Six Sigma Introduction

INTRODUCTION TO SIX SIGMA HAWTHORN 6SIGMA QUALITY SOLUTIONS [email_address] [email_address] WWW.HSQS.IN

TOPICS (SESSION 1) Understanding Six Sigma History of Six Sigma Six Sigma Methodologies & Tools Roles & Responsibilities How Six Sigma can be Beneficial for You

What is Six Sigma ? The term " Sigma " is used to designate the distribution or spread about the mean (average) of any process or procedure. For a business or manufacturing process, the sigma value is a metric that indicates how well that process is performing. The higher the sigma value, the better. Sigma measures the capability of the process to perform defect-free-work. A defect is anything that results in customer dissatisfaction.

With Sig Sigma, the common measurement index is "defects-per-unit," where a unit can be virtually anything--- a component, piece of material, line of code, administrative form, time frame, distance, etc. The Sigma value indicates how often defects are likely to occur. The higher the sigma value, the less likely a process will produce defects. As sigma increases, costs go down, cycle time goes down, and customer satisfaction goes up. What is Six Sigma … ?

SIX SIGMA IS. . . A performance goal, representing 3.4 defects for every million opportunities to make one. A series of tools and methods used to improve or design products, processes, and/or services. A statistical measure indicating the number of standard deviations within customer expectations. A disciplined, fact-based approach to managing a business and its processes. A means to promote greater awareness of customer needs, performance measurement, and business improvement.

Features that set Six Sigma apart from previous quality improvement initiatives include: A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project. An increased emphasis on strong and passionate management leadership and support. A special infrastructure of "Champions," "Master Black Belts," "Black Belts," "Green Belts", etc. to lead and implement the Six Sigma approach. A clear commitment to making decisions on the basis of verifiable data, rather than assumptions and guesswork.

WHAT’S IN A NAME? Sigma is the Greek letter representing the standard deviation of a population of data. Sigma is a measure of variation (the data spread) μ σ

WHAT DOES VARIATION MEAN? Variation means that a process does not produce the same result (the “Y”) every time. Some variation will exist in all processes. Variation directly affects customer experiences. Customers do not feel averages!

MEASURING PROCESS PERFORMANCE THE PIZZA DELIVERY EXAMPLE. . . Customers want their pizza delivered fast! Guarantee = “30 minutes or less” What if we measured performance and found an average delivery time of 23.5 minutes? On-time performance is great, right? Our customers must be happy with us, right?

HOW OFTEN ARE WE DELIVERING ON TIME? ANSWER: LOOK AT THE VARIATION! Managing by the average doesn’t tell the whole story. The average and the variation together show what’s happening. s 0 10 20 30 40 50 x 30 min. or less

REDUCE VARIATION TO IMPROVE PERFORMANCE HOW MANY STANDARD DEVIATIONS CAN YOU “FIT” WITHIN CUSTOMER EXPECTATIONS? Sigma level measures how often we meet (or fail to meet) the requirement(s) of our customer(s). s 0 10 20 30 40 50 x 30 min. or less

MANAGING UP THE SIGMA SCALE Sigma % Good % Bad DPMO 1 30.9% 69.1% 691,462 2 69.1% 30.9% 308,538 3 93.3% 6.7% 66,807 4 99.38% 0.62% 6,210 5 99.977% 0.023% 233 6 99.9997% 0.00034% 3.4

EXAMPLES OF THE SIGMA SCALE In a world at 3 sigma. . . There are 964 U.S. flight cancellations per day. The police make 7 false arrests every 4 minutes. In MA, 5,390 newborns are dropped each year. In one hour, 47,283 international long distance calls are accidentally disconnected. In a world at 6 sigma. . . 1 U.S. flight is cancelled every 3 weeks. There are fewer than 4 false arrests per month. 1 newborn is dropped every 4 years in MA. It would take more than 2 years to see the same number of dropped international calls.

TOPICS Understanding Six Sigma History of Six Sigma Six Sigma Methodologies & Tools Roles & Responsibilities How Six Sigma can be Beneficial for You.

THE SIX SIGMA EVOLUTIONARY TIMELINE 1736 : French mathematician Abraham de Moivre publishes an article introducing the normal curve. 1896 : Italian sociologist Vilfredo Alfredo Pareto introduces the 80/20 rule and the Pareto distribution in Cours d’Economie Politique . 1924 : Walter A. Shewhart introduces the control chart and the distinction of special vs. common cause variation as contributors to process problems. 1941 : Alex Osborn, head of BBDO Advertising, fathers a widely-adopted set of rules for “brainstorming”. 1949 : U. S. DOD issues Military Procedure MIL-P-1629, Procedures for Performing a Failure Mode Effects and Criticality Analysis . 1960 : Kaoru Ishikawa introduces his now famous cause-and-effect diagram. 1818 : Gauss uses the normal curve to explore the mathematics of error analysis for measurement, probability analysis, and hypothesis testing. 1970s : Dr. Noriaki Kano introduces his two-dimensional quality model and the three types of quality. 1986 : Bill Smith, a senior engineer and scientist introduces the concept of Six Sigma at Motorola 1994 : Larry Bossidy launches Six Sigma at Allied Signal. 1995 : Jack Welch launches Six Sigma at GE.

SIX SIGMA AND FINANCIAL SERVICES

TOPICS Understanding Six Sigma History of Six Sigma Six Sigma Methodologies & Tools Roles & Responsibilities How Six Sigma can be Beneficial for You

DMAIC – THE IMPROVEMENT METHODOLOGY D efine M easure A nalyze I mprove C ontrol Objective : DEFINE the opportunity Objective : MEASURE current performance Objective : ANALYZE the root causes of problems Objective : IMPROVE the process to eliminate root causes Objective : CONTROL the process to sustain the gains. Key Define Tools : Cost of Poor Quality (COPQ) Voice of the Stakeholder (VOS) Project Charter As-Is Process Map(s) Primary Metric (Y) Key Measure Tools : Critical to Quality Requirements (CTQs) Sample Plan Capability Analysis Failure Modes and Effect Analysis (FMEA) Key Analyze Tools : Histograms, Boxplots, Multi-Vari Charts, etc. Hypothesis Tests Regression Analysis Key Improve Tools : Solution Selection Matrix To-Be Process Map(s) Key Control Tools : Control Charts Contingency and/or Action Plan(s)

DEFINE – DMAIC PROJECT WHAT IS THE PROJECT? What is the problem? The “problem” is the Output (a “Y” in a math equation Y=f(x1,x2,x3) etc). What is the cost of this problem Who are the stake holders / decision makers Align resources and expectations Project Charter Voice of the Stakeholder Six Sigma $ Cost of Poor Quality

DEFINE – CUSTOMER REQUIREMENTS WHAT ARE THE CTQS? WHAT MOTIVATES THE CUSTOMER? Voice of the Customer Key Customer Issue Critical to Quality SECONDARY RESEARCH PRIMARY RESEARCH Surveys OTM Industry Intel Listening Posts Market Data Industry Benchmarking Focus Groups Customer Service Customer Correspondence Obser-vations

MEASURE – BASELINES AND CAPABILITY WHAT IS OUR CURRENT LEVEL OF PERFORMANCE? Sample some data / not all data Current Process actuals measured against the Customer expectation What is the chance that we will succeed at this level every time?

ANALYZE – POTENTIAL ROOT CAUSES WHAT AFFECTS OUR PROCESS? y = f (x 1 , x 2 , x 3 . . . x n ) Ishikawa Diagram (Fishbone) Six Sigma

ANALYZE – VALIDATED ROOT CAUSES WHAT ARE THE KEY ROOT CAUSES? y = f (x 1 , x 2 , x 3 . . . x n ) Critical Xs Process Simulation Data Stratification Regression Analysis Six Sigma

IMPROVE – POTENTIAL SOLUTIONS HOW CAN WE ADDRESS THE ROOT CAUSES WE IDENTIFIED? Address the causes, not the symptoms. Decision y = f (x 1 , x 2 , x 3 . . . x n ) Critical Xs Evaluate Clarify Generate Divergent | Convergent

IMPROVE – SOLUTION SELECTION HOW DO WE CHOOSE THE BEST SOLUTION? Solution Implementation Plan Solution Selection Matrix Solution Sigma Time CBA Other Score Time Quality Cost Six Sigma ☺ Nice Try Nice Idea X Solution Right Wrong Implementation Bad Good

CONTROL – SUSTAINABLE BENEFITS HOW DO WE ”HOLD THE GAINS” OF OUR NEW PROCESS? Some variation is normal and OK How High and Low can an “X” go yet not materially impact the “Y” Pre-plan approach for control exceptions

DFSS – THE DESIGN METHODOLOGY D ESIGN F OR S IX S IGMA Uses Design new processes, products, and/or services from scratch Replace old processes where improvement will not suffice Differences between DFSS and DMAIC Projects typically longer than 4-6 months Extensive definition of Customer Requirements (CTQs) Heavy emphasis on benchmarking and simulation; less emphasis on base lining Key Tools Multi-Generational Planning (MGP) Quality Function Deployment (QFD) D efine M easure A nalyze D evelop V erify

CHAMPIONS Promote awareness and execution of Six Sigma within lines of business and/or functions Identify potential Six Sigma projects to be executed by Black Belts and Green Belts Identify, select, and support Black Belt and Green Belt candidates Participate in 2-3 days of workshop training

BLACK BELTS Use Six Sigma methodologies and advanced tools (to execute business improvement projects Are dedicated full-time (100%) to Six Sigma Serve as Six Sigma knowledge leaders within Business Unit(s) Undergo 5 weeks of training over 5-10 months

GREEN BELTS Use Six Sigma DMAIC methodology and basic tools to execute improvements within their existing job function(s) May lead smaller improvement projects within Business Unit(s) Bring knowledge of Six Sigma concepts & tools to their respective job function(s) Undergo 8-11 days of training over 3-6 months

OTHER ROLES Subject Matter Experts Provide specific process knowledge to Six Sigma teams Ad hoc members of Six Sigma project teams Financial Controllers Ensure validity and reliability of financial figures used by Six Sigma project teams Assist in development of financial components of initial business case and final cost-benefit analysis

TOPICS Understanding Six Sigma History of Six Sigma Six Sigma Methodologies & Tools Roles & Responsibilities How Six Sigma can be Beneficial for You?

Focus on customers. Improved customer loyalty. Reduced cycle time. Less waste. Data based decisions. Time management Sustained gains and improvements. Systematic problem solving. Employee motivation Data analysis before decision making. Faster to market. Team building. Improved customer relations. Assure strategy planning.

Effective Supply chain management Knowledge of Competition & Competitors. Develop Leadership skill. Breakdown barriers between departments and functions. Management training. Improve presentation skills. Integration of products ,services and distribution. Use of standard operating procedures. Better decision making. Improving Projects Planning kills.

Six Sigma Introduction

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