Satyam - Six Sigma Awareness Program Module 1.1

WHAT IS SIX SIGMA?

What Does “Six” and “Sigma” signify?

Why DO I Need it?

What Would I gain from it?

The Many Facets of Six Sigma

Metric Benchmark Vision Philosophy Method Tool Symbol Goal Value

Metric Benchmark Vision Philosophy Method Tool Symbol Goal Value

66

What is Six Sigma

A Structured Methodology to

Reduce Variation & Defects & Waste in any Process.

Customer Focused - Both Internally & Externally

Tools Qualitative, Statistical Methods

for observing and managing Critical Process Variables & their Relationship

Six Sigma is a wayof achieving world class

performance by focusing on customers' needs and

eliminating defects

Six Sigma is a quantitative statistical

measurement that means not more than 3.4 defects per million opportunities

What is 6

Always listen to the Customer

99.99966% Good (6 Sigma)

• 20,000 lost articles of mail per hour

• Unsafe drinking water for almost 15 minutes each day

• 5,000 incorrect surgical operations per week

• Two short or long landings at most major airports each day

• 200,000 wrong drug prescriptions each year

• No electricity for almost seven hours each month

• Seven articles lost per hour

• One unsafe minute every seven months

• 1.7 incorrect operations per week

• One short or long landing every five years

• 68 wrong prescriptions per year

• One hour without electricity every 34 years

99% Good (3.8 Sigma)

What is the Practical Meaning?

Users don‘t like bugs

Access

denied

O.k., and now you‘ll doexactly what I‘m telling you !

Defect

Ten to fifty percent of a typical company’s costs are wasted on inspection, scrap, rework, warranty issues, crisis firefighting, and recurring corrective actions. In addition, untold losses are incurred when customers are lost.

The Impact on Costs...

Profit

Overhead

Material and Labor Costs

Price to CustomerCost to Business

EVA

EVA

HIGHER QUALITY & INCREASED MARGINMARKET ADVANTAGE AS THE LOW COST PROVIDER

HIGHER QUALITY & INCREASED MARGINMARKET ADVANTAGE AS THE LOW COST PROVIDER

Profit

Total Cost to manufactureand deliver

products

Profit

TheoreticalCosts

Cost ofPoor Quality

COPQ

Price Erosion

TheoreticalCosts

Cost ofPoor Quality

COPQ

Profit

TheoreticalCosts

COPQ

TIME

Choosing a Business Strategy

OPPORTUNITY

PROFITABILITYPROFITABILITY

COST OF SALESCOST OF SALESSALESSALES

• Capacity• Quality• Demand• Reputation• Customer Enthusiasm

• Scrap• Rework• Cycle Time• Inefficiencies• Processes• Material• Support

Opportunity

Variation

TargetX XXX X XX XX

XXX

XX

XXXX

XX

XX

XX

X

XXX

XX

XX XXX

XXXX X

X

X

X

Every Human Activity Has Variability...Customer

Specification

defectsdefects

Understanding Variability & Customer Specification is The Essence of Six Sigma

Understanding Variability & Customer Specification is The Essence of Six Sigma

The need...

Target

CustomerSpecification

Target CustomerSpecification

1

2

3

A 3 process because 3 standard deviationsfit between target and spec

3

6.6% Defects

Before

After6

~ No Defects!

Reducing Variability Is The Key To Six Sigma Reducing Variability Is The Key To Six Sigma

Six Sigma - Graphical view

spec = 12 +/- 1/2

11 12/16 11 13/16 11 14/16 11 15/16 12 12 1/16 12 2/16 12 3/16 12 4/16

COLLECTDATA

Meaning of Six Sigma

99.99966% Probability-1-2-3 +2 +3X +1

LowerSpecLimits

UpperSpecLimits

-4-5-6 +5 +6+4

68%

95.4%

99.7%

Six Sigma = 3.4 Defects Per Million Opportunities

# of occurren

ces

Process Observations

Maths is not everything

Customer: The person(s) downstream of your process. Could be internal or external.

EX: Internal Customer - the Project Team Member is a customer for the Quality Initiatives .

External Customer - businesses/functions that receive developed application - may not use it themselves ( Software Distribution Centers, etc.)

Consumer: The end user of the product. Usually considered external; i.e., the homeowner.

Examples of Consumer/Customer Cues:– Renovated Code must reach at specified time– Response time as given by application should be

at a specified level– Complaints must be answered promptly

Philosophy of Six Sigma

Six Sigma Focus: The End User (Customer or Consumer)

What is a Customer need or Consumer “Cue”?

CTQ

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

Before a Six Sigma Project 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

CustomerValue

ProcessThroughput

ZeroDefect

Quality

Delivery&

Service

Drive outConstraints!

Drive out Variation! Flawless Reliability!

Drive down cycletimes and leadtimes!

Respond faster-better!

Focus of Six Sigma…

Y= f (X)

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)

Focus of Six Sigma

The Goals of Six Sigma

DEFECT REDUCTION

PROCESS YIELD IMPROVEMENT

IMPROVED CUSTOMER DELIGHT

BUSINESS SUCCCESS

Are you satisfied with 99 % ok

in your life ???

Are you satisfied with 99 % ok

in your life ???

Six sigma is about getting at the root causes of our defectsAnd eliminating them through process improvement

Six sigma is NOT about putting in more checks and re-checks

Inaccurate Billing

Late DeliveriesPartialShipments

Disappointed Customer

I’ve Got to Getto the Bottom of This!!!

Why 6

What makes it Different ...

• LEADERSHIP• COMMITMENT• COMPETENCE• INVOLVEMENT

• METHODOLOGY & TOOLS• DRIVEN BY THE DATA• STATISTICALLY VALIDATED

• FOCUS ON THE CUSTOMER

• PROJECTS • KEYED TO DEFECT REDUCTION• SCOPED FOR SUCCESS

Applicable Across Functions

As long as there is a process that produces an output…… we can apply Six Sigma

6 Sigma

Methods

MFG.

DESIGNSERVICESERVICE

PURCH.

MAINT.

ADMIN.

QA

Data Driven

Data allows us to establish a common language throughout the organization:

• Communicate in an objective manner• Collecting quantifiable facts about an object or process• Establish baseline information regarding a problem, part or

process• Facilitate cost-benefit analysis of proposed solutions and

improvements• Quantify the lasting impact of a solution through comparison• Allow an extention of a specific solution across many areas

First-pass-yield Up-time Efficiency

• Quality issues• Rework• Retest requirements• Scrap• Customer defects• Cost of operation• Supplier quality

• Machine run time• Maintenance• Replacement• Repair• Capital issues• Constraint

• Training needs• Process Flow• Maintenance• Hidden rework• ROA issues

Performance Metric(First-pass-yield) x (Up-time) x (Efficiency)

Quality = Performance = CustomerQuality = Performance = Customer Quality = Performance = CustomerQuality = Performance = Customer

Use 6 Sigma tools to solve problems across the board……use the right metrics to measure progress!

Use 6 Sigma tools to solve problems across the board……use the right metrics to measure progress!

Establish Meaningful Metrics

LSL USLT

SERVICE REQUIREMENTS

0

2

4

6

8

10

12

14

16

A B C D E F G H I J

ANALYZE THEFALL - OUT

SERVICE WATERFALL CHART • COLLECT FAILURE DATA• ANALYZE THE FAILURES• DETERMINE ROOT CAUSE• IMPLEMENT PROCESS CONTROLS OR DESIGN CHANGES• DETERMINE IMPACT TO COST• LEVERAGE LESSONS LEARNED

BEFORE

AFTERSIX SIGMATARGET

Be Deliberate with Analysis

3Capability Historical Standard

4Capability Current Standard

6Capability New Standard

93.32%

99.38%

99.99966%

Long-Term Yield

Performance Based

2 308,537

3 66,807

4 6,210

5 233

6 3.4

PPMPPM

Process

Capability

Process

Capability

Defects per

Million Opp.

Bridging the Real World

Practical ProblemPractical Problem

Statistical ProblemStatistical Problem

Statistical SolutionStatistical Solution

Practical SolutionPractical Solution

Need

Do

Do

Do

Need

Need

ProblemSolving

Flow

Practical Problem: Low Yield

Statistical Problem: Mean Off Target

Statistical Solution: Isolate Key Variables

Practical Solution: Install Automatic Controller

Need

All functional areas of the business must contribute ifWorld Class Performance is to be Achieved!

All functional areas of the business must contribute ifWorld Class Performance is to be Achieved!

ValueDelivery

Quality &Reliability

Availability

Responsivenessand

Accuracy

SupportServices

NewProducts

ExistingProducts

ProductDelivery

Product Quality Service and Commercial Quality

DesignProduction

SIX SIGMA

MAIC DFSS CONSTRAINTS AND INFORMATION QUALITY

CriticalDeliverables

Quality in Product and Service

We don't know what we don't know

We can't act on what we don't know

We won't know until we search

We won't search for what we don't question

Hence, We just don't know

Bulk of FruitProcess Characterization and Optimization

Low Hanging FruitSeven Basic Tools

Ground FruitLogic and Intuition

Sweet fruitDFSS

Harvesting the fruits of Six Sigma

A TargetA Target3.4 Defects per 3.4 Defects per

MillionMillion

A Problem A Problem Solving Solving

ApproachApproach

Statistical Statistical

MethodsMethods

Involves Involves EveryoneEveryone

Data DrivenData DrivenDecisionsDecisions

A BusinessA BusinessStrategyStrategyA CultureA Culture

All functions All functions

Voice ofVoice ofCustomerCustomer

Six Sigma

In Short ..

Success stories

Education and training

Stretch goals

Establishing meaningful, focused metrics

Top-down Approach

Success Factors

Recognizing ENTITLEMENT

Six Sigma only works when Leadership is passionate about excellence and willing to change.

Six Sigma only works when Leadership is passionate about excellence and willing to change.

“Everyone has the will to win, few have the will to work to win.”

Fundamentals of Leadership Challenge the process Inspire a shared vision Enable others to act Model the way Encourage the heart

Six Sigma is a catalyst for leaders

Leadership Drives Performance

• Owns vision, • Leads change

• Owns process• Implements solutions• Leads change

• Full time• Trains and coaches Agents

and Six Sigma Analysts

• Full time• Facilitates problem solving• Trains and coaches Green

Belts, Project Teams

• Part-time• Project-specific

All employees

• Understand vision• Apply concepts to

their job and work area

• Part-time• Helps BBs

Master BBs BBs

Six Sigma GBs

Project Team Members

Process Owner

Champion

Six Sigma Deployment

Roles and Responsibilities

Champion / Sponsor Black Belt / Green Belt

Master Black Belt Six Sigma Team

•Select MBB, BB and teammembers•Determine needed resources•Orient teams•Review Progress•Provide strategic direction for the project team

Project Initiation and Coordination Project Completion as per schedule Ownership of Project Track the project progress Anticipate and respond to needed changes

•Sign off on the project start up and completion•Mentor/Coach the project teams•Observe team performance•Participate in all Six Sigma project reviews

•Participate in the meeting•Help with administrative tasks•Meet with Champion for reviews•Make recommendations or changes

6

Think it Talk it

Do it

Motorola ROI … 1987-1994

Reduced in-process defect levels by a factor of 200. Reduced manufacturing costs by $1.4 billion. Increased employee production on a dollar basis by 26%. Increased stockholders share value fourfold.

Allied Signal ROI … 1992-1996

$1.4 Billion cost reduction. 14% growth per quarter. 520% price/share growth. Reduced new product introduction time by 16%. 4% bill/cycle reduction.

General Electric ROI ...1995-1998 Company wide savings of over $1 Billion.

Estimated annual savings to be $6.6 Billion by the year 2000.

Return on Investment...

Other 6 Stars ...

• Allied Signal Reported more than 2 billion dollars in cost savings & waste management through Six Sigma in just a

few years.

• Raytheon Estimated to burn away over $1 billion in Costs

annually.

• Honeywell Realized over $3 billion in cumulative savings from

Six Sigma - related activities

• Posco Steel Major plans to achieve $600 million in financial earnings from the completion of the 1680 6 projects by 2005.

• Ford Saved $650 million in last two years in Waste Elimination and plans to save $200 million in next

two years.

• Motorola

• Texas Instruments

• ABB

• AlliedSignal

• GE

• Bombardier

• Nokia

• Toshiba

• DuPont

• American Express

Companies Implementing Six Sigma

• Ford

• Dow Chemical

• Johnson Controls

• Lear Corporation

• Satyam Computers

• Maruti Udyog

• Wipro

• Reliance Group

• Tata Steel

• Visteon

• TCS

• ICICI

• Delphi Automotive

• Cummins India

• Godrej Appliances

• A V Birla Group

• Taj Group

• Telco

• Asian Paints

• Bajaj Auto