3 Variation Reduction Overview

7/27/2019 3 Variation Reduction Overview

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1

Variation Reduction (DMAIC) Fundamentals


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2002 ConceptFlow 2

Module Objective

By the end of this module, the participant should be able to:

Discuss the fundamentals of DMAIC in Variation Reduction

Explain the benefits of DMAIC in Reducing Variation


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2002 ConceptFlow 3

ReduceVariabilityEliminateWaste

Growth

DMAICLEAN

DFSS

Merrill Lynch Six Sigma is a System ofProven Methodologies

Growth Engines

El iminate

Redundancies

Develop Talent

Service

Lets look at the second of these 3 Key Components . . .


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2002 ConceptFlow 4

Premise

The basic premise of DMAIC is that sources of variation can be: Identified

Quantified

Eliminated or Controlled

Focused on strategic or core processes

Data driven

Measurements focused on right things

Variation Is The Enemy!


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2002 ConceptFlow 5

The Goal: Breakthrough Performance

Time

Defectsand

Waste

Six SigmaBreakthrough

Current State

Breakthrough State

Improvement Period


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2002 ConceptFlow 6

99.99966%

99.98%

99.38%

93.32%

69.15%

3.4

233

6,210

66,807

308,537

6

5

4

3

2

Long Term YieldDefects per Million OpportunitiesProcess CapabilitySigma Level

If you played 100 rounds of golf per year, and played at:

2 sigma - you'd miss 6 putts per round

3 sigma - you'd miss 1 putt per round 4 sigma - you'd miss 1 putt every 9 rounds

5 sigma - you'd miss 1 putt every 2.33 years

6 sigma - you'd miss 1 putt every 163 years!


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Simple Definition of Variation

Reduce spread

Client target

Defects

Defects

Accuracy = Centering Precision = Spread

Center on target

Client target

Off center and spread = process variation = Defects



Voice of the Process Versus Voice of theClient

Voice of the Process is independent of the Voice of the Client

Defects

Voice of the Process

InadequateDesignMargin

InadequateProcess

CapabilityUnstable

Defects Acceptable

LSL USL

Voice of the Client



Goals of Six Sigma

Center Process on TargetReduce Variation

Client target

Meet Client Targetand Specifications

Client target

Eliminate DefectsReduce Variation

Client target

Defects Defects

GOAL

USLLSL

LSLLSL USL USL



-3 -2 -1 0 1 2 3

3 Sigma ProcessAverage = 0St.Dev. = 2Tolerance = 12

Shift the average 1.5

-4-5-6 4 5 6

-3 -2 -1 0 1 2 3-4-5-6 4 5 6

Shift the average 1.56 Sigma Process

Average = 0

St.Dev. = 1Tolerance = 12

LSL USL

In a six sigma process, Client Satisfaction and Business Objectives are robust

to shifts due to process or product variation!

By shifting a 6 sigma process1.5 we create 3.4 defects per

million opportunities

By shifting a 3 sigma process1.5 we create 66,807 defects

per million opportunities

Six Sigma As a Statistical Measure



Cost

Cost

LSL USLNom

Taguchi Loss Function

(New View)

LSL USLNom

TraditionalView

Acceptable

Can We Tolerate Variability?

There will always be variability present in any process We can tolerate variability if:

The process is on target

The total variability is relatively small compared to the processspecifications

The process is stable over time



Is 99% Good Enough?

99% Good (3.8 Sigma) 99.99966% Good (6 Sigma)20,000 lost articles of mail perhour

Seven articles lost per hour

Unsafe drinking water for

almost 15 minutes each day

One unsafe minute every

seven months5,000 incorrect surgicaloperations per week

1.7 incorrect operations perweek

Two short or long landings atmost major airports each day

One short or long landingevery five years

200,000 wrong drugprescriptions each year

68 wrong prescriptions peryear

No electricity for almost sevenhours each month

One hour without electricityevery 34 years


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2002 ConceptFlow 13

The Magnitude of Six Sigma

Sigma Area Spelling Money Time Distance

3 Floor space of 1.5 misspelled $2.7 million 3 1/2 months Coast-to-coasta small hard- words per page indebtedness per per century tripware store in a book $1 billion in assets

4 Floor space of 1 misspelled $63,000 indebted- 2 1/2 days per 45 minutes of

a typical living word per 30 pages ness per $1 billion century freewayroom in a book in assets driving(inany direction

5 Size of the 1 misspelled word $570 indebtedness 30 minutes A trip to thebottom of in a set of per $1 billion in per century local gasyour telephone encyclopedias assets station

6 Size of a 1 misspelled word $2 indebtedness 6 seconds 4 steps in any

typical in all of the books per $1 billion per century directiondiamond contained in a assets

small library


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2002 ConceptFlow 14

7

Sigma Scale of Measure

1,000,000

100,000

10,000

1,000

100

10

1

DPMOPPM

Restaurant Bills

Doctor Prescription WritingPayroll Processing

Order WriteupJournal Vouchers

Wire TransfersAirline Baggage Handling

Purchased MaterialLot Reject Rate

Domestic Airline FlightFatality Rate (0.43 PPM)

Best-in-ClassAverageCompany

3 4 5 621

Phone In Tax Advice(140,000 PPM)

Six Sigma... Todays Performance

How does your industry rank?


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2002 ConceptFlow 15

Can We Inspect Our Way to Six Sigma?

PPMlt

2 308,5373 66,807

4 6,2105 2336 3.4

Process Capability

Defects Per Million

Opportunities

Inspection can only get us so far

st


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2002 ConceptFlow 16

The Inspection Exercise

Task: Count the number of times the 6th letter of the alphabet appearsin the following text:

The necessity of training farm hands for first class farms in the fatherlyhandling of farm live stock is foremost in the eyes of farm owners.Since the forefathers of the farm owners trained the farm hands forfirst class farms in the fatherly handling of farm live stock, the farmowners feel they should carry on with the family tradition of trainingfarm hands of first class farmers in the fatherly handling of farm livestock because they believe it is the basis of good fundamental farmmanagement


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2002 ConceptFlow 18

Practical Problem Statistical Problem

Statistical SolutionPractical Solution

Overall Problem Solving Approach

Measure Analyze

ImproveControl

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


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2002 ConceptFlow 19

Process Focus of Six Sigma

Inputs (X1, X2 . . . Xn)

Independent

Cause

Control

Output

Dependent on Input

Effect

Monitor

ProcessY = f(x)X Y

Determining the critical Xs & controlling the Xs to guarantee the Ys


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2002 ConceptFlow 20

How Y=f(x) Relates to a Process

Process

X1

X2Y

(VOP)

Correct

(In-Spec.)

Xn

X3

Process InputVariables

(PIV)

Process OutputVariables

(POV)

ClientsNeeds &

Expectations(VOC)

Critical To Satisfaction(CTS)

Cost Quality Delivery

Control the INPUTS to achieve the desired OUTPUTS

that satisfies our Clients Expectations


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2002 ConceptFlow 21

Optimized Process

10-15 Xs

8-10 KPIVs

4-8 Key KPIVs

Dynamics of Execution Strategy - The FunnelEffect

3-6 Key KPIVs

30-50 Inputs (X)Define Phase

Measure Phase

Analyze Phase

Improve Phase

Control Phase


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2002 ConceptFlow 22

Leaders Need to Speak a New Language,Ask Relevant Questions

To better understand our process, Leaders need to ask questions Same questions same answers

Changing the result means we have to change the question

As questions arise, visions emerge, direction becomes apparent

To lead change, Black Belts have to be able to ask critical questions

Of the organization

Of process experts

Of process authority

Questions may often drive behavior

Our Process Owners, Managers and Black Belts will work on what you

are interested in . . . What gets measured, gets done


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2002 ConceptFlow 23

Purpose of the Define Phase

Identify product and/or process to be improved

Identify the clients, their needs and requirements

Quantify the gap(s) between process outputs and clientrequirements

Define the performance standards or measures

Establish project objectives

Ensure resources are in place for the improvement project

Primary responsibility of Project Champion and Black Belt


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2002 ConceptFlow 24

Define Phase Deliverables

Product or process balanced against strategic businessrequirements

Client, critical-to-satisfaction requirements

Linkage of client requirements to process outputs

Team formed with charter describing purpose, goals andbenefits of the six sigma project

Financial benefits approved by Finance Department

A high-level process map of major processing events

occurring in the process Project plan with milestones and deliverables

States the need of the client (CTS) and the problem


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2002 ConceptFlow 25

The Funnel Effect - Measure Phase

Key Tools Process Map

C&E Matrix

FMEA

Measurement System Analysis

Data Collection Plan

Baseline Control Charts

Process Capability Analysis Graphic Techniques

Optimized Process

30 - 50 Inputs (X)

10 - 15 Xs

Eliminate Waste


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2002 ConceptFlow 26

Measure Phase Deliverables

Validated project definition Detailed process map with outputs and labeled inputs Clearly defined process output measures (Ys) Measurement System Analyses on the Ys Control charts on baseline, process performance

Process capability and entitlementAssessment of current control plan C&E Matrix to determine focus within process FMEA to assess and prioritize process risk Low hanging fruit actions assigned to team Valid data in accordance with the data collection plan Graphical interpretation of data

Determines baseline process performance


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2002 ConceptFlow 27

Key Tools Hypothesis Testing

Multi-Vari Studies

Variance Components

ANOVA

Correlation

Regression

Optimized Process

30 - 50 Inputs (X)

10 - 15 Xs

8 - 10 KPIVs

Eliminate Waste

The Funnel Effect - Analyze Phase


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2002 ConceptFlow 28

Analyze Phase Deliverables

A prioritized list of potential sources of variation

Variation Component Studies

Measurement Analysis on the xs

Data collected to validate sources

Graphical and statistical analysis of data

p-value establishing level of significance and probability

Correlation and regression analysis to determine variablerelationships

Reduced list of potential key input variables that affect the

output(s) Updated control charts, process map & FMEA

Results to data (compared to baseline)

Statistically links key input variables with key output variable


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2002 ConceptFlow 29

The Funnel Effect - Improve Phase

Key Tools Screening DOEs

DOEs

Historical DOEs

Modeling DOEs

Optimized Process

30 - 50 Inputs

10 - 15 Xs

8 - 10 KPIVs

4-8 Key KPIVs

3-6 Key KPIVs

Eliminate Waste


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2002 ConceptFlow 30

Improve Phase Deliverables

Systematically experiment with KPIVs

Determine optimum conditions of KPIVs to result inoptimum KPOV to meet CTQ

Proposed optimum operating conditions and solution

Proposed operating tolerances

Continue to lean processA new (improved) process performance baseline and

capability

Validated significance of improvements

Confirmation plan or results

Statistically validates optimum process operation conditions


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2002 ConceptFlow 31

The Funnel Effect - Control Phase

Key Tools Control Plan

SPC

Mistake Proofing

Standard Operations

Optimized Process

30 - 50 Inputs (X)

10 - 15 Xs

8 - 10 KPIVs

4-8 Key KPIVs

3-6 Key KPIVs

Eliminate Waste


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2002 ConceptFlow 32

Control Phase Deliverables

Approved Control Plan encompassing documentationrequired to maintain improvements

Lock in optimum KPIVs

Monitor and control KPIVs to generate optimum KPOV

Continue to lean process

Meet CTQ consistently; sustainable results

Documented project and process improvements

Statistically validated process performance monitoringvehicle

Keep the Process Owner involved throughout the project!


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2002 ConceptFlow 33

Optimized Process

10-15 Xs

8-10 KPIVs

4-8 Key KPIVs

Dynamics of Execution Strategy - The FunnelEffect

3-6 Key KPIVs

30-50 Inputs (X)Define Phase

Measure Phase

Analyze Phase

Improve Phase

Control Phase


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2002 ConceptFlow 34

Module Objective

By the end of this module, the participant should be able to:

Discuss the fundamentals of DMAIC in Variation Reduction

Explain the benefits of DMAIC in Reducing Variation


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D M


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2002 ConceptFlow 36

Identify the problem

Define client requirements

DDEFINE PHASE

Who are your key clients and their criticalrequirements (CTSs)?

What are your key process metrics (KPOVs or Ys)and key deliverables objectives and milestones?

Have you created a high-level process map? Has team been initiated (kick-off)? Have you identified areas where you need to collect

data? What is your plan for getting started with your

project? What steps will you take first? Have you selected the key players associated with

the project? Has Finance been involved (approved) in the

project? What is the objective of the project . . . Vision of the

area management team? Review with process owner, IT and Finance? Project definition refined? Project entered in Tracking System?

For the define stage of your project:

Six Sigma Key Concepts

Average vs. VariationAverage tells little about client experience.

The average is hidden within the variationof the data. Within the variation of aprocess are the defects, which prevent youfrom consistently achieving your

Entitlement.

Quantify process performance

Calculate Sigma level

Measure key steps / inputs

MMEASURE PHASE

Have you determined what type of data (KPOVs) isavailable and how has it been collected?

Baseline control charts over time of the KPOVs? Have you completed a process map (flowchart) and

who was involved in its development? Have you determined the categories of defects as

shown in your Pareto analysis? Have you determined if a technology problem is

indicated? If yes, what do you think it will take toimprove it? Are there any other alternatives?

What did you learn when you verified themeasurement system on this project? How did youemploy measurement system analysis to yourproject and what were your takeaways?

Did you identify your next steps? Are you satisfied with the level of cooperation and

support that you are getting? Have you determined the Entitlement of the

Process? What process did you use to determinethe Entitlement?

Have you finalized performance objectives andproject scope?

Update project in Tracking System?

For the measure stage of your project:


Enti t lementDemonstrated examples of superior

performance represent your Entitlement.Entitlement is a statistical term that refers

to the short-term capability of a process . . .That is referred to the best you have been

in the process

A I


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2002 ConceptFlow 37

Identify, verify and quantify

root causes

Establish improvement targets

Validate hypothesis

ANALYZE PHASE

What tools have you used in this phase and howwere they helpful?

What interim actions have you taken to containdefects until a final solution can be developed andimplemented? Has an FMEA (Failure Modes andEffects Analysis) been completed?

What are your improvement plans and next steps toget there (including timing, responsibility andexpected results)?

Are you satisfied with the level of cooperation andsupport that you are getting?

What other support actions or activities do you needto accelerate your progress?

Is your project statistically a Mean issue, a

Variation issue or both?

Update project in Tracking System?

For the analyze stage of your project:


DefectsVarious statistical models uncover the

critical factors, which prevent the majorityfrom performing at the Entitlement.

Process change removes the defects andallows performance to shift to theEntitlement.

ACreate the solution design

Validate and pilot the solution

Implement improvement plan

Test solutions

IIMPROVE PHASE

What new tools have you used in this phase andhow were they helpful?

What are the possible root causes of defects?

What product or process design changes arerequired to achieve your improvement goals?

What are your next steps toward achieving yourimprovement targets?

Has Finance been involved in the project to fullyunderstand the cost implications of yourimprovement plans?

Are you satisfied with the level of cooperation andsupport that you are getting?

What other support actions or activities do youneed to accelerate your progress?

For the improve stage of your project:


Rolled Throughput YieldTypically, we measure the equality of agiven process by calculating the numberof transactions that pass the final step in

the process. However, Rolled ThroughputYield accurately measures the cumulativedefect rate across all critical steps in a

process. Y=f(X1 ,X2 ,X3 ,X4 ,X5)

C


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2002 ConceptFlow 38

EliminateWaste

ReduceVariability

Growth

Six Sigma Elements

Six Sigma is a business phi losophythat employs aclient-centric, fact-based appro achto reduc ing

variat ionin order to dramatically improve qu al i tybyeliminating defects and, as a result, reduc ing cost.

Variation Reduction Report-OutQuestions and Key Concepts

Document procedures

Standardize Process

CCONTROL PHASE

What process controls are being implemented toensure we sustain the gains?

Who is the process owner? Is he or she present?Are they fully aware that they are responsible formaintaining the process after your team hascompleted its project?

Is there a plan to revisit this process in the future toensure the new capability level is maintained?

What is the expected improvement in terms of costreduction? Has finance been involved in theproject?

What new tools have you learned that were used inthe phase of the project?

Are you satisfied with the level of cooperation andsupport that you received during the project? Whatshould we do differently to better support the nextproject?

For the control stage of your project:


Putt ing it in PerspectiveSigma Level % Defect Free DPMO*

3 Sigma 93% 66,807

4 Sigma 99.4% 6,210

5 Sigma 99.976% 233

6 Sigma 99.9997% 3.4

*Defects Per Million Opportunities


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Trademarks and Service Marks

Six Sigma is a federally registered trademark of Motorola, Inc.

Breakthrough Strategy is a federally registered trademark of Six Sigma Academy.

VISION. FOR A MORE PERFECT WORLD is a federally registered trademark of Six Sigma Academy.

ESSENTEQ is a trademark of Six Sigma Academy.

FASTART is a trademark of Six Sigma Academy.

Breakthrough Design is a trademark of Six Sigma Academy.

Breakthrough Lean is a trademark of Six Sigma Academy.

Design with the Power of Six Sigma is a trademark of Six Sigma Academy.

Legal Lean is a trademark of Six Sigma Academy.

SSA Navigator is a trademark of Six Sigma Academy.

SigmaCALC is a trademark of Six Sigma Academy.

iGrafxis a trademark of Micrografx, Inc.

SigmaTRAC is a trademark of DuPont.

MINITAB is a trademark of Minitab, Inc.

3 Variation Reduction Overview

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