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Page 1: Six Sigma Awareness Training

Six Sigma Awareness Training

Page 2: Six Sigma Awareness Training

Course Objectives

The objectives of this workshop are:

To explain the purpose of Six Sigma

and the Six Sigma approach.

To discuss Six Sigma implementation.

To discuss the process for setting up

projects and deploying project teams.

Page 3: Six Sigma Awareness Training

Course Contents

1. Six Sigma Overviews

2. The DMAIC Process Steps and Tools

3. Six Sigma Implementation

4. Collective Decision Making

5. Define: Set Up Projects and Deploy Teams

Page 4: Six Sigma Awareness Training

Section 1

Six Sigma Overview

Page 5: Six Sigma Awareness Training

Six Sigma: What & Why

Effective Approach + Proper Deployment

RESULTS

Page 6: Six Sigma Awareness Training

Six Sigma Approach — Key Components

Problem Solving Process Define—Measure—Analyze—Improve—Control

Improvement Tools Comprehensive and Integrated Set of Effective Improvement Tools

Quality Principles A Set of Sound Underlying Concepts

Page 7: Six Sigma Awareness Training

Results-ExamplesAllied Signal• Turn around from weak financial position in late 80’s.• US$3.2B cost savings during 1996 and 1997.

General Electric• Achieve 40% increase in operating margin.• Develop a better leadership for today’s more competitive

world.

Fort Wayne City• Saved or avoided the need to spend nearly $3 million.• Has made numerous changes that have meant better service

for city residents.

Page 8: Six Sigma Awareness Training

Evolution of Quality Practices

1930’s Testing and Inspection

SQC (Statistical Quality Control)

TQC (Total Quality Control)1960’s

Just In Time (JIT)Total Quality Management

1980’s ISO9000

Business Process Reengineering

Lean Manufacturing

Six Sigma2000’s

DFSS, Lean Six Sigma

Page 9: Six Sigma Awareness Training

The Origin of Six Sigma 1979

“ The Real Problem At Motorola Is That Our Quality Stinks ! ”

Art Sundry(Formerly Motorola’s Senior Executive)

Page 10: Six Sigma Awareness Training

“ Tenfold Improvement Over A Five Year Period ”

Robert Galvin

(Formerly Motorola’s President)

1981

Page 11: Six Sigma Awareness Training

1980’s

• Bill Smith discovered the correlation between market failures rate and manufacturing defects rate.

• At Government Electronics Group, under the leadership of Mikel Harry, experiments with problem solving through statistical analysis showed dramatic results.

• Mikel Harry began to formulate a methodology for applying statistical tools for problem solving. His work culminated in a paper titled “The Strategic Vision for Accelerating Six Sigma

Within Motorola.”

Page 12: Six Sigma Awareness Training

1990

• Robert Galvin asked Mikel Harry to start up and lead

Motorola’s Six Sigma Research Institute.

• The mission was to develop Six Sigma implementation

strategies, deployment guidelines, and advanced statistical

tools that would work in a variety of companies and industries.

Page 13: Six Sigma Awareness Training

Adoption of Six Sigma - Seagate

- Caterpillar

- 3M

- Dupont

- Citibank

- Bank One

- Fort Wayne City

- Sony

- Toshiba

- Shimano

- Matsushita Motorola

AlliedSignal

General Electric

1987 1992 1995 2000

Page 14: Six Sigma Awareness Training

Adaptation of Six Sigma: Purpose and Approach

• 1987 Motorola - Defect reduction

- Manufacturing processes

• 1992 AlliedSignal - Operational excellence

- Include non-manufacturing processes

• 1995 General

Electric

- Financial results

- Design for Six Sigma (DFSS)

- Leadership development

• 2000 Sony - Management Quality

Page 15: Six Sigma Awareness Training

Six Sigma As Improvement Management SystemBusiness Goals

Performance Measures

Dashboard

Process Improvement(projects)

Bottom Line Improvement

Mindset Skill Set

Champions

Black Belts

& Green Belts

Define

Measure

M-A-I-C

Data

+

Analysis

Tools

Financial Benefit

Page 16: Six Sigma Awareness Training

Performance Measure - Examples

Motorola• Sigma Capability / Defect Per Million Opportunities (DPMO)

AlliedSignal Laminate System• Capacity Utilization

• Cost of Poor Quality (COPQ) Reduction

• Process Yield

General Electric Aircraft Engine Services• Project Financial Benefits

• Order To Remittance

• Inventory Turns

• Span / On Time Delivery

Page 17: Six Sigma Awareness Training

Drill Down Process To Identify ProjectsBusiness Objective Deployment Approach:

Project 1

Project 2

Project 3

Project 4

Sub – CTQ 1

Sub – CTQ 2

Sub – CTQ 3

Sub – CTQ 4

CTQ 1

CTQ 2

Objective

A

Objective

B

Bu

sin

ess

Goa

l

Role & Responsibility:Executive Team Champion

Black Belts

Green Belts

Page 18: Six Sigma Awareness Training

Profitability Manage Cost

Increase Sales

ImproveWorkingCapital

Sales Orders

Production Output

New Products

Material Cost

Failure Cost

Utility Cost

Account Receivable

Inventory

Sales Lead TimeOn Time DeliveryOrder FulfillmentCustomer ComplaintsProcess Yield

Down Time

Process EfficiencyTime to Market

Market Success RateDesign Changes

Material Price

Material Usage Rate

Lot Reject RateWIP RejectsMaterial Rejects

ElectricityWaterGas

Example : CTQ Tree

Page 19: Six Sigma Awareness Training

Teamwork

Coming Together Is A Beginning

Keeping Together Is Progress

Working Together Is Success

Henry Ford

Page 20: Six Sigma Awareness Training

Six Sigma Benefits GE Capital’s railcar-leasing business achieved 62% reduction in

turnaround time at its repair shops.

Customer who once found themselves able to talk with a GE

Capital Mortgage associate only 76% of the time now have a 99%

chance of success on the first try.

GE Plastics added 300 million pounds of new capacity through

rigorous Six Sigma process work.

Citibank’s Regional Cash Product Management Unit in Asia Pacific

improved the defect rate of its fund transfer process to 4.95 sigma

level.

Page 21: Six Sigma Awareness Training

Six Sigma As Problem Solving Process

• Identify Performance Measures

• Create Projects

Phases

DEFINE

MEASURE

ANALYZE

IMPROVE

CONTROL

Key Tasks

• Establish Data Collection Plan

• Understand Current Performance

• Brainstorm Possible Causes

• Verify Root Causes

• Identify Improvement Solutions

• Validate Effectiveness

• Establish Control System

• Share Lessons Learned

Responsibility

Champion

Bla

ck B

elt

Gre

en B

elt

Page 22: Six Sigma Awareness Training

The DMAIC Toolkit

Process Map Brainstorming Dashboard CTQ Drill

Down Cause & Effect

analysis Pareto diagram Selection Matrix Project Charter

Define Measure Analyze Improve Control

Data Collection

plan Histogram Distribution Measurement

System

Analysis Descriptive

Statistics Run charts Control Charts Process

Capability

Pareto diagram Brainstorming Nominal group

technique Scatter plot Box plot Stratification FMEA Process C&E

matrix Interval Estimate Hypothesis Test Process mapping

and analysis

Creativity Techniques

Selection matrix Design Of

Experiments Force field

analysis Potential risks

assessments Stakeholder

analysis Process

Capability

Control plan Documentation

system Control charts On the job

training Story board

Page 23: Six Sigma Awareness Training

A] Soft Tools (Team Problem Solving)

— Brainstorming

— Affinity Diagram

— Nominal Group Technique

— Decision Matrix

— Effectiveness / Practicality Matrix

— Quality Function Deployment

— Failure Mode and Effect Analysis

— Force Field Analysis

Page 24: Six Sigma Awareness Training

B] Hard Tools (Quantitative Data Analysis)

— Graphical Tools

— Process Capability Study

— Measurement System Analysis

— Hypothesis Testing

— Design Of Experiments

— Control Charts

Page 25: Six Sigma Awareness Training

C] Work Process Redesign

— Process Mapping

— Non-value Add Analysis

— 7 Principles of Process Redesign

— Technology Enabler

— Process Streamlining

— “ Should Be ” Process Map

ProcessInput Output

Page 26: Six Sigma Awareness Training

D] LEAN

— Value Stream Mapping

— Seven Major Wastes

— Flow-based Processing

— Kan ban System

— Set-up Reduction

— Mistake Proofing

— Visual Management

— Take Time

— Total Productive Maintenance

Page 27: Six Sigma Awareness Training

Six Sigma Key Features

• Top down approach Goals Alignment

• Logical and systematic process Consistency

• Rigorous problem solving method Effective

• Data driven and fact based decision Scientific

• Question conventions Breakthrough Results

• Financial benefits oriented Bottom Line Focus

Page 28: Six Sigma Awareness Training

What is “Sigma”? Sigma (Greek letter Ơ) is a symbol for statistical unit of measurement

called standard deviation that measure the variability of data from the

mean.

In Six Sigma program, Sigma is an index for measuring the capability

of process to produce “defect free” products or services. A “defect” is

any mistake that results in customer dissatisfaction.

The higher the sigma level, the less likely a process will produce

defects. As sigma increases, costs go down, cycle time goes down,

and customer satisfaction goes up.

Page 29: Six Sigma Awareness Training

Process Variation

• All businesses are a system of interconnected processes.

• Variations exist in all processes.

• Variations in processes result in process outputs variability.

• Understanding and reducing process variability is the key to improving the capability of a process to produce “defect free” products or services.

ProcessInput Output

Page 30: Six Sigma Awareness Training

Process Output Variability

Cycle time for taking X-ray at a hospital

0 10 20 30 40 50 60 (minutes)

Page 31: Six Sigma Awareness Training

Process Variability &Process Capability

Defects

Process OutputVariability

Customer Requirements

Customer Requirements

• Less variability means less defects will be produced.

• Less defects means better capability in meeting customer

requirements.

Page 32: Six Sigma Awareness Training

Process Capability:Sigma

Process Defect Per Percent CompetitivenessSigma Million Good

2

3

4

5

6

308,538

66,807

6,210

233

3.4

69.2%

93.3%

99.4%

99.98%

99.9997%

Noncompetitive Companies

Average Companies

World Class Companies

Page 33: Six Sigma Awareness Training

Is Three Sigma Performance Acceptable?Example: GE Plastics before Six Sigma implementation• 95% compounded product first pass yield

=>3 million pounds of rework week.

• 90% on-time delivery…

=>1 missed shipment every 30 minutes.

• 98% billing accuracy….

=> 1 billing error every 3 hours.

• 98% capacity utilization…

=> 20 million pounds of lost opportunity.

• 95% meetings star on time(5%with a 10-minute delay)

=> 1,000 work-hours lost each day.

Page 34: Six Sigma Awareness Training

Variability and Cost of Poor Quality (COPQ)The Costs of Not Doing Things Right the First Time

Activity 1 Activity 3Activity 2

Re-do

Re-check Re-check Re-check

Re-doRe-do

Re-Scheduling Lost Customer Service RecoveryGoodwillAdditional

HandlingCorrective Actions

Ad-hoc Meetings

Page 35: Six Sigma Awareness Training

COPQ of an Average organization

Opportunity For IncreasingProfit Margin

4 – 8%Of Sales

20 – 25%

Of Sales

Direct Loss• Re-do

• Re-check

Indirect Loss• Expediting Costs

• Ad-hoc meetings

• Service Recovery

• Corrective Actions

• Lost Customer Goodwill

• Longer Cycle Time

Page 36: Six Sigma Awareness Training

Process Variability and COPQ

Correlation between an organization’s COPQ and variability

of its key processes

2 3 4 5 6 Sigma Level(308538dpmo) (66807dpmo) (6210dpmo) (233dpmo) (3.4dpmo)

40

30

20

10

CO

PQ

(%

of

Sal

es)

Page 37: Six Sigma Awareness Training

Why Six Sigma?Q: Is the goal of Six Sigma to achieve six sigma level of

quality?

Contrary to what some believe, the goal of Six Sigma is

not to achieve six sigma levels of quality. Six Sigma is

about improving profitability, although improved quality

and efficiency are immediate by-product of Six Sigma .

“Six Sigma”, Mikel Harry and Richard Schroeder

Page 38: Six Sigma Awareness Training

Six Sigma and Other Improvement Approaches

High Hanging Fruits(~ 6 Sigma)

Low Hanging Fruits (~ 4 Sigma)

Bulk of Fruits(~ 5 Sigma)

Ground Fruits(~ 3 Sigma)

Six Sigma Approach(DMAIC)

QCC & 7 Basic Tools

Common Sense &Intuition

Design for Six Sigma(DFSS)

Page 39: Six Sigma Awareness Training

What Is Six Sigma - Summary

A management approach aiming at improving processes to

achieve excellent performance level.

It provides a comprehensive methodology and tools on how to

effectively achieve sustainable breakthrough improvements.

Through Six Sigma management:

- makes known the intention to achieve excellence,

- provides the enabling skills and knowledge,

- creates the supporting infrastructures and mindset, and makes breakthrough improvement possible.

Page 40: Six Sigma Awareness Training

Section 2

The DMAIC Process

Steps and Tools

Page 41: Six Sigma Awareness Training

The DMAIC Process Steps (1)

Phase Step Task

DEFINE

1 Identify Focus Areas / Key Performance

Measures

2 Set Up Project and Deploy Team

MEASURE

3 Define Key Process Output Variable

4 Develop Data Collection Plan

5 Determine Process Current Performance

Page 42: Six Sigma Awareness Training

The DMAIC Process Steps (2)Phase Step Task

ANALYZE6 Brainstorm All Possible Causes

7 Shortlist Major Suspected Causes

8 Verify Root Causes

IMPROVE9 Identify and Evaluate Possible Improvement

Solutions

10 Confirm Improvement Solutions

CONTROL11 Standardize Improvement Plan

12 Close The Project

Page 43: Six Sigma Awareness Training

Step 1: Identify Focus Areas / Key Performance Measures

Purpose: Focus limited resources on important areas.• This usually entails a working session participated by the

management team (the champions) where they examine the various possible areas that impact the business results and then, using a structured collective decision making process, decide the critical areas to focus the improvement efforts.

• Examples of focus areas include line reject rate, on-time shipment, capacity utilization, inventory turns, response time and warranty costs / customer complaints.

Page 44: Six Sigma Awareness Training

Profitability Manage Cost

Increase Sales

ImproveWorkingCapital

Sales Orders

Production Output

New Products

Material Cost

Failure Cost

Utility Cost

Account Receivable

Inventory

Sales Lead TimeOn Time DeliveryOrder FulfillmentCustomer ComplaintsProcess Yield

Down Time

Process EfficiencyTime to Market

Market Success RateDesign Changes

Material Price

Material Usage Rate

Lot Reject RateWIP RejectsMaterial Rejects

ElectricityWaterGas

A tool that is commonly used for this purpose is the Tree Diagram

Page 45: Six Sigma Awareness Training

Alternatively, the SIPOC diagram is used. SIPOC is more suitable for non-profit organization or supporting departments.

SIPOC Diagram[ Supplier — Inputs — Process — Outputs — Customers ]

ProcessInputs Outputs

Suppliers Customers

Page 46: Six Sigma Awareness Training

Step 2: Set Up Project and Deploy TeamPurpose: To clarify the issue faced within the focus area and deploy

suitable team to tackle the issue.

• Here, the champion (usually with the help of his / her people) defines

the problem statement, decide the improvement goal, and select the

project team members.

• This helps to make sure that due thoughts are given to make sure

that the project is a valid one.

• The project should be scoped at she process level where specific

actions can be taken to realize the improvement in business results.

• The outcome of this step is an approved project charter.

Page 47: Six Sigma Awareness Training

Project Selection Process-OverviewProject Ideas Sources

Project Ideas Sources

Project Ideas Sources

Project Ideas Sources

Performance Voice of Cost ReductionGap Customer Initiative

Competitive Issues of ConcernPressure

ProjectCharters

Page 48: Six Sigma Awareness Training

Project Charter • Project charter is a document created at the outset of a project

to assign the project to the team.

• It is an important tool for building committed project team.

• A Team Charter should specify the followings:

- Project title.

- The process involved.

- The business case and problem statement.

- The goal statement.

- Estimated financial benefits.

- Name of Champion.

- Team leader and members.

- Project time line.

Page 49: Six Sigma Awareness Training

The 4 ‘Rights’ of Successful Project

• Right project

• Right team composition

• Right team process

Right Result

Page 50: Six Sigma Awareness Training

Notes on forming a team :

• There should be a management member (champion) appointed as the project

sponsor.

• Team members are to be selected based on the problem statement and the

process to be improved.

• Team members must have good working knowledge on the process to be

improved.

• Rule of thumb for the number of people in a team is 5 to 7 persons.

• The team leader should be trained on:

- Problem solving process steps

- Team facilitation skills

- Process improvement tools

Page 51: Six Sigma Awareness Training

Step 3 : Define Key Process Output Variable

Purpose : Define a measure for key process output variable.

Why is it necessary to measure the process output?• To quantify the current performance level.• To objectively evaluate the gap.• To aid in the analysis of key input factors.• To verify the effectiveness of the improvement

solutions..

Input Process Output

Page 52: Six Sigma Awareness Training

Examples of Key Process Output Variables:

• Proportion defective / Proportion resubmission

• Defect per unit / Error per unit / Callback per unit

• Process capability ratio (Cpk, Ppk)

• Cycle time / Turn around time / Service response

time / Queue time

• On time delivery / Span

• Proportion of value adding activities

• Availability of personnel / material / facility

Page 53: Six Sigma Awareness Training

Step 4: Develop Data Collection Plan

Purpose : To make sure the data accurately describes

the process output variation.

Components of Data Collection Plan:

- Definition of data to be collected (from step 3)

- Measurement method

- Sampling timeframe

- Sample size

- Sampling method

- Recording sheet

Page 54: Six Sigma Awareness Training

Measurement System Analysis

When instrument or visual inspectors are involved to collect the

data, make sure the measurement system is OK.

Important aspects of a measurement system:

• Accuracy Calibration System

• Precision Gage Repeatability and Reproducibility Study

• Linearity Regression Analysis

• Stability Control Charts

Page 55: Six Sigma Awareness Training

Step 5: Determine Process Current Performance

Purpose: Determine objectively how well the process is

performing now.

• Gather process output data according to data collection plan.

• Translate the raw data into useful process information:

- Use histogram to show the variation in process output variable

- Estimate the process average and process variation using

descriptive statistics

- Evaluate current process capability

- Evaluate process stability using a run chart or a control chart

Page 56: Six Sigma Awareness Training

Case Study 1 : Invoicing process

Problem Statement :

About 30% of payments are received later than 60 days after

invoices were issued.

Goal Statement :

To reduce the percentage of late payments to less than 5%.

Financial Benefit :

Successful completion of this project will result in an estimated

financial benefit of US$50,000.

Page 57: Six Sigma Awareness Training

Data Collection Plan

Critical To Quality: Payment received on time

Measure: Cycle time from date of invoice issued to date of

payment received (days)

Specification: Not more than 60 days

Process output unit: An invoice

Data source: Account department

Data collection method: Pre-exist data

Sample frame: Three months period from January to March

Sampling method: Random sampling

Number of samples: 60

Page 58: Six Sigma Awareness Training

And Then…

MinitabA powerful data-analyzing software

which can help us have a good knowledge of current performance

Page 59: Six Sigma Awareness Training

Step 6: Brainstorm All Possible Causes

Purpose: List all possible factors causing the process

performance gap.

• Team leader to facilitate the brainstorming process.• Leverage collective experiences of the team members.• Search thoroughly, do not leave out any possible cause.• Depending on the situation, choose the most suitable

tool for this purpose. ( Cause and Effect diagram, Process

FMEA, Process Mapping, Process C&E Matrix )

Page 60: Six Sigma Awareness Training

Identify possible causes using brainstorming and organize the information using cause and effect diagram

Why are Customers Late in Paying Invoices?

Customer Related Invoice Related

Invoicing Method Others

CustomerPayment Policy

Customer Location

Customer FinancialPosition

Customer Acct

Payable Process

Need for Currency

Payment Method

Frequency of

Exchange

Invoicing

Errors In Invoice

In Invoice

Money Amount

Don’t Match P.O.

Wrong Address

Wrong Amount

Product Quality Problem

Past DuesNo Follow Up On

Relationship With

Customers

Customer Type

Page 61: Six Sigma Awareness Training

Step 7: Shortlist Major Suspected CausesPurpose: Identify key suspects.

• Use structured discussion and team’s collective knowledge to

narrow the possible causes down to a few most probable causes.

• Team leader to facilitate this narrowing process. It is important

for the team to gain a common understanding on the possible

causes before starting the narrowing process.

• Choose the most suitable tool for this purpose. ( Multi-voting,

nominal group technique, selection matrix )

Page 62: Six Sigma Awareness Training

Step 8: Verify Root Causes

Purpose: Confirm the key suspects are actually root causes.

• Make sure the key suspect are actually root causes.

• Discuss and decide how to confirm the key suspects.

• The methods commonly used for this purpose are:

- Historical data analysis.

- Design of Experiments.

- Process observation and tracking.

Page 63: Six Sigma Awareness Training

Step 9: Identify and Evaluate Improvement Solutions

Purpose: Identify various possible solutions and evaluate their

strengths and weaknesses.

• With the root causes identified, brainstorm all possible improvement solution. The first solution is usually not the best solution.

• Without any constraints, generate a list of possible solutions. Choose the most suitable creativity techniques for this purpose.

• Evaluate and select the best improvement solution.

Page 64: Six Sigma Awareness Training

Challenging conventional thinking / assumptions:

Do not think

- It can’t be done.

- It will not work.

- They’ll never buy it.

- We’ve always done it this way.

- We’ve never try this before.

Think

- How to get it done.

- Try and make it works.

- We can convince them.

- Let’s see if there is a better way.

- If we don’t try, we don’t know.

Page 65: Six Sigma Awareness Training

Examples of tools for idea generation,evaluation and selection:

• Creative thinking techniques• Brainstorming• Effectiveness — Practicality Matrix• Lateral Field Analysis• Selection Matrix

Page 66: Six Sigma Awareness Training

Use Effectiveness – Practicality Matrix to evaluate each idea

Effectiveness

Practicality

D

C

A

G

F

B

E

Page 67: Six Sigma Awareness Training

Using Force Field Analysis to evaluate in detail the idea of giving rebate if customers pay on time for those invoices with high dollar values.

Driving Forces +• Increased cash flow

of about $ xx.• Contribute $ xx to

financial benefits.

- Restraining Forces• An estimated $ xx will

be incurred as rebates.• An estimated xx hrs of

administrative efforts.• An estimated total costs

of $ xx will be incurred by the company

Page 68: Six Sigma Awareness Training

Step 10 : Confirm Improvement SolutionsPurpose: Make sure solutions are effective before standardization.

• Decide and develop an action plan to check solution effectiveness

• Collect initial data to make sure the solutions are effective:

- Check data distribution,compute the descriptive statistics,

calculate new process capability.

• Perform Potential risk assessment and stakeholder analysis to

anticipate and address possible problems when implementing

the solutions.

Page 69: Six Sigma Awareness Training

Implementation Action Plan

Improvement

Action

Error proof the invoicing process.

Make arrangements with customer to use payment method other than cheque.

Develop and implement a rebate scheme

ResponsiblePerson

Completion Date

30May

30May

18MayIrene

Peter

Adeline

Page 70: Six Sigma Awareness Training

Step 11 : Standardize Improvement Plan

Purpose: Incorporate improvement solutions into process

control system.

• Transfer the solutions from the team to the process owners.

• Revise process control system / documents ( control plan,

procedure, work instruction, etc. )

• Train / brief staff on the revised process control system.

• Implement a continual monitoring system.

Page 71: Six Sigma Awareness Training

Step 12 : Close the project

• Get Champion’s approval to close the project.

• Project can be closed when:

- The project phases have been completed.

- Project documentations have been completed.

- Improvement plan documented.

• Share the lessons learned and knowledge gained with other related processes / areas.

Page 72: Six Sigma Awareness Training

Case Study 2: Orders Fulfillment Define

Problem Statement

The time taken from the moment production is completed to delivery is 2 days. Some urgent orders require products to be delivered in 1 day.

Goal Statement :

To reduce the turn-around-time time to 1 day.

The process :

Orders fulfillment process

Page 73: Six Sigma Awareness Training

MeasureMap Current Process

• Make the process visible by creating the process maps.

• Common process mapping methods:

- Linear flowchart

- Cross functional map

- Relationship map

• Validate the maps created by walking-through the process and collect the necessary data.

Page 74: Six Sigma Awareness Training

AnalyzeExamine Current Process

• Look for flaws in current process.

• Examples of process flaws:

- Waiting

- Duplication

- Nom-value adding activities

- Unnecessary check / approval

- Errors

- Re-do

Page 75: Six Sigma Awareness Training

Analysis SummaryA] Waiting - Visual inspection does not start until laboratory tests have been completed. - Store supervisor waits for the test certificates before he can prepare the shipments.

B] Duplications - Packers record product names,lot numbers and quantities and send these information to store.Store supervisor key in the same information into the finished goods inventory system.

C] Non-value Adding Activities - Unnecessary movements involved in sending information or documents around.

Page 76: Six Sigma Awareness Training

ImproveIdentify Improvement Solutions

A] Reduce waiting - Laboratory tests and visual inspections to be performed concurrently. - Store supervisor prints test certificates from computerized workflow system.

B] Reduce non-value adding activities & duplications - Packers key in product information into finished goods inventory system. - Reduce document movements by installing a computerized workflow systems. - Empower QA technicians to decide lots acceptance based on the specification.

Page 77: Six Sigma Awareness Training

Transaction Project ExamplesSales and Marketing• Motorola employed Six Sigma methodology to improve its prospect

success rate. The company tracked prospects and monitored marketing

activities received (emails, website, etc.). By keeping a database of

activities for each prospect, Motorola calculated the types of marking

efforts generating the best customer responses.

• 3M’s Marine and Recreational Vehicle business applied Six Sigma

within the sales organization to accelerate the conversion of sales.

Managers and directors rank the sales representatives in 25 areas

including product knowledge and combine this data with each sales

rep’s conversion of accounts and growth in market share. Through data

analysis, the company determines about 10 attributes that most impacted

the conversion of sales and design a training program based on these

attributes.

Page 78: Six Sigma Awareness Training

• A business unit in Johnson & Johnson employed Six Sigma to resolve a distribution channel problem and create an improved data management system for sales reporting process. Prior to redesign the process, the company estimated that sales reps spent approximately 15% of their time on reporting activities, diverting their attention from selling. After completing the project, the company cut the time spent by sales reps on reporting activities in half.

Source: Corporate Executive Board

• A home appliance company was facing a high number of “no-fault found” problem.

This occurs when a repair technician is send to look into a fault reported by a customer

and found out that it is not a real fault.After collecting the data to understand the

problem, an effective solution was found. The solution is to get the receptionists to filter

out the “non-fault” problems. Thos involves training the receptionists to clarify the type

of faults reported by the customers and be able to explain to customers on how to

operate the appliance correctly over the phone.

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Banking and Finance

• Copeland Companies,which are distributors and record keepers of finance

service products, use Cross Functional Mapping and Process Redesign methods to

improve the accuracy and timeliness of statements (28 days to 15 days).

• Global Equipment Finance,which provides global financing and leasing services,

improved all steps’ cycle times from a customer places an order to product delivery.

The group also reduced the credit decision cycle by 67 percent, from3 days to 1 day.

• Private Bank – Western Hemisphere, which served wealthy individuals reduced

internal call backs by 80%,external call backs by 85% and credit process time by 50%

Source : baldrigeplus.com

Page 80: Six Sigma Awareness Training

Finance, Purchasing and Logistics

• A company in OEM business faced problems in paying its suppliers on time.

Delays in payment result in the suppliers holding back shipments causing the

company to re-schedule production, suffer line down and miss delivery dates

to its customers.

• A cross functional team consisting members from logistics, account, finance,

production planning and purchasing was form to solve the problem. The champion

was the finance director.

• The team created the cross functional process map, identified and verified key

issues in the process that result in delays. These issues include (1) incomplete / delay

in purchasing and shipping documents, (2) information that do not tally, (3)

disconnects in the process flow.

• The team identified and recommended the countermeasures needed to overcome

these issues. With strong backing from the champion,the team implemented the

countermeasures and achieved the project goal.

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Human Resource

• A business unit in Johnson and Johnson identified sales force turnover as a

significant threat to sales productivity. Therefore it used Six Sigma method

to track and analyze the rate and demographics of turnover in the current

budget year compared to both the current year estimates, previous years’

turnover and data from other Johnson and Johnson companies to determine

factors causing sales rep to leave the company.

Source: Corporate Executive Board

• A large MNC with multiple manufacturing sites was having problem with

high level of medical leaves consumed by its employees. It was believed that

a high proportion of the medical leaves taken was not really necessary. This

issue results in lost labor hours and higher medical expenses. From the data

collected, it was found that a certain group of employees has a significantly

higher count of medical leaves taken. Based on this information, some solutions

(such as incentive-scheme and company approved clinics) was tried out. When

the solutions were found to be effective,they were standardized by revising the

medical leave policy.

Page 82: Six Sigma Awareness Training

• An MNC set stretch goals on project financial benefits company wide and this includes the Human Resources dept. A team in HR examined the expenses in HR and Administration and discovered that one of the vital few high expense items was traveling expenses. Most of the traveling expenses incurred was air fares. There are about 50 engineers in the company who travel frequently to the company headquarter in the USA. The engineers traveled in business class. The team proposed giving an option to the engineers:While they can still travel in business class, alternatively they can opt for traveling in the economy class and receive an

additional travel allowance of US$500. The team performed stakeholder analysis and potential risks assessment before they proposed this idea to the management. The idea was implemented and many engineers chose the

second options resulting a saving of about US$50,000 annually.

Page 83: Six Sigma Awareness Training

Public Service

• A government authority reviews and approves applications from the businesses.

A high proportion of applications were suspended and the applicants need to

resubmit the application. A suspended application means the time spent to review the

application is a waste (cost of not going things right the first time), Some applications

went through as high as 5 resubmissions before they are approved. A team was formed

to measure the problem, analyze the reasons for suspensions and recommend

countermeasures. As a result, the number of suspensions per application reduced

significantly and the labor cost saving was about $35,000 annually.

• A hospital form a team to improve the patients discharge process. Many patients

called back the hospital to clarify information on medication, follow-up appointment,

etc. Each time a patient called,the nurses need to spent a substantial amount of time to

retrieve the file, review the files and answer the enquiries. If the patient discharge

process is done right the first time,the patients should not need to call back. Using Six

Sigma methodology, the team reduced the number of call backs.

Page 84: Six Sigma Awareness Training

Section 3Six Sigma Implementation

Page 85: Six Sigma Awareness Training

The Six Sigma Leap

MostCompanies

• A vision that excellence performance is possible and is essential to success.

• New paradigms, outlook, mindset.

• New skills, tools and data.

Culture Change

2 3 4 5 6Sigma Sigma Sigma SigmaSigma

Page 86: Six Sigma Awareness Training

Six Sigma Implementation Stages

Executive Briefing & Initial AssessmentAlignment

CTQs & Project SelectionImprovement Priority

Black Belts & Green Belts TrainingImprovement Skills Development

Page 87: Six Sigma Awareness Training

The Six Sigma Implementation Roadmap

1. Executive Briefing

2. Six Sigma’s Objective Ascertained

3. Six Sigma Deployment Committee Formed

4. Deployment Plan Developed

5. Champions Trained

6. Performance Measures (CTQ) Identified

7. Projects Identified ( 1st. Wave )

8. Black Belts & Green Belts Trained

9. 1st. Wave Projects Completed

10. Cont. With Next Projects

Page 88: Six Sigma Awareness Training

Six Sigma Roles - Overview

Set direction and provide

resources

Plan and lead organization-wide

implementation

Set up projects and deploy

teams

Coach and support team leaders

Execute projects

Senior Executives

Deployment Committee

Champions

Master Black Belts and

Black BeltsBlack Belts, Green Belts

And Project Teams

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Typical GE Six Sigma Organization StructureManaging Director

Finance Rep. Six Sigma Dept.Master Black Belt

DivisionManager

(Champion)

DivisionManager

(Champion)

DivisionManager

(Champion)

DivisionManager

(Champion)

Black Belt – Full Time Black Belt – Full Time

Engineer( Green Belt )

Engineer( Green Belt )

Officer( Green Belt )

Officer( Green Belt )

Page 90: Six Sigma Awareness Training

Senior Executives’ Role

• Understand what Six sigma is and how Six Sigma helps accomplish business objectives.

• Give directive for Six Sigma implementation.

• Provide the necessary resources.

• Be seen as an advocate and supporter.

• Follow – up on:

- results

- effectiveness of the approach

- extent of deployment

Page 91: Six Sigma Awareness Training

AlliedSignal

Our Vision

We will be one of the world’s premier companies,

distinctive and successful in everything we do.

Our Commitment

We will become a Total Quality Company by

continuously improving all our work processes

to satisfy our internal and external customers.

Page 92: Six Sigma Awareness Training

IomegaHow did we decide on Six Sigma? We recognize the need for a change in the way we pursue operational

excellence.

Why change the way we do it now?• To deal with a world of declining product prices.• To compete successfully with the best companies in the world.• To establish standard language and approaches across functions and

across businesses.• To develop the next generation of leaders.

To Increase Our Rate of Quality and Productivity Improvement Faster than Our Competitors!

Page 93: Six Sigma Awareness Training

General Electric

… quality at GE will be taken to world-leading levels,

providing us with yet another competitive differentiator.

Our openness to learning……as well as the generosity of

Motorola and others in sharing their techniques with us, will

bring GE to a whole new level of quality in a fraction of the

time it would have taken to climb the learning curve on our

own.

GE’s 1996 Annual Report

Page 94: Six Sigma Awareness Training

Guideline Principle for Leading Change

VISION

PASSION

ACTION

Page 95: Six Sigma Awareness Training

Guiding Principle for New Work Habit

• Want To Do.

- appreciate the purpose

- understand ‘what is in it for me’

• What To Do.

- approach framework / model

- role and responsibility

• How To Do.

- process

- tools

Page 96: Six Sigma Awareness Training

Six Sigma Deployment Committee

• Tasked by Senior Executives to implement

Six Sigma in the organization.

• Responsibilities:

- promoting - monitoring

- planning

- coordinating

- controlling - recommending

- evaluating

- reporting

Page 97: Six Sigma Awareness Training

Master Black Belts

Role

• Lead Six Sigma implementation committee.

• Adviser to senior executives team and champions.

• Instructor of Six Sigma training courses.

• Coach for Black Belts and Green Belts.

Profile

• Business / technical degree, management experience.

• Respected member of management.

• Master of Six Sigma principles and practices.

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Champions’ Role

• Lead the implementation of Six Sigma in their areas.

• Determine and track key performance measures (CTQs).

• Select and prepare Black Belt and Green Belt candidates.

• Identify, set up and support projects.

- Ensure the projects are properly set up.

- Follow up on the projects’ progress.

- Help teams to remove barriers.

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Six Sigma Skill Levels and “Belts”

Basic Level

Intermediate Level

Advanced Level

Yel

low

Bel

t

Gre

en B

elt

Bla

ck B

elt

~95%

~75%

~50%

Opp

ortu

nity

To

App

ly

( C

umul

ativ

e )

Efforts Needed To Acquire The Tools

Page 100: Six Sigma Awareness Training

Black Belts Role

Serve as an expert who has in-depth knowledge of Sis Sigma

methodology and tools.

• Lead Six Sigma projects.

• Coach green belts on their projects.

• Trainers of certain Six Sigma tools.

Profile

• University education, 5 years working experience.

• Respected by peer and management.

• Good interpersonal and analytical skills.

Page 101: Six Sigma Awareness Training

Green BeltsRole

• Serve as a trained personnel who is able to lead Six Sigma

projects.

• Participate effectively in Black Belt’s project as team

member.

Profile

• Higher education level.

• 3 years working experience.

• Respected by peer.

Page 102: Six Sigma Awareness Training

Executive 1 Day

Champion 2-3 Days Green Belt 8-10 Days (spread over 2 months period)

Black Belt 16-20 Days (spread over 4 months period)

Typical Training Duration

Page 103: Six Sigma Awareness Training

Training Approach

Describe / explain the techniques.

Practise the techniques in class exercises.

Apply the techniques in actual work

environment through project.

Review the effectiveness of applications.

Explain

Review

Practise

Apply

Page 104: Six Sigma Awareness Training

Finance Representative

Role • Provides financial data for financial benefits calculation.

• Provides guidelines for calculating financial benefits.

• Verify actual financial benefits.

Page 105: Six Sigma Awareness Training

Human Resource

Role Review and suggest appropriate incentive system

for Six Sigma :• Career advancement opportunity • Recognition of efforts and contributions• Monetary reward for achievements

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Policies / Guidelines

• Personnel Selection.

• Project Selection.

• Financial Benefits Calculation.

• Project Tracking System.

• Black Belt Certification.

• Incentive Scheme.

Page 107: Six Sigma Awareness Training

Projects Tracking System

Information to be tracked:

• Total number of projects.

• The numbers of completed projects and

on-going projects.

• The status of each on-going project.

• Targeted financial benefits and actual

financial benefits to date.

Page 108: Six Sigma Awareness Training

Projects Review

Objectives:

1. Ensure projects proceed as plan.

2. Present the findings of each phase.

3. Make sure the vigor of Six Sigma

approach is maintained.

4. Discuss the barriers faced.

5. Check correct applications of tools.

Page 109: Six Sigma Awareness Training

Six Sigma Critical Success Factors

• The link of Six Sigma to business strategy is clear.• Recognize and manage Six Sigma as a change initiative.• Understand that Six Sigma is a management approach, not just a problem solving tool.• Identifying the right focus areas for Improvement.• Selection of key personnel.• Diligent and disciplined use methodology, fact and data.

Page 110: Six Sigma Awareness Training

Section 4Collective Decision Making

Page 111: Six Sigma Awareness Training

Why Make Decision Collectively?• A good decision has two basic components: quality and commitment.

• A quality decision takes into account all of the facts and viewpoints, and makes good use of that information.

• When decision is made4 on a collective basis, it pulls together the skills, knowledge, experience, and opinions of several people. This produces a decision that is usually better than the decisions made by individuals.

• Knowing how to make collective decision effectively is an

important skill to an organization.

Page 112: Six Sigma Awareness Training

Benefits of Collective Decision Making

• Fresh and diverse ideas.• Minimize misunderstandings and biases.• Increased learning and personal growth. • Better ownership.• Increased understanding of the big picture – better

buy-in.• Better decision – quality and commitment.

Page 113: Six Sigma Awareness Training

Collective Decision Making Process• Collective decision making is a process where a

group of people bring up, share, and discuss different ideas and viewpoints, and to select and agree on the best ideas.

• Effective collective decision making process is not something that will happen by nature.

• There are a set of tools that are developed to make the process more effective. Knowing these tools and the ability to apply them effectively is an important skill.

Page 114: Six Sigma Awareness Training

Collective Decision Making – General Steps• Define and clarify topic / objective.• Surface / generate ideas by stimulating discussion, using open questions, and brainstorming creatively.• Record all inputs on charts in full view.• Get everyone to understand each other’s ideas by reviewing inputs on the chart.• Group, combine, map or evaluate all inputs.• Make consensus decision by summarizing, eliminating, narrowing, or win-win negotiation to arrive at an agreement / consensus.

Page 115: Six Sigma Awareness Training

Collective Decision Making - ToolsLess Complex : - Brainstorming - Multi-voting - Nominal Group Technique - Selection Matrix (or Decision Matrix) - Cause and Effective Diagram

More Complex : - Quality Function Deployment (QFD) - Failure Modes & Effects Analysis (FMEA)

Page 116: Six Sigma Awareness Training

Collective Decision Making - Notes• The chance of everyone having exactly the same

idea or viewpoint about an issue are very slim.

• Letting the most powerful person make the decision

or by mean of majority rules are not effective

approaches.

• Good decisions require the team to pool information,

consider different viewpoints and arrive at an

agreement or consensus.

Page 117: Six Sigma Awareness Training

Consensus (1)A better decision will be made if…

• People with good knowledge and experience on the

subject matter participate in the process.

• Everyone’s opinions and thoughts are sought, clarified

and considered.

• There is a structured process that enables the team to

listen to each other and discuss their ideas.

• Consensus and buy-in from all participants are ensured.

Page 118: Six Sigma Awareness Training

Consensus (2)Is:• A search for the best decision through the exploration of everyone’s viewpoints.• Everyone has had an opportunity to be heard.• A decision that reflects the collective thinking of a team and that all the team members understand fully, can live with, and will actively support, and believe is workable.Is Not: • A unanimous decision.• Having everyone completely satisfied with the outcome.• Necessarily everyone’s first choice.

Page 119: Six Sigma Awareness Training

Collective Decision Making Process - Tips

• Have enough time, do not speed up the process.

• Balance power.

• Listen carefully. Check for understanding.

• Be open to different ideas, but avoid playing ‘nice guy’ to avoid disagreement.

• Encourage differences of opinions. Have someone plays devil advocate role.

Page 120: Six Sigma Awareness Training

Brainstorming

• A tool for creating a wide range of options

in an environment free of criticism.

• Brainstorming if useful when you want to

generate a large numbers of ideas about

- Issues to tackle.

- Possible causes of a problem.

- Corrective measures to take.

Page 121: Six Sigma Awareness Training

Brainstorming Ground Rules

• Active participation by all.

• No criticism, suspend judgment.

• Ideas build on ideas.

• Record all ideas.

• Set a time limit.

Page 122: Six Sigma Awareness Training

Brainstorming Steps

1. Review the rules.

2. Set a time limit.

3. Assign a time keeper and idea recorder.

4. State the topic.

5. Collect ideas.

6. Record ideas.

7. Clarify each idea (after all ideas are recorded).

8. Eliminate duplications.

Page 123: Six Sigma Awareness Training

Brainstorming Methods

A. Freewheeling

- Share ideas simultaneously.

- List all ideas as they are”shouted out”.

B. Round-Robin

- Everyone takes a turn offering an idea.

- Anyone can pass on any turn.

- Continue until there are no more ideas.

- All ideas listed as they are offered.

Page 124: Six Sigma Awareness Training

Multi-voting

• A tool for short listing key ideas.

• To reduce a long list of items to a manageable number of items.

• Identifying the most popular or highest priority items to a group a people.

• Also called the Delphi Technique.

Page 125: Six Sigma Awareness Training

Multi-voting - Steps

1. Work from a large list.

2. Assign a letter to each item.

3. Vote individually.

4. Tally the votes.

5. Repeat where necessary.

Page 126: Six Sigma Awareness Training

Multi-voting - Rule of Thumb

• Number of votes allowed = half the number of items

• Number of members Eliminate items with

5 or fewer

6 to 15 3 or fewer votes

more than 15 4 or fewer votes

2 or fewer votes

Page 127: Six Sigma Awareness Training

Exercise

Use brain storming and

multi-voting to decide

what are the key reasons

for ineffective meeting

Page 128: Six Sigma Awareness Training

Nominal Group Technique• A weighted ranking method that enables a team to

generate and prioritize a large number of options• A mechanism that

Gives everyone an equal voice. Neutralizes the domination of the loudest

person. However, it will interactions between team

members during ideas generation.

Page 129: Six Sigma Awareness Training

Nominal Group Technique-Steps1. Introduce and clarify subject.

2. Generate ideas individually (each idea on one post-it note).

3. Collect ideas.

4. Read each idea out loud. Clarify if needed.

5. Combine similar ideas.

6. Assign a letter to each idea.

7. Rank the ideas independently.

8. Add the ranking.

9. Prioritize items according to scores.

Page 130: Six Sigma Awareness Training

Selection Matrix

• A method for relating a set of ideas or options with specific selection criteria.

• Used when the team needs to achieve a consensus on the best idea or option.

Page 131: Six Sigma Awareness Training

Selection Matrix-Steps

1. List the ideas or options to be evaluated.

2. Decide the criteria for selecting the best idea or option.

3. Create a table to relate the ideas / options with selection criteria.

4. Determine the rating scale for the selection criteria.

5. For each idea / option, all members individually decides the score for each criteria.

6. Sum up the total score for each idea or option.

7. Identify the best option based on total score.

Page 132: Six Sigma Awareness Training

Cause and Effect Diagram

• A tool that helps identify, sort, organize and display possible causes of a specific problem or quality characteristic.

• It graphically illustrates the relationship between a given outcome and all the factors that influence the outcome.

• Also called an ‘Ishikawa diagram’ or a ‘fishbone diagram’.

Page 133: Six Sigma Awareness Training

Cause & Effect Diagram-Steps

1. Identify and clarify the effect to be analyzed.

2. Identify the main causes contributing to the effect.

3. For each main cause, identify other specific factors.

4. Identify increasingly more detailed levels of causes.

5. Analyze the diagram to identify causes that warrant

investigation.

• Quality characteristic

• Problem

• 5 M’s (man, machine, method, material, mother nature)

Page 134: Six Sigma Awareness Training

Example

MachineDown Time

Software Users

Hardware Environment

Faulty installation

Faulty media

Faulty design

Faulty component

Component failure

Power fluctuation

Misuse

Use wrong software

Lack of training

Corrosion

Mechanical shock

Humidity

Temperature

Page 135: Six Sigma Awareness Training

Section 5Define: Set Up Projects

and Deploy Teams

Page 136: Six Sigma Awareness Training

Project Selection Process-OverviewProject Ideas Sources

Project Ideas Sources

Project Ideas Sources

Project Ideas Sources

Performance Voice of Cost ReductionGap Customer Initiative

Competitive Issues of ConcernPressure

ProjectCharters

Page 137: Six Sigma Awareness Training

CTQ Drill Down — A General Framework

1. Clarify Business Goals and identify key performance drivers that impact the business goal.

2. Define measures for key performance drivers.

3. Implement the process for collecting data and reporting the measures.

4. Identify gaps between goals and current baselines -prioritize focus areas for improvement.

5. Brainstorm the causes that drive the measures.

Page 138: Six Sigma Awareness Training

6. Discuss the relationship between the causes (X’s) and the effect (Y) to identify vital few factors that drive the measures. For the vital few causes, identify project ideas that will move the effect (Y) to the desired level.

7. Apply project Assessment Matrix to prioritize the project ideas.

8. Scope the project and create Project Charter.

Page 139: Six Sigma Awareness Training

CTQ Drill Down-Example

Step 1: Clarify Business Goals and identify key performance

drivers that impact the business goal.

Examples of performance driver:

1. Capacity Utilization

2. Inventory Turns

3. Cost of Poor Quality

Page 140: Six Sigma Awareness Training

Profitability Manage Cost

Increase Sales

ImproveWorkingCapital

Sales Orders

Production Output

New Products

Material Cost

Failure Cost

Utility Cost

Account Receivable

Inventory

Sales Lead TimeOn Time DeliveryOrder FulfillmentCustomer ComplaintsProcess Yield

Down Time

Process EfficiencyTime to Market

Market Success RateDesign Changes

Material Price

Material Usage Rate

Lot Reject RateWIP RejectsMaterial Rejects

ElectricityWaterGas

Example : CTQ Tree

Page 141: Six Sigma Awareness Training

Step 2: Define Measures for Key Performance Drivers.

Examples:

Performance Driver Measure

Inventory Inventory Turns: Monthly sales amount ( $ ) over inventory

holding costs for that month.

Order Fulfillment Fulfillment Rate: Number of ordered items delivered on time

over total number of ordered items ( % ).

Lead Time Cycle Time: Time interval from order received to

product / service delivery (days).

Page 142: Six Sigma Awareness Training

Criteria of Good Measures

• Direct Relate directly to the characteristic being assessed.

• Exact Can be observed or measured.

• Detail but concise Clear, understandable, and unambiguous.

Page 143: Six Sigma Awareness Training

Step 3: Implement the Process for Collecting Data and Reporting the Measures.

• Determine data source.

• Create recording sheet / form.

• Decide reporting format.

• Develop a procedure for collecting, reporting

and review the information.

Page 144: Six Sigma Awareness Training

Example on a Procedure for Collecting and Reporting Data:

Operator— Collect Data Daily

— Submit by 2nd day of month

— Record Sheets

Clerk

— Collate Data

— Update charts

— Submit by 4th day of month

— Run Charts

Manager and officers

— Monthly meeting to review

charts and previous actions

— 5th day of month

— Meeting Minutes

— Actions Plan

Clerk— Post charts and actions

plan on dashboard

— Department

Dashboard

Responsibility Procedure Outline Record

Page 145: Six Sigma Awareness Training

Common Graphical Tools for Reporting Data:

• Data are reported in tables rather that graphs.

• Only the most recent data are reported.

• No comparative data are presented.

• Pie Chart

• Bar Chart

• Run Chart

• Histogram

• Pareto Diagram

• Control Chart

Common Mistakes in Reporting Data:

Page 146: Six Sigma Awareness Training

Example on Data Reporting Format:

RTY Inc

Logistics Div

Measure: Inventory Turns

Owner: Bruce McDonald

’00 ’01 ’02 J F M A M J J ……

2003 Goal

Page 147: Six Sigma Awareness Training

Characteristics of a Good Feedback System:

• Important and meaningful information

• Accurate information

• Timely feedback

• Easy to understand

• Accessible

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Step 4: Identify Gaps Between Goals and Current Baselines — Prioritize Focus Areas for Improvement.

2003 Goal

J F M A M J J A S O N D

Page 149: Six Sigma Awareness Training

Step 5: Brainstorm the Causes that Drive the Measures.Fill the Cause and Effect Diagram with data ( if available ).

InventoryTurn

Purchasing Others

System Supplies

Safety Stock Policy

Stock Replenish Policy

Central WarehouseStock Count Accuracy (80%)

Material Storage

Housekeeping

Forecast Accuracy (70%)

Inventory Control System

Quality (5% lot reject rate)

Lead Time (30 days)

On – Time (95%)

Shipment Quantity

Page 150: Six Sigma Awareness Training

Step 6: Discuss the relationship between the causes (X’s) and the effect (Y) to identify vital few factors that drive the measures. For the vital few causes. identify project ideas that will move the effect (Y) to the desired level.

InventoryTurn

Purchasing Others

System Supplies

Safety Stock Policy

Stock Replenish Policy

Central WarehouseStock Count Accuracy (80%)

Material Storage

Housekeeping

Forecast Accuracy (70%)

Inventory Control System

Quality (5% lot reject rate)

Lead Time (30 days)

On – Time (95%)

Shipment Quantity

Page 151: Six Sigma Awareness Training

Step 7: Apply Project Assessment Matrix to the Prioritize Project Ideas.

Examples of Selection Criteria:

• Magnitude of impact

• Probability of success

• Estimated duration

• Effort Required

• Estimated cost

Page 152: Six Sigma Awareness Training

The 3 Conditions for a Six Sigma Project

• A gap exists between current and the desired performance.

• The cause of the problem is not clearly understood.

• The solution is not apparent.

Is it a problem to be solved or an action to be taken?

Page 153: Six Sigma Awareness Training

Step 8: Scope the Project and Create Project Charter.

Project Title

Problem Statement Business Case

Goal Statement Process

Team Leader

Members

Time Line

Financial Benefit (estimate) Champion Name Sign

Date

Page 154: Six Sigma Awareness Training

The 4 ‘Rights’ of Successful Project

• Right project

• Right team composition

• Right team process

Right Result

Page 155: Six Sigma Awareness Training

Right Project

• Well selected

- Address important business issue.

• Well scoped

- Focus on specific problem or process.

• Well defined

- Comprehensive and clear instruction, not a vague idea.

Page 156: Six Sigma Awareness Training

Project Charter• Project Charter is a document created at the outset of a project to

formally assign the project to the team.

• It is an important tool for giving clear instruction and getting commitment from the project team.

• A Project Charter provides the following information:

- Project title.

- The process to be improved.

- The business case.

- The problem statement and goal statement.

- Estimated financial benefits.

- Name of Champion, team leader and members.

- Project time line.

Page 157: Six Sigma Awareness Training

Project Title

• A brief description of the project.

• An idea on what the project is about

Examples:

• SB687 Mis-registration Reduction

• Order Fulfillment Process Cycle Time Reduction

• Loan Application Process Error Reduction

Page 158: Six Sigma Awareness Training

Process• The name of the particular process to be improved.

• Can be described using a high level process block diagram.

Examples:

• Sales orders handling

• Multi-layer circuit board lamination

• Funds transfer transactions

• Pick and place process

Page 159: Six Sigma Awareness Training

Business Case• A broad statement on the business issue pertaining to the

project.

• Provides the rationale on why the project should be a business priority.

Examples:

• Competitor’s better quality product has reduced our market share.

• Lower product prices have reduced profit margin, therefore the need to reduce costs.

• Faster response time will generate more sales.

Page 160: Six Sigma Awareness Training

Problem / Opportunity Statement• A description on the symptom of the issue faced.• More specific and focused than business case.• Contains quantitative figure.

Examples:

• Sales for product A has fallen by 20% since last year.• The mis-registration defect rate has increased to 7% since

last month.• The turn-around-time of competitor A is 5 days faster than

ours.

Page 161: Six Sigma Awareness Training

Goal Statement• A description on what is to be achieved.

Examples:

• To reduce the orders confirmation cycle time 2 days.

• To reduce the mis-registration defect rate from 5% to 1%.

• To increase the inventory turns by 50%.

• To improve the forecast accuracy to 90%.

Page 162: Six Sigma Awareness Training

The ‘Right’ Team Composition• Right Members. - Those familiar with the problem, issue, work process. - Those who are affected by related changes.

• Right Team Size - 5 to 7 members seem to function most effectively.

• Role of Team Leader - Clarify with champion/management on project objective. - Schedule and conduct team meetings. - Get the necessary resources (time, training, equipment, materials, people) .

Page 163: Six Sigma Awareness Training

Responsibility of Team Members

• Carry out team assignments (collect data,

prepare presentation materials, etc.).

• Participate actively in team discussions and

decision making.

• Share ideas and knowledge.

• Implement improvement actions.

Page 164: Six Sigma Awareness Training

Team Effectiveness

• A group of individuals is not a team.

• An effective team if characterized by members who are:

- Committed to team goal.

- Collective responsibility to project success.

- Collaborate and support each other.

• Team facilitation skill is necessary to create teamwork.

Page 165: Six Sigma Awareness Training

Project Set-up Guideline• Is the project aligned with the business goal?

• Is there a specific problem to be addressed or multiple problems?

• Is there a pre-determined solution?

• Is the project focused on specific area / process?

• Are the benefits of the project identified?

• Are the right persons in the team.

• Is the number of team members too many / few?

• Are the team members trained?

• Can the project be completed in 4 - 6 months.

Page 166: Six Sigma Awareness Training

Financial Benefits

• Better quality

• Lower cost

• Consistent delivery

• Shorter lead time

• More capacity

• Reduced floor space

• Improved cash flow

• Higher flexibility

Page 167: Six Sigma Awareness Training

The Purpose of Financial Benefit

• To quantify projects benefits financially.

• To help prioritize improvement projects.

• To evaluate the returns on investment from the Six Sigma program and improvement solutions.

Page 168: Six Sigma Awareness Training

Financial Benefit Reporting

-------------------------------------------------------------Define

Measure

Analyze

Improve

Control

-------------------------------------------------------------

A] Project Start Up: Rough estimatebased on project goal.

B] Project Reviews: Revised estimated figurebased on new data where necessary.

C] Project Closure: Confirm estimated figurebased on actual improvement achieved.

Page 169: Six Sigma Awareness Training

Saving Items - Examples

• Cost Reduction - Direct Savings

- Material saving

- Reduced concession / warranty

- Direct labor savings

- Reduced scraps and reworks

- Expedited freight cost reduction

• Cost Reduction - Indirect Savings

- Time savings for indirect

employees

- Reduced administrative effort

• Cost Avoidance - Investment avoidance as a result of increased productivity / capacity - Expense avoidance as a result of preventative measures

• Incremental Revenue - Increased sales volumes - Contribution margin enhancement

• Working Capital Reduction - Inventory reduction - Receivables reduction

Page 170: Six Sigma Awareness Training

Financial Benefit Guidelines• Guidelines are necessary for:

- Calculating the financial benefits in certain conditions

- Classify if a savings item has a direct impact to the profit (hard saving) or has an indirect impact (soft saving).

• Financial benefit guidelines should be determined by the finance department.

Page 171: Six Sigma Awareness Training

Thank You !!!