SIX SIGMA

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SIX SIGMA

• Striving for Near Perfection

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What is Six Sigma?

• Six Sigma is a management philosophy that
  emphasizes
• Setting extremely high objectives
• Collecting data
• Analyzing results
• to a fine degree as a way to reduce defects in
  products and services.

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SIX SIGMA DEFINITION

• Six Sigma is
• a comprehensive and flexible system for
• Achieving
• Sustaining
• Maximizing
• business success.

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SIX SIGMA DEFINITION (cont.)

• Six Sigma is uniquely driven by close
  understanding of
• Customer needs
• Disciplined use of facts
• Data
• Statistical analysis
• Diligent attention to
• Managing
• Improving
• Reinventing
• business processes.

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SIX SIGMA AN INTRODUCTION

• Developed at Motorola in the 1980s as method to
  improve process quality.
• Initially created for process quality
• Now being used for business quality.
• A black belt can save a company 230,000 per
  project and complete 4-6 projects per year.
• Focuses on eliminating defects and maintaining
  less than 3.4 per million opportunities.
• Efficiency and lack of variation is key.

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The Six Sigma Philosophy

• The philosophy behind Six Sigma is
• If you measure how many defects are in a process
• you can figure out how to systematically
  eliminate them
• get as close to perfection as possible.
• In order for a company to achieve Six Sigma
• it cannot produce more than 3.4 defects per
  million opportunities
• An opportunity is defined as a chance for
  nonconformance.

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Why do companies implement Six Sigma?

• The reason that companies use Six Sigma is to
  increase profitability. 
• Sometimes however, the impetus to get started on
  a Six Sigma process is brought on by customer
  demands.  

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How can Six Sigma help companies improve quality
and productivity?

• Six Sigma as a philosophy will create a
  heightened awareness of the need for on-going and
  everlasting quality improvement efforts. 
• Six Sigma as a process will provide employees
  with the tools and skills they need to embrace
  the Six Sigma philosophy. 
• By striving to achieve a six sigma level of
  quality, companies reduce costs related to
• Scrap
• Rework
• Inspection
• Customer dissatisfaction.

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How does Six Sigma work?

• Six Sigma starts at the top of an organization
• Requires constant attention by senior managers
  who are responsible for establishing the Six
  Sigma culture. 
• Senior management must enable the creation of an
  infrastructure to support Six Sigma improvement
  projects.  

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SIX SIGMA THE STATISTICS

• Sigma (s) is the representation of the standard
  deviation from the mean of a population.
• Six sigma from the mean would make it nearly
  impossible to perform a defective process.
• Lean Six Sigma is merely a theoretical goal to
  strive for.

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SIX SIGMA THE STATISTICS
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SIX SIGMA PRACTICAL EXAMPLES

• - 3.8 Sigma
• - 99 Accurate

• - 6.0 Sigma
• - 99.99966 Accurate

• 200,000 Wrong drug prescriptions per year.
• 2 Delayed or late flights per day.
• No electricity for about 7 hours per month.

• 68 Wrong drug prescriptions per year.
• 1 Delayed or late flight every 5 years.
• One hour without electricity every 34 years.

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SIX SIGMA WHO HAS USED IT?

• Motorola
• General Electric
• Xerox
• Honeywell
• Bank of America
• Siemens
• Allied Signal
• Dow
• Ford
• Etc.

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SIX SIGMA HOW HAS IT HELPED?

• GE saved 12 billion over five years and added 1
  to its earnings per share.
• Honeywell recorded more than 800 million in
  savings.
• GE produces annual benefits of over 2.5 billion
  across the organization from Six Sigma.
• Motorola reduced manufacturing costs by 1.4
  billion from 1987-1994.
• Six Sigma reportedly saved Motorola 15 billion
  over the last 11 years.
• Six Sigma enabled Bank of America to generate
  more than 300M in first-year productivity gains.

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SIX SIGMA INDUSTRY EXAMPLES

• Automotive
• waste elimination
• improved forecasting processes
• improved fuel tank turnaround time.
• Chemical business improvements resulting in
  1.5B increase within 3 years.
• Healthcare
• turnaround times for lab results in ICUs
  decreased from 53 to 22 minutes
• reduced intravenous medication errors.

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SIX SIGMA INDUSTRY EXAMPLES

• Hi-Tech streamlined contract approval
  procedures and increasing customer satisfaction
  levels.
• Financial restructuring major websites to take
  attention away from costly human support centers.
• Retail
• saving over 20 on procurement costs and thus
  improving profit margin
• improving marketing mix by applying experimental
  design testing.

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DMAIC

• Define,
• Measure
• Analyze
• Improve
• Control.
• Incremental process improvement using Six Sigma
  methodology. SeePronounced (Duh-May-Ick).
• DMAIC refers to a data-driven quality strategy
  for improving processes.
• Is an integral part of the company's Six Sigma
  Quality Initiative.

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SIX SIGMA DMAIC METHODOLOGY

• DMAIC Used for refining already existing
  business processes.
• Design - formally define the process improvement
  goals that are consistent with customer demands
  and enterprise strategy.
• Measure - to define baseline measurements on
  current process for future comparison.
• Analyze - to verify relationship and causality of
  factors.
• Improve - optimize the process based upon the
  analysis using techniques like Design of
  Experiments.
• Control
• setup pilot runs to establish process capability
• transition to production and thereafter
  continuously measure the process and institute
  control mechanisms to ensure that variances are
  corrected before they result in defects.

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DMADV

• Define
• Measure
• Analyze
• Design
• Verify.
• Design for Six Sigma or new product/service
  introduction.
• DMADV is a data-driven quality strategy for
  designing products and processes
• It is an integral part of a Six Sigma Quality
  Initiative.

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SIX SIGMA DMADV METHODOLOGY

• DMADV Used for creating entirely new products.
• Design - formally define the goals of the design
  activity that are consistent with customer
  demands and enterprise strategy.
• Measure - identify CTQs (critical to qualities),
  product capabilities, production process
  capability, risk assessment, etc.
• Analyze - develop and design alternatives, create
  high-level design and evaluate design capability
  to select the best design.
• Design - develop detail design, optimize design,
  and plan for design verification. This phase may
  require simulations.
• Verify - design, setup pilot runs, implement
  production process and handover to process owners.

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DMAIC Versus DMADV

• We know that everything in business is a process,
  right?
• Sales people have a list of companies and
  contacts that they work in a certain fashion to
  produce a sale
• Production receives an order and schedules the
  manufacturing, the product is
• Built
• Packaged
• Shipped
• Invoiced.
• When the packing department has a problem with
  their process
• should they fix it with a DMAIC or DMADV ?

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The Similarities of DMAIC and DMADV

• DMAIC and DMADV are both
• Six Sigma methodologies used to drive defects to
  less than 3.4 per million opportunities.
• Data intensive solution approaches. Intuition has
  no place in Six Sigma -- only cold, hard facts.
• Implemented by Green Belts, Black Belts and
  Master Black Belts.
• Ways to help meet the business/financial
  bottom-line numbers.
• Implemented with the support of a champion and
  process owner.

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The Differences of DMAIC and DMADV

• When To Use DMAICThe DMAIC methodology, instead
  of the DMADV methodology should be used when
• a product or process is in existence at your
  company but is not meeting customer specification
  or is not performing adequately.
• When To Use DMADVThe DMADV methodology, instead
  of the DMAIC methodology, should be used when
• A product or process is not in existence at your
  company and one needs to be developed
• The existing product or process exists and has
  been optimized (using either DMAIC or not) and
  still doesn't meet the level of customer
  specification or six sigma level

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SIX SIGMA THE ROLES
Champions responsible for implementation across
organization.
Master Black Belts mentors and trainers to
black belts and others.
Black Belts focus on applying to individual
projects.
Green Belts employees utilizing six sigma.
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Roles required for implementation

• Six Sigma identifies five key roles for its
  successful implementation
• Executive Leadership
• Champions
• Master Black Belts
• Experts
• Black Belts
• Green Belts

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Executive Leadership

• Includes CEO and other key top management team
  members.
• They are responsible for setting up a vision for
  Six Sigma implementation.
• They empower the other role holders with the
  freedom and resources to explore new ideas for
  breakthrough improvements.

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Champions

• Are responsible for the Six Sigma implementation
  across the organization in an integrated manner.
• The Executive Leadership draws them from the
  upper management. Champions also act as mentor to
  Black Belts.
• At GE this level of certification is now called
  "Quality Leader".

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Master Black Belts

• Identified by champions
• Act as in-house expert coach for the organization
  on Six Sigma.
• They devote 100 of their time to Six Sigma.
• They assist champions and guide Black Belts and
  Green Belts.
• Apart from the usual rigor of statistics, their
  time is spent on ensuring integrated deployment
  of Six Sigma across various functions and
  departments.

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Experts

• This level of skill is used primarily within
  Aerospace and Defense Business Sectors.
• Experts work across company boundaries,
  improving
• Services
• Processes
• Products
• For their
• Suppliers
• Their entire campuses
• Their customers.

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Black Belts

• Operate under Master Black Belts to apply Six
  Sigma methodology to specific projects.
• They devote 100 of their time to Six Sigma.
• They primarily focus on Six Sigma project
  execution
• Champions and Master Black Belts focus on
  identifying projects/functions for Six Sigma.

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Green Belts

• Are the employees who take up Six Sigma
  implementation along with their other job
  responsibilities.
• They operate under the guidance of Black Belts
  and support them in achieving the overall
  results.

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What are some mistakes companies make when they
implement Six Sigma?

• Here are the top reasons why Six Sigma does not
  work
• Thinking that six sigma is just using the tools
  and ignoring the improvement cultural component. 
  
• Seeing Six Sigma as a temporary activity rather
  than a way of on-going business operations. 
• Not understanding the power and importance of
  data and statistics. 

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What are some mistakes companies make when they
implement Six Sigma? (cont.)

• Assigning responsibilities to implement Six Sigma
  without giving the authority and training
  necessary to carry through on Six Sigma efforts.
• Not measuring processes or ignoring the story the
  measurers are telling.
• Not linking compensation to six sigma
  performance.

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Six Sigma and Project Management

• Project management is a broad subject that
  involves various tools and techniques for meeting
  project requirements under the triple constraint.
• Six Sigma is a more specific methodology used for
  quality improvement and control.
• Both concepts have similar best practices
• Identify and communicate w/ stakeholders
• Have a well-defined, established plan
• Conduct regular reviews
• Manage cost, schedule, and resources (triple
  constraint)

35
Six Sigma and Project Management

• Project management uses sound practices, tools,
  and techniques on a project-by-project basis.
• Consists of nine knowledge areas
• Six Sigma looks for the root cause of quality
  problems or defects and attempts to prevent
  recurrence, as opposed to a project-by-project
  basis.
• Focuses mainly on quality management and is more
  data-driven

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Six Sigma and Project Management

• Project selection an is important step of Six
  Sigma
• What makes a good Six Sigma project?
• There must be a quality problem or gap between
  current and desired performance
• Project should not have a clearly understood
  problem
• Solution should not be predetermined or apparent

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Six Sigma and Project Management

• Once a project is selected for Six Sigma, many PM
  tools and techniques are used
• Business case
• Project charter
• Requirements documents
• Schedule
• Budget
• Overall, Six Sigma methodology complements and
  extends professional project management, but does
  not replace it.

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Criticism of Six Sigma

• It can be expensive to implement
• Six Sigma training can take a long time and may
  require outside consultants
• It is not a quick fix
• It cannot survive without full executive support
• It involves change which can be challenging to
  manage

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Tips for Implementing Six Sigma

• Leadership/top management support is critical
• All leaders should be trained as Six Sigma
  champions.
• Include Six Sigma training within the business
  operating plan.
• Select good consultants to train employees at all
  levels.
• Create a certification process and mentoring
  program for all involved.
• Create an effective communication plan. Answer
  the questions
• What is Six Sigma?
• Whats in it for the employees?
• What does it mean for the business?

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Strategic Six Sigma Process Management

• Because the philosophy was so effective in
  improving process quality, it has been enhanced
  and expanded in various ways.
• Dell added R for Report Out
• American Express added L for Leverage
• Indicating expanded usage for communication and
  enterprise strategy.

Report Out
Measure
Analyze
Improve
Control
Define
Leverage
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Six Sigma Core Processes Value

• GE refocused Six Sigma efforts on core-processes,
  the Game Changers that would add competitive
  advantage and maximize the value creation for
  stakeholders.
• Shell Gas (LPG) expanded their Six Sigma
  foundation to identify the high-impact projects
  that would directly impact cost and revenue.
• Understanding the critical components of a
  business and identifying changeable elements,
  companies can establish the metrics indicating
  improvement.

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Six Sigma and Project Selection

• SoAnalyzing the procedural composition of the
  business defines the measurements of success and
  provides direction for strategic project
  selection.
• Knowing the value of a project portfolio will
  inevitably steer
• Project selection
• Scope definition
• Risk assessment
• And any project phase when decisions are made!

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Six Sigma Process Management replaces Get
Better with measurable factors that can be
precisely defined and valued.
For example A software company development team
may believe that updating their development tools
would be the greatest quality improvement
possible. An end-to-end core business analysis
could contradict that conclusion by revealing
that customers value stability over innovation.
The thorough permeation of Six Sigma practices
through an organization can allign strategic
vision and mission with the granular details of
business process improvement.
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Questions?
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Sources

• http//en.wikipedia.org/wiki/Standard_deviation
• http//en.wikipedia.org/wiki/Six_Sigma
• http//www.motorola.com/content.jsp?globalObjectId
  3069-5787
• http//www.isixsigma.com/sixsigma/six_sigma.asp
• http//software.isixsigma.com/library/content/c040
  721b.asp
• http//www.cio.com/archive/enterprise/011599_proce
  ss.html
• http//www.isixsigma.com/library/content/c021030a.
  asp
• http//www.isixsigma.com/library/content/c030929a.
  asp
• http//www.isixsigma.com/dictionary/DMADV-56.htm
• http//www.isixsigma.com/dictionary/DMAIC-57.htm
• http//www.isixsigma.com/library/content/c001211a.
  asp
• http//whatis.techtarget.com/definition/0,,sid9_gc
  i763122,00.html
• http//www.reseng.com/overviews/6sigma_overview.ht
  m
• http//www.sixsigmagroup.co.uk/implementing/implem
  enting.asp