Lean Six Sigma

Session 1
Chapter 1

Introduction to Lean Six Sigma

 Course Introduction
➢ Six Sigma is a data driven approach that emphasises on setting high quality benchmarks,
collecting and analysing information and reducing defects in products and services.

➢ In simple words, it is a methodology of improving quality and achieving world class

performance/efficiency.

➢ While Lean focuses on the elimination of waste through resource planning and management.

➢ Lean Six Sigma is a technique that aims at improving performance by systematically eliminating
non value added resources.
S. No Reference No Particulars

1 Chapter 1 Introduction to Lean Six Sigma

2 Chapter 2 Implementing Six Sigma
3 Chapter 3 Basic Statistical Concepts for Six Sigma
4 Chapter 4 Six Sigma Tools and Techniques
5 Chapter 5 The Define Phase
6 Chapter 6 The Measure Phase
7 Chapter 7 Analyse Phase
8 Chapter 8 The Improve/Design Phase
9 Chapter 9 Control/Verify Phase
Introduction to Lean Six Sigma

➢ Explain the concept and history of Six Sigma

➢ Describe the Six Sigma process
➢ Relate the Six Sigma metrics
➢ Summarise why organisations need Six Sigma
➢ Define Lean Six Sigma
➢ Outline the concept of value and waste
➢ Compare lean production and mass production
Introduction to Six Sigma
➢ The term Six Sigma has its roots in the terminology related to statistical modelling of
manufacturing processes, which is used in statistical quality control to evaluate process
capability.
➢ In a Six Sigma-compliant process, it is expected that 99.99966% of all the opportunities
to perform a specific activity would be statistically free of defects.
➢ In other words, only 3.4 or fewer defects would occur per million opportunities (DPMO).
 Concept and History of Six Sigma
➢ Six Sigma is a quality methodology that focuses on the number of defects and limits the defects in
a product or service to a count of 3.4 Defects Per Million Opportunities (DPMO).

➢ Six Sigma aims at process improvement which is made possible by identification, mitigation and
elimination of reasons underlying defects in a process.

➢ Further, the Six Sigma methodology also aims at minimising the extent of variability in the
processes of manufacturing and service.

➢ A typical Six Sigma project in an organisation is implemented in a pre-defined sequence of steps

with some specified expected outcomes such as reduction in Turnaround Time (TAT), and
reduction in costs, wastage, customer dissatisfaction and losses.
 Concept and History of Six Sigma
➢ The concept of Six Sigma was first developed by engineers Bill Smith & Mikel J Harry while working
at Motorola in 1986.

➢ In the 1980s, Smith was working at GE. During that time, he recommended to the then CEO of
Motorola, Bob Galvin, that the company should focus on the defects caused by process variation.

➢ Galvin on Smith’s recommendation initiated a long-term quality program, called “The Six Sigma
Quality Program”. It was a corporate program that set Six Sigma as the desired capability level to
achieve the standard of 3.4 defects per million opportunities (DPMO).

➢ Today many leading companies across the world use this quality methodology to achieve operational
and business excellence.

➢ Some companies which use Lean Six Sigma are Accenture, GE, Genpact, IBM and Verizon.
 Six Sigma Process
➢ The term Six Sigma methodology represents the basic assumption
or concept that no product will fail to meet specifications if the
process mean is at least Six Sigma away from the nearest
specification limit.
➢ Process capability studies measure the number of standard
deviations that occur between the process mean and the nearest
specification limit in units of sigma.
➢ Standard deviation is represented by the Greek letter s (sigma).
➢ An increase in the process deviation or movement of the process
mean away from the tolerance limit leads to the possibility of a
lesser number of standard deviations between the process mean
and the nearest specification limit.
➢ This results in the reduction in the sigma number and an
increased likelihood of items outlying the limits of specification.
➢ The calculation of sigma levels for a process data does not depend
on the data normalcy; therefore, there is no need to trans- form
non-normal data into normal data.
 Six Sigma Process- Define
➢ It is the first phase of the Six Sigma implementation.

➢ Here, the project manager and his team create a roadmap for Six Sigma implementation,
which is known as the Project Charter. It gives a high-level view of the project and is a step to
document the voice of the customer.

➢ Major activities carried out under this phase include:

✓ A problem statement is documented to define the problem.

✓ A goal statement is documented to define the goals of the project.

✓ Process maps are created and documented to define the current and future state of processes.

✓ Requirements and definitions of customers are documented.

✓ Scope of the project is determined and documented.

✓ Tentative timelines of different activities are documented.

Six Sigma Process- Measure
➢ In this phase, project stakeholders begin the data collection exercise with the following goals:

✓ Identify the current state or project start point. This sets the process baseline.

✓ Make preliminary efforts to identify immediately visible root causes of the stated problems.

➢ Some important activities under this phase include:

✓ Establishing the process baseline.

✓ Identifying immediate root causes of the problems.

✓ Creating a data collection plan.

✓ Piloting a data sample to ensure reliability.

✓ Modifying the Project Charter if required.

Six Sigma Process- Analyse
➢ Once the data is collected as defined in the Measure phase, it is analysed by project experts.

➢ In the data analysis phase, processes are observed and the maximum possible root causes of

process variation and waste are identified.

➢ Some important activities under this phase include:

✓ Close observation of processes

✓ Visual data display using techniques such as fish and bone diagram, box plot diagrams, etc.

✓ Validation of root causes

✓ Modification of the Project Charter (if required)

Six Sigma Process- Improve
➢ Once the problem, its root causes and possible solutions are documented, a structured
plan to implement proposed solutions is developed.

➢ Some important activities under this phase include:

✓ Identifying and proposing possible solutions using methods such as brainstorming.

✓ Selecting and documenting all the feasible solutions.

✓ Creating solution-wise process maps.

✓ Identifying the most feasible solution.

✓ Launching the solution(s).

✓ Documenting and measuring the improvement.

Six Sigma Process- Control
➢ Once the proposed solution has been implemented and accepted, a roadmap is created for
sustaining improvements.

➢ Process improvement ownership, infrastructure and related documents are then handed over to
process owners and their teams.

➢ Some important activities under this phase include:

✓ Finding innovative means to continually improve processes using the principles of Six Sigma.

✓ Validating management and control of processes.

✓ Replicating improved processes in as many functions of the organisation as possible.

✓ Sharing the gains of the new process with the other departments.

Critical to Quality (CTQ)
metrics
The CTQ metric makes use of a
statistical control chart which is
compulsory for making the
process metric stable and under
statistical control.
Six Sigma Metrics
Critical to Schedule (CTS)
metrics
Critical to schedule metrics are
generally concerned with process
completion timelines such as cycle
time or Turnaround Time (TAT)],
scheduling efficiencies, efficiencies
related to the scheduling of tasks,
equipment, efficiency of process cycle,
process velocity, etc.
Critical to Cost (CTC)
metrics
Six Sigma is a methodology
that measures the
performance of a process using
metrics that are critical to
both quality and schedule.
However, how perfect a
process may be, if it is not cost
effective, it may not serve the
intended purpose. Hence, Six
Sigma also takes into
consideration those metrics
that are critical to cost.
 Six Sigma Metrics
Overall Equipment Effectiveness (OEE) metric
Overall Equipment Efficiency (OEE) can be described as a set of metrics that
emphasizes critical success factors for manufacturing organizations.

OEE = Availability x Performance Rate x Quality Rate

where,
➢ Availability is the percentage of planned time for which equipment is available to
function. Such time is also referred to as uptime.
➢ Performance rate measures how effectively a process is carried out against pre-
defined targets and represents speed losses that may occur during the production
process.
➢ Quality rate considers quality loss because of products not produced as per quality
standards.
Why Organisations Need Six Sigma
There are several advantages that the Six Sigma implementation bring to an organisation.
Organisations need Six Sigma due to the following reasons:

➢ Increased customer retention and loyalty: By implementing Six Sigma, an organisation can
mitigate the risk of having customer dissatisfaction. Under Six Sigma, staff members are trained
better for an efficient handling of customers. In addition, there are fewer defective products
produced. Organisations can benefit if they carry out studies that collate the voice of the
customer. This helps them understand the attributes of products or services that are critical for
customer satisfaction.
Why Organisations Need Six Sigma
Strategic planning
➢ The Six Sigma methodology, when implemented, has the potential to facilitate achievement of
the organisation’s strategic vision.

➢ An organisation can identify its strengths and weaknesses using SWOT analysis.

➢ After the organisation has carried out the SWOT analysis, managers can clearly focus on areas
of improvement, minimising the threats and taking advantages of the available opportunities.

➢ As an example, if the strategy of an organisation is to become a market leader on the basis the
competitive cost of its product, then the organisation can make use of the Six Sigma methodology
to improvise internal processes, increase yields, eliminate waste that arises out of non-value
adding activities and achieve agreements from suppliers at the lowest cost.

➢ Irrespective of the strategy of the company, Six Sigma can be instrumental in achieving a
competitive edge in the market.
Why Organisations Need Six Sigma
Better time management

➢ Implementation of the Six Sigma methodology within the organisation reduces wasted efforts on
poor quality and rework.
➢ Resource conservation gives an opportunity to the employees for a gainful re-employment and they
are able to manage their time effectively, which leads to business efficiency and more productive
employees.
➢ In the Six Sigma methodology, employees are asked to take charge of their workplace goals that are
Specific, Measurable, Achievable, Realistic and Time Bound (SMART).
➢ Three key elements – learning, performance and fulfilment – are the focus of this intervention. As
an example of learning, an employee may be asked to make note of the times he/she has to leave a
task midway to attend to something else, and out of these incidences how many could be managed
without his/her attention.
➢ Similarly, with respect to performance, the employees may be asked to mention how the
organisation is supporting them reach their goals. On the basis of their answers, the employees may
be asked to create an action plan for themselves. The outcome of this exercise may be more efficient
and satisfied employees with a better work-life balance.
Why Organisations Need Six Sigma
Reduced cycle time

➢ In organisations, many a time projects get extended beyond their planned deadlines
due to recurrent chang- es in the project scope or in the policies of the management.

➢ An organisation can make use of the Six Sigma methodology to create a team of
experienced employees representing all the functional departments and levels.

➢ The team so created has the ownership to identify and manage the root causes of
delay.

➢ Further they may be entrusted to brainstorm on the possible solutions for the
identified root causes. This kind of intervention aids organisations in adhering to their
scheduled timelines and project scopes, thus helping in achieving shorter cycle times.
Why Organisations Need Six Sigma
Motivated workforce

➢ Performance of employees plays a major role in the organisational ability to achieve its
objective of profitability.

➢ A poor performance is detrimental to achieving the objective.

➢ To be able to give in their best, employees need motivation.

➢ It is common knowledge that organisations which have programs for employee

engagement demonstrate increased productivity.

➢ Problem solving tools and techniques of Six Sigma aid in employee development and
help create an environment conducive for employee motivation.
 Concept of "Lean" in Six Sigma
➢ Lean works on the principle to do more with less where less can mean less human effort or less
number of equipment or less time required, etc.

➢ Lean and Six Sigma are complementary management concepts, and the concept of Lean Six Sigma
combines the benefits of both the Lean and Six Sigma methodologies.

➢ Lean is a concept that identifies and aims to reduce or even eliminate different kinds of wastes in
organisational activities.

➢ Lean Six Sigma aims at obtaining a seamless flow of a process by filling the gaps between consecutive
process steps.

➢ In a nutshell, the objective of lean is to expose various causes of process variation while Six Sigma
focuses on the reduction of process variability which enables a continuous cycle of improvement.
Concept of Lean Six Sigma
Principles of Lean Thinking

➢ According to Womack and Jones, there are five principles of Lean Six Sigma as follows:

1.Identify value: The first principle of Lean Six Sigma implementation is to define what is
meant by value. This is done by customers because they are the ones who need to define
what product or service means what kind of value for them.

2.Understand the value stream and create a value stream map: Under this principle, the
project team needs to identify and map all the end-to-end actions, processes and functions
that are required for converting inputs into outputs and for eliminating waste.
Concept of Lean Six Sigma
Principles of Lean Thinking

3. Create flow: Creating a flow involves the successive completion of targeted activities and
tasks along the value stream so that the movement of a product from design to launch and
order to delivery takes place seamlessly without any unwarranted stoppages.

4. Establish pull: A product is said to be ‘pulled’ within the various steps of processes at a
rate at which it is demanded by the customer.

5. Seek perfection: It is the state of elimination of all waste in the value stream. After
eliminating wastes, the project teams need to ensure continuous process of improvement in
order to attain perfection.
Concept of Lean Six Sigma
If internal activities can be converted into external activities, the total setup time can be reduced and
it is known as incredible reduction. The total setup time can be reduced by adopting the following
approaches:

➢ Categorise all setup activities into internal or external: Internal setups are done when the process
is inactive while external setups can be carried out even when the process is operating.

➢ Convert internal activities into external steps (wherever possible): Setup time can be decreased by
reducing the non-operational time of the process which is related to the number and time of
internal steps. Hence, the person/team who is conducting the VSM activity should convert as many
internal steps into external steps as possible. For example, if a customer’s room in a hotel can be
prepared while the payment is being processed at the counter, the total cycle time of the customer’s
settling down gets reduced comfortably.
Concept of Lean Six Sigma
➢ Focus on reducing time for the remaining internal steps: After converting internal setup activities
into external setup activities there still remain certain internal setup activities that need to be
carried out while the process is operational. Efforts should be concentrated to reduce the time
needed for completion of such of these activities which can potentially lead to delay in the overall
process. For example, if a hotel has a policy that the customer luggage cannot be moved unless
he/she makes the payment, the hotel should try to reduce the time it takes to take payments.

➢ Eliminate adjustments: Process improvement is a vital aspect of Six Sigma and it involves making
adjustments in order to fix issues and effect waste reduction to optimise costs. Corrective action
needs to be carried out on detection of a problem so as to avoid unnecessary delays in production
and fault recurrence. Effective process control can be used to eliminate the need for adjustments.
Concept of Lean Six Sigma
How to Achieve Overall Reduction

➢ One of the important strategies for Lean Six Sigma implementation is a technique called Setup
Reduction.

➢ Setup reduction is utilised for level load balancing which is a strategy for lean deployment.

➢ The time lapse for change between the first good item of the new order and the last item of the
previous order is called setup time.

➢ The four activities of setup reduction activity–

➢ Preparation

➢ Replacement

➢ Location and

➢ Adjustment – are acronymised as PRLA.

Concept of Lean Six Sigma
How to Achieve Overall Reduction

➢ Preparation: This sub-activity is further broken down into sub-sub-activities that are associated
with obtaining or storing of tools and aids that may be necessary to carry out a process.

➢ Replacement: A replacement sub-activity includes sub-sub-activities that are related to the addition
or removal of items or tools that are used in the process.

➢ Location: Tasks and sub-sub-activities under location sub-activity are related with positioning or
placement during setup.

➢ Adjustment: Adjustment sub-activity includes sub-sub-activities that are carried out to ensure
correct process settings.
Concept of Value and Waste
➢ Value and waste are two opposite concepts.
➢ Value is a positive thing, whereas waste is a negative thing.

➢ Usually, adding value to a product/ service results in profitability, whereas wastage of any type
results in the loss to the organisation.

➢ The three types of value additions or concepts related to value are:

✓ Value added
✓ Business Value Added (BVA)
✓ Non Value Added (NVA)
Concept of Value and Waste
➢ Every organisation should ideally undertake an analysis of all its activities to categorise them as
either a waste or value added. Such an analysis is presented graphically in the form of a map,
known as Value Stream Analysis or Value Stream Mapping (VSM).

➢ In 1985, Michael Porter, in his book Competitive Advantage defined value stream as a chain of
activities that a firm operating in a specific industry performs in order to deliver a valuable product
or service for the market.

➢ In other words, it is the series of activities that are carried out from the point of ordering to the point
of delivery of a product or service to make the product/service valuable.
 Concept of Value and Waste
➢ There are eight kinds of wastes also known as muda.
➢ These wastes are classified as shown in the following Figure:

Defects

Overproduction

Unnecessary Transportation

Prolonged Waiting

Excessive Inventory

Unnecessary Motion

Over Processing

Skills
Concept of Value and Waste
Types of Wastes
➢ Any step or activity in a process that is unnecessary and is not required to complete the process
successfully is called waste or a non-value adding activity (NVA).

➢ There are generally eight types of wastes in any kind of lean organisation that include:

1. Defects: Any product or service that does not conform to the required specification is
unusable and requires additional resources for correction.

2. Over-processing: When activities that are not necessary in the production of a functional
product or service are carried out, it is said to be over-processing.

3. Excess inventory: Stock of goods that is not being utilised in production or is not anticipated
to be used for long.
Concept of Value and Waste
Types of Wastes

4. Excess motion: Unnecessary movement of people, resources or information owing to discrepancies in

the layout of shop floors workspace, ergonomic issues or displacements.
5. Unutilized talent: Employees who are not deployed as per their talent and skills.
6. Overproduction: The quantity of product produced which exceeds demand or requirement.
7. Transportation: Unnecessary transportation from one location to another of items/raw
materials/tools/equipment.
8. Waiting: Lag period between the current step and the earlier step to complete the process.
 Lean vs. Mass Production
➢ Mass production is a manufacturing methodology ➢ Lean production is a manufacturing process where production
under which products are manufactured on a mass of goods or services is determined based on current trends.
scale. ➢ Lean production focuses on producing goods in smaller
➢ The focus of mass production is to churn out batches according to the demand inputs from customers.
manufactured goods in bulk lots. ➢ There is a minimal requirement of stockpiling in lean
➢ In mass production, goods are produced in bulk but production.
not all of them are sold immediately.
➢ In lean production, the manufacturing cycle and the sales
➢ In mass production, due to a considerable time lag
cycle are heavily interdependent as there is a direct
between the manufacture and sale of goods, the
relationship between demand and production.
manufacturing cycle and the sales cycle are separate
➢ Lean production is a “pull” process, i.e. customers take
issues.
charge of the process and pull the product based on their
➢ Mass production is a “push” type of process, i.e.
demand.
finished products get pushed to the market.
➢ Minimal waste is produced in a lean production process.
➢ In mass production, a huge volume of waste is
generated.
 Summary
➢ Six Sigma is a quality methodology that is used for problem solving in business organisations. Use of this
methodology aids organisations in enhancement of their operational functions.
➢ A typical Six Sigma project in an organisation is implemented in a pre-defined sequence of steps with some
specified expected outcomes like: reduction in Turnaround Time (TAT), and reduction in costs, wastage,
customer dissatisfaction and losses.
➢ Six Sigma projects focus on obtaining quantified and measured results. These results may be operational
and/or financial nature.
➢ The Six Sigma concept was first developed by engineers Bill Smith & Mikel J Harry while working at
Motorola in 1986. It was a corporate program that set Six Sigma to the desired capability level to achieve
the standard of 3.4 Defects Per Million Opportunities (DPMO). Bill Smith is often referred to as the
“Father of Six Sigma”.
➢ The term Six Sigma process represents the basic assumption or concept that no product will fail to meet
specifications if the process mean is at least Six Sigma away from the nearest specification limit.
➢ In general, the process of Six Sigma implementation consists of five phases namely, Define, Measure,
Analyse, Improve and Control (DMAIC).
➢ Six Sigma identifies some critical metrics that are important for business sustainability and operational
excellence. These include Critical to Quality (CTQ) metrics, Critical to Schedule (CTS) metrics, Critical to
Cost (CTC) metrics, Overall Equipment Effectiveness, etc.
➢ Problem solving tools and techniques of Six Sigma aid in employee development and help create a
conducive environment for employee motivation.
 Summary
➢ Lean works on the principle to do more with less where less can be less amount of human effort, less
number of equipment, less required time, etc.
➢ One of the important strategies for Lean Six Sigma implementation is a technique called Setup Reduction
that is utilised for level load balancing. The time lapse for change between the first good item of the new
order and the last item of the previous order is called setup time.
➢ Value is meaningful when a product or service meets the customer’s needs at a specific price and at a
specific time.
➢ Any step or activity in a process that is unnecessary and is not compulsory to complete the process
successfully is called waste or a non-value adding activity (NVA). On removal of wasteful activities, value
adding steps remain, which help save resources and help the organisation to efficiently deliver a
satisfactory product or service to the customer.
➢ Mass production is a kind of manufacturing process where the manufacture of the products takes place on
a mass scale. Lean production on the other hand is a manufacturing process where production of goods or
services is determined on the basis of current trends.