Introduction to Six Sigma

Purpose of Six Sigma -

To make Customer Happier and Increase
Profits
 Origin of Six Sigma
1987 Motorola Develops Six Sigma
– Raised Quality Standards
Other Companies adopt Six Sigma
– GE
– Promotions, Profit Sharing (Stock Options), etc. directly
tied to Six Sigma training.
– Dow Chemical, DuPont, Honeywell, Whirlpool, ABB,
Bechtel, IBM, Texas Instruments, Kodak, .....................
 Time Line
Johnson & Johnson,
Ford, Nissan,
Honeywell

MOTOROLA Allied
Signal
1985 1987 1992 1995 2002

General Electric
Dr Mikel J Harry wrote a
paper relating early
failures to Quality.
Question : Which company pioneered
the concept of six sigma?
GE
Bombay Dabbawallas
ASQ
Motorola
Question : Which company pioneered
the concept of six sigma?
GE
Bombay Dabbawallas
ASQ
Motorola
 Pilot's Six Sigma Performance

Width of Landing Strip

1/2 Width of
Landing strip

If pilot always lands

within 1/2 the
landing strip width,
we say that he has Six
Sigma capacity.
Pilot's Six Sigma Performance

This is a very crude way of telling that when

you perform in half the margin allowed to
you, you may call it six sigma performance.
Question: You have to park your car where side margins are 6
inches on both sides, if your car is perfectly parked in center.
What is your performance level when you find out that all the
times you are able to park your car within 3 inches from the
center and at any time the side margin is not less than 3 inches?

Twelve sigma
Six Sigma
Zero Sigma
Three sigma
Question: You have to park your car where side margins are 6
inches on both sides, if your car is perfectly parked in center.
What is your performance level when you find out that all the
times you are able to park your car within 3 inches from the
center and at any time the side margin is not less than 3 inches?

Twelve sigma
Six Sigma
Zero Sigma
Three sigma
 Current Leadership Challenges

Delighting Customers
Reducing Cycle Times
Keeping up with Technology Advances
Retaining People
Reducing Costs
Responding More Quickly Six sigma will be
able to help in
Structuring for Flexibility dealing with all
these challenges
Growing Overseas Markets to a certain extent.
Question: How six sigma helps in retaining
people?

Because two times 3 σ is 6 σ

Three sigma does not motivate.
Sigma reduces stress level.
By empowering them to solve their problems.
Question: How six sigma helps in retaining
people?

Because two times 3 σ is 6 σ

Three sigma does not motivate.
Sigma reduces stress level.
By empowering them to solve their problems.
 Six Sigma Benefits
Generated sustained success
Project selected to Organizational strategy
– Customer Focused
– Profits
Project Outcomes/ Benefits tied to financial
Reporting systems.
Full-time Black Belts in a rigorous project oriented
method.
Recognition and Reward system established to
provide Motivation.
Question: What is the key
purpose of six sigma?
Do not bother about profits, just make customer happy at any cost.
To make customer happy
To increase profits (50% marks)
To make customer happy and increase profits
Question: What is the key
purpose of six sigma?
Do not bother about profits, just make customer happy at any cost.
To make customer happy
To increase profits (50% marks)
To make customer happy and increase profits
What can Six Sigma do ?
 GE Six Sigma Economics
6 Sigma Projest Success
(in millions)

$2,500

$2,000

$1,500
Cost
Benefit
$1,000

$500

$0
1996 1998 2000 2002

Source: 1998 GE Annual Report, Jack Welch Letter to Share Owner and Employees -
progress based upon total corporation cost/ benefits attributable to Six Sigma.
 Overview of Six Sigma

Six Sigma a
PHILOSOPHY CHANGE
THE
WORLD

TRANSFORM THE
ORGANIZATION

Six Sigma as a
GROWTH
Process

COSTS OUT
Six Sigma as a
Statistical Tool.
PAIN, URGENCY, SURVIVAL
 It's a Philosophy
Anything less than ideal is an opportunity for
Improvement.
Defects Costs Money.
Understanding processes and improving them is the
most efficient way to achieve lasting results.
 It's a Process

To achieve this level of performance you need to

Define, Measure, Analyze, Improve and Control.
 It's Statistics

Six Sigma processes will produce less

than 3.4 Defects per million
Opportunities.
 Management Involvement ?

Executives and upper Management

drive the effort through:
– Understanding Six Sigma
– Significant Financial Commitments
– Actively selecting projects tied to Strategy
– Setting up Formal Review process
– Selecting Champions
– Determining Strategic Measures
Question: How many defects per million
opportunities make six sigma?

3.4
0.34
3400
34
Question: How many defects per million
opportunities make six sigma?

3.4
0.34
3400
34

This is with long term shift of 1.5 sigma

 Key issues for Leadership
How will Leadership organize to support Six Sigma? (Six Sigma
Council, Director Six Sigma, etc.)
Transition Rate to achieve Six Sigma
Level of resource Commitment
Centralized or Decentralized approach
Integration with current initiatives e.g. QMS
How will the progress be monitored?
 Philosophy of six sigma
Know What's Important to the Customer (CTQ)
Reduce Defects (DPMO)
Center Around Target (MEAN)
Reduce Variation (Standard Deviation)
 Critical Elements
Genuine Focus on the Customer
Data and Fact Driven Management
Process Focus
Proactive Management
Boundary-less Collaboration
Drive for Perfection, Tolerance for Failure
 Data Driven Decision

Y = f(x)
•Y • X1…… Xn

• Dependant • Independent

• Output • Input-Process

• Effect • Cause

• Symptom • Problem

• Monitor • Control
 Two Processes

DMAIC DMADV
– New Processes
– Existing Process
– DFSS

Define Define
Measure Measure
Analyze Analyze
Improve Design
Control Verify
Question: In the representation
Y=f(X), which of these is X

Headache
Viral Infection
Fever
Cough
Question: In the representation
Y=f(X), which of these is X

Headache
Viral Infection
Fever
Cough

True, that is the cause of the problem.

Some Basic Concepts
 COPQ - Cost of Poor Quality
• Inspection
Traditional Quality Costs:
• Warranty
• Scrap • Tangible
• Rework • Easy to Measure
• Rejects

HIDDEN COST:
• More Setup’s
• Intangible
• Expediting Costs  Lost Opportunities • Difficult to Measure
• Lost Sales
 The Hidden Factory
• Late Delivery
• Lost Customer Loyalty
• Excess Inventory
• Long Cycle Times
• Costly Engineering Changes

AVERAGE COPQ approximately 15% of Sales

 COPQ v/s Sigma Level
COPQ vs Sigma Level

50%
45%
40%
Cost of Quality % Sales

35%
30%
25%
20%
15%
10%
5%
0%
2 3 4 5 6

Sigma Level
Question: Which of the followings
is "not" the Cost of poor quality?

Cost of raw material

Cost of lost customer
Cost of inspections
Cost of repair
Question: Which of the followings
is "not" the Cost of poor quality?

Cost of raw material

Cost of lost customer
Cost of inspections
Cost of repair
 Process
A Process is a group of steps, tasks, or
activities, which take inputs (People, material,
Information ...) and in some way change them
to product an output (Service, Product ...)

X’s Step 1 Step 2 Step 3 Y’s

INPUT PROCESS OUTPUT

 CTQ (Critical To Quality)
CTQ Characteristics for the process, service or
product
Measure of "What is important to Customer?“
Six Sigma projects are designed to improve CTQ
Examples
– Waiting time in Clinic
– Spelling mistakes in Letter
– % of valves leaking in Operation
 Defective and Defect
A Nonconforming unit is a defective unit
Defect is Nonconformance on one of many
possible Quality characteristics of a unit that
causes customer dissatisfaction
A defect does not necessarily make the unit
defective
Examples
– Scratch on Water Bottle
– However if the customer wants a scratch free bottle, then
this will be defective bottle
Question: Critical to Quality(CTQ)
related to?

The needs of customer

Meeting the specified requirements
Question: Critical to Quality(CTQ)
related to?

The needs of customer

Meeting the specified requirements
 Defect Opportunities

Circumstances in which CTQ can fail to meet

Number of defect opportunities relate to
complexity of the unit
Complex units - Greater opportunities of defect
than simple units
Examples
– A unit has 5 parts, an in each part there are 3 opportunities
for defects, then

Total Defect Opportunities = 5 x 3 = 15

 DPO (Defect Per Opportunity)
Number of Defects divided by Number of Defect
opportunities
Examples
– In previous case (15 Defect opportunities), if 10 units
have 2 defects
Defects per Unit = 2 / 10 = 0.2
DPO = 2 / (15*10) = 0.0133333
 DPMO (Defects Per Million Opportunities)

DPO multiplies by 1 Million

Examples
– In previous case (15 Defect opportunities), if 10 units
have 2 defects
Defects per Unit = 2 / 10 = 0.2
DPO = 2 / (15*10) = 0.0133333
DPMO = 0.013333333 x 1,000,000 = 13,333

Six Sigma Performance is 3.4 DPMO

13,333 DPMO is 3.7 Sigma
 What is Sigma?

Have you ever

- Shot a Riffle?
- Played Darts?

What is the point of these sports?

What is the point of these sports?
 Have you ever….
Jack
- Shot a Riffle?
- Played Darts?

JIM

Who is a Better Shooter?

 Variability

Deviation = Distance between observation

and the mean(or average)
 Variability
Variance = Average Distance between observations and
the mean squared Jack
8
7
10
8
9

Observations Deviations Squared Deviations

10 10 - 8.4 = 1.6 2.56
9 9 - 8.4 = 0.6 0.36 JIM
8 8 - 8.4 = - 0.4 0.16
8 8 - 8.4 = - 0.4 0.16
7 7 - 8.4 = - 1.4 1.96
Averages 8.4 0 1.0

VARIANCE
 Variability
Variance = Average Distance between observations and
the mean squared Jack
Observations Deviations Squared Deviations
7 7 - 6.6 = 0.4 0.16
7 7 - 6.6 = 0.4 0.16
7 7 - 6.6 = 0.4 0.16
6 6 - 6.6 = - 0.6 0.36
6 6 - 6.6 = - 0.6 0.36
Averages 6.6 0 0.24

VARIANCE JIM

7
6
7
7
6
 Variability
The World tends to
be Bell – Shaped …

Even very rare Fewer Most Fewer Even very rare

outcomes are in the Outcomes in the outcomes are
possible “tails” occur in “tails” possible
(lower) the (lower)
middle
“NORMAL” Bell Shaped Curve
Normal distributions are divided
up into 3 Standard deviations on
each side of the mean

Once you are that, you

know a lot about what’s
going on …

µ
68%
1 -1 That’s what
95% Standard Deviation
2 -2 is Good for
99.7%
3 -3
 Causes of Variability
Common Causes
– Random variation within predictable range (usual)
– No Pattern
– Inherent in Process
– Adjusting the process increased it's Variation
Special Causes
– Non-random variation (unusual)
– May exhibit a pattern
– Assignable, Explainable, Controllable
– Adjusting the process decreases it's Variation
 Limits
Process and Control Limits
– Statistical
– Process limits are used for Individual Items
– Control limits are used with Averages
– Limits = µ -3
– Define usual (common causes) & unusual (special causes)
Specification Limits
– Engineered
– Limits = target - tolerance
– Define acceptable & unacceptable
 Acceptable v/s Defective
Another View
OFF - TARGET

LARGE VARIATION

USL
LSL
LSL USL

ON - TARGET

Center Process Reduce Speed

LSL = Lower Specification Limit

USL = Upper Specification Limit
LSL USL
 More about Limits

Cpk measures "Process Capability"

If process limits and control limits are at the same location, Cpk = 1. Cpk  2 is Exceptional.
 A Six sigma process
Predictably twice as good as what the Customer wants

-6 +6

6

1 1 1 1 1 1

LSL 1 2 3 4 5 6 7 8 9 10 11 USL
 Process shift Allowed

LSL 1.5SD 1.5SD USL

SD = 1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
 Six sigma Measurement
# of Defects
# of Sigmas
per Million
1.5s 500,000
2.0s 308,300
2.5s 158,650
3.0s 67,000
3.5s 22,700
4.0s 6,220 600,000
4.5s 1,350
5.0s 233
500,000
5.5s 32
6.0s 3.4
# of Defects per Million

400,000

300,000

200,000

100,000

1.5 2 2.5 3 3.5 4 4.5 5 5.5 6

# of Sigma
 Components of Six Sigma

1. Process Power

2. People Power
DMAIC
 DMAIC - Simplified
Define
What is Important?
Measure
How are we doing?
Analyze
What is wrong?
Improve
Fix what's wrong.
Control
Ensure gains are maintained to guarantee performance
 DMAIC Approach
D Define the customer, their Critical to Quality (CTQ) issues, and the
Core Business Process Involved
Define

M
Measure the performance of the Core Business Process involved
Measure

A Analyze the data collected and process map to determine Root

causes and opportunities for improvement
Analyze

I Improve the target process by designing creative solutions to fix

and prevent problems.
Improve

C
Control the improvements to keep the process on the new course
Control
Question: Why should there be a Control phase
when Improvement is already done?
Only for companies totally out of control

It is a optional phase
This is to maintain the gains
This phase is as per the choice of Management
Question: Why should there be a Control phase
when Improvement is already done?
Only for companies totally out of control

It is a optional phase
This is to maintain the gains
This phase is as per the choice of Management
 Define

VOC - Who wants the project and Why?

The scope of Project/ Improvement (SMART Objective)
Key Team members / Resources for the project
Critical milestones and stakeholders review
Budget Allocation
 Measure
Ensure Measurement system reliability
– Is the tool used to measure the output variable flawed?

Prepare data Collection plan

– How many data points do you need to collect?
– How many days do you need to collect data for?
– What is the sampling strategy?
– Who will collect data and how will data get stored?
– What could the potential drivers of variation be?

Collect Data
 Analyze

How well or poorly processes are working when

compared with
– Best possible (Benchmarking)
– Competitor's

Shows you maximum possible result

Don't focus on symptoms, find the Root Cause

 Improve
Present recommendations to Process owner

Pilot run
– Formulate Pilot run
– Test improved process (Run Pilot)
– Analyze pilot and results

Develop implementation plan

– Prepare final presentation
– Present final recommendation to Management Team
 Control

Don't be too hasty to declare Victory

How will you maintain to Gains made?

– Change Policy & Procedures
– Change Drawings
– Change Planning
– Revise Budget
– Training
 People power

Tell me, I Forget.

Show me, I Remember.
Involve me, I Understand.
 6 Sigma Training
Mentor, Trainer, and Coach of Black Belts and other in
Master Black Belt the Organization

Leader of teams implementing the Six Sigma

Black Belts Methodology on projects.

Delivers successful focused projects using the Six Sigma

Green Belts Methodology on tools.

Team Members/ Participates on and supports the project teams,

Yellow Belts typically in the context of his or her existing
responsibilities.
 Champion

Plans improvement projects

Charters or Champions chartering process
Identifies, sponsors and directs Six Sigma
projects
Holds regular project reviews in accordance
with project charters
Includes Six Sigma requirements in expense
and capital budgets
Question: Is Black belt position a
full time job in the company?

False
True
Question: Is Black belt position a
full time job in the company?

False
True
 Champion
Identifies and removes organizational and
cultural barriers to Six Sigma success
Rewards and recognizes team and individual
accomplishments (Formally and Informally)
Communicates Leadership Vision
Monitors and reports Six Sigma progress
Validates Six Sigma project results
Nominates highly qualified Black Belt and/ or
Green Belt candidates.
 Master Black Belt
Roles
– Enterprise Six Sigma Expert
– Permanent Full-time Change Agent
– Certified Black Belt with additional specialized skills or experience especially useful
in deployment of Six Sigma across the enterprise

Responsibilities
– Highly proficient in using Six Sigma methodology to achieve tangible business results
– Technical expert beyond Black Belt level on one or more aspects of process
improvement (e.g. - advanced statistical analysis, project management,
communications, program administration, teaching, project coaching)
– Identifies high-leverage opportunities for applying the Six Sigma approach across the
enterprise
– Basic Black Belt Training
– Green Belt Training
– Coach / Mentor Black Belts
 Black Belt

Roles
– Six Sigma Technical expert
– Temporary, Full-time change agent (will return to other duties after completing a two to
three year tour of duty as a Black Belt)

Responsibilities
– Leads business process improvement projects where Six Sigma approach is indicated
– Successfully completes High-Impact projects that result in tangible benefits to the
enterprise
– Demonstrate Mastery of Black Belt body of Knowledge
– Demonstrated proficiency at achieving results through the application of Six Sigma
Approach
– Coach / Mentor Green Belts
– Recommends Green Belts for Certifications
 Green Belt

Roles
– Six Sigma Project Originator
– Part-time Six sigma change agent. Continuous to perform duties while participating on
Six Sigma Project teams
– Six Sigma champion in local area

Responsibilities
– Recommends Six Sigma Projects
– Participates on Six Sigma Project teams
– Leads Six Sigma teams in local improvement projects
 Yellow Belt

Roles
– Learns and applies Six Sigma Tools to projects

Responsibilities
– Actively participates in team tasks
– Communicates well with other team members
– Demonstrates basic improvement tool knowledge
– Accepts and executes assignments as determined by team
 Financial Analyst

Validates the baseline status for each

project
Validates the sustained results / savings
after completion of the project
Complies overall investment v/s Benefits on
Six Sigma for management reporting
Will usually be the part of Senior Leadership
Team.
 Project Selection

Voice of Customer
– What are we falling short of meeting customer needs?
– What are the new needs of Customers?

Voice of Market
– What are market trends, and are we ready to adapt?

Voice of Competitor
– Why are we behind our competitor?
 Harvesting the Fruit of Six Sigma

Sweet Fruit
– Design for Repeatability
– Process Enhancement

Bulk of Fruit
– Process Characterization and Optimization

Low Hanging Fruit

– Seven Basic Tools

Ground Fruit
– Logic and Intuition
 What Qualifies as a Six Sigma project?

3 Basic Qualifications
– There is a gap between current and desired /
needed performance
– The cause of problem is not clearly understood
– The solution is not pre determined, nor is the
optimal solution apparent
Thank You