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You are on page 1of 25

Joe Kurian

Definition of a Process

A process is a collection of

interacting components that

transform inputs into outputs toward

a common aim, called a mission

statement.

Transformation

The transformation, involves the addition

or creation of value in one of three aspects:

time, place, or form.

An output has "time value" if it is available

when needed by a user.

For example, you have food when you are

hungry, or material inputs are ready on

schedule.

An output has "place value" if it is available

where needed by a user.

Variation in a Process

The outputs from all processes and their

component parts may be measured; the

measurements invariably vary over time

and create a distribution of measurements.

The distribution of measurements of the

outputs from a process over time is called

the Voice of the Process (VoP).

Variation is well understood by Process

Capability.

Feedback Loops

1. No feedback loop:

2. Special cause only feedback loop:

3. Special and common cause

feedback loop:

THE CUSTOMER)

Goalpost View of Quality

Quality meant "conformance to valid customer

requirements."

That is, as long as an output fell within acceptable

limits, called specification limits, around a desired value,

called the nominal value (denoted by m), or target

value, it was deemed conforming, good, or acceptable.

We refer to this as the "goalpost" definition of quality.

The nominal value and specification limits are set based

on the perceived needs and wants of customers.

Specification limits are called the Voice of the Customer

(VoC).

LSL = lower specification limit = nominal tolerance

A service example

A monthly accounting report that

must be completed in 7 days

(nominal) but no earlier than 4 days

(LSLnot all the necessary data will

be available) and no later than 10

days (USLthe due date for the

report in the board meeting).

Quality

uniformity and dependability, at low cost

and suited to the market.

The Taguchi Loss Function, called the

Loss curve in figure, expresses the loss

of deviating from nominal within

specifications: the left hand vertical axis

is "loss," and the horizontal axis is the

measure, y, of a quality characteristic.

L(y) = k(y m) = Taguchi Loss Function

y = the value of the quality characteristic for a

particular item of product or service,

m = the nominal value for the quality

characteristic, and

k = a constant, A/d

A = the loss (cost) of exceeding specification limits

(e.g., the cost to scrap a unit of output), and

d = the allowable tolerance from the nominal value

that is used to determine specification limits

(y)

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

1.00

1.00

1.00

0.64

0.36

0.16

0.04

0.00

0.04

0.16

0.36

0.64

1.00

1.00

1.00

MANAGEMENT

Six Sigma management is the

relentless and rigorous pursuit of the

reduction of variation in all critical

processes to achieve continuous and

breakthrough improvements that

impact the bottom line and/or top

line of the organization and increase

customer satisfaction.

An Example

For example, a bank takes 60 days on

average to process a loan with a 10%

rework rate in 2000.

In a Six Sigma organization, the bank

should take no longer than 30 days

on average to process a loan with a

1% error rate in 2002 and no more

than 15 days on average to process a

loan with a 0.10% error rate by 2004.

Six Sigma is derived from the normal

distribution used in statistics.

2 sigma

In a normal distribution, the interval

created by the mean plus or minus 2

standard deviations contains 95.44%

of the data points, or 45,600 data

points per million (sometimes called

parts per million, denoted ppm) are

outside of the area created by the

mean plus or minus 2 standard

deviations [(1.00 0.9544 = 0.0456)

1,000,000 = 45,600]

3 sigma

In a normal distribution, the interval

created by the mean plus or minus 3

standard deviations contains 99.73%

of the data, or 2,700 ppm are outside

of the area created by the mean plus

or minus 3 standard deviations [(1.00

0.9973 = 0.0027) 1,000,000 =

2,700].

6 sigma

In a normal distribution, the interval

created by the mean plus or minus 6

standard deviations contains

99.9999998% of the data, or 2 data

points per billion data points (ppb)

outside of the area created by the

mean plus or minus 6 standard

deviations.

and VoC

Six Sigma promotes the idea that the

distribution of output for a stable

normally distributed process (Voice of

the Process) should be designed to

take up no more than half of the

tolerance allowed by the

specification limits (Voice of the

Customer).

and VoC

If a process is originally designed to be twice as good

as a customer demands (i.e., the specifications

representing the customer requirements are 6 standard

deviations from the process target), then even with a

shift, the customer demands are likely to be met.

In fact, even if the process shifted off target by 1.5

standard deviations, there are 4.5 standard deviations

between the process mean ( + 1.5) and closest

specification ( + 6.0), which results in at worst 3.4

ppm at the time the process has shifted or the variation

has increased to have similar impact as a 1.5 standard

deviation shift.

"Voice of the Process" for an

accounting function with an average

of 7 days, a standard deviation of 1

day, and a stable normal distribution.

It also shows a nominal value of 7

days, a lower specification limit of 4

days, and an upper specification limit

of 10 days.

scenario will yield 1,350 defects per

million opportunities at either

specification limit or one early or late

monthly report in 61.73 years

[(1/0.00135)/12].

Sigma Shift in the Mean

66,807 defects per million opportunities at the nearest

specification limit or one early or late monthly report in

1.25 years ([1/0.066807]/12)

the Mean

but the process standard deviation has been reduced

to a half-day through application of process

improvement. In this case, the resulting output will

exhibit 1 defect per billion opportunities at either

specification limit or one early or late monthly report

in 83,333,333 years ([1/0.000000001]/12).

Shift in the Mean

in 3.4 defects per million at the nearest specification

limit or one early or late monthly report in 24,510

years [(1/.0000034/12]. This is the definition of Six

Sigma level of quality.

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