INTRODUCTION TO SIX SIGMA

CONCEPTS

1. Six Sigma Quality Programme is defined as a customer

oriented, structured, systematic, proactive and quantitative
company-wide approach for continuous improvement of
manufacturing, services, engineering, suppliers and other
business processes. It measures the degree to which the
process deviates from the goals and then takes efforts to
improve the process to achieve total customer satisfaction.

2. “Six Sigma” quality is defined as achieving reduction in

the variations which allows for a +/- 1.5 Sigma shift. It is
also described as Philosophy, Methodology and Break
through strategy to solve problems.
 CONCEPTS (Contd.)

• Six Sigma means several things. First it is a statistical measurement which tells
us how good our products, services and processes really are and enables us to
benchmark our operations in order to identify improvement opportunities.

• When we say that a process is at six sigma level, such a process will
normally yield two instances of non-conformances out of every billion opportunities
for non conformances out of every billion opportunities for non
conformance, provided there is no shift in the process average. The same
will yield 3.4 instances of non-conformances out of every million
opportunities with an expected shift of 1.5 sigma in the process average. This
is considered to be best-in-class quality.
• Second, six sigma is a business strategy which can greatly help us to gain a
competitive edge. As the sigma level increases, the product quality
improves and costs go down resulting in improved customer satisfaction.

• Third, six sigma is a philosophy, essentially one of working smarter. This means
making fewer and fewer mistakes in everything we do. As we discover and
eliminate harmful sources of variation, our non- conformances go away, process
capability improves and sigma rating goes up.
 ‘Six Sigma is also improving profitability – improved quality and
efficiently are the immediate by-products.
 “Six Sigma” is the Philosophy and Goal – 3.4 defects per million
opportunities.
 “Six Sigma” is a break through strategy which provides the meaning to
achieve the GOALS through highly focused system of problem solving.
 “Six Sigma” is a process to Tangible, Quantifiable answers with ultimately
produced profitable results.
 “Six Sigma” focuses on a systematic methodology to reduce variability
rather than on reducing number of defects per million opportunities
(DPMO).
 “Six Sigma” includes Manufacturing, Product Design, Purchasing, Finance
and After Market Sales as well.
 Typically it is not an ordinary Kaizen type improvement but a “Nehonteki
na Kaizen” type improvement.
 WHY SIX SIGMA

•The answer is simple – Survival

• Because the customers feel the “Variations” and not “Mean”.
• It is company wide initiative and provides a common platform for intra-
department discussions.
• Enhanced production capacity by identifying a “hidden factories” – reduced
spending and reduced rework.
• Elimination of waste (the difference between potential and actual quality).
Potential quality is the known maximum possible value added per unit of in-
put while actual quality is the current value added per unit of in-put.
• Reduction in cost cost of poor quality.
• Scrap, Rework cost, Re-processing cost, Time wastage in un-necessary
meetings.
• Reduction in cycle time both Manufacturing & Non Manufacturing
activities.
 SIX SIGMA REVIEWS

• Globally Companies like GE, Allied Signal, Dupont,

Polaroid, Raytheon etc. have embraced Six Sigma in a big
way. Motorola saved $ 4 billion by 1992.

• Jack Welch of GE – “Most important initiative that GE has

ever undertaken”. Dramatically improved quality will
increase employee and customer satisfaction, will improve
share and profitability, and will enhance our reputation.
GE saved $300 M in 1997 over $600 M in 1998 through
Six Sigma and $6 Billion in 2000.
• Polaroid is adding 6% to its bottom line every year through
six sigma
• Raytheon expects to reduce its cost of doing business by
more than $1B every year through Six Sigma by 2001 etc.
• Allied Signal saved $ 1.50 billion through Six Sigma.
WIPRO saved Rs. 4.4 crores by March, 2000 and expects
to hit Six Sigma level by 2002.
 TYPICAL SIX SIGMA PROJECTS

o Productivity Increase
o First Time Yield Increase
o Reduction in Rejection
o Energy Cost Reduction
o Reduction in Time to Quote New Business
o Warranty Cost Reduction
o Scrap Reduction
o Training Cost Reduction
o Localization of Components
o Interest Cost Reduction
o Freight Cost Reduction
o Supplier Cost Reduction
o Improvement in Machine Uptime etc.
 THE METHODOLOGY

DMAIC, or Define-Measure-Analyze-Improve-Control. DMAIC can be

described as follows:-

• Define the goals of the improvement activity. At the top level the goals
will be the strategic objectives of the organization, such as a higher ROI
or market share. At the operations level, a goal might be to increase the
throughput of a production department. At the project level goals might
be to reduce the defect level and increase throughput. Apply data mining
methods to identify potential improvement.

• Measure the existing system. Establish valid and reliable metrics to help
monitor progress towards the goal(s) defined at the previous step. Begin
by determining the current baseline. Use exploratory and descriptive
data analysis to help you understand the data.
 THE METHODOLOGY (contd.)

• Analyze the system to identify ways to eliminate the gap between the
current performance of the system or process and the desired goal.
Apply statistical tools to guide the analysis.

• Improve the system. Be creative in finding new ways to do things

better, cheaper, or faster. Use project management and other planning and
management tools to implement the new approach. Use statistical
methods to validate the improvement.

• Control the new system. Institutionalize the improved system by

modifying compensation and incentive systems, policies, procedures, MRP,
budgets, operating instructions and other management systems. You may
wish to utilize systems such as ISO 9000 to assure that documentation is
correct
 THE METHODOLOGY (contd.)

•Infrastructure
A very powerful feature of Six Sigma is the creation of an
infrastructure to assure that performance improvement activities
have the necessary resources. In this author’s opinion, failure to
provide this infrastructure is the #1 reason why 80% of all TQM
implementation failed in the past. Six Sigma makes
improvement and change the full-time job of a small but critical
percentage of the organization's personnel. These full time
change agents are the catalyst that institutionalizes change.
 IMPLEMENTATION
• Leadership : Six Sigma involves changing major business value streams
that cut across organizational barriers. It is the means by which the
organization's strategic goals are to be achieved. This effort can not be lead by
anyone other than the CEO, who is responsible for the performance of the
organization as a whole. Six Sigma must be implemented from the top-
down.

• Champions and Sponsors : Six Sigma champions are high-level

individuals who understand Six Sigma and are committed to its success.

• Master Black Belt: This is the highest level of technical and

organizational proficiency. Master Black Belts provide technical leadership
of the Six Sigma program.
• Black Belt : Candidates for Black Belt status are technically oriented
individuals held in high regard by their peers. They should be actively involved in
the process of organizational change and development.

• Green Belt : Green Belts are Six Sigma project leaders capable of
forming and facilitating Six Sigma teams and managing Six Sigma projects
from concept to completion.
 WHAT IS SIX SIGMA?

 Metric Based on the Standard Deviation

 Vision

 Benchmark

 Philosophy

 Methodology

 Aggressive (Stretch) Goals

 “Hard work and best efforts put forth without
guidance of profound knowledge may well be the
root of our ruination. There is no substitute for
knowledge…”

Deming
PROFOUND KNOWLEDGE

ABILITY TO ANSWER PROFOUND QUESTIONS

 INTERESTING QUOTES FROM THE PAST
 not knowing the difference between opinion and fact makes it difficult
to make good decisions.
Marilyn Vos Savant

 Sound understanding of statistical control is essential to management,

engineering, manufacturing, purchase of materials, and service.

W. Edwards
Deming
 Statistical thinking will one day be as necessary for efficient citizenship
as the ability to read and write.

H.G. Wells

 Data without concepts is blind. Concepts without data are empty.

Immanuel Kant
 PROCESS CAPABILITY
 The purpose of a process capability study is to
separate inherent “random variability” from “special
causes” and then eliminate the most significant “special
causes”. Random variability is generally present in the
defined by basic imitations associated with the machinery,
materials, people’s ability or manufacturing methods.
Special causes come and go in the system causing
time-related variations in yield performance or
reliability. Traditionally, special causes have often
appeared to be random because they were never
examined closely enough.
 The Capability Indices
• The degree of capability i.e. the spread and location of the distribution
within acceptable specification limits is measured in terms of the Capability
Indices, C p and C pk.
• C p the process capability index defines a process in terms of its parameter
spread with respect to the defined limits of a specification.
• C pk the location index indicates the location of the center of the actual
distribution curve with respect to the target value.
• Refer diagrams:-
 The Capability Indices (contd.)
• Cp is a function of two variables the width of the specification and the
process spread as follows:

Specification Width
Cp = -------------------------
Process Spread
or
U.S.L. – LSL
Cp = ----------------
Six Sigma

Note: however that the above equation while giving the ratio of specification width to
process spread does not place the distribution curve within the specification limits.
Indeed this formula simply indicates the potential capability if the distribution were to
fall within these limits. For a minimum capability condition the process would have to
be perfectly centred. Any shift of the process mean would place a substantial part of
the distribution curve outside the spec limit and seriously degrade the yield. To
determine actual capability, therefore, a second formula dealing with location is
required.
 The Capability Indices (contd.)
• This is represented by Cpk where:

Cpk = Cp (1 – k)
And
Target Value – Process Mean
k= ------------------------------------
Specification Width2

In this equation, k defines the actual location of the mean of the distribution with
respect to the target. If the process is perfectly centred, so that the target value is the
same as the process meanthen k equals 0, and Cpk equals Cp.