Introduction to SIX - SIGMA

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Introduction toSIX - SIGMA

• Presented by http//www.QualityGurus.com

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Agenda
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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.
• - 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
Johnson Johnson, Ford, Nissan, Honeywell
Motorola
General Electric
2002
1995
1992
1987
1985
Dr Mikel J Harry wrote a Paper relating early
failures to quality
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Pilots Six-Sigma Performance
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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.

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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.

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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
6 Sigma Project Progress
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
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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 achieve lasting results

• It is Statistics
• 6 Sigma processes will produce less than 3.4
  defects per million opportunities

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Philosophy

• Know Whats Important to the Customer (CTQ)
• Reduce Defects (DPMO)
• Center Around Target (Mean)
• Reduce Variation (Standard Deviation)

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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
f(X)
Y

• Y
• Dependent
• Output
• Effect
• Symptom
• Monitor

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

The focus of Six sigma is to identify and control
Xs
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Two Processes
DMAIC
DMADV

• Existing Processes

• New Processes
• DFSS

• Define
• Measure
• Analyze
• Improve
• Control

• 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

• Traditional Quality Costs
• Tangible
• Easy to Measure

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

• Hidden Costs
• Intangible
• Difficult to Measure

- Lost Opportunities - The Hidden Factory
Average COPQ approximately 15 of Sales
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COPQ v/s Sigma Level
Cost of Quality Sales
Sigma Level
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CTQ (Critical-To-Quality)

• 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?

• Waste of Correction
• Waste of Overproduction
• Waste of processing
• Waste of conveyance (or transport)
• Waste of inventory
• Waste of motion
• Waste of waiting

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1. Waste of correction

• Repairing a defect wastes time and resources
  (Hidden factory)

Hidden Factory
Rework
Rework
Failure Investigation
Failure Investigation
Product
Operation 1
Test
Test
Operation 2
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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?

Who is the better shooter?
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Variability

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

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Variability

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

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Variability

• Variance average distance between observations
  and the mean squared

Variance
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Variability

• Variance average distance between observations
  and the mean squared

Variance
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Variability

• Standard deviation square root of variance

Jack
Jill
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Variability
The world tends to be bell-shaped
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Variability
Here is why
Even outcomes that are equally likely (like
dice), when you add them up, become bell shaped
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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
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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 3s
• Define usual (common causes) unusual (special
  causes)
• Specification limits
• Engineered
• Limits target tolerance
• Define acceptable unacceptable

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Usual v/s Unusual, Acceptable v/s Defective
Another View
Off-Target
Large Variation
USL
LSL
LSL
USL
On-Target
Center Process
Reduce Spread
LSL Lower spec limit USL Upper spec limit
LSL
USL
The statistical view of a problem
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More about limits
Poor quality defects are common (Cpklt1)
Good quality defects are rare (Cpkgt1)
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 (Cpkgt1)
• Poor quality defects are common (Cpklt1)

USL x 3s
24 20 3(2)


.667
Cpk min

x - LSL 3s
20 15 3(2)


.833


3s (UPL x, or x LPL)
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A Six Sigma Process Predictably twice as good
as what the customer wants
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3 s v/s 6 s
6 Sigma curve
LSL
USL
3 Sigma curve
3
4
5
6
8
9
12
10
16
15
14
13
11
1
2
7
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Process shift allowed
1.5 SD
1.5 SD
LSL
USL
SD 1
2
3
4
5
6
7
8
9
12
10
16
15
14
13
11
1
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Six Sigma Measurement
On one condition Calculate the defects and
estimate the opportunities in the same way...
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Six Sigma Measurement
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• Components of Six Sigma

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Components
Two components of Six Sigma1. Process
Power2. People Power
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Process Power
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P-D-C-A
Plan
Act
A
P
Plan the change
Act on what was learned
C
D
Check
Do
Check the results
Implement the change on a small scale.
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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 whats wrong
• Control
• Ensure gains are maintained to guarantee
  performance

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DMAIC approach
D Define
Identify and state the practical problem
M Measure
Validate the practical problem by collecting data
A Analyze
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
VoC - Who wants the project and why ?
M Measure
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
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
  ?

I Improve
C Control
Collect data
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Analyze
D Define
M Measure
How well or poorly processes are working compared
with - Best possible (Benchmarking) -
Competitors Shows you maximum possible
result Dont focus on symptoms, find the root
cause
A Analyze
I Improve
C Control
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Improve
D Define

• 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.

M Measure
A Analyze
I Improve
C Control
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Control
D Define
Dont be too hasty to declare victory.
M Measure
A Analyze
How will you maintain to gains made?
I Improve

• - Change policy procedures
• - Change drawings
• Change planning
• Revise budget
• Training

C Control
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Omitting a step in DMAIC?
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Tools for DMAIC
Define What is wrong?
Measure Data Process capability
Analyze When and where are the defects
Improve How to get to six sigma
Control Display key measures
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Components
Two components of Six Sigma1. Process
Power2. People Power
Tell me, I forget. Show me , I remember. Involve
me, I understand.
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6 s Training
Mentor, trainer, and coach of Black Belts and
others in the organization.
Master Black Belt
Leader of teams implementing the six sigma
methodology on projects.
Black Belts
Champions
Delivers successful focused projects using the
six sigma methodology and tools.
Green Belts
Participates on and supports the project teams,
typically in the context of his or her existing
responsibilities.
Team Members / Yellow Belts
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Six Sigma Organization
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6 s Training
Position in Six Sigma Organisation
Typical Training
Expected Role Post Training
Executive overview 2/3 Days
Senior Executives Champions / Process
owners Black-Belt Green
Belt Employees (Yellow-Belt)
Provide Leadership
Champions Training - I 2 days
Champions Training II 3 days

Process Mgmt. Project champion
(Total 5 days)
Training / Facilitation skills
Master Black-Belt -As Trainer -Coach
teams -Facilitateimprovement projects
Week 1
Week 2
Week 3
Week 4
Project-work
Black-Belt

• Part of project teams
• Sometime lead the teams

Project work
1 Week Green-Belt Training

• General process control improvement
• Project Team Member

1 / 2 Days core training on Six-Sigma
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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

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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

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Master Black Belt
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Black Belt
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Green Belt
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Yellow Belt
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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

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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?

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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

• 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

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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.

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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?
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Way forward

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