Satyam - Six Sigma Awareness Program- Module 2.1

Six Sigma Methodology

Overview

Y Dependent Output Effect Symptom Monitor

X1 . . . XN

Independent Input-Process Cause Problem Control

To get results, should we focus our behavior on the Y or X?

Y = f (X)

Six Sigma Basis

Practical Problem Statistical Problem

Statistical SolutionPractical Solution

y f x x xk= ( , ,..., )1 2

Measure Analyze

ImproveControl

Overall Approach

D M A I CMethodology

• Data-driven Quality Methodology

• A Five-step approach to process improvement

• Can be used for both incremental and exponential improvement projects

• Iterative process

Define Define : Customer expectations of the process ?

MeasureMeasure : What is the frequency of Defects ?

AnalyzeAnalyze : Why, When and Where do defects occur ?

ImproveImprove : How can we fix the Process ?

ControlControl : How can we make the process stay fixed ?

DMAIC

DefineProject Charter, CTQs, High Level Process Map

MeasureProject Y and Current Performance,

Determine Process Capabilities,Validate MSA, Set Project goals

AnalyzeAnalyze Root Causes,

Identify sources of variation & Screen potential causes

ImproveDiscover variable relationships,

Establish tolerances & Suggest improvements

ControlDetermine Process Capabilities,

Implement process control & Institutionalize improvements

The 5 step

DMAIC

METHODOLOGY

Questions to be answered

1. What is the Problem or Opportunity?

2. Why should be this a Priority?

3. What is the Effect of this Problem?

4. What Processes are affected?

5. Who should be on the Team?

1. What is the Problem or Opportunity?

2. Why should be this a Priority?

3. What is the Effect of this Problem?

4. What Processes are affected?

5. Who should be on the Team?

Deliverables - Phase level

1. Project CTQs

2. Approved Project Charter

3. High Level Process Map

1. Project CTQs

2. Approved Project Charter

3. High Level Process Map

Tools

Pareto Analysis Voice of Customer Affinity DiagramInterviews/Questionnaire QFD COQ Analysis Project CharterBrainstorming Process Mapping Stratification

Pareto Analysis Voice of Customer Affinity DiagramInterviews/Questionnaire QFD COQ Analysis Project CharterBrainstorming Process Mapping Stratification

Define

1. What is the Primary CTQ and how isit measured?

2. How good is the measurementsystem?

3. How bad is the problem?

4. Are there any clues about its behavior?

1. What is the Primary CTQ and how isit measured?

2. How good is the measurementsystem?

3. How bad is the problem?

4. Are there any clues about its behavior?

1. Project response variable (Y)

2. Data collection on Y

3. Assess the performance standards on Y (Specs)

4. Analysis of the measurementsystem capability

5. Determine performance capability

6. Establish improvement goals

1. Project response variable (Y)

2. Data collection on Y

3. Assess the performance standards on Y (Specs)

4. Analysis of the measurementsystem capability

5. Determine performance capability

6. Establish improvement goals

Process Map Graphical Tools Control charts Z ScoreProcess Capability Descriptive statistics Project CharterCause & Effect Matrix FMEA Gage R & R Brainstorming

Process Map Graphical Tools Control charts Z ScoreProcess Capability Descriptive statistics Project CharterCause & Effect Matrix FMEA Gage R & R Brainstorming

Measure

Questions to be answered Deliverables - Phase level

Tools

1. What could cause the symptoms?

2. How much impact will we have?

3. What returns will be there?

1. What could cause the symptoms?

2. How much impact will we have?

3. What returns will be there?

1. Prioritize list of all X’s

2. Identify the likely families ofvariability (Vital few)

3. Perform Graphical Analysis

4. Perform ANOVA

5. Use of basic statistical tools

6. Quantified financialopportunity

1. Prioritize list of all X’s

2. Identify the likely families ofvariability (Vital few)

3. Perform Graphical Analysis

4. Perform ANOVA

5. Use of basic statistical tools

6. Quantified financialopportunity

Brainstorming Cause & Effect Correlation/RegressionTest of Hypothesis/ANOVA COQ Analysis Statistical tool-kitGraphical Analysis FMEA Project Charter

Brainstorming Cause & Effect Correlation/RegressionTest of Hypothesis/ANOVA COQ Analysis Statistical tool-kitGraphical Analysis FMEA Project Charter

Questions to be answered Deliverables - Phase level

Tools

Analyze

1. What is the root cause?

2. How was this verified?

3. What could be done about each cause?

4. What will be done to address these?

1. What is the root cause?

2. How was this verified?

3. What could be done about each cause?

4. What will be done to address these?

1. Confirmed Vital X’s

2. Optimized solutions

3. Confirmed solutions

4. Risk Assessment plan

1. Confirmed Vital X’s

2. Optimized solutions

3. Confirmed solutions

4. Risk Assessment plan

DOE Z scores Brainstorming/Benchmarking FMEA CapabilityCost benefit analysis Sample size Project Charter Process MapStatistical Tolerancing Regression Hypothesis/ANOVA

DOE Z scores Brainstorming/Benchmarking FMEA CapabilityCost benefit analysis Sample size Project Charter Process MapStatistical Tolerancing Regression Hypothesis/ANOVA

Improve

Questions to be answered Deliverables - Phase level

Tools

1. How will the solution be implemented?

2. Who will be affected?

3. How will the change be sustained?

4. What are the verified impacts?

1. How will the solution be implemented?

2. Who will be affected?

3. How will the change be sustained?

4. What are the verified impacts?

1. Sustained Process- Mistake proof- Tolerance the process- Monitor (SPC)

2. Project Documentation

3. Translated Learning's

4. Project Closure

1. Sustained Process- Mistake proof- Tolerance the process- Monitor (SPC)

2. Project Documentation

3. Translated Learning's

4. Project Closure

SPC Process Capability Process MapCommunication plan Error proofing Project CharterControl plan Project documentation

SPC Process Capability Process MapCommunication plan Error proofing Project CharterControl plan Project documentation

Questions to be answered Deliverables - Phase level

Tools

Control

D M A D VMethodology

Define Determine objectives & deployment

MeasureUnderstand customer needs & specify

measurable design requirements

Analyze Develop concept design

Design Developed details & optimized design

Verify Verify Performance

The 5 step

DMADV

METHODOLOGY

The 5 step

DMADV

METHODOLOGY

Measure Define Analyze Design Verify

Measure Define Analyze Improve Control

Does a process

exist?

Is the improvement

a new or redesigned

product/service?

IsIncremental improvement

enough?

Y Y N

N YN

DMADV-DMAIC Relationship and Transition Points

Six Sigma Metrics

Identify the CTQs

Critical to Quality Characteristics of the Customer requirements for a Product (or) Service

Define Defect Opportunities

Any step in the process where a defect could occur in a CTQ

Look for defects in

products (or) services

Count defects or failures to meet CTQ requirements in all process steps

Arrive at DPMO

Defects per million opportunities

Convert DPMO to Sigma level

Use the Sigma Conversion table (or) Normsinv Function in Ms-Excel

How do we arrive at Sigma Levels

Report as Z-Short term

Value

Z-LT = Z-ST - 1.5

CTQs and Technical Requirements are the foundation for all Six Sigma Projects. They must be defined UP FRONT!

Before we can begin, the “Voice of the Consumer” (Consumer Cue)must be translated into the “Voice of the Engineer” (Technical Requirement).

schedules should be adhered to. A call-taker must answer all incoming calls

(Telephone promptness)

Translate the customer/consumer cue into “Critical to Quality” requirements (dimensions/ parameters that need to bemeasured and/or controlled)

Schedule Adherence - 99% Answer rate (% of incoming calls answered) - 100%

Technical Requirement

CTQ/System of CTQs

Translation process

(“Cues” to “CTQs” or Critical to Quality

requirements)

Renovated Code must reach at specified time Call-takers must be available to answer calls

Consumer Cue

Translation of Customer “Cues into

CTQs

1. Anything that results in customer dissatisfaction

2. Anything that results in non-conformance

3. Any variation of a required characteristic of a product or service or its parts which prevents the product or service from fulfilling the functional / physical requirements of the customer

Defect Definition...

1. A measure of volume of output from your area

2. It is observable and countable

3. It should have a definite starting and stopping point

- Where work is normally reviewed (e.g., inspection, test)

4. That “thing” for which you are counting defects

Unit Definition...

Financial Report

Defect : Entry not correct

Unit : Each entry

# of Defects = 50

# of Units = 50000

DPU = .001

Telephone response

Defect : not answered within 5 rings

Unit : every call

# of defects = 45# of calls = 2000DPU = .0225

DPU Examples...

Can we say that processes of Supplier no 1 are better than supplier no 2? WHY?

SUPPLIER No 1

•Blank A4 size paper supplier’s DPU = 0.002

(1 defect / 500 papers)

SUPPLIER No 2

•PC manufacturer (Compaq, Dell) ‘s DPU = 0.2

(1 defect / 5 PC units)

DPU Examples...

Can we say that processes of Supplier no 1 and supplier no 2 are equal in performance? WHY?

SUPPLIER No 1

•Software Product DPU = 0.01

(5 defect / 500 Products)

SUPPLIER No 2

•Software Product DPU = 0.01

(5 defect / 500 Products)

DPU Examples...

Defect Opportunity is the number of chances in a process where a defect could occur in a Product/Process standard (CTQs)

•Indicates complexity of process

•Need to be independent

•Measurable

Defect Opportunity...

How many No. of Defect Opportunities are there

for a Product if there are 5 CTQs on the Product

and 1 Opportunities for each CTQ across the

Process steps...

Total No. of Opportunities = 5 x 1 = 5

Defect Opportunity...

Calculate Defects per Unit (DPU):

DPU=Total # of Defects

Total # of Units Produced

Calculate Defects per Million Opportunities (DPMO):

Go to a Sigma Chart and Estimate the Sigma Level

DPMO=DPU x 1,000,000

(# of Opportunities for Error in One Unit)

Calculate Defects per Opportunity (DPO):

DPO=DPU

(# of Opportunities for Error in One Unit)

Calculating DPMO...

Finance Report

CTQs : Amount and Date of TransactionDefect : Amount & Date not accurate

# Defects = 500Unit : Each entry

# of units = 50000# of opportunities = 2 steps in the Entry process

DPU = 500/50000 = 0.01DPMO = (0.01 x 1000000)/ (2)

= 5000Sigma Value : 4.075

DPMO Example...

Assumptions:Assumptions:1Unit = 1 Invoice1Unit = 1 Invoice

Invoicing to the customer has 3 process steps that are CTQ’s for the customerInvoicing to the customer has 3 process steps that are CTQ’s for the customer1) Correct Quantity1) Correct Quantity2) Correct Price2) Correct Price 3) Invoice Received Timely3) Invoice Received Timely

•• 3 opportunities for a defect exists for each invoice.3 opportunities for a defect exists for each invoice.•• There is one opportunity for a defect in each processThere is one opportunity for a defect in each process

To evaluate actual invoicing performance:To evaluate actual invoicing performance:

Process Process # of # of ## # # Opp Opp Yield Yield ImpactingImpacting UnitsUnits ofof of of for for for for

CTQCTQ ProducedProduced DefectsDefects SuccessesSuccesses ProcessProcess ProcessProcess

Correct QuantityCorrect Quantity 500500 465465 11 0.930.93Correct PriceCorrect Price 500500 350350 11 0.70.7Invoice Received TimelyInvoice Received Timely 500500 425425 11 0.850.85

260260

35351501507575

DPMO Example...

Sigma Value = 2.4

Less than 3-Sigma: Process is not meeting the

customer requirements

3-Sigma: Process barely meets requirements; no

latitude for upsets

4-Sigma: Typical corporate performance

5-Sigma: Excellent performance

6-Sigma: Robust to nearly all upsets

Interpreting your Sigma levels

Rolled Throughput

Yield...

66% 90%

... why not?

ScrapScrap

90% Customer Quality

ReworkRework

Hidden FactoryNOTOK

Yield After Inspection or Test

OperationOperationInputsInputs InspectInspect First TimeFirst TimeYieldYield =

OK

ProcessA B C

90%Yield

90%Yield

81 % 73 %

Final TestD

Rolled-Throughput Yield Classical First-Time Yield

90%Yield

66 %

90%Yield

Rolled Yield

RTY Vs Final Yield

• Calculate Yield

Yield = e-DPU

(Using Poisson Approximation)

Rolled Throughput Yield = Y1*Y2*Y3*Y…

Calculating Yield...

Rolled yield of a multi step process = Yield (process 1) * Yield (process 2) * etc.

For ONE process, rolled yield = 93%

For TEN processes, rolled yield = 50%

For ONE HUNDRED processes, rolled yield = 0%

For ONE processes, rolled yield = 100.00%

For TEN processes, rolled yield = 100.00%

For ONE HUNDRED processes, rolled yield = 99.97%

Rolled Throughput Yield...

Six Sigma and COPQ...

• What is the – hidden cost of failing to meet customer expectations

the first time – hidden opportunity for increased efficiency– hidden potential for higher profits– hidden loss in market share– hidden increase in production cycle time– hidden labor associated with ordering replacement

material– hidden costs associated with disposing of defects

• For most companies today, the cost of poor quality is likely to be 25-40 % of sales.

What is Cost of Poor Quality?

40%

35%

30%

25%

20%

15%

10%

5%

3.4 233

6210

66,807

308,537

691,462

Cost

of

Failu

re

(%

Sale

s)

DPMO

6 5 4 3 2 1

Sigma

Cost of Poor Quality Vs Sigma

Cost of Poor Quality PPM Sigma

30-40% revenue 308,537 2

20-30% revenue 66,807 3

15-20% revenue 6,210 4

10-15% revenue 233 5

less than 10% revenue 3.4 6

Non-competitive

Industry average

World class

Correlation to Sigma Level...

Engineering change orders

Traditional Quality Costs

Lost Opportunity

Hidden Factory

Lost sales

Late delivery

Long cycle times

Expediting costs

Excess inventory

(intangible)

(tangible)

(Difficult or impossible to measure)

Lost Customer Loyalty

More Setups

Scrap

Rework Inspection

Warranty

Rejects

Administration / Disposition

Concessions

Average COPQ approximately 15% of Sales

Improvement program costs

Quality audits

Additional Cost of Poor Quality

COPQ Iceberg

Defect rate Cost of control

Point of diminishingeconomic returns

fromquality investments

Failures Cost

Quality improvement

The highest quality

producer is not

necessarily the lowest

cost producer

Classical COPQ Model

Failures Cost

Defect rate

Cost of control

3

4 5

6

The highest quality producer

is also the lowest cost producer

Six Sigma COPQ Model