% 100% 0%
100% 0.1 90% 90% 0%
Yield (Binomial)
0.2 80% 82% 2%
Yield (Poisson)
Yield (RTY)
80%
0.3 70% 74% 4%
0.4 60% 67% 7%
60%
0.5 50% 61% 11%
0.6 40% 55% 15%
40%
0.7 30% 50% 20%
20%
0.8 20% 45% 25%
0.9 10% 41% 31%
0% 1.0 0% 37% 37%
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Probability of a defect
Binomial Poisson
n = number of units
r = number of predicted defects
p = probability of a defect occurrence
q=1-p
For low defect rates (p < 0.1) the Poisson approximates the Binomial fairly well.
Official
Deriving RTY from DPU - Modeling
Unit
Basic Question: What is the likelihood of producing
Opportunity a unit with zero defects?
• For the unit shown the following data was

gathered:
– 60 defects observed
RTY for DPU = 1
– 60 units processed 0.368
• What is the DPU? 0.364
0.36
Yield
0.356
0.352
• What is probability that any given 0.348
opportunity will be a defect? 10 100 1000 10000 100000 1000000
Chances Per Unit
• What is the probability that any given Opportunities P(defect) P(no defect) RTY (Prob defect free unit)
opportunity will NOT be a defect is: 10 0.1 0.9 0.34867844
100 0.01 0.99 0.366032341
1000 0.001 0.999 0.367695425
10000 0.0001 0.9999 0.367861046
• The probability that all 10 opportunities on 100000 0.00001 0.99999 0.367877602
1000000 0.000001 0.999999 0.367879257
single unit will be defect-free is:
If we extend the concept to an infinite number of
opportunities, all at a DPU of 1.0, we will approach
the value of 0.368.
Official
RTY Prediction — Poisson Model
• Use the binomial to estimate the probability of a discrete event (good/bad)

when sampling from a relatively large population,
n > 16 and p < 0.1.
• When r = 0 we compute the probability of finding zero defects per unit
(called “rolled throughput yield”).
• The table to the right shows the proportion of product which will have:
– 0 defects (r = 0) (dpu) r e – dpu
Y=
– 1 defect (r = 1) When DPU = 1 r r! p[r]
– 2 defects (r = 2), etc… 0 0.3679
• When on average we have a process with 1 defect per unit then we say 1 0.3679
there is a 36.79% chance of finding a unit with zero defects. There is only a
1.53% chance of finding a unit with 4 defects. 2 0.1839
3 0.0613
• When r = 1 this equation simplifies to: (dpu)*e_dpu = 2.718^(-1) = (1/2.718) =
0.3679 = 36.79 % 4 0.0153
• To predict the % of units with zero defect (i.e., RTY): 5 0.0031
– count the number of defects found 6 0.0005
– count the number of units produced 7 0.0001
– compute the dpu and enter it in the dpu equation
8 0.0000
Official
Six Sigma Metrics – Calculating DPU
The DPU for a given operation can be calculated by dividing the number of defects
found in the operation by the number of units entering the operational step.
100 parts built

2 defects identified and corrected
dpu = 0.02
So RTY for this step would be e-.02 (.980199) or 98.02%.
RTY1=0.98 RTY2=0.98 RTY3=0.98 RTY4=0.98 RTY5=0.98 RTYTOT= 0.904

dpu = .02 dpu = .02 dpu = .02 dpu = .02 dpu = .02 dpuTOT = .1
If the process had only 5 process steps with the same yield the process RTY would be: 0.98 * 0.98
* 0.98 * 0.98 * 0.98 = 0.903921 or 90.39%. Since our metric of primary concern is the COPQ of this
process we can say less than 9% of the time we will be spending dollars in excess of the pre-
determined standard or value added amount to which this process is entitled.
Note: RTY’s must be multiplied across a process, DPU’s

are added across a process.
Official
Focusing our Effort – FTY vs. RTY
Assume we are creating two products in our organization that

use similar processes.
Product A
FTY = 80%
Product B
FTY = 80%
How do you know what to work on?
Official
Focusing our Effort – FTY versus RTY
Let’s look at the DPU of each product assuming equal opportunities and
margin…
Product A
Product B
dpu 100 / 100 = 1 dpu dpu 200 / 100 = 2 dpu
Now, can you tell which to work on?
“the product with the highest DPU?” …think again!
How much more time and/or raw material are required?

How much extra floor space do we need?
How much extra staff or hours are required to perform the rework?
How many extra shipments are we paying for from our suppliers?
How much testing have we built in to capture our defects?
Official
Summary
At this point you should be able to:
• Describe what is meant by “Process Focus”
• Generate a High Level Process Map
• Describe the importance of VOC, VOB and VOE, and CTQ’s
• Explain COPQ
• Describe the Basic Six Sigma metrics
• Explain the difference between FTY and RTY
• Explain how to calculate “Defects per Unit” DPU
Any Questions?
Official
IASSC® Lean Six Sigma Green Belt

The International Association for Six Sigma Certification (IASSC) is a Professional Association
dedicated to growing and enhancing the standards within the Lean Six Sigma Community.
An IASSC Lean Six Sigma Green Belt by PeopleCert is

an internationally recognized professional who is
well versed in the Lean Six Sigma Methodology. The
Green Belt Exam is a 3 hour, 100 question live-
proctored exam.
Learn about IASSC Lean Six Sigma Certifications and Exam options
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LSS Green Belt v12 MT - Define Phase © Open Source Six Sigma, LLC
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Lean Six Sigma Green Belt

PeopleCert delivers exams in over 200

2,500 Accredited Training

Online (web) proctored exams, any

Comprehensive Portfolio of 600

Software Development &

Change, Risk & Benefits Management

Business Management & Improvement

Understanding Six Sigma

Six Sigma Fundamentals

Voice of the Customer

Cost of Poor Quality

Wrap Up & Action Items

Why have a process focus?

– So we can understand how and why work gets done

proc•ess (pros′es) n. – A repetitive and systematic series

We go through processes every day. Below are some examples of those

• Injection molding • Recruiting staff

The purpose of a Process Map is to:

Start Step A Step B Step C Step D Finish

Standard symbols for Process Mapping:

A RECTANGLE indicates an A PARALLELOGRAM shows that

A DIAMOND signifies a decision point. An ELLIPSE shows the start and

An ARROW shows the A CIRCLE WITH A LETTER OR

Process Map for a Call Center -

REVIEW CASE LOGOFF PHONE, CHECK

When multiple departments or functional groups are involved in a complex process

Sending Wire Transfers

Attach ACH ACH – Automated

Fill out ACH Receive

Vendor Yes Input info into bank batch to balance ACH

transfer money and

Exercise objective: Using your favorite Process Mapping

1. Create a high level Process Map, use enough detail to

Knowing your customer is more than just a handshake. It is necessary to

Voice Of the Customer Critical to Customer

Critical to Quality (CTQ’s) are measures we use to capture VOC properly.

CTQ’s can be vague and difficult to define.

• COPQ stands for Cost of Poor Quality

• This project COPQ represents the financial opportunity of your team’s

• COPQ helps us understand the financial impact of problems created by

• COPQ is a symptom, not a defect

Internal COPQ Prevention

External COPQ Detection

Engineering change orders Lost sales

Time value of money (less obvious) Late delivery

Working Capital allocations

• In some cases waste may be

COPQ – Hard Savings COPQ – Soft Savings

• Labor Savings • Gaining Lost Sales

Exercise objective: Identify current COPQ

1. Brainstorm a list of COPQ opportunities.

2. Categorize the top three sources of COPQ for the

In any process improvement endeavor the ultimate objective is to

Think of Cycle Time in terms of your product or transaction in

What is the cycle time of the process you mapped?

– Defects account for all errors on a unit

Two Defects One Defective

FTY is the traditional quality metric for yield

Total Units Passed

Units in = 100 Units in = 100 Units in = 100 Units Tested = 100

Defects Repaired Defects Repaired Defects Repaired

RTY is a more appropriate metric for problem solving