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Page 1: Microsoft PowerPoint - Six_Sigma_-_An_Introduction.ppt [Read ...

Information United System Consulting Group(Member of Tariq Alghanim Holding)

Six Sigma – An Introduction

(Member of Tariq Alghanim Holding)

Six Sigma An Introduction

Program : 6th September 2007Program : 6th September 2007By: Ravi Kalimuthu

Specially Designed for Tamilnadu Engineers ForumSpecially Designed for Tamilnadu Engineers Forum

copyrights- IC Group 2007

Venue: Caesars Restaurant. Fahaheel

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About the Tutor.

Business Development Manager & Management Consultant20 Years experience in Industrial & Management SectorC tifi d Si Si G b lt & ISOCertified Six Sigma Green belt & ISO 9001:2000 Lead AuditorConducted More than 40 Training R i K li thConducted More than 40 Training Programs in Several titles in Management & Technical

Ravi Kalimuthu

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About Information United System Consulting Group. (IUSC Group)Group. (IUSC Group)

(A Member of Tariq Al Ghanim Holdings)

Provides Management Consultancy ServicesServices

One stop solution for any businessOne stop solution for any business needs

Consultancy provided >40 clients

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Services offered…

Certification related services

Value added servicesValue added services

Trainings / seminarsTrainings / seminars

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Certification related services

ISO 9001:2000 – Quality Management SystemISO 14001:2004 – Environmental Management SystemOHSAS 18001:2002 – Safety Management SystemSystemISO 22000:2005 – Food Safety Management SystemISO 27001:2005 – Information Security Management System

dand more……

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Value added services

Training & Implementation of Six SigmaEstablishing KPIs PerformanceEstablishing KPIs, Performance measurement system & Balanced ScorecardScorecardDevelopment of vision & values

lBusiness PlanBusiness Process Re-engineering

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Value added services

Support services for effective implementation of ISO systemsp yImplementing total quality managementImplementing cost managementImplementing cost management concepts like activity based costing and quality costing etc.,Implementing 5 ‘S’Consultancy on CE markingConsultancy on CE marking

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Training services

Support for sustaining International standards certificationTailor made in-house programs Knowledge reach to 175 topics specially g p p ydesigned for improving business

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Before we start !!!

Your participation is key to success…If any doubts, stop & clarify…Share your thoughts…Get involved…Switch off / Silent your mobile phones…Participate, and Contribute to make this program successfulContribute to make this program successful

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Six Sigma A Breakthrough StrategySix Sigma - A Breakthrough Strategy

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ContentsContents

What is Six Sigma?

Why Six Sigma?Why Six Sigma?

Comparison of various management initiatives

Overview of six sigma and lean principlesOverview of six sigma and lean principles

Role of Green Belt

Project Management IdeaProject Management Idea

Process Mapping & Process Management

Team Dynamics and Techniquesy q

Appreciating the use of QFD

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What is Sigma (σ)Th ‘Si ’ k f h G k l h b iThe term ‘Sigma’ taken from the Greek alphabet, isused to designate the distribution or spread about themean (average) of any parameter of product, process or( g ) y p p , pprocedure. Six Sigma is a system of practices originallydeveloped by Motorola to systematically improveprocesses by eliminating defects The process wasprocesses by eliminating defects. The process waspioneered by Bill Smith at Motorola in 1986 and wasoriginally defined as a metric for measuring defects andi i lit d th d l t d d f timproving quality, and a methodology to reduce defectlevels below 3.4 defects per one million opportunities(DPMO).( )

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What is Six Sigma (6σ)

Level of process performance equivalent to producing only 3.4 parts per million defects orproducing only 3.4 parts per million defects or has a yield of 99.9997%.

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What is Six Sigma (6σ)

Six Sigma is a long-term, forward-thinking initiative designed to fundamentally change the way corporations do business.It is first and foremost "a business process that enables companies to increase profits dramatically by streamliningcompanies to increase profits dramatically by streamlining operations, improving quality, and eliminating defects or mistakes in everything a company does.While traditional quality programs have focused on detecting and correcting defects, Six Sigma encompasses something broader: It provides specific methods to re-something broader: It provides specific methods to recreate the process itself so that defects are never produced in the first place."

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What is Six Sigma (6σ)

Six Sigma has evolved over the last two decades and so has its definition Sixdecades and so has its definition. Six Sigma has literal, conceptual, and practical definitions Six Sigma can be taken at threedefinitions. Six Sigma can be taken at three different levels:As a metricAs a metric As a methodology As a management system Essentially, Six Sigma is all three at theEssentially, Six Sigma is all three at the same time.

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Six Sigma as a Metric

The term "Sigma" is often used as a scaleThe term "Sigma" is often used as a scale for levels of "goodness" or quality. Using this scale "Six Sigma" equates to 3 4this scale, "Six Sigma" equates to 3.4 defects per one million opportunities (DPMO) Therefore Six Sigma started as a(DPMO). Therefore, Six Sigma started as a defect reduction effort in manufacturing and was then applied to other businessand was then applied to other business processes for the same purpose.

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Six Sigma as a Methodology

As Six Sigma has evolved, there has been less emphasis on the literal definition of 3.4 DPMO, or counting defects in products and processes. Six Sigma is a business improvement methodology that focuses an organization on:that focuses an organization on:Understanding and managing customer requirements Aligning key business processes to achieve those requirements Utilizing rigorous data analysis to minimizeUtilizing rigorous data analysis to minimize variation in those processes Driving rapid and sustainable improvement to business processes

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Six Sigma as a Methodology 2

At the heart of the methodology is the DMAIC d l f i DMAIC imodel for process improvement. DMAIC is

commonly used by Six Sigma project teams and is an acronym for:y

-Define opportunity

-Measure performance

A l t it-Analyze opportunity

-Improve performancep p

-Control performance

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Six Sigma Management

When practiced as a management system, Six Sigma is a high performance system for executing business strategy Six Sigma is a top down solutionbusiness strategy. Six Sigma is a top-down solution to help organizations:•Align their business strategy to critical improvement efforts •Mobilize teams to attack high impact projects•Mobilize teams to attack high impact projects •Accelerate improved business results •Govern efforts to ensure improvements are sustained The Six Sigma Management System drives clarityThe Six Sigma Management System drives clarity around the business strategy and the metrics that most reflect success with that strategy. It provides h f k fthe framework to prioritize resources for projects

that will improve the metrics, and it leverages leaders who will manage the efforts for rapid, g p ,sustainable, and improved business results.

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Determining Sigma Levelg g

Determining sigma levels of processes (1 sigma, 6 Sigma etc) allows process performance to compared throughout the

i ti Si i t ti ti l t th t horganization. Sigma is a statistical term that measures how much a process varies from perfection, based on the

number of defects per million units.p1 Sigma = 690,000 DPMO = 30.9% Final yield2 Sigma = 308,000 DPMO = 69.2%3 Sigma = 66,800 DPMO = 93.3%4 Sigma = 6,210 DPMO = 99.4%5 Si 320 DPMO 99 8%5 Sigma = 320 DPMO = 99.8%6 Sigma = 3.4 DPMO = 99.9997

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The Cost of Quality

Sigma level DPMO Cost of Quality

2 308,507(non NA, (competitive companies)

3 66,807 25 – 40% of Sales

4 6,210 (Industry Average)

15 -25% of Sales

5 233 5 – 15 % of sales

6 3 4 ( ld l ) 1% f l6 3.4 (world class) <1% of sales

Each sigma shift provides a 10% net income improvement.

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Impact of six sigma implementation at GE ( lt hi d fi t 2 1996 1998)

R h i t $100 billi 11%

(results achieved over first 2 years 1996-1998)

- Revenues have risen to $100 billion, up 11% - Earnings have increased to $9.3 billion, up 13%13% - Earnings per share have grown to $2.80, up 14% - Operating margin has risen to a record 16.7% - Working capital turns have risen sharply to 9.2%, up from 1997's record of 7.4

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Why Six Sigma? Is it necessary to go for zero defects?

Why isn’t 99.9% defect-free good enough? Here are some examples of what life would be like if 99.9% were "good enough:"

- 1 HOUR OF UNSAFE DRINKING WATER EVERY MONTH- 2 LONG OR SHORT LANDINGS AT EVERY AMERICAN AIRPORTS EACH DAYAIRPORTS EACH DAY- 400 LETTERS PER HOUR WHICH NEVER ARRIVE AT THEIR DESTINATION

500 INCORRECT SURGICAL OPERATIONS EACH WEEK- 500 INCORRECT SURGICAL OPERATIONS EACH WEEK- 3,000 NEWBORNS ACCIDENTALLY FALLING FROM THE HANDS OF NURSES OR DOCTORS EACH YEAR- 4,000 INCORRECT DRUG PRESCRIPTIONS PER YEAR- 22,000 CHECKS DEDUCTED FROM THE WRONG BANK ACCOUNT EACH HOURACCOUNT EACH HOUR- 32,000 MISSED HEARTBEATS PER PERSON PER YEAR

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Why Six Sigma? Is it necessary to go for zero defects?

Here are some examples of what life would be like at Six Sigma

-13 WRONG DRUG PRESCRIPTIONS PER YEAR13 WRONG DRUG PRESCRIPTIONS PER YEAR

-10 NEWBORNS ACCIDENTALLY FALLING FROM THE HANDS OF NURSES OR DOCTORS EACH YEARHANDS OF NURSES OR DOCTORS EACH YEAR

- 1 LOST ARTICLE OF MAIL PER HOUR

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Various Management Initiatives

TOTAL PRODUCTIVE MAINTENANCE

SIX SIGMA

ISO 9001:2000

TOTAL QUALITY MANAGEMENT

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Various Management Initiatives

THE FOCUS IN TOTAL PRODUCTIVE THE FOCUS IN TOTAL PRODUCTIVE MAINTENANCE (TPM) IS MINIMISATION OFMAINTENANCE (TPM) IS MINIMISATION OFMAINTENANCE (TPM) IS MINIMISATION OF MAINTENANCE (TPM) IS MINIMISATION OF

LOSSESLOSSES

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Various Management Initiatives

THE FOCUS IN SIX SIGMA IS MEASUREMENTTHE FOCUS IN SIX SIGMA IS MEASUREMENT

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Various Management Initiatives

THE FOCUS IN ISO 9001 IS SYSTEMSTHE FOCUS IN ISO 9001 IS SYSTEMS

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Various Management Initiatives

THE FOCUS IN TOTAL QUALITY MANAGEMENT THE FOCUS IN TOTAL QUALITY MANAGEMENT (TQM) IS PEOPLE(TQM) IS PEOPLE(TQM) IS PEOPLE(TQM) IS PEOPLE

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Various Management Initiatives

CAN ONE INITIATIVE WORK WITHOUT THE OTHERCAN ONE INITIATIVE WORK WITHOUT THE OTHER

1 F L (TPM) M t1 F L (TPM) M t1. For Losses (TPM), Measurements 1. For Losses (TPM), Measurements (Six Sigma) are essential(Six Sigma) are essential

2. For Measurement (Six Sigma),2. For Measurement (Six Sigma),Systems (QMS) are essentialSystems (QMS) are essential

3. For Systems (QMS), People 3. For Systems (QMS), People (TQM) are essential(TQM) are essential

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Summaryy

All the initiatives are complementary to each other. .The

continued focus is the key factor. It is prudent to integrate

each initiative with the fundamental QMS like ISO

9001 2000 Th ff h ld b k h l l9001:2000 The effort should be to take the people along

the processthe process

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Five Pillars of TQMQ

PRODUCT

EFFECTIVENESS WASTE ELIMINATION

PROCESS

SYSTEM RE-ENGINEERING

PEOPLE

SUITABILITY CULTURE & MATURITY

LEADERSHIP

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Six SigmaSix Sigma

Process standard Vs Performance StandardSix Sigma Vs ISO 9001I d f l t dIs process and performance relatedWhat is important in businessPerformance should consider both internal andPerformance should consider both internal and external needsMeasurement is the key.M h t i i t t h t i d dMeasure what is important or what is neededMeasurement without a target is meaning lessDeviation from target is defectDeviation from target is defectDefect is more important to customer than reject

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DPMO Vs PPM

Six Sigma demands 3.4 Defects per Million OpportunityMillion Opportunity

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Why the name “Green Belts”?

The name Green belts comes from the sport ofThe name Green belts comes from the sport ofKarate. Both Karate and Six Sigma depend onmental discipline and systematic, intensive training.Just as black belts in Karate depend on power, speedand decisiveness, Six Sigma green belts should alsodepend on the same qualities. Six Sigma Green beltsdepend on the same qualities. Six Sigma Green beltsalso must be able to reposition themselves as theymove from one project to another.

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Characteristics of Six Sigma Green Belt

Proper understanding of Deliverable & CTQ.

Proper Understanding of DMAIC steps

Speaks the language of money time organizationalSpeaks the language of money, time, organizationalobjectives.

Understands Project Charter and base line performanceUnderstands Project Charter and base line performance

An expert in SPC and continuous improvement tools.

C bl f i l ti t d di ti th dCapable of implementing standardization methods

Drives change by challenging conventional wisdom.

Anticipates and confronts problems proactively and solvesthem.

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What is DMAIC ?

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Define phase

Thi h d fi th j t It id tifi iti lThis phase defines the project. It identifies critical

customer requirements and links them to business

needs. It also defines a project charter and the

business processes to be undertaken for Six Sigma.

Note: This phase is extensively covered in aNote: This phase is extensively covered in a

separate chapter “Define phase”.

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Measurement phase

This phase involves selecting product characteristicThis phase involves selecting product characteristic,mapping respective process, making necessarymeasurements and recording the results of theprocess. This is essentially a data collection phase.

Note: This phase is extensively covered in aNote: This phase is extensively covered in a separate chapter “Measurement phase”.

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Analysis phase

In this phase an action plan is created to close thep p“gap” between how things currently work and how theorganization would like them to work in order to meetthe goals for a particular product or service This phasethe goals for a particular product or service. This phasealso requires organizations to estimate their short termand long term process capabilities.

Note: This phase is extensively covered in a separate chapter “Analysis phase”separate chapter Analysis phase .

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Improvement phase

This phase involves improving processes/productp p g p /pperformance characteristics for achieving desired resultsand goals. This phase involves application of scientific toolsand techniques for making tangible improvements inand techniques for making tangible improvements inprofitability and customer satisfaction.

Note: This phase is extensively covered in a separate chapter “Improvement phase”.

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Control phase

This phase requires the process conditions to be properlydocumented and monitored through statisticalprocess control methods. After a “settling in” period, theprocess capability should be reassessed. Dependingprocess capability should be reassessed. Dependingupon the results of such a follow-up analysis, it may besometimes necessary to revisit one or more of thepreceding phasespreceding phases.

Note: This phase is extensively covered in aNote: This phase is extensively covered in a separate chapter “Control phase”.

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Key steps of the define phase

A Identify project which are critical toA. Identify project which are critical to customers.

B Develop team charter / action planB. Develop team charter / action plan.

C. Define process map.

E h t i di d i d t il i th f ll iEach step is discussed in detail in the following slide.

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Deliverable & CTQ

S.no Deliverables CTQ Measurement method Acceptable criteria RemarksDepartment/ Function : Accounts 1

1 Customer reconcilations Correct statement of accountsAgreement with customer book

Timely updation Every monthTimely updation Every month

2 Fili f i s t s Ti l s b issi

Respective date for various submission as

i2 Filing of various returns Timely submission per matrix

Accuracy No penalty Late feesy p yInterest to the company

3Branch and profit-centre wise

fit bilit Timely submission of statements By 25th of every month3 profitability Timely submission of statements By 25th of every monthAccuracy of report

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Deliverable & CTQS.no Deliverables CTQ Measurement method Acceptable criteria Remarks

1 Receipt of material Correct inwarding of quantity Delivery challan Zero Variance

Visual30% reduction from

Reduction in unloading time Visual present condition

2Documentation flow to excise department Timely issue of documents SAP 1 Day

Accuracy of information SAP Zero Variancey

3 Cost Optimization 1.Re use warranty material warranty claim To be decided2. Reduction of cost through material handling equipments

Visual 30% reduction in present situationImprove 50% floor

3. Use of floor space Store LayoutImprove 50% floor space

4. Recycling of cotton waste VSM 10% cost savings

5 Reduction of non moving material SAP T b d id d5. Reduction of non-moving material To be decided

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Operations related :- Marketing

1. Accuracy of forecast assumptions.

2. Number of incorrect order entries.

3 O t k d fi ld li3. Overstocked field supplies.

4. Contract errors.

5. Late deliveries.

6 Customer complaints6. Customer complaints.

7. Warranty cost as a percentage of sales.

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Operations related :- Purchase

1. Premium freight cost/ demurrage charges.

2. Down - time because of parts shortages.

3. Number of Off specification parts used to keep line3. Number of Off specification parts used to keep line going.

4. Cycle time from start of purchase request until4. Cycle time from start of purchase request until items in house.

5. Excess inventory.5. Excess inventory.

6. Percentage of purchased material rejected on receipt.receipt.

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Operations related :-Manufacturing

1. Yield per ton of raw materials.

2. Percentage of parts scrapped.2. Percentage of parts scrapped.

3. Percentage of parts reworked.

4. Percentage of parts accepted on concession.

5. Percentage of final product graded as g p gseconds.

6. Production per man / machine.p /

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Operations related :- Product engineering

1. Number of engineering changes per document.

2. Number of errors found during design review.

3 N b f f d i d i l ti t t3. Number of errors found in design evaluation test.

4. Percentage of time over- run compared to l d ti f d l tplanned time for development.

5. Percentage of cost over - run over estimated cost f d l tof development.

6. Number of tooling redesign after trial production.

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Operations related :- Quality Assurance

1. Percentage of lots rejected due to errors.

2. Percentage of products having defects detectedby customers.

3. Number of engineering changes that should havebeen detected in design review.

4. Errors in inspection / test reports.

5 C l ti t t ti ti5. Cycle time to get corrective actions.

6. Percentage of appraisal cost compared tod ti tproduction cost.

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Operations related :- Product reliability

Mean time to failure.

Failure rateFailure rate.

Probability of failure occurrence during given time intervaltime interval.

Probability of failure non-occurrence during i e ti e i te lgiven time interval.

Mean life time.

Mean time to first generate overhaul.

Mean time to repairMean time to repair.

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Operations related :- AccountingOpe at o s e ated ccou t g

1. Percentage of late payments.2. Time to respond to customer request for

information.

3. Billing errors.

4. Incorrect accounting entries.

5. Payroll errors.

6 E i t ti t6. Errors in cost estimates.

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Customer related

Market share

Market penetrationMarket penetration

New markets identified

Overall customer satisfaction

Customer complaintsCustomer complaints

Customer retention

R&D expenditure as a percentage of sales

New products and services introducedp

Sales per employee

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Six Sigma – Tools and Techniques

Q li i A l i f iQuality Function DeploymentDesign of experiments

Analysis of varianceCorrelation and RegressionChi-Square

7 QC toolsNew 7 toolsMeasurement system

qControl chartsControl plansRobust designMeasurement system

analysisProcess mappingProject Management

Robust designCost of qualityReliability EngineeringQ lit tProject Management

FMEASPCT T t

Quality systemsFault tree analysis

T – Test

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Certification of Six SigmaOption I – Certification as Six Sigma Green BeltBecoming certified as a Six Sigma Green Belt confirms your commitment to quality and the positive impact itwill have on your organization. The Six Sigma Green Belt operates in support of or under the supervision of aSix Sigma Black Belt, analyzes and solves quality problems and is involved in quality improvement projects.

Option II – Certification as Six Sigma Black BeltBecoming certified Six Sigma Black Belt leads the quality or core process team involve in the data analysis. TheSix Sigma Black belt guides the green belt in taking the decisions with respect to quality problems and directquality improvement projects

Certification procedure:ASQ (American Society for Quality) offers the certification programmes in various field of discipline. In today’sworld, where competition is a fact of life and the need for a work force proficient in the principles and practicesof quality is a central concern of many companies, certification is a mark of excellence. It demonstrates that theq y y p ,certified individual has the knowledge to ensure the quality of products and services. Certification is aninvestment in your career and in the future of your employer.

Training procedure:The Information United System Consulting Group offers extensive training for management staffs in order toThe Information United System Consulting Group offers extensive training for management staffs in order toachieve the certification for Six Sigma black belt and Six Sigma green belt. The training avenues could be asfollows:

•In-house training can be conducted within the premises of any Company

•External training

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Sigma Conversion TableSIGMA VALUE DPMO SIGMA VALUE DPMO SIGMA VALUE DPMO

0.00 933193 2.50 158655 3.25 40059

0.20 903199 2.55 146859 3.30 359300.20 903199 2.55 146859 3.30 35930

0.50 841345 2.60 135666 3.35 32157

1.00 697700 2.65 125072 3.40 28717

1.50 500000 2.70 115070 3.45 25588

2.00 308537 2.75 105650 3.50 22750

2.05 291160 2.80 96800 3.55 20182

2.10 274253 2.85 88505 3.60 17865

2.15 257846 2.90 80757 3.65 15778

2.20 241964 2.95 73529 3.70 13904

2.25 226627 3.00 66807 3.75 12225

2.30 211856 3.05 60571 3.80 10724

2 35 197663 3 10 54799 3 85 93872.35 197663 3.10 54799 3.85 9387

2.40 184060 3.15 49471 3.90 8198

2.45 171056 3.20 44565 3.95 7143

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Sigma Conversion TableSIGMA VALUE DPMO SIGMA VALUE DPMO SIGMA VALUE DPMO

4.00 6210 4.65 816 5.30 72

4 05 5386 4 70 687 5 35 594.05 5386 4.70 687 5.35 59

4.10 4661 4.75 577 5.40 48

4.15 4024 4.80 483 5.45 39

4.20 3467 4.85 404 5.50 32

4.25 2980 4.90 337 5.55 26

4.30 2555 4.95 280 5.60 21

4.35 2186 5.00 233 5.65 17

4 40 1866 5 05 193 5 70 134.40 1866 5.05 193 5.70 13

4.45 1589 5.10 159 5.75 11

4.50 1350 5.15 131 5.80 9

4.55 1144 5.20 108 5.90 5

4.60 968 5.25 89 6.00 3

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Sigma Conversion TableSIGMA VALUE DPMO SIGMA VALUE DPMO SIGMA VALUE DPMO

4.00 6210 4.65 816 5.30 72

4 05 5386 4 70 687 5 35 594.05 5386 4.70 687 5.35 59

4.10 4661 4.75 577 5.40 48

4.15 4024 4.80 483 5.45 39

4.20 3467 4.85 404 5.50 32

4.25 2980 4.90 337 5.55 26

4.30 2555 4.95 280 5.60 21

4.35 2186 5.00 233 5.65 17

4 40 1866 5 05 193 5 70 134.40 1866 5.05 193 5.70 13

4.45 1589 5.10 159 5.75 11

4.50 1350 5.15 131 5.80 9

4.55 1144 5.20 108 5.90 5

4.60 968 5.25 89 6.00 3

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Project Charter

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Our Training ProgramsOur Training Programs

*October 3rd Week 2007 – Six Sigma Green Belt Certification Program

( A 3 Day Program)( A 3 Day Program)

*November 3rd Week 2007 – ISO 9001:2000 Lead Auditor Certification CourseCertification Course

(A 5 Day program)

Please enroll in our training programs to attain career development and call us for any of your training & Management consultancy needsManagement consultancy needs…

* Tentative Schedule

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Thank you for your Time & Involvement

If need any clarifications or for assistance, please f l f t d t M bil +965 9529846feel free to conduct me on Mobile: +965 9529846 or write to me in email: [email protected]


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