Achieving Operational
Excellence by Six Sigma
Six Sigma Methodology
Goals and Objectives:
Understand the difference between a sporadic and a chronic quality problems.
Enumerate the different phases of the six-sigma methodology and understand their purpose.
Comprehend some basic qualitative tools that complement the six-sigma methodology.
You may start with Sporadic vs.
Chronic Problems
Sporadic problems: adverse changes that
are sudden and that can be restored in the
short term.
Chronic problems: need to be addressed
with a longer term perspective. They can
be very costly for the organizations.
A structured and project approach is
needed to address chronic problems.
Generic Project Tasks
Verifying the project need and mission.
Diagnosing the causes.
Providing a remedy (make the case of its
effectiveness).
Dealing with resistance to change.
Instituting controls to hold the gains.
Six-Sigma Methodology
Statistical foundation: the process variations,
given the product specifications, allows only
3.4 defects by millions of parts.
The six-sigma methodology is related to
projects that aim to improve processes
through disciplined and data driven analysis.
There are two Six Sigma Methodologies
DMAIC to improve existing processes
DMADV to develop new processes
DMAIC
Define
Measure
Analyze
Improve
Control Performance
Process Power:
DMAIC—Five Step Process
Define
Measure
AnalyzeImprove
Control
Six Sigma - The Process
Control
Improve
Analyze
Measure
Define
• At GE, the DMAIC process is utilized for quality improvement
of existing products and processes.
• A modified version of the process (DMADV) is utilized
in new product and process design.
6 DMAIC Process
Develop Charter and
Business Case
Map Existing Process
Collect Voice of the Customer
Specify CTQs / Requirements
Measure CTQs / Requirements
Determine Process Stability
Determine Process Capability
Calculate Baseline Sigma
Refine Problem Statement
Identify Root Causes
Quantify Root Causes
Verify Root Causes
Institutionalize Improvement
Control Deployment
Quantify Financial Results
Present Final Project Results
and Lessons Learned
Close Project
Select Solution (Including
Trade Studies, Cost/Benefit
Analysis)
Design Solution
Pilot Solution
Implement Solution
Define
Measure
Analyze
Improve
Control
DMAIC = Define, Measure, Analyze, Improve and Control
QFD
Process Mapping
Measurement Systems
Benchmarking/Baselining
Yield & Sigma
Basic Quality Tools
Design of Experiments
Brainstorm & Workout
Control Charts
Procedures
Training
Product
or
Service
1 Select CTQ Characteristics
2 Define Performance Standards
3 Validate Measurement System
4 Establish Product Capability
5 Define Performance Objectives
6 Identify Variation Sources
7 Screen Potential Causes
8 Discover Variable Relationships
9 Establish Operating Tolerances
10 Validate Measurement System
11 Determine Process Capability
12 Implement Process Controls
Measure
Improve
Control
Analyze
“Strategy”“Cookbook”
—the steps
“Tools &
Concepts”
Define• Define the problem
• Select cross-functional team
• Define team charter
DMAIC—each step has a question
Define
What is important?
Measure
How are we doing?
Analyze
What is wrong?
Improve
Fix what’s wrong
Control
Ensure gains are maintained to
guarantee performance
Define:
Clearly identify the problem
Utilize numerical definition
Focus on process that creates the problem
not on the outcome
Define—doing it with excellence
Identify our internal and external customers
Determine what our customers want
Identify our suppliers
Determine what we need from our suppliers
Identify problems
Identify the process that contributes to the problems
Identify improvement opportunities
Scope the improvement project
Select the right players
Set goals and objectives
Measure:
Benchmark
Capability of a given process
Focus on CTQ
Measure—doing it with excellence
Review the current process
Identify key inputs and outputs
Develop baseline and entitlement metrics
Performance
Cost
Collect and organize data
Evaluate the performance of the process
Defects
Cycle time
Assess the amount of variation
In the process
In the measurement system
Analyze:
Current process results
What is possible compared to what the
competition is doing
Analyze—doing a great job here
Identify issues that occur at each step in the process
Assess customer impact of problems
Prioritize most critical inputs
Assess the effect on outputs or performance
Determine root causes
Generate solutions
Select most likely solutions
Improve:
Implement changes
Be creative to find new ways to do things
better, cheaper, or faster
Improve—this is most critical!
Develop Action Items
Prioritize improvements
Test solutions
Determine best combination of inputs
and controls
Refine solutions
Document solutions
Implement solutions
Control:
Lock in successes
Implement measures to keep variables
within the new operating limits
Control—sustaining your gains
Measure progress
Capture and quantify benefits of the process improvements
Document the project
Communicate for organizational learning
Recognize the team’s efforts and success
Monitor and manage to hold gains
Adjust for continuous improvement
Recall Evolution of QA Methods…
Inspection
Six Sigma…
DOE
Quality Mgmt
Systems
Taguchi
1930 1940 … 1975 1985 1990 1995 2000
SPC
Six Sigma DMAIC Model is most
systematic!
1. IDENTIFY OPPORTUNITIES
Process Flow Analysis
SURVEYYES NO
A
B
C
D
Benchmarking
Pareto Analysis
2. FORM TEAM & SCOPE PROJECT
Identify Customers
and Requirements
Tree Diagram
Establish Process
Boundaries
3. ANALYZE CURRENT PROCESS
Analyze Available
Data
Process Flow Analysis
Check Sheet
HISTORY CHECK SHEET
REPORT
4. DEFINE DESIRED OUTCOMES
FOR IMPROVED PROCESS
Define Performance
Measures
Agree on Goals
GOAL
5. IDENTIFY ROOT CAUSES & PROPOSED SOLUTIONS
Why-Why
Diagram
Brainstorming Process Redesign
EFFECT
Cause & Effect
Diagram
Nominal Group Technique
6. PRIORITIZE, PLAN AND TEST
PROPOSED SOLUTIONS
Design of
Experiments
C-
C-
C+
C+90.00
83.67
77.33
71.00
64.67
58.33
52.00
A- A+
Level Loading
PRODUCTION DAYS
A
B
C
D
1 2 3 30
Pull System
PRIOROPERATION
NEXTOPERATION
7. REFINE AND IMPLEMENT
SOLUTIONS
Force Field Analysis
GANTT Chart
9. ACKNOWLEDGE TEAM AND
COMMUNICATE RESULTS
Training & Procedures
Brainstorming
RECYCLE IF NECESSARY
8. MEASURE PROGRESS & HOLD
GAINS
Trend Chart SPC
REPORT
TEAM RESULTS
Phase Step(s)
Define 1 & 2
Measure 3 & 4
Analyze 5
Improve 6 & 7
Control 8 & 9
Hi
Low
Time
Cycl
e T
ime
an
d D
efec
tsUsing Successive 6 Projects for
Cycle Time and Defect Reduction
Six Sigma is really different!
A look into DMAIC:
Problem Process Definition
Measure to determine current Process Capability and Control (Mean and Deviation)
How / What Methodology do we apply to Improve
Implement Methodology / Action to Improve
Action for continuous improvement and control
Six Sigma
Qualitative Tools
--soft, yet they are very useful!
Brainstorming and affinity diagram.
Pareto analysis.
Cause-effect diagram.
Process mapping
Six Sigma
Quantitative Tools
Statistical testing.
Design for experiment.
Control chart .
Process capability .
Reliability analysis
... And there are others…
Tools & Templates by DMAIC Phase
Note: The relationship between the specific tool and the DMAIC phase is based on most likely usage as opposed to possible usage.
Tool Define Measure Analyze Improve Control
Action Item/Implementation Plan X
Affinity Diagram X X X
Brainstorming X X X
Business Impact (ABM) X
Cause & Effect Matrix X
Check Sheet X
Control/Reaction Plan X X
Control Chart X X
Cycle Time Analysis
Design of Experiment (DOE) X
Decision Matrix X
DPMO to Sigma Conversion Table X X
Five Whys X
Failure Mode and Effects Analysis (FMEA) X
Force Field Analysis X
Four Up X X X X X
Histogram X
Tools & Templates by DMAIC Phase continued
Tool Define Measure Analyze Improve Control
Ishikawa (Fishbone) X
Measurement System Evaluation (MSE) X
Multivoting X
Pareto Chart X
Process Capability X X X X
Process Costing Tool X
Process Maps X X X X
Problem Statement/Critical Business Issue (CBI) X
Requirements Analysis X
Run Chart X X
Scatter Diagram X
Sigma Calculator X X
SIPOC Chart X
Story Board X
SWOT Analysis X
Team Charter X
Thought Process Map XNote: The relationship between the specific tool and the DMAIC phase is based on most likely usage as opposed to possible usage.
Service Impacted The timely and accurate
payment of commissions and
collection of carrier payments
Division & Function CitiStreet RSD
Commissions, Finance
Black Belt
Green Belt
Pete Ferlita
John Cirillo
Telephone Number(s) Ext 2566
Ext 2477
Executive Sponsor
Champion
Bob Dughi
Bill Valentine
Andy Lovasz
Telephone Number(s) Ext 2001
Ext 2014
Ext 2179
Start Date 1/1/03 Target Completion Date 9/01/03
Element Description Team Charter1. Process: The process in which the
opportunity exists.
Carrier Billing, receipt of payments, and payment of AE
Commissions
2. Problem Statement: Describe the critical business
issue that is being addressed.
Financial transactions are not being recorded in the Commission
Accounting System resulting in deferred or lost carriers payments
and incorrect payment of AE commission.
3. Objective: What performance
improvements are targeted and
what impacts are expected on
Area of
Improvement Baseline Goal
Target
Date
Unit of
Measure(DPMO,%,$)
Revenue, Expense, Cost/Risk
Avoidance and Capacity
Revenue $2 M 7/1/03 $
Rework (ABM)? PAEF
Records
1,485,530 -50% 9/1/03 %
PAEF
Premium
$72,964,70
4
-75% 7/1/03 %
4. Business Results: What functional areas of the
organization will realize the
benefits?
Commissions, Account Executives
5. Team members: Who are the team members? Dawn Simpson, Chris Hsieh, Melissa Kopsco, Bob Mezier, Deon
Van Renburg, Andy Lovaz, Ralph Winnicker, Pete Ferlita
John Cirillo, Mike Bikofsky
6. Project Scope: Which part of the process will
be investigated?
Determine why certain transactions are not bridging to CAS.
Eliminate records from entering the Premium Applied Error File.
7. Benefit to Customers: Who are the final customers,
what benefits will they see and
what are their most critical
requirements?
Account Executives – will be paid on time and correctly.
Commissions Team – will take less inquiry calls from AE’s
questioning incorrect payments.
Citistreet – will recognize all revenue due from carriers in a timely
manor.
8. Schedule of Key Milestone
Dates:
D – Define Project Start January 2003
M – Measurement “M” Completion February 2003
A – Analyze “A” Completion April 2003
I – Improve “I” Completion September 2003
C – Control “C” Completion October 2003
Project Completion October 2003
9. Support Required: Do you anticipate the need for
any special capabilities,
hardware, trials, etc?
Possible IT support.
Define - Team Charter
This is a project!
What is the focus of the
team’s efforts?
What are the
boundaries (scope)
of the effort?
What is the expected
outcome?
Why is this important?
Who are the key
players?
Problem Statement
Assets reflected on the Travelers and CitiStreet record keeping systems are not in balance on a
daily basis. This results in daily reconciliation issues, extensive manual effort and significant
exposure to market value adjustments.
Information and Data with Respect to the Problem
. Approximately 10% of our accounts are out of balance on a daily basis (e.g. fixed cell issues).
. There are approximately 500-700 reconciling items per day (plans and funds).
. Assets are out of balance by approximately $2MM Inception to Date .
. There are approximately $120M of receivables > than 5 business days out of balance YTD 2002.
Processes to be Considered
Plan Setup, Product Definition, Fund and Case Translation, Trading/Transmission/Pricing, Cash
Settlement, Monthly Travelers Bill, Transaction Processing, Reconciliation.
Key Questions
. Why do we have rejects every day?
. Are the systems functioning according to the latest specifications?
. Will we have IT resources available to work on this project?
. Do we need two record keeping systems?
. Do we need two transmissions (money in/money out)?
. Does Travelers need to be made aware of the daily reconciling items?
Actions and Tools to Address the Key Questions
. Develop daily metrics and source of error for out of balance situations.
. Develop daily metrics and source of error for manual adjustments being sent to Travelers.
. Perform root cause analysis on all sources of error .
. Compile and review the complete set of systems specifications and perform a gap analysis.
. Evaluate the need for two systems.
. Evaluate the possibility of having one daily feed versus two.
. Develop a list of Subject Matter Experts for the "Processes to be Considered".
Action Plan
. Collect base line metrics.
. Conduct an As Is session in Hartford the week of 9/23/02.
. Conduct a Should Be session in E. Brunswick the week of 10/14/02.
. Implement process improvements.
. Implement a control plan.
Define - Thought Process Map
1. What is the problem?
2. Do we have any data
and information on the
problem?
3. What processes are
being considered?
4. What are the key
questions that need to
be answered?
Plan Participantrequests,completes and
mails a Distribution RequestField Office/Outside Carrier
receives the request
Mail Room (N.O.)receives application
Benefits Area sorts by plan
Benefits Processorprocesses the check
Mailroom sends check to thePlan Participant
Plan Participant receivesthe check
Benefits Processor reviewsand processes applications
- Opens Mail- Sorts Mail
- Delivers to Benefits Department
- Opens Mail- Sorts by Plan- Distributes to Processors
- Review for good order- If not in good order, recycles- If in good order, processes
- Reviews check to DistributionForm
- If in good order, mails- If not in good order, voidscheck and reprocesses
- Places check in envelope- Sends out the check
- Office Manager Reviews- Carrier Reviews- Mails request to National Office
Benefit Distributions - Top Level Map
Define - Top Level Process Map
What is the starting point
of the process?
What is the end point of
the process?
What are the major steps in
the process?
Who is involved in the
process?
Time Period covered 12 months
TOTAL UNITS PRODUCED 319,366
parts / unit 1 total part defects 14,869
process step / unit 0 total process step defects 0
performance opportunity / unit 0 total performance defects 0total opportunities / unit 1
TOTAL OPPORTUNITIES 319,366 TOTAL DEFECTS 14,869
DPMO 46,558
SHORT TERM SIGMA = 3.18 LONG TERM SIGMA = 1.68
Participant Call Completion
Time Period covered 12 months
TOTAL UNITS PRODUCED 66,651
parts / unit 1 total part defects 1,253
process step / unit 0 total process step defects 0
performance opportunity / unit 0 total performance defects 0total opportunities / unit 1
TOTAL OPPORTUNITIES 66,651 TOTAL DEFECTS 1,253
DPMO 18,799
SHORT TERM SIGMA = 3.58 LONG TERM SIGMA = 2.08
Plan Call Completion
Measure - DPMO and Sigma
What is the output
volume of the process?
What are the
opportunities for error?
How many defects
are produced?
What is the
performance level of
the process?
(DPMO: Defects per million opportunities)
Measure – Use Descriptive Statistics
Is our data normally
distributed?
What are the confidence
intervals?
Can we use our data for
further analysis?
70
60
50
40
30
20
10
0
Indiv
idua
l Va
lue
s
X=40.83
UCL=69.85
LCL=11.81
40
30
20
10
0
Mo
ving
Range
mR=10.91
URL=35.64
LRL=0
J F M A M J J A S O N D
Percent of Transactions Rejected
Measure - Control Charts
What are the
performance trends?
Is variation within the
normal range?
Is the process stable?
Is the process capable?
Measure - Detailed Process Map
Who are the suppliers
and customers?
What are the inputs
and outputs?
Which inputs are
controllable?
Where do we have
issues?
What impacts cycle time?
Is there a hidden factory?
What % of the steps
add value?
Start
Get data to define
the testing
population
ERISA
BP via Mainframe Dump
MM/SK via Excel DB
Core via ERISA Lotus Notes DB
Generate a
hardcopy census
Create year-end
packages
customized by
market
ERISA - BP ERISA
Review census
ERISA
No
Note source of
problem on cover
sheet or check
sheet
ERISA
Image the census
and log image
numbers on the
Excel spreadsheet
ERISA
A
Data enter census',
send an electronic
copy via e-mail, and
return the hardcopy
to BP - ERISA
Log the hardcopy
census' and
distribute them to
the ERISA
Specialists for
testing
B
Extract data from
the ERISA
Workstation
ERISA - BP
BP - Account Management Team
CR - Case Managers
MM/SK - ERISA Specialists
BP - ERISA
Review and scrub
data in ASC
ADP/ACP Testing - As Is Process
BP - ERISA Specialists
Data Entry Vendor
1
18
12
41
53
Mail year-end
packages
ERISA/Marketing/Vendor
BP via Vendor
CR/MM/SK via in-house
Wait for
information
from plan
Information
received by
follow-up date?
Execute
follow-up
letter process
ERISA
Marketing
NoLog receipt of
information
Yes
ERISA
Missing or
unreadable
information?
YesResolvable by a
phone call?
Call client for
information
Yes
Return original
information to client
with request for
additional
information or
clarifications
No
BP - Account Management Team
CR - Case Managers
MM/SK - ERISA Specialists
Information
obtained?
Image and send
the hardcopy
census to the
vendor for data
entry
BP - ERISA
Yes
No
No
B
Request the OMNI
data on the ERISA
Workstation
BP/MM/SK - ERISA Specialists
CR - Case Managers
Import data to
Excel, review and
scrub
BP/MM/SK - ERISA Specialists
CR - Case Managers
MM/SK - ERISA Specialists
CR - Case Managers
Import data to
ASC
BP/MM/SK - ERISA Specialists
CR - Case Managers
Through
13 Through 17 27 Through 20
22 Through 25 48
21 26 40
28 Through 36
28 37 38 39 43 52Through
54 55 56 57 60Through 43 65 70Through42
64 71 74Through 64 72 74
61 62
75 79Through
80 81 82
Load P-Census to
the AS400 which
automatically
populates the
AS400, OMNI and
ERISA Workstation
IT Operations
83 84 85 92Through 93 94
Data complete
and accurate?Yes
A
C
No
C
To
Page 2
Issues CategoriesData and
Data Entry
Year End
Package and
Other Client
Communication
Internal
Education
Client Education Quality Control
and QC Processes
1, 2, 3, 5, 6, 9, 10,
12, 16, 21, 22, 23,
25, 27, 32, 52, 53,
54, 55, 76, 77, 78
79, 80, 81, 89, 90,
94, 97, 102, 115,
118, 132, 135, 143,
145, 150
18, 19, 20, 33, 34,
35, 36, 38, 60,
124, 126, 128,
131, 132, 139,
156
31, 36, 65, 73, 104,
110, 166
19, 38, 53, 54, 59,
60, 61, 94, 03, 111,
139, 143
53, 65, 80, 81, 90,
98, 99, 100, 101,
118, 135, 145, 148,
150, 153, 154, 159,
169
Mailing and
Carriers
Printing Systems Software Process and
Standards
Staffing and
Scheduling
14, 26, 28, 29, 30,
31, 32, 118, 119,
120, 121, 122, 123,
130
13, 14, 15, 17, 109 91, 92, 95, 96, 104,
105, 106, 113
39, 40, 41, 42, 47,
54, 56, 57, 62, 63,
73, 86, 87, 93, 111,
131, 135, 141, 144,
147, 149, 151, 155,
157, 158, 159, 160,
162, 164, 165, 166,
167, 168
3, 17, 18, 23, 29,
43, 44, 83, 84, 101,
103, 108, 128, 155,
169
Imaging ERISA
Workstation
Tracking and
Sorting
Census and Plan
Connect
Policy
68, 69, 70 81, 85, 86, 87, 88,
93
1, 2, 4, 7, 10, 11,
12, 24, 25, 30, 31,
38, 41, 43, 44, 45,
52, 57, 58, 63, 66,
67, 70, 71, 72, 83,
107, 116, 117,127,
128, 129, 133,134,
140, 141, 149, 152,
154, 161, 162, 163
46, 48, 49, 50, 51,
54, 74, 75, 81, 82
8, 64, 112, 126,
136, 137, 144, 146
Measure - Issues List
What goes wrong
at each step in
the process?
Where are the
majority of the
problems?
What functional
areas are most
affected?
Process: Recycled Paperwork - Benefits Distributions
Customer Requirements
Output
Ma
ke
Re
qu
est
Ea
sy to
Ma
ke
Assis
tan
ce
Re
turn
Instr.
Co
rrect P
aym
en
t
Fa
st P
aym
en
t
To
tal V
alu
e
Inputs Weight 10 7 4 7 10 4
Step Process
40 7 40 28 10 4
1 Request Form Contact 4 1 10 4 1 1 129
100 7 4 49 10 4
1 Request Form Phone Number 10 1 1 7 1 1 174
40 7 4 70 10 4
1 Request Form Address 4 1 1 10 1 1 135
100 28 28 28 70 16
2 Screen Request Guidelines 10 4 7 4 7 4 270
100 7 28 49 70 16
2 Screen Request Plan Information 10 1 7 7 7 4 270
100 7 4 7 10 43 Send Form Contact 10 1 1 1 1 1 132
100 7 4 7 10 4
3 Send Form Address 10 1 1 1 1 1 132
10 49 4 7 40 16
4 Fill Out Form Form 1 7 1 1 4 4 126
10 70 40 28 100 28
4 Fill Out Form Instructions 1 10 10 4 10 7 276
10 7 4 7 100 28
4 Fill Out Form Signatures 1 1 1 1 10 7 156
10 7 4 70 10 28
5 Return Form Return Envelope 1 1 1 10 1 7 129
10 7 4 70 10 28
5 Return Form Return Address 1 1 1 10 1 7 129
10 7 4 7 100 40
6 Process Form Correct Form 1 1 1 1 10 10 168
10 7 4 7 70 28
6 Process Form Procedures 1 1 1 1 7 7 126
10 7 4 7 40 16
6 Process Form Processor 1 1 1 1 4 4 84
10 7 4 7 100 40
6 Process Form Required Information 1 1 1 1 10 10 168
10 7 4 7 10 40
6 Process Form Required Signatures 1 1 1 1 1 10 78
10 7 4 7 100 16
7 Send Payment Check 1 1 1 1 10 4 144
10 7 4 7 10 40
7 Send Payment Address 1 1 1 1 1 10 78
Total 70
0
25
9
19
6
46
9
88
0
40
0
Note:
Rating scale 1, 4, 7, 10
Analyze - Cause and Effect Matrix
What are the most important
customer requirements?
What is the relationship
of major process steps
and inputs to customer
requirements?
Where should we focus our
improvement efforts?
Analyze - Ishikawa (Fishbone)
(I think this is the best QM tool ever!)
Which of the process
inputs are likely to
contribute to the
problem?
What are the categories
of root causes?
What are the most
likely root causes within
each category?
Click on the boxes to enter your Cause & Effect
Material Methods Environment
Men MeasurementMachine
click
Click to enter
Poorly Designed
No guidelines
Not trained
Provide Wrong Form
Not trained
Provide Wrong Instructions
No Procedures
Not Trained
Too busy
Don’t instruct PP
Call Carrier Directly
Didn’t get instructions
Don’t underst and instruct ions
Don’t Re ad Instructions
Not trained
Unaware of requirements
Inconsistent use of title
Contract/Legal Language Used
Form Congested
Hard to Follow
Inconsistent Across Products
Hard to Follow
Not Sent
Legal Language
Missing
Legal Concerns
Don’t want responsibility
Forget to Sign
Not trained
Unaware of Requirements
No return envelope
No return instructions
Provide wrong forms
Provide generic or noinstructions
Turnover
Problem Statement
Employer Signature missing
on over 30% of forms
Major Cause
Forms
Major Cause
Plan Participant
Major Cause
Field Office/HELPLINE
Major Cause
Carriers
Major Cause
Employer
Major Cause
Instructions
Pareto by Reason Code
Analyze - Pareto What is the frequency
of occurrence of each
potential root cause?
Which root causes are
likely to contribute
most to our defects?
Which root causes
should we focus
on first?
139112231619192140143183263484
1111246699121731
100999998969490857970604831
1500
1000
500
0
100
80
60
40
20
0
Defect
Count
Percent
Cum%
Per c
ent
Count
Analyze - FMEA
How can our product,
service or process fail?
What are the
consequences of
failure?
How likely is the failure
to occur?
How likely is the
customer to be
affected?
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
ML MS NL NS TL TS
3
2
1
Reason Codes .
Carrier
Form Type
Reason
Code
Mutual
L S
1 2 3 4 1 2 3 4
Nationwide
L S
1 2 3 4 1 2 3 4
Travelers
L S
1 2 3 4 1 2 3 4
Nested Hierarchy
Dot Frequency Diagram
Analyze - Components of Variation
Locate the key ―trouble-makers‖
Where are the major
sources of variation?
How much variation
is present at each
level of the
hierarchy?
Where should we
focus our efforts to
reduce the variation?
Improve – Mean Sqr Error!!!
How real is the
variation that
we observe in
our process?
Does the
measurement
system contribute to
the variation?
Is the measurement
system adequate?
More than two raters Yes
Two raters only No
RAW DATAMultiple Raters (> 2)
Number of questions n = 20 sum x2
ij = 180
Number of raters m = 3 sum p*q = 0.5 Koverall = 1
Categories 1 P
2 R
3
4
5 Two Raters
6 Pobserved =
7 Pchance = Koverall or individual =
8
9
10
11 Kappacategory for > 2 raters
12 Category Kappa
13 P 1
14 R 1
15
P P
P
observed chance
chance1
category
ij ij
i
n
j j
x m x
nm m p q
1
1
1
( )
1. Enter information (#
of questions, # of raters,
category values) in
column below2. Then enter data in
indicated worksheet:
3. Once worksheet contains
data, appropriate calculations
will appear below
overall
ijj
k
i
n
j jj
k
nm x
nm m p q
1
1
2 2
11
1
( )
StdOrder RunOrder Checklist Instructions Language Sample C*I C*L C*S I*L I*S L*S Complete Withdrawals
12 1 1 1 -1 1 1 -1 1 -1 1 -1 18
7 2 -1 1 1 -1 -1 -1 1 1 -1 -1 13
16 3 1 1 1 1 1 1 1 1 1 1 19
11 4 -1 1 -1 1 -1 1 -1 -1 1 -1 16
10 5 1 -1 -1 1 -1 -1 1 1 -1 -1 18
8 6 1 1 1 -1 1 1 -1 1 -1 -1 17
15 7 -1 1 1 1 -1 -1 -1 1 1 1 16
5 8 -1 -1 1 -1 1 -1 1 -1 1 -1 14
4 9 1 1 -1 -1 1 -1 -1 -1 -1 1 16
1 10 -1 -1 -1 -1 1 1 1 1 1 1 11
13 11 -1 -1 1 1 1 -1 -1 -1 -1 1 14
3 12 -1 1 -1 -1 -1 1 1 -1 -1 1 11
14 13 1 -1 1 1 -1 1 1 -1 -1 1 18
2 14 1 -1 -1 -1 -1 -1 -1 1 1 1 15
6 15 1 -1 1 -1 -1 1 -1 -1 1 -1 16
9 16 -1 -1 -1 1 1 1 -1 1 -1 -1 15
Hardship Withdrawals DOE Data Matrix
0 1 2 3
AB
ABC
ABCD
AC
BC
AD
BCD
BD
ABD
ACD
B
C
CD
D
A
Pareto Chart of the Effects(response is Complete Withdrawals, Alpha = .10)
A: ChecklistB: InstructionsC: LanguageD: Sample
Improve – by using DOE Which of the
improvement ideas
identified with
other tools
represent the
largest payback
with respect to the
CBI?
Do multiple
improvements
work in concert to
produce a better
result?
Action Item Description: Develop and implement a process to establish product profitability expectations and to track
and evaluate financial performance against the expectations.
Expected Benefits: Ensure that the profitability expectation is positive prior to committing to the product.
Key Deliverables: Standard unit costs; Data capture process; P&L Model.
Appraisal Criteria: P&L model is implemented that meets with the approval of Finance. P&L model serves the
needs of the Product Review Team, Product Review Board and Post Mortem Team.
Team MembersName (*-Action Item Owner, &-Backup, +-Mentor) Organization - Location Skill Set or Knowledge Expected
* Ralph Winnicker Operations Quality
Theresa LaPlaca Finance
Glenn Lovrich Finance
Interdependencies/Linkage to other Action Items:AI# Description of Dependency
5 P&L model will be used to assess financial benefits.
6 P&L model will be used to review financial benefits.
7 Standard unit costs will be used for the detailed product specifications.
10, 15 P&L model will be used to assess the impact of rework due to performance issues.
18 P&L model will be validated during the post mortem.
Implementation Plan:Milestone Target Date Revised
Target DateActual
Completion DateStatus
Develop and publish standard unit costs. 10/31Develop a data capture process with respect to
project activity so that standard unit costs can be
applied.
11/15 Contingent on target date of Action Item 8.
Develop and implement a P&L model thatevaluates product profitability in conjunction with
the applied standard unit costs and the pricing
model.
12/15 Contingent on the completion of milestone 2.
Recent Accomplishments:
Date Description
10/11 Reviewed data elements of the current Pricing Model with Glenn, and outlined a plan to develop a stripped-down version
for use with the Product Specification Template (AI 7).
10/22 Glenn developed a stripped-down version. We determined that too much “off template” detail was required to develop the
Product P&L. We decided to utilize the new Pricing Model (currently being developed), and to modify it to reflect Product-
level versus Case-level data.
11/4 Reviewed the new Pricing Model, and scoped out changes required to make it Product-level.
11/5 Next step is to review Model and proposed changes at 11/5 Action Item Review.
AIMS Review:
Date Prepared By Remarks
11/5/02 Ralph Winnicker and Glenn Lovrich
Improve - Action Items Which of the
validated improvements are we going to implement?
What is the expected benefit?
What are the key deliverables?
What is the implementation schedule?
How will we know that the Action Item was successfully implemented?
Control - Control and Reaction Plan
Do the key outputs
meet the
performance
standard?
What are the most
likely causes of an
out-of-standard
condition?
What actions need
to be taken?
Who is responsible
to take the
actions?
0
10
20
30
40
Indiv
idual V
alu
es
0
10
20
Movin
g R
ange
UCL=34.92
X=20.42
LCL=11.81
URL=17.82
mR=5.45
LRL=0
Percent of Transactions Rejected
Control - Control Charts
What are the
performance
trends?
Are we holding the
gains from our
process
improvements?
Is any further action
required?
Process stepOut of Control
Condition MeasurementMeasurement
Frequency Probable Cause What to Check Actions to Take Responsible When
1 ScreenRequest forDistributionForm
Reason Code1,3,5,6,11,12,14,16,18,19 or 20exceeds 10%and DPMO targetexceeded by 5%
RecycleDatabase,pareto andDPMO chart
Daily/Weekly Screeningpersonnel nottrained
Screeningpersonnel do nothave adequateguidelines.
New hires/transfersor changes made?
Guidelines andchecklists up todate?
Talk sheets used?
Train/retrainpersonnel.
Update guidelinesand checklists.
Enforce use of talksheets.
Field Office and HELPLINEManagement.
Marketing. Field Office and HELPLINE
Management.
New hires or transfers join thearea or process changes aremade
New plan introduced or planchanges made
Daily
2 SendDistributionPackage
Reason Code5,11, or 19exceeds 10%and DPMO targetexceeded by 5%
RecycleDatabase,pareto andDPMO chart
Daily/Weekly Fulfillmentpersonnel nottrained.
Fulfillmentprocedures notunderstood or notused.
System address isincorrect.
New hires/transfersor changes made?
Proceduresdistributed to allpersonnel?
Procedures up todate?
Address updatesneed to beprocessed?
Train /retrainpersonnel.
Enforce use ofprocedures.
Update procedures. Update address
information onsystem.
Field Office and HELPLINEManagement
Field Office and HELPLINEManagement.
Field AdministrativeServices and HELPLINEManagement
Benefit DistributionsProcessors
New hires or transfers join thearea or process changes aremade.
Daily New Plan introduced or Plan
changes made. Plan participant changes
residence.
3 PlanParticipantCompletestheDistributionForms
Reason Code2,4,5,8,9,10,13,15, 17,19 or 20exceeds 10%and DPMO targetexceeded by 5%
RecycleDatabase,pareto andDPMO chart
Daily/Weekly Instructions may becomplex, unclear, ormay not have beensent with thepackage.
Current instructionsand forms sent?
Instructions andforms up to date?
Maintain currentinventory ofinstructions andforms.
Update instructionsand forms.
Field Office and HELPLINEManagement.
Marketing and FieldAdministrative Services
New Plan introduced or Planchanges made.
New Plan introduced or Planchanges made.
4 PlanParticipantReturns theDistributionForms asdirected
Reason Code 4,11, or 19exceeds 10%and DPMO targetexceeded by 5%
RecycleDatabase,pareto andDPMO chart
Daily/Weekly Plan Participant wasnot provided withreturn instructions.
Plan participant wasprovided incorrectreturn instructions.
Return envelopeand instructionssent?
Return envelopeand instructions upto date?
Maintain currentinventory ofenvelopes andinstructions.
Update envelopesand instructions.
Field Office and HELPLINEManagement.
Marketing and FieldAdministrative Services
New Plan introduced or Planchanges made.
New Plan introduced or Planchanges made.
5 BenefitsDistributionDepartmentreviews andprocessesthe request
Kappa Score islower than .7
MSE for 3Raters and 20Transactions
January, July Benefit distributionprocessors nottrained.
Different processorsusing differentcriteria.
New hires/transfersor changes made?
Rating guidelinesbeing used?
Reason codes beingused?
Train/retrainPersonnel.
Enforce use of ratingguidelines.
Enforce use ofreason codes.
Benefit DistributionsManagement
Benefit DistributionsManagement
Benefit DistributionsManagement
New hires or transfers join thearea or process changes aremade
Daily January and July, annually.
Control/Reaction Plan for Distributions
Improved
Customer
Satisfaction
$20,000
Market
Value
Adjustments
$250,000
Increased
Sales
Non-Financial
Mail &
Phone Cost Market Risk
Rework
Manpower Cash Flow
Repeat Sales
and Revenue
Retention
ABM Cost Model
•Processing
•Imaging
•Mailroom
•Office Manager
•Account Executive
•Help Desk
•Benefit Load
•Supplies & Mail
•Long Distance
Per Repair
•10 Minutes
•05 Minutes
•05 Minutes
•10 Minutes
•30 Minutes
•10 Minutes
•17.4%
•$.80
•$1.00
Cost Takeout
Cash Flow
Reduce Non-
Value Added
Cost Avoidance
Growth
$20,000 $250,000 $270,000
Control - Business Impact (ABM)
What is the business
impact of the process
improvement?
How should the
savings be reflected
in the current plan or
forecast?
Does the
improvement free up
capacity to satisfy
new demand?
Some Final Thoughts About 6
Tools
Select tools based on what you need to do
Use of tools is a good way to share knowledge among
team members
The sequence of tool use documents the team’s thought
process
Never use a tool that’s more complex than the
problem that you’re trying to solve
Use enough tools to guarantee the success
of the project
But…Don’t become a slave to the tools
Designing Products for Six Sigma Performance The DMADV Process is like DMAIC
Validate
Design
Analyze
Measure
Define• Select cross-functional team
• Define team charter
• Understand Customer needs
• Specify CTQs
• Develop high level design
• Develop detailed design
• Build test plan
• Test design
• Scale-up
Customer-driven design of
processes with 6 capability.
Predicting design quality up
front.
Top down requirements
flowdown (CTQ flowdown)
matched by capability flowup.
Cross-functional integrated
design involvement.
Drives quality measurement
and predictability improvement
in early design phases.
Utilizes process capabilities to
make final design decisions.
Monitors process variances to
verify 6 customer
requirements are met.
WHAT IS DESIGN FOR SIX SIGMA
(DFSS)?
MARKET
RESEARCH
DESIGN
PRODUCTION
LOGISTICS
DISTRIBUTION
SERVICE
SALES
DMADV
CUSTOMERS
New Product/Service Introduction
that Achieves Six Sigma Business
Performance— note the interactions