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Introduction To Six Sigma

Sep 12, 2014



Introduction To Six Sigma

  • Purpose of six sigma : To make customer happier and increase profitsIntroduction To Six Sigma

  • Origin of Six Sigma1987 Motorola Develops Six SigmaRaised Quality Standards

    Other Companies Adopt Six SigmaGEPromotions, Profit Sharing (Stock Options), etc. directly tied to Six Sigma training.Dow Chemical, DuPont, Honeywell, Whirlpool

  • Time Line20021995199219871985Dr Mikel J Harry wrote aPaper relating early failures to qualityMotorolaAllied SignalGeneral ElectricJohnson & Johnson,Ford, Nissan,Honeywell

  • Current Leadership ChallengesDelighting Customers.Reducing Cycle Times.Keeping up with Technology Advances.Retaining People.Reducing Costs.Responding More Quickly.Structuring for Flexibility. Growing Overseas Markets.

  • Six Sigma Benefits?Generated sustained successProject selection tied to organizational strategy Customer focusedProfitsProject outcomes / benefits tied to financial reporting system.Full-time Black Belts in a rigorous, project-oriented method.Recognition and reward system established to provide motivation.

  • Management involvement?Executives and upper management drive the effort through:Understanding Six SigmaSignificant financial commitmentsActively selecting projects tied to strategySetting up formal review processSelecting ChampionsDetermining strategic measures

  • Key issues for Leadership:How will leadership organize to support Six Sigma ? (6 council, Director 6 , etc)Transition rate to achieve 6 .Level of resource commitment.Centralized or decentralized approach.Integration with current initiatives e.g. QMSHow will the progress be monitored?Management Involvement?

  • What can it do?Motorola: 5-Fold growth in SalesProfits climbing by 20% paCumulative savings of $14 billion over 11 yearsGeneral Electric:$2 billion savings in just 3 yearsThe no.1 company in the USABechtel Corporation:$200 million savings with investment of $30 million

  • GE Six Sigma EconomicsSource: 1998 GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon total corporation cost/benefits attributable to Six Sigma.6 Sigma Project Progress

  • Overview of Six Sigma

  • Overview of Six SigmaIt is a PhilosophyAnything less than ideal is an opportunity for improvementDefects costs moneyUnderstanding processes and improving them is the most efficient way to achieve lasting results

    It is a ProcessTo achieve this level of performance you need to: Define, Measure, Analyse, Improve and Control

    It is Statistics6 Sigma processes will produce less than 3.4 defects per million opportunities

  • PhilosophyKnow Whats Important to the Customer (CTQ)Reduce Defects (DPMO) Center Around Target (Mean) Reduce Variation (Standard Deviation)

  • Critical ElementsGenuine Focus on the CustomerData and Fact Driven ManagementProcess FocusProactive managementBoundary-less CollaborationDrive for Perfection; Tolerance for failure

  • Data Driven DecisionYDependentOutputEffectSymptomMonitorX1 . . . XnIndependentInput-ProcessCauseProblemControlf(X)Y=The focus of Six sigma is to identify and control Xs

  • Two ProcessesDefineMeasureAnalyzeImproveControlDefineMeasureAnalyzeDesignVerifyDMAICDMADVExisting ProcessesNew ProcessesDFSS

  • Key Concepts

  • COPQ (Cost of Poor Quality)- Lost Opportunities- The Hidden Factory- More Setups- Expediting Costs- Lost Sales- Late Delivery- Lost Customer Loyalty- Excess Inventory- Long Cycle Times- Costly Engineering ChangesAverage COPQ approximately 15% of Sales Hidden Costs: Intangible Difficult to MeasureTraditional Quality Costs: Tangible Easy to Measure- Inspection- Warranty- Scrap- Rework- Rejects

  • Cost of Quality % SalesSigma LevelCOPQ v/s Sigma Level

  • CTQ (Critical-To-Quality)CTQ characteristics for the process, service or processMeasure of What is important to Customer6 Sigma projects are designed to improve CTQExamples:Waiting time in clinicSpelling mistakes in letter% of valves leaking in operation

  • Defective and DefectA nonconforming unit is a defective unitDefect is nonconformance on one of many possible quality characteristics of a unit that causes customer dissatisfaction.A defect does not necessarily make the unit defectiveExamples:Scratch on water bottle (However if customer wants a scratch free bottle, then this will be defective bottle)

  • Defect OpportunityCircumstances in which CTQ can fail to meet.Number of defect opportunities relate to complexity of unit.Complex units Greater opportunities of defect than simple unitsExamples:A units has 5 parts, and in each part there are 3 opportunities of defects Total defect opportunities are 5 x 3 = 15

  • DPO (Defect Per Opportunity)Number of defects divided by number of defect opportunitiesExamples:In previous case (15 defect opportunities), if 10 units have 2 defects.Defects per unit = 2 / 10 = 0.2DPO = 2 / (15 x 10) = 0.0133333

  • DPMO (Defect Per Million Opportunities)DPO multiplies by one millionExamples:In previous case (15 defect opportunities), if 10 units have 2 defects.Defects per unit = 2 / 10 = 0.2DPO = 2 / (15 x 10) = 0.0133333DPMO = 0.013333333 x 1,000,000 = 13,333 Six Sigma performance is 3.4 DPMO 13,333 DPMO is 3.7 Sigma

  • YieldProportion of units within specification divided by the total number of units.Examples:If 10 units have 2 defectivesYield = (10 2) x 100 /10 = 80 %Rolled Through Yield (RTY)Y1 x Y2 x Y3 x . x YnE.g 0.90 x 0.99 x 0.76 x 0.80 = 0.54

  • Forms of Waste

  • What are the forms of waste?Waste of CorrectionWaste of OverproductionWaste of processingWaste of conveyance (or transport)Waste of inventoryWaste of motionWaste of waiting

  • 1. Waste of correctionRepairing a defect wastes time and resources (Hidden factory)Operation 1TestTestProductOperation 2FailureInvestigationReworkFailureInvestigationReworkHiddenFactory

  • 2. Waste of OverproductionProducing more than necessary or producing at faster rate than requiredExcess labor, space, money, handling

  • 3. Waste of processingProcessing that does not provide value to the productExcess level of approvalsTying memos that could be handwrittenCosmetic painting on internals of equipmentPaint thickness more than specific values

  • 4. Waste of conveyanceUnnecessary movement of material from one place to other to be minimized because -It adds to process timeGoods might get damagedConvey material and information ONLY when and where it is needed.

  • 5. Waste of inventoryAny excess inventory is drain on an organization.Impact on cash flowIncreased overheadsCovers Quality and process issuesExamplesSpares, brochures, stationary,

  • 6. Waste of MotionAny movement of people, equipment, information that does not contribute value to product or service

  • 7. Waste of WaitingIdle time between operationsPeriod of inactivity in a downstream process because an upstream activity does not deliver on time.Downstream resources are then often used in activities that do not add value, or worst result in overproduction.

  • Some more sources of WasteWaste of untapped human potential.Waste of inappropriate systemsWasted energy and waterWasted materialsWaste of customer timeWaste of defecting customers

  • What is Sigma?

  • Have you everShot a rifle?Played darts?

    What is the point of these sports?What makes them hard?

  • Who is the better shooter? Have you everShot a rifle?Played darts?

  • VariabilityDeviation = distance between observations and the mean (or average)

    ObservationsDeviations1010 - 8.4 = 1.699 - 8.4 = 0.688 - 8.4 = -0.488 - 8.4 = -0.4 77 - 8.4 = -1.4averages8.40.0

  • Deviation = distance between observations and the mean (or average)


    ObservationsDeviations77 - 6.6 = 0.477 - 6.6 = 0.477 - 6.6 = 0.46 6 - 6.6 = -0.666 - 6.6 = -0.6averages6.60.0

  • Variance = average distance between observations and the mean squaredVarianceVariability

    ObservationsDeviations1010 - 8.4 = 1.699 8.4 = 0.688 8.4 = -0.488 8.4 = -0.4 77 8.4 = -1.4averages8.40.0

    Squared Deviations2.560.360.160.161.961.0

  • Variance = average distance between observations and the mean squaredVarianceVariability

    ObservationsDeviations77 - 6.6 = 0.477 - 6.6 = 0.477 - 6.6 = 0.466 6.6 = -0.6 66 6.6 = -0.6averages6.60.0

    Squared Deviations0.

  • VariabilityStandard deviation = square root of variance


    AverageVarianceStandard DeviationJack8.41.01.0Jill6.60.240.4898979

  • The world tends to be bell-shapedVariability

  • Here is why: Even outcomes that are equally likely (like dice), when you add them up, become bell shapedVariability




















    1 die

    2 dice

    3 dice

    Sum of dots


    Add up the dots on the dice


    observationsdeviationsquared deviationdeviationsquare deviation