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Page 1: NPTEL Last Lecture on Problem Solving by Six Sigma

Achieving Operational

Excellence by Six Sigma

Page 2: NPTEL Last Lecture on Problem Solving 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.

Page 3: NPTEL Last Lecture on Problem Solving by Six Sigma

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.

Page 4: NPTEL Last Lecture on Problem Solving by Six Sigma

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.

Page 5: NPTEL Last Lecture on Problem Solving by Six Sigma

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.

Page 6: NPTEL Last Lecture on Problem Solving by Six Sigma

There are two Six Sigma Methodologies

DMAIC to improve existing processes

DMADV to develop new processes

Page 7: NPTEL Last Lecture on Problem Solving by Six Sigma

DMAIC

Define

Measure

Analyze

Improve

Control Performance

Page 8: NPTEL Last Lecture on Problem Solving by Six Sigma

Process Power:

DMAIC—Five Step Process

Define

Measure

AnalyzeImprove

Control

Page 9: NPTEL Last Lecture on Problem Solving by Six Sigma

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.

Page 10: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 11: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 12: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 13: NPTEL Last Lecture on Problem Solving by Six Sigma

Define:

Clearly identify the problem

Utilize numerical definition

Focus on process that creates the problem

not on the outcome

Page 14: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 15: NPTEL Last Lecture on Problem Solving by Six Sigma

Measure:

Benchmark

Capability of a given process

Focus on CTQ

Page 16: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 17: NPTEL Last Lecture on Problem Solving by Six Sigma

Analyze:

Current process results

What is possible compared to what the

competition is doing

Page 18: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 19: NPTEL Last Lecture on Problem Solving by Six Sigma

Improve:

Implement changes

Be creative to find new ways to do things

better, cheaper, or faster

Page 20: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 21: NPTEL Last Lecture on Problem Solving by Six Sigma

Control:

Lock in successes

Implement measures to keep variables

within the new operating limits

Page 22: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 23: NPTEL Last Lecture on Problem Solving by Six Sigma

Recall Evolution of QA Methods…

Inspection

Six Sigma…

DOE

Quality Mgmt

Systems

Taguchi

1930 1940 … 1975 1985 1990 1995 2000

SPC

Page 24: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 25: NPTEL Last Lecture on Problem Solving by Six Sigma

Hi

Low

Time

Cycl

e T

ime

an

d D

efec

tsUsing Successive 6 Projects for

Cycle Time and Defect Reduction

Page 26: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 27: NPTEL Last Lecture on Problem Solving by Six Sigma

Six Sigma

Qualitative Tools

--soft, yet they are very useful!

Brainstorming and affinity diagram.

Pareto analysis.

Cause-effect diagram.

Process mapping

Page 28: NPTEL Last Lecture on Problem Solving by Six Sigma

Six Sigma

Quantitative Tools

Statistical testing.

Design for experiment.

Control chart .

Process capability .

Reliability analysis

... And there are others…

Page 29: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 30: NPTEL Last Lecture on Problem Solving by Six Sigma

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.

Page 31: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 32: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 33: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 34: NPTEL Last Lecture on Problem Solving by Six Sigma

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)

Page 35: NPTEL Last Lecture on Problem Solving by Six Sigma

Measure – Use Descriptive Statistics

Is our data normally

distributed?

What are the confidence

intervals?

Can we use our data for

further analysis?

Page 36: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 37: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 38: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 39: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 40: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 41: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 42: NPTEL Last Lecture on Problem Solving by Six Sigma

Click on the boxes to enter your Cause & Effect

Material Methods Environment

Men MeasurementMachine

click

Click to enter

Page 43: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 44: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 45: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 46: NPTEL Last Lecture on Problem Solving by Six Sigma
Page 47: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 48: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 49: NPTEL Last Lecture on Problem Solving by Six Sigma

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

( )

Page 50: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 51: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 52: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 53: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 54: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 55: NPTEL Last Lecture on Problem Solving by Six Sigma

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?

Page 56: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 57: NPTEL Last Lecture on Problem Solving by Six Sigma

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

Page 58: NPTEL Last Lecture on Problem Solving by Six Sigma

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)?

Page 59: NPTEL Last Lecture on Problem Solving by Six Sigma

MARKET

RESEARCH

DESIGN

PRODUCTION

LOGISTICS

DISTRIBUTION

SERVICE

SALES

DMADV

CUSTOMERS

New Product/Service Introduction

that Achieves Six Sigma Business

Performance— note the interactions


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