Intro To Six Sigma

Introduction to SIX - SIGMA

Presented by : http://www.QualityGurus.com

Agenda 0750 - 0800 0800 - 0930 0930 - 0945 0945 - 1200

Participants introduction Introduction to Six Sigma concept Key Concepts Tea / Coffee Break

1200 - 0100

Forms of waste What is Sigma Components of Six Sigma Lunch Break

0100 - 0200

Selecting a Project

0200- 0300

Open session / Q&A QualityGurus.com

Participants Introduction Your Name Department Your job profile Your exposure to Quality Management/ Six Sigma

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Ground Rules Program success depends on your participation. Actively participate. Please avoid cross-talks. Observe specified timings. Please keep your mobile phones switched off. Feel free to ask question at any point of time. - Restrict question to specific issue being discussed, while general questions can be discussed during Q & A session. Enjoy the program !

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Introduction to Six Sigma

Purpose of six sigma :

To make customer happier and increase profits QualityGurus.com

Origin of Six Sigma 1987 Motorola Develops Six Sigma Raised Quality Standards

Other Companies Adopt Six Sigma GE Promotions, Profit Sharing (Stock Options), etc. directly tied to Six Sigma training.

Dow Chemical, DuPont, Honeywell, Whirlpool

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Time Line

Allied Signal Motorola

1985

1987

General Electric

1992 1995

Johnson & Johnson, Ford, Nissan, Honeywell

2002

Dr Mikel J Harry wrote a Paper relating early failures to quality

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Pilot’s Six-Sigma Performance Width of landing 1/2 Width strip of landing strip

If pilot always lands within 1/2 the landing strip width, we say that he has Six-sigma capability.

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Current Leadership Challenges Delighting Customers. Reducing Cycle Times. Keeping up with Technology Advances. Retaining People. Reducing Costs. Responding More Quickly. Structuring for Flexibility. Growing Overseas Markets. QualityGurus.com

Six Sigma— Benefits? Generated sustained success Project selection tied to organizational strategy Customer focused Profits Project outcomes / benefits tied to financial reporting system. Full-time Black Belts in a rigorous, project-oriented method. Recognition and reward system established to provide motivation. QualityGurus.com

Management involvement? Executives and upper management drive the effort through: Understanding Six Sigma Significant financial commitments Actively selecting projects tied to strategy Setting up formal review process Selecting Champions Determining strategic measures QualityGurus.com

Management Involvement? Key issues for Leadership: 

    

How will leadership organize to support Six Sigma ? (6 σ council, Director 6 σ, etc) Transition rate to achieve 6 σ. Level of resource commitment. Centralized or decentralized approach. Integration with current initiatives e.g. QMS How will the progress be monitored? QualityGurus.com

What can it do? Motorola: 5-Fold growth in Sales Profits climbing by 20% pa Cumulative savings of $14 billion over 11 years

General Electric:  

$2 billion savings in just 3 years The no.1 company in the USA

Bechtel Corporation: $200 million savings with investment of $30 million

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GE Six Sigma Economics (in millions)

6 Sigma Project Progress

2500 2000 1500 Cost 1000

Benefit

500 0 1996

1998

2000 2002

Source: 1998 GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon total corporation cost/benefits attributable to Six Sigma.

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Overview of Six Sigma 6 SIGMA AS A PHILOSOPHY

CHANGE THE WORLD TRANSFORM THE ORGANIZATION

6 SIGMA AS A PROCESS

6 SIGMA AS A STATISTICAL TOOL

GROWTH

COSTS OUT PAIN, URGENCY, SURVIVAL

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Overview of Six Sigma It is a Process To achieve this level of performance you need to: Define, Measure, Analyse, Improve and Control

It is a Philosophy Anything less than ideal is an opportunity for improvement Defects costs money Understanding processes and It is Statistics improving them is the 6 Sigma processes will most efficient way to produce less than 3.4 achieve lasting results defects per million opportunities

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Philosophy Know What’s Important to the Customer (CTQ) Reduce Defects (DPMO) Center Around Target (Mean) Reduce Variation (Standard Deviation) QualityGurus.com

Critical Elements Genuine Focus on the Customer Data and Fact Driven Management Process Focus Proactive management Boundary-less Collaboration Drive for Perfection; Tolerance for failure

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Data Driven Decision

Y= • • • • • •

Y Dependent Output Effect Symptom Monitor

f(X) • • • • • •

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

The focus of Six sigma is to identify and control Xs QualityGurus.com

Two Processes DMAIC • Existing Processes • • • • •

Define Measure Analyze Improve Control

DMADV • New Processes • DFSS • • • • •

Define Measure Analyze Design Verify

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Key Concepts

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COPQ (Cost of Poor Quality) - Inspection - Warranty - Scrap - Rework - Rejects

- More Setups - Expediting Costs - Lost Sales - Late Delivery - Lost Customer Loyalty - Excess Inventory - Long Cycle Times - Costly Engineering Changes

Traditional Quality Costs: - Tangible - Easy to Measure

Lost Opportunities

Hidden Costs: - Intangible - Difficult to Measure

The Hidden Factory

Average COPQ approximately 15% of Sales

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Cost of Quality % Sales

COPQ v/s Sigma Level 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

2

3

4

5

6

Sigma Level

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CTQ (Critical-ToQuality)

CTQ characteristics for the process, service or process Measure of “What is important to Customer” 6 Sigma projects are designed to improve CTQ Examples: Waiting time in clinic Spelling mistakes in letter % of valves leaking in operation QualityGurus.com

Defective and Defect A nonconforming unit is a defective unit Defect is nonconformance on one of many possible quality characteristics of a unit that causes customer dissatisfaction. A defect does not necessarily make the unit defective Examples: Scratch on water bottle (However if customer wants a scratch free bottle, then this will be defective bottle) QualityGurus.com

Defect Opportunity Circumstances in which CTQ can fail to meet. Number of defect opportunities relate to complexity of unit. Complex units – Greater opportunities of defect than simple units Examples: A units has 5 parts, and in each part there are 3 opportunities of defects – Total defect opportunities are 5 x 3 = 15 QualityGurus.com

DPO (Defect Per Opportunity)

Number of defects divided by number of defect opportunities Examples: In previous case (15 defect opportunities), if 10 units have 2 defects. Defects per unit = 2 / 10 = 0.2 DPO = 2 / (15 x 10) = 0.0133333

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DPMO (Defect Per Million Opportunities) DPO multiplies by one million Examples: In previous case (15 defect opportunities), if 10 units have 2 defects. Defects per unit = 2 / 10 = 0.2 DPO = 2 / (15 x 10) = 0.0133333 DPMO = 0.013333333 x 1,000,000 = 13,333

Six Sigma performance is 3.4 DPMO 13,333 DPMO is 3.7 Sigma

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Yield Proportion of units within specification divided by the total number of units. Examples: If 10 units have 2 defectives Yield = (10 – 2) x 100 /10 = 80 %

Rolled Through Yield (RTY) Y1 x Y2 x Y3 x ……. x Yn E.g 0.90 x 0.99 x 0.76 x 0.80 = 0.54 QualityGurus.com

Forms of Waste

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What are the forms of waste?

1. 2. 3. 4. 5. 6. 7.

Waste of Correction Waste of Overproduction Waste of processing Waste of conveyance (or transport) Waste of inventory Waste of motion Waste of waiting QualityGurus.com

1. Waste of correction Repairing a defect wastes time and resources (Hidden factory) Hidden Factory Rework

Rework Failure Investigation Operation 1

Test

Failure Investigation Operation 2

Test

Product

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2. Waste of Overproduction

Producing more than necessary or producing at faster rate than required Excess labor, space, money, handling

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3. Waste of processing Processing that does not provide value to the product Excess level of approvals Tying memos that could be handwritten Cosmetic painting on internals of equipment Paint thickness more than specific values

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4. Waste of conveyance Unnecessary movement of material from one place to other to be minimized because It adds to process time Goods might get damaged

Convey material and information ONLY when and where it is needed.

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5. Waste of inventory Any excess inventory is drain on an organization. Impact on cash flow Increased overheads Covers Quality and process issues

Examples Spares, brochures, stationary, …

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6. Waste of Motion Any movement of people, equipment, information that does not contribute value to product or service

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7. Waste of Waiting Idle time between operations Period of inactivity in a downstream process because an upstream activity does not deliver on time. Downstream resources are then often used in activities that do not add value, or worst result in overproduction.

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Some more sources of Waste

Waste of untapped human potential. Waste of inappropriate systems Wasted energy and water Wasted materials Waste of customer time Waste of defecting customers

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What is Sigma?

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Have you ever… Shot a rifle? Played darts?

What is the point of these sports? What makes them hard?

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Have you ever… Shot a rifle? Played darts? Jack

Jill

Who is the better shooter? QualityGurus.com

Variability Deviation = distance between observations and the mean (or average) 8 Observations

average s

10

Deviations 10 - 8.4 = 1.6

9

9 - 8.4 = 0.6

8

8 - 8.4 = -0.4

8

8 - 8.4 = -0.4

7

7 - 8.4 = -1.4

8.4

0.0

7 10 8 9

Jack

Jill

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Variability Deviation = distance between observations and the mean (or average)

Observations

Deviations

7

7 - 6.6 = 0.4

7

7 - 6.6 = 0.4

7 6

7 - 6.6 = 0.4 6 - 6.6 = -0.6 6 - 6.6 = -0.6

6.6

0.0

6 average s

Jack

7 6 7 7 6

Jill

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Variability Variance = average distance between observations and the mean squared 8 Observation s 10 9 8 8 7 averag es

Deviations 10 - 8.4 = 1.6 9 – 8.4 = 0.6 8 – 8.4 = -0.4 8 – 8.4 = -0.4 7 – 8.4 = -1.4

Squared Deviations 2.56

7 10 8 9 Jack

0.36 0.16 0.16 1.96 1.0

8.4

0.0

Jill

Variance QualityGurus.com

Variability Variance = average distance between observations and the mean squared Observation s

averag es

Deviations

Squared Deviations

7 7 - 6.6 = 0.4

0.16

7 7 - 6.6 = 0.4

0.16

7 7 - 6.6 6– 6 6– 6

0.16

6.6

= 0.4 6.6 = -0.6 6.6 = -0.6 0.0

0.36 0.36 0.24

Jack

7 6 7 7 6

Jill

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Variability Standard deviation = square root of variance Jack

Jack Jill

Average Varianc Standard e Deviation 8.4 1.0 1.0 6.6 0.24 0.4898979 Jill

But what good is a standard deviation QualityGurus.com

Variability The world tends to be bell-shaped

Even very rare outcomes are possible

Fewer in the “tails” (lower)

Most outcomes occur in the middle

Fewer Even very rare in the outcomes are “tails” possible (upper)

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Variability Here is why:

Even outcomes that are equally likely (like dice), when you add them up, become bell shaped Add up the dots on the dice

Probability

0.2 0.15

1 die

0.1

2 dice

0.05

3 dice

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Sum of dots

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“Normal” bell shaped curve Normal distributions are divide up into 3 standard deviations on each side of the mean Once your that, you know a lot about what is going on

And that is what a standard deviation is good for QualityGurus.com

Causes of Variability Common Causes: Random variation within predictable range (usual) No pattern Inherent in process Adjusting the process increases its variation Special Causes Non-random variation (unusual) May exhibit a pattern Assignable, explainable, controllable Adjusting the process decreases its variation QualityGurus.com

Limits Process and Control limits: Statistical Process limits are used for individual items Control limits are used with averages Limits = μ ± 3σ Define usual (common causes) & unusual (special causes) Specification limits: Engineered Limits = target ± tolerance Define acceptable & unacceptable QualityGurus.com

Usual v/s Unusual, Acceptable v/s Defective Another View Off-Target

LSL

Large Variation

LSL

USL

USL

On-Target Center Process

Reduce Spread LSL

USL

LSL = Lower spec limit USL = Upper spec limit

The statistical view of a problem

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More about limits Poor quality: defects are common (Cpk<1) Good quality: defects are rare (Cpk>1)

μ target μ target

Cpk measures “Process Capability” If process limits and control limits are at the same location, Cpk = 1. Cpk ≥ 2 is exceptional.

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Process capability Good quality: defects are rare (Cpk>1) Poor quality: defects are common (Cpk<1)

Cpk = min

= USL – x = 24 – 20 =.667 3σ 3(2) = x - LSL = 20 – 15 =.833 3σ 3(2)

= = 3σ = (UPL – x, or x – LPL)

14

15

20

24

26

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A Six Sigma Process –

Predictably twice as good as what the customer wants LSL

−6σ

6σ 1σ

1

2

3

4

1σ

5

1σ

6

USL

+6σ

1σ

7

1σ

1σ

8

9

10 11

12

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3 σ v/s 6 σ 6 Sigma curve

LSL

USL 3 Sigma curve

1

2

3

4

5

6

7

8

9

10

11 12 13

14

15

16

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Process shift allowed 1.5 SD

1.5 SD LSL

USL SD = 1

1

2

3

4

5

6

7

8

9

10

11 12 13

14

15

16

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Six Sigma Measurement Sigma

7 6 5 4

0.02

3

3.4

On one condition : Calculate the defects and estimate the opportunities in the same way...

DPMO

233 6210 66810

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Six Sigma Measurement 1.5s 2.0s 2.5s 3.0s 3.5s 4.0s 4.5s 5.0s 5.5s 6.0s

Defects per million 500,000 308,300 158,650 67,000 22,700 6,220 1,350 233 32 3.4

500,000 # of Defect per Million

Sigma numbers

600,000

400,000 300,000 200,000 100,000 0 1.5

2.5

3.5

4.5

5.5

# of Sigmas

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Components of Six Sigma

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Components Two components of Six Sigma

1. Process Power 2. People Power QualityGurus.com

Process Power

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P-D-C-A

Act

A

P

C

D

Act on what was learned

Check

Check the results

Plan Plan the change

Do Implement the change on a small scale. QualityGurus.com

Approach Practical Problem

Statistical Problem Statistical Solution Practical Solution

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DMAIC - simplified 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

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DMAIC approach D Define M Measure A Analyze

Identify and state the practical problem

Validate the practical problem by collecting data

Convert the practical problem to a statistical one, define statistical goal and identify potential statistical solution

I Improve

Confirm and test the statistical solution

C Control

Convert the statistical solution to a practical solution

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Define D Define M Measure

VoC - Who wants the project and why ?

The scope of project / improvement (SMART Objective)

A Analyze

Key team members / resources for the project

I Improve

Critical milestones and stakeholder review

C Control

Budget allocation

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Measure D Define

Ensure measurement system reliability - Is tool used to measure the output variable flawed ?

M Measure A Analyze I Improve C Control

Prepare data collection plan -

How many data points do you need to collect ? How many days do you need to collect data for ? What is the sampling strategy ? Who will collect data and how will data get stored ? What could the potential drivers of variation be ?

Collect data

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Analyze D Define M Measure

How well or poorly processes are working compared with - Best possible (Benchmarking) - Competitor’s

A Analyze

Shows you maximum possible result

I Improve

Don’t focus on symptoms, find the root cause

C Control

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Improve D Define M Measure A Analyze I Improve C Control

Present recommendations to process owner. Pilot run - Formulate Pilot run. - Test improved process (run pilot). - Analyze pilot and results. Develop implementation plan. - Prepare final presentation. - Present final recommendation to Management Team.

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Control D Define

Don’t be too hasty to declare victory.

M Measure A Analyze I Improve C Control

How will you maintain to gains made? - Change policy & procedures - Change drawings - Change planning - Revise budget - Training

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Omitting a step in DMAIC? Step

1. 2. 3. 4. 5.

Consequences if the step is omitted

Define Measure Analyze Improve Control

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Tools for DMAIC Define

Measure

Analyze

Improve

Control

What is wrong?

Data & Process capability

When and where are the defects

How to get to six sigma

Display key measures

 Benchmark  Baseline  Contract / Charter  Kano Model  Voice of the Customer  Quality Function Deployment  Process Flow Map  Project Management  “Management by Fact” Fact” – 4 What’ What’s

 7 Basic Tools  Defect Metrics  Data Collection, Forms, Plan, Logistics  Sampling Techniques

 Cause & Effect Diagrams  Failure Models &  Effect Analysis  Decision & Risk Analysis  Statistical Inference  Control Charts  Capability  Reliability Analysis  Root Cause Analysis  5 Why’ Why’s  Systems Thinking

 Design of Experiments  Modelling  Tolerancing  Robust Design  Process Map

Statistical Controls  Control Charts  Time Series Methods Non Statistical Controls  Procedure adherence  Performance Mgmt  Preventive activities  Poke yoke

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Components Two components of Six Sigma 1. Process Power

2. People Power Tell me, I forget. Show me , I remember. Involve me, I understand.

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6 σ Training

Mentor, trainer, and coach of Black Belts and othe Masterin the organization.

Champions

Black Belt

Black Belts

Leader of teams implementing the six sigma methodology on projects.

Delivers successful focused projects usin the six sigma methodology and tools.

Green Belts

Team Members / Yellow Belts

Participates on and supports the project teams, typically in the context of his or her existing responsibilities.

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Six Sigma Organization

Master Black Belt

Champion Black Belt Green Belt

Black Belt

Green Belt

Green Belt

Black Belt Green Belt

Green Belt

Yellow Belt

Yellow Belt

Yellow Belt

Yellow Belt

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6 σ Training Position in Six Sigma Organisation

Expected Role Post Training

Typical Training Executive overview 2/3 Days

Senior Executives

Champions Training - I 2 days

Champions / Process owners

+

Provide Leadership

Champions Training –II 3 days

Process Mgmt. & Project champion

(Total 5 days)

Black-Belt

Week 1

Week 2

Week 3

Week 4

Black-Belt

Training / Facilitation skills Project-work

Master Black-Belt -As Trainer -Coach teams -Facilitate improvement projects

- Part

Green Belt

1 Week Green-Belt Training

Employees (Yellow-Belt)

1 / 2 Days core training on Six-Sigma

Project work

of project teams - Sometime lead the teams - General

process control & improvement - Project Team Member

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Champion Plans improvement projects Charters or champions chartering process Identifies, sponsors and directs Six Sigma projects Holds regular project reviews in accordance with project charters Includes Six Sigma requirements in expense and capital budgets QualityGurus.com

Champion Identifies and removes organizational and cultural barriers to Six Sigma success. Rewards and recognizes team and individual accomplishments (formally and informally) Communicates leadership vision Monitors and reports Six Sigma progress Validates Six Sigma project results

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Master Black Belt Roles

Responsibilities

- Enterprise Six Sigma - Highly proficient in using Six expert Sigma methodology to achieve - Permanent full-time tangible business results. - Technical expert beyond Black Belt change agent - Certified Black Belt with level on one or more aspects of improvement (e.g., additional specialized skills process or experience especially advanced statistical analysis, project communications, useful in deployment of Six management, Sigma across the program administration, teaching, project coaching) enterprise - Identifies high-leverage opportunities for applying the Six Sigma approach across the enterprise - Basic Black Belt training - Green Belt training - Coach / Mentor Black Belts

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Black Belt Roles

Responsibilities

- Six Sigma technical expert - Leads business process improvement projects where Six - Temporary, full-time change Sigma approach is indicated. agent (will return to other duties after completing a - Successfully completes hightwo to three year tour of impact projects that result in duty as a Black Belt) tangible benefits to the enterprise - Demonstrated mastery of Black Belt body of knowledge - Demonstrated proficiency at achieving results through the application of the Six Sigma approach - Coach / Mentor Green Belts - Recommends Green Belts for Certification

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Green Belt Roles

Responsibilities

- Six Sigma Project originator - Recommends Six Sigma projects - Part-time Six Sigma change - Participates on Six Sigma project agent. Continues to perform teams normal duties while - Leads Six Sigma teams in local participating on Six Sigma improvement projects project teams - Six Sigma champion in local area

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Yellow Belt Roles - Learns and applies Sigma tools to projects

Responsibilities Six - Actively participates in team tasks - Communicates well with other team members - Demonstrates basic improvement tool knowledge - Accepts and executes assignments as determined by team

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Financial Analyst Validates the baseline status for each project. Validates the sustained results / savings after completion of the project. Compiles overall investment vs. benefits on Six Sigma for management reporting. Will usually be the part of Senior Leadership Team. QualityGurus.com

Thought of the day We don't know what we don't know We can't act on what we don't know We won't know until we search We won't search for what we don't question We don't question what we don't measure Hence, We just don't know QualityGurus.com

Project Selection

The first step to implement Six Sigma

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Sources of Projects External Sources: Voice of Customer  

What are we falling short of meeting customer needs? What are the new needs of customers?

Voice of Market 

What are market trends, and are we ready to adapt?

Voice of Competitors What are we behind our competitors? QualityGurus.com

Sources of Projects Internal Sources: Voice of Process   

Where are the defects, repairs, reworks? What are the major delays? What are the major wastes?

Voice of Employee What concerns or ideas have employees or managers raised? What are we behind our competitors?

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Project Selection As a team List down at least 20 improvement projects related to your work areas …….  Problem SpecificStatement - It does should not solve world hunger A be SMART:  Measurable - It has a way to measure success  Achievable - It is possible to be successful  Relevant - It has an impact that can be quantified  Timely - It is near term not off in the future QualityGurus.com

Harvesting the Fruit of Six Sigma Sweet Fruit Design for Repeatability Process Enhancement

Bulk of Fruit Process Characterization and Optimization -----------------------------------Low Hanging Fruit Seven Basic Tools

-----------------------------------Ground Fruit Logic and Intuition

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Types of Savings Hard Savings: 

Cost Reduction Energy

Saving Raw Material saving Reduced Rejection, Waste, Repair

Revenue Enhancement Increased production Yield Improvement Quality Improvement QualityGurus.com

Types of Savings Hard Savings: 

Cash flow improvement Reduced

cash tied up in inventory Reduced late receivables, early payables Reduced cycle time

Cost and Capital avoidance Optimizing the current system / resources Reduced maintenance costs

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Types of Savings Soft Savings: Customer Satisfaction / Loyalty Employee Satisfaction

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Cost of implementing Direct Payroll Full time (Black Belts, Master Black Belts)

Indirect Payroll Time by executives, team members, data collection

Training and Consulting Black Belt course, Overview for Mgmt etc.

Improvement Implementation Costs

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What Qualifies as a Six Sigma Project Three basic qualifications: -There is a gap between current and desired / needed performance. The cause of problem is not clearly understood. The solution is not pre-determined, nor is the optimal solution apparent. How many projects out of 20 now qualify as Six sigma projects? QualityGurus.com

Way forward

Get Started Look for low hanging fruits Even poor usage of these tools will get results Learn more about Six Sigma

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