Introduction To Six Sigma

Introduction to Six Sigma

• Six Sigma is a disciplined, datadriven methodology to eliminate defects in a process • A way to assess performance of a process – Devised at Motorola in 1987 – Higher the process sigma, the fewer the defects

• Focused on customer requirements – Internal, but especially external customers – Track Defects (aka CTQs) that affect satisfaction, loyalty, revenue, market share

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

• Other Companies Adopt Six Sigma – GE – Dow Chemical, DuPont, Honeywell, Whirlpool

Time Line

Allied Signal Motorola

1985

1987

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

General Electric

1992

1995

Johnson & Johnson, Ford, Nissan, Honeywell

2002

Six Sigma

A scientific and practical method to achieve improvements in a company

Scientific: • Structured approach. • Assuming quantitative data. ”Show me the money”

Practical: • Emphasis on financial result. • Start with the voice of the customer.

“Show me the data”

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

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

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

Two Processes DMAIC

DMADV

• Existing Processes

• • • • •

Define Measure Analyze Improve Control

• New Processes • DFSS

• • • • •

Define Measure Analyze Design Verify

Where can Six Sigma be applied? Service Management

Design

Purchase

Administration

Six Sigma Methods

Production

IT

Quality Depart. HRM

M&S

Is Six Sigma New? • The basic premise of Six Sigma started in 1600 B.C. by Egyptian physicians and is noted on the Edwin Smith papyrus. It essentially says: • Make no remedy without first understanding the cause.

Juran, Deming, Shewhart, and Crosby simply restated this principle.

Key Concepts

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

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)

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

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

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

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

Examples of what Six Sigma means in business

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

Financial Aspects Benefits of 6σ approach w.r.t. financials σ-level Defect rate Costs of poor quality Status of the (ppm) company 6 3.4 < 10% of turnover World class 5 233 10-15% of turnover 4 6210 15-20% of turnover Current standard 3 66807 20-30% of turnover 2 308537 30-40% of turnover Bankruptcy

Statistical background Some Key measure

Target = µ

Statistical background ‘Control’ limits +/ − 3 σ

Target = µ

Statistical background Required Tolerance LSL

+/ − 3 σ

Target = µ

USL

Statistical background Tolerance LSL

+/ − 3 σ

Target = µ +/ − 6 σ Six-Sigma

USL

Statistical background Tolerance LSL

USL

+/ − 3 σ

1350 ppm

1350 ppm

Target = µ +/ − 6 σ

Statistical background Tolerance LSL

0.001 ppm

USL

+/ − 3 σ

1350 ppm

1350 ppm

Target = µ +/ − 6 σ

0.001 ppm

Statistical background Tolerance LSL

0 ppm

USL

1. 5σ

3.4 ppm

66807 ppm

µ

+/ − 6σ

3.4 ppm

Performance Standards

σ 2 3 4 5 6

PPM 308537 66807 6210 233 3.4

Yield 69.1% 93.3% 99.38% 99.977% 99.9997%

Current standard

World Class

Process performance

Defects per million

Long term yield

Reduce Process Variation & Centering Off-Target

Too Much Variation

Centered On-Target

Center Process

Reduce Spread

The objective is to understand customer requirements and reduce process variation and center of target

Critique of ISO 9000 • Bureaucratic, large scale • Focus on satisfying auditors, not customers • Certification is the goal; the job is done when certified • Little emphasis on improvement • The return on investment is not transparent • Main driver is: – We need ISO 9000 to become a certified supplier, – Not “we need to be the best and most cost effective supplier to win our customer’s business”

• Corrupting influence on the quality profession

Components of Six Sigma

Components Two components of Six Sigma

1. Process Power 2. People Power

Process Power

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.

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

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

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

Define Business Case

Voice of the Customer VOC

Delighters

Key Issue

CTQ

More Is Better

Must Be

Initial Process Mapping Inputs

Process

Outputs

Yield: 60% Yield: 90% Yield: 45% Yield: 98%

CUSTOMERS

Problem Statement: Goal: Business Case: Scope: Cost Benefit Projection: Milestones:

SUPPLIERS

Project Charter

Example - SIPOC A SIPOC will allow your project team to put parameters around the process being reviewed and identify the areas impacted both up and down stream SIPOC Suppliers Clients Sales People Candidates Web Site Recruiting Data Base

Get Requirement

    

Input Requirements Resumes Profiles Margin Template

Search for Candidate

Process

Screen Candidate

Output Profile Interview Summaries Offer Letters

Make Offer

Suppliers – who feeds the process Inputs – what do they feed Process – steps in the process Outputs – outputs of the process Customer – who pulls from the process

Present Candidate

Customer Client Sales People Delivery Management Candidate/Employee

Fill Requirement

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

Identify the Metrics

Measure

Identify Process Capability LSL

I

P

O

USL

Display Data UCL 1000

Cp = 0.4 s = 2.7

X

0

LCL

-1000

10

20

30

D B F A C E Other

Measure the process

Prioritize the Metrics

Data Collection Plan Data Collection Plan

O1 O2 O3 O4 I1 I2 I3 I4

FMEA

What questions do you want to answer? Operational Definition and Procedures Data What Measure type/ How Related Sampling How/ Data type measured conditions notes where

How will you ensure consistency and stability?

What is your plan for starting data collection? How will the data be displayed?

Validate Measurement Systems Col # Inspector Sample # 1 2 3 4 5 Totals Averages

1

2

3

4

5

6

1st Trial 2.0 2.0 1.5 3.0 2.0 10.5 2.1

A 2nd Trial 1.0 3.0 1.0 3.0 1.5 9.5 1.9

Diff 1.0 1.0 0.5 0.0 0.5 3.0 0.6

1st Trial 1.5 2.5 2.0 2.0 1.5 9.5 1.9

B 2nd Trial 1.5 2.5 1.5 2.5 0.5 8.5 1.7

Diff 0.0 0.0 0.5 0.5 1.0 2.0 0.4

Sum XA

4.0 2.0

R A

Sum XB

3.6 1.8

R B

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

Analyze Process Door VA

Data Door

NVA

22

Cause & Effect

O

O

21

O

20

O

19

n

18

X

17

n

O

X

n

O

O

O n

n

X

n X

X O

X

n

14

n

X O

16 15

n

X

n

13

X

12

.

Hypothesis-Testing Chi-Square

1

2

3

Regression Analysis

Y

5

6

7

8

9

10

Design of Experiments

t-test ANOVA

c²

4

Regression X1

.

.

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.

Improve Plan Implementation

Generate Solutions A B C D

4 1 3 2

1 2

4

5

6

7

8

9

10

B C D G

E

F H

Perform Cost-Benefit Analysis

Select the Solution

3

A

Run Pilot Original

Assess Risks FMEA

Test

G I

J

Full scale

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

Control Document & Standardize

Key Learnings

Closure

Results

Training Op Pro erati ng Curriculum ced Training Maunres Manual ual

Learnings

Fill to here

Recommendations

• • •

next

QC Process Chart Product Name Process Name Process Code #

Flowchart

Date of Issue: Revision Date

Issued by: Reason

Approved by: Signature

Process Owner

Control/Check Points Response to Abnormality Work Control Immediate Permanent Instructions Code # CharacW ho Who Notes teristicsLimitsMethod Fix Fix

. Evaluate Project Results

1

2

12

Ownership & Monitoring

Process Change Management After

Before

UCL

}

A2 A1 A3 A4

A1 A2 A3 A4

Before

After

Good

}

.

LCL

Improvement

Step 4 changes implemented

}

Improvement Remaining Gap Target

s = Cp =

3.7 1.4 LSL

s = 2.7 Cp = 0.4

USL

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

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.

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

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

Champion Cont. 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

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

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

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

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

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.

Project Selection

The first step to implement Six Sigma

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?

Sources of Projects Cont. 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?

Project Selection A Problem Statement should be SMART:  Specific - It does not solve world hunger    

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

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

Questions and Answers