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# Introduction to Six Sigma

Topics (Session 1)
Understanding Six Sigma History of Six Sigma

## Six Sigma Methodologies & Tools

Roles & Responsibilities How YOU can use Six Sigma

## Six Sigma is. . .

A performance goal, representing 3.4 defects for

## every million opportunities to make one.

A series of tools and methods used to improve or

## design products, processes, and/or services.

A statistical measure indicating the number of

## standard deviations within customer expectations.

A disciplined, fact-based approach to managing a

Whats in a name?
Sigma is the Greek letter representing the standard

## deviation of a population of data.

Sigma is a measure

20

## Variation means that a

15

process does not produce the same result (the Y) every time.
Some variation will exist in

10

-5

all processes.

-10

## Measuring Process Performance

The pizza delivery example. . .
Customers want their pizza

delivered fast!

## average delivery time of 23.5 minutes?

On-time performance is great, right? Our customers must be happy with us, right?

s
30 min. or less

10

20

30

40

50

## Reduce Variation to Improve Performance

How many standard deviations can you fit within customer expectations?
30 min. or less

10

20

30

40

50

## Managing Up the Sigma Scale

Sigma 1 2 3 4 5 6 % Good % Bad
30.9% 69.1% 93.3% 99.38% 99.977% 69.1% 30.9% 6.7% 0.62% 0.023%

DPMO
691,462 308,538 66,807 6,210 233 3.4

99.9997% 0.00034%

## Examples of the Sigma Scale

In a world at 3 sigma. . .
There are 964 U.S. flight

In a world at 6 sigma. . .
1 U.S. flight is cancelled every

## cancellations per day.

The police make 7 false arrests

3 weeks.
There are fewer than 4 false

every 4 minutes.
In MA, 5,390 newborns are

## arrests per month.

1 newborn is dropped every 4

## dropped each year.

In one hour, 47,283

years in MA.
It would take more than

## 2 years to see the same number of dropped international calls.

Topics
Understanding Six Sigma History of Six Sigma

## Six Sigma Methodologies & Tools

Roles & Responsibilities How YOU can use Six Sigma

## The Six Sigma Evolutionary Timeline

1818: Gauss uses the normal curve to explore the mathematics of error analysis for measurement, probability analysis, and hypothesis testing. 1736: French mathematician Abraham de Moivre publishes an article introducing the normal curve. 1896: Italian sociologist Vilfredo Alfredo Pareto introduces the 80/20 rule and the Pareto distribution in Cours dEconomie Politique. 1924: Walter A. Shewhart introduces the control chart and the distinction of special vs. common cause variation as contributors to process problems.

## for Performing a Failure Mode Effects and Criticality Analysis.

1941: Alex Osborn, head of BBDO Advertising, fathers a widely-adopted set of rules for brainstorming. 1986: Bill Smith, a senior engineer and scientist introduces the concept of Six Sigma at Motorola

1960: Kaoru Ishikawa introduces his now famous cause-and-effect diagram. 1970s: Dr. Noriaki Kano introduces his two-dimensional quality model and the three types of quality.

1995: Jack Welch launches Six Sigma at GE. 1994: Larry Bossidy launches Six Sigma at Allied Signal.

## Six Sigma and Financial Services

Topics
Understanding Six Sigma History of Six Sigma

## Six Sigma Methodologies & Tools

Roles & Responsibilities How YOU can use Six Sigma

## DMAIC The Improvement Methodology

Define
Objective: DEFINE the opportunity

## Measure Analyze Improve Control

Objective: Objective: Objective: MEASURE current ANALYZE the root IMPROVE the performance causes of problems process to eliminate root causes Key Measure Tools: Critical to Quality Requirements (CTQs) Sample Plan Capability Analysis Failure Modes and Effect Analysis (FMEA) Key Analyze Tools: Histograms, Boxplots, MultiVari Charts, etc. Hypothesis Tests Regression Analysis Objective: CONTROL the process to sustain the gains.

Key Define Tools: Cost of Poor Quality (COPQ) Voice of the Stakeholder (VOS) Project Charter As-Is Process Map(s) Primary Metric (Y)

Key Improve Key Control Tools: Tools: Solution Selection Control Charts Matrix Contingency To-Be Process and/or Action Map(s) Plan(s)

## Define DMAIC Project

What is the project?
\$

Project Charter

Stakeholders

## Voice of the Stakeholde r

Six Sigma
What is the problem? The problem is the Output (a Y

in a math equation Y=f(x1,x2,x3) etc). What is the cost of this problem Who are the stake holders / decision makers Align resources and expectations

## Define As-Is Process

How does our existing process work?
Move-It! Courier Package Handling Process
Courier Mail Clerk In-SortClerk In-SortSupervisor DistanceFeeClerk WeightFeeClerk Accounts ReceivableClerk Accounts Supervisor Out-SortClerk Out-SortSupervisor
Observ e package weight (1 or 2) on back of package

Look up appropriate Weight Fee and write in top middle box on package back Take packages f rom Weight Fee Clerk Outbox to A/R Clerk Inbox. Add Distance & Weight Fees together and write in top right box on package back

Accounting

Take packages f rom A/R Clerk Outbox to Accounts Superv isorInbox. Take packages f rom Accounts Superv isor Outbox to OutSort Clerk Inbox.

## Does EVERYONE agree how the current process works?

Circle Total Fee and Draw Arrow f rom total to sender code

Write Total Fee f rom package in appropriate Sender column on Accts. Supv .s log

Finalizing

## Sort packages in order of Sender Code bef ore placing in outbox

Add up Total # of Packages and Total Fees f rom log and create client inv oice

Observ e sender and receiv er codes and make entry in Out-Sort Superv isors log

Delivery

## Define Customer Requirements

What are the CTQs? What motivates the customer?
Listening Posts Industry Intel

SECONDARY RESEARCH
Market Data

## Key Customer Issue

Critical to Quality

Industry Benchmarking

Customer Service

Customer Correspondence

PRIMARY RESEARCH
Survey s

OTM Observations

Focus Groups

## Measure Baselines and Capability

What is our current level of performance?

Descriptive Statistics

Sample some data / not all data Current Process actuals measured against the Customer expectation What is the chance that we will succeed at this level every time?

## Variable: 2003 Output

Anderson-Darling Normality Test A-Squared: P-Value: Mean StDev Variance Skewness Kurtosis N Minimum 1st Quartile Median 3rd Quartile Maximum 0.211 0.854 23.1692 10.2152 104.349 0.238483 0.240771 100 0.2156 16.4134 23.1475 29.6100 55.2907

10

20

30

40

50

## 95% Confidence Interval for Mu 21.1423

19.5 20.5 21.5 22.5 23.5 24.5 25.5 26.5

25.1961

## 95% Confidence Interval for Sigma 8.9690 11.8667

95% Confidence Interval for Median 95% Confidence Interval for Median 19.7313 26.0572

## Measure Failures and Risks

Where does our process fail and why?
Subjective opinion mapped into an objective risk profile number
Failure Modes and Effects Analysis (FMEA)
Process/Product
Process or Product Name: Responsible:

Prepared by:

## Potential Failure Effects

S E V

Potential Causes

O C C

Current Controls

D E T

R P N 0

Actions Recommended

Resp.

Actions Taken

S E V

O C C

D E T

R P N 0

X1 X2 X3 X4
etc

0 0 0 0 0 0 0

0 0 0 0 0 0 0

## Analyze Potential Root Causes

What affects our process?
Ishikawa Diagram (Fishbone)

Six Sigma

## Analyze Validated Root Causes

What are the key root causes?

Experimental Design

## Data Stratification Process Simulatio n

Regression Analysis

Six Sigma

Critical Xs

## Improve Potential Solutions

How can we address the root causes we identified?

Generate

Evaluate

Clarify

Decision

## y = f (x1, x2, x3 . . . xn)

Critical Xs

Divergent | Convergent

## Improve Solution Selection

How do we choose the best solution?
Solution Selection Matrix
Qualit y
Solution Sigma Time CBA Other Score

Time

Cost

Six Sigma
Solution Right Wrong Implementation Good Bad

Nice Idea

Nice Try

## Control Sustainable Benefits

How do we hold the gains of our new process?
Some variation is normal and OK How High and Low can an X go yet not materially impact the Y Pre-plan approach for control exceptions

## Process Control System (Business Process Framework)

Process Owner: Process Description: Direct Process Customer: CCR: Date:

Flowchart
Customer Sales Processing Branch Manager Loan Service Manager

## Measuring and Monitoring Key Measure ments

P1 - activity duration, min.

## Specs &/or Targets

Measures (Tools) Responsibility Contingency Where & (Who) (Quick Fix) Frequency

Remarks

35 UCL=33.48

## Complete meeting information

No

Application Complete?

Individual Value

25

Mean=24.35

## 1.3 Credit review

1.2 Processing

15 0 10 20 30

LCL=15.21

1.4 Review

Observation Number

1.5 Disclosure

## DFSS The Design Methodology

Design for Six Sigma Define
Uses
Design new processes, products, and/or services from scratch Replace old processes where improvement will not suffice

Verify

## Differences between DFSS and DMAIC

Projects typically longer than 4-6 months Extensive definition of Customer Requirements (CTQs) Heavy emphasis on benchmarking and simulation; less emphasis on baselining

Key Tools
Multi-Generational Planning (MGP) Quality Function Deployment (QFD)

Topics
Understanding Six Sigma History of Six Sigma

## Six Sigma Methodologies & Tools

Roles & Responsibilities How YOU can use Six Sigma

Champions
Promote awareness and execution of Six Sigma

## within lines of business and/or functions

Identify potential Six Sigma projects to be

## executed by Black Belts and Green Belts

Identify, select, and support Black Belt and

## Green Belt candidates

Participate in 2-3 days of workshop training

Black Belts
Use Six Sigma methodologies and advanced tools

## (to execute business improvement projects

Are dedicated full-time (100%) to Six Sigma Serve as Six Sigma knowledge leaders within

Undergo 5 weeks of training over 5-10 months

Green Belts
Use Six Sigma DMAIC methodology and basic

## tools to execute improvements within their existing job function(s)

May lead smaller improvement projects within

Bring knowledge of Six Sigma concepts & tools to

## their respective job function(s)

Undergo 8-11 days of training over 3-6 months

Other Roles
Subject Matter Experts Provide specific process knowledge to Six Sigma teams Ad hoc members of Six Sigma project teams
Financial Controllers Ensure validity and reliability of financial figures used by Six Sigma project teams Assist in development of financial components of initial business case and final cost-benefit analysis

Topics
Understanding Six Sigma History of Six Sigma

## Six Sigma Methodologies & Tools

Roles & Responsibilities How YOU can use Six Sigma

Questions?

## Topics for Detailed Discussion

Problem Identification Cost of Poor Quality Problem Refinement Process Understanding Potential X to Critical X Improvement

Problem Identification
If it aint broke, why fix it This is the way weve always done it

Problem Identification
First Pass Yield Roll Throughput Yield Histogram Pareto

Problem Identification
First Pass Yield (FPY): The probability that any given unit can go through a system defect-free without rework.
Scrap 10 Units 100 Units Step 1 Outputs / Inputs 100 / 100 = 1 100

Step 2

90 / 100 = .90

90

Scrap 3 Units

Step 3

87 / 90 = .96

87 85 / 87 = .97

Scrap 2 Units

Step 4

85

## When in fact the FPY is (1 x .90 x .96 x .97 = .838)

Problem Identification
Rolled Throughput Yield (RTY): The yield of individual process steps multiplied together. Reflects the hidden factory rework issues associated with a process.
Re-Work 10 Units 100 Units

## Outputs / Inputs 90 / 100 = .90

Step 1

100 Units

Step 2
Re-Work 3 Units 100 Units

97 / 100 = .97

Step 3
Re-Work 2 Units

98 / 100 = .98

100 Units

Step 4

## .90 x .97 x .98 = .855

100 Units

Problem Identification
RTY Examples - Widgets
50

Function 1

## 50/50 = 1 (50-5)/50 = .90 (50-10)/50 = .80

5

50 Function 2

(50-5)/50 = .90

50 Function 3 10 50 Function 4 5 50

## Put another way, this process is operating a 65% efficiency

Problem Identification
RTY Example - Loan Underwriting
50

## Roll Throughput Yield

Application

50/50 = 1
7 Fails Underwriting

50 Underwrite

## 1 x .82 x .86 x .93 = .66

1 Decide not to borrow

43 Close

42

## Put another way, this process is operating a 66% efficiency

Problem Identification
Histogram A histogram is a basic graphing tool that displays the relative frequency or occurrence of continuous data values showing which values occur most and least frequently. A histogram illustrates the shape, centering, and spread of data distribution and indicates whether there are any outliers.
Histogram of Cycle Time
40

30

Frequency

20

10

## 0 0 100 200 300 400 500

C8

Problem Identification
Histogram Can also help us graphically understand the data

Descriptive Statistics
Variable: CT
Anderson-Darling Normality Test A-Squared: P-Value: Mean StDev Variance Skewness Kurtosis N Minimum 1st Quartile Median 3rd Quartile Maximum 69.947
54 64 74 84 94

6.261 0.000 80.1824 67.6003 4569.81 2.31712 8.26356 170 1.000 31.000 66.000 105.000 444.000 90.417 75.664 84.494

25

100

175

250

325

400

## 95% Confidence Interval for Mu

95% Confidence Interval for Mu 95% Confidence Interval for Sigma 61.098 95% Confidence Interval for Median 55.753 95% Confidence Interval for Median

Problem Identification
Pareto The Pareto principle states that 80% of the impact of the problem will show up in 20% of the causes. A bar chart that displays by frequency, in descending order, the most important defects.
Pareto Chart for WEB
100 100 80 60 50 40 20 0 0
n-W No EB ers Oth eb) (W

Defect
Count Percent Cum %

96 86.5 86.5

15 13.5 100.0

Percent

Count

Topics (Session 2)

Problem Identification Cost of Poor Quality Problem Refinement Process Understanding Potential X to Critical X Improvement

## Cost of Poor Quality

COPQ - The cost involved in fulfilling the gap between the desired and actual product/service quality. It also includes the cost of lost opportunity due to the loss of resources used in rectifying the defect.
Hard Savings - Six Sigma project benefits that allow you to do the same amount of business with less employees (cost savings) or handle more business without adding people (cost avoidance).
Soft Savings - Six Sigma project benefits such as reduced time to market, cost avoidance, lost profit avoidance, improved employee morale, enhanced image for the organization and other intangibles may result in additional savings to your organization, but are harder to quantify. Examples / Buckets Roll Throughput Yield Inefficiencies (GAP between desired result and current result multiplied by direct costs AND indirect costs in the process).

Cycle Time GAP (stated as a percentage between current results and desired results) multiplied by direct and indirect costs in the process.

Topics (Session 2)

Problem Identification Cost of Poor Quality Problem Refinement Process Understanding Potential X to Critical X Improvement

Problem Refinement
Multi Level Pareto Logically Break down initial Pareto data into subsets (to help refine area of focus)

## Pareto Chart for WEB

100 100 80 60 50 40 20 0 0
nNo B WE ers Oth eb) (W

Percent

Count

## Pareto Chart for Type

100 100 80 60 50 40 20 0 0
ers Oth

Defect
Count Percent Cum %

96 86.5 86.5

15 13.5 100.0

Defect
Count Percent Cum %

al nu An

ime eT On

45 41.3 41.3

35 32.1 73.4

e im eT On

i ng Go On d an

13 11.9 85.3

16 14.7 100.0

Percent

Count

Problem Refinement
Problem Statement A crisp description of what we are trying to solve. Primary Metric An objective measurement of what we are attempting to solve (the y in the y = f(x1, x2, x3.) calculation). Secondary Metric An objective measurement that ensures that a Six Sigma Project does not create a new problem as it fixes the primary problem. For example, a quality metric would be a good secondary metric for an improve cycle time primary metric.

Problem Refinement
Fish Bone Diagram - A tool used to solve quality problems by brainstorming causes and logically organizing them by branches. Also called the Cause & Effect diagram and Ishikawa diagram

## Provides tool for exploring cause / effect and 5 whys

Topics (Session 2)

Problem Identification Cost of Poor Quality Problem Refinement Process Understanding Potential X to Critical X Improvement

Process Understanding
SIPOC Suppliers, Inputs, Process, Outputs, Customers You obtain inputs from suppliers, add value through your process, and provide an output that meets or exceeds your customer's requirements.

Process Understanding
Process Map should allow people unfamiliar with the process to understand the interaction of causes during the work-flow. Should outline Value Added (VA) steps and non-value add (NVA) steps.
Size Sorts Control Docs Open Full Form Pull & Sort

Receipt / Extract

Start

Ck / Vouch Verify

Requal Group

Perfection

No Remit Yes Pass 1 Pass 2 Rulrs Prep cks, route vouch Prep cks Ship to IP

Vouchers

Data Cap

Balance

No

## Full Form QCReview

Ship to Cust

Process Understanding
Create daily peak staff need plan Action Plan

No
Add 30% to the required no. Check off desired returnee staff & "need to retrain" list To Floor

Yes

## Call employee (3x)

Operations

No
Compare to original Billet rpt

Yes

OJT

Make it?

No

Yes No
Need re -train

Yes

To Floor

## Add 40% to staff needed

Call (3x) Update IPS Do they want to work this peak? Have we No hired enough? Rev original billet & call uncheck ed Do they want to work this peak? Have we No Call Wait hired List enough?

Stop!

No
Send Letters to desired staff

No Yes Interview /
pre-hire Rank as "1 2 3" Meet Fleet hiring criteria

Do they respond?

Yes

No
New

Yes

Yes

HR / Recruit

Start

## HR sends req for staffing nos.

What if the returnee is already working here on another program? Currently send the ltr anyways

No
Do they want to stay on the list

Yes

No
Do they want to stay on the list

Yes

No

Stop!

No

Stop!

## Hire in 12 order (3's are not placed)

Yes
Place into dept show up orienta tion

No

Call 3X

Wait List

Yes Yes

Yes
New & Other People call in Take off IPS system

Yes

Reach

No

Show up?

No

Call 1X

## Notify HR Gen rpt for Ops Kronos Recruit

Training
Train

Yes

No

Pass?

Yes

Update IPS

Topics (Session 2)

Problem Identification Cost of Poor Quality Problem Refinement Process Understanding Potential X to Critical X Improvement

Potential X to Critical X
Y is the dependent output of a variable process. In other words, output is a function of input variables (Y=f(x1, x2, x3).

Through hypothesis testing, Six Sigma allows one to determine which attributes (basic descriptor (generally limited or binary in nature) for data we gather ie. day of the week, shift, supervisor, site location, machine type, work type, affect the output. For example, statistically, does one shift make more errors or have a longer cycle time than another? Do we make more errors on Fridays than on Mondays? Is one site faster than another? Once we determine which attributes affect our output, we determine the degree of impact using Design of Experiment (DOE).

Potential X to Critical X
A Design of Experiment (DOE) is a structured, organized method for determining the relationship between factors (Xs) affecting a process and the output of that process (Y). Not only is the direct affect of an X1 gauged against Y but also the affect of X1 on X2 against Y is also gauged. In other words, DOE allows us to determine - does one input (x1) affect another input (x2) as well as Output (Y).

Potential X to Critical X
DOE Example
Main Effects Plot (data means) for Elapsed
Lo w h Hig Lo w h Hig Lo w h Hig Lo w h Hig

1.4

1.3

Elapsed

1.2

1.1

1 3 1 3 1 3 1 3

Jams
1 3

DCDEL
3

SK
3 1

P2Jam
3 1

## 1.50 1.25 1.00

Potential X to Critical X
DOE Optimizer Allows us to statistically predict the Output (Y) based on optimizing the inputs (X) from the Design of experiment data.

Topics (Session 2)

Problem Identification Cost of Poor Quality Problem Refinement Process Understanding Potential X to Critical X Improvement

Improvement
Once we know the degree to which inputs (X) affect our output (Y), we can explore improvement ideas, focusing on the cost benefit of a given improvement as it relates to the degree it will affect the output. In other words, we generally will not attempt to fix every X, only those that give us the greatest impact and are financially or customer justified.

Control
Once improvements are made, the question becomes, are the improvement consistent with predicted Design of Experiment results (ie are they what we expected) and, are they statistically different than pre-improvement results.

## Process Capability Analysis for Sept

Process Data USL 0.23000 Target * LSL -1.00000 Mean -0.02391 Sample N 23 StDev (Within) 0.166425 StDev (Overall) 0.221880

LSL

USL
Within Overall

Potential (Within) Capability Z.Bench 1.53 Z.USL 1.53 Z.LSL 5.87 Cpk 0.51 Cpm *

-1.0

-0.5

0.0

0.5

1.0
Exp. "Overall" Performance % < LSL 0.00 % > USL 12.62 % Total 12.62

Overall Capability Z.Bench 1.14 Z.USL 1.14 Z.LSL 4.40 Ppk 0.38

Observed Performance % < LSL 0.00 % > USL 13.04 % Total 13.04

Exp. "Within" Performance % < LSL 0.00 % > USL 6.35 % Total 6.35

Control
Control Chart - A graphical tool for monitoring changes that occur within a process, by distinguishing variation that is inherent in the process(common cause) from variation that yields a change to the process(special cause). This change may be a single point or a series of points in time - each is a signal that something is different from what was previously observed and measured.
I and MR Chart for Sept
Individual Value
1 0.5 UCL=0.5293

0.0 2 -0.5

Mean=0.03

LCL=-0.4693 Sept 13
9/13

Subgroup
Date

Sept 20
9/25

Moving Range

UCL=0.6134

R=0.1877 LCL=0

Wrap Up