What is Six Sigma? Jim Bossert Bank of America The problem used to be: “How do we get management interested enough in quality to do something about it?”

What is Six Sigma?Jim Bossert Bank of America

The problem used to be:

“How do we get management interested enough in quality to do something about it?”

Now the problem is:

“How do we get the people to believe that we are reallygoing to do something and stick with it?”

Philip B. Crosby

“Nothing flourishes until is is clear in the mindof the thought leaders”

“Real comprehension has to exist if thedetermination is to be obvious”

Philip B. Crosby

What is Six Sigma?Six Sigma - The Initiative

ProcessSystematic Approach to Reducing

Defects which Affect What is Important to the Customer

ToolsQualitative, Statistical and

Instructional Devices for “Observing” Process Variables & Their Relationships as well as “Managing” their Character

Vision Goal Philosophy Metric Method Tool Symbol Benchmark Value

Vision Goal Philosophy Metric Method Tool Symbol Benchmark Value

What is Six Sigma ?

A level of performance that reflects significantly reduced defects in our products

A statistical measurement of ourprocess capability, as well as abenchmark for comparison

A set of statistical “tools” to helpus measure, analyze, improve, and control our processes

A commitment to our customersto achieve an acceptable levelof performance

.... A means to stretch ourthinking with respect to quality

Sigma is a letter in the Greek Alphabet

Six Sigma - Six Sigma - GoalGoal

(DPMO Distribution Shifted ± 1.5)

2 308,5373 66,8074 6,2105 2336 3.4

PPMPPM

ProcessCapability

ProcessCapability

Defects per Million Opp.

THE GOALS OF SIX SIGMA:

Defect Reduction

Yield Improvement

Improved Customer Satisfaction

Higher Net Income

IRS - Tax Advice (phone-in)

(140,000 PPM)

7

Sigma Scale of Measure

1,000,000

100,000

10,000

1,000

100

10

1

PPM

•

Restaurant BillsDoctor Prescription Writing

Payroll ProcessingOrder Write-up

Journal VouchersWire Transfers

Airline Baggage Handling

Purchased Material Lot Reject Rate

Domestic Airline Flight Fatality Rate (0.43 PPM)

(with ± 1.5 shift)

Best-in-Class

Average Company

3 4 5 621

© 1994 Dr. Mikel J. Harry - V4.0

Where does industry stand ?Where does industry stand ?

© 1994 Six Sigma Academy

What’s it Based On ?

Customer ..... Anyone Who Receives Product, Service, or Information

Opportunity ..... Every Chance to Do Something Either “Right” or “Wrong”

Successes Vs. Defects ..... Every Result of an Opportunity Either Meets the Customer Specification or it Doesn’t

Strategy

• Know What’s Important to the Customer

• Reduce Defects

• Center Around Target

• Reduce Variation

Breakthrough Improvement Not Incremental!

Profit

Total Cost to manufactureand deliver

products

Profit

TheoreticalCosts

Cost ofPoor Quality

COPQ

Why Focus on COPQ?

Price Erosion

TheoreticalCosts

Cost ofPoor Quality

COPQ

Profit

TheoreticalCosts

COPQ

Which Feels Better??

The Cost of Poor Quality (COPQ) “Iceberg”

Engineering change orders

Traditional Quality Costs

Lost Opportunity

Hidden Factory

Lost salesLate delivery

Long cycle times

Expediting costs

Excess inventory

Additional Costs of Poor Quality(intangible)

(tangible)

(Difficult or impossible to measure)Lost Customer Loyalty

More Setups

ScrapRework

InspectionWarranty

Rejects

Administration / DispositionConcessions

Average COPQ approximately 15% of Sales

RiskofLoss

RiskofLoss

Extent of Knowledge(Derived from Observation & Measurement)

Extent of Knowledge(Derived from Observation & Measurement)

““When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind. It may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the state of science.”

Lord Kelvin

Knowledge is the Foundation

Science ArtDiscipline

Chaos

Knowledge

Where Are Your Processes Today?

Directions of Knowledge

Good Decisions

Fire Fighting

Waste

• Leadership Commitment, Competence & Involvement

• Methodology & Tools

•Data Driven

•Statistically Validated

• Best People 100% Dedicated to Defect Reduction

• Project Focused

What Makes Six Sigma Different?

Collecting Data

•Communicate in an objective manner

• To collect quantifiable facts about a problem or opportunity

• To establish baseline information about a problem or process

• To facilitate cost benefit analysis of proposed solutions

• To compare before and after - quantify the impact of a solution

• To justify extension of the solution

Data Builds Knowledge

The Importance of the Common Language of Data

What do I need to knowto make Decisions?

How do I need to seethe information?

What tool will be used?

What data do we need?

Where is the data located?

Pla

nn

ing

Execu

tion

Questions to be Answered Drive Data Collection

STATISTICS IS COMMUNICATING INFORMATION FROM DATA-Schilling

STATISTICS IS NOT A SUBSTITUTE FOR ENGINEERING JUDGMENT- Dodge

STATISTICAL THINKING WILL ONE DAY BE AS NECESSARY FOREFFICIENT CITIZENSHIP AS THE ABILITY TO READ AND WRITE.-H.G. Wells

DATA IS NOT KNOWLEDGE. IN ORDER TO GIVE UP ITS KNOWLEDGE, DATA MUST BE TORTURED. STATISTICS ARE THE IMPLEMENTS OF TORTURE.Mikel Harry

Old Philosophy of Quality New Philosophy of Quality

LSL USL LSL USL

Area outside the specification limits represent quality losses.

Conformance to Specifications

“Goal Post Mentality”

Deviation from the targetrepresents quality losses.Taguchi’s Loss Function

Average Loss = k[2 + (y - T)2]

“Variation is Evil”-Some Production Guy

No Losses @ the Target

The Changing Quality Philosophy

Appraisaland

Prevention

QualityQuality

Internal and

External Failure

Old Belief

44

Appraisaland

Prevention

Internal and

External Failure

4455

66

New Belief

QualityQuality

The Changing Quality Philosophy

The highest quality products and services are the lowest cost products and services

BreakthroughStrategy

Characterization

Phase 1:Measure

Phase 2:Analyze

Optimization

Phase 3:Improve

Phase 4:Control

1

10

100

1000

10000

100000

1000000

33

44

55

66

77

1,000,0001,000,000

100,000100,000

10,00010,000

1,0001,000

100100

1010

11

22

Sigma Scale of Measure

PPM

AverageAverageCompanyCompany

AverageAverageCompanyCompany

Best-in-ClassBest-in-ClassBest-in-ClassBest-in-Class

The Basic ObjectiveThe Basic ObjectiveThe Basic ObjectiveThe Basic Objective

The Breakthrough Methodology

Define the problem...

DMAIC to the Rescue!

THE NATURE OF THE PROBLEM

Six Sigma methodology identifies processes that are off-target, and/or have a high degree of variation, and corrects the process

Six Sigma methodology identifies processes that are off-target, and/or have a high degree of variation, and corrects the process

Off-Target Variation

On-Target

CenterProcess

Reduce Spread

XX

XXXXX

XX

X

X

X X

X

X

X

XX

X

X

XXX

X

XXXX

XX

XXXX

XXX

Another View

LSL USL USLLSL

Off-Target Variation

On-Target

CenterProcess

Reduce Spread

The statistical view of a problem

USLLSL

LSL = Lower spec limit

USL = Upper spec limit

Large

THE NATURE OF THE PROBLEM - A STATISTICAL LOOK

InsufficientProcess

Capability

UnstableParts andMaterial

Region of Six Sigma Synergy

InadequateDesignMargin

USLT

LSL

Primary Sources of Variation

• Measure of variation and quality

• Measure of capability of our processes

How Do We Measure Variation and Quality?

The Standard Deviation

Point of Inflection

11

TT USLUSL

p(d)

Upper Specification Limit (USL)Target Specification (T)Lower Specification Limit (LSL)Mean of the distribution (m)Standard Deviation of the distribution (s)

Upper Specification Limit (USL)Target Specification (T)Lower Specification Limit (LSL)Mean of the distribution (m)Standard Deviation of the distribution (s) 3

The distance between the point of inflection and the mean constitutes a standard deviation. If three such deviations can be fit between the target value and the specification limit, we would say the process has “three sigma capability.”

The distance between the point of inflection and the mean constitutes a standard deviation. If three such deviations can be fit between the target value and the specification limit, we would say the process has “three sigma capability.”

Point of Inflection

11

TTUSLUSL

p(d)

p(d)

1 2 3 4 5 6

33

This is a 6 Sigma Process

The Standard Deviation

f (X)f (X)Y=Y=

X1 . . . XN Independent Input-Process Cause Problem Control

Y Dependent Output Effect Symptom Monitor

The Focus of Six Sigma

To get results, should we focus our behavior on the Y or X ?

If we are so good at X, why do we constantly test and inspect Y ?

Focus on X rather than Y, as done historically

Improvement Strategy (DMAIC)

Focus

Vital Few xi

Y

Y

Y

Y

Y

x1, x2, ... xn

x1, x2, ... xn

Vital Few xi

Vital Few xi

Vital Few xi

Vital Few xi

Phase

Measure

Analyze

Improve

Control

Select Product or Process Key Characteristic(s); e.g..., Customer Y

Define Performance Standards For Y

Validate Measurement System for Y

Establish Process Capability of Creating Y

Define Improvement Objectives For Y

Identify Variation Sources In Y

Screen Potential Causes For Change In Y & Identify Vital Few xi

Discover Variable Relationships Between Vital Few x i

Establish Operating Tolerances On Vital Few x i

Validate Measurement System For xi

Determine Ability To Control Vital Few xi

Implement Process Control System On Vital Few x i

SIX SIGMA METHODS GENERATE DATA-BASED DECISIONS

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

Harvesting the Fruit of Six Sigma

Sweet FruitSweet Fruit Design for Manufacturability

Bulk of FruitBulk of FruitProcess Characterization and Optimization

Low Hanging FruitLow Hanging FruitSeven Basic Tools

Ground FruitGround FruitLogic and Intuition

Process EntitlementProcess Entitlement

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

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

We don't question what we don't measure

Hence, We just don't know

Breakthrough Strategy

Black Belt Certification Program

Event Cycle Activity Description Duration1 Initial Meeting and Planning Session 2 days2 1 Champion Coordination Meeting 1 day3 1 Session 1: Black-Belt Training 5 days4 1 On-The-Job Application Exercise 15 days5 2 Champion Coordination Meeting 1 day6 2 Standard Six Sigma Review 1 day7 2 Session 2: Black-Belt Training 4 days8 2 On-The-Job Application Exercise 15 days9 3 Champion Coordination Meeting 1 day10 3 Standard Six Sigma Review 1 day11 3 Session 3: Black-Belt Training 4 days12 3 On-The-Job Application Exercise 15 days13 4 Champion Coordination Meeting 1 day14 4 Standard Six Sigma Review 1 day15 4 Session 4: Black Belt Training 3 days17 Contingency 6 days

1stMonth

2ndMonth

3rdMonth

4thMonth