Six Sigmas

Introduction to SIX - SIGMA Presented by : http://www.QualityGurus.com QualityGurus.com

Agenda 0750 - 0800

Participants introduction

0800 - 0930

Introduction to Six Sigma concept Key Tea /Concepts Coffee Break

0930 - 0945 0945 - 1200 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

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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.  

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- 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

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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 1985

1987 1987

General Electric

1992 1992

1995 1995

Johnson & Johnson, Ford, Nissan, Honeywell

2002 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 

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Management Involvement? •Key issues for Leadership: –How will leadership organize to support Six Sigma ? (6  council, Director 6  , etc) –Transition rate to achieve 6 . –Level of resource commitment. –Centralized or decentralized approach. –Integration with current initiatives e.g. QMS –How will the progress be monitored?

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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 improving them is the most efficient way to It is Statistics achieve lasting results –6 Sigma processes will • produce less than 3.4 • 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 Sigma Level

5

6

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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

•

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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)

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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

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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

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Forms of Waste

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What are the forms of waste?

1.Waste of Correction 2.Waste of Overproduction 3.Waste of processing 4.Waste of conveyance (or transport) 5.Waste of inventory 6.Waste of motion 7.Waste of waiting

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1. Waste of correction • Repairing a defect wastes time and Hid resources (Hidden factory) den Fact Rework ory

Rework Failure Investigatio n Operatio n 1

Test

Failure Investigatio n Operatio n 2

Test

Pro duct

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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)

averages

Observations

Deviations

10

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

8 7 10 8 9 Jack

Jill

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

averages

Observations

Deviations

7 7

7 - 6.6 = 0.4 7 - 6.6 = 0.4

7

7 - 6.6 = 0.4

6

6 - 6.6 = -0.6

6

6 - 6.6 = -0.6

6.6

0.0

Jack

7 6 7 7 6

Jill

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Variability • Variance = average distance between observations and the mean squared

averages

Observations

Deviations

Squared Deviations

10

10 - 8.4 = 1.6

9

9 – 8.4 = 0.6

2.56 0.36

8

8 – 8.4 = -0.4

8

8 – 8.4 = -0.4

7

7 – 8.4 = -1.4

8.4

0.0

8 7 10 8 9 Jack

0.16 0.16 1.96 1.0

Jill

Variance QualityGurus.com

Variability • Variance = average distance between observations and the mean squared

averages

Observations

Deviations

Squared Deviations

7

7 - 6.6 = 0.4

0.16

7

7 - 6.6 = 0.4

0.16

7

7 - 6.6 = 0.4

0.16

6

6 – 6.6 = -0.6

0.36

6

6 – 6.6 = -0.6

0.36

6.6

0.0

0.24

Jack

7 6 7 7 6

Jill

Variance QualityGurus.com

Variability • Standard deviation = square root of variance • Jack Jill

Average 8.4 6.6

Variance 1.0 0.24

Jack

Standard 1.0 Deviation 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 Most in the outcomes “tails” occur in the (lower) 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

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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

1σ

1σ

4

5

1σ

6

USL

+ 6σ

1σ

1σ

7

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

DPMO 3.4

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

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

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 Defects numbers per million

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 Identify and state the practical problem

fin e D D r su a e M

Validate the practical problem by collecting data

lyze a n A

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

Confirm and test the statistical solution

Convert the statistical solution to a practical solution

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M A ve ro p Im I trl n o C C

Define VoC - Who wants the project and why ?

fin e D D

The scope of project / improvement (SMART Objective)

r su a e M M lyze a n A A

Key team members / resources for the project

ve ro p Im I

Critical milestones and stakeholder review

trl n o C C Budget allocation

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

fin e D D r su a e M M

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 ?

lyze a n A A ve ro p Im I trl n o C

Collect data

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C

Analyze fin e D D r su a e M

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

lyze a n A

Shows you maximum possible result

ve ro p Im

Don’t focus on symptoms, find the root cause

M A I trl n o C C

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Improve 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.

fin e D D r su a e M M lyze a n A A ve ro p Im I trl n o C C

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Control Don’t be too hasty to declare victory.

fin e D D r su a e M M lyze a n A A

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

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ve ro p Im I trl n o C C

Omitting a step in DMAIC? Step Consequences if the step is omitted 1. Define 2. Measure 3. Analyze 4. Improve 5. Control

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Tools for DMAIC

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

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

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Cause & Effect Diagrams Failure Models & Effect Analysis Decision & Risk Analysis Statistical Inference Control Charts Capability Reliability Analysis Root Cause Analysis 5 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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6σ

Training

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

Champions

Master Black Belt

Black Belts

Leader of teams implementing the six sigma methodology on projects .

Delivers successful focused projects usi 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

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6σ Position in Six Sigma Organisation

Training Typical Training

Expected Role Post 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

Green Belt 1 Week Green-Belt Training Employees (Yellow-Belt)

1 / 2 Days core training on Six-Sigma

Project work

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

-Part 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 •Nominates highly qualified Black Belt and/or Green Belt candidates QualityGurus.com

Master Black Belt Roles

Responsibilities

Enterprise Six Sigma expert Permanent full-time change agent Certified Black Belt with additional specialized skills or experience especially useful in deployment of Six Sigma across the enterprise

- Highly proficient in using Six Sigma methodology to achieve tangible business results. Technical expert beyond Black Belt level on one or more aspects of process improvement (e.g., advanced statistical analysis, project management, communications, program administration, teaching, project coaching) 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 Six Sigma technical expert Temporary, full-time change agent (will return to other duties after completing a two to three year tour of duty as a Black Belt) 

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Responsibilities Leads business process improvement projects where Six Sigma approach is indicated. Successfully completes high-impact projects that result in 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 Six Sigma Project originator Part-time Six Sigma change agent. Continues to perform normal duties while participating on Six Sigma project teams Six Sigma champion in local area 

Responsibilities Recommends Six Sigma projects Participates on Six Sigma project teams Leads Six Sigma teams in local improvement projects 

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Yellow Belt Roles

Responsibilities

Learns and applies Six Sigma tools Actively participates in team tasks Communicates well with other team to projects  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.

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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

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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 ……. • A Problem Statement should be SMART: nSpecific - It does not solve world hunger nMeasurable - It has a way to measure success n nAchievable - It is possible to be successful n nRelevant - It has an impact that can be n quantified nn 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

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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 –Installing new solution, IT driven solutions etc. QualityGurus.com

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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