Six Sigma

SIXSIGMAcreating value for our customers

creating value for our customers

SIXSIGMA

What is it?What is it?

creating value for our customers

SIXSIGMA

Six SigmaSix Sigma – A Simple Definition – A Simple Definition

• Six Sigma is Six Sigma is – a customer focused, a customer focused, – well defined problem solving methodology, well defined problem solving methodology, – supported by a hand full of powerful analytical tools.supported by a hand full of powerful analytical tools.

• Continuous improvement is driven by the execution of carefully selected Continuous improvement is driven by the execution of carefully selected projects. projects.

• A goal of the six sigma approach is to take small steps forward and no A goal of the six sigma approach is to take small steps forward and no steps backward.steps backward.

• Six Sigma is a quality objective that specifies the variability required of a Six Sigma is a quality objective that specifies the variability required of a process in terms of the specifications of the product so that product quality process in terms of the specifications of the product so that product quality and reliability meets and exceeds today's demanding customer and reliability meets and exceeds today's demanding customer requirements.requirements.

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Sigma - the lower case Greek letter that denotes a statistical unit of measurement used to define the standard deviation of a population. It measures the variability or spread of the data.

What is Sigma?What is Sigma?

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What Does the Customer Have To Do What Does the Customer Have To Do With It?With It?

• ““The best Six Sigma projects begin not inside the The best Six Sigma projects begin not inside the business but outside it, focused on answering the business but outside it, focused on answering the question—how can we make the customer more question—how can we make the customer more competitive? What is critical to the customer's competitive? What is critical to the customer's success? . . . One thing we have discovered with success? . . . One thing we have discovered with certainty is that anything we do that makes the certainty is that anything we do that makes the customer more successful inevitably results in a customer more successful inevitably results in a financial return for us.”financial return for us.”

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The Six Ingredients of The Six Ingredients of Six SigmaSix Sigma

1.1. Genuine focus on the customer – Genuine focus on the customer – Voice of the customerVoice of the customer

2.2. Data and fact driven managementData and fact driven management3.3. Process focus, management, and improvementProcess focus, management, and improvement4.4. Proactive managementProactive management5.5. Boundryless collaborationBoundryless collaboration6.6. Drive for perfection, tolerate failureDrive for perfection, tolerate failure

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Where Did the “Where Did the “Six SigmaSix Sigma” Quality ” Quality Program Come From?Program Come From?

• Key figures in the history of quality: Key figures in the history of quality: – Dr. Deming Dr. Deming – Dr. JuranDr. Juran

• A real life quality program derived from A real life quality program derived from TQM – Total Quality ManagementTQM – Total Quality Management– First formulated and applied in Motorola in the 1980’sFirst formulated and applied in Motorola in the 1980’s

• Made famous by early adopters includingMade famous by early adopters including– General ElectricGeneral Electric– Allied SignalAllied Signal– Lithonia LightingLithonia Lighting

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Organizational ViewOrganizational View

• Quality CouncilQuality Council– Senior Management Team who define Process Improvement Senior Management Team who define Process Improvement

projects and prioritizes themprojects and prioritizes them

• BeneficiariesBeneficiaries– Process Owners who have their processes improved Process Owners who have their processes improved – Ultimately the customer is the beneficiary: Ultimately the customer is the beneficiary:

• improved processes yield fewer defects, improved processes yield fewer defects, • result in products delivered on time and result in products delivered on time and • at a reduced cost.at a reduced cost.

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For For Six SigmaSix Sigma To Be Effective To Be Effective

1.1. Processes must exist and be in use.Processes must exist and be in use.You can’t improve a process that doesn’t existYou can’t improve a process that doesn’t exist

2.2. The processes must be in control statistically.The processes must be in control statistically.Must have some track record of performance Must have some track record of performance

3.3. The processes may then be improved The processes may then be improved Reduce variation in the processReduce variation in the process

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Variation – At the Heart of Variation – At the Heart of Six SigmaSix Sigma Measurement Measurement

• Any process has variationAny process has variation

• There are two kinds of variationThere are two kinds of variation– Common cause variationCommon cause variation– Special cause variationSpecial cause variation

• The amount of variation is measured in terms The amount of variation is measured in terms of sigma or standard deviation.of sigma or standard deviation.

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On Your Way To WorkOn Your Way To Work

• What causes variation in your trip time?What causes variation in your trip time?– Stop SignsStop Signs– School busSchool bus– Red lightsRed lights– People in crosswalksPeople in crosswalks– The gas tanker truck that crashed into the bridge The gas tanker truck that crashed into the bridge

on I285on I285

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Dealing With VariationDealing With Variation

• Eliminate Eliminate special cause variationspecial cause variation by by recognizing it and dealing with it outside of the recognizing it and dealing with it outside of the processprocess

• Reduce Reduce common cause variationcommon cause variation by improving by improving the processthe process

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What is the “Methodology”?What is the “Methodology”?

DDefineefine

MMeasureeasure

AAnalyzenalyze

IImprovemprove

CControlontrol

D M A I C

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Six SigmaSix Sigma Improvement Process – Improvement Process – DMAICDMAIC

• Define – Understand the problem and limit scopeDefine – Understand the problem and limit scope

• Measure – Quantify the results of the processMeasure – Quantify the results of the process

• Analyze – Understand the causes of variationAnalyze – Understand the causes of variation

• Improve – Determine how to best reduce variation Improve – Determine how to best reduce variation (And don’t forget to implement the improvements)(And don’t forget to implement the improvements)

• Control –Measure results of the new process to ensure Control –Measure results of the new process to ensure that the improvements have occurred and benefits are that the improvements have occurred and benefits are realizedrealized

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The Tools of The Tools of Six SigmaSix Sigma – – The Simple ToolsThe Simple Tools

• Control ChartsControl Charts

Adapted from Putting Total Quality Management to Work

Marshall Sashkin & Kenneth Kiser

SIXSIGMA

The Tools of The Tools of Six SigmaSix Sigma – – The Simple ToolsThe Simple Tools

• Control ChartsControl Charts

• Pareto ChartsPareto Charts

Adapted from Putting Total Quality Management to Work

Marshall Sashkin & Kenneth Kiser

SIXSIGMA

The Tools of The Tools of Six SigmaSix Sigma – – The Simple ToolsThe Simple Tools

• Control ChartsControl Charts

• Pareto ChartsPareto Charts• Cause / Effect Cause / Effect

diagrams (Fishbone diagrams (Fishbone diagrams)diagrams)

Adapted from Putting Total Quality Management to Work

Marshall Sashkin & Kenneth Kiser

SIXSIGMA

The Tools of The Tools of Six SigmaSix Sigma – – The Simple ToolsThe Simple Tools

• Control ChartsControl Charts

• Pareto ChartsPareto Charts

• Cause / Effect diagrams (Fishbone Cause / Effect diagrams (Fishbone diagrams)diagrams)

• Run ChartsRun Charts

Adapted from Putting Total Quality Management to Work

Marshall Sashkin & Kenneth Kiser

SIXSIGMA

The Tools of The Tools of Six SigmaSix Sigma – – The Simple ToolsThe Simple Tools

• Control ChartsControl Charts• Pareto ChartsPareto Charts• Cause / Effect diagrams (Fishbone Cause / Effect diagrams (Fishbone

diagrams)diagrams)• Run ChartsRun Charts

• HistogramsHistograms

Adapted from Putting Total Quality Management to Work

Marshall Sashkin & Kenneth Kiser

SIXSIGMA

The Tools of The Tools of Six SigmaSix Sigma – – The Simple ToolsThe Simple Tools

• Control ChartsControl Charts

• Pareto ChartsPareto Charts

• Cause / Effect diagrams (Fishbone diagrams)Cause / Effect diagrams (Fishbone diagrams)

• Run ChartsRun Charts

• HistogramsHistograms

• Scatter DiagramsScatter Diagrams

Adapted from Putting Total Quality Management to Work

Marshall Sashkin & Kenneth Kiser

SIXSIGMA

The Tools of The Tools of Six SigmaSix Sigma – – The Simple ToolsThe Simple Tools

• Control ChartsControl Charts• Pareto ChartsPareto Charts• Cause / Effect diagrams (Fishbone diagrams)Cause / Effect diagrams (Fishbone diagrams)• Run ChartsRun Charts• HistogramsHistograms• Scatter DiagramsScatter Diagrams

• Flow ChartsFlow Charts

Adapted from Putting Total Quality Management to Work

Marshall Sashkin & Kenneth Kiser

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Six Reasons why Leaders Love Six Sigma

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After implementing Six Sigma in a wide range of processes throughout the organization, one global automotive company added approximately $52 million to the bottom line in 2000 and $300 million in 2001.

The company then achieved waste elimination savings of more than $350 million in 2002!

Impacts the Bottom Line…Impacts the Bottom Line…

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Drives Strategy ExecutionDrives Strategy Execution

• Leaders love Six Sigma because it Leaders love Six Sigma because it drives focus on the results that really drives focus on the results that really matter and on high-impact projects matter and on high-impact projects and activities and activities

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Generate Robust Flexible Generate Robust Flexible Business ProcessesBusiness Processes

• Leaders love Six Sigma because it Leaders love Six Sigma because it recognizes that recognizes that mastering processmastering process is is the best way to accomplish this the best way to accomplish this objective on an ongoing basis.objective on an ongoing basis.

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Improves Human PerformanceImproves Human Performance

• Leaders love Six Sigma because it helps Leaders love Six Sigma because it helps their employees improve their their employees improve their performance and impact on the issues that performance and impact on the issues that matter most. matter most.

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Highly ScalableHighly Scalable

• Leaders love Six Sigma because it can be Leaders love Six Sigma because it can be applied to tackle a specific problem in a applied to tackle a specific problem in a single department or to renew the entire single department or to renew the entire business.business.

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Low Risk InvestmentLow Risk Investment

• Leaders love Six Sigma because it Leaders love Six Sigma because it delivers financial returns that far delivers financial returns that far outweigh the investments it requires.outweigh the investments it requires.

• That's why these Fortune 100 companies That's why these Fortune 100 companies have implemented Six Sigma already have implemented Six Sigma already

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Who are the other “Key Players”?Who are the other “Key Players”?• Senior ChampionSenior Champion: : Owns Six Sigma for the Business.Owns Six Sigma for the Business.

• ChampionChampion: : The Champion typically has day-to-day responsibility for the business process The Champion typically has day-to-day responsibility for the business process

being improved and their role is to ensure the Six Sigma project team has the being improved and their role is to ensure the Six Sigma project team has the resources required to successfully execute the project. resources required to successfully execute the project.

• Black Black BBeltelt: : A Six Sigma expert highly skilled in the application of rigorous statistical tools and A Six Sigma expert highly skilled in the application of rigorous statistical tools and

methodologies to drive business process improvement. Leads the project teammethodologies to drive business process improvement. Leads the project team..

• Master Master BBlack lack BBeltelt::A Black Belt achieves "Master" status after demonstrating experience and impact A Black Belt achieves "Master" status after demonstrating experience and impact

over some period of time. Master Black Belts address the most complex over some period of time. Master Black Belts address the most complex process improvement projects and provide coaching and training to Black Belts process improvement projects and provide coaching and training to Black Belts and Green Belts. and Green Belts.

creating value for our customers

SIXSIGMA

““Key Players”Key Players”

• Green Green BBeltselts::A Six Sigma practitioner trained in the methodology and tools to need to work A Six Sigma practitioner trained in the methodology and tools to need to work

effectively on a process improvement team. Green Belts may act as team effectively on a process improvement team. Green Belts may act as team members under the direction of a Black Belt or may lead their own less complex, members under the direction of a Black Belt or may lead their own less complex,

high impact projects.high impact projects.

• Project SponsorsProject Sponsors::A member of the leadership team that is responsible for selecting Six Sigma projects A member of the leadership team that is responsible for selecting Six Sigma projects

and is ultimately accountable for a project's results.and is ultimately accountable for a project's results.

• Consultant:Consultant:A company or individual with experience and expertise in Six Sigma business A company or individual with experience and expertise in Six Sigma business

improvement implementations who is hired for a limited time to advise and improvement implementations who is hired for a limited time to advise and

facilitate Six Sigma implementation.facilitate Six Sigma implementation.

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Industries using Six SigmaIndustries using Six Sigma

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AutomotiveAutomotive• Six Sigma drives improvements for the automotive Six Sigma drives improvements for the automotive

industryindustry• Consider this example:Consider this example:• Since deploying Six Sigma in 1999, one automotive Since deploying Six Sigma in 1999, one automotive

organization has saved about $1 billion in waste organization has saved about $1 billion in waste elimination globally, achieving year-over-year savings elimination globally, achieving year-over-year savings worldwide of $359 million in 2003.worldwide of $359 million in 2003.

• This Six Sigma implementation raised customer This Six Sigma implementation raised customer satisfaction by five percentage points in the company's satisfaction by five percentage points in the company's internal customer satisfaction survey. internal customer satisfaction survey.

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ChemicalChemical• Good chemistry results from Six Sigma!Good chemistry results from Six Sigma!• In 1999, one large multinational chemical In 1999, one large multinational chemical

company launched a corporate-wide Six Sigma company launched a corporate-wide Six Sigma program across all of its businesses and program across all of its businesses and functions, predicting business improvements functions, predicting business improvements totaling $1.5 billion by the end of 2003.totaling $1.5 billion by the end of 2003.

• In fact, the company achieved its goal at the In fact, the company achieved its goal at the close of 2002 -- a full year ahead of schedule!close of 2002 -- a full year ahead of schedule!

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HealthcareHealthcare• As an early adopter of Six Sigma, one leading As an early adopter of Six Sigma, one leading

Hospital has reduced:Hospital has reduced:

• turn around time for intensive care unit lab turn around time for intensive care unit lab results from 53 to 22 minutes results from 53 to 22 minutes

• time elapsed between diagnosis of a heart attack time elapsed between diagnosis of a heart attack and patient arrival at the hospital for treatment and patient arrival at the hospital for treatment by 60% by 60%

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Hi-TechHi-Tech• Hi-tech boosts business with Six SigmaHi-tech boosts business with Six Sigma• When customers of one satellite communication links When customers of one satellite communication links

provider became upset with contract approval times, a provider became upset with contract approval times, a Six Sigma team solved the problem by changing old Six Sigma team solved the problem by changing old assumptions on how much scrutiny was needed for a assumptions on how much scrutiny was needed for a contract and by deploying new, streamlined contract and by deploying new, streamlined procedures.procedures.

• The result? Customer satisfaction increased and The result? Customer satisfaction increased and revenue was boosted annually by $1 million!revenue was boosted annually by $1 million!

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FinancialFinancial• Six Sigma in Financial Services leads to higher Six Sigma in Financial Services leads to higher

quality and lower costsquality and lower costs• When one financial services leader observed that its When one financial services leader observed that its

customers preferred getting account information from customers preferred getting account information from its costly call center and not its website, a Six Sigma its costly call center and not its website, a Six Sigma project team reworked the site content to more project team reworked the site content to more effectively answer customer questions.effectively answer customer questions.

• Customers now prefer using the website, saving the Customers now prefer using the website, saving the company thousands of dollars a year!company thousands of dollars a year!

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RetailRetail• Six Sigma is a real bargain in Retail!Six Sigma is a real bargain in Retail!• When a leading European retail chain known for providing good When a leading European retail chain known for providing good

bargains to its customers needed to improve its ability to source a bargains to its customers needed to improve its ability to source a diverse range of products within aggressive time and budget diverse range of products within aggressive time and budget dictates, it leveraged Six Sigma to optimize and integrate dictates, it leveraged Six Sigma to optimize and integrate procurement processes.procurement processes.

• The result? Savings of 20% over budgeted procurement costs and The result? Savings of 20% over budgeted procurement costs and increased margins.increased margins.

• Six Sigma can also help fine tune the marketing mix. By applying Six Sigma can also help fine tune the marketing mix. By applying experimental design methods, marketers can evaluate many experimental design methods, marketers can evaluate many stimulus-response combinations. stimulus-response combinations.