Six Sigma Awareness Training

Course Objectives
The objectives of this workshop are:
To explain the purpose of Six Sigma
and the Six Sigma approach.
To discuss Six Sigma implementation.
To discuss the process for setting up
projects and deploying project teams.

Course Contents
1. Six Sigma Overviews
2.
3.
4.
5.

The DMAIC Process Steps and Tools

Six Sigma Implementation
Collective Decision Making
Define: Set Up Projects and Deploy Teams

Section 1
Six Sigma Overview

Six Sigma: What & Why

Effective Approach + Proper Deployment

RESULTS

Six Sigma Approach Key Components

Problem Solving Process
DefineMeasureAnalyzeImproveControl

Improvement Tools
Comprehensive and Integrated Set of Effective
Improvement Tools

Quality Principles
A Set of Sound Underlying Concepts

Results-Examples
Allied Signal
Turn around from weak financial position in late 80s.
US$3.2B cost savings during 1996 and 1997.

General Electric
Achieve 40% increase in operating margin.
Develop a better leadership for todays more competitive
world.

Fort Wayne City

Saved or avoided the need to spend nearly $3 million.
Has made numerous changes that have meant better service
for city residents.

Evolution of Quality Practices

DFSS, Lean Six Sigma

2000s

1980s
1960s

1930s

Six Sigma
Lean Manufacturing
Business Process Reengineering
ISO9000
Total Quality Management
Just In Time (JIT)

TQC (Total Quality Control)

SQC (Statistical Quality Control)
Testing and Inspection

The Origin of Six Sigma

1979
The Real Problem At Motorola Is That
Our Quality Stinks !
Art Sundry
(Formerly Motorolas Senior Executive)

1981

Tenfold Improvement Over

A Five Year Period
Robert Galvin
(Formerly Motorolas President)

1980s
Bill Smith discovered the correlation between market failures
rate and manufacturing defects rate.
At Government Electronics Group, under the leadership of
Mikel Harry, experiments with problem solving through
statistical analysis showed dramatic results.
Mikel Harry began to formulate a methodology for applying
statistical tools for problem solving. His work culminated in a
paper titled The Strategic Vision for Accelerating Six Sigma
Within Motorola.

1990
Robert Galvin asked Mikel Harry to start up and lead
Motorolas Six Sigma Research Institute.
The mission was to develop Six Sigma implementation
strategies, deployment guidelines, and advanced statistical
tools that would work in a variety of companies and
industries.

Adoption of Six Sigma

General Electric
AlliedSignal

Motorola
1987

1992

1995

- Seagate
- Caterpillar
- 3M
- Dupont
- Citibank
- Bank One
- Fort Wayne City
- Sony
- Toshiba
- Shimano
- Matsushita
2000

Adaptation of Six Sigma: Purpose and Approach

1987

Motorola

- Defect reduction
- Manufacturing processes

1992

AlliedSignal

- Operational excellence
- Include non-manufacturing processes

1995

General
Electric

- Financial results
- Design for Six Sigma (DFSS)
- Leadership development

2000

Sony

- Management Quality

Six Sigma As Improvement Management System

Mindset

Business Goals

Skill Set

Define
Performance Measures

Data

Champions
Dashboard

Measure

Analysis
Black Belts

Process Improvement
(projects)

& Green Belts

Bottom Line
Improvement

M-A-I-C

Tools

Financial Benefit

Performance Measure - Examples

Motorola
Sigma Capability / Defect Per Million Opportunities (DPMO)
AlliedSignal Laminate System

Capacity Utilization
Cost of Poor Quality (COPQ) Reduction
Process Yield

General Electric Aircraft Engine Services

Project Financial Benefits

Order To Remittance
Inventory Turns
Span / On Time Delivery

Drill Down Process To Identify Projects

Business Goal

Business Objective Deployment Approach:

Sub CTQ 1

Project 1

Objective

Sub CTQ 2

Project 2

Sub CTQ 3

Project 3

Sub CTQ 4

Project 4

CTQ 1

CTQ 2

Objective

B
Role & Responsibility:
Executive Team

Champion
Black Belts
Green Belts

Example : CTQ Tree

Increase Sales

Sales Orders

Production Output

Sales Lead Time

On Time Delivery
Order Fulfillment
Customer Complaints
Process Yield
Down Time

New Products

Profitability

Manage Cost

Material Cost

Process Efficiency
Time to Market
Market Success Rate
Design Changes
Material Price
Material Usage Rate

Failure Cost
Utility Cost
Improve
Working
Capital

Account Receivable
Inventory

Lot Reject Rate

WIP Rejects
Material Rejects
Electricity
Water
Gas

Teamwork
Coming Together Is A Beginning
Keeping Together Is Progress
Working Together Is Success
Henry Ford

Six Sigma Benefits

GE Capitals railcar-leasing business achieved 62% reduction in
turnaround time at its repair shops.
Customer who once found themselves able to talk with a GE
Capital Mortgage associate only 76% of the time now have a 99%
chance of success on the first try.
GE Plastics added 300 million pounds of new capacity through
rigorous Six Sigma process work.

Citibanks Regional Cash Product Management Unit in Asia Pacific

improved the defect rate of its fund transfer process to 4.95 sigma
level.

Six Sigma As Problem Solving Process

Identify Performance Measures
Create Projects

MEASURE

Establish Data Collection Plan

Understand Current Performance

ANALYZE

Brainstorm Possible Causes

Verify Root Causes

IMPROVE

Identify Improvement Solutions

Validate Effectiveness

CONTROL

Establish Control System

Share Lessons Learned

Responsibility

Champion

Green Belt

DEFINE

Key Tasks

Black Belt

Phases

The DMAIC Toolkit

Define

Measure Analyze Improve

Process Map

Brainstorming
Dashboard

CTQ Drill

Down

Cause & Effect

analysis
Pareto diagram
Selection Matrix
Project Charter

Data Collection
plan
Histogram
Distribution
Measurement
System
Analysis
Descriptive
Statistics
Run charts
Control Charts
Process
Capability

Pareto diagram
Brainstorming
Nominal group
technique

Scatter plot

Box plot
Stratification

FMEA
Process C&E

matrix
Interval Estimate
Hypothesis Test
Process mapping
and analysis

Creativity
Techniques
Selection matrix
Design Of
Experiments
Force field
analysis
Potential risks
assessments
Stakeholder
analysis
Process
Capability

Control

Control plan
Documentation
system
Control charts
On the job
training
Story board

A] Soft Tools (Team Problem Solving)

Brainstorming
Affinity Diagram
Nominal Group Technique
Decision Matrix
Effectiveness / Practicality Matrix
Quality Function Deployment
Failure Mode and Effect Analysis
Force Field Analysis

B] Hard Tools (Quantitative Data Analysis)

Graphical Tools
Process Capability Study
Measurement System Analysis
Hypothesis Testing
Design Of Experiments
Control Charts

C] Work Process Redesign

Process Mapping
Non-value Add Analysis
7 Principles of Process Redesign
Technology Enabler
Process Streamlining
Should Be Process Map
Input

Process

Output

D] LEAN
Value Stream Mapping
Seven Major Wastes
Flow-based Processing
Kan ban System
Set-up Reduction
Mistake Proofing
Visual Management
Take Time
Total Productive Maintenance

Six Sigma Key Features

Top down approach Goals Alignment

Logical and systematic process Consistency
Rigorous problem solving method Effective
Data driven and fact based decision Scientific
Question conventions Breakthrough Results
Financial benefits oriented Bottom Line Focus

What is Sigma?
Sigma (Greek letter ) is a symbol for statistical unit of measurement
called standard deviation that measure the variability of data from the
mean.
In Six Sigma program, Sigma is an index for measuring the capability
of process to produce defect free products or services. A defect is
any mistake that results in customer dissatisfaction.

The higher the sigma level, the less likely a process will produce
defects. As sigma increases, costs go down, cycle time goes down,
and customer satisfaction goes up.

Process Variation
Input

Process

Output

All businesses are a system of interconnected processes.

Variations exist in all processes.
Variations in processes result in process outputs variability.
Understanding and reducing process variability is the key to
improving the capability of a process to produce defect free
products or services.

Process Output Variability

Cycle time for taking X-ray at a hospital

10

20

30

40

50

60 (minutes)

Process Variability &Process Capability

Process Output
Variability

Customer
Requirements

Customer
Requirements

Defects
Less variability means less defects will be produced.
Less defects means better capability in meeting customer
requirements.

Process Capability:Sigma
Process
Sigma

Defect Per
Million

308,538

69.2%

66,807

93.3%

6,210

99.4%

233

99.98%

3.4

Percent
Good

99.9997%

Competitiveness

Noncompetitive
Companies

Average
Companies

World Class
Companies

Is Three Sigma Performance Acceptable?

Example: GE Plastics before Six Sigma implementation
95% compounded product first pass yield
=>3 million pounds of rework week.
90% on-time delivery
=>1 missed shipment every 30 minutes.
98% billing accuracy.
=> 1 billing error every 3 hours.
98% capacity utilization
=> 20 million pounds of lost opportunity.
95% meetings star on time(5%with a 10-minute delay)
=> 1,000 work-hours lost each day.

Variability and Cost of Poor Quality (COPQ)

The Costs of Not Doing Things Right the First Time

Activity 1

Activity 2

Activity 3

Re-do

Re-do

Re-do

Re-check

Re-check

Re-check

Re-Scheduling
Service Recovery
Corrective Actions
Additional
Handling
Ad-hoc Meetings

Lost Customer
Goodwill

COPQ of an Average organization

Direct Loss
4 8%
Of Sales

Re-do

Re-check

Indirect Loss

20 25%
Of Sales
Opportunity For Increasing
Profit Margin

Expediting Costs
Ad-hoc meetings
Service Recovery
Corrective Actions
Lost Customer Goodwill
Longer Cycle Time

Process Variability and COPQ

COPQ (% of Sales)

Correlation between an organizations COPQ and variability

of its key processes
40
30
20
10

(308538dpmo)

(66807dpmo)

(6210dpmo)

(233dpmo)

(3.4dpmo)

Sigma Level

Why Six Sigma?

Q: Is the goal of Six Sigma to achieve six sigma level of
quality?
Contrary to what some believe, the goal of Six Sigma is
not to achieve six sigma levels of quality. Six Sigma is
about improving profitability, although improved quality
and efficiency are immediate by-product of Six Sigma .
Six Sigma, Mikel Harry and Richard Schroeder

Six Sigma and Other Improvement Approaches

High Hanging Fruits
(~ 6 Sigma)

Bulk of Fruits
(~ 5 Sigma)
Low Hanging Fruits
(~ 4 Sigma)
Ground Fruits
(~ 3 Sigma)

Design for Six Sigma

(DFSS)
Six Sigma Approach
(DMAIC)

QCC & 7 Basic Tools

Common Sense &
Intuition

What Is Six Sigma - Summary

A management approach aiming at improving processes to
achieve excellent performance level.
It provides a comprehensive methodology and tools on how to
effectively achieve sustainable breakthrough improvements.

Through Six Sigma management:

- makes known the intention to achieve excellence,
- provides the enabling skills and knowledge,
- creates the supporting infrastructures and mindset, and
makes breakthrough improvement possible.

Section 2
The DMAIC Process
Steps and Tools

The DMAIC Process Steps (1)

Phase
DEFINE

MEASURE

Step
1

Task
Identify Focus Areas / Key Performance
Measures

Set Up Project and Deploy Team

Define Key Process Output Variable

Develop Data Collection Plan

Determine Process Current Performance

The DMAIC Process Steps (2)

Phase

Step
6

ANALYZE

Shortlist Major Suspected Causes

Verify Root Causes

Identify and Evaluate Possible Improvement

Solutions

10

Confirm Improvement Solutions

11

Standardize Improvement Plan

12

Close The Project

IMPROVE

CONTROL

Task
Brainstorm All Possible Causes

Step 1: Identify Focus Areas / Key

Performance Measures
Purpose: Focus limited resources on important areas.
This usually entails a working session participated by the
management team (the champions) where they examine
the various possible areas that impact the business results
and then, using a structured collective decision making
process, decide the critical areas to focus the improvement
efforts.
Examples of focus areas include line reject rate, on-time
shipment, capacity utilization, inventory turns, response
time and warranty costs / customer complaints.

A tool that is commonly

used for this purpose is
the Tree Diagram
Increase Sales

Sales Orders

Production Output

Sales Lead Time

On Time Delivery
Order Fulfillment
Customer Complaints
Process Yield
Down Time

New Products

Profitability

Manage Cost

Material Cost

Process Efficiency
Time to Market
Market Success Rate
Design Changes
Material Price
Material Usage Rate

Failure Cost
Utility Cost
Improve
Working
Capital

Account Receivable
Inventory

Lot Reject Rate

WIP Rejects
Material Rejects
Electricity
Water
Gas

Alternatively, the SIPOC diagram is used. SIPOC is more suitable

for non-profit organization or supporting departments.

SIPOC Diagram
[ Supplier Inputs Process Outputs Customers ]

Inputs

Suppliers

Process

Outputs
Customers

Step 2: Set Up Project and Deploy Team

Purpose: To clarify the issue faced within the focus area and deploy
suitable team to tackle the issue.
Here, the champion (usually with the help of his / her people) defines
the problem statement, decide the improvement goal, and select the
project team members.
This helps to make sure that due thoughts are given to make sure
that the project is a valid one.
The project should be scoped at she process level where specific
actions can be taken to realize the improvement in business results.
The outcome of this step is an approved project charter.

Project Selection Process-Overview

Project Ideas Sources

Performance
Gap

Voice of
Customer

Competitive
Pressure

Project Ideas Sources

Project Ideas Sources

Project Ideas Sources

Project
Charters

Cost Reduction
Initiative

Issues of
Concern

Project Charter
Project charter is a document created at the outset of a project
to assign the project to the team.
It is an important tool for building committed project team.

A Team Charter should specify the followings:

- Project title.
- The process involved.
- The business case and problem statement.
- The goal statement.
- Estimated financial benefits.
- Name of Champion.
- Team leader and members.
- Project time line.

The 4 Rights of Successful Project

Right project
Right team composition
Right team process

Right Result

Notes on forming a team :

There should be a management member (champion) appointed as the project
sponsor.
Team members are to be selected based on the problem statement and the
process to be improved.
Team members must have good working knowledge on the process to be
improved.
Rule of thumb for the number of people in a team is 5 to 7 persons.
The team leader should be trained on:
- Problem solving process steps
- Team facilitation skills
- Process improvement tools

Step 3 : Define Key Process Output Variable

Purpose : Define a measure for key process output variable.
Input

Process

Output

Why is it necessary to measure the process output?

To quantify the current performance level.
To objectively evaluate the gap.
To aid in the analysis of key input factors.
To verify the effectiveness of the improvement solutions..

Examples of Key Process Output Variables:

Proportion defective / Proportion resubmission

Defect per unit / Error per unit / Callback per unit
Process capability ratio (Cpk, Ppk)
Cycle time / Turn around time / Service response
time / Queue time
On time delivery / Span
Proportion of value adding activities
Availability of personnel / material / facility

Step 4: Develop Data Collection Plan

Purpose : To make sure the data accurately describes
the process output variation.
Components of Data Collection Plan:
- Definition of data to be collected (from step 3)
- Measurement method
- Sampling timeframe
- Sample size
- Sampling method
- Recording sheet

Measurement System Analysis

When instrument or visual inspectors are involved to collect the
data, make sure the measurement system is OK.

Important aspects of a measurement system:

Accuracy
Precision
Linearity
Stability

Calibration System
Gage Repeatability and Reproducibility Study
Regression Analysis
Control Charts

Step 5: Determine Process Current

Performance
Purpose: Determine objectively how well the process is
performing now.
Gather process output data according to data collection plan.
Translate the raw data into useful process information:
- Use histogram to show the variation in process output variable
- Estimate the process average and process variation using
descriptive statistics
- Evaluate current process capability
- Evaluate process stability using a run chart or a control chart

Case Study 1 : Invoicing process

Problem Statement :
About 30% of payments are received later than 60 days after
invoices were issued.
Goal Statement :
To reduce the percentage of late payments to less than 5%.
Financial Benefit :
Successful completion of this project will result in an estimated
financial benefit of US$50,000.

Data Collection Plan

Critical To Quality: Payment received on time
Measure: Cycle time from date of invoice issued to date of
payment received (days)
Specification: Not more than 60 days
Process output unit: An invoice
Data source: Account department
Data collection method: Pre-exist data
Sample frame: Three months period from January to March
Sampling method: Random sampling
Number of samples: 60

And Then

Minitab
A powerful data-analyzing software
which can help us have a good
knowledge of current performance

Step 6: Brainstorm All Possible Causes

Purpose: List all possible factors causing the process
performance gap.

Team leader to facilitate the brainstorming process.

Leverage collective experiences of the team members.
Search thoroughly, do not leave out any possible cause.
Depending on the situation, choose the most suitable
tool for this purpose. ( Cause and Effect diagram, Process
FMEA, Process Mapping, Process C&E Matrix )

Identify possible causes using brainstorming and organize

the information using cause and effect diagram
Customer Related

Invoice Related

Customer
Payment Policy

Money Amount
In Invoice

Customer Location

Errors In Invoice

Customer Financial
Position

Dont Match P.O.

Customer Acct
Payable Process

Need for Currency

Exchange
Payment Method
Frequency of
Invoicing

Invoicing Method

Wrong Address
Wrong Amount

Product Quality Problem

No Follow Up On
Past Dues
Relationship With
Customers
Customer Type

Others

Why are
Customers Late in
Paying Invoices?

Step 7: Shortlist Major Suspected Causes

Purpose: Identify key suspects.

Use structured discussion and teams collective knowledge to

narrow the possible causes down to a few most probable causes.

Team leader to facilitate this narrowing process. It is important

for the team to gain a common understanding on the possible
causes before starting the narrowing process.

Choose the most suitable tool for this purpose. ( Multi-voting,

nominal group technique, selection matrix )

Step 8: Verify Root Causes

Purpose: Confirm the key suspects are actually root causes.

Make sure the key suspect are actually root causes.

Discuss and decide how to confirm the key suspects.
The methods commonly used for this purpose are:
- Historical data analysis.
- Design of Experiments.
- Process observation and tracking.

Step 9: Identify and Evaluate

Improvement Solutions
Purpose: Identify various possible solutions and evaluate their
strengths and weaknesses.
With the root causes identified, brainstorm all possible
improvement solution. The first solution is usually not the
best solution.
Without any constraints, generate a list of possible solutions.
Choose the most suitable creativity techniques for this
purpose.
Evaluate and select the best improvement solution.

Challenging conventional thinking / assumptions:

Do not think

Think

- It cant be done.
- It will not work.
- Theyll never buy it.
- Weve always done it this way.
- Weve never try this before.

- How to get it done.

- Try and make it works.
- We can convince them.
- Lets see if there is a better way.
- If we dont try, we dont know.

Examples of tools for idea generation,

evaluation and selection:

Creative thinking techniques

Brainstorming
Effectiveness Practicality Matrix
Lateral Field Analysis
Selection Matrix

Use Effectiveness Practicality Matrix to evaluate each idea

Effectiveness
G

C
D

A
Practicality
B
E

Using Force Field Analysis to evaluate in detail the idea of

giving rebate if customers pay on time for those invoices with
high dollar values.

Driving Forces +
Increased cash flow
of about $ xx.
Contribute $ xx to
financial benefits.

- Restraining Forces
An estimated $ xx will
be incurred as rebates.
An estimated xx hrs of
administrative efforts.
An estimated total
costs of $ xx will be
incurred by the
company

Step 10 : Confirm Improvement Solutions

Purpose: Make sure solutions are effective before standardization.

Decide and develop an action plan to check solution

effectiveness
Collect initial data to make sure the solutions are effective:
- Check data distribution,compute the descriptive statistics,
calculate new process capability.
Perform Potential risk assessment and stakeholder analysis to
anticipate and address possible problems when implementing
the solutions.

Implementation Action Plan

Improvement
Action

Responsible
Person

Completion
Date

Error proof the invoicing

process.

Irene

18May

Make arrangements with

customer to use payment
method other than cheque.

Peter

30May

Develop and implement a

rebate scheme

Adeline

30May

Step 11 : Standardize Improvement Plan

Purpose: Incorporate improvement solutions into process
control system.
Transfer the solutions from the team to the process owners.
Revise process control system / documents ( control plan,
procedure, work instruction, etc. )
Train / brief staff on the revised process control system.

Implement a continual monitoring system.

Step 12 : Close the project

Get Champions approval to close the project.

Project can be closed when:

- The project phases have been completed.
- Project documentations have been completed.
- Improvement plan documented.
Share the lessons learned and knowledge gained
with other related processes / areas.

Case Study 2: Orders Fulfillment

Define
Problem Statement
The time taken from the moment production is completed
to delivery is 2 days. Some urgent orders require
products to be delivered in 1 day.
Goal Statement :
To reduce the turn-around-time time to 1 day.
The process :
Orders fulfillment process

Measure
Map Current Process
Make the process visible by creating the process maps.
Common process mapping methods:
- Linear flowchart
- Cross functional map
- Relationship map
Validate the maps created by walking-through the process
and collect the necessary data.

Analyze
Examine Current Process

Look for flaws in current process.

Examples of process flaws:

- Waiting
- Duplication
- Nom-value adding activities
- Unnecessary check / approval
- Errors
- Re-do

Analysis Summary
A] Waiting
- Visual inspection does not start until laboratory tests have
been completed.
- Store supervisor waits for the test certificates before he
can prepare the shipments.
B] Duplications
- Packers record product names,lot numbers and quantities
and send these information to store.Store supervisor key
in the same information into the finished goods inventory
system.
C] Non-value Adding Activities
- Unnecessary movements involved in sending information
or documents around.

Improve
Identify Improvement Solutions
A] Reduce waiting
- Laboratory tests and visual inspections to be performed
concurrently.
- Store supervisor prints test certificates from computerized
workflow system.
B] Reduce non-value adding activities & duplications
- Packers key in product information into finished goods
inventory system.
- Reduce document movements by installing a computerized
workflow systems.
- Empower QA technicians to decide lots acceptance based
on the specification.

Transaction Project Examples

Sales and Marketing

Motorola employed Six Sigma methodology to improve its prospect

success rate. The company tracked prospects and monitored marketing
activities received (emails, website, etc.). By keeping a database of
activities for each prospect, Motorola calculated the types of marking
efforts generating the best customer responses.

3Ms Marine and Recreational Vehicle business applied Six Sigma

within the sales organization to accelerate the conversion of sales.
Managers and directors rank the sales representatives in 25 areas
including product knowledge and combine this data with each sales
reps conversion of accounts and growth in market share. Through data
analysis, the company determines about 10 attributes that most impacted
the conversion of sales and design a training program based on these
attributes.

A business unit in Johnson & Johnson employed Six Sigma to resolve a distribution
channel problem and create an improved data management system for sales reporting
process. Prior to redesign the process, the company estimated that sales reps spent
approximately 15% of their time on reporting activities, diverting their attention from
selling. After completing the project, the company cut the time spent by sales reps on
reporting activities in half.
Source: Corporate Executive Board
A home appliance company was facing a high number of no-fault found problem.
This occurs when a repair technician is send to look into a fault reported by a customer
and found out that it is not a real fault.After collecting the data to understand the
problem, an effective solution was found. The solution is to get the receptionists to filter
out the non-fault problems. Thos involves training the receptionists to clarify the type
of faults reported by the customers and be able to explain to customers on how to
operate the appliance correctly over the phone.

Banking and Finance

Copeland Companies,which are distributors and record keepers of finance
service products, use Cross Functional Mapping and Process Redesign methods to
improve the accuracy and timeliness of statements (28 days to 15 days).
Global Equipment Finance,which provides global financing and leasing services,
improved all steps cycle times from a customer places an order to product delivery.
The group also reduced the credit decision cycle by 67 percent, from3 days to 1 day.
Private Bank Western Hemisphere, which served wealthy individuals reduced
internal call backs by 80%,external call backs by 85% and credit process time by 50%

Source : baldrigeplus.com

Finance, Purchasing and Logistics

A company in OEM business faced problems in paying its suppliers on time.

Delays in payment result in the suppliers holding back shipments causing the
company to re-schedule production, suffer line down and miss delivery dates
to its customers.
A cross functional team consisting members from logistics, account, finance,
production planning and purchasing was form to solve the problem. The champion
was the finance director.
The team created the cross functional process map, identified and verified key
issues in the process that result in delays. These issues include (1) incomplete / delay
in purchasing and shipping documents, (2) information that do not tally, (3)
disconnects in the process flow.
The team identified and recommended the countermeasures needed to overcome
these issues. With strong backing from the champion,the team implemented the
countermeasures and achieved the project goal.

Human Resource

A business unit in Johnson and Johnson identified sales force turnover as a

significant threat to sales productivity. Therefore it used Six Sigma method
to track and analyze the rate and demographics of turnover in the current
budget year compared to both the current year estimates, previous years
turnover and data from other Johnson and Johnson companies to determine
factors causing sales rep to leave the company.
Source: Corporate Executive Board

A large MNC with multiple manufacturing sites was having problem with
high level of medical leaves consumed by its employees. It was believed that
a high proportion of the medical leaves taken was not really necessary. This
issue results in lost labor hours and higher medical expenses. From the data
collected, it was found that a certain group of employees has a significantly
higher count of medical leaves taken. Based on this information, some solutions
(such as incentive-scheme and company approved clinics) was tried out. When
the solutions were found to be effective,they were standardized by revising the
medical leave policy.

An MNC set stretch goals on project financial benefits company wide

and this includes the Human Resources dept. A team in HR examined the
expenses in HR and Administration and discovered that one of the vital
few high expense items was traveling expenses. Most of the traveling
expenses incurred was air fares. There are about 50 engineers in the
company who travel frequently to the company headquarter in the USA.
The engineers traveled in business class. The team proposed giving an
option to the engineers:While they can still travel in business class,
alternatively they can opt for traveling in the economy class and receive an
additional travel allowance of US$500. The team performed stakeholder
analysis and potential risks assessment before they proposed this idea to
the management. The idea was implemented and many engineers chose the
second options resulting a saving of about US$50,000 annually.

Public Service

A government authority reviews and approves applications from the businesses.

A high proportion of applications were suspended and the applicants need to
resubmit the application. A suspended application means the time spent to review the
application is a waste (cost of not going things right the first time), Some applications
went through as high as 5 resubmissions before they are approved. A team was formed
to measure the problem, analyze the reasons for suspensions and recommend
countermeasures. As a result, the number of suspensions per application reduced
significantly and the labor cost saving was about $35,000 annually.

A hospital form a team to improve the patients discharge process. Many patients
called back the hospital to clarify information on medication, follow-up appointment,
etc. Each time a patient called,the nurses need to spent a substantial amount of time to
retrieve the file, review the files and answer the enquiries. If the patient discharge
process is done right the first time,the patients should not need to call back. Using Six
Sigma methodology, the team reduced the number of call backs.

Section 3
Six Sigma Implementation

The Six Sigma Leap

Most
Companies

A vision that excellence

performance is possible and
is essential to success.
New paradigms, outlook,
mindset.
New skills, tools and data.

2
Sigma

3
Sigma

4
Sigma

5
Sigma

6
Sigma

Culture
Change

Six Sigma Implementation Stages

Executive Briefing & Initial Assessment
Alignment

CTQs & Project Selection

Improvement Priority

Black Belts & Green Belts Training

Improvement Skills Development

The Six Sigma Implementation Roadmap

10. Cont. With Next Projects
9. 1st. Wave Projects Completed
8. Black Belts & Green Belts Trained
7. Projects Identified ( 1st. Wave )
6. Performance Measures (CTQ) Identified
5. Champions Trained
4. Deployment Plan Developed
3. Six Sigma Deployment Committee Formed
2. Six Sigmas Objective Ascertained
1. Executive Briefing

Six Sigma Roles - Overview

Senior Executives

Set direction and provide

resources

Deployment Committee

Plan and lead organization-wide

implementation

Champions

Set up projects and deploy

teams

Master Black Belts and

Coach and support team leaders

Black Belts
Black Belts, Green Belts
And Project Teams

Execute projects

Typical GE Six Sigma Organization Structure

Managing Director
Finance Rep.

Division
Manager
(Champion)

Division
Manager
(Champion)

Black Belt Full Time

Engineer
( Green Belt )

Engineer
( Green Belt )

Six Sigma Dept.

Master Black Belt

Division
Manager
(Champion)

Division
Manager
(Champion)

Black Belt Full Time

Officer
( Green Belt )

Officer
( Green Belt )

Senior Executives Role

Understand what Six sigma is and how Six Sigma helps
accomplish business objectives.
Give directive for Six Sigma implementation.
Provide the necessary resources.

Be seen as an advocate and supporter.

Follow up on:
- results
- effectiveness of the approach
- extent of deployment

AlliedSignal
Our Vision

We will be one of the worlds premier companies,

distinctive and successful in everything we do.
Our Commitment
We will become a Total Quality Company by
continuously improving all our work processes
to satisfy our internal and external customers.

Iomega
How did we decide on Six Sigma?
We recognize the need for a change in the way we pursue operational
excellence.

Why change the way we do it now?

To deal with a world of declining product prices.
To compete successfully with the best companies in the world.
To establish standard language and approaches across functions and
across businesses.
To develop the next generation of leaders.

To Increase Our Rate of Quality and Productivity

Improvement Faster than Our Competitors!

General Electric
quality at GE will be taken to world-leading levels,
providing us with yet another competitive differentiator.
Our openness to learningas well as the generosity of
Motorola and others in sharing their techniques with us, will
bring GE to a whole new level of quality in a fraction of the
time it would have taken to climb the learning curve on our
own.

GEs 1996 Annual Report

Guideline Principle for Leading Change

VISION

PASSION
ACTION

Guiding Principle for New Work Habit

Want To Do.
- appreciate the purpose
- understand what is in it for me
What To Do.
- approach framework / model
- role and responsibility
How To Do.
- process
- tools

Six Sigma Deployment Committee

Tasked by Senior Executives to implement

Six Sigma in the organization.

Responsibilities:
- promoting
- planning
- coordinating
- controlling

- monitoring
- evaluating
- reporting
- recommending

Master Black Belts

Role
Lead Six Sigma implementation committee.
Adviser to senior executives team and champions.
Instructor of Six Sigma training courses.
Coach for Black Belts and Green Belts.
Profile
Business / technical degree, management experience.
Respected member of management.
Master of Six Sigma principles and practices.

Champions Role
Lead the implementation of Six Sigma in their areas.
Determine and track key performance measures (CTQs).
Select and prepare Black Belt and Green Belt candidates.

Identify, set up and support projects.

- Ensure the projects are properly set up.
- Follow up on the projects progress.
- Help teams to remove barriers.

~95%

Basic
Level

Intermediate
Level

Green Belt

~50%

Black Belt

~75%

Yellow Belt

Opportunity To Apply
( Cumulative )

Six Sigma Skill Levels and Belts

Advanced Level

Efforts Needed To Acquire The Tools

Black Belts
Role
Serve as an expert who has in-depth knowledge of Sis Sigma
methodology and tools.
Lead Six Sigma projects.
Coach green belts on their projects.
Trainers of certain Six Sigma tools.
Profile
University education, 5 years working experience.
Respected by peer and management.
Good interpersonal and analytical skills.

Green Belts
Role
Serve as a trained personnel who is able to lead Six Sigma
projects.
Participate effectively in Black Belts project as team
member.
Profile
Higher education level.
3 years working experience.
Respected by peer.

Typical Training Duration

Executive

1 Day

Champion

2-3 Days

Green Belt

8-10 Days
(spread over 2 months period)

Black Belt

16-20 Days
(spread over 4 months period)

Training Approach
Explain
Practise

Describe / explain the techniques.

Practise the techniques in class exercises.

Apply

Apply the techniques in actual work

environment through project.

Review

Review the effectiveness of applications.

Finance Representative
Role
Provides financial data for financial
benefits calculation.
Provides guidelines for calculating
financial benefits.
Verify actual financial benefits.

Human Resource
Role
Review and suggest appropriate incentive system
for Six Sigma :

Career advancement opportunity

Recognition of efforts and contributions

Monetary reward for achievements

Policies / Guidelines

Personnel Selection.
Project Selection.
Financial Benefits Calculation.
Project Tracking System.
Black Belt Certification.
Incentive Scheme.

Projects Tracking System

Information to be tracked:
Total number of projects.
The numbers of completed projects and
on-going projects.
The status of each on-going project.
Targeted financial benefits and actual
financial benefits to date.

Projects Review
Objectives:
1. Ensure projects proceed as plan.
2. Present the findings of each phase.
3. Make sure the vigor of Six Sigma
approach is maintained.
4. Discuss the barriers faced.
5. Check correct applications of tools.

Six Sigma Critical Success Factors

The link of Six Sigma to business strategy is clear.
Recognize and manage Six Sigma as a change
initiative.
Understand that Six Sigma is a management
approach, not just a problem solving tool.
Identifying the right focus areas for Improvement.
Selection of key personnel.
Diligent and disciplined use methodology, fact and
data.

Section 4
Collective Decision Making

Why Make Decision Collectively?

A good decision has two basic components: quality and

commitment.

A quality decision takes into account all of the facts and

viewpoints, and makes good use of that information.

When decision is made4 on a collective basis, it pulls

together the skills, knowledge, experience, and opinions
of several people. This produces a decision that is usually
better than the decisions made by individuals.

Knowing how to make collective decision effectively is an

important skill to an organization.

Benefits of Collective Decision Making

Fresh and diverse ideas.

Minimize misunderstandings and biases.
Increased learning and personal growth.
Better ownership.
Increased understanding of the big picture better
buy-in.
Better decision quality and commitment.

Collective Decision Making Process

Collective decision making is a process where a
group of people bring up, share, and discuss
different ideas and viewpoints, and to select and
agree on the best ideas.
Effective collective decision making process is
not something that will happen by nature.
There are a set of tools that are developed to make
the process more effective. Knowing these tools
and the ability to apply them effectively is an
important skill.

Collective Decision Making General Steps

Define and clarify topic / objective.
Surface / generate ideas by stimulating discussion,
using open questions, and brainstorming creatively.
Record all inputs on charts in full view.
Get everyone to understand each others ideas by
reviewing inputs on the chart.
Group, combine, map or evaluate all inputs.
Make consensus decision by summarizing,
eliminating, narrowing, or win-win negotiation to
arrive at an agreement / consensus.

Collective Decision Making - Tools

Less Complex :
- Brainstorming
- Multi-voting
- Nominal Group Technique
- Selection Matrix (or Decision Matrix)
- Cause and Effective Diagram
More Complex :
- Quality Function Deployment (QFD)
- Failure Modes & Effects Analysis (FMEA)

Collective Decision Making - Notes

The chance of everyone having exactly the same
idea or viewpoint about an issue are very slim.

Letting the most powerful person make the decision

or by mean of majority rules are not effective
approaches.

Good decisions require the team to pool information,

consider different viewpoints and arrive at an
agreement or consensus.

Consensus (1)
A better decision will be made if

People with good knowledge and experience on the

subject matter participate in the process.

Everyones opinions and thoughts are sought, clarified

and considered.

There is a structured process that enables the team to

listen to each other and discuss their ideas.

Consensus and buy-in from all participants are ensured.

Consensus (2)
Is:
A search for the best decision through the exploration of
everyones viewpoints.
Everyone has had an opportunity to be heard.
A decision that reflects the collective thinking of a team
and that all the team members understand fully, can live
with, and will actively support, and believe is workable.
Is Not:
A unanimous decision.
Having everyone completely satisfied with the outcome.
Necessarily everyones first choice.

Collective Decision Making Process - Tips

Have enough time, do not speed up the process.

Balance power.
Listen carefully. Check for understanding.

Be open to different ideas, but avoid playing

nice guy to avoid disagreement.
Encourage differences of opinions. Have
someone plays devil advocate role.

Brainstorming
A tool for creating a wide range of options
in an environment free of criticism.
Brainstorming if useful when you want to
generate a large numbers of ideas about
- Issues to tackle.
- Possible causes of a problem.
- Corrective measures to take.

Brainstorming Ground Rules

Active participation by all.
No criticism, suspend judgment.
Ideas build on ideas.
Record all ideas.
Set a time limit.

Brainstorming Steps
1.
2.
3.
4.
5.
6.
7.
8.

Review the rules.

Set a time limit.
Assign a time keeper and idea recorder.
State the topic.
Collect ideas.
Record ideas.
Clarify each idea (after all ideas are recorded).
Eliminate duplications.

Brainstorming Methods
A. Freewheeling
- Share ideas simultaneously.
- List all ideas as they areshouted out.

B. Round-Robin
- Everyone takes a turn offering an idea.
- Anyone can pass on any turn.
- Continue until there are no more ideas.
- All ideas listed as they are offered.

Multi-voting
A tool for short listing key ideas.
To reduce a long list of items to a manageable
number of items.
Identifying the most popular or highest priority
items to a group a people.
Also called the Delphi Technique.

Multi-voting - Steps
1.
2.
3.
4.
5.

Work from a large list.

Assign a letter to each item.
Vote individually.
Tally the votes.
Repeat where necessary.

Multi-voting - Rule of Thumb

Number of votes allowed = half the number of items
Number of members
5 or fewer
6 to 15
more than 15

Eliminate items with

2 or fewer votes
3 or fewer votes
4 or fewer votes

Exercise
Use brain storming and
multi-voting to decide
what are the key reasons
for ineffective meeting

Nominal Group Technique

A weighted ranking method that enables a team to
generate and prioritize a large number of options
A mechanism that
Gives everyone an equal voice.
Neutralizes the domination of the loudest
person.
However, it will interactions between team
members during ideas generation.

Nominal Group Technique-Steps

1.
2.
3.
4.
5.
6.
7.
8.
9.

Introduce and clarify subject.

Generate ideas individually (each idea on one
post-it note).
Collect ideas.
Read each idea out loud. Clarify if needed.
Combine similar ideas.
Assign a letter to each idea.
Rank the ideas independently.
Add the ranking.
Prioritize items according to scores.

Selection Matrix
A method for relating a set of ideas or
options with specific selection criteria.
Used when the team needs to achieve a
consensus on the best idea or option.

Selection Matrix-Steps
1.
2.
3.
4.
5.
6.
7.

List the ideas or options to be evaluated.

Decide the criteria for selecting the best idea or option.
Create a table to relate the ideas / options with selection
criteria.
Determine the rating scale for the selection criteria.
For each idea / option, all members individually decides
the score for each criteria.
Sum up the total score for each idea or option.
Identify the best option based on total score.

Cause and Effect Diagram

A tool that helps identify, sort, organize and
display possible causes of a specific problem or
quality characteristic.
It graphically illustrates the relationship between
a given outcome and all the factors that influence
the outcome.
Also called an Ishikawa diagram or a fishbone
diagram.

Cause & Effect Diagram-Steps

1. Identify and clarify the effect to be analyzed.
Quality characteristic
Problem

2.

Identify the main causes contributing to the effect.

5 Ms (man, machine, method, material, mother nature)

3.
4.
5.

For each main cause, identify other specific factors.

Identify increasingly more detailed levels of causes.
Analyze the diagram to identify causes that warrant
investigation.

Example
Software

Users
Lack of training

Faulty installation

Misuse

Faulty media

Use wrong software

Faulty design

Machine
Down Time
Faulty component

Corrosion
Mechanical shock

Component failure
Power fluctuation

Humidity
Temperature

Hardware

Environment

Section 5
Define: Set Up Projects
and Deploy Teams

Project Selection Process-Overview

Project Ideas Sources

Performance
Gap

Voice of
Customer

Competitive
Pressure

Project Ideas Sources

Project Ideas Sources

Project Ideas Sources

Project
Charters

Cost Reduction
Initiative

Issues of
Concern

CTQ Drill Down A General Framework

1.

Clarify Business Goals and identify key performance

drivers that impact the business goal.

2.

Define measures for key performance drivers.

3.

Implement the process for collecting data and reporting

the measures.

4.

Identify gaps between goals and current baselines prioritize focus areas for improvement.

5.

Brainstorm the causes that drive the measures.

6. Discuss the relationship between the causes (Xs)

and the effect (Y) to identify vital few factors that
drive the measures. For the vital few causes,
identify project ideas that will move the effect (Y)
to the desired level.
7. Apply project Assessment Matrix to prioritize the
project ideas.
8. Scope the project and create Project Charter.

CTQ Drill Down-Example

Step 1: Clarify Business Goals and identify key performance
drivers that impact the business goal.
Examples of performance driver:
1. Capacity Utilization
2. Inventory Turns
3. Cost of Poor Quality

Example : CTQ Tree

Increase Sales

Sales Orders

Production Output

Sales Lead Time

On Time Delivery
Order Fulfillment
Customer Complaints
Process Yield
Down Time

New Products

Profitability

Manage Cost

Material Cost

Process Efficiency
Time to Market
Market Success Rate
Design Changes
Material Price
Material Usage Rate

Failure Cost
Utility Cost
Improve
Working
Capital

Account Receivable
Inventory

Lot Reject Rate

WIP Rejects
Material Rejects
Electricity
Water
Gas

Step 2: Define Measures for Key Performance Drivers.

Examples:

Performance Driver
Inventory

Order Fulfillment
Lead Time

Measure
Inventory Turns:
Monthly sales amount ( $ ) over inventory
holding costs for that month.

Fulfillment Rate:
Number of ordered items delivered on time
over total number of ordered items ( % ).

Cycle Time:
Time interval from order received to
product / service delivery (days).

Criteria of Good Measures

Direct
Relate directly to the characteristic being assessed.

Exact
Can be observed or measured.
Detail but concise
Clear, understandable, and unambiguous.

Step 3: Implement the Process for Collecting Data and

Reporting the Measures.

Determine data source.

Create recording sheet / form.
Decide reporting format.
Develop a procedure for collecting, reporting
and review the information.

Example on a Procedure for Collecting and Reporting Data:

Responsibility
Operator

Clerk

Procedure Outline

Collect Data Daily

Record Sheets
Submit by 2nd day of month
Collate Data
Update charts
Submit by 4th day of month

Monthly meeting to review

charts and previous actions
Manager and officers
5th day of month

Clerk

Record

Post charts and actions

plan on dashboard

Run Charts

Meeting Minutes
Actions Plan
Department
Dashboard

Common Graphical Tools for Reporting Data:

Pie Chart

Histogram

Bar Chart

Pareto Diagram

Run Chart

Control Chart

Common Mistakes in Reporting Data:

Data are reported in tables rather that graphs.

Only the most recent data are reported.

No comparative data are presented.

Example on Data Reporting Format:

RTY Inc
Logistics Div

Measure: Inventory Turns

Owner: Bruce McDonald
2003 Goal

00 01 02

M A

Characteristics of a Good Feedback System:

Important and meaningful information
Accurate information

Timely feedback
Easy to understand
Accessible

Step 4: Identify Gaps Between Goals and Current Baselines

Prioritize Focus Areas for Improvement.
2003 Goal

M A M

J J A S O N

Step 5: Brainstorm the Causes that Drive the Measures.

Fill the Cause and Effect Diagram with data ( if available ).
Purchasing
Safety Stock
Policy

Others
Central Warehouse

Stock Count Accuracy (80%)

Material Storage

Stock Replenish
Policy

Housekeeping

Inventory
Turn
Forecast Accuracy
(70%)
Inventory
Control System

System

Quality (5% lot reject rate)

Lead Time (30 days)

On Time (95%)
Shipment Quantity

Supplies

Step 6: Discuss the relationship between the causes (Xs) and the effect (Y)
to identify vital few factors that drive the measures. For the vital
few causes. identify project ideas that will move the effect (Y) to
the desired level.
Purchasing

Safety Stock
Policy

Others

Central Warehouse
Stock Count Accuracy (80%)

Material Storage

Stock Replenish
Policy

Housekeeping
Inventory
Turn

Forecast Accuracy
(70%)
Inventory
Control System
System

Quality (5% lot reject rate)

Lead Time (30 days)

On Time (95%)
Shipment Quantity
Supplies

Step 7: Apply Project Assessment Matrix to the Prioritize

Project Ideas.

Examples of Selection Criteria:

Magnitude of impact
Probability of success
Estimated duration
Effort Required
Estimated cost

The 3 Conditions for a Six Sigma Project

A gap exists between current and the desired
performance.
The cause of the problem is not clearly understood.

The solution is not apparent.

Is it a problem to be solved or an action to be taken?

Step 8: Scope the Project and Create Project Charter.

Project Title
Problem Statement

Business Case

Goal Statement

Process

Team Leader
Members

Time Line

Financial Benefit (estimate)

Champion Name

Sign
Date

The 4 Rights of Successful Project

Right project
Right team composition
Right team process

Right Result

Right Project
Well selected
- Address important business issue.
Well scoped
- Focus on specific problem or process.
Well defined
- Comprehensive and clear instruction, not a vague idea.

Project Charter
Project Charter is a document created at the outset of a project
to formally assign the project to the team.
It is an important tool for giving clear instruction and getting
commitment from the project team.
A Project Charter provides the following information:
- Project title.
- The process to be improved.
- The business case.
- The problem statement and goal statement.
- Estimated financial benefits.
- Name of Champion, team leader and members.
- Project time line.

Project Title
A brief description of the project.
An idea on what the project is about
Examples:
SB687 Mis-registration Reduction
Order Fulfillment Process Cycle Time Reduction
Loan Application Process Error Reduction

Process
The name of the particular process to be improved.
Can be described using a high level process block
diagram.
Examples:

Sales orders handling

Multi-layer circuit board lamination
Funds transfer transactions
Pick and place process

Business Case
A broad statement on the business issue pertaining to the project.
Provides the rationale on why the project should be a business
priority.

Examples:
Competitors better quality product has reduced our market
share.
Lower product prices have reduced profit margin, therefore the
need to reduce costs.
Faster response time will generate more sales.

Problem / Opportunity Statement

A description on the symptom of the issue faced.
More specific and focused than business case.
Contains quantitative figure.

Examples:
Sales for product A has fallen by 20% since last year.
The mis-registration defect rate has increased to 7% since
last month.
The turn-around-time of competitor A is 5 days faster than
ours.

Goal Statement
A description on what is to be achieved.
Examples:

To reduce the orders confirmation cycle time 2 days.

To reduce the mis-registration defect rate from 5% to 1%.
To increase the inventory turns by 50%.
To improve the forecast accuracy to 90%.

The Right Team Composition

Right Members.
- Those familiar with the problem, issue, work process.
- Those who are affected by related changes.
Right Team Size
- 5 to 7 members seem to function most effectively.
Role of Team Leader
- Clarify with champion/management on project
objective.
- Schedule and conduct team meetings.
- Get the necessary resources (time, training, equipment,
materials, people) .

Responsibility of Team Members

Carry out team assignments (collect data,
prepare presentation materials, etc.).
Participate actively in team discussions and
decision making.
Share ideas and knowledge.

Implement improvement actions.

Team Effectiveness
A group of individuals is not a team.
An effective team if characterized by members who are:
- Committed to team goal.
- Collective responsibility to project success.
- Collaborate and support each other.

Team facilitation skill is necessary to create teamwork.

Project Set-up Guideline

Is the project aligned with the business goal?
Is there a specific problem to be addressed or multiple
problems?
Is there a pre-determined solution?
Is the project focused on specific area / process?
Are the benefits of the project identified?
Are the right persons in the team.
Is the number of team members too many / few?
Are the team members trained?
Can the project be completed in 4 - 6 months.

Financial Benefits

Better quality
Lower cost
Consistent delivery
Shorter lead time
More capacity
Reduced floor space
Improved cash flow
Higher flexibility

The Purpose of Financial Benefit

To quantify projects benefits financially.
To help prioritize improvement projects.
To evaluate the returns on investment from the
Six Sigma program and improvement solutions.

Financial Benefit Reporting

Define

A] Project Start Up: Rough estimate

based on project goal.

-------------------------------------------------------------

Measure B] Project Reviews: Revised estimated figure

based on new data where necessary.
Analyze
Improve
-------------------------------------------------------------

Control C] Project Closure: Confirm estimated figure

based on actual improvement achieved.

Saving Items - Examples

Cost Reduction - Direct Savings
- Material saving
- Reduced concession / warranty
- Direct labor savings
- Reduced scraps and reworks
- Expedited freight cost reduction

Cost Avoidance
- Investment avoidance as a result
of increased productivity / capacity
- Expense avoidance as a result of
preventative measures

Incremental Revenue
- Increased sales volumes
- Contribution margin enhancement

Cost Reduction - Indirect Savings

- Time savings for indirect

employees
- Reduced administrative effort

Working Capital Reduction

- Inventory reduction
- Receivables reduction

Financial Benefit Guidelines

Guidelines are necessary for:
- Calculating the financial benefits in certain
conditions
- Classify if a savings item has a direct impact to
the profit (hard saving) or has an indirect impact
(soft saving).
Financial benefit guidelines should be determined
by the finance department.

Thank You !!!