SIX SIGMA MANAGEMENT
Six Sigma
• a business philosophy to improve customer
satisfaction.
• a metric of world-class companies allowing for a
benchmark.
• reduces the cost of doing business because the process
is done right in the first time.
• a set of statistical tools to help companies measure,
Six Sigma
• Tool for eliminating process variation and reduced
defects in products and services.
Variation is the cause of defects and out-of-
control processes.
• Defects that reach the customers:
-customer dissatisfaction,
-resultant loss in customers
- demise of an organization or business.
Six Sigma Today
• 'brand' in the world of corporate development.
• business performance methodology:
- in organizations
-local government departments,
-prisons, hospitals,
-the armed forces,
-banks,
- multi-nationals corporations.
Six Sigma
• In manufacturing:
– eliminating almost all defects, rework and scrap,
– operating processes under statistical control,
– controlling input variables, rather than inspecting for defects at the
end of the process,
– maximizing equipment uptime,
– optimizing cycle times.
• In customer service, purchasing (and safety):
– an obvious reduction in cycle time,
– rapid response time to customers,
– speed and accuracy in inventory control.
• in supply management:
-mistake proofing the processes,
History of Six Sigma
• 1920: the word 'sigma’ used by mathematicians
and engineers as a symbol for a unit of
measurement in product quality variation.
• 1980: engineers in Motorola Inc. used 'Six
Sigma' an informal name for an in-house
initiative for reducing defects in production
processes,
• ‘Six Sigma’ became a federally registered
trademark and service mark of Motorola Inc.
History of Six Sigma
• 1991: Allied Signal Company, adopted the Six
Sigma methods, and claimed significant
improvements and cost savings within six months.
• 1998: GE claimed that Six Sigma had generated
over three-quarters of a billion dollars of cost
savings.
• 2000: Six Sigma was effectively established as an
industry in its own right.
Capability Study
• Sigma refers to the number of standard deviations
between the process mean and the nearest
specification limit.
• As process standard deviation goes up, or the mean
of the process moves away from the center of the
tolerance, the Process Capability sigma number
goes down, because fewer standard deviations will
then fit between the mean and the nearest
specification limit.
See in the Figure.
Six Sigma Capability Improvement
Capability Study
• In the long term, processes usually do not perform
as well as they do in the short term.
• Sigma based on long-term data, is less than or
equal to an estimate based on short-term sigma.
• Many ordinary businesses actually operate at
between three and two sigma performance. This
equates to between approximately 66,800 and
308,500 defects per million operations.
Six Sigma Defect Metrics
• A unit of product can be defective if it contains one
or more defects.
• A unit of product can have more than one
opportunity to have a defect.
Six Sigma Defect Metrics
• Proportion Defective (p):
p = Number of Defective Units / Total Number of Product
Units
• Yield
Y=1-p
The Yield proportion can convert to a sigma value using the Z
tables
• Defects per Unit - DPU, or u in SPC
DPU = Number of Defects / Total Number of Product Units
Six Sigma Defect Metrics
• Defects per Opportunity ( DPO)
DPO = no. of defects / (no. of units X no. of defect
opportunities per unit)
• Defects per Million Opportunities (DPMO, or PPM)
DPMO = dpo x 1,000,000
Defects per Million Opportunities or DPMO can be
then converted to sigma & equivalent Cp values.
(Sigma table)
Six Sigma Defect Metrics
• Defect Based Six Sigma Metrics - Example
• If there are 9 defects among 150 invoices, and there are 8
opportunities for errors for every invoice, what is the dpmo?
dpu = no. of defects / total no. of product units = 9/150 = .06 dpu
dpo = no. of defects / (no. of units X no. of defect opportunities per
unit)
• = 9/ (150 X 8) = .0075 dpo
• dmpo = dpo x 1,000,000 = .0075 X 1,000,000 = 7,500 dpmo
what are the equivalent Sigma and CP values? See Sigma Table.
Six Sigma Defect Metrics
• Six sigma calculator
• http://www.isixsigma.com/sixsigma/six_sigma
_calculator.asp
Six Sigma Defect Metrics
DPMO (Defects per Million Operations) can include:
• anything from a component,
• piece of material,
• line of code,
• an administrative form,
• time frame
• distance.
A sigma quality level offers an indicator of how often defects are likely to occur, where a
higher sigma quality level indicates a process that is less likely to create defects.
As sigma level of quality increases:
• product reliability improves,
• the need for testing and inspection diminishes,
• work in progress declines,
• cycle time goes down,
• costs go down,
• customer satisfaction goes up.
Six Sigma Defect Metrics
• Desire to achieve six sigma either side of the
nominal target inside the specification relates to:
-very tight production characteristics,
- very low incidence of cases outside the
specification, 'defects’.
Methodology
• The model that is used to improve a process in Six Sigma
management:
• DMAIC model: Define-Measure-Analyze-Improve-Control.
These are the stages:
• Define formally define the process improvement goals that are
consistent with customer demands and enterprise strategy.
• Measure to define baseline measurements on current process for
future comparison.
-Measure the existing systems.
-Identify and describe the potential critical processes/
products
- Perform measurement system analysis
METHODOLOGY
• Analyze
Analyze the system to identify ways to eliminate the gap between the current
performance of the system or process and the desired goal.
A process is to be considered capable when it is in control, predictable and
stable.
• Improve
optimize the process based upon analysis.
• Control
-continuously measure the process.
-institute control mechanisms to ensure that variances are corrected before they
result in defects.
-record all the processes.
Tools used in DMAIC Method
example
Six sigma project people selection
• Define: Why is there such a difference in the sales
performance of people?
Measure: Top people have 10X volume of the bottom
25%. Failure to meet sales quotas is a defect.
Analyze: Education, training, time in job, product line,
sales area, profiles.
Improve: Able to identify by profile 72% of the top sales
people. Use this tool to select new people into this
function.
Control: Use profiles for new hires and continue to
monitor performance levels.
Six Sigma Roles and Responsibilities
Key roles for a successful implementation:
• Executive Leadership includes CEO and other key top
management team members.
They provide the direction, and the alignment necessary for the ultimate
success of Six Sigma management. They also empower the other role
holders with the freedom and resources to explore new ideas for
breakthrough improvements.
• Champions take a very active leadership and sponsorship role
in implementing Six Sigma management.
The Executive Leadership draws them from the upper management.
Champions also act as mentor to Black Belts.
• Master Black Belts, identified by champions, act as in-house
expert coach for the organization on Six Sigma.
They devote 100% of their time to Six Sigma. They assist champions and
Six Sigma Roles and Responsibilities
• Green Belts are the employees who take up Six
Sigma implementation along with their other job
responsibilities.
They are technical process experts and change agents who
work in their own functional area.
• Process Owner is the individual who has the
ultimate authority to change a process.
The process owner should be identified for every project or
task that is entered onto an organizational metric tracking
system.
