1st Middle East Six Sigma Forum Six Sigma

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• 1st Middle East Six Sigma ForumSix Sigma A
  Strategy for Achieving World Class Performance
• 7th to 9th December, Dubai
• Sunil ThawaniManager Business Process
  ImprovementUnion National Bank, Abu Dhabi
• Sthawani_at_unb.com

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Purpose of Presentation

• Share concepts and application of Six Sigma with
  a case study
• Deployment of Six Sigma as a strategy to achieve
  World Class Performance
• Integration of Six Sigma with EFQM framework
• Lessons Learnt

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World Class Performance
With 99 Quality With Six Sigma Quality
For every 300000 letters delivered 3,000 misdeliveries 1 misdelivery
For every week of TV broadcasting per channel 1.68 hours of dead air 1.8 seconds of dead air
Out of every 500,000 computer restarts 4100 crashes Less than 2 crashes
Source The Six Sigma Way by Peter Pande and
Others
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What is Six Sigma ?

• Based on teachings of Dr. Walter Shewhart, Dr. W.
  E. Deming Dr. J. Juran.
• Process Control
• Plan Do Check Act
• Common and Special Causes
• Improvement can be done project by project
• Statistical tools
• Hawthorne Plant Experiences
• Developed by Bill Smith at Motorola in 1980s

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What Is Six Sigma?
?

• Degree of variation
• Level of performance in terms of defects
• Statistical measurement of process capability
• Benchmark for comparison
• Process improvement methodology
• It is a Goal
• Strategy for change
• A commitment to customers to achieve an
  acceptable level of performance

Sigma is a letter in the Greek Alphabet
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Six Sigma Definitions

• Business Definition
• A break through strategy to significantly improve
  customer satisfaction and shareholder value by
  reducing variability in every aspect of business.
• Technical Definition
• A statistical term signifying 3.4 defects per
  million opportunities.

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Sigma Level Defects Per Million Opportunities Rate of Improvement
1 ? 690,000
2 ? 308,000 2 times
3 ? 66,800 5 times
4 ? 6,210 11 times
5 ? 230 27 times
6 ? 3.4 68 times
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Bank of America SS Experience

• Goals
• 1 in Customer Satisfaction
• Worlds most admired company
• Worlds largest bank
• Strategy - Develop business process excellence
  by applying voice of the customer to identify and
  engineer critical few business processes using
  Six Sigma
• Created Quality Productivity Division
• Source Best Practices Report

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Bank of America SS Experience

• Wanted results in 1 year
• Hired more than 225 MBB BBs from GE, Motorola,
  Allied Signal for rapid deployment
• Developed 2 week Green Belt training programs
• Introduced computer simulation of processes
• Trained 3767 Green Belts, certified 1230 -
  Minimum value target per GB project 250K
• Trained 305 Black Belts, certified 61 - Minimum
  value target per BB project 1 million
• Trained 43 MBB,
• 1017 in DFSS
• 80 of Executive Team trained in GB and 50
  Certified

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Bank of America SS Experience

• Results of first 2 years
• Reduced ATM withdrawal losses by 29.7
• Reduced counterfeit losses in nationwide cash
  vaults by 54
• Customer delight up 20
• Added 2.3 million customer households
• 1.3 million fewer customer households experienced
  problems
• Stock value up 52
• Y 2002 BOA named Best Bank in US Euro money's
  Worlds Most Improved Bank

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High Level Business Metrics

• Revenue
• Capital Utilization
• Return on Assets
• Profits

• Quote Time
• Defect Rate
• Waste
• On Time Delivery
• Inventory
• Machine Utilization

Operating Level Metrics
Strategically Used by Leadership as a vehicle to
develop sustainable culture of Customer,
Quality, Value and Continuous improvement.
Operationally By Quality Managers to reduce
cycle times, costs, errors, rework, inventory,
equipment downtime. Deployment across all types
of processes and industries - worldwide
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Six Sigma EFQM/ DQA Framework
Recognizing People
Competency Productivity
People Results
People
Key Perf Results
Establishing Process management System to
be used
Personally actively Involved in improvement
Developing Team skills
Aligning Individual Organization Goals
Satisfaction Involvement
Gross margins Net profit Sales Market Share
Recognition
Implementing Process Measures
Customer Results
Encouraging enabling people To participate
in Improvement
Identifying designing processes to
deliver strategy
Response Time to customers
Process cycle time Process costs Defect
rates Productivity
Delivery, Value, reliability
Repurchase satisfaction
Time to Market
Policy Strategy
Cash flow Maintenance cost Return on assets
Improving processes to satisfy and Generate
value For customers
Recognizing Individual Team effort
Utility consumption Timeliness Inventory
Society Results
Partnerships Resources
Leadership
Processes
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Who is Implementing Six Sigma

• At least 25 of the fortune 200 claim to have a
  serious six sigma program - Michael Hammer.
• Financial - Bank of America, GE Capital,
  Electronics - Allied Signal, Samsung, Sony
• Chemicals - Dupont, Dow Chemicals
• Manufacturing - GE Plastics, Johnson and Johnson,
  Motorola, Nokia, Microsoft, Ford.
• Airline - Singapore, Lufthansa, Bombardier
• And hundreds of others in Americas, Europe, Sub
  Continent.

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Six Sigma Results
Company Annual Savings
General Electric 2.0 billion
JP Morgan Chase 1.5 billion (since inception in 1998)
Motorola 16 billion (since inception in 1980s)
Johnson Johnson 500 million
Honeywell 600 million
Six Sigma Savings as of revenue vary from 1.2
to 4.5 For 30 million/yr sales Savings
potential 360,000 to 1.35 million. Investment
salary of in house experts, training, process
redesign.
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Six Sigma Project Methodology


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Six Sigma Case Study Service Organisation

• Background
• M/s Alpha Inc. manages out bound cargo from a
  distribution centre to different stores.
• Deliveries made on trucks - owned and hired.
• Customers dissatisfied at delivery schedules.
• Leadership decision to deploy Six Sigma
• Team of 1 Black Belt and 3 Green Belts formed
• Sponsor of the project Distribution Manager

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Define - Critical to Quality (CTQ)

• Focus on customers generating annual revenue of
  USD 400,000/-.

Customer needs Improved delivery performance
Level 1 CTQ Timely delivery
Level 2 CTQ On time delivery to schedule
Level 3 CTQ Delivery within /- 1 hour of scheduled delivery time
Current process sigma level - 2.43 or 175889 DPMO
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Define - Goal Statement

• Reduce number of delayed deliveries by 50 by
  31st December Y 2002 to better meet customer
  requirement of timely delivery defined as within
  /- 1 hour of scheduled delivery.

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Define - Performance Standards
Output unit A scheduled delivery of freight
Output characteristic Timely delivery
Project Y measure Process starts when an order is received Ends when goods are received signed for at customers desk. Process measurement Deviation from scheduled delivery time in minutes.
Specification limits LSL -60 minutes USL 60 minutes
Target Scheduled time or zero minutes deviation
Defect Delivery earlier or later than 1 hour.
No. of defect opportunities per unit 1 opportunity for a defect per scheduled delivery of freight.
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Define - SIPOC Diagram
Supplier Stores Manager
Input Stores Order
Process Steps (high level) Receive order Plan delivery Dispatch Driver with goods Deliver goods to stores Receive delivery
Output Received freight with Documents
Customer Store Manager

• Detailed process maps drawn

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Measure and Analyze

• Driver and Distance identified as key factors
  influencing delivery performance.
• Driver selected for focus.
• Potential root causes as to why Driver influenced
  the time
• Size of the vehicle
• Type of engine
• Type of tyres
• Fuel capacity

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Improve

• Experiments designed and conducted using truck
  type and tyre size.
• Findings
• Larger tyres took longer time at certain routes
  where area was cramped and time lost in
  maneuvering.
• High incidence of tyre failures since tight turns
  led to stress on tyres thus increasing number of
  flat tyres.
• Team modified planning of dispatch process by
  routing smaller trucks at more restrictive areas.

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Control

• Test implementation.
• Process sigma level up from 2.43 or 175889 DPMO
  to 3.94 or 7353 DPMO.
• Performance still fell short of best in class
  4.32 or 2400 DPMO.
• Improvement led to significant customer
  satisfaction.
• Process continually monitored and data on new
  cycle times, tyre failure collected as per
  defined methods and frequency, analysed and
  monitored.
• Customer satisfaction measured and monitored.

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Key Lessons Learnt

• Define
• Difficulty in identifying the right project and
  defining the scope
• Difficulty in applying statistical parameters to
  Voice of the Customers
• Trouble with setting the right goals
• Measure
• Inefficient data gathering
• Lack of measures
• Lack of speed in execution

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Key Lessons Learnt

• Analyse
• Challenge of identifying best practices
• Overuse of statistical tools/ under use of
  practical knowledge
• Challenge of developing hypotheses
• Improve
• Challenge of developing ideas to remove root
  causes
• Difficulty of implementing solutions
• Control
• Lack of follow up by Managers/ Process Owners
• Lack of continuous Voice of the Customer feedback
• Failure to institutionalize continuous
  improvement.

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Key Lessons Learnt

• Define ranked most important step but gets
  the lowest resource allocation
• Project scoping and its definition is critical to
  its success/ failure
• Measure is considered most difficult step and
  also gets the highest resources
• Source Greenwich Associates Study Y 2002

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What Makes Six Sigma Different?

• Versatile
• Breakthrough improvements
• Financial results focus
• Process focus
• Structured disciplined problem solving
  methodology using scientific tools and techniques
• Customer centered
• Involvement of leadership is mandatory.
• Training is mandatory
• Action learning (25 class room, 75
  application)
• Creating a dedicated organisation for problem
  solving (85/50 Rule).

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Benefits of Six Sigma

• Generates sustained success
• Sets performance goal for everyone
• Enhances value for customers
• Accelerates rate of improvement
• Promotes learning across boundaries
• Executes strategic change

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• Thank you
• Q A