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)

Variability

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 Deviations0.160.160.160.360.360.24

VariabilityStandard deviation = square root of variance

JackJill

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

Chart1

0.166666666711

0.16666666670.02777777782

0.16666666670.05555555560.0046296296

0.16666666670.08333333330.0138888889

0.16666666670.11111111110.0277777778

0.16666666670.13888888890.0462962963

70.16666666670.0694444444

80.13888888890.0972222222

90.11111111110.1157407407

100.08333333330.125

110.05555555560.125

120.02777777780.1157407407

13130.0972222222

14140.0694444444

15150.0462962963

16160.0277777778

17170.0138888889

18180.0046296296

1 die

2 dice

3 dice

Sum of dots

Probability

Add up the dots on the dice

Sheet1

observationsdeviationsquared deviationdeviationsquare deviation

101.62.5670.40.16

90.60.3670.40.16

8-0.40.1670.40.16

8-0.40.166-0.60.36

7-1.41.966-0.60.36

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